SEC Filing - Bel Fuse Inc.

================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 10-Q PRIVATE ----------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ............. to ............ Commission file number: 0-11676 ----------------- BEL FUSE INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) NEW JERSEY 22-1463699 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 198 VAN VORST STREET JERSEY CITY, NEW JERSEY 07302 ---------------------------------------- (Address of principal executive offices) (Zip Code) 201-432-0463 ---------------------------------------------------- (Registrant's telephone number, including area code) ---------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. At August 1, 1999, there were 2,613,570 shares of Class A Common Stock, $.10 par value, outstanding and 2,623,570 shares of Class B Common Stock, $.10 par value, outstanding.

BEL FUSE INC. INDEX Page Number ----------- Part I.--FINANCIAL INFORMATION Item 1. Financial Statements 1 Consolidated Balance Sheets as of June 30, 1999 (unaudited) and December 31, 1998 2 - 3 Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 1999 and 1998 (unaudited) 4 - 5 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 (unaudited) 6 - 7 Notes to Consolidated Financial Statements (unaudited) 8 - 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 - 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk 16 Part II. OTHER INFORMATION Item 1. Legal Proceedings 17 Item 4. Submission of Matters to a Vote of Security Holders 17 Item 6. Exhibits and Reports on Form 8-K 17 Signatures 18

PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Certain information and footnote disclosures required under generally accepted accounting principles have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. The results of operations for the six month period ended June 30, 1999 are not necessarily indicative of the results for the entire fiscal year or for any other period. -1-

BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS June 30, December 31, 1999 1998 ------------ ------------ (unaudited) Current Assets: Cash and cash equivalents $ 15,806,562 $ 14,923,685 Accounts receivable, less allowance for doubtful accounts of $317,000 20,335,259 17,072,537 Inventories 27,797,241 21,847,563 Prepaid expenses and other current assets 696,202 353,869 Deferred income taxes 90,000 284,000 ------------ ------------ Total Current Assets 64,725,264 54,481,654 Property, plant and equipment - net 36,128,176 35,471,498 Goodwill-net of amortization of $1,279,906 and $523,423 12,509,486 13,222,223 Other assets 415,639 449,253 ------------ ------------ TOTAL ASSETS $113,778,565 $103,624,628 ============ ============ (Continued) See notes to consolidated financial statements. -2-

BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 1999 1998 ------------ ------------- (unaudited) Current Liabilities: Accounts payable $ 5,601,562 $ 4,985,840 Accrued expenses 7,416,896 8,416,051 Income taxes payable 1,186,176 10,247 Dividends payable 262,357 260,331 ------------ ------------ Total Current Liabilities 14,466,991 13,672,469 Deferred income taxes 814,000 1,146,000 ------------ ------------ Total Liabilities 15,280,991 14,818,469 ------------ ------------ 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 2,613,570 and 2,603,310 shares (net of 1,072,770 treasury shares) 261,357 260,331 Class B common stock, par value $.10 per share--authorized 10,000,000 shares; outstanding 2,623,570 and 2,603,310 shares (net of 1,072,770 treasury shares) 262,357 260,331 Additional paid-in capital 8,926,426 8,561,421 Retained earnings 89,042,920 79,728,787 Cumulative other comprehensive income (loss) 4,514 (4,711) ------------ ------------ Total Stockholders' Equity 98,497,574 88,806,159 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $113,778,565 $103,624,628 ============ ============ See notes to consolidated financial statements. -3-

BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) Six Months Ended Three Months Ended June 30, June 30, ------------------------- ------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Sales $59,210,700 $39,046,355 $28,451,932 $19,531,655 ----------- ----------- ----------- ----------- Costs and Expenses: Cost of sales 38,253,853 26,024,635 17,939,247 12,846,907 Selling, general and administrative expenses 9,648,344 7,033,510 4,843,473 3,646,028 ----------- ----------- ----------- ----------- 47,902,197 33,058,145 22,782,720 16,492,935 ----------- ----------- ----------- ----------- Income from operations 11,308,503 5,988,210 5,669,212 3,038,720 Other income--net 331,109 893,983 179,367 477,985 ----------- ----------- ----------- ----------- Earnings before income taxes 11,639,612 6,882,193 5,848,579 3,516,705 Income tax provision 1,801,000 877,000 1,131,000 478,000 ----------- ----------- ----------- ----------- Net earnings $ 9,838,612 $ 6,005,193 $ 4,717,579 $ 3,038,705 =========== =========== =========== =========== Basic earnings per common share $1.88 $1.16 $ .90 $ .59 ===== ===== ===== ===== Diluted earnings per common share $1.83 $1.15 $ .88 $ .58 ===== ===== ===== ===== Weighted average number of common shares outstanding--basic 5,224,149 5,158,028 5,234,847 5,184,994 =========== =========== =========== =========== Weighted average number of common shares outstanding and potential common shares--diluted 5,379,500 5,222,613 5,376,411 5,212,584 =========== =========== =========== =========== (Continued) See notes to consolidated financial statements. -4-

BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, ---------------------------- 1999 1998 ----------- ----------- Cash flows from operating activities: Net income $ 9,838,612 $ 6,005,193 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,982,029 1,662,700 Other (78,000) 196,000 Changes in operating assets and liabilities (8,791,097) 1,569,259 ----------- ----------- Net Cash Provided by Operating Activities 3,951,544 9,433,152 ----------- ----------- Cash flows from investing activities: Purchase of property, plant and equipment (2,872,939) (1,837,547) Payment for acquisition (43,806) -- Purchase of marketable securities -- (2,830,415) Proceeds from repayment by contractors 64,500 82,531 ----------- ----------- Net Cash Used in Investing Activities (2,852,245) (4,585,431) ----------- ----------- Cash flows from financing activities: Proceeds from exercise of stock options 308,057 832,137 Dividends (524,479) -- ----------- ---------- Net Cash (Used in) Provided by Financing Activities (216,422) 832,137 ----------- ---------- Net increase in Cash 882,877 5,679,858 Cash and Cash Equivalents - beginning of period 14,923,685 29,231,967 ----------- ---------- Cash and Cash Equivalents - end of period $15,806,562 $34,911,825 =========== ========== (Continued) See notes to consolidated finacial statements. -6-

BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued) (unaudited) Six Months Ended June 30, ---------------------------- 1999 1998 ----------- ----------- Changes in operating assets and liabilities consist of: Increase in accounts receivable $(3,262,722) $(1,016,160) (Increase) decrease in inventories (5,949,678) 2,347,951 Increase in prepaid expenses and other current assets (406,833) (363,378) Decrease in other assets 33,614 89,566 Increase (decrease) in accounts payable 615,722 (285,771) Increase (decrease) in accrued expenses (999,155) 872,639 Increase (decrease) in income taxes payable 1,175,929 (75,588) Increase in dividends payable 2,026 ----------- ----------- $(8,791,097) $ 1,569,259 =========== =========== Supplementary information: Cash paid during the period for: Interest $ -- $ -- =========== =========== Income taxes $ 726,000 $ 432,000 =========== =========== See notes to consolidated financial statements. -7-

BEL FUSE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated balance sheet as of June 30, 1999, and the consolidated statements of operations and comprehensive income and cash flows for the periods presented herein have been prepared by the Company and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations and comprehensive income and cash flows for all periods presented have been made. Certain items in the June 30, 1998 financial statements have been reclassified to conform to 1999 classifications. The information for December 31, 1998 was derived from audited financial statements. 2. Earnings Per Share - Basic earnings per common share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per common share are computed using the weighted average number of common shares and potential common shares outstanding during the period. 3. Acquisition On October 2, 1998, the Company acquired the manufacturing assets, primarily consisting of inventory and fixed assets, of Lucent Technologies, Inc.'s ("Lucent") signal transformer product line in exchange for approximately $27 million in cash plus acquisition costs of approximately $500,000. Under the terms of the agreement, the Company, among other things, will continue to supply certain of Lucent's telecom magnetics requirements up to forty-two months. The Company is moving the majority of the manufacturing for this business to the Republic of China. Lucent and the Company entered into a Transition Services Agreement whereby Lucent has agreed to provide contract labor and transitional services to the Company for an agreed price until the earlier of September 30, 1999 or the date on which Signal Transformer Manufacturing operations and the purchased assets are relocated. The acquisition has been accounted for under the purchase method of accounting and includes the results of operations of the acquired entity from the date of acquisition. Intangible assets and goodwill which arose in connection with the acquisition in the amount of $13.5 million, are being amortized over three and one-half to 15 years using the straight line method. Proforma unaudited results of operations for the six months ended June 30, 1998 reflect the consolidated operations of the Company assuming the acquisition occurred on January 1, 1998. Proforma adjustments have been made for amortization of intangibles, depreciation, reduction of interest income and income taxes. The proforma results are as follows: -8-

BEL FUSE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Six Months Ended Three Months Ended June 30, 1998 June 30, 1998 ---------------- ------------------ (Dollars in thousands except per share data) Sales $57,411 $28,858 Net earnings (1) 10,337 5,080 Diluted earnings per common share $1.98 $ .97 - ---------- (1) In arriving at net earnings, income taxes were estimated based upon assumptions as to the geographic area in which the operating income would have been earned by the Company. 4. Inventories consist of the following: June 30, 1999 December 31, 1998 ------------- ----------------- Raw materials $15,736,928 $11,459,928 Work-in-process 120,581 139,166 Finished goods 11,939,732 10,248,469 ---------- ----------- $27,797,241 $21,847,563 ========== =========== 5. Property, plant and equipment consists of the following: June 30, 1999 December 31, 1998 ------------- ---------------- Land $ 1,164,436 $ 1,164,436 Buildings and improvements 14,037,278 13,901,108 Machinery and equipment 49,404,615 46,658,618 Idle property held for sale 935,000 935,000 ----------- ----------- 65,541,329 62,659,162 Less accumulated depreciation and amortization 29,413,153 27,187,664 ----------- ----------- Net property, plant and equipment $36,128,176 $35,471,498 =========== =========== -9-

BEL FUSE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Business Segment Information The Company does not have reportable operating segments as defined in Statement of Financial Accounting Standards No.131, "Disclosures about Segments of an Enterprise and Related Disclosures". The method for attributing revenues for interim purposes is based on total shipments from the country of origination less intergeographic revenues. The Company operates facilities in the United States, Europe and the Far East. The primary criteria by which financial performance is evaluated and resources are allocated include revenues and operating income. The following is a summary of key financial data: Six Months Ended Three Months Ended June 30, June 30, ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Total Revenues: United States $ 38,346,172 $ 19,818,878 $ 18,538,709 $ 10,888,789 Asia 53,958,049 35,520,190 25,437,471 17,787,480 Less intergeographic revenues (33,093,521) (16,292,713) (15,524,248) (9,144,614) ------------ ------------ ------------ ------------ $ 59,210,700 $ 39,046,355 $ 28,451,932 $ 19,531,655 ============ ============ ============ ============ Income from Operations: United States $ 5,017,358 $ 1,566,151 $ 2,789,626 $ 1,090,870 Asia 6,291,145 4,422,059 2,879,586 1,947,850 ------------ ------------ ------------ ------------ $ 11,308,503 $ 5,988,210 $ 5,669,212 $ 3,038,720 ============ ============ ============ ============ -10-

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the percentage relationship to net sales of certain items included in the Company's consolidated statements of operations. Percentage of Net Sales -------------------------------------------- Six Months Ended Three Months Ended June 30, June 30, ------------------ ------------------- 1999 1998 1999 1998 ------ ------ ------- ------ Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 64.6 66.7 63.0 65.8 Selling, general and administrative expenses 16.3 18.0 17.0 18.7 Other income, net of interest expense .6 2.3 .6 2.5 Earnings before income tax provision 19.6 17.6 20.6 17.9 Income tax provision 3.0 2.2 4.0 2.4 Net earnings 16.6 15.4 16.6 15.6 The following table sets forth, for the periods indicated, the percentage increase (decrease) of items included in the Company's consolidated statements of operations. Increase (Decrease) from Prior Period ------------------------------------------- Six Months Ended Three Months Ended June 30, 1999 June 30, 1999 compared with 1998 compared with 1998 ------------------ ------------------ Net sales 51.6% 45.7% Cost of sales 47.0 39.6 Selling, general and administrative expenses 37.2 32.8 Other income - net (63.0) (62.5) Earnings before income tax provision 69.1 66.3 Income tax provision 105.4 136.6 Net earnings 63.8 55.2 On October 2, 1998, the Company acquired Lucent Technologies' signal transformer product line and the related manufacturing assets, primarily consisting of inventory and fixed assets. See Note 3 of the Notes to Consolidated Financial Statements. This transaction was accounted for as a purchase and the results of operations of this acquisition have been included in results of operations since the date of acquisition. The 1998 periods described do not reflect this acquisition. -11-

SIX MONTHS 1999 VS. SIX MONTHS 1998 NET SALES Net sales increased 51.6% from $39,046,355 during the first six months of 1998 to $59,210,700 during the first six months of 1999. The Company attributes this increase primarily to sales growth of telecom magnetic products of the signal transformer product line recently acquired from Lucent, and increased fuse sales. COST OF SALES Cost of sales as a percentage of net sales decreased 2.1 % to 64.6 % during the first six months of 1999 from 66.7 % during the first six months of 1998. The decrease in the cost of sales percentage is primarily attributable to lower material content offset in part by higher overhead, principally attributed to increased depreciation expense and increased overheads associated with the telecom magnetic product line. The Company is moving the telecom magnetic product line to China and expects to complete the move during the third quarter of 1999. The Company's statement regarding the completion of this transition represents a Forward Looking Statement under the Private Securities Litigation Reform Act of 1995 (a "Forward - Looking Statement"). Actual results could differ materially from the Company's estimate as a result of a variety of factors, including but not limited to unanticipated logistical problems related to the transfer, the effect of business and economic conditions, capacity and supply constraints and the regulatory and trade environment. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The percentage relationship of selling, general and administrative expenses to net sales decreased from 18.0 % for the first six months of 1998 to 16.3 % for the first six months of 1999. The Company attributes the percentage decrease primarily to increased sales. Selling, general and administrative expenses increased in dollar amount by 37.2 %. The Company attributes the increase in dollar amount of such expenses primarily to increases in sales and marketing salaries and other sales related expenses and amortization of goodwill resulting from the acquisition of the signal transformer product line recently acquired from Lucent. OTHER INCOME AND EXPENSES Other income, consisting principally of interest earned on cash equivalents and marketable securities, decreased by approximately $563,000 during the first six months of 1999 compared to the first six months of 1998. The decrease is primarily due to the use of cash and cash equivalents in the acquisition of the signal transformer business from Lucent. PROVISION FOR INCOME TAXES The provision for income taxes for the first six months of 1999 was $1,801,000 as compared to $877,000 for the first six months of 1998. The increase in the provision is due primarily to higher United States and foreign earnings in 1999 versus 1998. -12-

THREE MONTHS 1999 VS. THREE MONTHS 1998 SALES Sales increased 45.7% to $28,451,932 during the second quarter of 1999 from $19,531,655 during the second quarter of 1998. The Company attributes the increase primarily to the reasons set forth in the six month analysis. COST OF SALES Cost of sales as a percentage of net sales decreased 2.8% to 63.0% during the second quarter of 1999 from 65.8% during the second quarter of 1998. The Company attributes the decrease primarily to the reasons set forth in the six month analysis. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The percentage relationship of selling, general and administrative expenses to net sales decreased 1.7% to 17.0% during the second quarter of 1999 from 18.7% during the second quarter of 1998. Selling, general and administrative expenses increased in dollar amount by $1,197,000. The Company attributes the decrease in such percentage relationship and the increase in dollar amount to the reasons set forth in the six month analysis. OTHER INCOME AND EXPENSE Other income increased for the second quarter of 1999 compared to the second quarter of 1998 due to the reasons set forth in the six month analysis. PROVISION FOR INCOME TAXES The provision for income taxes increased to $1,131,000 for the second quarter of 1999 from $478,000 for the second quarter of 1998. The Company attributed the increase in the provision to the reasons set forth in the six month analysis. -13-

LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has financed its capital expenditures through cash flows from operating activities. Management believes that the cash flow from operations, combined with its existing capital base and the Company's available lines of credit, will be sufficient to fund its operations for the near term. This statement represents a Forward-Looking Statement. Actual results could differ materially from such statement if the Company experiences substantial unanticipated cash requirements. The Company has lines of credit, all of which were unused at June 30, 1999, in the aggregate amount of $14 million, of which $12 million is from domestic banks and $2 million is from foreign banks. During the first six months of 1999, the Company's cash and cash equivalents increased by approximately $.9 million, reflecting approximately $4 million provided by operating activities and approximately $.3 million from the exercise of stock options, offset, in part, by approximately $2.9 million in purchases of plant and equipment and approximately $.5 million in dividends. Cash and cash equivalents and accounts receivable comprised approximately 31.8 % and 30.9 % of the Company's total assets at June 30, 1999 and December 31, 1998, respectively. The Company's current ratio (i.e., the ratio of current assets to current liabilities) was 4.5 to 1 and 4.0 to 1 at June 30, 1999 and December 31, 1998, respectively. OTHER MATTERS Year 2000 BACKGROUND The Year 2000 issue is the result of computer programs being written using two digits (rather than four) to define the applicable years. Any of the Company's programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000, which could result in miscalculations or system failures. The Company relies heavily on computer technologies to operate its business. In 1997, the Company conducted an initial assessment of its information technology to determine which Year 2000 related problems might cause processing errors or computer system failures. The Company also did a complete analysis of its computer system. Based on the results of that analysis, the management began to focus on the Year 2000 issue as a top corporate priority and established a group to develop a solution. Based on the group's evaluation, management decided to upgrade the entire computer system at the same time as addressing the Year 2000 issue. Though the cost of the Year 2000 issue is not material, the estimate for upgrading the computer system, including the solution for the Year 2000 issue, is approximately $350,000. -14-

The following discussion of the implications of the Year 2000 issue for the Company contains numerous Forward-Looking Statements based on inherently uncertain information. The cost of the project and the date on which the Company plans to complete its internal Year 2000 modifications are based on management's best estimates, which were derived utilizing a number of assumptions of future events including the continued availability of internal and external resources, third party modifications and other factors. However, there can be no guarantee that these estimates will be achieved, and actual results could differ. Moreover, although the Company believes it will be able to make the necessary modifications in advance, there can be no guarantee that failure to modify the systems would not have a material adverse effect on the Company. In addition, the Company places a high degree of reliance on computer systems of third parties, such as customers, trade suppliers and computer hardware and commercial software suppliers. Although the Company is assessing the readiness of these third parties and preparing contingency plans, there can be no guarantee that the failure of these third parties to modify their systems in advance of December 31, 1999, would not have a material adverse effect on the Company. Inasmuch as the Company has international operations, Y2K issues arising in foreign locations could have a material adverse effect on the Company. The Company cannot provide an opinion that Y2K problems outside the U.S. will not impact the Company. READINESS The Year 2000 project is intended to ensure that all critical systems, devices and applications, as well as data exchanged with customers, trade suppliers and other third parties have been evaluated and will be suitable for continued use into and beyond the Year 2000. Responsibility for implementation of the project has been assigned to an internal group of the Company. General priorities have been defined, dependencies identified, preliminary delivery dates assigned, detailed project plans developed, and internal and external technical resources assigned or hired. In addition, internal management reporting requirements have been established. Plans and progress against these plans are reviewed by the Company's Chief Financial Officer. The Company has completed the majority of the project. The Company is currently conducting a rigorous final level testing under Post-Year 2000 conditions. Since early 1997, the Company has required Year 2000 compliance statements from all suppliers of the Company's computer hardware and commercial software. Regardless of the compliance statements, all third party hardware and software will also be subjected to testing to reconfirm Year 2000 readiness. -15-

COST The Company estimates that the total cost of achieving Year 2000 readiness for its internal systems, devices and applications (including the cost of replacement systems) is approximately $350,000. Year 2000 project costs are difficult to estimate accurately and the projected cost could change due to unanticipated technological difficulties and Year 2000 readiness of third parties. Through June 30, 1999 approximately $325,000 has been expended. CONTINGENCY PLANS In the event that the efforts of the Company's Year 2000 project do not address all potential systems problems, the Company is currently developing business interruption contingency plans, including maintaining the Company's old computer system which was not subject to the Year 2000 problem. The Company believes, however, that due to the widespread nature of potential Year 2000 issues, the contingency planning process is an ongoing one which will require further modifications as the Company obtains additional information regarding (1) the Company's internal systems during the remediation and testing phases of its Year 2000 project and (2) the status of third party Year 2000 readiness. Contingency planning for possible Year 2000 disruptions will continue to be defined, improved and implemented. RISKS The Company believes that completed and planned modifications and conversions of its critical systems, devices and applications will allow it to be Year 2000 compliant in a timely manner. There can be no assurances, however, that the Company's internal systems, devices and applications or those of third parties on which the Company relies will be Year 2000 compliant by year 2000 or that the Company's or third parties' contingency plans will mitigate the effects of any noncompliance. An interruption of the Company's ability to conduct its business due to a Year 2000 readiness problem could have a material adverse effect on the Company. This report contains Forward-Looking Statements that involve substantial risks and uncertainties. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the "Business", "Management's Discussion and Analysis of Financial Condition and Results of Operations", and "Risks and Uncertainties" captions in the Company's Form 10-K for the year ended December 31, 1998. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not Applicable - no significant changes to the information included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. -16-

PART II. Other Information Item 1. LEGAL PROCEEDINGS See Item 3 of the Company's Form 10-K for the year ended December 31, 1998. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's annual meeting of security holders was held on June 11, 1999. At the meeting the following vote was taken: (1) The Board's nominees were elected to the Board of Directors for the term of three years. The votes were cast as follows: For Withheld --------- -------- Elliot Bernstein 2,325,054 58,325 Robert Simandl 2,324,204 59,175 There were -0- abstentions and -0- broker non-votes. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: 27.1 Financial Data Schedule (b) There were no Current Reports on Form 8-K filed by the registrant during the quarter ended June 30, 1999. -17-

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BEL FUSE INC. By:/s/Daniel Bernstein ------------------------------ Daniel Bernstein, President (Principal Financial and Accounting Officer) Dated: August 13, 1999 -18-

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BEL FUSE INC. AND SUBSIDIARIES FINANCIAL STATEMENTS AT JUNE 30, 1999 AND THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 12-MOS DEC-31-1999 JUN-30-1999 15,806,562 0 20,652,259 317,000 27,797,241 64,725,264 65,541,329 29,413,153 113,778,565 14,466,991 0 523,714 0 0 97,973,860 113,778,565 59,210,700 59,210,700 38,253,853 47,902,197 0 0 0 11,639,612 1,801,000 9,838,612 0 0 0 9,838,612 1.88 1.83