SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2000
[ ] 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
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BEL FUSE INC.
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(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
(201) 432-0463
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(Address and telephone number, including area code, of registrant's
principal executive office)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of voting stock held by non-affiliates as of March
8, 2001 was approximately $60,800,000 (based upon the closing sales price of
those shares reported on the National Association of Securities Dealers
Automated Quotation System for that day).
Aggregate market value of non-voting stock held by non-affiliates as of
March 8, 2001 was approximately $187,043,000 (based upon the closing sales price
of those shares reported on the National Association of Securities Dealers
Automated Quotation System for that day).
Number of shares of Common Stock outstanding as of March 8, 2001: 2,654,202
Class A Common Stock; 8,025,437 Class B Common Stock
Documents incorporated by reference:
Bel Fuse Inc.'s Definitive Proxy Statement for the 2001 Annual Meeting of
Stockholders is incorporated by reference into Part III.
BEL FUSE INC.
INDEX
Part I PAGE
Item 1. Business............................................. 1
Item 2. Properties........................................... 5
Item 3. Legal Proceedings.................................... 5
Item 4. Submission of Matters to Vote of Security
Holders.............................................. 5
Item 4A. Executive Officers of the Registrant................. 6
Part II
Item 5. Market for Registrant's Common Equity
And Related Stockholder Matters...................... 8
Item 6. Selected Financial Data.............................. 9
Item 7. Management's Discussion and Analysis
Of Financial Condition and Results of
Operations........................................... 10
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk.................................... 14
Item 8. Financial Statements and Supplementary Data.......... 15
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure............... 16
Part III
Item 10. Directors of the Registrant; Compliance with
Section 16(a) of the Exchange Act.................... 16
Item 11. Executive Compensation............................... 16
Item 12. Security Ownership of Certain
Beneficial Owners and Management..................... 16
Item 13. Certain Relationships and Related Transactions....... 16
Part IV
Item 14. Exhibits, Financial Statement Schedules
And Reports on Form 8-K.............................. 18
Signatures......................................................... 20
*Page F-1 follows page 15
FORWARD LOOKING INFORMATION
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 (a) the risk that it may be unable to respond
adequately to rapidly changing technological developments in its industry, (b)
risks associated with its Far East operations described herein under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Other Matters," (c) the highly competitive nature of the Company's
industry and the impact that competitors' new products and pricing may have upon
the Company, (d) the likelihood that revenues may vary significantly from one
accounting period to another accounting period due to a variety of factors,
including customers' buying decisions, the Company's product mix and general
market and economic conditions, (e) the Company's reliance on certain
substantial customers, and (f) risks associated with the Company's ability to
manufacture and deliver products in a manner that is responsive to its
customers' needs. 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 1995 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
Item 1 of this Annual Report on Form 10-K for the year ended December 31, 2000,
which could 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.
PART I
Item 1. Business
General
Bel Fuse Inc. (the "Company") is organized under New Jersey law. The
Company does not have reportable segments as defined in Statement of Financial
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and
Related Information". The Company is engaged in the design, manufacture and sale
of products used in networking, telecommunication, automotive and consumer
electronic applications. The Company operates facilities in the United States,
Europe and the Far East. The Company maintains its principal executive offices
at 206 Van Vorst Street, Jersey City, New Jersey 07302; telephone (201)
432-0463. The term "Company" as used in this Annual Report on Form 10-K refers
to Bel Fuse Inc. and its consolidated subsidiaries unless otherwise specified.
-1-
On October 2, 1998, the Company acquired the manufacturing assets,
primarily consisting of inventory and fixed assets, of Lucent Technologies,
Inc.'s ("Lucent") Power Systems Signal Transformer product line in exchange for
approximately $27 million in cash. Under the terms of the agreement, the
Company, among other things, was to be provided new product opportunities and
continue to supply the majority of Lucent's telecom magnetic requirements. The
Company has moved substantially all of the manufacturing of this business to the
People's Republic of China. The Company has established research and development
support and legacy product manufacturing in Dallas, Texas.
Product Groups
Magnetic Components
The Company manufactures a broad range of magnetic components. These
wire-wound devices perform such functions as signal delay, signal timing, signal
conditioning, impedance matching, filtering, isolation, power conversion and
power transfer. The Company directs its design and marketing efforts to supply
the needs of the following markets: manufacturers of networking and
telecommunication equipment, computer manufacturers, and consumer, automotive
and industrial electronic manufacturers. Transformers may be either standard
devices to meet a market-based requirement or developed to meet an individual
customer need. They may be used either in conjunction with an Integrated Circuit
(IC) reference design or used independently to meet the needs of a unique
circuit.
Integrated Connector Modules
These modules combine RJ-45 and USB connectors with the Company's magnetic
components. In addition to connectivity, these modules provide the signal
conditioning, electro-magnetic interference suppression and signal isolation
which were previously performed by multiple, discrete components.
Value-added Modules
The Company supplies value-added modules to end users whose requirements
can be satisfied by combining in one integrated package one or more of the
Company's capabilities in surface mount assembly, automatic winding, hybrid
fabrication and component encapsulation.
-2-
Miniature, Micro and Chip Fuses
Fuses prevent currents in an electrical or electronic circuit from
exceeding certain predetermined levels. Fuses act as a safety valve to protect
expensive components from damage or to cut off high currents before they can
generate enough heat to cause smoke or fire. The Company manufactures miniature
and micro fuses for supplementary circuit protection. The Company sells its
fuses to a worldwide market. They are used in such products as televisions,
VCR's, power supplies, computers, telephones and networking equipment.
Marketing
The Company sells its products to more than 500 customers throughout North
America, Western Europe and the Far East. Sales are made through independent
sales representative organizations and authorized distributors who are overseen
by the Company's sales personnel throughout the world. As of December 31, 2000,
the Company had a sales staff of 25 persons that supported 51 sales
representative organizations and 1 non-exclusive distributor.
The Company has written agreements with all of its sales representative
organizations and major distributor. Written agreements terminable on short
notice by either party are standard in the industry.
Finished products manufactured by the Company in its Far East facilities
are, in general, either sold to the Company's Jersey City facility for resale to
customers in the Americas or are shipped directly to other customers throughout
the world. For further information regarding the Company's geographic
operations, see Note 7 of Notes to Consolidated Financial Statements.
The Company had sales to three customers in excess of ten percent of 2000
consolidated sales. The amount and percentage of consolidated sales were
approximately $20,707,000 (14.3%), $17,622,000 (12.1%) and $15,483,000 (10.2%),
respectively. The sales to these customers represent various products
manufactured by the Company. The loss of any of these customers could have a
material adverse effect on the Company's results of operations, financial
position and cash flows.
Research and Development
The Company's research and development efforts in 2000 were spread among
all of the Company's current product groups. The Company's research and
development facilities are located in California, Indiana, Texas, and Hong Kong.
In addition, the Company maintains continuing programs to improve the
reliability of its products and to design specialized assembly equipment to
increase manufacturing efficiencies. Research and development costs amounted to
$6,229,000 in 2000.
Suppliers
The Company has multiple suppliers for most of the raw materials that it
purchases. Where possible, the Company has contractual agreements with suppliers
to assure a continuing supply of critical components.
-3-
With respect to those items which are purchased from single sources, the
Company believes that comparable items would be available in the event that
there were a termination of the Company's existing business relationships with
any such supplier. While such a termination could produce a disruption in
production, the Company believes that the termination of business with any one
of its suppliers would not have a material adverse effect on its long-term
operations. The preceding sentence constitutes a Forward-Looking Statement.
Backlog
The Company manufactures products against firm orders and projected usage
by customers. Cancellation and return arrangements are either negotiated by the
Company on a transactional basis or contractually determined. The Company's
backlog of orders as of February 25, 2001 was approximately $46 million, as
compared with a backlog of $31.5 million as of February 25, 2000. Management
expects that all of the Company's backlog as of February 25, 2001 will be
shipped by December 31, 2001. Such expectation constitutes a Forward-Looking
Statement. Factors that could cause the Company to fail to ship all such orders
by year-end include unanticipated supply difficulties, changes in customer
demand and new customer designs. The Company's major customers have negotiated
shorter lead times on purchase orders and have implemented consignment inventory
programs with the goal of reducing their inventories. Accordingly, backlog is no
longer as reliable an indicator of the timing of future sales as it has been in
the past.
Trademarks and Patents
The Company has been granted a number of U.S. patents and has additional
U.S. patent applications pending relating to its products. While the Company
believes that the issued patents are defendable and that the pending patent
applications relate to patentable inventions, there can be no assurance that a
patent will be obtained from the applications or that its existing patents can
be successfully defended. It is management's opinion that the successful
continuation and operation of the Company's business does not depend upon the
ownership of patents or the granting of pending patent applications, but upon
the innovative skills, technical competence and marketing and managerial
abilities of its personnel. The patents have a life of seventeen years from the
date of issue or twenty years from filing of patent applications. The Company's
existing patents expire on various dates from March 11, 2001 to August 29, 2020.
The Company utilizes eight U.S. registered trademarks - BELFUSE, BEL,
BELMAG, BELSTACK, BELSTICK, SLO-BEL, SURFUSE and Components for a Connected
World - to identify various products that it manufactures. The trademarks
survive as long as they are in use and the registrations of these trademarks are
renewed.
Competition
There are numerous independent companies and divisions of major companies
which manufacture products that are competitive with one or more of the
Company's products. Some of the Company's competitors possess greater financial,
marketing and other resources than those available to the Company. The Company's
ability to compete is dependent upon several factors, including product
performance, quality, reliability, design and price.
-4-
Employees
As of December 31, 2000, the Company had 1,101 full-time employees. The
Company employed 117 people in its U.S. facilities and 984 throughout the rest
of the world excluding workers supplied by independent contractors. The
Company's employees are not represented by any labor union. The Company believes
that its relations with employees are satisfactory.
Risks and Uncertainties
The Company's business is subject to several risks and uncertainties,
including: (a) the risk that it may be unable to respond adequately to rapidly
changing technological developments in its industry, (b) risks associated with
its Far East operations described herein under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations - Other
Matters," (c) the highly competitive nature of the Company's industry and the
impact that competitors' new products and pricing may have upon the Company, (d)
the likelihood that revenues may vary significantly from one accounting period
to another accounting period due to a variety of factors, including customers'
buying decisions, the Company's product mix and general market and economic
conditions, (e) the Company's reliance on certain substantial customers, and (f)
risks associated with the Company's ability to manufacture and deliver products
in a manner that is responsive to its customers' needs. Such factors, as well as
shortfalls in the Company's results of operations as compared with analysts'
expectations, capital market conditions and general economic conditions, may
also cause substantial volatility in the market price of the Company's common
stock.
Item 2. Properties
The Company currently occupies approximately 490,000 square feet of
manufacturing, warehouse, office, technical and staff quarter space worldwide.
In addition to the Company's principal corporate offices in New Jersey, the
Company maintains facilities in The People's Republic of China and its special
administrative regions ("SAR") of Hong Kong and Macau in the Far East, in
California, Texas and Indiana in the U.S.A. and in the United Kingdom in Europe.
The Company also owns an idle facility of 46,300 square feet in Illinois.
Approximately 43% of the 490,000 square feet the Company occupies is owned,
while the remainder is leased. See Note 11 of Notes to Consolidated Financial
Statements for additional information pertaining to leased properties.
Item 3. Legal Proceedings
The Company is not presently subject to any legal proceedings which are
material to the consolidated results of operations or financial condition of the
Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of 2000.
-5-
Item 4A. Executive Officers of the Registrant
The following table and biographical outlines set forth the positions and
offices within the Company presently held by each executive officer of the
Company and a brief account of the business experience of each such officer for
the past five years.
Positions and Offices
Officer With the Company/
Name and Age Since Business Experience
- ------------ ----- -------------------
Elliot Bernstein, 77 1954 Chairman of the Board,
Chief Executive Officer
and Director
Daniel Bernstein, 47 1985 President, Managing
Director of the Company's
Macau Subsidiary and
Director
Robert H. Simandl, 72 1967 Secretary and Director
Arnold Sutta, 74 1985 Vice President of Sales
Peter Christoffer, 59 1986 Vice President of Research
and Development
Colin Dunn, 56 1992 Vice President of Finance and
Treasurer
Joseph Meccariello, 50 1995 Vice President of
Manufacturing
Elliot Bernstein has been a Director of the Company since its inception in
January 1949, served as President and Chief Executive Officer from 1954 to 1992,
and has served as Chairman of the Board and Chief Executive Officer since 1992.
One of his sons (Daniel Bernstein) is the President and a Director of the
Company, and his brother (Howard Bernstein) is a Director of the Company.
Daniel Bernstein has served the Company as President since June 1992. He
previously served as Vice President (1985-1992) and Treasurer (1986-1992) and
has served as a Director since 1986. He has occupied other positions with the
Company since 1978. He was appointed Managing Director of the Company's Macau
subsidiary during 1991. Daniel Bernstein is Elliot Bernstein's son and Howard
Bernstein's nephew.
-6-
Item 4A. Executive Officers of the Registrant (continued)
Robert H. Simandl, a Director and Secretary of the Company since 1967, is a
member of the law firm of Robert H. Simandl, Counselor At Law. He has been a
practicing attorney in New Jersey since 1953.
Arnold Sutta joined the Company in 1966 and has served the Company as Vice
President, Sales since 1985. Mr. Sutta supervises the worldwide sales force of
the Company.
Peter Christoffer has served the Company as Vice President since 1986.
Since 1991, he has been responsible for the engineering and production of
value-added modules at the Company's Indiana facility.
Colin Dunn joined the Company in 1991 as Finance Manager and in 1992 was
named Vice President of Finance and Treasurer. Prior to joining the Company, Mr.
Dunn was Vice President of Finance and Operations at Kentek Information Systems,
Inc. from 1985 to 1991 and had previously held a series of senior management
positions with Braintech Inc. and Weyerhaeuser Company.
Joseph Meccariello joined the Company in 1979 as a Manager of Mechanical
Engineering and in 1994 became the Deputy Managing Director of the Company's
Hong Kong subsidiary, Bel Fuse, Ltd. In 1995 he was named Vice President of
Manufacturing with responsibility for Far East production operations.
-7-
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
(a) Market Information
On July 9, 1998 the shareholders approved an amendment to the Company's
Certificate of Incorporation authorizing a new voting Class A Common Stock, par
value $.10 per share, and a new non-voting Class B Common Stock, par value $.10
per share ("Class A" and "Class B," respectively), which are traded on the
Nasdaq National Market. The following table sets forth the high and low closing
sales price range (as reported by National Quotation Bureau, Inc.) for the
Common Stock on Nasdaq for each quarter during the past two years, after giving
retroactive effect to a two for one stock split payable in the form of a
dividend on December 1, 1999. On that date, the Company issued one share of
Class B Common Stock for each share of Class A Common Stock and Class B Common
Stock outstanding on the applicable record date.
Class A Class B Class A Class B
High High Low Low
------- ------- ------- -------
Year Ended December 31, 1999
First Quarter $24.75 $20.00 $15.31 $12.50
Second Quarter 21.19 18.63 13.38 12.88
Third Quarter 19.31 17.19 14.00 12.63
Fourth Quarter 37.38 35.00 16.68 14.56
Year Ended December 31, 2000
First Quarter $25.75 $24.50 $18.50 $16.56
Second Quarter 29.50 28.81 14.81 14.88
Third Quarter 44.94 41.75 25.00 22.31
Fourth Quarter 46.00 44.94 28.75 27.00
The Common Stock is reported under the symbol BELFA and BELFB in the Nasdaq
National Market.
(b) Holders
As of March 1, 2001 there were 110 registered shareholders of the Company's
Class A Common Stock and 133 registered shareholders of Class B Common Stock.
The Company estimates that there were 2,482 beneficial shareholders of Class A
Common Stock and 4,907 beneficial shareholders of Class B Common Stock.
(c) Dividends
There are no contractual restrictions on the Company's ability to pay
dividends. On February 1, 2000, May 1, 2000, August 1, 2000, and November 1,
2000 the Company paid a $.05 per share dividend to all shareholders of record of
class B Common Stock in the total amount of $393,908, $395,356, $395,504, and
$396,091, respectively. On February 1, 1999, May 1, 1999, August 1, 1999 and
November 1, 1999, the Company paid a $.10 per share dividend to all shareholders
of record of Class B Common Stock in the total amount of $254,239, $261,988,
$262,356 and $262,469, respectively. On February 1, 2001 the Company paid a $.05
per share dividend to all shareholders of record at January 11, 2001 of Class B
Common Stock in the total amount of $399,700.
-8-
Item 6. Selected Financial Data
Years Ended December 31,
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2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(In thousands of dollars, except per share data)
Selected Statements of Operations Data:
Net sales $145,227 $119,464 $ 90,754 $ 73,531 $ 65,458
Cost of sales 88,479 76,113 58,654 50,724 46,539
Selling, general and
administrative expenses 23,284 19,502 16,648 13,830 11,494
Other income - net (a) 3,912 878 1,579 1,428 2,306
Earnings before
income taxes 37,376 24,727 17,031 10,405 9,731
Income tax provision 5,159 3,435 1,813 1,555 1,925
Net earnings 32,217 21,292 15,218 8,850 7,806
Earnings per common
share - basic (b) 3.04 2.03 1.47 0.87 0.77
Earnings per common
share - diluted (b) 2.94 1.98 1.45 0.86 0.76
As of December 31,
-------------------------------------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
(In thousands of dollars, except per share data)
Selected Balance Sheet Data:
Working capital $ 97,720 $ 65,077 $ 40,899 $ 44,750 $ 38,137
Total assets 169,513 125,249 103,625 83,152 71,614
Stockholders' equity 141,016 110,254 88,806 72,829 63,399
Book value per
share (b) 13.25 10.46 8.56 7.11 6.25
Return on average
total assets, % 21.87 18.25 12.50 11.60 11.50
Return on average
Stockholders'
equity, % 25.64 20.93 19.00 13.10 13.10
(a) Includes gains of $1,081 and $1,267 from the sale of marketable
securities during 2000 and 1996, respectively.
(b) After giving retroactive effect to a two for one stock split payable
in the form of a dividend on December 1, 1999.
-9-
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis should be read in conjunction with
the Company's consolidated financial statements and the notes related thereto.
The discussion of results, causes and trends should not be construed to infer
any conclusion that such results, causes or trends will necessarily continue in
the future.
Results of Operations
The following table sets forth, for the past three years, the percentage
relationship to net sales of certain items included in the Company's
consolidated statements of operations.
Percentage of Net Sales
--------------------------------------
Years Ended December 31,
--------------------------------------
2000 1999 1998
---- ---- ----
Net sales 100.0% 100.0% 100.0%
Cost of sales 60.9% 63.7% 64.6%
Selling, general and
administrative expenses 16.0% 16.3% 18.3%
Other income, net of
interest expense 2.7% 0.7% 1.7%
Earnings before income
taxes 25.8% 20.7% 18.8%
Income tax provision 3.6% 2.9% 2.0%
Net earnings 22.2% 17.8% 16.8%
Increase from
Prior Period
--------------------------------
2000 compared 1999 compared
with 1999 with 1998
------------- --------------
Net sales 21.6% 31.6%
Cost of sales 16.3% 29.8%
Selling, general and
administrative expenses 19.4% 17.1%
Net earnings 51.3% 39.9%
-10-
Sales
Net sales increased 21.6% from approximately $119.5 million in 1999 to
approximately $145.2 million in 2000. The Company attributes this increase
primarily to an increased volume of sales of integrated connector modules
("ICM"), magnetic components and fuses.
Net sales increased 31.6% from approximately $90.8 million in 1998 to
approximately $119.5 million in 1999. The Company attributes this increase
primarily to the inclusion of sales 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 from 63.7% in 1999 to
60.9% in 2000. The decrease is primarily attributable to lower labor and factory
overhead expenses, the move of Telcom production to the Far East from Texas
during the fourth quarter of 1999 and higher sales volume which results in
greater manufacturing efficiencies offset, in part, by higher raw material
content associated with the current sales mix.
Cost of sales as a percentage of net sales decreased from 64.6% in 1998 to
63.7% in 1999. The decrease in the cost of sales percentage is primarily
attributable to lower labor and factory overhead costs as a percentage of sales
offset, in part, by higher material content, principally attributed to
differences in sales mix.
Selling, General and Administrative Expenses
The percentage relationship of selling, general and administrative
expenses to net sales decreased from 16.3% in 1999 to 16.0% in 2000. The Company
attributes the percentage decrease primarily to increased sales. Selling,
general and administrative expenses increased in dollar amount by 19.4% over
1999. The Company attributes the increase in the dollar amount of such expenses
primarily to increases in commissions and other sales related expense due to
increased sales, and increases in sales, marketing and customer service
salaries.
-11-
The percentage relationship of selling, general and administrative expenses
to net sales decreased from 18.3% in 1998 to 16.3% in 1999. The Company
attributes the percentage decrease primarily to increased sales. Selling,
general and administrative expenses increased in dollar amount by 17.1%. 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 acquired from Lucent in the fourth quarter of 1998.
Other Income - Net
Other income, consisting principally of interest earned on cash and cash
equivalents and gains on the sale of marketable securities, increased by
approximately $3.0 million from the year 1999 to 2000. The increase is due to
the gains on the sale of marketable securities and higher interest income as the
Company maintained higher cash and cash equivalent balances.
Other income, consisting principally of interest earned on cash and cash
equivalents, decreased by approximately $700,000 from the year 1998 to 1999. The
decrease is primarily due to the use of cash and cash equivalents in the
acquisition of the signal transformer business for Lucent.
Provision for Income Taxes
The Company has historically followed a practice of reinvesting a portion
of the earnings of foreign subsidiaries in the expansion of its foreign
operations. If the unrepatriated earnings were distributed to the parent
corporation rather than reinvested in the Far East, such funds would be subject
to United States Federal income taxes. Management has identified $20 million of
foreign earnings that may not be permanently reinvested. Deferred income taxes
in the amount of approximately $6.1 million have been provided on such earnings
($2.1 million during 2000, $2.0 million during 1999 and $2.0 million in years
prior to 1998).
The Company files income tax returns in every jurisdiction in which it has
reason to believe it is subject to tax. Historically, the Company has been
subject to examination by various taxing jurisdictions. To date, none of these
examinations has resulted in any material additional tax. Nonetheless, any tax
jurisdiction may contend that a filing position claimed by the Company regarding
one or more of its transactions is contrary to that jurisdiction's laws or
regulations.
The provision for income taxes for 2000 was $5.2 million as compared to
$3.4 million in 1999. The increase in the provision is due primarily to higher
United States taxes, resulting from the gains on the sale of marketable
securities and higher foreign earnings subject to taxes in 2000 versus 1999.
The provision for income taxes in 1999 was $3.4 million as compared to $1.8
million in 1998. The increase in the provision is due primarily to higher
foreign earnings and an increase in foreign effective tax rates in 1999 versus
1998.
-12-
The Company's effective tax rate has been lower than the statutory United
States corporate rate primarily as a result of the lower tax rates in Hong Kong
and Macau.
Inflation
During the past two years, the effect of inflation on the Company's
profitability was not material. Historically, fluctuations of the U.S. dollar
against other major currencies have not significantly affected the Company's
foreign operations as most transactions have been denominated in U.S. dollars or
currencies linked to the U.S. dollar.
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. Such statement constitutes a Forward Looking Statement. Factors which
could cause the Company to require additional capital include, among other
things, potential acquisitions requiring substantial capital and future
expansion of the Company's operations.
The Company has two domestic unsecured lines of credit amounting to
$11,000,000 which were unused at December 31, 2000. The lines of credit are
renewable annually. Borrowings under a $10 million line of credit are secured by
a first priority security interest in and a lien on all personal property of Bel
Fuse Inc. and its domestic subsidiaries.
The Company's Hong Kong subsidiary has an unsecured line of credit of
approximately $2,000,000 which expires in October 2001. Borrowing on the line of
credit is guaranteed by the U.S. parent.
The Company has contracted for the reconstruction and addition of new
corporate offices in Jersey City in the amount of $2.6 million. As of December
31, 2000 approximately $1.8 million has been paid towards this contract.
On May 10, 2000 the Board of Directors authorized the repurchase of up to
10% of the Company's outstanding Class A and Class B shares from time to time in
market or privately negotiated transactions. As of December 31, 2000 the Company
had repurchased 23,600 Class B shares at a total cost of approximately $808,000.
During 2000, the Company's cash and cash equivalents increased by
approximately $31.2 million, reflecting approximately $38.4 million provided by
operating activities, $3.0 from the sale of marketable securities and $1.0 from
the exercise of stock options, offset, in part, by approximately $8.1 million in
purchases of plant and equipment, approximately $1.6 million in dividends and
$.8 million in purchases of marketable securities.
Cash, marketable securities and cash equivalents and accounts receivable
comprised approximately 51.9% and 42.2% of the Company's total assets at
December 31, 2000 and 1999, respectively. The Company's current ratio (i.e., the
ratio of current assets to current liabilities) was and 5.5 to 1 and 7.5 to 1 at
December 31, 2000 and 1999, respectively.
-13-
Other Matters
Territories of Hong Kong, Macau and The People's Republic of China
The Territory of Hong Kong became a Special Administrative Region ("SAR")
of The People's Republic of China in the middle of 1997. The territory of Macau
became a SAR of The People's Republic of China at the end of 1999. Management
cannot presently predict what future impact, if any, this will have on the
Company or how the political climate in China will affect its contractual
arrangements in China. Substantially all of the Company's manufacturing
operations and approximately 49% of its identifiable assets are located in Hong
Kong, Macau, and The People's Republic of China. Accordingly, events resulting
from the expiration of such leases as well as any change in the "Most Favored
Nation" status granted to China by the U.S. could have a material adverse effect
on the Company.
New Accounting Pronouncements
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, is effective for all fiscal years
beginning after June 15, 2000. SFAS 133, as amended, establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. Under SFAS
133, certain contracts that were not formerly considered derivatives may now
meet the definition of a derivative. The Company adopted SFAS 133 effective
January 1, 2001. Management has concluded that the adoption of SFAS 133 will not
have a significant impact on the financial position, results of operations, or
cash flows of the Company.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
The Company adopted the provisions of SAB 101 during the fourth quarter ended
December 31, 2000. Such adoption has not had a material impact on the Company's
consolidated results of operations, financial position or cash flows.
In March, 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44 (FIN No. 44), Accounting for Certain Transactions
Involving Stock Compensation - an interpretation of APB 25. FIN No. 44 clarifies
(i) the definition of employees for purposes of applying APB Opinion No. 25,
(ii) the criteria for determining whether a plan qualifies as a noncompensatory
plan, (iii) the accounting consequences of various modifications to the terms of
a previously fixed stock option or award, and (iv) the accounting for an
exchange of stock compensation awards in a business combination. FIN No. 44 was
effective July 1, 2000. This standard has not had a significant impact on the
Company's consolidated results of operations, financial position or cash flows.
-14-
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Fair Value of Financial Instruments -- The following disclosure of the
estimated fair value of financial instruments is made in accordance with the
requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments". The estimated fair
values of financial instruments have been determined by the Company using
available market information and appropriate valuation methodologies.
However, considerable judgment is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts that the Company could realize in
a current market exchange.
The Company has not entered into, and does not expect to enter into,
financial instruments for trading or hedging purposes. The Company does not
currently anticipate entering into interest rate swaps and/or similar
instruments.
The Company's carrying values of cash, marketable securities, accounts
receivable, accounts payable and accrued expenses are a reasonable approximation
of their fair value.
The Company's business in this regard is subject to certain risks,
including, but not limited to, differing economic conditions, loss of
significant customers, changes in political climate, differing tax structures,
other regulations and restrictions and foreign exchange rate volatility. The
Company's future results could be materially and adversely impacted by changes
in these or other factors.
Item 8. Financial Statements and Supplementary Data
See the consolidated financial statements listed in the accompanying Index
to Consolidated Financial Statements for the information required by this item.
-15-
BEL FUSE INC.
INDEX
Page
Financial Statements ----
- --------------------
Independent Auditors' Report .................................... F-1
Consolidated Balance Sheets as of December 31, 2000 and 1999 .... F-2--F-3
Consolidated Statements of Operations for Each of the Three
Years in the Period Ended December 31, 2000 .................... F-4
Consolidated Statements of Stockholders' Equity
for Each of the Three Years in the Period
Ended December 31, 2000 ........................................ F-5--F-6
Consolidated Statements of Cash Flows for Each
of the Three Years in the Period Ended
December 31, 2000 .............................................. F-7--F-9
Notes to Consolidated Financial Statements ...................... F-10--F-26
Selected Quarterly Financial Data--Years Ended
December 31, 2000 and 1999 (Unaudited) ......................... F-27
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Bel Fuse Inc.
Jersey City, New Jersey
We have audited the accompanying consolidated balance sheets of Bel Fuse, Inc.
and its subsidiaries (the "Company") as of December 31, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 2000. Our
audits also included the financial statement schedule listed in the Index at
Item 14. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Bel Fuse Inc. and its subsidiaries
as of December 31, 2000 and 1999, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2000 in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
/S/ DELOITTE & TOUCHE LLP
March 7, 2001
New York, New York
F-1
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2000 1999
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 62,587,033 $ 31,382,629
Marketable securities 231,431 2,253,039
Accounts receivable - less allowances
of $945,000 and $661,000 25,165,748 18,815,513
Inventories 30,259,606 24,210,654
Prepaid expenses and other current
assets 318,120 334,820
Deferred income taxes 654,000 --
------------ ------------
Total Current Assets 119,215,938 76,996,655
------------ ------------
Property, plant and equipment - net 39,738,064 36,021,708
Goodwill - net of amortization of
$3,548,401 and $2,042,008 10,241,051 11,747,444
Other assets 318,352 372,475
------------ ------------
TOTAL ASSETS $169,513,405 $125,138,282
============ ============
See notes to consolidated financial statements.
F-2
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2000 1999
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 13,038,299 $ 4,375,915
Accrued expenses 8,058,326 4,969,672
Income taxes payable -- 241,850
Dividends payable 399,700 393,908
Deferred income taxes -- 247,000
------------ ------------
Total Current Liabilities 21,496,325 10,228,345
------------ ------------
Deferred income taxes 7,001,000 4,656,000
------------ ------------
Total Liabilities 28,497,325 14,884,345
------------ ------------
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
2,646,828 and 2,632,197 shares, respectively
(net of 1,072,770 treasury shares) 264,683 263,220
Class B common stock, par value
$.10 per share - authorized
30,000,000 shares; outstanding
7,993,783 and 7,910,306 shares, respectively
(net of 3,218,310 treasury shares) 799,379 791,031
Additional paid-in capital 9,419,553 8,811,653
Retained earnings 130,470,576 99,839,765
Cumulative other comprehensive
income 61,889 548,268
------------ ------------
Total Stockholders' Equity 141,016,080 110,253,937
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $169,513,405 $125,138,282
============ ============
See notes to consolidated financial statements.
F-3
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
--------------------------------------------------------
2000 1999 1998
------------ ------------ ------------
Net Sales $145,226,811 $119,463,650 $ 90,754,195
------------ ------------ ------------
Costs and expenses:
Cost of sales 88,478,545 76,112,866 58,654,040
Selling, general and administrative 23,284,152 19,501,988 16,648,125
------------ ------------ ------------
111,762,697 95,614,854 75,302,165
------------ ------------ ------------
Income from operations 33,464,114 23,848,796 15,452,030
Other income (net) 3,912,347 878,037 1,578,790
------------ ------------ ------------
Earnings before income taxes 37,376,461 24,726,833 17,030,820
Income tax provision 5,159,000 3,435,000 1,813,000
------------ ------------ ------------
Net earnings $ 32,217,461 $ 21,291,833 $ 15,217,820
============ ============ ============
Earnings per common share - basic $ 3.04 $ 2.03 $ 1.47
============ ============ ============
Earnings per common share - diluted $ 2.94 $ 1.98 $ 1.45
============ ============ ============
Weighted average number of
common shares outstanding - basic 10,582,916 10,476,670 10,361,630
============ ============ ============
Weighted average number of
common shares outstanding - diluted 10,953,540 10,777,485 10,527,844
============ ============ ============
See notes to consolidated financial statements.
F-4
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Cumulative
Other
Compre- Compre- Class A Class B Additional
hensive Retained hensive Common Common Common Paid-In
Total Income Earnings Income (loss) Stock Stock Stock Capital
---------- ----------- ----------- -------------- ------------ --------- ------- ----------
Balance, January 1, 1998 $72,829,410 $64,771,298 $ 20,167 $ 1,024,384 $ -- $ -- $7,013,561
Exercise of stock
options 863,138 16,016 231 693 846,198
Effect of splitting Common
stock into A and B shares (1,040,400) 260,100 780,300
Tax benefits arising
from the non-qualified
disposition of
incentive sock options 181,000 181,000
Cash dividends on Class B
Common stock-$.10 per share (260,331) (260,331)
Currency translation
adjustment (24,878) $ (24,878) (24,878)
Net earnings 15,217,820 15,217,820 15,217,820
-----------
Comprehensive Income $15,192,942
===========
----------- ----------- -------- ----------- -------- -------- ----------
Balance, December 31, 1998 88,806,159 79,728,787 (4,711) -- 260,331 780,993 8,040,759
Exercise of stock
options 662,821 2,889 10,038 649,894
Tax benefits arising
from the non-qualified
disposition of
incentive sock options 121,000 121,000
Cash dividends on Class B
common stock (1,180,855) (1,180,855)
Currency translation
adjustment 15,275 $ 15,275 15,275
Unrealized gain
on marketable
securities-net of taxes 537,704 537,704 537,704
Net earnings 21,291,833 21,291,833 21,291,833
-----------
Comprehensive Income $21,844,812
==========
See notes to consolidated financial statements.
F-5
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Cumulative
Other
Compre- Compre- Class A Class B Additional
hensive Retained hensive Common Common Common Paid-In
Total Income Earnings Income (loss) Stock Stock Stock Capital
------------- ------------ ------------ ------------- ------ --------- --------- ----------
Balance, December 31, 1999 110,253,937 99,839,765 548,268 -- 263,220 791,031 8,811,653
Exercise of stock
options 962,516 1,463 10,708 950,345
Tax benefits arising
from the non-qualified
disposition of
incentive sock options 438,000 438,000
Cash dividends on Class B
common stock (1,586,650) (1,586,650)
Currency translation
adjustment 26,607 $ 26,607 26,607
Purchase and retirement of
common stock (807,805) (2,360) (805,445)
Issuance of stock warrants
for consulting services 25,000 25,000
Decrease in marketable
securities-net of taxes (512,986) (512,986) (512,986)
Net earnings 32,217,461 32,217,461 32,217,461
------------
Comprehensive Income $ 31,731,082
============
------------- ------------ -------- ----- --------- --------- -----------
Balance, December 31, 2000 $ 141,016,080 $130,470,576 $ 61,889 $ -- $ 264,683 $ 799,379 $ 9,419,553
============= ============ ======== ===== ========= ========= ===========
See notes to consolidated financial statements.
F-6
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
------------------------
2000 1999 1998
---- ---- ----
Cash flows from operating
activities:
Net income $ 32,217,461 $ 21,291,833 $ 15,217,820
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation and amortization 5,931,755 6,100,768 4,128,868
Other 493,269 126,929 303,108
Deferred income taxes 1,783,000 1,634,000 416,000
Gain on sale of marketable securities (1,081,437) -- --
Changes in operating assets
and liabilities (941,946) (5,908,708) (4,250,999)
------------ ------------ ------------
Net Cash Provided by
Operating Activities 38,402,102 23,244,822 15,814,797
------------ ------------ ------------
Cash flows from investing activities:
Purchase of property, plant
and equipment (8,127,595) (5,272,130) (3,652,388)
Purchase of marketable
securities (773,253) (1,357,335) (2,830,415)
Payment for acquisition -- (43,806) (27,514,000)
Proceeds from sale of
marketable securities 3,024,432 -- 2,829,840
Proceeds from sale of
equipment 865 136,953 14,291
------------ ------------ ------------
Net Cash (Used in)
Investing Activities (5,875,551) (6,536,318) (30,986,217)
------------ ------------ ------------
See notes to consolidated financial statements.
(Continued)
F-7
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Year Ended December 31,
------------------------
2000 1999 1998
---- ---- ----
Cash flows from financing
activities:
Repurchase of common stock (807,805) -- --
Loan repayments 104,000 128,804 166,455
Dividends paid to
common shareholders (1,580,858) (1,041,185) --
Proceeds from exercise of
stock options 962,516 662,821 863,138
------------ ------------ ------------
Net Cash Provided by
(used in) financing
activities (1,322,147) (249,560) 1,029,593
------------ ------------ ------------
Net Increase (decrease) in
Cash and Cash Equivalents 31,204,404 16,458,944 (14,308,282)
Cash and Cash Equivalents
- beginning of year 31,382,629 14,923,685 29,231,967
------------ ------------ ------------
Cash and Cash Equivalents
- end of year $ 62,587,033 $ 31,382,629 $ 14,923,685
============ ============ ============
Changes in operating assets
and liabilities consist of:
Increase in accounts
receivable $ (6,377,235) $ (1,742,976) $ (5,981,158)
Increase in inventories (6,048,952) (2,363,091) (2,215,625)
Increase in prepaid
expenses and other
current assets (87,300) (109,755) (142,042)
Decrease in other assets 54,123 76,778 131,511
Increase (decrease) in
accounts payable 8,662,384 (609,925) 1,517,943
(Decrease) increase in
accrued expenses 3,096,884 (1,391,342) 2,665,640
Increase (decrease) in
income taxes payable (241,850) 231,603 (227,268)
------------ ------------ ------------
$ (941,946) $ (5,908,708) $ (4,250,999)
============ ============ ============
See notes to consolidated financial statements.
(Continued)
F-8
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONCLUDED)
Year Ended December 31,
-----------------------
2000 1999 1998
---- ---- ----
Supplementary information:
Cash paid during the year for:
Income Taxes $ 3,183,000 $ 1,598,000 $ 1,261,000
=========== =========== ===========
Details of acquisition:
Fair value of assets
acquired $27,514,000
Liabilities assumed --
-----------
Net cash paid for
acquisition $27,514,000
===========
Warrants issued in connection with
consulting services $ 25,000
===========
See notes to consolidated financial statements.
F-9
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Bel Fuse Inc. and its subsidiaries (the "Company") operate in one industry
segment and are engaged in the design, manufacture and sale of products used in
local area networking, telecommunication, business equipment and consumer
electronic applications. Operations are managed on a geographic basis. Sales are
predominantly in North America, Western Europe and the Far East.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries. All intercompany
transactions and balances have been eliminated.
USE OF ESTIMATES - The preparation of the financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
CASH EQUIVALENTS - Cash equivalents include short-term investments in U.S.
treasury bills and commercial paper with an original maturity of three months or
less when purchased. At December 31, 2000 and 1999, cash equivalents approximate
$53,128,000 and $19,586,000, respectively.
MARKETABLE SECURITIES - The Company classifies its investments in equity
securities as "available for sale", and accordingly, reflects unrealized gains
and losses, net of deferred income taxes, as a separate component of
stockholders' equity.
The fair values of marketable securities are estimated based on quoted
market prices. Realized gains or losses from the sales of marketable securities
are based on the specific identification method.
F-10
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
CONCENTRATION OF CREDIT RISK - Financial instruments which potentially
subject the Company to concentrations of credit risk consist principally of
accounts receivable and temporary cash investments. The Company grants credit
primarily to original equipment manufacturers and to subcontractors of original
equipment manufacturers based on an evaluation of the customer's financial
condition, without requiring collateral. Exposure to losses on receivables is
principally dependent on each customer's financial condition. The Company
controls its exposure to credit risk through credit approvals, credit limits and
monitoring procedures and establishes allowances for anticipated losses.
The Company places its temporary cash investments with quality financial
institutions and, by policy, limits the amount of credit exposure with any one
financial instrument.
INVENTORIES - Inventories are stated at the lower of weighted average cost
or market.
REVENUE RECOGNITION - Revenue is recognized when products are shipped and
title passes to customers.
AMORTIZATION OF INTANGIBLES - Goodwill represents the excess of purchase
price and related costs over the value assigned to the net tangible assets
acquired in a business acquisition. Goodwill and other intangible assets are
amortized on a straight-line basis over 3 1/2 to 15 years. Amortization expense
was $1,506,000 in 2000, $1,518,000 in 1999, and $394,000 in 1998.
DEPRECIATION - Property, plant and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are
calculated primarily using the declining-balance method for machinery and
equipment and the straight-line method for buildings and improvements over their
estimated useful lives.
F-11
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
INCOME TAXES - The Company accounts for income taxes using an asset and
liability approach under which deferred income taxes are recognized by applying
enacted tax rates applicable to future years to the differences between the
financial statement carrying amounts and the tax bases of reported assets and
liabilities.
Except for a portion of foreign earnings, an income tax provision has not
been recorded for U.S. federal income taxes on the undistributed earnings of
foreign subsidiaries as such earnings are intended to be permanently reinvested
in those operations. Such earnings would become taxable upon the sale or
liquidation of these foreign subsidiaries or upon the repatriation of dividends.
The principal items giving rise to deferred taxes are the use of
accelerated depreciation methods for plant and equipment, the assumed
repatriation of a portion of foreign earnings and certain expenses which have
been deducted for financial reporting purposes which are not currently
deductible for income tax purposes.
STOCK - BASED COMPENSATION - The Company accounts for employee stock
options in accordance with the provisions of Accounting Principles Board Opinion
No. 25 "Accounting for Stock Options Issued to Employees". Accordingly, stock
options granted to employees are recorded using the intrinsic value method. The
Company has adopted the disclosure-only provisions of Statement Of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation." The
standard encourages, but does not require, companies to recognize compensation
expense for grants of stock, stock options and other equity instruments to
employees based on fair value.
EVALUATION OF LONG-LIVED ASSETS - Long-lived assets are assessed for
recoverability on an on-going basis. In evaluating the fair value and future
benefits of long-lived assets, their carrying value would be reduced by the
excess, if any, of the long-lived asset over management's estimate of the
anticipated discounted future net cash flows of the related long-lived asset. As
of December 31, 2000, management concluded that no impairment exists.
EARNINGS PER COMMON SHARE - Basic earnings per common share are computed by
dividing net earnings by the weighted average number of common shares
outstanding during the year. Diluted earnings per common share are computed by
dividing net earnings by the weighted average number of common shares and
potential common shares outstanding during the year. Potential common shares
used in computing diluted earnings per share relate to stock options and
warrants which, if exercised, would have a dilutive effect on earnings per
share. The number of potential common shares outstanding were 370,624, 300,815,
and 166,214 for the years ended December 31, 2000, 1999 and 1998, respectively.
During the three years ended December 31, 2000, there were no antidilutive
options and warrants omitted from the calculation of diluted earnings per share.
F-12
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
FAIR VALUE OF FINANCIAL INSTRUMENTS - For financial instruments including
cash, accounts receivable, accounts payable and accrued expenses, it was assumed
that the carrying amount approximated fair value because of the short maturities
of such instruments.
NEW FINANCIAL ACCOUNTING STANDARDS - Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities, is effective for all fiscal years beginning after June 15, 2000.
SFAS 133, as amended, establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. Under SFAS 133, certain contracts
that were not formerly considered derivatives may now meet the definition of a
derivative. The Company will adopt SFAS 133 effective January 1, 2001.
Management has concluded that the adoption of SFAS 133 will not have a
significant impact on the financial position, results of operations, or cash
flows of the Company.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principles to revenue recognition in financial statements.
The Company adopted the provisions of SAB 101 during the fourth quarter ended
December 31, 2000. Such adoption has not resulted in a material impact on the
Company's consolidated results of operations, financial position or cash flows.
In March, 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44 (FIN No. 44), Accounting for Certain Transactions
Involving Stock Compensation - an interpretation of APB 25. FIN No. 44 clarifies
(i) the definition of employees for purposes of applying APB Opinion No. 25,
(ii) the criteria for determining whether a plan qualifies as a noncompensatory
plan, (iii) the accounting consequences of various modifications to the terms of
a previously fixed stock option or award, and (iv) the accounting for an
exchange of stock compensation awards in a business combination. FIN No. 44 was
effective July 1, 2000. This standard has not had a significant impact on the
Company's consolidated results of operations, financial position or cash flows.
F-13
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. 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. Under the terms of the agreement, the Company, among other
things, was to be provided new product opportunities and continue to supply the
majority of Lucent's telecom magnetic requirements. The Company has moved
substantially all of the manufacturing of this business to the People's Republic
of China. The Company has established research and development, support and
legacy product manufacturing in Dallas, Texas.
The acquisition has been accounted for under the purchase method of
accounting and includes the results of operations of the acquired entity from
October 2, 1998 to December 31, 1998. Intangible assets and goodwill which arose
in connection with the acquisition in the amount of $13.5 million, are being
amortized over 3 1/2 to 15 years using the straight line method. Proforma
unaudited results of operations for the year ended December 31, 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:
Year Ended
December 31,
1998
----------------------
Dollars in thousands
Except per share data)
Sales $123,418
Net earnings (1) 25,003
Diluted earnings per
common share (2) $ 2.37
(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.
(2) After giving retroactive effect to a two for one stock split payable in the
form of a dividend on December 1, 1999.
F-14
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. MARKETABLE SECURITIES
At December 31, 2000 and 1999 respectively, marketable securities have a
cost of $186,000 and $1,357,000, an estimated fair value of $231,000 and
$2,253,000, gross unrealized gain of $45,000 and $896,000 and realized gain of
$1,081,000 during 2000. The realized gain in 2000 is included in other income
(net).
4. INVENTORIES
Inventories consist of the following:
December 31,
--------------------------
2000 1999
----------- -----------
Raw materials $16,486,878 $11,811,699
Work in process 91,095 100,273
Finished goods 13,681,633 12,298,682
----------- -----------
$30,259,606 $24,210,654
=========== ===========
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
December 31,
--------------------------
2000 1999
----------- -----------
Land $ 1,164,436 $ 1,164,436
Buildings and improvements 16,027,254 14,282,892
Machinery and equipment 57,654,254 51,331,262
Idle property held for sale 935,000 935,000
----------- -----------
75,780,944 67,713,590
Less accumulated depreciation 36,042,880 31,691,882
----------- -----------
$39,738,064 $36,021,708
=========== ===========
Depreciation expense for the years ended December 31, 2000, 1999, and 1998
was $4,425,000, $4,585,000, and $3,735,000, respectively.
F-15
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. INCOME TAXES
The provision for income taxes consists of the following:
Years Ended December 31,
------------------------
2000 1999 1998
----------- ----------- -----------
Current:
Federal $ 1,758,000 $ 907,000 $ 935,000
Foreign 1,367,000 729,000 352,000
State 251,000 165,000 200,000
----------- ----------- -----------
3,376,000 1,801,000 1,487,000
----------- ----------- -----------
Deferred:
Federal 1,806,000 1,691,000 180,000
Foreign (23,000) (57,000) 146,000
----------- ----------- -----------
1,783,000 1,634,000 326,000
----------- ----------- -----------
$ 5,159,000 $ 3,435,000 $ 1,813,000
=========== =========== ===========
A reconciliation of taxes on income computed at the federal statutory rate
to amounts provided is as follows:
Years Ended December 31,
------------------------
2000 1999 1998
------------ ------------ ------------
Tax provision computed
at the Federal sta-
tutory rate $ 12,708,000 $ 8,407,000 $ 5,791,000
Increase (decrease) in
taxes resulting from:
Lower tax rates applicable
to foreign operations (7,376,000) (4,924,000) (4,255,000)
State taxes, net of federal
benefit 166,000 109,000 132,000
Other, net (339,000) (157,000) 145,000
------------ ------------ ------------
$ 5,159,000 $ 3,435,000 $ 1,813,000
============ ============ ============
F-16
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. INCOME TAXES (continued)
The types of temporary differences between the tax basis of assets and
liabilities and their financial reporting amounts that give rise to the deferred
tax liability and deferred tax asset and their approximate tax effects are as
follows:
December 31,
------------------------------------------------------
2000 1999
-------------------------- -------------------------
Temporary Temporary
Difference Tax Effect Difference Tax Effect
----------- ----------- ----------- -----------
Deferred Liabilities-
non-current
Depreciation and
amortization $11,334,000 $ 872,000 $13,961,000 $ 604,000
Unremitted earnings
foreign subsidiaries
not permanently
reinvested 20,430,000 6,129,000 13,507,000 4,052,000
----------- ----------- ----------- -----------
$31,764,000 $ 7,001,000 $27,468,000 $ 4,656,000
=========== =========== =========== ===========
Deferred Assets
(Liabilities)-current
Unrealized
appreciation
in marketable
securities $ (45,000) $ (18,000) $ (896,000) $ (358,000)
Other temporary
differences 1,635,000 672,000 278,000 111,000
----------- ----------- ----------- -----------
$ 1,590,000 $ 654,000 $ (618,000) $ (247,000)
=========== =========== =========== ===========
The Company files income tax returns in all jurisdictions in which it has
reason to believe it is subject to tax. Historically, the Company has been
subject to examination by various taxing jurisdictions. To date, none of these
examinations has resulted in any material additional tax. Nonetheless, any tax
jurisdiction may contend that a filing position claimed by the Company regarding
one or more of its transactions is contrary to that jurisdiction's laws or
regulations.
F-17
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. INCOME TAXES (continued)
It is management's intention to permanently reinvest the majority of the
earnings of foreign subsidiaries in the expansion of its foreign operations. No
earnings were repatriated during 2000, 1999, or 1998. Unrepatriated earnings,
upon which U.S. income taxes have not been accrued, approximate $102.3 million
at December 31, 2000. Estimated income taxes related to unrepatriated foreign
earnings would approximate $30.7 million. Management has identified
approximately $20 million of foreign earnings that may not be permanently
reinvested. Deferred income taxes in the amount of approximately $6.1 million
have been provided on such earnings ($2.1 million during 2000 and $2.0 million
during 1999 and $2.0 million in years prior to 1998).
7. SEGMENTS - GEOGRAPHIC AREAS
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". Operations are managed on a
geographic basis. The method for attributing revenues to individual countries is
based on the destination to which finished goods are shipped. The Company
operates facilities in the United States, Europe and the Far East.
The Company had sales to individual customers in excess of ten percent of
consolidated net sales as follows: The amount and percentages of the Company's
sales to three customers were approximately $20,707,000 (14.3%), $17,622,000
(12.1%) and $15,483,000 (10.2%) in 2000, $24,066,000 (20.1%), $21,118,000
(17.7%) and $12,733,000 (10.7%) in 1999, respectively; sales and related
percentages to two customers were; $23,055,000 (25.4%) and $13,385,000 (14.7%)
in 1998, respectively. The loss of any of these customers could have a material
adverse effect on the Company's results of operations, financial position and
cash flows.
F-18
2000 1999 1998
---- ---- ----
Revenue from unrelated
entities and country
of Company's domicile:
United States (1) $ 84,389,919 $ 69,603,111 $ 47,884,195
Asia/Pacific 30,021,853 23,675,905 17,914,000
Hong Kong 14,292,061 7,622,297 4,337,000
United Kingdom 2,211,792 347,745 1,657,000
Europe 13,903,454 17,835,412 17,656,000
Other 407,732 379,180 1,306,000
------------- ------------- -------------
$ 145,226,811 $ 119,463,650 $ 90,754,195
============= ============= =============
Total revenues:
United States $ 84,875,000 $ 72,048,046 $ 49,641,429
Asia 121,230,526 104,083,997 75,662,502
Less intergeographic
revenues (60,878,715) (56,668,393) (34,549,736)
------------- ------------- -------------
$ 145,226,811 $ 119,463,650 $ 90,754,195
============= ============= =============
Income from Operations:
United States $ 3,735,292 $ 2,299,951 $ 1,877,219
Asia 29,728,822 21,548,845 13,574,811
------------- ------------- -------------
$ 33,464,114 $ 23,848,796 $ 15,452,030
============= ============= =============
Identifiable Assets:
United States $ 49,925,968 $ 51,770,893 $ 42,374,486
Asia 123,634,713 87,826,707 66,096,256
Less intergeographic
eliminations (4,047,276) (14,459,318) (4,846,114)
------------- ------------- -------------
Total identifiable assets $ 169,513,405 $ 125,138,282 $ 103,624,628
============= ============= =============
Capital Expenditures:
United states $ 2,337,330 $ 1,334,885 $ 469,286
Asia 5,790,265 3,937,245 3,183,102
------------- ------------- -------------
$ 8,127,595 $ 5,272,130 $ 3,652,388
============= ============= =============
Depreciation and Amortization
expense:
United States $ 1,262,419 $ 1,208,414 $ 639,637
Asia 4,669,336 4,892,354 3,489,231
------------- ------------- -------------
$ 5,931,755 $ 6,100,768 $ 4,128,868
============= ============= =============
(1) Includes Mexico and Canada
F-19
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. OPERATIONS IN GEOGRAPHIC AREAS, FOREIGN OPERATIONS AND EXPORT SALES
(Continued)
Transfers between geographic areas include raw materials manufactured in
the United States which are shipped to foreign countries to be manufactured into
finished products and finished products manufactured in foreign countries and
transferred to the United States for sale. Income from operations represents
total revenue less operating expenses.
Identifiable assets are those assets of the Company that are identified
with the operations of each geographic area.
The territory of Hong Kong became a Special Administrative Region ("SAR")
of the People's Republic of China in the middle of 1997. The territory of Macau
became a SAR of the People's Republic of China at the end of 1999. Management
cannot presently predict what future impact, this will have on the Company, if
any, or how the political climate in China will affect the Company's contractual
arrangements in China. Substantially all of the Company's manufacturing
operations and approximately 49% of its identifiable assets are located in The
People's Republic of China and its special administrative regions ("SAR") of
Hong Kong and Macau. Accordingly, events which may result from the expiration of
such leases, as well as any change in the "Most Favored Nation" status granted
to China by the U.S. could have a material adverse effect on the Company.
The Company's research and development facilities are located in
California, Indiana, Texas and Hong Kong. Research and development costs, which
are expensed as incurred, amounted to $6,229,000 in 2000, $5,932,000 in 1999,
and $4,989,000 in 1998.
8. RETIREMENT FUND AND PROFIT SHARING PLAN
The Company maintains a domestic profit sharing plan and a contributory
stock ownership and savings 401(K) plan, which combines stock ownership and
individual voluntary savings provisions to provide retirement benefits for plan
participants. The plan provides for participants to voluntarily contribute a
portion of their compensation, subject to certain legal maximums. The Company
will match, based on a sliding scale, up to $350 for the first $600 contributed
by each participant. Matching contributions plus additional discretionary
contributions will be made with Company stock purchased in the open market. The
expense for the years ended December 31, 2000, 1999, and 1998 amounted to
approximately $261,000, $281,000, and $174,000, respectively. As of December 31,
2000, the plans owned 34,873 and 140,792 shares of Bel Fuse Inc. Class A and
Class B common stock, respectively.
F-20
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. RETIREMENT FUND AND PROFIT SHARING PLAN (Continued)
The Company's Far East subsidiaries have a retirement fund covering
substantially all of their Hong Kong based full-time employees. Eligible
employees contribute up to 5% of salary to the fund. In addition, the Company
may contribute an amount equal to a percentage of eligible salary, as determined
by the Company, in cash or Company stock. The expense for the years ended
December 31, 2000, 1999, and 1998 amounted to approximately $518,000, $511,000,
and $516,000, respectively. The Company has agreed to repurchase its stock, from
the plan, if no market exists, should it be requested to do so by the trustees
of the Company's Far East plan. As of December 31, 2000, the plan owned 4,820
and 22,079 shares of Bel Fuse Inc. Class A and Class B common stock,
respectively.
9. STOCK OPTION PLAN
The Company has a Qualified Stock Option Plan (the "Plan") which provides
for the granting of "Incentive Stock Options" to key employees within the
meaning of Section 422 of the Internal Revenue Code of 1954, as amended. The
Plan provides for the issuance of 2,400,000 shares. Substantially all options
outstanding become exercisable twenty-five (25%) percent one year from the date
of grant and twenty-five (25%) percent for each year of the three years
thereafter. The price of the options granted pursuant to the Plan is not to be
less than 100 percent of the fair market value of the shares on the date of
grant. An option may not be exercised within one year from the date of grant,
and in general, no option will be exercisable after five years from the date
granted. All outstanding options as of July 9, 1998 were split equally into
Class A Common Stock and Class B Common Stock. The Company has adopted the
disclosure-only provisions of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS No. 123). Accordingly, no
compensation cost has been recognized for the stock options awarded. Had
compensation cost for the Company's stock option plan been determined based on
the fair value at the grant date for awards in 2000, 1999 and 1998 consistent
with the provisions of SFAS No. 123, the Company's net earnings and earnings per
share would have been reduced to the pro forma amounts indicated below:
F-21
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. STOCK OPTION PLAN (Continued)
December 31,
--------------------------------------------
2000 1999 1998
------------ ------------ ------------
Net earnings - as reported $ 32,217,461 $ 21,291,833 $ 15,217,820
Net earnings - pro forma $ 30,576,995 $ 20,373,438 $ 14,717,692
Earnings per share - basic - as reported $ 3.04 $ 2.03 $ 1.47
Earnings per share - basic - pro forma $ 2.89 $ 1.95 $ 1.43
Earnings per share - diluted - as reported $ 2.94 $ 1.98 $ 1.45
Earnings per share - diluted - pro forma $ 2.79 $ 1.89 $ 1.41
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 2000, 1999 and 1998, respectively: dividends
yield of .8%, .8% and 0%; expected volatility of 76%, 0% and 65% for Class A and
85%, 82% and 59% for Class B; risk-free interest rate of 5%, 5% and 5.05%, and
expected lives of 5 years.
F-22
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. STOCK OPTION PLAN (Continued)
Information regarding the Company's Plan for 2000, 1999, and 1998 is as
follows after giving retroactive effect to a two for one stock split on December
1, 1999:
2000 1999 1998
------------------------- -------------------------- ------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------------ --------- ---------- ----------- ----------- ---------
Options out-
standing, begin-
ning of year 568,137 $ 9.03 523,400 $ 6.07 472,800 $ 5.73
Options exercised (121,708) $ 7.91 (129,263) $ 5.13 (169,400) $ 5.10
Options granted 376,000 $ 17.34 174,000 $15.40 230,000 $ 6.07
Options cancelled -- -- $ -- 10,000 $ 6.44
--------- --------- ---------
Options out-
standing, end
of year 822,429 $ 13.07 568,137 $ 9.03 523,400 $ 6.07
========= ========= ========
Options price
range at end
of year $5.75 to $19.00 $5.75 to $15.44 $3.25 to $6.63
Options price
range for
exercised
shares $5.75 to $15.44 $3.25 to $7.00 $3.25 to $7.00
Options available
for grant at end
of year 337,000 713,000 887,000
Weighted-
average fair
value of options,
granted during
the year $9.28 $9.61 $3.35
F-23
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. STOCK OPTION PLAN (continued)
The following table summarizes information about fixed-price stock options
outstanding at December 31, 2000:
Weighted-
Number Out- Average Weighted Number Weighted-
Range of standing at Remaining Average Exercisable at Average
Exercise December 31, Contractual Exercise December 31, Exercise
Prices 2000 Life Price 2000 Price
------------------- ----------------- ------------ ----------- --------------- -----------
$5.75 to $7.00 292,429 2 years $ 6.36 127,793 $ 6.51
$15.38 to $15.44 154,000 3 years $ 15.41 21,000 $ 15.40
$17.00 to $19.00 376,000 4 years $ 17.34 -- $ --
-------- -------
822,429 148,793
======== =======
10. COMMON STOCK
On July 9, 1998, the shareholders approved an amendment to Article VI of
the Company's Certificate of Incorporation that (i) authorized a new voting
Class A Common Stock, par value $.10 per share, and a new non-voting Class B
Common Stock, par value $.10 per share; (ii) increased the authorized number of
shares of common stock from 10,000,000 to 20,000,000, consisting of 10,000,000
shares of Class A Common Stock and 10,000,000 shares of Class B Common Stock;
(iii) established the rights, powers and limitations of the Class A Common Stock
and the Class B Common Stock, and (iv) reclassified each share of the Company's
issued Common Stock, par value $.10 per share, as one-half share of Class A
Common Stock and one-half share of Class B Common Stock.
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 was 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 increasing the number of
authorized shares of Class B common stock from 10,000,000 shares to 30,000,000
shares.
F-24
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During 2000 the Board of Directors of the Company authorized the purchase
of up to ten percent (10%) of the Company's outstanding common shares. During
the year the Company purchased and retired 23,600 Class B common shares at a
cost of approximately $808,000, which reduced the number of Class B common
shares outstanding.
11. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases various facilities. Some of these leases require the
Company to pay certain executory costs (such as insurance and maintenance).
Future minimum lease payments for operating leases are approximately as
follows:
Years Ending
December 31,
------------
2001 $ 425,000
2002 271,000
2003 208,000
2004 141,000
2005 135,000
2006 72,000
----------
$1,252,000
==========
Rental expense was approximately $670,000, $600,000, and $521,000, for the
years ended December 31, 2000, 1999, and 1998, respectively.
F-25
Credit Facilities
The Company has two domestic unsecured lines of credit amounting to
$11,000,000 which were unused at December 31, 2000. The lines of credit are
renewable annually. Borrowings under the $10 million line of credit are secured
by a first priority security interest in and a lien on all personal property of
Bel Fuse Inc. and its domestic subsidiaries.
The Company's Hong Kong subsidiary has an unsecured line of credit of
approximately $2,000,000 which expires in October 2001. Borrowing on the line of
credit is guaranteed by the U.S. parent.
Facilities
The Company has contracted for the renovation and addition of new corporate
offices in Jersey City in the amount of $2.6 million. As of December 31, 2000,
$1.8 million has been paid towards this contract.
F-26
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
Quarter Ended Total Year
--------------------------------------------------------------- Ended
March 31, June 30, September 30, December 31, December 31,
2000 2000 2000 2000 2000
----------- ----------- ------------- ------------ ------------
Net sales $26,133,179 $33,721,946 $41,560,409 $43,811,277 $145,226,811
Gross profit 9,428,734 12,778,998 16,815,062 17,725,472 56,748,266
Net earnings 4,471,801 6,559,484 10,184,167 11,002,009 32,217,461
Earnings
per share
- basic (1) (2) $ 0.42 $ 0.62 $ 0.96 $ 1.04 $ 3.04
Earnings
per share -
diluted (1) (2) $ 0.41 $ 0.60 $ 0.92 $ 0.98 $ 2.91
Quarter Ended Total Year
--------------------------------------------------------------- Ended
March 31, June 30, September 30, December 31, December 31,
1999 1999 1999 1999 1999
----------- ----------- ----------- ------------ ------------
Net sales $30,758,768 $28,451,932 $30,536,478 $29,716,472 $119,463,650
Gross profit 10,444,162 10,512,466 10,931,466 11,462,471 43,350,565
Net earnings 5,121,033 4,717,579 5,315,398 6,137,823 21,291,833
Earnings
per share
- basic (1) (2) $ 0.49 $ 0.45 $ 0.51 $ 0.58 $ 2.03
Earnings
per share -
diluted (1) (2) $ 0.48 $ 0.44 $ 0.50 $ 0.57 $ 1.99
(1) Quarterly amounts of earnings per share may not agree to the total for the
year due to rounding.
(2) After giving retroactive effect to a two for one stock split payable in the
form of a dividend on December 1, 1999.
F-27
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
The information required by Items 10 through 13 is included
in the Company's 2001 definitive proxy statement under the
captions Election of Directors, Beneficial Ownership of
the Company's Stock, Section 16(a) Beneficial Ownership
Reporting Compliance; Summary of Cash and Certain Other
Compensation; Employment Agreement; Option Exercises and
Holdings; the Board of Directors; Committees of the Board;
Directors' Compensation. Compensation Committee Interlocks
and Insider Participation; and Vote Required Shares Entitled
to Vote Principal Shareholders. Such information is
incorporated herein by reference, pursuant to General
Instruction G(3).
-16-
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
PAGE
----
(a) Financial Statements
1. Financial statements filed as a part of this
Annual Report on Form 10-K:
Independent Auditors' Report F-1
Consolidated Balance Sheets as of December 31,
2000 and 1999 F-2 - F-3
Consolidated Statements of Operations for Each
of the Three Years in the Period Ended
December 31, 2000 F-4
Consolidated Statements of Stockholders' Equity
for Each of the Three Years in the Period
Ended December 31, 2000 F-5 - F-6
Consolidated Statements of Cash Flows for Each
of the Three Years in the Period Ended
December 31, 2000 F-7 - F-9
Notes to Consolidated Financial Statements F-10 - F-26
Selected Quarterly Financial Data - Years Ended
December 31, 2000 and 1999 (Unaudited) F-27
2. Financial statement schedules filed as part of
this report:
Schedule II: Valuation and Qualifying Accounts S-1
All other schedules are omitted because they are
inapplicable, not required or the information is
included in the financial statements or notes thereto.
(b) Reports on Form 8-K
The Company did not file any current reports on Form 8-K during the
three month period ended December 31, 2000.
(c) Exhibits
3.1 Certificate of Incorporation, as amended, is incorporated by
reference to Exhibit 3.1 of the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
-17-
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(continued)
EXHIBIT NO.:
3.2 By-laws, as amended, are hereby incorporated by reference to
Exhibit 4.2 of the Company's Registration Statement on Form S-2
(Registration No. 33-16703) filed with the Securities and Exchange
Commission on August 25, 1987.
10.1 Agency agreement dated October 1, 1988 between Bel Fuse Ltd. and
Rush Profit Ltd. Incorporated by reference to Exhibit 10.1 of the
Company's annual report on Form 10-K for the year ended December
31, 1994.
10.2 Contract dated March 16, 1990 between Accessorios Electronicos (Bel
Fuse Macau Ltd.) and the Government of Macau. Incorporated by
reference to Exhibit 10.2 of the Company's annual report on Form
10-K for the year ended December 31, 1994.
10.3 Loan agreement dated February 14, 1990 between Bel Fuse, Ltd. (as
lender) and Luen Fat Lee Electronic Factory (as borrower).
Incorporated by reference to Exhibit 10.3 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
10.4 Stock Option Plan. Incorporated by reference to Exhibit 28.1 of the
Company's Registration Statement on Form S-8 (Registration No.
33-53462) filed with the Securities and Exchange Commission on
October 20, 1992.
10.5 Employment agreement between Elliot Bernstein and Bel Fuse Inc.
dated October 29, 1997. Incorporated by reference to Exhibit 10.7
of the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
-18-
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(continued)
EXHIBIT NO.:
10.6 Agreement for the Purchase and Sale of Assets by and among Lucent
Technologies Inc. and Lucent Technologies Maquiladoras Inc. (each
as Seller) and Bel Fuse Inc. (Buyer) dated October 9, 1998.
Incorporated by reference to Exhibit 2.1 of the Company's Report on
Form 8-K dated October 17, 1998.
11.1 A statement regarding the computation of earnings per share is
omitted because such computation can be clearly determined from the
material contained in this Annual Report on Form 10-K.
22.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Auditors.
-19-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates indicated.
BEL FUSE, INC.
BY: /s/ DANIEL BERNSTEIN
-----------------------------------
Daniel Bernstein, President
/s/ COLIN DUNN
-----------------------------------
Colin Dunn, Vice President of
Finance and Chief Financial Officer
Dated: March 19, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board
/s/ ELLIOT BERNSTEIN and Director (Principal March 19, 2001
- ------------------------ Executive Officer)
Elliot Bernstein
President, (Principal
/s/ DANIEL BERNSTEIN Financial and Accounting March 19, 2001
- ------------------------ Executive Officer)
Daniel Bernstein
/s/ HOWARD B. BERNSTEIN Director March 19, 2001
- ------------------------
Howard B. Bernstein
/s/ ROBERT H. SIMANDL Director March 19, 2001
- ------------------------
Robert H. Simandl
/s/ PETER GILBERT Director March 19, 2001
- ------------------------
Peter Gilbert
/s/ JOHN TWEEDY Director March 19, 2001
- ------------------------
John Tweedy
/s/ JOHN JOHNSON Director March 19, 2001
- ------------------------
John Johnson
-20-
EX - 22.1
Subsidiaries of the Registrant
Jurisdiction of
Name Incorporation
---- ----------------
Bel Fuse Limited Hong Kong
Bel Fuse Macau LDA Macau
Bel Hybrids and Magnetics Inc. Indiana
Bel Delaware LLC Delaware
Bel Fuse Europe Ltd. United Kingdom
Bel Magnetics Ltd. Texas
Bel Fuse America Inc. Delaware
Bel Fuse Delaware Inc. Delaware
Bel Fuse California Inc. Delaware
Bel Ventures Inc. Delaware
Bel Power Products Inc. Delaware
BEL FUSE INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Column A Column B Column C Column D Column E Column F
-------- -------- -------- -------- -------- --------
Additions
--------------------------------------------------------------------------
-1 -2
Charged Charged
Balance at to profit to other Balance
beginning and loss accounts Deductions at close
Description of period or income (describe) (describe) of period
- ---------------------------- ----------- ---------- ------------ ------------ ----------
Year ended December 31, 2000
Allowance for doubtful
accounts $ 661,000 $ 1,454,000 $ -- (a) $1,170,000 $ 945,000
========== =========== ======== ========== ==========
Allowance for excess and
obsolete inventory $1,542,000 $ 1,644,000 $ -- (a) $ 339,000 $2,847,000
========== =========== ======== ========== ==========
Year ended December 31, 1999
Allowances for doubtful
accounts $ 317,000 $ 344,000 $ -- $ -- $ 661,000
========== =========== ======== ========== ==========
Allowance for excess and
obsolete inventory $ 764,000 $ 1,468,000 $ -- (a) $ (690,000) $1,542,000
========== =========== ======== ========== ==========
Year ended December 31, 1998
Allowance for doubtful
accounts $ 227,000 $ 90,000 $ -- $ -- $ 317,000
========== =========== ======== ========== ==========
Allowance for excess and
obsolete inventory $ 522,000 $ 242,000 $ -- $ -- $ 764,000
========== =========== ======== ========== ==========
(a) Write offs.
S-1
INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in the Registration Statements (2-93572, 33-45809 and 33-53462) on Forms S-8 of Bel Fuse Inc. of our report dated March 7, 2001, appearing in this Annual Report on Form 10-K of Bel Fuse Inc. for the year ended December 31, 2000. DELOITTE AND TOUCHE March 7, 2001 New York, New York