SEC Filing - Bel Fuse Inc.

================================================================================ FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 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 November 1, 1999, there were 2,627,694 shares of Class A Common Stock, $.10 par value, outstanding and 2,632,994 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 September 30, 1999 (unaudited) and December 31, 1998 2 - 3 Consolidated Statements of Operations and Comprehensive Income for the Three and Nine Months Ended September 30, 1999 and 1998 (unaudited) 4 - 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 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 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 nine month period ended September 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 September 30, December 31, 1999 1998 ------------ ------------ (Unaudited) Current Assets: Cash and cash equivalents $ 21,219,756 $ 14,923,685 Marketable securities 1,901,596 -- Accounts receivable, less allowance for doubtful accounts of $317,000 20,139,746 17,072,537 Inventories 24,799,782 21,847,563 Prepaid expenses and other current assets 593,191 353,869 Deferred income taxes 300,000 284,000 ------------ ------------ Total Current Assets 68,954,071 54,481,654 Property, plant and equipment - net 36,806,591 35,471,498 Goodwill-net of amortization of $1,656,263 and $523,423 12,133,189 13,222,223 Other assets 389,832 449,253 ------------ ------------ TOTAL ASSETS $118,283,683 $103,624,628 ============ ============ (Continued) See notes to consolidated financial statements. -2-

BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 1999 1998 ------------- ------------- (unaudited) Current Liabilities: Accounts payable $ 3,203,791 $ 4,985,840 Accrued expenses 8,017,432 8,416,051 Income taxes payable 1,641,514 10,247 Dividends payable 262,469 260,331 ------------- ------------- Total Current Liabilities 13,125,206 13,672,469 Deferred income taxes 1,115,000 1,146,000 ------------- ------------- Total Liabilities 14,240,206 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 2,627,194 and 2,603,310 shares (net of 1,072,770 treasury shares) 262,720 260,331 Class B common stock, par value $.10 per share - authorized 10,000,000 shares; outstanding 2,627,194 and 2,603,310 shares (net of 1,072,770 treasury shares) 262,719 260,331 Additional paid-in capital 9,084,108 8,561,421 Retained earnings 94,095,850 79,728,787 Cumulative other comprehensive income (loss) 338,080 (4,711) ------------- ------------- Total Stockholders' Equity 104,043,477 88,806,159 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 118,283,683 $ 103,624,628 ============= ============= See notes to consolidated financial statements. -3-

BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) Nine Months Ended Three Months Ended September 30, September 30, --------------------------- --------------------------- 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Sales $89,747,178 $60,195,036 $30,536,478 $21,148,681 ----------- ----------- ----------- ----------- Costs and Expenses: Cost of sales 57,858,865 39,616,162 19,605,012 13,591,527 Selling, general and administrative expenses 14,817,201 10,886,493 5,168,857 3,852,983 ----------- ----------- ----------- ----------- 72,676,066 50,502,655 24,773,869 17,444,510 ----------- ----------- ----------- ----------- Income from operations 17,071,112 9,692,381 5,762,609 3,704,171 Other income - net 537,898 1,441,573 206,789 547,590 ----------- ----------- ----------- ----------- Earnings before income taxes 17,609,010 11,133,954 5,969,398 4,251,761 Income tax provision 2,455,000 1,477,000 654,000 600,000 ----------- ----------- ----------- ----------- Net earnings $15,154,010 $ 9,656,954 $ 5,315,398 $ 3,651,761 =========== =========== =========== =========== Basic earnings per common share $2.90 $1.87 $1.01 $.70 ===== ===== ===== ==== Diluted earnings per common share $2.82 $1.85 $ .99 $.70 ===== ===== ===== ==== Weighted average number of common shares outstanding-basic 5,229,700 5,172,873 5,240,829 5,202,078 =========== =========== =========== =========== Weighted average number of common shares outstanding and potential common shares - diluted 5,377,399 5,222,696 5,373,013 5,222,378 =========== =========== =========== =========== (Continued) See notes to consolidated financial statements. -4-

BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended September 30 ------------------------------ 1999 1998 ------------ ------------ Cash flows from operating activities: Net income $ 15,154,010 $ 9,656,954 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,495,684 2,547,636 Other (187,000) 351,530 Changes in operating assets and liabilities (6,845,336) 3,216,730 ------------ ------------ Net Cash Provided by Operating Activities 12,617,358 15,772,850 ------------ ------------ Cash flows from investing activities: Purchase of property, plant and equipment (4,683,352) (3,026,344) Payment for acquisition (43,806) -- Purchase of marketable securities (1,353,396) (2,830,415) Proceeds from sale of marketable securities -- 1,000,000 Proceeds from repayment by contractors 96,750 124,728 ------------ ------------ Net Cash Used in Investing Activities (5,983,804) (4,732,031) ------------ ------------ Cash flows from financing activities: Proceeds from exercise of stock options 449,464 835,387 Dividends (786,947) -- ------------ ------------ Net Cash (Used in) Provided by Financing Activities (337,483) 835,387 ------------ ------------ Net increase in Cash 6,296,071 11,876,206 Cash and Cash Equivalents - beginning of period 14,923,685 29,231,967 ------------ ------------ Cash and Cash Equivalents - end of period $ 21,219,756 $ 41,108,173 ============ ============ (Continued) See notes to consolidated financial statements. -6-

BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (unaudited) Nine Months Ended September 30, ------------------------------ 1999 1998 ----------- ----------- Changes in operating assets and liabilities consist of: Increase in accounts receivable $(3,067,209) $(1,879,062) (Increase) decrease in inventories (2,952,219) 2,592,177 Increase in prepaid expenses and other current assets (336,072) (344,172) Decrease in other assets 59,421 137,124 Increase (decrease) in accounts payable (1,782,049) 443,267 Increase (decrease) in accrued expenses (400,613) 1,989,948 Increase in income taxes payable 1,631,267 277,448 Increase in dividends payable 2,138 -- ----------- ----------- $(6,845,336) $ 3,216,730 =========== =========== Supplementary information: Cash paid during the period for: Interest ................................. $ -- $ -- =========== =========== Income taxes ............................. $ 1,018,000 $ 555,000 =========== =========== Non-cash investing activities: Unrealized gain on marketable securities .................... $ 328,206 $ -- =========== =========== See notes to consolidated financial statements. -7-

BEL FUSE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated balance sheet as of September 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 September 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, continued to supply certain of Lucent's telecom magnetics requirements. As of September 30, 1999, the Company had moved the majority of the manufacturing for this business to the Republic of China. 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 nine months ended September 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 3. Acquisition (Continued) Nine Months Ended Three Months Ended September 30, 1998 September 30, 1998 ------------------ ------------------ (Dollars in thousands except per share data) Sales $ 89,854 $ 32,443 Net earnings (1) 16,951 6,614 Diluted earnings per common share $3.25 $1.27 (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. Subsequent Event On November 5, 1999 the Board of Directors declared a two for one stock split to be paid in the form of a special dividend of one share of Class B common stock for each share of Class A and Class B outstanding. The special stock dividend is payable on December 1, 1999 to all Class A and Class B shareholders of record on November 22, 1999. The Board also approved an amendment to the Company's certificate of incorporation (to be filed on or after December 1, 1999) increasing the number of authorized shares of Class B common stock from 10,000,000 shares to 30,000,000 shares. The pro forma effect on basic and diluted shares and earnings per share giving effect to the dividend for all periods presented is as follows: Nine Months Ended Three Months Ended ---------------------- ---------------------- September 30, September 30, 1999 1998 1999 1998 ---------- ---------- ---------- ---------- Basic income per share $1.49 $.93 $.51 $.35 ===== ==== ==== ==== Basic weighted average shares 10,459,451 10,345,791 10,481,658 10,405,111 ========== ========== ========== ========== Diluted income per share $1.43 $.93 $.50 $.35 ===== ==== ==== ==== Diluted weighted average shares 10,607,240 10,395,614 10,613,482 10,425,411 ========== ========== ========== ========== -9-

BEL FUSE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. 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 Information". 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: Nine Months Ended Three Months Ended September 30, September 30, ------------------------------ ------------------------------ 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Total Revenues: United States $ 56,020,435 $ 30,790,750 $ 17,674,263 $ 10,971,872 Asia 86,094,564 55,160,430 32,136,515 19,640,240 Less intergeographic revenues (52,367,821) (25,756,144) (19,274,300) (9,463,431) ------------ ------------ ------------ ------------ $ 89,747,178 $ 60,195,036 $ 30,536,478 $ 21,148,681 ============ ============ ============ ============ Income from Operations: United States $ 1,732,530 $ 1,533,421 $ 1,051,172 $ 618,270 Asia 15,338,582 8,158,960 4,711,437 3,085,901 ------------ ------------ ------------ ------------ $ 17,071,112 $ 9,692,381 $ 5,762,609 $ 3,704,171 ============ ============ ============ ============ -10-

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The Company's quarterly and annual operating results are affected by a wide variety of factors that could materially and adversely affect revenues and profitability, including competition from other suppliers; unanticipated logistical problems related to the transfer of the signal transformer line to the Republic of China; changes in the regulatory and trade environment; changes in consumer preferences and spending habits; the inability to successfully manage growth; seasonality; the ability to introduce and the timing of the introduction of new products and the inability to obtain adequate supplies or materials at acceptable prices. As a result of these and other factors, the Company may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect its business, financial condition, operating results, and stock prices. Furthermore, this document and other documents filed by the Company with the Securities and Exchange Commission (the "SEC") contain certain forward-looking statements under the Private Securities Litigation Reform Act of 1955 with respect to the business of the Company. These forward-looking statements are subject to certain risks and uncertainties, including those mentioned above, and those detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 1998, which may cause actual results to differ significantly from these forward-looking statements. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements which may be necessary to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. An investment in the Company involves various risks, including those mentioned above and those which are detailed from time to time in the Company's SEC filings. 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 ---------------------------------------- Nine Months Ended Three Months Ended September 30, September 30, ----------------- ------------------ 1999 1998 1999 1998 ------ ------ ------ -------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of sales 64.5 65.8 64.2 64.3 Selling, general and administrative expenses 16.5 18.1 16.9 18.2 Other income-net .6 2.4 .7 2.6 Earnings before income tax provision 19.6 18.5 19.5 20.1 Income tax provision 2.7 2.5 2.1 2.8 Net earnings 16.9 16.0 17.4 17.3 -11-

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 ------------------------------------------------- Nine Months Ended Three Months Ended September 30, 1999 September 30, 1999 compared with 1998 compared with 1998 ------------------ ------------------ Net sales 49.1% 44.4% Cost of sales 46.0 44.2 Selling, general and administrative expenses 36.1 34.2 Other income - net (62.7) (62.2) Earnings before income tax provi- sion 58.2 40.4 Income tax provision 66.2 9.0 Net earnings 56.9 45.6 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 the acquisition have been included in the results of operations since the date of acquisition. The 1998 periods described do not reflect this acquisition. Nine Months ended September 30,1999 vs. Nine Months ended September 30, 1998 Net Sales Net sales increased 49.1% from $60,195,036 during the first nine months of 1998 to $89,747,178 during the first nine 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, increased fuse sales and initial sales of the new BELMAG(TM) high speed RJ-45 modular connector for computer network and hub applications. Cost of Sales Cost of sales as a percentage of net sales decreased 1.3 % to 64.5 % during the first nine months of 1999 from 65.8 % during the first nine months of 1998. The decrease in the cost of sales percentage is primarily attributable to lower material content and lower labor costs as a percentage of sales offset in part by higher overhead, principally attributed to increased depreciation expense and increased overheads associated with the telecom magnetic product line. The Company moved the telecom magnetic product line to China during the third quarter of 1999. -12-

Selling, General and Administrative Expenses The percentage relationship of selling, general and administrative expenses to net sales decreased from 18.1% for the first nine months of 1998 to 16.5% for the first nine months of 1999. The Company attributes the percentage decrease primarily to increased sales. Selling, general and administrative expenses increased in dollar amount by 36.1%. 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 $904,000 during the first nine months of 1999 compared to the first nine 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 nine months of 1999 was $2,455,000 as compared to $1,477,000 for the first nine months of 1998. The increase in the provision is due primarily to higher United States and foreign earnings in 1999 versus 1998. Three Months ended September 30,1999 vs. Three Months ended September 30,1998 Net Sales Net sales increased 44.4 % to $30,536,478 during the third quarter of 1999 from $21,148,681 during the third quarter of 1998. The Company attributes the increase primarily to the reasons set forth in the nine month analysis. Cost of Sales Cost of sales as a percentage of net sales remained relatively constant during the third quarter of 1999 compared to the third quarter of 1998. The Company incurred lower labor costs as a percentage of sales offset in part by higher material content associated with the current sales mix. Factory overheads increased in dollar amount during the third quarter of 1999 compared to the third quarter of 1998 but remained constant as a percentage of sales. Selling, General and Administrative Expenses The percentage relationship of selling, general and administrative expenses to net sales decreased 1.3% to 16.9% during the third quarter of 1999 from 18.2% during the third quarter of 1998. Selling, general and administrative expenses increased in dollar amount by approximately $1,316,000. The Company attributes the decrease in such percentage relationship and the increase in dollar amount to the reasons set forth in the nine month analysis. -13-

Other Income and Expense Other income decreased for the third quarter of 1999 compared to the third quarter of 1998 due to the reasons set forth in the nine month analysis. Provision for Income Taxes The provision for income taxes increased to $654,000 for the third quarter of 1999 from $600,000 for the third quarter of 1998. The Company attributes the increase in the provision to the reasons set forth in the nine month analysis. 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 September 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 nine months of 1999, the Company's cash and cash equivalents increased by approximately $6.3 million, reflecting approximately $12.6 million provided by operating activities and approximately $.4 million from the exercise of stock options, offset, in part, by approximately $4.7 million in purchases of plant and equipment, $1.4 million in purchases of marketable securities and approximately $.8 million in dividends. Cash and cash equivalents and accounts receivable comprised approximately 36.6% and 30.9% of the Company's total assets at September 30, 1999 and December 31, 1998, respectively. The Company's current ratio (i.e., the ratio of current assets to current liabilities) was 5.3 to 1 and 4.0 to 1 at September 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. -14-

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. 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. In as much 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 issues outside the United States 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. -15-

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. 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 September 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 has developed business interruption contingency plans, including installation of a dedicated back-up computer system in the new Dallas, Texas office that can run all corporate functions. 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. 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 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 September 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: November 12, 1999 -18-

5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BEL FUSE INC. AND SUBSIDIARIES FINANCIAL STATEMENTS AT SEPTEMBER 30, 1999 AND THE NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 12-MOS DEC-31-1999 SEP-30-1999 21,219,756 1,901,596 20,456,746 317,000 24,799,782 68,954,071 67,357,102 30,550,511 118,283,683 13,125,206 0 525,439 0 0 103,518,038 118,283,683 89,747,178 89,747,178 57,858,865 72,676,066 0 0 0 17,609,010 2,455,000 15,154,010 0 0 0 15,154,010 2.90 2.82