For the quarterly period ended | September 30, 2007 |
For the transition period from | to |
Commission File Number: | 0-11676 |
BEL
FUSE INC.
|
(Exact
name of registrant as specified in its
charter)
|
NEW
JERSEY
|
22-1463699
|
|
(State
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)
|
(201)
432-0463
|
(Registrant's
telephone number, including area
code)
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
BEL
FUSE INC.
|
|||||
INDEX
|
|||||
Page
|
|||||
Part
I
|
Financial
Information
|
||||
Item
1.
|
Financial
Statements
|
1
|
|||
Condensed
Consolidated Balance Sheets as of September 30, 2007
(unaudited)
and December 31, 2006
|
2-3
|
||||
Condensed
Consolidated Statements of Operations for the Three and
Nine
Months Ended September 30, 2007 and 2006 (unaudited)
|
4
|
||||
Condensed
Consolidated Statements of Stockholders' Equity for
the
Year Ended December 31, 2006 and
the
Nine Months Ended September 30, 2007 (unaudited)
|
5-6
|
||||
Condensed
Consolidated Statements of Cash Flows for the Nine
Months
Ended September 30, 2007 and 2006 (unaudited)
|
7-9
|
||||
Notes
to Condensed Consolidated Financial Statements (unaudited)
|
10-29
|
||||
Item
2.
|
Management's
Discussion and Analysis of
Financial
Condition and Results of Operations
|
30-49
|
|||
Item
3.
|
Quantitative
and Qualitative Disclosures About
Market
Risk
|
50
|
|||
Item
4.
|
Controls
and Procedures
|
51
|
|||
Part
II
|
Other
Information
|
||||
Item
1.
|
Legal
Proceedings
|
52-53
|
|||
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
53
|
|||
Item
6.
|
Exhibits
|
54
|
|||
Signatures
|
55
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
102,051,013
|
$
|
76,760,543
|
|||
Marketable
securities
|
4,169,127
|
15,576,212
|
|||||
Accounts
receivable - less allowance for doubtful accounts
of $1,031,720 and $1,087,006 at September
30, 2007 and December 31, 2006, respectively
|
47,793,960
|
43,765,750
|
|||||
Inventories
|
42,543,340
|
46,297,208
|
|||||
Prepaid
expenses and other current assets
|
1,467,430
|
1,382,807
|
|||||
Deferred
income taxes
|
1,572,623
|
1,665,857
|
|||||
Assets
held for sale
|
3,717,488
|
848,049
|
|||||
Total
Current Assets
|
203,314,981
|
186,296,426
|
|||||
Property,
plant and equipment - net
|
40,224,949
|
44,289,159
|
|||||
Restricted
cash
|
4,500,000
|
-
|
|||||
Deferred
income taxes
|
5,218,763
|
3,425,375
|
|||||
Intangible
assets - net
|
1,278,913
|
1,892,417
|
|||||
Goodwill
|
28,117,143
|
28,117,143
|
|||||
Other
assets
|
5,669,113
|
4,476,990
|
|||||
TOTAL
ASSETS
|
$
|
288,323,862
|
$
|
268,497,510
|
BEL
FUSE INC. AND SUBSIDIARIES
|
||||
CONDENSED
CONSOLIDATED BALANCE
SHEETS
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
(Unaudited)
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable
|
$
|
18,836,366
|
$
|
17,244,937
|
|||
Accrued
expenses
|
14,107,839
|
12,713,417
|
|||||
Income
taxes payable
|
1,812,702
|
11,094,107
|
|||||
Dividends
payable
|
795,133
|
566,583
|
|||||
Total
Current Liabilities
|
35,552,040
|
41,619,044
|
|||||
Long-term
Liabilities:
|
|||||||
Deferred
gain on sale of property
|
4,653,229
|
-
|
|||||
Liability
for uncertain tax positions
|
6,783,000
|
-
|
|||||
Minimum
pension obligation and unfunded pension
liability
|
5,442,246
|
4,728,286
|
|||||
Total
Long-term Liabilities
|
16,878,475
|
4,728,286
|
|||||
Total
Liabilities
|
52,430,515
|
46,347,330
|
|||||
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 2,588,577 and 2,702,677 shares, respectively (net
of 1,072,770 treasury shares)
|
258,858
|
270,268
|
|||||
Class
B common stock, par value $.10 per share - authorized 30,000,000
shares; outstanding 9,291,977 and 9,167,665 shares, respectively
(net of
3,218,310 treasury shares)
|
929,198
|
916,767
|
|||||
Additional
paid-in capital
|
30,229,301
|
31,826,046
|
|||||
Retained
earnings
|
205,120,117
|
190,952,754
|
|||||
Accumulated
other comprehensive (loss)
|
(644,127
|
)
|
(1,815,655
|
)
|
|||
Total
Stockholders' Equity
|
235,893,347
|
222,150,180
|
|||||
TOTAL
LIABILITIES AND
|
|||||||
STOCKHOLDERS'
EQUITY
|
$
|
288,323,862
|
$
|
268,497,510
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|||||||||||||
(Unaudited)
|
|||||||||||||
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
|
|||||||||||||
Net
Sales
|
$
|
189,797,803
|
$
|
194,360,103
|
$
|
66,378,882
|
$
|
73,259,757
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
148,777,682
|
146,058,522
|
52,287,781
|
55,809,958
|
|||||||||
Selling,
general and administrative
|
27,333,450
|
28,706,846
|
8,672,403
|
9,096,679
|
|||||||||
Gain
on sale of property, plant and equipment
|
(1,186,793
|
)
|
-
|
(306,989
|
)
|
-
|
|||||||
Casualty
loss
|
-
|
1,029,853
|
-
|
(67,418
|
)
|
||||||||
174,924,339
|
175,795,221
|
60,653,195
|
64,839,219
|
||||||||||
Income
from operations
|
14,873,464
|
18,564,882
|
5,725,687
|
8,420,538
|
|||||||||
Interest
expense and other costs
|
(124,656
|
)
|
(52,787
|
)
|
(1,193
|
)
|
(8,401
|
)
|
|||||
Gain
on sale of marketable securities - net
|
2,507,868
|
5,151,039
|
-
|
-
|
|||||||||
Interest
income
|
2,979,687
|
2,015,106
|
1,143,748
|
841,348
|
|||||||||
Earnings
before provision for income taxes
|
20,236,363
|
25,678,240
|
6,868,242
|
9,253,485
|
|||||||||
Income
tax provision
|
4,155,000
|
5,172,000
|
954,000
|
1,508,000
|
|||||||||
Net
earnings
|
$
|
16,081,363
|
$
|
20,506,240
|
$
|
5,914,242
|
$
|
7,745,485
|
|||||
Earnings
per share (2006, as restated, see Note 1)
|
|||||||||||||
Earnings
per Class A common share
|
|||||||||||||
Basic
|
$
|
1.29
|
$
|
1.66
|
$
|
0.47
|
$
|
0.62
|
|||||
Diluted
|
$
|
1.29
|
$
|
1.66
|
$
|
0.47
|
$
|
0.62
|
|||||
Weighted
average Class A common shares
|
|||||||||||||
outstanding
- basic
|
2,661,750
|
2,702,677
|
2,621,623
|
2,702,677
|
|||||||||
Weighted
average Class A common shares
|
|||||||||||||
outstanding
- diluted
|
2,661,750
|
2,702,677
|
2,621,623
|
2,702,677
|
|||||||||
Earnings
per Class B common share
|
|||||||||||||
Basic
|
$
|
1.37
|
$
|
1.76
|
$
|
0.50
|
$
|
0.66
|
|||||
Diluted
|
$
|
1.37
|
$
|
1.75
|
$
|
0.50
|
$
|
0.66
|
|||||
Weighted
average Class B common shares
|
|||||||||||||
outstanding
- basic
|
9,228,038
|
9,086,371
|
9,275,962
|
9,126,469
|
|||||||||
Weighted
average Class B common shares
|
|||||||||||||
outstanding
- diluted
|
9,253,930
|
9,141,595
|
9,292,095
|
9,169,704
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||||||||||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
|
|||||||||||||||||||||||||
(Unaudited)
|
|
|
|
|
Accumulated
|
|
|
|
Deferred
|
|||||||||||||||||
|
|
Compre-
|
|
Other
|
Class
A
|
Class
B
|
Additional
|
Stock-
|
|||||||||||||||||
|
|
hensive
|
Retained
|
Comprehensive
|
Common
|
Common
|
Paid-In
|
Based
|
|||||||||||||||||
|
Total
|
Income
|
Earnings
|
Income
(loss)
|
Stock
|
Stock
|
Capital
|
Compensation
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance,
January 1, 2006
|
$
|
201,576,549
|
$
|
167,991,188
|
$
|
4,262,867
|
$
|
270,268
|
$
|
901,327
|
$
|
31,713,608
|
$
|
(3,562,709
|
)
|
||||||||||
Exercise
of stock options
|
3,186,587
|
13,280
|
3,173,307
|
||||||||||||||||||||||
Tax
benefits arising from the disposition of non-qualified incentive
stock
options
|
336,456
|
336,456
|
-
|
||||||||||||||||||||||
Cash
dividends declared on Class A common stock
|
(430,940
|
)
|
(430,940
|
)
|
|||||||||||||||||||||
Cash
dividends declared on Class B common stock
|
(1,810,847
|
)
|
(1,810,847
|
)
|
|||||||||||||||||||||
Issuance
of restricted common stock
|
-
|
2,160
|
(2,160
|
)
|
|||||||||||||||||||||
Deferred
stock-based compensation
|
(1,403,157
|
)
|
(1,403,157
|
)
|
-
|
||||||||||||||||||||
Currency
translation adjustment
|
387,822
|
$
|
387,822
|
387,822
|
|||||||||||||||||||||
Change
in unrealized gain or loss on marketable securities-net of
taxes
|
(4,819,632
|
)
|
(4,819,632
|
)
|
(4,819,632
|
)
|
|||||||||||||||||||
Stock-based
compensation expense
|
1,570,701
|
1,570,701
|
-
|
||||||||||||||||||||||
Adoption
of SFAS No. 123 (R)
|
-
|
(3,562,709
|
)
|
3,562,709
|
|||||||||||||||||||||
Unfunded
SERP liability-net of taxes upon adoption of SFAS No. 158
|
(1,646,712
|
)
|
(1,646,712
|
)
|
|||||||||||||||||||||
Net
earnings
|
25,203,353
|
25,203,353
|
25,203,353
|
||||||||||||||||||||||
Comprehensive
income
|
$
|
20,771,543
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
Balance,
December 31, 2006
|
222,150,180
|
190,952,754
|
(1,815,655
|
)
|
270,268
|
916,767
|
31,826,046
|
-
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||||||||||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Continued)
|
|||||||||||||||||||||||||
(Unaudited)
|
|
|
|
|
Accumulated
|
|
|
|
Deferred
|
|||||||||||||||||
|
|
Compre-
|
|
Other
|
Class
A
|
Class
B
|
Additional
|
Stock-
|
|||||||||||||||||
|
|
hensive
|
Retained
|
Comprehensive
|
Common
|
Common
|
Paid-In
|
Based
|
|||||||||||||||||
|
Total
|
Income
|
Earnings
|
Income
|
Stock
|
Stock
|
Capital
|
Compensation
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Exercise
of stock options
|
1,336,428
|
5,831
|
1,330,597
|
||||||||||||||||||||||
Tax
benefits arising from the disposition of non-qualified incentive
stock
options
|
138,214
|
138,214
|
|||||||||||||||||||||||
Cash
dividends declared on Class A common stock
|
(383,000
|
)
|
(383,000
|
)
|
|||||||||||||||||||||
Cash
dividends declared on Class B common stock
|
(1,531,000
|
)
|
(1,531,000
|
)
|
|||||||||||||||||||||
Currency
translation adjustment
|
485,602
|
$
|
485,602
|
485,602
|
|||||||||||||||||||||
Change
in unrealized gain or loss on marketable securities -net of
taxes
|
685,926
|
685,926
|
685,926
|
||||||||||||||||||||||
Issuance
of restricted common stock
|
-
|
7,420
|
(7,420
|
)
|
|||||||||||||||||||||
Termination
of restricted common stock
|
-
|
(820
|
)
|
820
|
|||||||||||||||||||||
Repurchase/retirement
of Class A common stock
|
(4,124,931
|
)
|
(11,410
|
)
|
(4,113,521
|
)
|
|||||||||||||||||||
Stock-based
compensation expense
|
1,054,565
|
1,054,565
|
|||||||||||||||||||||||
Net
earnings
|
16,081,363
|
16,081,363
|
16,081,363
|
||||||||||||||||||||||
Comprehensive
income
|
$
|
17,252,891
|
|||||||||||||||||||||||
|
|||||||||||||||||||||||||
Balance,
September 30, 2007
|
$
|
235,893,347
|
$
|
205,120,117
|
$
|
(644,127
|
)
|
$
|
258,858
|
$
|
929,198
|
$
|
30,229,301
|
$
|
-
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||
(Unaudited)
|
Nine
Months Ended
|
|||||||
September
30,
|
|||||||
2007
|
2006
|
||||||
Cash
flows from operating
|
|||||||
activities:
|
|||||||
Net
earnings
|
$
|
16,081,363
|
$
|
20,506,240
|
|||
Adjustments
to reconcile net income
to net cash provided by operating activities:
|
|||||||
Depreciation
and amortization
|
5,812,718
|
6,983,518
|
|||||
Casualty
loss
|
-
|
1,029,853
|
|||||
Stock-based
compensation
|
1,054,565
|
1,189,599
|
|||||
Excess
tax benefits from share-based payment
arrangements
|
(138,214
|
)
|
(250,699
|
)
|
|||
Gain
on sale of marketable securities
|
(2,507,868
|
)
|
(5,151,039
|
)
|
|||
Gain
on sale of property, plant and
equipment
|
(1,186,793
|
)
|
-
|
||||
Other
|
387,247
|
643,905
|
|||||
Deferred
income taxes
|
(2,018,000
|
)
|
(778,000
|
)
|
|||
Changes
in operating assets and
liabilities
|
(1,341,502
|
)
|
(8,421,059
|
)
|
|||
Net
Cash Provided by Operating
Activities
|
16,143,516
|
15,752,318
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchase
of property, plant and
equipment
|
(6,159,523
|
)
|
(7,633,002
|
)
|
|||
Purchase
of marketable securities
|
(11,801,386
|
)
|
(2,236,972
|
)
|
|||
Payment
for acquisitions - net of cash
acquired
|
-
|
(2,960,974
|
)
|
||||
Proceeds
from sale of marketable
securities
|
27,498,919
|
24,489,966
|
|||||
Proceeds
from sale of property, plant and equipment
|
3,628,206
|
-
|
|||||
|
|||||||
Net
Cash Provided by Investing
Activities
|
13,166,216
|
11,659,018
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
|
||||
(Unaudited)
|
Nine
Months Ended
|
|||||||
September
30,
|
|||||||
2007
|
2006
|
||||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from exercise of stock
options
|
1,336,428
|
2,764,143
|
|||||
Dividends
paid to common shareholders
|
(1,685,450
|
)
|
(1,660,523
|
)
|
|||
Purchase
and retirement of Class A common stock
|
(4,124,931
|
)
|
-
|
||||
Excess
tax benefits from share-based payment
arrangements
|
138,214
|
250,699
|
|||||
Net
Cash (Used In) Provided By Financing
Activities
|
(4,335,739
|
)
|
1,354,319
|
||||
Effect
of exchange rate changes on cash
|
316,477
|
124,897
|
|||||
Net
Increase in Cash
and Cash Equivalents
|
25,290,470
|
28,890,552
|
|||||
Cash
and Cash Equivalents
|
|||||||
-
beginning of period
|
76,760,543
|
51,997,634
|
|||||
Cash
and Cash Equivalents
|
|||||||
-
end of period
|
$
|
102,051,013
|
$
|
80,888,186
|
|||
Changes
in operating assets and
liabilities consist of:
|
|||||||
Increase
in accounts receivable
|
$
|
(3,583,668
|
)
|
$
|
(13,114,129
|
)
|
|
Decrease
(increase) in inventories
|
3,887,608
|
(7,289,696
|
)
|
||||
Increase
in prepaid expenses and other current
assets
|
(84,623
|
)
|
(443,578
|
)
|
|||
Increase
in other assets
|
(2,003,640
|
)
|
(372,254
|
)
|
|||
Increase
in accounts payable
|
1,572,794
|
7,428,294
|
|||||
Increase
(decrease) in income taxes payable
|
(2,360,191
|
)
|
3,069,675
|
||||
Increase
in accrued expenses
|
1,230,218
|
2,300,629
|
|||||
$
|
(1,341,502
|
)
|
$
|
(8,421,059
|
)
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
|
||||
(Unaudited)
|
Nine
Months Ended
|
|||||||
September
30,
|
|||||||
2007
|
2006
|
||||||
Supplementary
information:
|
|||||||
Cash
paid during the period for:
|
|||||||
Income
taxes
|
$
|
8,763,000
|
$
|
2,441,000
|
|||
Interest
|
$
|
-
|
$
|
52,787
|
|||
Details
of acquisitions:
|
|||||||
Intangibles
|
$
|
-
|
$
|
446,571
|
|||
Goodwill
|
-
|
6,000,000
|
|||||
Acquisition
costs
|
-
|
6,446,571
|
|||||
Less:
Amounts paid on acquisition payment
|
-
|
514,403
|
|||||
Amounts
accrued
|
-
|
(4,000,000
|
)
|
||||
Cash
paid for acquisitions
|
$
|
-
|
$
|
2,960,974
|
1. |
BASIS
OF PRESENTATION AND ACCOUNTING
POLICIES
|
Restatement
of Earnings Per Share
|
|||||||
As
Previously
|
|||||||
Nine
Months Ended
|
Reported
|
As
Restated
|
|||||
September
30, 2006
|
|||||||
Basic
|
$
|
1.74
|
|||||
Diluted
|
$
|
1.73
|
|||||
Class
A - Basic
|
$
|
1.66
|
|||||
Class
B- Basic
|
$
|
1.76
|
|||||
Class
A- Diluted
|
$
|
1.66
|
|||||
Class
B - Diluted
|
$
|
1.75
|
|||||
Three
Months Ended
|
|||||||
September
30, 2006
|
|||||||
Basic
|
$
|
0.65
|
|||||
Diluted
|
$
|
0.65
|
|||||
Class
A - Basic
|
|
$
|
0.62
|
||||
Class
B- Basic
|
$
|
0.66
|
|||||
Class
A- Diluted
|
$
|
0.62
|
|||||
Class
B - Diluted
|
$
|
0.66
|
Nine
Months Ended
|
Three
Months Ended
|
||||||
September
30,
|
September
30,
|
||||||
2006
|
2006
|
||||||
Basic
|
11,789,048
|
11,829,146
|
|||||
Diluted
|
11,844,272
|
11,872,381
|
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
(As
restated)
|
(As
restated)
|
||||||||||||
Class
A Common Shares
|
|||||||||||||
Weighted
average shares outstanding - basic
|
2,661,750
|
2,702,677
|
2,621,623
|
2,702,677
|
|||||||||
Dilutive
impact of stock options and
unvested
restricted stock awards
|
-
|
-
|
-
|
-
|
|||||||||
Weighted
average shares oustanding - diluted
|
2,661,750
|
2,702,677
|
2,621,623
|
2,702,677
|
|||||||||
Class
B Common Shares
|
|||||||||||||
Weighted
average shares outstanding - basic
|
9,228,038
|
9,086,371
|
9,275,962
|
9,126,469
|
|||||||||
Dilutive
impact of stock options and
unvested
restricted stock awards
|
25,892
|
55,224
|
16,133
|
43,235
|
|||||||||
Weighted
average shares oustanding - diluted
|
9,253,930
|
9,141,595
|
9,292,095
|
9,169,704
|
2. |
GOODWILL
AND OTHER INTANGIBLES
|
3. |
MARKETABLE
SECURITIES
|
4. |
INVENTORIES
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Raw
materials
|
$
|
25,461,325
|
$
|
24,374,438
|
|||
Work
in progress
|
2,672,424
|
3,531,148
|
|||||
Finished
goods
|
14,409,591
|
18,391,622
|
|||||
$
|
42,543,340
|
$
|
46,297,208
|
5. |
BUSINESS
SEGMENT INFORMATION
|
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Total
segment revenues
|
|||||||||||||
North
America
|
$
|
65,058,170
|
$
|
61,973,366
|
$
|
25,890,375
|
$
|
22,442,362
|
|||||
Asia
|
133,937,916
|
140,544,037
|
45,673,823
|
52,300,151
|
|||||||||
Europe
|
24,748,147
|
21,025,711
|
6,846,682
|
7,670,179
|
|||||||||
Total
segment revenues
|
223,744,233
|
223,543,114
|
78,410,880
|
82,412,692
|
|||||||||
Reconciling
items:
|
|||||||||||||
Intersegment
revenues
|
(33,946,430
|
)
|
(29,183,011
|
)
|
(12,031,998
|
)
|
(9,152,935
|
)
|
|||||
Net
sales
|
$
|
189,797,803
|
$
|
194,360,103
|
$
|
66,378,882
|
$
|
73,259,757
|
|||||
Income
from Operations:
|
|||||||||||||
North
America
|
$
|
2,903,689
|
$
|
2,225,522
|
$
|
793,042
|
$
|
2,246,177
|
|||||
Asia
|
10,933,129
|
15,351,855
|
4,545,749
|
5,644,688
|
|||||||||
Europe
|
1,036,646
|
987,505
|
386,896
|
529,673
|
|||||||||
$
|
14,873,464
|
$
|
18,564,882
|
$
|
5,725,687
|
$
|
8,420,538
|
6. |
DEBT
|
7. |
INCOME
TAXES
|
8. |
ACCRUED
EXPENSES
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Sales
commissions
|
$
|
1,650,596
|
$
|
1,715,816
|
|||
Subcontracting
labor
|
1,434,593
|
2,032,763
|
|||||
Deposits
on future sale of properties
|
2,278,270
|
-
|
|||||
Salaries,
bonuses and
|
|||||||
related
benefits
|
3,783,615
|
4,147,135
|
|||||
Other
|
4,960,765
|
4,817,703
|
|||||
$
|
14,107,839
|
$
|
12,713,417
|
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Service
cost
|
$
|
437,000
|
$
|
582,000
|
$
|
146,000
|
$
|
96,000
|
|||||
Interest
cost
|
86,000
|
115,000
|
29,000
|
19,000
|
|||||||||
Amortization
of adjustments
|
52,000
|
70,000
|
17,000
|
12,000
|
|||||||||
Total
SERP expense
|
$
|
575,000
|
$
|
767,000
|
$
|
192,000
|
$
|
127,000
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Balance
sheet amounts:
|
|||||||
Minimum
pension obligation
and
unfunded
liability
|
$
|
5,442,246
|
$
|
4,728,286
|
|||
Accumulated
other comprehensive
income
(loss)
|
(1,646,712
|
)
|
(1,646,712
|
)
|
10. |
SHARE-BASED
COMPENSATION
|
Weighted
|
|||||||||||||
Average
|
|||||||||||||
Weighted
|
Remaining
|
Aggregate
|
|||||||||||
Average
|
Contractual
|
Intrinsic
|
|||||||||||
Options
|
Shares
|
Exercise
Price
|
Term
|
Value
|
|||||||||
Outstanding
at January 1, 2007
|
137,813
|
$
|
25.59
|
||||||||||
Granted
|
-
|
||||||||||||
Exercised
|
(58,313
|
)
|
22.92
|
$
|
853,479
|
||||||||
Forfeited
or expired
|
(1,500
|
)
|
18.89
|
||||||||||
Outstanding
at September 30, 2007
|
78,000
|
$
|
27.72
|
1.9
|
$
|
574,200
|
|||||||
Exercisable
at September 30, 2007
|
44,500
|
$
|
25.79
|
1.4
|
$
|
419,410
|
Weighted-Average
|
|||||||
Grant-Date
|
|||||||
Nonvested
Shares
|
Shares
|
Fair
Value
|
|||||
Nonvested
at December 31, 2006
|
91,000
|
$
|
25.53
|
||||
Granted
|
-
|
||||||
Vested
|
(56,000
|
)
|
22.86
|
||||
Forfeited
|
(1,500
|
)
|
18.89
|
||||
Nonvested
at September 30, 2007
|
33,500
|
$
|
30.28
|
Weighted
|
||||||||||
Weighted
|
Average
|
|||||||||
Average
|
Remaining
|
|||||||||
Restricted
Stock
|
Award
|
Contractual
|
||||||||
Awards
|
Shares
|
Price
|
Term
|
|||||||
Outstanding
at January 1, 2007
|
167,000
|
$
|
34.93
|
3.85
years
|
||||||
Granted
|
74,200
|
36.40
|
||||||||
Vested
|
-
|
|||||||||
Forfeited
|
(10,200
|
)
|
36.97
|
|||||||
Outstanding
at September 30, 2007
|
231,000
|
35.35
|
3.55
years
|
|||||||
Exercisable
at September 30, 2007
|
-
|
11. |
COMMON
STOCK
|
12. |
COMPREHENSIVE
INCOME
|
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Net
earnings
|
$
|
16,081,363
|
$
|
20,506,240
|
$
|
5,914,242
|
$
|
7,745,485
|
|||||
Currency
translation adjustment
|
485,602
|
216,394
|
151,782
|
11,426
|
|||||||||
Increase
(decrease) in unrealized
|
|||||||||||||
gain
on marketable securities
|
|||||||||||||
-
net of taxes
|
685,926
|
(3,881,863
|
)
|
(266,904
|
)
|
(857,336
|
)
|
||||||
Comprehensive
income
|
$
|
17,252,891
|
$
|
16,840,771
|
$
|
5,799,120
|
$
|
6,899,575
|
13. |
ASSETS
SOLD AND HELD FOR SALE
|
14. |
NEW
FINANCIAL ACCOUNTING STANDARDS
|
15. |
LEGAL
PROCEEDINGS
|
16. |
ACCUMULATED
OTHER COMPREHENSIVE INCOME (LOSS)
|
September
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Foreign
currency translation adjustment
|
$
|
1,626,486
|
$
|
1,140,884
|
|||
Unrealized
holding (loss)
on
available-for-sale securities
under
SFAS No. 115, net of
taxes
of $(380,554) and $(802,797) as of September 30,
2007 and December 31, 2006 |
(623,901
|
)
|
(1,309,827
|
)
|
|||
Unfunded
SERP liability net of taxes
of
$(686,000) as of September 30, 2007
and
December 31, 2006
|
(1,646,712
|
)
|
(1,646,712
|
)
|
|||
Accumulated
other comprehensive loss
|
$
|
(644,127
|
)
|
$
|
(1,815,655
|
)
|
Percentage
of Net Sales
|
Percentage
of Net Sales
|
||||||||||||
Nine
Months Ended
|
Three
Months Ended
|
||||||||||||
September
30,
|
September
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||
Cost
of sales
|
78.4
|
75.1
|
78.8
|
76.2
|
|||||||||
Selling,
general and administrative expenses
|
14.4
|
14.8
|
13.1
|
12.4
|
|||||||||
Gain
on sale of property, plant and equipment
|
0.6
|
-
|
0.5
|
-
|
|||||||||
Casualty
loss
|
-
|
0.5
|
-
|
(0.1
|
)
|
||||||||
Interest
income and interest and financing expense
|
1.5
|
1.0
|
1.7
|
1.1
|
|||||||||
Gain
on sale of property and marketable securities
|
1.3
|
2.7
|
-
|
-
|
|||||||||
Earnings
before provision for income taxes
|
10.7
|
13.2
|
10.3
|
12.6
|
|||||||||
Income
tax provision
|
2.2
|
2.7
|
1.4
|
2.1
|
|||||||||
Net
earnings
|
8.5
|
10.6
|
8.9
|
10.6
|
Increase
(decrease) from
Prior
Period
|
(Decrease)
from
Prior
Period
|
||||||
Nine
Months Ended
September
30, 2007
compared
with Nine
Months
Ended September
30,
2006
|
Three
Months Ended
September
30, 2007
compared
with Three
Months
Ended September
30,
2006
|
||||||
Net
sales
|
(2.3
|
)%
|
(9.4
|
)%
|
|||
Cost
of sales
|
1.9
|
(6.3
|
)
|
||||
Selling,
general and administrative expenses
|
(4.8
|
)
|
(4.7
|
)
|
|||
Net
earnings
|
(21.6
|
)
|
(23.6
|
)
|
¨ |
The
Company established a $1.2 million warranty accrual for a defective
part,
including a $.4 million inventory write-off of materials on hand
related
to this matter which are deemed to be
unusable.
|
¨ |
The
Company incurred a 3.4% increase in material costs as a percentage
of net
sales. The increase in raw material costs is principally related
to
increased manufacturing of value-added products, which have a higher
raw
material content than the Company’s other products, increased costs for
raw materials such as copper, steel and petroleum-based products
and
increased transportation costs. Since the majority of the manufacturing
is
conducted in the Far East, the increased material costs negatively
impact
the operating profits in the Far East.
|
¨ |
The
Company is currently paying higher wage rates and benefits to its
production workers in China. These higher rates and benefits are
reflected
in the Company’s cost of sales and result from new labor regulations and a
continuing tightening of the labor market.
|
¨ |
Sales
of the Company’s DC-DC power products have increased. While these products
are strategic to Bel’s growth and important to total earnings, they return
lower gross profit percentage margins as a larger percentage of their
bills of materials are purchased components. As these sales continue
to
increase, the Company’s average gross profit percentage will likely
decrease.
|
¨ |
The
Company incurred a 4.4% increase in material costs as a percentage
of net
sales. The increase in raw material costs is principally related
to
increased manufacturing of value-added products, which have a higher
raw
material content than the Company’s other products, increased costs for
raw materials such as copper, steel and petroleum-based products
and
increased transportation costs. Since the majority of the manufacturing
is
conducted in the Far East, the increased material costs negatively
impact
the operating profits in the Far East.
|
¨ |
The
Company is currently paying higher wage rates and benefits to its
production workers in China. These higher rates and benefits are
reflected
in the Company’s cost of sales and result from new labor regulations and a
continuing tightening of the labor market.
|
¨ |
Sales
of the Company’s DC-DC power products have increased. While these products
are strategic to Bel’s growth and important to total earnings, they return
lower gross profit percentage margins as a larger percentage of their
bills of materials are purchased components. As these sales continue
to
increase, the Company’s average gross profit percentage will likely
decrease.
|
Payments
due by period
|
||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than 1 year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
|||||||||||
Capital
expenditure obligations
|
$
|
2,149,976
|
$
|
2,149,976
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Operating
leases
|
4,357,567
|
1,310,698
|
1,546,428
|
1,052,079
|
448,362
|
|||||||||||
Raw
material purchase obligations
|
20,064,385
|
20,064,385
|
-
|
-
|
-
|
|||||||||||
Total
|
$
|
26,571,928
|
$
|
23,525,059
|
$
|
1,546,428
|
$
|
1,052,079
|
$
|
448,362
|
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 20, 2007
|
1,000
|
$
|
33.64
|
1,000
|
1,031,974
|
||||||||
August
1 - August 31, 2007
|
11,828
|
34.26
|
11,828
|
1,020,146
|
|||||||||
September
1 - September 30, 2007
|
34,246
|
35.29
|
34,246
|
985,900
|
|||||||||
Total
|
47,074
|
$
|
35.00
|
47,074
|
985,900
|
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.
|
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
|