x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
¨ |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
NEW
JERSEY
|
22-1463699
|
(State
of other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
206
Van Vorst Street
|
Jersey
City, New Jersey
|
07302
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Smaller
reporting company ¨
|
(Do
not check if a smaller
reporting company) |
Page
|
|||
Part
I
|
Financial
Information
|
||
Item
1.
|
Financial
Statements
|
1
|
|
Condensed
Consolidated Balance Sheets as of September 30, 2008 and December
31,
2007
|
2-3
|
||
Condensed
Consolidated Statements of Operations for the Three and Nine
Months Ended
September 30, 2008 and 2007
|
4
|
||
Condensed
Consolidated Statements of Stockholders' Equity for the Year
Ended
December 31, 2007 and the Nine Months Ended September 30,
2008
|
5
|
||
Condensed
Consolidated Statements of Cash Flows for the Nine Months Ended
September
30, 2008 and 2007
|
6-7
|
||
Notes
to Condensed Consolidated Financial Statements
|
8-25
|
||
Item
1A.
|
Risk
Factors
|
26-27
|
|
Item
2.
|
Management's
Discussion and Analysis of
|
||
Financial
Condition and Results of Operations
|
28-43
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About
|
||
Market
Risk
|
44-45
|
||
Item
4.
|
Controls
and Procedures
|
46
|
|
Part
II
|
Other
Information
|
||
Item
1.
|
Legal
Proceedings
|
46
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
47
|
|
Item
6.
|
Exhibits
|
48
|
|
Signatures
|
49
|
September 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
82,771
|
$
|
83,875
|
|||
Marketable
securities
|
10,778
|
3,273
|
|||||
Short-term
investments
|
5,774
|
20,542
|
|||||
Accounts
receivable - less allowance for doubtful
|
|||||||
accounts
of $754 and $977 at September 30,
|
|||||||
2008
and December 31, 2007, respectively
|
47,240
|
52,217
|
|||||
Inventories
|
49,136
|
39,049
|
|||||
Prepaid
expenses and other current
|
|||||||
assets
|
1,597
|
1,446
|
|||||
Refundable
income taxes
|
1,913
|
3,168
|
|||||
Deferred
income taxes
|
1,251
|
2,661
|
|||||
Total
Current Assets
|
200,460
|
206,231
|
|||||
Property,
plant and equipment - net
|
41,307
|
41,113
|
|||||
Restricted
cash
|
2,315
|
4,553
|
|||||
Long-term
investments
|
2,459
|
2,536
|
|||||
Deferred
income taxes
|
7,506
|
4,364
|
|||||
Intangible
assets - net
|
993
|
1,181
|
|||||
Goodwill
|
28,524
|
28,447
|
|||||
Other
assets
|
4,938
|
5,435
|
|||||
TOTAL
ASSETS
|
$
|
288,502
|
$
|
293,860
|
September
30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable
|
$
|
19,230
|
$
|
16,975
|
|||
Accrued
expenses
|
12,918
|
11,283
|
|||||
Income
taxes payable
|
4,642
|
4,007
|
|||||
Dividends
payable
|
830
|
795
|
|||||
Total
Current Liabilities
|
37,620
|
33,060
|
|||||
Long-term
Liabilities:
|
|||||||
Deferred
gain on sale of property
|
4,623
|
4,645
|
|||||
Liability
for uncertain tax positions
|
3,543
|
6,930
|
|||||
Minimum
pension obligation and
|
|||||||
unfunded
pension liability
|
5,182
|
4,698
|
|||||
Total
Long-term Liabilities
|
13,348
|
16,273
|
|||||
Total
Liabilities
|
50,968
|
49,333
|
|||||
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 2,191,804 and 2,545,644 shares, respectively (net
of 1,072,770
treasury shares)
|
219
|
255
|
|||||
Class
B common stock, par value $.10 per share - authorized 30,000,000
shares;
outstanding 9,370,643 and 9,286,627 shares, respectively (net
of 3,218,310
treasury shares)
|
937
|
929
|
|||||
Additional
paid-in capital
|
19,839
|
29,107
|
|||||
Retained
earnings
|
218,107
|
214,580
|
|||||
Accumulated
other comprehensive loss
|
(1,568
|
)
|
(344
|
)
|
|||
Total
Stockholders' Equity
|
237,534
|
244,527
|
|||||
TOTAL
LIABILITIES AND
|
|||||||
STOCKHOLDERS'
EQUITY
|
$
|
288,502
|
$
|
293,860
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
|
|||||||||||||
Net
Sales
|
$
|
66,964
|
$
|
66,379
|
$
|
200,287
|
$
|
189,798
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
56,337
|
52,288
|
165,292
|
148,778
|
|||||||||
Selling,
general and administrative
|
8,934
|
8,673
|
27,151
|
27,334
|
|||||||||
Restructuring
charge
|
329
|
-
|
329
|
-
|
|||||||||
Gain
on sale of property, plant and equipment
|
-
|
(307
|
)
|
-
|
(1,187
|
)
|
|||||||
65,600
|
60,654
|
192,772
|
174,925
|
||||||||||
Income
from operations
|
1,364
|
5,725
|
7,515
|
14,873
|
|||||||||
Interest
expense and other costs
|
(1
|
)
|
(1
|
)
|
(2
|
)
|
(125
|
)
|
|||||
(Impairment
charge)/gain on sale of investment
|
(1,397
|
)
|
-
|
(4,030
|
)
|
2,508
|
|||||||
Interest
income
|
529
|
1,144
|
2,047
|
2,980
|
|||||||||
Earnings
before (benefit) provision for income taxes
|
495
|
6,868
|
5,530
|
20,236
|
|||||||||
Income
tax (benefit) provision
|
(1,451
|
)
|
954
|
(394
|
)
|
4,155
|
|||||||
Net
earnings
|
$
|
1,946
|
$
|
5,914
|
$
|
5,924
|
$
|
16,081
|
|||||
Earnings
per Class A common share
|
|||||||||||||
Basic
|
$
|
0.16
|
$
|
0.47
|
$
|
0.47
|
$
|
1.29
|
|||||
Diluted
|
$
|
0.16
|
$
|
0.47
|
$
|
0.47
|
$
|
1.29
|
|||||
Weighted
average Class A common shares outstanding
|
|||||||||||||
Basic
|
2,325,745
|
2,621,623
|
2,460,550
|
2,661,750
|
|||||||||
Diluted
|
2,325,745
|
2,621,623
|
2,460,550
|
2,661,750
|
|||||||||
Earnings
per Class B common share
|
|||||||||||||
Basic
|
$
|
0.17
|
$
|
0.50
|
$
|
0.52
|
$
|
1.37
|
|||||
Diluted
|
$
|
0.17
|
$
|
0.50
|
$
|
0.51
|
$
|
1.37
|
|||||
Weighted
average Class B common shares outstanding
|
|||||||||||||
Basic
|
9,134,643
|
9,275,962
|
9,126,499
|
9,228,038
|
|||||||||
Diluted
|
9,373,347
|
9,292,095
|
9,346,611
|
9,253,930
|
|
Accumulated
|
|||||||||||||||||||||
Compre-
|
Other
|
Class A
|
Class B
|
Additional
|
||||||||||||||||||
hensive
|
Retained
|
Comprehensive
|
Common
|
Common
|
Paid-In
|
|||||||||||||||||
Total
|
Income
|
Earnings
|
Income (loss)
|
Stock
|
Stock
|
Capital
|
||||||||||||||||
|
||||||||||||||||||||||
Balance,
January 1, 2007
|
$
|
222,150
|
$
|
190,953
|
$
|
(1,816
|
)
|
$
|
270
|
$
|
917
|
$
|
31,826
|
|||||||||
Exercise
of stock options
|
1,452
|
6
|
1,446
|
|||||||||||||||||||
Tax
benefits arising from the disposition of non-qualified incentive
stock
options
|
149
|
149
|
||||||||||||||||||||
Cash
dividends declared on Class A common stock
|
(534
|
)
|
(534
|
)
|
||||||||||||||||||
Cash
dividends declared on Class B common stock
|
(2,175
|
)
|
(2,175
|
)
|
||||||||||||||||||
Issuance
of restricted common stock
|
-
|
7
|
(7
|
)
|
||||||||||||||||||
Termination
of restricted common stock
|
-
|
(1
|
)
|
1
|
||||||||||||||||||
Repurchase/retirement
of Class A common stock
|
(5,733
|
)
|
(15
|
)
|
(5,718
|
)
|
||||||||||||||||
Currency
translation adjustment
|
960
|
960
|
960
|
|||||||||||||||||||
Unrealized
holding gains on marketable
|
||||||||||||||||||||||
securities
arising during the year, net of taxes
|
2,077
|
2,077
|
2,077
|
|||||||||||||||||||
Reclassification
adjustment for gains
|
||||||||||||||||||||||
included
in net earnings, net of taxes
|
(2,058
|
)
|
(2,058
|
)
|
(2,058
|
)
|
||||||||||||||||
Stock-based
compensation expense
|
1,410
|
1,410
|
||||||||||||||||||||
Change
in unfunded SERP liability, net of taxes
|
493
|
493
|
493
|
|||||||||||||||||||
Net
earnings
|
26,336
|
26,336
|
26,336
|
|||||||||||||||||||
Comprehensive
income
|
$
|
27,808
|
||||||||||||||||||||
Balance,
December 31, 2007
|
$
|
244,527
|
$
|
214,580
|
$
|
(344
|
)
|
$
|
255
|
$
|
929
|
$
|
29,107
|
|||||||||
Exercise
of stock options
|
312
|
3
|
309
|
|||||||||||||||||||
Tax
benefits arising from the disposition
|
||||||||||||||||||||||
of
non-qualified incentive stock options
|
79
|
79
|
||||||||||||||||||||
Cash
dividends declared on Class A
|
||||||||||||||||||||||
common
stock
|
(448
|
)
|
(448
|
)
|
||||||||||||||||||
Cash
dividends declared on Class B
|
||||||||||||||||||||||
common
stock
|
(1,949
|
)
|
(1,949
|
)
|
||||||||||||||||||
Issuance
of restricted common stock
|
-
|
6
|
(6
|
)
|
||||||||||||||||||
Termination
of restricted common stock
|
-
|
(1
|
)
|
1
|
||||||||||||||||||
Repurchase/retirement
of Class A
|
||||||||||||||||||||||
common
stock
|
(10,785
|
)
|
(36
|
)
|
(10,749
|
)
|
||||||||||||||||
Currency
translation adjustment
|
(6
|
)
|
(6
|
)
|
(6
|
)
|
||||||||||||||||
Unrealized
holding losses on marketable
|
||||||||||||||||||||||
securities
arising during the year, net of taxes
|
(3,460
|
)
|
(3,460
|
)
|
(3,460
|
)
|
||||||||||||||||
Reclassification
adjustment of unrealized holding losses for
|
||||||||||||||||||||||
impairment
charge included in net earnings, net of taxes
|
2,242
|
2,242
|
2,242
|
|||||||||||||||||||
Stock-based
compensation expense
|
1,098
|
1,098
|
||||||||||||||||||||
Net
earnings
|
5,924
|
5,924
|
5,924
|
|||||||||||||||||||
Comprehensive
income
|
$
|
4,700
|
||||||||||||||||||||
Balance,
September 30, 2008
|
$
|
237,534
|
$
|
218,107
|
$
|
(1,568
|
)
|
$
|
219
|
$
|
937
|
$
|
19,839
|
Nine Months Ended
|
|||||||
September 30,
|
|||||||
2008
|
2007
|
||||||
Cash flows from
operating activities:
|
|||||||
Net
earnings
|
$
|
5,924
|
$
|
16,081
|
|||
Adjustments
to reconcile net earnings to net
|
|||||||
cash
provided by operating activities:
|
|||||||
Depreciation
and amortization
|
5,439
|
5,813
|
|||||
Stock-based
compensation
|
1,083
|
1,055
|
|||||
Excess
tax benefits from share-based
|
|||||||
payment
arrangements
|
(79
|
)
|
(138
|
)
|
|||
Loss
(gain) on sale of property, plant and equipment
|
84
|
(1,187
|
)
|
||||
Impairment
charge (gain on sale) on investment
|
4,030
|
(2,508
|
)
|
||||
Unrealized
foreign exchange transaction losses
|
141
|
-
|
|||||
Other,
net
|
607
|
387
|
|||||
Deferred
income taxes
|
(1,081
|
)
|
(2,018
|
)
|
|||
Changes
in operating assets and liabilities
|
(3,021
|
)
|
(1,341
|
)
|
|||
Net
Cash Provided by Operating Activities
|
13,127
|
16,144
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchase
of property, plant and equipment
|
(5,279
|
)
|
(6,160
|
)
|
|||
Purchase
of intangible asset
|
(300
|
)
|
-
|
||||
Purchase
of marketable securities
|
(12,524
|
)
|
(11,801
|
)
|
|||
Proceeds
from sale of marketable securities
|
-
|
27,499
|
|||||
Proceeds
from sale of property, plant and equipment
|
2,256
|
3,628
|
|||||
Redemption
of investment
|
14,433
|
-
|
|||||
Net
Cash (Used In) Provided by Investing Activities
|
(1,414
|
)
|
13,166
|
Nine Months Ended
|
|||||||
September 30,
|
|||||||
2008
|
2007
|
||||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from exercise of stock options
|
312
|
1,336
|
|||||
Dividends
paid to common shareholders
|
(2,362
|
)
|
(1,685
|
)
|
|||
Purchase
and retirement of Class A
|
|||||||
common
stock
|
(10,785
|
)
|
(4,125
|
)
|
|||
Excess
tax benefits from share-based
|
|||||||
payment
arrangements
|
79
|
138
|
|||||
Net
Cash Used In Financing Activities
|
(12,756
|
)
|
(4,336
|
)
|
|||
Effect
of exchange rate changes on cash
|
(61
|
)
|
316
|
||||
Net
(Decrease) Increase in Cash
|
|||||||
and
Cash Equivalents
|
(1,104
|
)
|
25,290
|
||||
Cash
and Cash Equivalents
|
|||||||
-
beginning of period
|
83,875
|
76,761
|
|||||
Cash
and Cash Equivalents
|
|||||||
-
end of period
|
$
|
82,771
|
$
|
102,051
|
|||
Changes
in operating assets
|
|||||||
and
liabilities consist of:
|
|||||||
Decrease
(increase) in accounts receivable
|
$
|
4,916
|
$
|
(3,584
|
)
|
||
(Increase)
decrease in inventories
|
(10,088
|
)
|
3,888
|
||||
Increase
in prepaid expenses
|
|||||||
and
other current assets
|
(158
|
)
|
(84
|
)
|
|||
Increase
in other assets
|
(64
|
)
|
(2,004
|
)
|
|||
Increase
in accounts payable
|
2,222
|
1,404
|
|||||
Decrease
in income taxes
|
(1,496
|
)
|
(2,360
|
)
|
|||
Increase
in accrued expenses
|
1,647
|
1,399
|
|||||
$
|
(3,021
|
)
|
$
|
(1,341
|
)
|
||
Supplementary
information:
|
|||||||
Cash
paid during the period for income taxes
|
$
|
2,017
|
$
|
8,763
|
1.
|
BASIS
OF PRESENTATION AND ACCOUNTING
POLICIES
|
2.
|
EARNINGS
PER SHARE
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Numerator:
|
|||||||||||||
Net
earnings
|
$
|
1,946
|
$
|
5,914
|
$
|
5,924
|
$
|
16,081
|
|||||
Less
Dividends:
|
|||||||||||||
Class
A
|
142
|
156
|
448
|
383
|
|||||||||
Class
B
|
644
|
639
|
1,949
|
1,531
|
|||||||||
Undistributed
earnings
|
$
|
1,160
|
$
|
5,119
|
$
|
3,527
|
$
|
14,167
|
|||||
Undistributed
earnings allocation - basic:
|
|||||||||||||
Class
A undistributed earnings
|
226
|
1,086
|
721
|
3,053
|
|||||||||
Class
B undistributed earnings
|
934
|
4,033
|
2,806
|
11,114
|
|||||||||
Total
undistributed earnings
|
$
|
1,160
|
$
|
5,119
|
$
|
3,527
|
$
|
14,167
|
|||||
Undistributed
earnings allocation - diluted:
|
|||||||||||||
Class
A undistributed earnings
|
222
|
1,084
|
707
|
3,046
|
|||||||||
Class
B undistributed earnings
|
938
|
4,035
|
2,820
|
11,121
|
|||||||||
Total
undistributed earnings
|
$
|
1,160
|
$
|
5,119
|
$
|
3,527
|
$
|
14,167
|
|||||
Net
earnings allocation - basic:
|
|||||||||||||
Class
A allocated earnings
|
368
|
1,242
|
1,169
|
3,436
|
|||||||||
Class
B allocated earnings
|
1,578
|
4,672
|
4,755
|
12,645
|
|||||||||
Net
earnings
|
$
|
1,946
|
$
|
5,914
|
$
|
5,924
|
$
|
16,081
|
|||||
Net
earnings allocation - diluted:
|
|||||||||||||
Class
A allocated earnings
|
364
|
1,240
|
1,155
|
3,429
|
|||||||||
Class
B allocated earnings
|
1,582
|
4,674
|
4,769
|
12,652
|
|||||||||
Net
earnings
|
$
|
1,946
|
$
|
5,914
|
$
|
5,924
|
$
|
16,081
|
|||||
Denominator:
|
|||||||||||||
Weighted
average shares outstanding:
|
|||||||||||||
Class
A - basic and diluted
|
2,325,745
|
2,621,623
|
2,460,550
|
2,661,750
|
|||||||||
Class
B - basic
|
9,134,643
|
9,275,962
|
9,126,499
|
9,228,038
|
|||||||||
Dilutive
impact of stock options and
|
|||||||||||||
unvested
restricted stock awards
|
238,704
|
16,133
|
220,112
|
25,892
|
|||||||||
Class
B - diluted
|
9,373,347
|
9,292,095
|
9,346,611
|
9,253,930
|
|||||||||
Earnings
per share:
|
|||||||||||||
Class
A - basic
|
$
|
0.16
|
$
|
0.47
|
$
|
0.47
|
$
|
1.29
|
|||||
Class
A - diluted
|
$
|
0.16
|
$
|
0.47
|
$
|
0.47
|
$
|
1.29
|
|||||
|
|||||||||||||
Class
B - basic
|
$
|
0.17
|
$
|
0.50
|
$
|
0.52
|
$
|
1.37
|
|||||
Class
B - diluted
|
$
|
0.17
|
$
|
0.50
|
$
|
0.51
|
$
|
1.37
|
Assets at Fair Value as of September 30, 2008
|
|||||||||||||
Total
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||||
Available-for-sale
securities
|
$
|
10,778
|
$
|
10,778
|
-
|
-
|
|||||||
Other
long-term investments
|
4,388
|
4,388
|
-
|
-
|
|||||||||
Total
|
$
|
15,166
|
$
|
15,166
|
-
|
-
|
Assets at Fair Value as of September 30, 2008
|
Total Gains (Losses)
|
||||||||||||||||||
Total
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Three Months
Ended
September 30,
2008
|
Nine Months
Ended
September 30,
2008
|
||||||||||||||
Other
investments
|
$
|
8,233
|
-
|
$
|
8,233
|
-
|
($135
|
)
|
($412
|
)
|
|||||||||
Total
|
$
|
8,233
|
-
|
$
|
8,233
|
-
|
($135
|
)
|
($412
|
)
|
September 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
Raw materials
|
$
|
28,917
|
$
|
24,089
|
|||
Work in progress
|
2,662
|
2,434
|
|||||
Finished
goods
|
17,557
|
12,526
|
|||||
$
|
49,136
|
$
|
39,049
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Total
segment revenues
|
|||||||||||||
North
America
|
$
|
17,980
|
$
|
22,886
|
$
|
64,993
|
$
|
65,058
|
|||||
Asia
|
50,505
|
47,835
|
145,879
|
133,938
|
|||||||||
Europe
|
7,516
|
6,769
|
21,926
|
24,748
|
|||||||||
Total
segment revenues
|
76,001
|
77,490
|
232,798
|
223,744
|
|||||||||
Reconciling
items:
|
|||||||||||||
Intersegment
revenues
|
(9,037
|
)
|
(11,111
|
)
|
(32,511
|
)
|
(33,946
|
)
|
|||||
Net
sales
|
$
|
66,964
|
$
|
66,379
|
$
|
200,287
|
$
|
189,798
|
|||||
Income
from Operations:
|
|||||||||||||
North
America
|
$
|
118
|
$
|
793
|
$
|
2,862
|
$
|
2,904
|
|||||
Asia
|
1,095
|
4,545
|
3,399
|
10,933
|
|||||||||
Europe
|
151
|
387
|
1,254
|
1,036
|
|||||||||
$
|
1,364
|
$
|
5,725
|
$
|
7,515
|
$
|
14,873
|
September 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
Sales commissions
|
$
|
1,767
|
$
|
1,903
|
|||
Contract
labor
|
3,162
|
1,723
|
|||||
Salaries,
bonuses and
|
|||||||
related
benefits
|
4,398
|
4,082
|
|||||
Other
|
3,591
|
3,575
|
|||||
$
|
12,918
|
$
|
11,283
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Service
cost
|
$
|
73
|
$
|
146
|
$
|
220
|
$
|
437
|
|||||
Interest
cost
|
76
|
29
|
227
|
86
|
|||||||||
Amortization
of adjustments
|
33
|
17
|
100
|
52
|
|||||||||
Total
SERP expense
|
$
|
182
|
$
|
192
|
$
|
547
|
$
|
575
|
September 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
Balance sheet
amounts:
|
|||||||
Minimum
pension obligation
|
|||||||
and
unfunded pension liability
|
$
|
5,182
|
$
|
4,698
|
|||
Accumulated
other comprehensive loss
|
(1,154 |
)
|
(1,154 |
)
|
Average
|
Contractual
|
Intrinsic
|
|||||||||||
Options
|
Shares
|
Exercise Price
|
Term
|
Value (000's)
|
|||||||||
Outstanding
at January 1, 2008
|
70,000
|
$
|
28.42
|
||||||||||
Granted
|
-
|
||||||||||||
Exercised
|
(16,500
|
)
|
18.89
|
||||||||||
Forfeited
or expired
|
(500
|
)
|
18.89
|
||||||||||
Outstanding
at September 30, 2008
|
53,000
|
$
|
31.48
|
1.5
years
|
$
|
-
|
|||||||
Exercisable
at September 30, 2008
|
38,000
|
$
|
32.26
|
1.4
years
|
$
|
-
|
Weighted-Average
|
|||||||
Grant-Date
|
|||||||
Nonvested Stock Options
|
Shares
|
Fair Value
|
|||||
Nonvested
at December 31, 2007
|
33,500
|
$
|
30.28
|
||||
Granted
|
-
|
-
|
|||||
Vested
|
(18,500
|
)
|
29.50
|
||||
Forfeited
|
-
|
-
|
|||||
Nonvested
at September 30, 2008
|
15,000
|
$
|
29.50
|
Restricted
Stock
|
Award
|
Contractual
|
||||||||
Awards
|
Shares
|
Price
|
Term
|
|||||||
Outstanding
at January 1, 2008
|
195,400
|
$
|
35.31
|
3.43
years
|
||||||
Granted
|
56,300
|
24.47
|
||||||||
Vested
|
(4,500
|
)
|
30.67
|
|||||||
Forfeited
|
(11,200
|
)
|
32.23
|
|||||||
Outstanding
at September 30, 2008
|
236,000
|
$
|
32.96
|
3.13
years
|
Three Months Ended
|
Nine Months Ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Net
earnings
|
$
|
1,946
|
$
|
5,914
|
$
|
5,924
|
$
|
16,081
|
|||||
Currency
translation adjustment
|
(810
|
)
|
152
|
(6
|
)
|
486
|
|||||||
(Decrease)
increase in unrealized
|
|||||||||||||
gain
on marketable securities
|
|||||||||||||
-
net of taxes
|
(2,123
|
)
|
(267
|
)
|
(3,460
|
)
|
686
|
||||||
Reclassification
adjustment for
|
|||||||||||||
impairment
charge included in
|
|||||||||||||
net
earnings, net of tax
|
783
|
-
|
2,242
|
-
|
|||||||||
Comprehensive
(loss) income
|
$
|
(204
|
)
|
$
|
5,799
|
$
|
4,700
|
$
|
17,253
|
September 30,
|
December 31,
|
||||||
2008
|
2007
|
||||||
Foreign
currency translation adjustment
|
$
|
2,095
|
$
|
2,101
|
|||
Unrealized
holding loss on available-for-sale
|
|||||||
securities
under SFAS No. 115, net of taxes of
|
|||||||
$(1,533)
and $(789) as of September 30, 2008 and
|
|||||||
December
31, 2007
|
(2,509
|
)
|
(1,291
|
)
|
|||
Unfunded
SERP liability, net of taxes of ($483)
|
|||||||
as
of September 30, 2008 and December 31, 2007
|
(1,154
|
)
|
(1,154
|
)
|
|||
Accumulated
other comprehensive loss
|
$
|
(1,568
|
)
|
$
|
(344
|
)
|
Initial
restructuring accrual:
|
||||
Termination
benefit charges
|
329
|
|||
Cash
payments
|
(133
|
)
|
||
Balance,
September 30, 2008
|
$
|
196
|
Percentage of Net Sales
|
Percentage of Net Sales
|
||||||||||||
Three Months Ended
|
Nine Months Ended
|
||||||||||||
September 30,
|
September 30,
|
||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||
Cost
of sales
|
84.1
|
78.8
|
82.5
|
78.4
|
|||||||||
Selling,
general and
|
|||||||||||||
administrative
expenses
|
13.3
|
13.1
|
13.6
|
14.4
|
|||||||||
Restructuring
charge
|
0.5
|
-
|
0.2
|
-
|
|||||||||
Gain
on sale of property, plant
|
|||||||||||||
and
equipment
|
-
|
0.5
|
-
|
0.6
|
|||||||||
(Impairment
charge) gain on sale of
|
|||||||||||||
investment
|
(2.1
|
)
|
-
|
(2.0
|
)
|
1.3
|
|||||||
Interest
income, net of interest
|
|||||||||||||
and
financing expense
|
0.8
|
1.7
|
1.0
|
1.5
|
|||||||||
Earnings
before provision
|
|||||||||||||
for
income taxes
|
0.7
|
10.3
|
2.8
|
10.7
|
|||||||||
Income
tax (benefit) provision
|
(2.2
|
)
|
1.4
|
(0.2
|
)
|
2.2
|
|||||||
Net
earnings
|
2.9
|
8.9
|
3.0
|
8.5
|
Increase (decrease) from
|
Increase (decrease) from
|
||||||
Prior Period
|
Prior Period
|
||||||
Three Months Ended
|
Nine Months Ended
|
||||||
September 30, 2008
|
September 30, 2008
|
||||||
Compared with
|
Compared with
|
||||||
Three Months Ended
|
Nine Months Ended
|
||||||
September 30, 2007
|
September 30, 2007
|
||||||
Net
sales
|
0.9 | % |
5.5
|
%
|
|||
Cost
of sales
|
7.7 |
11.1
|
|||||
Selling,
general and
|
|||||||
administrative
expenses
|
3.0 |
(0.7
|
)
|
||||
Net
earnings
|
(67.1 | ) |
(63.2
|
)
|
¨ |
The
Company experienced a significant increase in labor costs during
the three
months ended September 30, 2008 (18.0% of sales as compared to
9.9% of
sales for the three months ended September 30, 2007). This increase
was
due to a variety of factors, including higher wage rates effective
April
1, 2008 as mandated by PRC officials and an increase in overtime
hours
worked to reduce our backlog, with many of these hours being
worked on
Saturdays and Sundays at the new double-time rates. In addition,
the PRC
yuan, in which all PRC workers and subcontractors are paid, has
appreciated on average by 10.5% against the U.S. dollar during
the three
months ended September 30, 2008 from the comparable period of
2007.
|
¨ |
The
Company’s costs related to support labor and fringe benefits increased
by
1.1% of net sales during the three months ended September 30,
2008 as
compared to the same period of 2007. The Company increased its
support
staff in its Wing Ming facility during the third quarter of 2008
which,
coupled with the appreciation of the PRC yuan, resulted in higher
support
staff costs in Asia during the three months ended September 30,
2008 as
compared to the same period of 2007.
|
¨ |
As
an offsetting factor, the Company experienced a 2.6% decrease
in material
costs as a percentage of net sales in comparison with the third
quarter of
2007. This reduction in material costs was primarily due to the
shift in
product mix to a lower sales volume of certain of the Company’s power
products during the third quarter 2008. As these were value-added
products
with a higher raw material content than the Company’s other products, the
decrease in sales volume triggered a related reduction in material
costs
as a percent of sales. Bel’s suppliers have continued to pass on price
increases related to raw materials such as gold, copper and plastics.
|
¨
|
The
Company’s legal and professional fees increased by $0.4 million from
the
third quarter of 2007, primarily due to increased legal activity
associated with the closure of Bel’s Westborough, MA facility and the
related lawsuit against former stockholders and key employees
of Galaxy,
and higher audit fees.
|
¨
|
Primarily
as a result of the strengthening of the U.S. dollar versus certain
European currencies during the three months ended September 30,
2008, the
Company’s currency exchange losses increased by $0.2 million. Payables
related to certain of the Company’s European purchases are denominated in
U.S. dollars, and receivables related to certain of the Company’s sales
are denominated in European currencies.
|
¨
|
The
above factors were partially offset by a $0.3 million decrease
in bad debt
expense during the three months ended September 30, 2008 as compared
to
the same period of 2007. Certain of the Company’s receivable accounts with
open balances were resolved during the third quarter of 2008
and as a
result, the bad debt reserve was reduced
accordingly.
|
¨ |
The
Company experienced a significant increase in labor costs during
the nine
months ended September 30, 2008 (14.8% of sales as compared to
10.2% of
sales for the nine months ended September 30, 2007). This increase
was due
to a variety of factors, including increased training costs and
production
inefficiencies resulting from the hiring of 5,300 net new hires
since
Lunar New Year, higher wage rates effective April 1, 2008 as
mandated by
PRC officials and an increase in overtime hours worked to reduce
our
backlog, with many of these hours being worked on Saturdays and
Sundays at
the new double-time rates. In addition, the PRC yuan, in which
all PRC
workers are paid, has appreciated on average by 9.7% during the
nine
months ended September 30, 2008 from the comparable period of
2007.
|
¨ |
As
an offsetting factor, the Company experienced a 0.6% decrease
in material
costs as a percentage of net sales as compared to the prior year.
This
reduction in material costs was primarily due to the shift in
product mix
to a lower sales volume of certain of the Company’s power products during
the third quarter 2008. As these were value-added products with
a higher
raw material content than the Company’s other products, the decrease in
sales volume triggered a related reduction in material costs
as a percent
of sales. While the Company experienced an overall decrease in
material
costs, Bel’s suppliers continued to pass on price increases related to raw
materials such as gold, copper and plastics throughout the nine
months
ended September 30, 2008.
|
¨
|
Legal
and professional fees decreased by $0.5 million from nine months
ended
September 30, 2007 principally due to the high level of patent
infringement activity during 2007 which did not recur in 2008.
This was
partially offset by increased activity related to the Galaxy
lawsuit
during the nine months ended September 30,
2008.
|
¨
|
Other
general and administrative costs decreased by $0.6 million during
the nine
months ended September 30, 2008 as compared to the same period
of 2007.
The Company has reduced its discretionary bonus expense during
the nine
months ended September 30, 2008 as a result of lower profitability
in
2008. In addition, the Company recorded a $0.1 million reduction
of
stock-based compensation expense related to forfeitures of restricted
stock awards. There were additional reductions in other general
and
administrative costs that were not individually significant.
Offsetting
these factors in part, sales and marketing expenses increased
by $0.7
million as compared to the nine months ended September 30, 2007
primarily
due to increased commissions on the higher sales volume.
|
¨
|
Primarily
as a result of the strengthening of the U.S. dollar versus certain
European currencies during the third quarter of 2008, the Company’s
currency exchange losses increased by $0.2 million. Payables
related to
certain of the Company’s European purchases are denominated in U.S.
dollars, and receivables related to certain of the Company’s sales are
denominated in European currencies.
|
a)
|
Disclosure
controls and procedures.
As of the end of the Company’s most recently completed fiscal quarter
covered by this report, the Company carried out an evaluation,
with the
participation of the Company’s management, including the Company’s chief
executive officer and vice president of finance, of the effectiveness
of
the Company’s disclosure controls and procedures pursuant to Securities
Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s chief
executive officer and vice president of finance concluded that
the
Company’s disclosure controls and procedures are effective in ensuring
that information required to be disclosed by the Company in the
reports
that it files or submits under the Securities Exchange Act is
recorded,
processed, summarized and reported, within the time periods specified
in
the SEC’s rules and forms.
|
b.)
|
Changes
in internal controls over financial reporting:
There have been no changes in the Company's internal controls
over
financial reporting that occurred during the Company's last fiscal
quarter
to which this report relates that have materially affected, or
are
reasonable likely to materially affect, the Company’s internal control
over financial reporting.
|
Period
|
Total Number
of Shares
Purchased
|
Average
Price Paid
per Share
|
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plan
|
|||||||||
July
1 - July 31, 2008
|
5,820
|
$
|
26.99
|
5,820
|
973,648
|
||||||||
August
1 - August 31, 2008
|
318,618
|
30.88
|
318,618
|
622,974
|
|||||||||
September
1 - September 30, 2008
|
958
|
25.96
|
958
|
621,720
|
|||||||||
Total
|
325,396
|
$
|
30.79
|
325,396
|
621,720
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification
of the Vice President of Finance pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification
of the Chief Executive Officer pursuant to Section 906 of the
Sarbanes -
Oxley Act of 2002.
|
|
32.2
|
Certification
of the Vice-President of Finance pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
BEL FUSE INC. | |
By:
|
/s/Daniel
Bernstein
|
Daniel Bernstein, President and | |
Chief Executive Officer | |
By:
|
/s/
Colin Dunn
|
Colin Dunn, Vice President of Finance |
1.
|
I
have reviewed this quarterly report on Form 10-Q of Bel Fuse Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a -
15(f) and 15d - 15(f)) for the registrant and have:
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b.
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c.
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
d.
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely
to
materially affect, the registrant's internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer and I have disclosed, based
on our
most recent evaluation of internal control over financial reporting,
to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record,
process, summarize and report financial information; and
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
|
By:
|
/s/
Daniel Bernstein
|
|
Daniel
Bernstein, President and
|
||
Chief
Executive Officer
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Bel Fuse Inc.;
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a
material fact or omit to state a material fact necessary to make
the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects
the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a -
15(f) and 15d - 15(f)) for the registrant and have:
|
a.
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is
being
prepared;
|
b.
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision,
to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c.
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness
of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
d.
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely
to
materially affect, the registrant's internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer and I have disclosed, based
on our
most recent evaluation of internal control over financial reporting,
to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent functions):
|
a.
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record,
process, summarize and report financial information; and
|
b.
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control
over financial reporting.
|
By:
|
/s/
Colin Dunn
|
|
Colin
Dunn, Vice President
|
||
of
Finance
|
By:
|
/s/
Daniel Bernstein
|
|
Daniel
Bernstein, President
|
||
and
Chief Executive Officer
|
/s/
Colin Dunn
|
||
Colin
Dunn, Vice President of
|
||
Finance
|