x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
NEW
JERSEY
|
22-1463699
|
(State
of other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
206
Van Vorst Street
|
Jersey
City, New Jersey
|
07302
|
(Address
of principal executive offices)
|
(Zip
Code)
|
BEL
FUSE INC.
|
|||
Page
|
|||
1
|
|||
2-3
|
|||
4
|
|||
5-6
|
|||
7-9
|
|||
10-32
|
|||
33-49
|
|||
50
|
|||
51
|
|||
52-53
|
|||
54
|
|||
55
|
PART I. |
Item 1. |
BEL
FUSE INC. AND SUBSIDIARIES
|
||||
March
31,
|
December
31,
|
||||||
2006
|
2005
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
53,250,439
|
$
|
51,997,634
|
|||
Marketable
securities
|
43,200,591
|
38,463,108
|
|||||
Accounts
receivable - less allowance for doubtful
|
|||||||
accounts
of $1,008,000 and $1,107,000 at
|
|||||||
March
31, 2006 and December 31, 2005, respectively
|
39,880,962
|
39,304,984
|
|||||
Inventories
|
35,694,948
|
32,947,103
|
|||||
Prepaid
expenses and other current
|
|||||||
assets
|
3,201,557
|
1,691,017
|
|||||
Assets
held for sale
|
828,131
|
828,131
|
|||||
Total
Current Assets
|
176,056,628
|
165,231,977
|
|||||
Property,
plant and equipment - net
|
42,712,791
|
42,379,356
|
|||||
Deferred
income taxes
|
3,937,000
|
3,901,000
|
|||||
Intangible
assets - net
|
2,835,585
|
2,782,188
|
|||||
Goodwill
|
24,117,742
|
22,427,934
|
|||||
Prepaid
pension costs
|
1,655,362
|
1,655,362
|
|||||
Other
assets
|
3,758,279
|
3,678,100
|
|||||
TOTAL
ASSETS
|
$
|
255,073,387
|
$
|
242,055,917
|
|||
BEL
FUSE INC. AND SUBSIDIARIES
|
||||
CONSOLIDATED
BALANCE SHEETS
|
March
31,
|
December
31,
|
||||||
2006
|
2005
|
||||||
(Unaudited)
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable
|
$
|
17,065,730
|
$
|
14,560,827
|
|||
Accrued
expenses
|
11,416,322
|
10,667,558
|
|||||
Deferred
income taxes
|
2,810,000
|
1,412,000
|
|||||
Income
taxes payable
|
10,177,678
|
9,840,295
|
|||||
Dividends
payable
|
552,000
|
548,000
|
|||||
Total
Current Liabilities
|
42,021,730
|
37,028,680
|
|||||
Long-term
Liabilities:
|
|||||||
Minimum
pension obligation
|
3,660,114
|
3,450,688
|
|||||
Total
Liabilities
|
45,681,844
|
40,479,368
|
|||||
Commitments
and Contingencies
|
|||||||
Stockholders'
Equity:
|
|||||||
Preferred
stock, no par value,
|
|||||||
authorized
1,000,000 shares;
|
|||||||
none
issued
|
—
|
—
|
|||||
Class
A common stock, par value
|
|||||||
$.10
per share - authorized
|
|||||||
10,000,000
shares; outstanding
|
|||||||
2,702,677
and 2,702,677 shares, respectively
|
|||||||
(net
of 1,072,769 treasury shares)
|
270,268
|
270,268
|
|||||
Class
B common stock, par value
|
|||||||
$.10
per share - authorized
|
|||||||
30,000,000
shares; outstanding 9,065,178
|
|||||||
and
9,013,264 shares, respectively
|
|||||||
(net
of 3,218,307 treasury shares)
|
906,518
|
901,327
|
|||||
Additional
paid-in capital
|
29,911,819
|
31,713,608
|
|||||
Retained
earnings
|
171,440,521
|
167,991,188
|
|||||
Deferred
stock-based compensation
|
—
|
(3,562,709
|
)
|
||||
Accumulated
other comprehensive income
|
6,862,417
|
4,262,867
|
|||||
Total
Stockholders' Equity
|
209,391,543
|
201,576,549
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
255,073,387
|
$
|
242,055,917
|
|||
BEL
FUSE INC. AND SUBSIDIARIES
|
||||
(Unaudited)
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
|
|||||||
Net
Sales
|
$
|
54,626,248
|
$
|
45,438,285
|
|||
Costs
and expenses:
|
|||||||
Cost
of sales
|
39,986,889
|
32,688,811
|
|||||
Selling,
general and administrative
|
9,377,185
|
7,221,303
|
|||||
Casualty
loss
|
963,791
|
—
|
|||||
50,327,865
|
39,910,114
|
||||||
Income
from operations
|
4,298,383
|
5,528,171
|
|||||
Interest
expense and other costs
|
(115,680
|
)
|
(67,150
|
)
|
|||
Interest
income
|
512,596
|
225,344
|
|||||
Earnings
before provision for income taxes
|
4,695,299
|
5,686,365
|
|||||
Income
tax provision
|
698,000
|
1,373,000
|
|||||
Net
earnings
|
$
|
3,997,299
|
$
|
4,313,365
|
|||
Earnings
per common share - basic
|
$
|
0.34
|
$
|
0.38
|
|||
Earnings
per common share - diluted
|
$
|
0.34
|
$
|
0.38
|
|||
Weighted
average common shares
|
|||||||
outstanding
- basic
|
11,749,645
|
11,371,677
|
|||||
Weighted
average common shares
|
|||||||
outstanding
- diluted
|
11,813,017
|
11,507,499
|
|||||
BEL
FUSE INC. AND SUBSIDIARIES
|
||||||||||||||||
(Unaudited)
|
|
Accumulated
|
||||||||||||||||||||||||
|
Other
|
Deferred
|
|||||||||||||||||||||||
Compre-
|
Compre-
|
Class
A
|
Class
B
|
Additional
|
Stock-
|
||||||||||||||||||||
hensive
|
Retained
|
hensive
|
Common
|
Common
|
Paid-In
|
Based
|
|||||||||||||||||||
Total
|
Income
|
Earnings
|
Income
|
Stock
|
Stock
|
Capital
|
Compensation
|
||||||||||||||||||
|
|||||||||||||||||||||||||
Balance,
January 1, 2005
|
$
|
178,461,296
|
$
|
149,949,283
|
$
|
5,386,512
|
$
|
270,268
|
$
|
866,059
|
$
|
21,989,174
|
$
|
—
|
|||||||||||
Exercise
of stock
|
|||||||||||||||||||||||||
options
|
4,115,508
|
20,028
|
4,095,480
|
||||||||||||||||||||||
Tax
benefits arising
|
|||||||||||||||||||||||||
from
the disposition of
|
|||||||||||||||||||||||||
non-qualified
|
|||||||||||||||||||||||||
incentive
stock options
|
429,802
|
429,802
|
—
|
||||||||||||||||||||||
Cash
dividends on Class A
|
|||||||||||||||||||||||||
common
stock
|
(430,940
|
)
|
(430,940
|
)
|
|||||||||||||||||||||
Cash
dividends on Class B
|
|||||||||||||||||||||||||
common
stock
|
(1,760,432
|
)
|
(1,760,432
|
)
|
|||||||||||||||||||||
Issuance
of restricted
|
|||||||||||||||||||||||||
common
stock
|
5,214,392
|
15,240
|
5,199,152
|
||||||||||||||||||||||
Deferred
stock-based
|
|||||||||||||||||||||||||
compensation
- net of taxes
|
(3,810,840
|
)
|
(3,810,840
|
)
|
|||||||||||||||||||||
Currency
translation
|
|||||||||||||||||||||||||
adjustment
- net of taxes
|
(669,153
|
)
|
$
|
(669,153
|
)
|
(669,153
|
)
|
||||||||||||||||||
Decrease
in unrealized gain or
|
|||||||||||||||||||||||||
loss
on marketable securities
|
|||||||||||||||||||||||||
-net
of taxes
|
(454,492
|
)
|
(454,492
|
)
|
(454,492
|
)
|
|||||||||||||||||||
Stock-based
compensation
|
|||||||||||||||||||||||||
expense
- net of taxes
|
248,131
|
248,131
|
|||||||||||||||||||||||
Net
earnings
|
20,233,277
|
20,233,277
|
20,233,277
|
||||||||||||||||||||||
Comprehensive
income
|
$
|
19,109,632
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
Balance,
December 31, 2005
|
201,576,549
|
167,991,188
|
4,262,867
|
270,268
|
901,327
|
31,713,608
|
(3,562,709
|
)
|
|||||||||||||||||
BEL
FUSE INC. AND SUBSIDIARIES
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||||||||||
(Unaudited)
|
|
Accumulated
|
||||||||||||||||||||||||
|
Other
|
||||||||||||||||||||||||
Compre-
|
Compre-
|
Class
A
|
Class
B
|
Additional
|
Stock-
|
||||||||||||||||||||
hensive
|
Retained
|
hensive
|
Common
|
Common
|
Paid-In
|
Based
|
|||||||||||||||||||
Total
|
Income
|
Earnings
|
Income
|
Stock
|
Stock
|
Capital
|
Compensation
|
||||||||||||||||||
|
|||||||||||||||||||||||||
Exercise
of stock
|
|||||||||||||||||||||||||
options
|
1,358,556
|
5,191
|
1,353,365
|
||||||||||||||||||||||
Tax
benefits arising
|
|||||||||||||||||||||||||
from
the disposition of
|
|||||||||||||||||||||||||
non-qualified
|
|||||||||||||||||||||||||
incentive
stock options
|
107,105
|
107,105
|
|
||||||||||||||||||||||
Cash
dividends on Class A
|
|||||||||||||||||||||||||
common
stock
|
(107,735
|
)
|
(107,735
|
)
|
|||||||||||||||||||||
Cash
dividends on Class B
|
|||||||||||||||||||||||||
common
stock
|
(440,231
|
)
|
(440,231
|
)
|
|||||||||||||||||||||
Issuance
of restricted
|
|||||||||||||||||||||||||
common
stock
|
|
|
|
||||||||||||||||||||||
Currency
translation
|
|||||||||||||||||||||||||
adjustment
- net of taxes
|
91,879
|
$
|
91,879
|
91,879
|
|||||||||||||||||||||
Increase
in unrealized gain or
|
|||||||||||||||||||||||||
loss
on marketable securities
|
|||||||||||||||||||||||||
-net
of taxes
|
2,507,671
|
2,507,671
|
2,507,671
|
||||||||||||||||||||||
Stock-based
compensation
|
|||||||||||||||||||||||||
expense
|
300,450
|
113,250
|
187,200
|
||||||||||||||||||||||
Adoption
of SFAS 123 (R)
|
—
|
(3,375,509
|
)
|
3,375,509
|
|||||||||||||||||||||
Net
earnings
|
3,997,299
|
3,997,299
|
3,997,299
|
||||||||||||||||||||||
Comprehensive
income
|
$
|
6,596,849
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
Balance,
March 31, 2006
|
$
|
209,391,543
|
$
|
171,440,521
|
$
|
6,862,417
|
$
|
270,268
|
$
|
906,518
|
$
|
29,911,819
|
$
|
—
|
|||||||||||
BEL
FUSE INC. AND SUBSIDIARIES
|
||||
(Unaudited)
|
Three
Months Ended
|
|||||||
March
31, 2006
|
|||||||
2006
|
2005
|
||||||
Cash
flows from operating
|
|||||||
activities:
|
|||||||
Net
income
|
$
|
3,997,299
|
$
|
4,313,365
|
|||
Adjustments
to reconcile net
|
|||||||
income
to net cash provided
|
|||||||
by
operating activities:
|
|||||||
Depreciation
and amortization
|
2,519,445
|
2,039,027
|
|||||
Casualty
loss
|
963,791
|
—
|
|||||
Stock-based
compensation
|
373,970
|
—
|
|||||
Excess
tax benefits from share-based
|
|||||||
payment
arrangements
|
(107,105
|
)
|
—
|
||||
Other
|
297,874
|
335,716
|
|||||
Deferred
income taxes
|
(638,000
|
)
|
(118,000
|
)
|
|||
Changes
in operating assets
|
|
|
|||||
and
liabilities (net of acquisitions)
|
(2,545,566
|
)
|
5,844,168
|
||||
Net
Cash Provided by
|
|||||||
Operating
Activities
|
4,861,708
|
12,414,276
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchase
of property, plant
|
|||||||
and
equipment
|
(2,472,483
|
)
|
(824,843
|
)
|
|||
Purchase
of marketable
|
|||||||
securities
|
—
|
(643,424
|
)
|
||||
Payment
for acquisitions - net of
|
|||||||
cash
acquired
|
(2,178,276
|
)
|
(18,803,978
|
)
|
|||
Proceeds
from sale of
|
|||||||
marketable
securities
|
93,500
|
—
|
|||||
Net
Cash Used in
|
|||||||
Investing
Activities
|
(4,557,259
|
)
|
(20,272,245
|
)
|
|||
BEL
FUSE INC. AND SUBSIDIARIES
|
||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
|
||||
(Unaudited)
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
Cash
flows from financing
|
|||||||
activities:
|
|||||||
Proceeds
from borrowings
|
—
|
8,000,000
|
|||||
Loan
repayments
|
—
|
(1,360,694
|
)
|
||||
Proceeds
from exercise of
|
|
|
|||||
stock
options
|
1,358,556
|
776,900
|
|||||
Dividends
paid to common
|
|
|
|||||
shareholders
|
(552,000
|
)
|
(541,000
|
)
|
|||
Excess
tax benefits from share-based
|
|||||||
payment
arrangements
|
107,105
|
—
|
|||||
Net
Cash Provided By
|
|||||||
Financing
Activities
|
913,661
|
6,875,206
|
|||||
Effect
of exchange rate changes on cash
|
34,695
|
(128,841
|
)
|
||||
Net
Increase (decrease) in
|
|||||||
Cash
and Cash Equivalents
|
1,252,805
|
(1,111,604
|
)
|
||||
Cash
and Cash Equivalents
|
|
|
|||||
-
beginning of year
|
51,997,634
|
71,197,891
|
|||||
Cash
and Cash Equivalents
|
|||||||
-
end of year
|
$
|
53,250,439
|
$
|
70,086,287
|
|||
Changes
in operating assets
|
|||||||
and
liabilities (net of acquisitions) consist of:
|
|||||||
(Increase)
decrease in accounts
|
|
|
|||||
receivable
|
$
|
(572,712
|
)
|
$
|
2,586,069
|
||
(Increase)
decrease in inventories
|
(2,849,918
|
)
|
799,766
|
||||
Increase
in prepaid
|
|||||||
expenses
and other
|
|||||||
current
assets
|
(1,510,540
|
)
|
(160,393
|
)
|
|||
(Increase)
decrease in other assets
|
(574,188
|
)
|
124,490
|
||||
Increase
in
|
|||||||
accounts
payable
|
2,500,286
|
3,780,810
|
|||||
Increase
(decrease) in income taxes payable
|
444,488
|
(20,288
|
)
|
||||
Increase
(decrease) in accrued expenses
|
17,018
|
(1,266,286
|
)
|
||||
$
|
(2,545,566
|
)
|
$
|
5,844,168
|
|||
BEL
FUSE INC. AND SUBSIDIARIES
|
||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Concluded)
|
||||
(Unaudited)
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
Supplementary
information:
|
|||||||
Cash
paid during the year for:
|
|||||||
Income
taxes
|
$
|
556,000
|
$
|
1,296,000
|
|||
Interest
|
$
|
27,232
|
$
|
67,000
|
|||
Details
of acquisitions:
|
|||||||
Fair
value of assets acquired (excluding
|
|||||||
cash
of $92,702 in 2005
|
$
|
—
|
$
|
4,088,383
|
|||
Intangibles
|
178,276
|
2,114,395
|
|||||
Goodwill
|
2,000,000
|
12,601,200
|
|||||
Cash
paid for acquisitions
|
$
|
2,178,276
|
$
|
18,803,978
|
|||
1. |
BASIS
OF PRESENTATION AND ACCOUNTING
POLICIES
|
Three
Months
|
||||
Ended
|
||||
March
31,
|
||||
2005
|
||||
Net
earnings - as reported
|
$
|
4,313,365
|
||
Add:
Stock-based compensation
|
||||
expense
included in net income,
|
||||
net
of taxes, as reported
|
||||
Deduct:
Total stock-based
|
||||
employee
compensation expense
|
||||
determined
under fair value based
|
||||
method
for all awards,
|
||||
net
of taxes
|
160,868
|
|||
Net
earnings- pro forma
|
$
|
4,152,497
|
||
Earnings
per common share -
|
||||
basic-as
reported
|
$
|
0.38
|
||
Earnings
per common share -
|
||||
basic-pro
forma
|
$
|
0.37
|
||
Earnings
per common share -
|
||||
diluted-as
reported
|
$
|
0.38
|
||
Earnings
per common share -
|
||||
diluted-pro
forma
|
$
|
0.36
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
Weighted
average shares outstanding - basic
|
11,749,645
|
11,371,677
|
|||||
Dilutive
impact of stock options and
|
|||||||
unvested
restricted stock awards
|
63,372
|
135,822
|
|||||
Weighted
average shares oustanding - diluted
|
11,813,017
|
11,507,499
|
2. |
ACQUISITIONS
|
Three
Months Ended
|
||||
March
31,
|
||||
2005
|
||||
Net
sales
|
$
|
49,732
|
||
Net
earnings
|
4,039
|
|||
Earnings
per share - diluted
|
0.35
|
Cash
|
$
|
311,856
|
||
Accounts
receivable
|
3,687,331
|
|||
Inventories
|
2,862,571
|
|||
Prepaid
expenses
|
96,120
|
|||
Income
taxes receivable
|
5,488
|
|||
Property,
plant and
|
||||
equipment
|
1,545,526
|
|||
Other
assets
|
32,083
|
|||
Deferred
tax asset
|
1,392,850
|
|||
Goodwill
|
12,546,080
|
|||
Intangible
assets
|
1,960,000
|
|||
Notes
payable
|
(860,694
|
)
|
||
Accounts
payable
|
(2,129,165
|
)
|
||
Accrued
expenses
|
(465,002
|
)
|
||
Net
assets acquired
|
$
|
20,985,044
|
3. |
GOODWILL
AND OTHER INTANGIBLES
|
Total
|
Asia
|
North
America
|
Europe
|
||||||||||
Balance,
January 1, 2005
|
$
|
9,881,854
|
$
|
6,407,435
|
$
|
2,869,092
|
$
|
605,327
|
|||||
Goodwill
allocation
|
|||||||||||||
related
to acquisitions
|
12,546,080
|
—
|
11,543,846
|
1,002,234
|
|||||||||
Balance,
December 31, 2005
|
22,427,934
|
6,407,435
|
14,412,938
|
1,607,561
|
|||||||||
Goodwill
allocation
|
|||||||||||||
related
to acquisitions
|
1,689,808
|
2,000,000
|
(310,192
|
)
|
-
|
||||||||
Balance,
March 31, 2006
|
$
|
24,117,742
|
$
|
8,407,435
|
$
|
14,102,746
|
$
|
1,607,561
|
December
31, 2005
|
|||||||||||||||||||
Total
|
Asia
|
North
America
|
|||||||||||||||||
Gross
Carrying
|
Accumulated
|
Gross
Carrying
|
Accumulated
|
Gross
Carrying
|
Accumulated
|
||||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
Amount
|
Amortization
|
||||||||||||||
Patents
and Product
|
|||||||||||||||||||
Information
|
$
|
2,935,000
|
$
|
1,812,853
|
$
|
2,653,000
|
$
|
1,634,566
|
$
|
282,000
|
$
|
178,287
|
|||||||
Customer
relationships
|
1,160,000
|
178,833
|
—
|
—
|
1,160,000
|
178,833
|
|||||||||||||
Covenants
not-to-compete
|
5,021,034
|
4,342,160
|
4,221,034
|
3,813,589
|
800,000
|
528,571
|
|||||||||||||
$
|
9,116,034
|
$
|
6,333,846
|
$
|
6,874,034
|
$
|
5,448,155
|
$
|
2,242,000
|
$
|
885,691
|
March
31, 2006
|
|||||||||||||||||||
Total
|
Asia
|
North
America
|
|||||||||||||||||
Gross
Carrying
|
Accumulated
|
Gross
Carrying
|
Accumulated
|
Gross
Carrying
|
Accumulated
|
||||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
Amount
|
Amortization
|
||||||||||||||
Patents
and Product
|
|||||||||||||||||||
Information
|
$
|
2,935,000
|
$
|
1,930,805
|
$
|
2,653,000
|
$
|
1,746,044
|
$
|
282,000
|
$
|
184,761
|
|||||||
Customer
relationships
|
1,830,000
|
333,148
|
—
|
—
|
1,830,000
|
333,148
|
|||||||||||||
Covenants
not-to-compete
|
5,199,310
|
4,864,772
|
4,399,310
|
4,136,201
|
800,000
|
728,571
|
|||||||||||||
$
|
9,964,310
|
$
|
7,128,725
|
$
|
7,052,310
|
$
|
5,882,245
|
$
|
2,912,000
|
$
|
1,246,480
|
Estimated
|
||||
Year
Ending
|
Amortization
|
|||
December
31,
|
Expense
|
|||
2006
|
$
|
799,901
|
||
2007
|
809,277
|
|||
2008
|
534,287
|
|||
2009
|
427,596
|
|||
2010
|
134,904
|
4. |
MARKETABLE
SECURITIES
|
5. |
INVENTORIES
|
March
31,
|
December
31,
|
||||||
2006
|
2005
|
||||||
Raw
materials
|
$
|
19,070,218
|
$
|
19,342,703
|
|||
Work
in progress
|
6,346,471
|
2,515,174
|
|||||
Finished
goods
|
10,278,259
|
11,089,226
|
|||||
$
|
35,694,948
|
$
|
32,947,103
|
6. |
BUSINESS
SEGMENT INFORMATION
|
Three
Months Ended
|
|||||||
March
31, 2006
|
|||||||
2006
|
2005
|
||||||
Total
segment revenues
|
|||||||
North
America
|
$
|
18,494,886
|
$
|
17,960,953
|
|||
Asia
|
38,905,599
|
31,135,372
|
|||||
Europe
|
5,684,833
|
3,998,422
|
|||||
Total
segment revenues
|
63,085,318
|
53,094,747
|
|||||
Reconciling
items:
|
|||||||
Intersegment
revenues
|
(8,459,070
|
)
|
(7,656,462
|
)
|
|||
Net
sales
|
$
|
54,626,248
|
$
|
45,438,285
|
|||
Income
(loss) from Operations:
|
|||||||
North
America
|
$
|
(893,902
|
)
|
$
|
1,284,654
|
||
Asia
|
4,840,319
|
4,084,950
|
|||||
Europe
|
351,966
|
158,567
|
|||||
$
|
4,298,383
|
$
|
5,528,171
|
7. |
DEBT
|
a. |
Short-term
debt
|
b. |
Long-term
debt
|
8. |
ACCRUED
EXPENSES
|
March
31,
|
December
31,
|
||||||
2006
|
2005
|
||||||
Sales
commissions
|
$
|
1,742,192
|
$
|
1,812,135
|
|||
Investment
banking commissions
|
1,752,593
|
1,105,510
|
|||||
Subcontracting
labor
|
1,686,096
|
1,597,279
|
|||||
Salaries,
bonuses and
|
|||||||
related
benefits
|
3,199,844
|
2,642,729
|
|||||
Other
|
3,035,597
|
3,509,905
|
|||||
$
|
11,416,322
|
$
|
10,667,558
|
9. |
RETIREMENT
FUND AND PROFIT SHARING PLAN
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
Service
cost
|
$
|
313,000
|
$
|
99,000
|
|||
Interest
cost
|
61,000
|
77,000
|
|||||
Amortization
of adjustments
|
40,000
|
44,000
|
|||||
Total
SERP expense
|
$
|
414,000
|
$
|
220,000
|
March
31,
|
December
31,
|
||||||
2006
|
2005
|
||||||
Balance
sheet amounts:
|
|||||||
Accrued
pension liability
|
$
|
3,660,114
|
$
|
3,450,688
|
|||
Intangible
asset
|
1,655,362
|
1,655,362
|
10. |
SHARE-BASED
COMPENSATION
|
Weighted
|
|||||||||||||
Average
|
|||||||||||||
Weighted
|
Remaining
|
Aggregate
|
|||||||||||
Average
|
Contractual
|
Intrinsic
|
|||||||||||
Options
|
Shares
|
Exercise
Price
|
Term
|
Value
|
|||||||||
Outstanding
at January 1, 2006
|
286,013
|
$
|
24.96
|
||||||||||
Granted
|
—
|
||||||||||||
Exercised
|
(51,913
|
)
|
26.17
|
$
|
565,102
|
||||||||
Forfeited
or expired
|
(6,000
|
)
|
30.96
|
||||||||||
Outstanding
at March 31, 2006
|
228,100
|
$
|
24.52
|
1.5
|
$
|
2,396,328
|
|||||||
Exercisable
at March 31, 2006
|
56,600
|
$
|
25.86
|
1.5
|
$
|
219,303
|
|||||||
Weighted-Average
|
|||||||
Grant-Date
|
|||||||
Nonvested
Shares
|
Shares
|
Fair
Value
|
|||||
Nonvested
at December 31, 2005
|
177,500
|
$
|
24.28
|
||||
Granted
|
—
|
||||||
Vested
|
—
|
||||||
Forfeited
|
(6,000
|
)
|
(30.96
|
)
|
|||
Nonvested
at March 31, 2006
|
171,500
|
$
|
24.04
|
Weighted
|
|||||||||||||
Weighted
|
Average
|
||||||||||||
Average
|
Remaining
|
Aggregate
|
|||||||||||
Restricted
Stock
|
Award
|
Contractual
|
Intrinsic
|
||||||||||
Awards
|
Shares
|
Price
|
Term
|
Value
|
|||||||||
Outstanding
at January 1, 2006
|
152,400
|
$
|
35.64
|
||||||||||
Granted
|
—
|
||||||||||||
Awardd
|
—
|
||||||||||||
Forfeited
|
(2,200
|
)
|
(37.00
|
)
|
|||||||||
Outstanding
at March 31, 2006
|
150,200
|
35.62
|
4.5
|
$
|
—
|
||||||||
Exercisable
at March 31, 2006
|
—
|
—
|
$
|
—
|
|||||||||
11. |
COMMON
STOCK
|
· |
Voting
- Class A receives one vote per share; Class B is
non-voting;
|
· |
Dividends
(cash) - Cash dividends are payable at the discretion of the Board
of
Directors and is subject to a 5% provision whereby cash dividends
paid out
to Class B must be at least 5% higher per share annually than Class
A. At
the discretion of the Board of Directors, Class B may receive a cash
dividend without Class A receiving a cash
dividend.
|
· |
Dividends
(other than cash) and distributions in connection with any
recapitalization and upon liquidation, dissolution or winding up
of the
Company - Shared equally among Class A and Class B;
|
· |
Mergers
and consolidations - Equal amount and form of consideration per share
among Class A and Class B;
|
· |
Class
B Protection - Any person or group that purchases 10% or more of
the
outstanding Class A (excluding certain shares, as defined) must make
a
public cash tender offer (within 90 days) to acquire additional shares
of
Class B to avoid disproportionate voting rights. Failure to do so
will
result in forfeiture of voting rights for those shares acquired after
the
recapitalization. Alternatively, the purchaser can sell Class A shares
to
reduce the purchaser's holdings below 10% (excluding shares owned
prior to
recapitalization). Above 10%, this protection transaction is triggered
every 5% (i.e., 15%, 20%, 25%,
etc.);
|
· |
Convertibility
- Not convertible into another class of Common Stock or any other
security
by the Company, unless by resolution by the Board of Directors to
convert
such shares as a result of either class becoming excluded from quotation
on NASDAQ, or if total outstanding shares of Class A falls below
10% of
the aggregate number of outstanding shares of both classes (in which
case,
all Class B shares will be automatically converted in Class A
shares).
|
· |
Transferability
and trading - Both Class A and Class B are freely transferable and
publicly traded on NASDAQ National
Market;
|
· |
Subdivision
of shares - Any split, subdivision or combination of the outstanding
shares of Class A or Class B must be proportionately split with the
other
class in the same manner and on the same
basis.
|
12. |
COMPREHENSIVE
INCOME
|
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
Net
earnings
|
$
|
3,997,299
|
$
|
4,313,365
|
|||
Currency
translation adjustment-
|
|||||||
net
of taxes
|
91,879
|
(190,527
|
)
|
||||
Increase
(decrease) in unrealized
|
|||||||
gain
on marketable securities
|
|||||||
-
net of taxes
|
2,507,671
|
(3,175,742
|
)
|
||||
Comprehensive
income
|
$
|
6,596,849
|
$
|
947,096
|
13. |
ASSETS
HELD FOR SALE
|
14. |
NEW
FINANCIAL ACCOUNTING STANDARDS
|
15. |
Legal
Proceedings
|
Item 2. |
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
Percentage
of Net Sales
|
|||||||
Three
Months Ended
|
|||||||
March
31,
|
|||||||
2006
|
2005
|
||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
|||
Cost
of sales
|
73.2
|
71.9
|
|||||
Selling,
general and
|
|||||||
administrative
expenses
|
17.2
|
15.9
|
|||||
Casualty
loss
|
1.8
|
—
|
|||||
Interest
expense and other costs
|
(0.2
|
)
|
|||||
Interest
income - net
|
1.0
|
0.3
|
|||||
Earnings
before provision
|
|||||||
for
income taxes
|
8.6
|
12.5
|
|||||
Income
tax provision
|
1.3
|
3.0
|
|||||
Net
earnings
|
7.3
|
9.5
|
Increase
(decrease) from
|
||||
Prior
Period
|
||||
Three
Months Ended
|
||||
March
31, 2006
|
||||
compared
with Three
|
||||
Months
Ended March
|
||||
31,
2005
|
||||
Net
sales
|
20.2
|
%
|
||
Cost
of sales
|
22.3
|
|||
Selling,
general and
|
||||
administrative
expenses
|
29.9
|
|||
Net
earnings
|
(7.3
|
)
|
t |
The
Company incurred a 9.2% increase in material costs as a percentage
of net
sales. The increase in raw material costs is principally related
to
increased manufacturing of value-added products (including new
Galaxy
products in 2005), which have a higher raw material content than
the
Company’s other products, and increased costs for raw materials such as
copper, steel and petroleum-based products and increased transportation
costs.
|
t |
The
Company has also started to pay higher wage rates and benefits
to its
production workers in China. These higher rates and benefits are
reflected
in the Company’s cost of goods sold.
|
t |
Sales
of the Company’s DC-DC power products have increased. While these products
are strategic to Bel’s growth and important to total earnings, they return
lower gross profit percentage margins as a larger percentage of
their
bills of materials are purchased components. As these sales continue
to
increase, the Company’s average gross profit percentage will likely
decrease. The increasing sales also have an impact on the accelerated
write off of intangibles related to contingent purchase price payments
arising from the acquisition of Current
Concepts.
|
Payments
due by period
|
||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than
nine
months
|
1-3
years
|
3-5
years
|
More
than
5
years
|
|||||||||||
Capital
expenditure obligations
|
$
|
985,298
|
$
|
985,298
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Contingent
purchase price commitments
|
951,477
|
951,477
|
—
|
—
|
—
|
|||||||||||
Operating
leases
|
4,099,812
|
1,427,898
|
1,557,634
|
1,114,280
|
—
|
|||||||||||
Raw
material purchase obligations
|
15,895,336
|
15,895,336
|
—
|
—
|
—
|
|||||||||||
Total
|
$
|
21,931,923
|
$
|
19,260,009
|
$
|
1,557,634
|
$
|
1,114,280
|
$
|
—
|
Item 3. |
Quantitative
and Qualitative Disclosures About Market
Risk
|
Item 4. |
Controls
and Procedures
|
a) |
Disclosure
controls and procedures.
As of the end of the Company’s most recently completed fiscal quarter
covered by this report, the Company carried out an evaluation, with
the
participation of the Company’s management, including the Company’s chief
executive officer and vice president of finance, of the effectiveness
of
the Company’s disclosure controls and procedures pursuant to Securities
Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s chief
executive officer and vice president of finance concluded that the
Company’s disclosure controls and procedures are effective in ensuring
that information required to be disclosed by the Company in the reports
that it files or submits under the Securities Exchange Act is recorded,
processed, summarized and reported, within the time periods specified
in
the SEC’s rules and forms.
|
b) |
Changes
in internal controls over financial reporting:
There have been no changes in the Company's internal controls over
financial reporting that occurred during the Company's last fiscal
quarter
to which this report relates that have materially affected, or are
reasonable likely to materially affect, the Company internal control
over
financial reporting.
|
Item 1. |
Legal
Proceedings
|
Item 6. |
Exhibits
|
(a) |
Exhibits:
|
31.1 |
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
31.2 |
Certification
of the Vice President of Finance pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
32.1 |
Certification
of the Chief Executive Officer pursuant to Section 906 of the Sarbanes
-
Oxley Act of 2002.
|
32.2 |
Certification
of the Vice-President of Finance pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
BEL FUSE, INC. | ||
|
|
|
Date: May 9, 2006 | By: | /s/ Daniel Bernstein |
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Name:
Daniel Bernstein
Title:
President and Chief Executive
Officer
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Date: May 9, 2006 | By: | /s/ Colin Dunn |
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Name:
Colin Dunn
Title:
Vice President of Finance
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Exhibit3 1.1 |
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Certification of the Chief Executive Officer pursuant to Section
302 of
the Sarbanes-Oxley Act of 2002.
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Exhibit 31.2 |
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Certification of the Vice President of Finance pursuant to Section
302 of
the Sarbanes-Oxley Act of 2002.
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Exhibit 32.1 |
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Certification of the Chief Executive Officer pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
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Exhibit 32.2 |
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Certification of the Vice President of Finance pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002.
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1. |
I
have reviewed this quarterly report on Form 10-Q of Bel Fuse Inc.;
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2. |
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3. |
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
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4. |
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a -
15(f) and 15d - 15(f)) for the registrant and have:
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a. |
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
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b. |
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
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c. |
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
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d. |
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely
to
materially affect, the registrant's internal control over financial
reporting; and
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5. |
The
registrant's other certifying officer and I have disclosed, based
on our
most recent evaluation of internal control over financial reporting,
to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
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a. |
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record,
process, summarize and report financial information; and
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b. |
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
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1. |
I
have reviewed this quarterly report on Form 10-Q of Bel Fuse Inc.;
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2. |
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3. |
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
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4. |
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a -
15(f) and 15d - 15(f)) for the registrant and have:
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a. |
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
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b. |
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
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c. |
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
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d. |
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely
to
materially affect, the registrant's internal control over financial
reporting; and
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5. |
The
registrant's other certifying officer and I have disclosed, based
on our
most recent evaluation of internal control over financial reporting,
to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
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a. |
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record,
process, summarize and report financial information; and
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b. |
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
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