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)
|
BEL
FUSE INC.
|
INDEX
|
Forward
Looking Information
|
Page
|
||
Part I
|
|||
Item
1.
|
Business
|
1
|
|
Item
1A.
|
Risk
Factors
|
9
|
|
Item
1B.
|
Unresolved
Staff Comments
|
15
|
|
Item
2.
|
Properties
|
15
|
|
Item
3.
|
Legal
Proceedings
|
16
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders..
|
18
|
|
Part II
|
|||
Item
5.
|
Market
for Registrant's Common Equity,
|
||
Related
Stockholder Matters and Issuer
|
|||
Purchases
of Equity Securities
|
19
|
||
Item
6.
|
Selected
Financial Data
|
22
|
|
Item
7.
|
Management's
Discussion and Analysis of Financial
|
||
Condition
and Results of Operations
|
24
|
||
Item
7A.
|
Quantitative
and Qualitative Disclosures About
|
||
Market
Risk
|
46
|
||
Item
8.
|
Financial
Statements and Supplementary Data
|
47
|
|
Item
9.
|
Changes
in and Disagreements With Accountants
|
||
on
Accounting and Financial Disclosure
|
48
|
||
Item
9A.
|
Controls
and Procedures
|
48
|
|
Item
9B.
|
Other
Information
|
49
|
|
Part III
|
|||
Item
10.
|
Directors,
Executive Officers and Corporate
|
||
Governance
|
49
|
||
Item
11.
|
Executive
Compensation
|
49
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners
|
||
and
Management and Related Stockholder Matters
|
49
|
BEL
FUSE INC.
|
INDEX
|
Page
|
|||
Part III (Con't)
|
|||
Item
13.
|
Certain
Relationships and Related Transactions,
|
||
and
Director Independence
|
49
|
||
Item
14.
|
Principal
Accountant Fees and Services
|
49
|
|
Part IV
|
|||
Item
15.
|
Exhibits,
Financial Statement Schedule
|
50
|
|
Signatures
|
53
|
||
*Page
F-1 follows page 47
|
·
|
Discrete
components
|
·
|
Diplexer
and triplexer filters
|
·
|
Power
transformers
|
·
|
MagJack®
integrated connector modules
|
·
|
Power
conversion modules
|
·
|
Integrated
modules
|
·
|
Miniature
fuses
|
·
|
Surface
mount PTC devices and fuses
|
·
|
Radial
PTC devices and micro fuses
|
·
|
Passive
jacks
|
·
|
Plugs
|
·
|
Cable
assemblies
|
Product
Group
|
Function
|
Applications
|
|
Magnetics
|
|||
Discrete
Components
|
Condition,
filter, and isolate the electronic signal to ensure accurate
data/voice/video transmission.
|
Network
switches, routers, hubs, and PCs used in 10/100/1000 Gigabit Ethernet and
Power over Ethernet (PoE).
|
|
Diplexer
and Triplexer Filters
|
Condition,
filter, and isolate the electronic signal to ensure accurate
data/voice/video transmission with maximum throughput.
|
Home
networking, set top box, and cable modem applications including high
bandwidth video transmission and triple play
applications.
|
|
Power
Transformers
|
Safety
isolation and distribution.
|
Power
supplies, alarm, fire detection, and security systems, HVAC, lighting and
medical equipment.
|
|
MagJack®
Integrated Connectors
|
Condition,
filter, and isolate the electronic signal to ensure accurate
data/voice/video transmission and provide RJ45 and USB
connectivity.
|
Network
switches, routers, hubs, and PCs used in 10/100/1000 Gigabit Ethernet,
Power over Ethernet (PoE), home networking, and cable modem
applications.
|
|
Modules
|
|||
Power
Conversion Modules (DC-DC Converters)
|
Convert
DC voltage level to other DC level as required to meet the power needs of
low voltage silicon devices.
|
Networking
equipment, distributed power architecture, telecom devices, computers, and
peripherals.
|
|
Integrated
Modules
|
Condition,
filter, and isolate the electronic signal to ensure accurate
data/voice/video transmission within a highly integrated, reduced
footprint
|
Broadband,
home networking, set top boxes, HDTV, and telecom equipment supporting
ISDN, T1/E1 and DSL technologies.
|
|
Circuit
Protection
|
|||
Miniature
Fuses
|
Protects
devices by preventing current in an electrical circuit from exceeding
acceptable levels.
|
Power
supplies, electronic ballasts, and consumer
electronics.
|
|
Surface
mount PTC devices and fuses
|
Protects
devices by preventing current in an electrical circuit from exceeding
acceptable levels. PTC devices can be reset to resume
functionality.
|
Cell
phone chargers, consumer electronics, power supplies, and set top
boxes.
|
|
Radial
PTC devices and micro fuses
|
Protects
devices by preventing current in an electrical circuit from exceeding
acceptable levels. PTC devices can be reset to resume
functionality.
|
Cell
phones, mobile computers, IC and battery protection, power supplies, and
telecom line cards.
|
|
Interconnect
|
|||
Passive
Jacks
|
RJ45
and RJ11 connectivity for data/voice/video transmission.
|
Network
routers, hubs, switches, and patch panels deployed in Category 5e, 6, 6a,
and 7a cable systems.
|
|
Plugs
|
RJ45
and RJ11 connectivity for data/voice/video transmission.
|
Network
routers, hubs, switches, and patch panels deployed in Category 5e, 6, 6a,
and 7a cable systems.
|
|
Cable
Assemblies
|
RJ45
and RJ11 connectivity for data/voice/video transmission.
|
Structured
Category 5e, 6, 6a, and 7a cable systems (premise
wiring).
|
·
|
announcements
of technological or competitive
developments;
|
·
|
general
market or economic conditions;
|
·
|
acquisitions
or strategic alliances by us or our
competitors;
|
·
|
the
gain or loss of a significant customer or order;
or
|
·
|
changes
in estimates of our financial performance or changes in recommendations by
securities analysts regarding us or our
industry
|
Location
|
Approximate
Square
Feet
|
Owned/
Leased
|
Percentage
Used
for
Manufacturing
|
||||||
Dongguan,
People's
|
|||||||||
Republic
of China
|
346,000 |
Leased
|
61 | % | |||||
Zhongshan,
People's
|
|
||||||||
Republic
of China
|
386,000 |
Leased
|
70 | % | |||||
Zhongshan,
People's
|
|
||||||||
Republic
of China
|
117,000 |
Owned
|
100 | % | |||||
Zhongshan,
People's
|
|
||||||||
Republic
of China
|
78,000 |
Owned
|
100 | % | |||||
Hong
Kong
|
43,000 |
Owned
|
7 | % | |||||
Louny,
Czech Republic
|
11,000 |
Owned
|
75 | % | |||||
Dominican
Republic
|
41,000 |
Leased
|
85 | % | |||||
Cananea,
Mexico
|
39,000 |
Leased
|
60 | % | |||||
Inwood,
New York
|
39,000 |
Owned
|
40 | % | |||||
Glen
Rock, Pennsylvania
|
74,000 |
Owned
|
60 | % | |||||
1,174,000 |
Class
A
|
Class
A
|
Class
B
|
Class
B
|
|||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
Year
Ended December 31, 2007
|
||||||||||||||||
First
Quarter
|
$ | 38.11 | $ | 27.36 | $ | 38.71 | $ | 31.22 | ||||||||
Second
Quarter
|
39.47 | 34.10 | 39.88 | 33.42 | ||||||||||||
Third
Quarter
|
38.17 | 32.60 | 36.59 | 29.55 | ||||||||||||
Fourth
Quarter
|
38.08 | 31.81 | 36.19 | 27.19 | ||||||||||||
Year
Ended December 31, 2008
|
||||||||||||||||
First
Quarter
|
33.50 | 24.73 | 29.15 | 26.21 | ||||||||||||
Second
Quarter
|
32.00 | 27.22 | 30.00 | 24.47 | ||||||||||||
Third
Quarter
|
30.97 | 25.71 | 31.06 | 23.78 | ||||||||||||
Fourth
Quarter
|
25.91 | 13.13 | 28.96 | 13.03 |
Dividend
per Share
|
Total
Dividend Payment (in 000’s)
|
|||||||||||||||
Class
A
|
Class
B
|
Class
A
|
Class
B
|
|||||||||||||
Year
Ended December 31, 2007
|
||||||||||||||||
February
1, 2007
|
$ | 0.04 | $ | 0.05 | $ | 108 | $ | 451 | ||||||||
May
1, 2007
|
0.04 | 0.05 | 108 | 452 | ||||||||||||
August
1, 2007
|
0.04 | 0.05 | 107 | 453 | ||||||||||||
November
1, 2007 (a)
|
0.06 | 0.07 | 157 | 637 | ||||||||||||
Year
Ended December 31, 2008
|
||||||||||||||||
February
1, 2008
|
0.06 | 0.07 | 153 | 638 | ||||||||||||
May
1, 2008
|
0.06 | 0.07 | 152 | 638 | ||||||||||||
August
1, 2008
|
0.06 | 0.07 | 151 | 640 | ||||||||||||
November
1, 2008
|
0.06 | 0.07 | 131 | 689 |
(a)
|
During
July 2007 the Board of Directors of the Company authorized an increase in
the dividends by $.02 per share per quarter for both Class A and B common
shares effective with the November 2007 dividend
payment
|
(d)
|
Securities authorized
for issuance under the Equity Compensation
Plans
|
Plan
Category
|
Number
of Securities to be
Issued
Upon Exercise of
Outstanding
Options,
Warrants
and Rights
(a)
|
Weighted
Average Exercise
Price
of Outstanding Options,
Warrants
and Rights
(b)
|
Number
of Securities Remaining
Available
for Future Issuance
Under
Equity Compensation
Plans
(Excluding Securities
Reflected
in Column (a))
(c)
|
|||||||||
Equity
compensation plans approved
by
security holders
|
53,000 | $ | 31.48 | 816,785 | ||||||||
Equity
compensation plans not
approved
by security holders
|
- | - | - | |||||||||
Totals
|
53,000 | $ | 31.48 | 816,785 |
(e)
|
Issuer Purchases of
Equity Securities
|
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or Programs
(a)
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|
||||||||||||
October
1, 2008 - October 31, 2008
|
8,255 | $ | 20.88 | 8,255 | 612,639 | |||||||||||
November
1, 2008 - November 30, 2008
|
- | - | - | 612,639 | ||||||||||||
December
1, 2008 - December 31, 2008
|
2,567 | 17.21 | 2,567 | 609,741 | ||||||||||||
Totals
|
10,822 | $ | 20.01 | 10,822 | 609,741 |
(a) These
share repurchases were made as part of a plan authorized by the Board of
Directors during 2000
|
whereby
the Company is authorized to purchase up to 10% of the Company's
outstanding common shares.
|
Years
Ended December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005 (a)
|
2004
|
||||||||||||||||
(In
thousands of dollars, except per share data)
|
||||||||||||||||||||
Selected
Statements of Operations Data:
|
||||||||||||||||||||
Net
sales
|
$ | 258,350 | $ | 259,137 | $ | 254,933 | $ | 215,916 | $ | 190,022 | ||||||||||
Cost
of sales
|
217,079 | 203,007 | 192,985 | 156,147 | 132,776 | |||||||||||||||
Selling,
general and
|
||||||||||||||||||||
administrative
expenses
|
36,093 | 36,117 | 37,800 | 33,152 | 31,302 | |||||||||||||||
Impairment
of assets (d) (e) (g)
|
14,805 | - | - | - | 1,033 | |||||||||||||||
Restructuring
charges (f)
|
1,122 | - | - | - | - | |||||||||||||||
Gain
on sale of property, plant and equipment
|
- | (5,499 | ) | - | - | - | ||||||||||||||
Casualty
loss (c)
|
- | - | 1,030 | - | - | |||||||||||||||
Interest
income - net
|
2,454 | 4,046 | 2,780 | 1,098 | 525 | |||||||||||||||
(Impairment
charge)/gain on sale of investment (h)
|
(10,358 | ) | 2,146 | 5,150 | - | - | ||||||||||||||
Lawsuit
proceeds (b)
|
- | - | - | - | 2,935 | |||||||||||||||
(Loss)
earnings before provision
|
||||||||||||||||||||
for
income taxes
|
(18,653 | ) | 31,704 | 31,048 | 27,715 | 28,371 | ||||||||||||||
Income
tax (benefit) provision
|
(3,724 | ) | 5,368 | 5,845 | 7,482 | 3,649 | ||||||||||||||
Net
(loss) earnings
|
(14,929 | ) | 26,336 | 25,203 | 20,233 | 24,722 | ||||||||||||||
(Loss)
earnings per Class A common
|
||||||||||||||||||||
share
- basic
|
(1.28 | ) | 2.11 | 2.03 | 1.67 | 2.10 | ||||||||||||||
(Loss)
earnings per Class A common
|
||||||||||||||||||||
share
- diluted
|
(1.28 | ) | 2.11 | 2.03 | 1.67 | 2.10 | ||||||||||||||
(Loss)
earnings per Class B common
|
||||||||||||||||||||
share
- basic
|
(1.30 | ) | 2.25 | 2.16 | 1.79 | 2.22 | ||||||||||||||
(Loss)
earnings per Class B common
|
||||||||||||||||||||
share
- diluted
|
(1.30 | ) | 2.24 | 2.15 | 1.77 | 2.16 | ||||||||||||||
Cash
dividends declared per
|
||||||||||||||||||||
Class
A common share
|
0.24 | 0.20 | 0.16 | 0.16 | 0.16 | |||||||||||||||
Cash
dividends declared per
|
||||||||||||||||||||
Class
B common share
|
0.28 | 0.24 | 0.20 | 0.20 | 0.20 |
As
of December 31,
|
||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
(In
thousands of dollars, except percentages)
|
||||||||||||||||||||
Selected
Balance Sheet Data and Ratios:
|
||||||||||||||||||||
Working
capital
|
$ | 163,985 | $ | 173,171 | $ | 144,677 | $ | 128,203 | $ | 127,624 | ||||||||||
Total
assets
|
261,784 | 293,860 | 268,497 | 242,056 | 217,777 | |||||||||||||||
Long
term debt
|
- | - | - | - | 6,500 | |||||||||||||||
Stockholders'
equity
|
217,773 | 244,527 | 222,150 | 201,577 | 178,461 | |||||||||||||||
Return
on average
|
||||||||||||||||||||
total
assets (i)
|
-5.17 | % | 9.34 | % | 9.65 | % | 8.83 | % | 12.37 | % | ||||||||||
Return
on average
|
||||||||||||||||||||
stockholders'
|
||||||||||||||||||||
equity
(i)
|
-6.23 | % | 11.30 | % | 11.81 | % | 10.75 | % | 15.20 | % |
(a)
|
During
2005, the Company acquired Galaxy Power, Inc. and Netwatch
s.r.o. These transactions were accounted for using the purchase
method of accounting and, accordingly, the results of operations of Galaxy
and Netwatch have been included in the Company's financial statements
since their respective dates of
acquisition.
|
(b)
|
The
Company was a party to an arbitration proceeding related to the
acquisition of its Telecom Components business in 1998. The Company
asserted that the seller breached the terms of a related Global
Procurement Agreement dated October 2, 1998 and sought damages related
thereto. During December 2004, the Company and the seller settled this
matter. The settlement resulted in a payment to the Company and an
unconditional release by the seller of all counterclaims against the
Company. The net gain of $2.9 million from the settlement is included in
the Company’s consolidated statement of operations for the year ended
December 31, 2004.
|
(c)
|
During
2006, the Company incurred a loss of $1.0 million as a result of a fire at
its leased manufacturing facility in the Dominican
Republic. The loss was for raw materials and equipment in
excess of estimated insurance proceeds. The production at this
facility was substantially restored during
2006.
|
(d)
|
During
2004, the Company wrote down fixed assets, principally machinery and
equipment, with a net book value of $1.0 million, at its Asia
manufacturing facilities. The Company considered these fixed
assets to be surplus equipment which was replaced by equipment with more
advanced technology.
|
(e)
|
During
the fourth quarter of 2008, the Company conducted its annual valuation
test related to the Company's goodwill by operating segment. As a
result of the reduction in the fair value of the North America operating
segment, the Company recorded charges of $14.1 million related to the
impairment of goodwill of its North America operating
segment.
|
(f)
|
During
2008, the Company ceased its manufacturing operations in its Westborough,
Massachusetts facility. In connection with this closure, the
Company incurred severance costs during 2008 of $0.6 million and lease
termination costs of $0.5
million.
|
(g)
|
During
2008, the Company incurred fixed asset impairments of $0.7 million related
to assets located at the Westborough, Massachusetts facility which ceased
operations as of December 31, 2008. This charge is included in
Impairment of Assets in the Company’s Statement of Operations for the year
ended December 31, 2008.
|
(h)
|
During
2008, the Company recorded other-than-temporary impairment charges and
realized losses of $10.4 million related to its investments in
Toko, Inc., Power-One, Inc. and the Columbia Strategic Cash
Portfolio. During 2007, the Company realized a gain from the
sale of Toko, Inc. common stock in the amount of $2.5 million, offset by
an other-than-temporary impairment charge and realized losses of $0.3
million related to its investment in the Columbia Strategic Cash
Portfolio. During 2006, the Company realized a gain principally
from the sale of Artesyn common stock in the amount of $5.2
million.
|
(i)
|
Returns
on average total assets and stockholders’ equity are computed for each
year by dividing net (loss) income for such year by the average balances
of total assets or stockholders’ equity, as applicable, on the last day of
each quarter during such year and on the last day of the immediately
preceding year.
|
·
|
North
America
|
·
|
Asia
|
·
|
Europe
|
Goodwill
Impairment Analysis
|
||||||||
Key
Assumptions
|
||||||||
2008
|
2007
|
|||||||
Income
Approach - Discounted Cash Flows:
|
||||||||
Revenue
growth rates
|
(8.9%)
- 10.3%
|
5.0%
|
||||||
Cost
of equity capital
|
13.0%
- 13.6%
|
13.2%
- 16.1%
|
||||||
Cost
of debt capital
|
4.9%
- 7.7%
|
|
3.5%
- 5.5%
|
|||||
Weighted
average cost of capital
|
11.0%
- 13.3%
|
|
11.2%
- 15.0%
|
|||||
Market
Approach - Multiples of Guideline Companies (a):
|
||||||||
EBIT
multiples used
|
6.0
- 10.7
|
9.7
- 14.3
|
||||||
EBITDA
multiples used
|
5.0
- 7.5
|
8.7
- 10.0
|
||||||
DFNI
multiples used
|
9.3
- 13.5
|
not utilized
|
||||||
DFCF
multiples used
|
6.4
- 7.4
|
11.4
- 14.4
|
||||||
Control
premium (b)
|
27.5%
- 31.7%
|
20.0%
|
||||||
Weighting
of Valuation Methods:
|
||||||||
Income
Approach - Discounted Cash Flows (c)
|
75%
|
50%
|
||||||
Market
Approach - Multiples of Guideline Companies (c)
|
25%
|
50%
|
Definitions:
|
EBIT
- Earnings before interest and taxes
|
EBITDA
- Earnings before interest, taxes, depreciation and
amortization
|
DFNI
- Debt-free net income
|
DFCF
- Debt-free cash
flow
|
(a)
Multiple range reflects multiples used throughout the North America, Asia
and Europe operating segments
|
(b)
Determined based on the industry mean control premium as published each
year in MergerStat Review
|
(c)
The weighting of valuation methods was changed in 2008, as management's
projections provided for the
|
discounted
cash flow analysis are believed to be more indicative of Bel's future
performance. The guideline
|
company
approach relies on the market and given the present state of the economy
with significant market
|
fluctuations,
management believes the discounted cash flow projections are a more
reliable base.
|
·
|
Increasing
pressures in the U.S. and global economy related to the global economic
downturn, the credit crisis, volatility in interest rates, investment
returns, energy prices and other elements that impact
commercial and end-user consumer spending, are creating a
highly challenging environment for Bel and its
customers.
|
·
|
These
weakening economic conditions have resulted in reductions in capital
expenditures by end-user consumers of our products, resulting in decreased
backlog of orders in 2009.
|
·
|
With
the overall reduction in demand in our industry, competition will continue
to increase. As a result, Bel is being faced with pricing pressures, which
will impact our future profit
margins.
|
·
|
Commodity
prices, especially those pertaining to gold and copper, have been highly
volatile during 2008. Fluctuations in these prices and other
commodity prices associated with our raw materials, will have a
corresponding impact on our profit
margins.
|
·
|
The
costs of labor, particularly in the People’s Republic of China where
several of our factories are located, have risen significantly during 2008
as a result of government mandates for new minimum wage and overtime
requirements. These rising labor costs will continue to have a
negative impact on our profit
margins.
|
·
|
The
global nature of our business exposes us to earnings volatility resulting
from exchange rate fluctuations.
|
·
|
Net
Sales. The Company’s sales decreased by $0.8 million or
0.3% during the year ended December 31, 2008 as compared to 2007,
primarily due to a decrease in magnetic sales of $7.0 million and a
decrease in circuit protection sales of $4.0 million during the year ended
December 31, 2008, as compared to 2007. The decrease in
magnetic sales primarily resulted from the production inefficiencies in
the People’s Republic of China (“PRC”) referred to below, which inhibited
the Company’s ability to increase product shipments through the second
quarter of 2008. The decrease in 2008 magnetic and circuit
protection sales was largely offset by an increase in module sales of $7.1
million for the year ended December 31, 2008, as compared to 2007. This
increase was principally due to the introduction of new
products. In addition, the Company’s interconnect sales
increased by $3.1 million for the year ended December 31, 2008, as
compared to 2007.
|
·
|
(Loss) Income from
Operations. The Company’s income from operations
decreased significantly from income of $25.5 million during the year ended
December 31, 2007 to a loss of $10.7 million for the year ended December
31, 2008. This reduction was primarily attributable to the
following factors:
|
§
|
Impairment
of Assets. In connection with its annual valuation of the
Company’s goodwill, it was determined that an impairment existed in the
Company’s North America operating segment, due to a reduction in estimated
future cash flows. As a result, the Company recorded a $14.1
million charge related to the impairment of its goodwill from its North
America operation segment. The Company also recorded a $0.7
million charge related to the impairment of its fixed assets in connection
with the closure of its Westborough, Massachusetts
facility.
|
§
|
Production
Inefficiencies. Bel experienced an unusually high increase in
backlog at its manufacturing facilities in the People’s Republic of China
(“PRC”) after the Lunar New Year holiday in February 2008. Bel
contracted for approximately 5,300 factory workers (net of turnover),
resulting in production inefficiencies and curtailed output through the
second quarter 2008.
|
§
|
Rising
Labor Costs. Effective April 1, 2008, PRC officials implemented
an increase in social benefits and wage rates in the areas where our
products are manufactured, plus double-time rates for Saturdays and
Sundays.
|
§
|
Unfavorable
Exchange Rate Fluctuations. During 2008, the U.S. dollar
continued to fall in value against the PRC yuan, the currency in which all
of Bel’s PRC factory workers and subcontractors are paid. In
addition, the U.S. dollar increased in value versus other currencies,
particularly the Euro, causing foreign exchange losses of $0.6 million
during the year ended December 31,
2008.
|
§
|
Restructuring
Charges. The Company ceased manufacturing at its Bel Power
manufacturing facility in Westborough, Massachusetts as of December 31,
2008. Related to this closure, the Company incurred severance
costs of $0.6 million and costs associated with its facility lease
obligation of $0.5 million during the year ended December 31,
2008.
|
·
|
Net
Loss. The Company’s net (loss) income also decreased
significantly from a net income of $26.3 million in 2007 to a net loss of
$14.9 million in 2008. In addition to the factors impacting
income from operations discussed above, the following non-operating
factors impacted the 2008 net loss:
|
§
|
Impairment
Charges on Investments. During the year ended December 31,
2008, the Company recorded $10.4 million in other-than-temporary
impairment charges and realized losses related to the Company’s
investments in Toko, Inc. and Power-One, Inc. and the Columbia Strategic
Cash Portfolio, as compared to a gain on sale of investment of $2.1
million in 2007.
|
§
|
Reduced
Interest Rates. Interest income decreased from $4.2 million in
2007 to $2.5 million in 2008 primarily as a result of significantly lower
interest rates earned on invested balances in
2008.
|
§
|
Reversal
of Tax Liability. During the year ended December 31, 2008,
certain statute of limitations expired which resulted in a reversal of a
previously recognized liability for uncertain tax positions in the amount
of $2.3 million.
|
Percentage
of Net Sales
|
||||||||||||
Years
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
sales
|
100.0 | % | 100.0 | % | 100.0 | % | ||||||
Cost
of sales
|
84.0 | 78.3 | 75.7 | |||||||||
Selling,
general and
|
||||||||||||
administrative
expenses
|
14.0 | 13.9 | 14.8 | |||||||||
Impairment
of assets
|
5.7 | - | - | |||||||||
Restructuring
charges
|
0.4 | - | - | |||||||||
Gain
on sale of property, plant
|
||||||||||||
and
equipment
|
- | 2.1 | - | |||||||||
(Impairment
charge)/gain on sale
|
||||||||||||
of
investment
|
(4.0 | ) | 0.8 | 2.0 | ||||||||
Casualty
loss
|
- | 0.4 | ||||||||||
Interest
income, net of interest
|
||||||||||||
and
financing expense
|
1.0 | 1.6 | 1.1 | |||||||||
(Loss)
earnings before (benefit) provision
|
||||||||||||
for
income taxes
|
(7.2 | ) | 12.2 | 12.2 | ||||||||
Income
tax (benefit) provision
|
(1.4 | ) | 2.1 | 2.3 | ||||||||
Net
(loss) earnings
|
(5.8 | ) | 10.2 | 9.9 |
Increase
(Decrease) from
|
||||||||
Prior
Period
|
||||||||
2008
compared
|
2007
compared
|
|||||||
with
2007
|
with
2006
|
|||||||
Net
sales
|
(0.3 | ) % | 1.6 | % | ||||
Cost
of sales
|
6.9 | 5.2 | ||||||
Selling,
general and administrative expenses
|
(0.1 | ) | (4.5 | ) | ||||
Net
(loss) earnings
|
(156.7 | ) | 4.5 |
¨
|
The
Company experienced a significant increase in labor costs, including
social benefits, during the year ended December 31, 2008 (15.0% of sales
as compared to 9.7% of sales for the year ended December 31,
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 the Lunar New Year, significantly
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, as compared to the dollar, on average by 9.5%
during the year ended December 31, 2008 from 2007. Labor costs
began to stabilize in the fourth quarter of 2008, due to a substantial
reduction in overtime worked during that
quarter.
|
¨
|
Sales
of a particular product line within the modules group have increased by
$11.3 million in 2008 compared to 2007. While these products
are strategic to Bel’s growth and important to total earnings, they return
lower gross profit margins as a larger percentage of the final product is
comprised of purchased components. As these sales continue to
increase, the Company’s average gross profit percentage will likely
decrease.
|
¨
|
Included
in cost of sales are research and development expenses of $7.4 million and
$7.2 million for the years ended December 31, 2008 and 2007,
respectively. The increase in research and development
expenses during 2008 was primarily related to Bel’s power products and new
integrated connector modules.
|
¨
|
The
Company established a $1.2 million warranty accrual for a defective part,
including a $0.4 million inventory write-off of materials on hand related
to this matter which are deemed to be
unusable.
|
¨
|
The
Company incurred a 4.5% increase in material costs as a percentage of net
sales. The increase in raw material costs was principally
related to increased manufacturing of module products, which have a higher
raw material content than the Company’s other products, increased costs
for raw materials such as copper, gold and plastic resin and increased
transportation costs. Since the majority of the manufacturing
is conducted in Asia, the increased material costs negatively impacted the
Company’s operating profits in
Asia.
|
¨
|
The
Company paid higher wage rates and benefits to its production workers in
the PRC in 2007 than it paid in prior periods. These higher
rates and benefits are reflected in the Company’s cost of sales and
resulted from new labor regulations and a continuing tightening of the
labor market.
|
¨
|
Sales
of the Company’s DC-DC power products increased by $16.3 million in 2007
compared to 2006. 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.
|
¨
|
Included
in cost of sales are research and development expenses of $7.2 million and
$6.6 million for the years ended December 31, 2007 and 2006,
respectively. The increase in 2007 compared to 2006 was
attributable to various factors, including an increase in headcount at the
Hangzhou research and development facility related to the DC-DC power
products, an unfavorable change in associated exchange rates for research
and development expenses in the PRC and the United Kingdom, and general
wage increases at Bel’s research and development
facilities.
|
¨
|
Legal
and professional fees increased by $0.2 million from 2007 principally due
to $0.4 million of legal activity related to the Galaxy lawsuit during
2008 and an increase in audit and accounting fees of $0.6 million during
2008 as compared to 2007. These additional legal and
professional fees were partially offset by the high level of patent
litigation costs totaling $0.9 million during 2007 which did not recur at
that level in 2008.
|
¨
|
Other
general and administrative costs decreased by $0.7 million during 2008 as
compared to 2007. The Company reduced its discretionary bonus
expense during 2008 as a result of lower profitability in
2008. In addition, the Company recorded a $0.2 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.
|
¨
|
Primarily
as a result of the strengthening of the U.S. dollar versus certain
European currencies during the latter half of 2008, the Company’s currency
exchange losses increased by $0.5 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.
|
¨
|
Legal
and professional fees decreased by $1.0 million from 2006, principally due
to the implementation of an internal audit and Sarbanes-Oxley function
which reduced audit and external consultant fees
significantly.
|
¨
|
A
reduction in depreciation and amortization expense of $0.7 million was
primarily due to lower amortization of intangibles due to certain
intangibles becoming fully
amortized.
|
¨
|
Sales
commissions decreased by $0.3 million during 2007, due to higher sales
volume handled by Bel’s direct sales associates during 2007 as compared to
2006. In addition, there was a $0.2 million reduction in travel
and tradeshow expenses in 2007.
|
¨
|
Offsetting
these factors in part, administrative salaries and related benefits
increased by $0.5 million as a result of increased bonus expense in
2007. During the fourth quarter of 2007, the Company modified
its bonus structure for 2008 such that bonuses are now earned based on
performance and service during the fourth quarter of the previous calendar
year and the first three quarters of the current calendar year, as opposed
to the prior structure whereby it was based on performance and service for
the four calendar quarters of the current year. This resulted
in the Company’s recording bonus expense in 2007 for the 2007 calendar
year, plus an additional accrual for the first quarter of the 2008 bonus
period. Such additional accrual amounted to approximately $0.5
million in the fourth quarter of
2007.
|
Payments
due by period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less than 1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
|||||||||||||||
Capital
expenditure obligations
|
$ | 1,982 | $ | 1,982 | $ | - | $ | - | $ | - | ||||||||||
Operating
leases
|
5,550 | 2,001 | 2,279 | 1,226 | 44 | |||||||||||||||
Raw
material purchase obligations
|
9,243 | 9,243 | - | - | - | |||||||||||||||
Total
|
$ | 16,775 | $ | 13,226 | $ | 2,279 | $ | 1,226 | $ | 44 |
BEL
FUSE INC.
|
INDEX
|
Financial Statements
|
Page
|
|
Report
of Independent Registered
|
||
Public
Accounting Firm
|
F-1
- F-2
|
|
Consolidated
Balance Sheets as of
|
||
December
31, 2008 and 2007
|
F-3
- F-4
|
|
Consolidated
Statements of Operations for Each
|
||
of
the Three Years in the Period Ended
|
||
December
31, 2008
|
F-5
|
|
Consolidated
Statements of Stockholders' Equity
|
||
for
Each of the Three Years in the Period Ended
|
||
December
31, 2008
|
F-6
- F-7
|
|
Consolidated
Statements of Cash Flows for
|
||
Each
of the Three Years in the Period Ended
|
||
December
31, 2008
|
F-8
- F-10
|
|
Notes
to Consolidated Financial Statements
|
F-11
- F-45
|
|
Condensed
Selected Quarterly Financial Data -
|
||
Years
Ended December 31, 2008 and 2007
|
||
(Unaudited)
|
F-46
|
BEL
FUSE INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(dollars
in
thousands)
|
December
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
and cash equivalents
|
$ | 74,955 | $ | 83,875 | ||||
Marketable
securities
|
13,735 | 3,273 | ||||||
Short-term
investments
|
4,013 | 20,542 | ||||||
Accounts
receivable - less allowance for doubtful
|
||||||||
accounts
of $660 and $977 at December 31,
|
||||||||
2008
and December 31, 2007, respectively
|
46,047 | 52,217 | ||||||
Inventories
|
46,524 | 39,049 | ||||||
Prepaid
expenses and other current assets
|
859 | 1,446 | ||||||
Refundable
income taxes
|
2,498 | 3,168 | ||||||
Assets
held for sale
|
236 | - | ||||||
Deferred
income taxes
|
4,752 | 2,661 | ||||||
Total
Current Assets
|
193,619 | 206,231 | ||||||
Property,
plant and equipment - net
|
39,936 | 41,113 | ||||||
Restricted
cash
|
2,309 | 4,553 | ||||||
Long-term
investments
|
1,062 | 2,536 | ||||||
Deferred
income taxes
|
5,205 | 4,364 | ||||||
Intangible
assets - net
|
926 | 1,181 | ||||||
Goodwill
|
14,334 | 28,447 | ||||||
Other
assets
|
4,393 | 5,435 | ||||||
TOTAL
ASSETS
|
$ | 261,784 | $ | 293,860 |
BEL
FUSE INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS - CONTINUED
|
(dollars
in thousands, except per share
data)
|
December
31,
|
December
31,
|
|||||||
2008
|
2007
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable
|
$ | 14,285 | $ | 16,145 | ||||
Accrued
expenses
|
9,953 | 12,113 | ||||||
Accrued
restructuring
|
555 | - | ||||||
Income
taxes payable
|
4,054 | 4,007 | ||||||
Dividends
payable
|
787 | 795 | ||||||
Total
Current Liabilities
|
29,634 | 33,060 | ||||||
Long-term
Liabilities:
|
||||||||
Accrued
restructuring
|
406 | - | ||||||
Deferred
gain on sale of property
|
4,616 | 4,645 | ||||||
Liability
for uncertain tax positions
|
3,445 | 6,930 | ||||||
Minimum
pension obligation and
|
||||||||
unfunded
pension liability
|
5,910 | 4,698 | ||||||
Total
Long-term Liabilities
|
14,377 | 16,273 | ||||||
Total
Liabilities
|
44,011 | 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
|
||||||||
2,180,982
and 2,545,644 shares, respectively
|
||||||||
(net
of 1,072,770 treasury shares)
|
218 | 255 | ||||||
Class
B common stock, par value $.10 per share -
|
||||||||
authorized
30,000,000 shares; outstanding
|
||||||||
9,369,893
and 9,286,627 shares, respectively
|
||||||||
(net
of 3,218,310 treasury shares)
|
937 | 929 | ||||||
Additional
paid-in capital
|
19,963 | 29,107 | ||||||
Retained
earnings
|
196,467 | 214,580 | ||||||
Accumulated
other comprehensive income (loss)
|
188 | (344 | ) | |||||
Total
Stockholders' Equity
|
217,773 | 244,527 | ||||||
TOTAL
LIABILITIES AND
|
||||||||
STOCKHOLDERS'
EQUITY
|
$ | 261,784 | $ | 293,860 |
BEL
FUSE INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(dollars
in thousands, except per share
data)
|
Years
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
Sales
|
$ | 258,350 | $ | 259,137 | $ | 254,933 | ||||||
Costs
and expenses:
|
||||||||||||
Cost
of sales
|
217,079 | 203,007 | 192,985 | |||||||||
Selling,
general and administrative
|
36,093 | 36,117 | 37,800 | |||||||||
Impairment
of assets
|
14,805 | - | - | |||||||||
Restructuring
charges
|
1,122 | - | - | |||||||||
Gain
on sale of property, plant and equipment
|
- | (5,499 | ) | - | ||||||||
Casualty
loss
|
- | - | 1,030 | |||||||||
269,099 | 233,625 | 231,815 | ||||||||||
(Loss)
income from operations
|
(10,749 | ) | 25,512 | 23,118 | ||||||||
Interest
expense and other costs
|
(4 | ) | (123 | ) | (71 | ) | ||||||
(Impairment
charge)/gain on sale of investment
|
(10,358 | ) | 2,146 | 5,150 | ||||||||
Interest
income
|
2,458 | 4,169 | 2,851 | |||||||||
(Loss)
earnings before (benefit) provision for income taxes
|
(18,653 | ) | 31,704 | 31,048 | ||||||||
Income
tax (benefit) provision
|
(3,724 | ) | 5,368 | 5,845 | ||||||||
Net
(loss) earnings
|
$ | (14,929 | ) | $ | 26,336 | $ | 25,203 | |||||
(Loss)
earnings per Class A common share
|
||||||||||||
Basic
|
$ | (1.28 | ) | $ | 2.11 | $ | 2.03 | |||||
Diluted
|
$ | (1.28 | ) | $ | 2.11 | $ | 2.03 | |||||
Weighted
average Class A common shares outstanding
|
||||||||||||
Basic
|
2,391,088 | 2,637,409 | 2,702,677 | |||||||||
Diluted
|
2,391,088 | 2,637,409 | 2,702,677 | |||||||||
(Loss)
earnings per Class B common share
|
||||||||||||
Basic
|
$ | (1.30 | ) | $ | 2.25 | $ | 2.16 | |||||
Diluted
|
$ | (1.30 | ) | $ | 2.24 | $ | 2.15 | |||||
Weighted
average Class B common shares outstanding
|
||||||||||||
Basic
|
9,135,986 | 9,244,198 | 9,104,897 | |||||||||
Diluted
|
9,135,986 | 9,266,016 | 9,149,445 |
BEL
FUSE INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
(dollars
in thousands)
|
Accumulated
|
||||||||||||||||||||||||||||||||
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
|
201,577 | 167,991 | 4,264 | 270 | 901 | 31,714 | (3,563 | ) | ||||||||||||||||||||||||
Exercise
of stock options
|
3,187 | 14 | 3,173 | |||||||||||||||||||||||||||||
Tax
benefits arising from the disposition of non-qualified incentive
stock options
|
336 | 336 | - | |||||||||||||||||||||||||||||
Cash
dividends declared on Class A common
stock
|
(431 | ) | (431 | ) | ||||||||||||||||||||||||||||
Cash
dividends declared on Class B common stock
|
(1,810 | ) | (1,810 | ) | ||||||||||||||||||||||||||||
Issuance
of restricted common stock
|
- | 2 | (2 | ) | ||||||||||||||||||||||||||||
Deferred
stock-based compensation
|
(1,403 | ) | (1,403 | ) | - | |||||||||||||||||||||||||||
Currency
translation adjustment
|
387 | $ | 387 | 387 | ||||||||||||||||||||||||||||
Change
in unrealized gain or loss on marketable
securities - net of taxes
|
(4,820 | ) | (4,820 | ) | (4,820 | ) | ||||||||||||||||||||||||||
Stock-based
compensation expense
|
1,571 | 1,571 | - | |||||||||||||||||||||||||||||
Adoption
of SFAS No. 123 (R)
|
- | (3,563 | ) | 3,563 | ||||||||||||||||||||||||||||
Unfunded
SERP liability-net of taxes upon adoption of SFAS No.
158
|
(1,647 | ) | (1,647 | ) | ||||||||||||||||||||||||||||
Net
earnings
|
25,203 | 25,203 | 25,203 | |||||||||||||||||||||||||||||
Comprehensive
income
|
$ | 20,770 | ||||||||||||||||||||||||||||||
Balance,
December 31, 2006
|
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 | $ | - |
BEL
FUSE INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
(dollars
in
thousands)
|
Accumulated
|
||||||||||||||||||||||||||||
Compre-
|
Other
|
Class
A
|
Class
B
|
Additional
|
||||||||||||||||||||||||
hensive
|
Retained
|
Comprehensive
|
Common
|
Common
|
Paid-In
|
|||||||||||||||||||||||
Total
|
Income
|
Earnings
|
Income
(loss)
|
Stock
|
Stock
|
Capital
|
||||||||||||||||||||||
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
|
39 | 39 | ||||||||||||||||||||||||||
Cash
dividends declared on Class A common
stock
|
(565 | ) | (565 | ) | ||||||||||||||||||||||||
Cash
dividends declared on Class B common
stock
|
(2,619 | ) | (2,619 | ) | ||||||||||||||||||||||||
Issuance
of restricted common stock
|
- | 6 | (6 | ) | ||||||||||||||||||||||||
Termination
of restricted common stock
|
- | (1 | ) | 1 | ||||||||||||||||||||||||
Repurchase/retirement
of Class A common stock
|
(11,002 | ) | (37 | ) | (10,965 | ) | ||||||||||||||||||||||
Currency
translation adjustment
|
(355 | ) | (355 | ) | (355 | ) | ||||||||||||||||||||||
Unrealized
holding losses on marketable securities arising during the
year, net of taxes
|
(4,230 | ) | (4,230 | ) | (4,230 | ) | ||||||||||||||||||||||
Reclassification adjustment
of unrealized holding losses
for impairment charge included in net earnings, net of
taxes
|
5,551 | 5,551 | 5,551 | |||||||||||||||||||||||||
Stock-based
compensation expense
|
1,478 | 1,478 | ||||||||||||||||||||||||||
Change
in unfunded SERP liability, net of taxes
|
(434 | ) | (434 | ) | (434 | ) | ||||||||||||||||||||||
Net
loss
|
(14,929 | ) | (14,929 | ) | (14,929 | ) | ||||||||||||||||||||||
Comprehensive
loss
|
$ | (14,397 | ) | |||||||||||||||||||||||||
Balance,
December 31, 2008
|
$ | 217,773 | $ | 196,467 | $ | 188 | $ | 218 | $ | 937 | $ | 19,963 |
BEL
FUSE INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(dollars
in thousands)
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
(loss) earnings
|
$ | (14,929 | ) | $ | 26,336 | $ | 25,203 | |||||
Adjustments
to reconcile net (loss) earnings to net
|
||||||||||||
cash
provided by operating activities:
|
||||||||||||
Depreciation
and amortization
|
7,443 | 7,921 | 9,027 | |||||||||
Casualty
loss
|
- | - | 1,030 | |||||||||
Stock-based
compensation
|
1,478 | 1,465 | 1,571 | |||||||||
Restructuring
charges, net of cash payments
|
961 | - | - | |||||||||
Excess
tax benefits from share-based
|
||||||||||||
payment
arrangements
|
(39 | ) | (149 | ) | (336 | ) | ||||||
Gain
on sale of property, plant and equipment
|
- | (5,499 | ) | - | ||||||||
Impairment
charge (gain on sale) on investment
|
10,358 | (2,146 | ) | (5,150 | ) | |||||||
Impairment
of assets
|
14,805 | - | - | |||||||||
Other,
net
|
1,565 | 207 | 678 | |||||||||
Deferred
income taxes
|
(3,616 | ) | (2,039 | ) | (988 | ) | ||||||
Changes
in operating assets and liabilities (see below)
|
(7,737 | ) | (6,250 | ) | (12,003 | ) | ||||||
Net
Cash Provided by Operating Activities
|
10,289 | 19,846 | 19,032 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of property, plant and equipment
|
(6,887 | ) | (9,169 | ) | (9,364 | ) | ||||||
Purchase
of intangible asset
|
(300 | ) | (100 | ) | - | |||||||
Purchase
of marketable securities
|
(18,970 | ) | (11,801 | ) | (3,634 | ) | ||||||
Redesignation
of marketable security to cash
|
||||||||||||
equivalent
(Note 3)
|
2,000 | - | - | |||||||||
Redesignation
of cash equivalent to investment (Note 3)
|
- | (25,684 | ) | - | ||||||||
Proceeds
from sale of marketable securities
|
- | 26,647 | 24,490 | |||||||||
Proceeds
from sale of property, plant and equipment
|
2,272 | 11,332 | - | |||||||||
Redemption
of investment
|
16,600 | 2,284 | - | |||||||||
Payment
of investment banking advisory fee
|
- | - | (300 | ) | ||||||||
Payment
for acquisitions - net of cash acquired
|
- | - | (6,961 | ) | ||||||||
Net
Cash (Used In) Provided by Investing Activities
|
(5,285 | ) | (6,491 | ) | 4,231 |
BEL
FUSE INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
|
(dollars
in thousands)
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from exercise of stock options
|
312 | 1,452 | 3,187 | |||||||||
Dividends
paid to common shareholders
|
(3,192 | ) | (2,473 | ) | (2,223 | ) | ||||||
Purchase
and retirement of Class A
|
||||||||||||
common
stock
|
(11,002 | ) | (5,733 | ) | - | |||||||
Excess
tax benefits from share-based
|
||||||||||||
payment
arrangements
|
39 | 149 | 336 | |||||||||
Net
Cash (Used In) Provided by Financing Activities
|
(13,843 | ) | (6,605 | ) | 1,300 | |||||||
Effect
of exchange rate changes on cash
|
(81 | ) | 364 | 200 | ||||||||
Net
(Decrease) Increase in Cash and Cash Equivalents
|
(8,920 | ) | 7,114 | 24,763 | ||||||||
Cash
and Cash Equivalents - beginning of period
|
83,875 | 76,761 | 51,998 | |||||||||
Cash
and Cash Equivalents - end of period
|
$ | 74,955 | $ | 83,875 | $ | 76,761 | ||||||
Changes
in operating assets
|
||||||||||||
and
liabilities consist of:
|
||||||||||||
Decrease
(increase) in accounts receivable
|
$ | 6,010 | $ | (7,934 | ) | $ | (4,280 | ) | ||||
(Increase)
decrease in inventories
|
(7,585 | ) | 7,482 | (13,501 | ) | |||||||
Decrease
(increase) in prepaid expenses
|
||||||||||||
and
other current assets
|
579 | (1 | ) | 288 | ||||||||
Increase
in other assets
|
(20 | ) | (1,135 | ) | (499 | ) | ||||||
(Decrease)
increase in accounts payable
|
(1,842 | ) | (1,184 | ) | 2,658 | |||||||
(Decrease)
increase in income taxes
|
(2,743 | ) | (3,194 | ) | 1,590 | |||||||
(Decrease)
increase in accrued expenses
|
(2,136 | ) | (284 | ) | 1,741 | |||||||
$ | (7,737 | ) | $ | (6,250 | ) | $ | (12,003 | ) |
BEL
FUSE INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Concluded)
|
(dollars
in thousands)
|
Year
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Supplementary
information:
|
||||||||||||
Cash
paid during the year for:
|
||||||||||||
Income
taxes
|
$ | 2,606 | $ | 10,809 | $ | 4,451 | ||||||
Interest
|
$ | 4 | - | 71 | ||||||||
Details
of acquisitions:
|
||||||||||||
Intangibles
|
$ | - | $ | - | $ | 447 | ||||||
Goodwill
|
- | - | 6,000 | |||||||||
- | - | 6,447 | ||||||||||
Amount
paid on prior year acquisition
|
- | - | 514 | |||||||||
Cash
paid for acquisitions
|
$ | - | $ | - | $ | 6,961 |
2008
|
2007
|
2006
|
||||||||||
Numerator:
|
||||||||||||
Net
(loss) earnings
|
$ | (14,929 | ) | $ | 26,336 | $ | 25,203 | |||||
Less
Dividends declared:
|
||||||||||||
Class
A
|
565 | 534 | 431 | |||||||||
Class
B
|
2,619 | 2,217 | 1,810 | |||||||||
Undistributed
(loss) earnings
|
$ | (18,113 | ) | $ | 23,585 | $ | 22,962 | |||||
Undistributed
(loss) earnings allocation - basic:
|
||||||||||||
Class
A undistributed (loss) earnings
|
$ | (3,614 | ) | $ | 5,039 | $ | 5,061 | |||||
Class
B undistributed (loss) earnings
|
(14,499 | ) | 18,546 | 17,901 | ||||||||
Total
undistributed (loss) earnings
|
$ | (18,113 | ) | $ | 23,585 | $ | 22,962 | |||||
Undistributed
(loss) earnings allocation - diluted:
|
||||||||||||
Class
A undistributed (loss) earnings
|
$ | (3,614 | ) | $ | 5,030 | $ | 5,041 | |||||
Class
B undistributed (loss) earnings
|
(14,499 | ) | 18,555 | 17,921 | ||||||||
Total
undistributed (loss) earnings
|
$ | (18,113 | ) | $ | 23,585 | $ | 22,962 | |||||
Net
(loss) earnings allocation - basic:
|
||||||||||||
Class
A undistributed (loss) earnings
|
$ | (3,049 | ) | $ | 5,573 | $ | 5,492 | |||||
Class
B undistributed (loss) earnings
|
(11,880 | ) | 20,763 | 19,711 | ||||||||
Net
(loss) earnings
|
$ | (14,929 | ) | $ | 26,336 | $ | 25,203 | |||||
Net
(loss) earnings allocation - diluted:
|
||||||||||||
Class
A undistributed (loss) earnings
|
$ | (3,049 | ) | $ | 5,564 | $ | 5,472 | |||||
Class
B undistributed (loss) earnings
|
(11,880 | ) | 20,772 | 19,731 | ||||||||
Net
(loss) earnings
|
$ | (14,929 | ) | $ | 26,336 | $ | 25,203 | |||||
Denominator:
|
||||||||||||
Weighted
average shares outstanding:
|
||||||||||||
Class
A - basic and diluted
|
2,391,088 | 2,637,409 | 2,702,677 | |||||||||
Class
B - basic
|
9,135,986 | 9,244,198 | 9,104,897 | |||||||||
Dilutive
impact of stock options and
|
||||||||||||
unvested
restricted stock awards
|
- | 21,818 | 44,548 | |||||||||
Class
B - diluted
|
9,135,986 | 9,266,016 | 9,149,445 | |||||||||
(Loss)
earnings per share:
|
||||||||||||
Class
A - basic
|
$ | (1.28 | ) | $ | 2.11 | $ | 2.03 | |||||
Class
A - diluted
|
$ | (1.28 | ) | $ | 2.11 | $ | 2.03 | |||||
Class
B - basic
|
$ | (1.30 | ) | $ | 2.25 | $ | 2.16 | |||||
Class
B - diluted
|
$ | (1.30 | ) | $ | 2.24 | $ | 2.15 |
Total
|
Asia
|
North America
|
Europe
|
|||||||||||||
Balance,
January 1, 2007
|
$ | 28,117 | $ | 12,407 | $ | 14,066 | $ | 1,644 | ||||||||
Foreign
exchange
|
330 | - | - | 330 | ||||||||||||
Balance,
December 31, 2007
|
28,447 | 12,407 | 14,066 | 1,974 | ||||||||||||
Impairment
charge
|
(14,066 | ) | - | (14,066 | ) | - | ||||||||||
Foreign
exchange
|
(47 | ) | - | - | (47 | ) | ||||||||||
Balance,
December 31, 2008
|
$ | 14,334 | $ | 12,407 | $ | - | $ | 1,927 |
·
|
Revenue
growth rates from (8.9%) to 10.3%
|
·
|
Weighted
average cost of capital of 11.0% to
13.3%
|
December
31, 2008
|
December
31, 2007
|
|||||||||||||||
Gross
Carrying
|
Accumulated
|
Gross
Carrying
|
Accumulated
|
|||||||||||||
Amount
|
Amortization
|
Amount
|
Amortization
|
|||||||||||||
Patents
and Product
|
||||||||||||||||
Information
|
$ | 1,132 | $ | 656 | $ | 2,750 | $ | 2,385 | ||||||||
Customer
relationships
|
1,830 | 1,380 | 1,830 | 1,014 | ||||||||||||
$ | 2,962 | $ | 2,036 | $ | 4,580 | $ | 3,399 |
Year
Ending
|
Amortization
|
|||
December
31,
|
Expense
|
|||
2009
|
$ | 456 | ||
2010
|
154 | |||
2011
|
47 | |||
2012
|
33 | |||
2013
|
33 |
For
the Year Ended
|
||||||||||||||||
As
of December 31, 2008
|
December
31, 2008
|
|||||||||||||||
Original
|
Carrying
|
Unrecognized
|
(Impairment
Charge)/
|
|||||||||||||
Cost
|
Value
|
Gains
(Losses)
|
Gain
(Loss) on Sale
|
|||||||||||||
Marketable
Securities
|
||||||||||||||||
Toko
|
$ | 5,655 | $ | 2,098 | $ | 60 | $ | (3,617 | ) | |||||||
Power-One,
Inc.
|
14,070 | 8,733 | - | (5,337 | ) | |||||||||||
Stephens,
Inc.
|
2,902 | 2,902 | - | - | ||||||||||||
Other
|
9 | 2 | (7 | ) | - | |||||||||||
22,636 | 13,735 | 53 | (8,954 | ) | ||||||||||||
Other
Investments
|
||||||||||||||||
Columbia
Portfolio
|
6,139 | 5,075 | - | (1,404 | ) | |||||||||||
Totals
|
$ | 28,775 | $ | 18,810 | $ | 53 | $ | (10,358 | ) |
For
the Year Ended
|
||||||||||||||||
As
of December 31, 2007
|
December
31, 2007
|
|||||||||||||||
Original
|
Carrying
|
Unrecognized
|
(Impairment
Charge)/
|
|||||||||||||
Cost
|
Value
|
Gains
(Losses)
|
Gain
(Loss) on Sale
|
|||||||||||||
Marketable
Securities
|
||||||||||||||||
Toko
|
$ | 5,649 | $ | 3,264 | $ | (2,385 | ) | $ | 2,468 | |||||||
Other
|
12 | 9 | (3 | ) | - | |||||||||||
5,661 | 3,273 | (2,388 | ) | 2,468 | ||||||||||||
Other
Investments
|
||||||||||||||||
Columbia
Portfolio
|
23,373 | 23,078 | - | (322 | ) | |||||||||||
Totals
|
$ | 29,034 | $ | 26,351 | $ | (2,388 | ) | $ | 2,146 |
Assets
at Fair Value as of December 31, 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
|
$ | 13,735 | $ | 13,735 | - | - | ||||||||||
Total
|
$ | 13,735 | $ | 13,735 | - | - |
Assets
at Fair Value as of December 31, 2008
|
Total
Losses
|
|||||||||||||||||||
Total
|
Quoted
Prices in Active Markets for Identical Assets (Level
1)
|
Significant
Other Observable Inputs (Level 2)
|
Significant
Unobservable Inputs (Level 3)
|
Year
Ended
December
31, 2008
|
||||||||||||||||
Other
investments
|
$ | 5,075 | - | $ | 5,075 | - | $ | (1,404 | ) | |||||||||||
Total
|
$ | 5,075 | - | $ | 5,075 | - | $ | (1,404 | ) |
December
31,
|
||||||||
2008
|
2007
|
|||||||
Raw
materials
|
$ | 25,527 | $ | 24,089 | ||||
Work
in progress
|
1,650 | 2,434 | ||||||
Finished
goods
|
19,347 | 12,526 | ||||||
$ | 46,524 | $ | 39,049 |
December
31,
|
||||||||
2008
|
2007
|
|||||||
Land
|
$ | 3,235 | $ | 3,239 | ||||
Buildings
and improvements
|
27,995 | 27,035 | ||||||
Machinery
and equipment
|
55,680 | 55,425 | ||||||
Construction
in progress
|
1,726 | 3,431 | ||||||
88,636 | 89,130 | |||||||
Accumulated
depreciation
|
(48,700 | ) | (48,017 | ) | ||||
$ | 39,936 | $ | 41,113 |
Balance
January 1, 2008
|
$ | 9,191 | ||
Additions
based on tax positions
|
||||
related
to the current year
|
415 | |||
Expiration
of statutes of limitations
|
(2,261 | ) | ||
Balance
December 31, 2008
|
$ | 7,345 |
Years Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | (426 | ) | $ | 4,294 | $ | 4,784 | |||||
Foreign
|
(107 | ) | 2,598 | 1,619 | ||||||||
State
|
425 | 515 | 430 | |||||||||
(108 | ) | 7,407 | 6,833 | |||||||||
Deferred:
|
||||||||||||
Federal
and state
|
(3,621 | ) | (2,119 | ) | (928 | ) | ||||||
Foreign
|
5 | 80 | (60 | ) | ||||||||
(3,616 | ) | (2,039 | ) | (988 | ) | |||||||
$ | (3,724 | ) | $ | 5,368 | $ | 5,845 |
Years Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Tax
(benefit) provision
|
||||||||||||
computed
at the Federal
|
||||||||||||
statutory
rate of 34%, 35% and 34%
|
$ | (6,342 | ) | $ | 11,096 | $ | 10,556 | |||||
Increase
(decrease) in taxes resulting from:
|
||||||||||||
Different
tax rates and permanent differences
|
||||||||||||
applicable
to foreign operations
|
(161 | ) | (4,992 | ) | (4,816 | ) | ||||||
Reversal
of liability for uncertain tax positions - net
|
(1,846 | ) | - | - | ||||||||
Utilization
of net operating loss carryforward
|
- | - | (66 | ) | ||||||||
Permanent
tax differences related to goodwill
|
||||||||||||
impairment
with no tax benefit
|
4,264 | - | - | |||||||||
Utilization
of research and development tax credits
|
(383 | ) | (365 | ) | (409 | ) | ||||||
State
taxes, net of federal benefit
|
368 | 335 | 279 | |||||||||
Other,
including qualified production activity credits,
|
||||||||||||
non-qualified
disposition of incentive stock options,
|
||||||||||||
fair
value of vested stock awards over accruals and
|
||||||||||||
amortization
of purchase accounting intangibles
|
376 | (706 | ) | 301 | ||||||||
$ | (3,724 | ) | $ | 5,368 | $ | 5,845 |
December
31,
|
||||||||
2008
|
2007
|
|||||||
Tax
Effect
|
Tax
Effect
|
|||||||
Deferred
Tax Assets - current:
|
||||||||
Unrealized
depreciation in
|
||||||||
marketable
securities
|
$ | 3,744 | $ | 1,007 | ||||
Restructuring
expenses
|
280 | - | ||||||
United
States net operating loss
|
||||||||
carryforward
|
- | 241 | ||||||
Foreign
tax credits carryforward
|
- | 564 | ||||||
Reserves
and accruals
|
728 | 849 | ||||||
$ | 4,752 | $ | 2,661 | |||||
Deferred
Tax Assets - noncurrent:
|
||||||||
Deferred
gain on sale of property,
|
||||||||
plant
and equipment
|
$ | 1,765 | $ | 1,765 | ||||
Unfunded
pension liability
|
606 | 481 | ||||||
Depreciation
|
205 | 222 | ||||||
Amortization
|
1,051 | 773 | ||||||
Federal
and state net operating loss
|
||||||||
and
credits carryforward
|
971 | 331 | ||||||
Restructuring
expenses
|
199 | - | ||||||
Other
accruals
|
1,379 | 1,123 | ||||||
Valuation
allowances
|
(971 | ) | (331 | ) | ||||
$ | 5,205 | $ | 4,364 |
Year
Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Sales
commissions
|
$ | 1,598 | $ | 1,903 | ||||
Subcontracting
labor
|
2,939 | 1,723 | ||||||
Salaries,
bonuses and
|
||||||||
related
benefits
|
2,834 | 4,082 | ||||||
Other
|
2,582 | 4,405 | ||||||
$ | 9,953 | $ | 12,113 |
2008
|
2007
|
2006
|
||||||||||
Net
sales from unrelated
|
||||||||||||
entities
and country
|
||||||||||||
of
Company's domicile:
|
||||||||||||
North
America
|
$ | 67,380 | $ | 78,091 | $ | 73,241 | ||||||
Asia
|
165,164 | 151,550 | 153,037 | |||||||||
Europe
|
25,806 | 29,496 | 28,655 | |||||||||
$ | 258,350 | $ | 259,137 | $ | 254,933 | |||||||
Net
sales:
|
||||||||||||
North
America
|
$ | 79,862 | $ | 90,939 | $ | 80,860 | ||||||
Asia
|
188,718 | 182,301 | 182,808 | |||||||||
Europe
|
27,143 | 30,680 | 30,105 | |||||||||
Less
intergeographic
|
||||||||||||
revenues
|
(37,373 | ) | (44,783 | ) | (38,840 | ) | ||||||
$ | 258,350 | $ | 259,137 | $ | 254,933 | |||||||
(Loss)
Income from Operations:
|
||||||||||||
North
America
|
$ | (12,646 | ) | $ | 6,515 | $ | 2,658 | |||||
Asia
|
1,202 | 17,488 | 19,622 | |||||||||
Europe
|
695 | 1,509 | 838 | |||||||||
$ | (10,749 | ) | $ | 25,512 | $ | 23,118 | ||||||
Long
Lived Assets:
|
||||||||||||
North
America
|
$ | 16,205 | $ | 18,786 | ||||||||
Asia
|
27,170 | 26,757 | ||||||||||
Europe
|
954 | 1,005 | ||||||||||
$ | 44,329 | $ | 46,548 | |||||||||
Capital
Expenditures:
|
||||||||||||
North
America
|
$ | 948 | $ | 1,453 | $ | 2,823 | ||||||
Asia
|
5,758 | 7,069 | 6,783 | |||||||||
Europe
|
181 | 196 | 227 | |||||||||
$ | 6,887 | $ | 8,718 | $ | 9,833 | |||||||
Depreciation
and Amortization
|
||||||||||||
expense:
|
||||||||||||
North
America
|
$ | 1,787 | $ | 1,841 | $ | 2,314 | ||||||
Asia
|
5,484 | 5,887 | 6,476 | |||||||||
Europe
|
172 | 193 | 237 | |||||||||
$ | 7,443 | $ | 7,921 | $ | 9,027 |
December
31,
|
2008
|
2007
|
2006
|
|||||||||
Change
in benefit obligation:
|
||||||||||||
Projected
benefit obligation at beginning of year
|
$ | 4,698 | $ | 4,728 | $ | 4,476 | ||||||
Service
cost
|
293 | 313 | 325 | |||||||||
Interest
cost
|
303 | 282 | 243 | |||||||||
Benefits
paid
|
(75 | ) | (75 | ) | (131 | ) | ||||||
Actuarial
losses (gains)
|
691 | (550 | ) | (185 | ) | |||||||
Minimum
pension obligation and
|
||||||||||||
unfunded
pension liability
|
$ | 5,910 | $ | 4,698 | $ | 4,728 | ||||||
Funded
status of plan:
|
||||||||||||
Under
funded status
|
$ | (5,910 | ) | $ | (4,698 | ) | ||||||
Unrecognized
net loss
|
- | - | ||||||||||
Unrecognized
prior service costs
|
- | - | ||||||||||
Accrued
pension cost
|
$ | (5,910 | ) | $ | (4,698 | ) | ||||||
Change
in plan assets:
|
||||||||||||
Fair
value of plan assets, beginning of year
|
$ | - | $ | - | $ | - | ||||||
Company
contributions
|
75 | 75 | 131 | |||||||||
Benefit
paid
|
(75 | ) | (75 | ) | (131 | ) | ||||||
Fair
value of plan assets, end of year
|
$ | - | $ | - | $ | - | ||||||
Balance
sheet amounts:
|
||||||||||||
Minimum
pension obligation and
|
||||||||||||
unfunded
pension liability
|
$ | 5,910 | $ | 4,698 | ||||||||
Accumulated
other comprehensive loss
|
$ | (1,588 | ) | $ | (1,154 | ) | ||||||
The
components of SERP expense are as follows:
|
||||||||||||
Year
Ended December 31,
|
2008
|
2007
|
2006
|
|||||||||
Service
cost
|
$ | 293 | $ | 313 | $ | 325 | ||||||
Interest
cost
|
303 | 282 | 243 | |||||||||
Net
amortization and deferral
|
133 | 146 | 161 | |||||||||
Total
SERP expense
|
$ | 729 | $ | 741 | $ | 729 | ||||||
Assumption
percentages:
|
||||||||||||
Discount
rate
|
6.00 | % | 6.50 | % | 6.00 | % | ||||||
Rate
of compensation increase
|
3.00 | % | 3.00 | % | 3.00 | % |
Years
Ending
|
||||
December 31,
|
||||
2009
|
$ | 75 | ||
2010
|
128 | |||
2011
|
72 | |||
2012
|
72 | |||
2013
|
140 | |||
2014
- 2018
|
1,318 |
Weighted-
|
||||||||||||||||
Weighted-
|
Average
|
|
Aggregate
|
|||||||||||||
Average
|
Remaining
|
|
Intrinsic
|
|||||||||||||
Exercise
|
Contractual
|
|
Value
|
|||||||||||||
Stock
Options
|
Shares
|
Price
|
Term
|
(in
000's)
|
||||||||||||
Outstanding
at January 1, 2008
|
70,000 | $ | 28.42 | |||||||||||||
Exercised
|
(16,500 | ) | 18.89 | |||||||||||||
Granted
|
- | - | ||||||||||||||
Cancelled
|
(500 | ) | 18.89 | |||||||||||||
Outstanding
at December 31, 2008
|
53,000 | $ | 31.48 | 1.2 years | $ | - | ||||||||||
Exercisable
at December 31, 2008
|
38,000 | $ | 32.26 | 1.1 years | $ | - |
Weighted-Average
|
||||||||
Grant-Date
|
||||||||
Nonvested
options
|
Options
|
Fair
Value
|
||||||
Nonvested
at December 31, 2007
|
33,500 | $ | 30.28 | |||||
Granted
|
- | - | ||||||
Vested
|
(18,500 | ) | $ | 30.92 | ||||
Forfeited
|
- | $ | 0.00 | |||||
Nonvested
at December 31, 2008
|
15,000 | $ | 29.50 |
Weighted
|
|||||||||
Weighted
|
Average
|
||||||||
Average
|
Remaining
|
||||||||
Restricted
Stock
|
Award
|
Contractual
|
|||||||
Awards
|
Shares
|
Price
|
Term
|
||||||
Outstanding
at January 1, 2008
|
195,400 | $ | 35.31 | ||||||
Granted
|
56,300 | $ | 24.47 | ||||||
Vested
|
(36,850 | ) | $ | 21.67 | |||||
Forfeited
|
(11,950 | ) | $ | 32.13 | |||||
Outstanding
at December 31, 2008
|
202,900 | $ | 32.58 |
3.06
years
|
Dividend
per Share
|
Total
Dividend Payment (in 000’s)
|
|||||||||||||||
Class
A
|
Class
B
|
Class
A
|
Class
B
|
|||||||||||||
Year
Ended December 31, 2007
|
||||||||||||||||
February
1, 2007
|
$ | 0.04 | $ | 0.05 | $ | 108 | $ | 451 | ||||||||
May
1, 2007
|
0.04 | 0.05 | 108 | 452 | ||||||||||||
August
1, 2007
|
0.04 | 0.05 | 107 | 453 | ||||||||||||
November
1, 2007 (a)
|
0.06 | 0.07 | 157 | 637 | ||||||||||||
Year
Ended December 31, 2008
|
||||||||||||||||
February
1, 2008
|
0.06 | 0.07 | 153 | 638 | ||||||||||||
May
1, 2008
|
0.06 | 0.07 | 152 | 638 | ||||||||||||
August
1, 2008
|
0.06 | 0.07 | 151 | 640 | ||||||||||||
November
1, 2008
|
0.06 | 0.07 | 131 | 689 |
|
(a)
During July 2007 the Board of Directors of the Company authorized an
increase in the dividends by $.02 per share per quarter for both Class A
and B common shares effective with the November 2007 dividend
payment
|
Years
Ending
|
||||
December 31,
|
||||
2009
|
$ | 2,001 | ||
2010
|
1,369 | |||
2011
|
910 | |||
2012
|
783 | |||
2013
|
443 | |||
Thereafter
|
44 | |||
$ | 5,550 |
2008
|
2007
|
|||||||
Foreign
currency translation adjustment
|
$ | 1,746 | $ | 2,101 | ||||
Unrealized
holding gain (loss) on available-for-sale
|
||||||||
securities
under SFAS No. 115, net of
|
||||||||
taxes
of $23 and $(789) as of
|
||||||||
December
31, 2008 and 2007
|
30 | (1,291 | ) | |||||
Unfunded
SERP liability related to SFAS
|
||||||||
No.
158, net of taxes of $(606) and $(483)
|
||||||||
as
of December 31, 2008 and 2007
|
(1,588 | ) | (1,154 | ) | ||||
Accumulated
other comprehensive income (loss)
|
$ | 188 | $ | (344 | ) |
Year
Ended
|
||||
December
31, 2008
|
||||
Severance
and related benefits
|
$ | 598 | ||
Costs
associated with facility lease obligation
|
524 | |||
Restructuring
charges
|
1,122 | |||
Impairment
of property, plant and equipment
|
739 | |||
Inventory
markdowns
|
355 | |||
$ | 2,216 |
Liability
at
|
New
|
Cash
Payments &
|
Liability
at
|
|||||||||||||
December
31, 2007
|
Charges
|
Other
Settlements
|
December
31, 2008
|
|||||||||||||
Termination
benefit charges
|
$ | - | $ | 598 | $ | (161 | ) | $ | 437 | |||||||
Facility
lease obligation
|
- | 524 | - | 524 | ||||||||||||
$ | - | $ | 1,122 | $ | (161 | ) | $ | 961 |
CONDENSED
SELECTED QUARTERLY FINANCIAL DATA
|
(Unaudited)
|
(In
thousands, except per share
data)
|
Total
Year
|
||||||||||||||||||||
Quarter Ended
|
Ended
|
|||||||||||||||||||
March
31,
|
June
30,
|
September
30,
|
December
31,
|
December
31,
|
||||||||||||||||
2008
|
2008
|
2008
|
2008
|
2008
(a)
|
||||||||||||||||
Net
sales
|
$ | 60,869 | $ | 72,454 | $ | 66,964 | $ | 58,063 | $ | 258,350 | ||||||||||
Cost
of sales
|
49,638 | 59,317 | 56,337 | 51,787 | 217,079 | |||||||||||||||
Net
earnings (loss) (b)
|
2,167 | 1,811 | 1,946 | (20,853 | ) | (14,929 | ) | |||||||||||||
Earnings
(loss) per Class A common share:
|
||||||||||||||||||||
Basic
|
$ | 0.17 | $ | 0.14 | $ | 0.16 | $ | (1.78 | ) | $ | (1.28 | ) | ||||||||
Diluted
|
$ | 0.17 | $ | 0.14 | $ | 0.16 | $ | (1.78 | ) | $ | (1.28 | ) | ||||||||
Earnings
(loss) per Class B common share:
|
||||||||||||||||||||
Basic
|
$ | 0.19 | $ | 0.16 | $ | 0.17 | $ | (1.85 | ) | $ | (1.30 | ) | ||||||||
Diluted
|
$ | 0.19 | $ | 0.16 | $ | 0.17 | $ | (1.85 | ) | $ | (1.30 | ) |
Total
Year
|
||||||||||||||||||||
Quarter Ended
|
Ended
|
|||||||||||||||||||
March
31,
|
June
30,
|
September
30,
|
December
31,
|
December
31,
|
||||||||||||||||
2007
|
2007
|
2007
|
2007
|
2007
(1)
|
||||||||||||||||
Net
sales
|
$ | 61,807 | $ | 61,612 | $ | 66,379 | $ | 69,339 | $ | 259,137 | ||||||||||
Cost
of sales
|
47,891 | 48,599 | 52,288 | 54,229 | 203,007 | |||||||||||||||
Net
earnings
|
4,009 | 6,158 | 5,914 | 10,255 | 26,336 | |||||||||||||||
Earnings
per Class A common share:
|
||||||||||||||||||||
Basic
|
$ | 0.32 | $ | 0.49 | $ | 0.47 | $ | 0.83 | $ | 2.11 | ||||||||||
Diluted
|
$ | 0.32 | $ | 0.49 | $ | 0.47 | $ | 0.83 | $ | 2.11 | ||||||||||
Earnings
per Class B common share:
|
||||||||||||||||||||
Basic
|
$ | 0.34 | $ | 0.52 | $ | 0.50 | $ | 0.88 | $ | 2.25 | ||||||||||
Diluted
|
$ | 0.34 | $ | 0.52 | $ | 0.50 | $ | 0.88 | $ | 2.24 |
(a)
|
Quarterly
amounts of earnings per share may not agree to the total for the year due
to rounding.
|
(b)
|
Net
earnings (loss) for the quarter ended December 31, 2008 includes a
goodwill impairment charge of $14.1 million related to the Company’s North
America operating segment and charges related to the closure of the
Westborough, Massachusetts facility of $1.4 million ($0.9 million after
tax).
|
(c)
|
Net
earnings (loss) for the quarters ended June 30, 2008, September 30, 2008
and December 31, 2008 include after tax other-than-temporary impairment
charges related to the Company’s investments of $1.6 million, $0.9 million
and $4.1 million, respectively.
|
BEL
FUSE INC. AND SUBSIDIARIES
|
SCHEDULE
II - VALUATION AND QUALIFYING ACCOUNTS
|
(Amounts
in
thousands)
|
Column A
|
Column B
|
Column C
|
Column D
|
Column E
|
Column F
|
|||||||||||||||
Charged
|
Additions
|
|||||||||||||||||||
Balance
at
|
to
profit
|
Charged
|
Balance
|
|||||||||||||||||
beginning
|
and
loss
|
to
other
|
Deductions
|
at
close
|
||||||||||||||||
Description
|
of
period
|
or
income
|
accounts
(b)
|
(describe)(a)
|
of
period
|
|||||||||||||||
Year
ended December 31, 2008
|
||||||||||||||||||||
Allowance
for doubtful
|
||||||||||||||||||||
accounts
|
$ | 977 | $ | (191 | ) | $ | (43 | ) | $ | (83 | ) | $ | 660 | |||||||
Allowance
for excess and
|
||||||||||||||||||||
obsolete
inventory
|
$ | 3,266 | $ | 1,079 | $ | (10 | ) | $ | (284 | ) | $ | 4,051 | ||||||||
Year
ended December 31, 2007
|
||||||||||||||||||||
Allowance
for doubtful
|
||||||||||||||||||||
accounts
|
$ | 1,087 | $ | (50 | ) | $ | 48 | $ | (108 | ) | $ | 977 | ||||||||
Allowance
for excess and
|
||||||||||||||||||||
obsolete
inventory
|
$ | 5,004 | $ | (1,134 | ) | $ | 17 | $ | (621 | ) | $ | 3,266 | ||||||||
Year
ended December 31, 2006
|
||||||||||||||||||||
Allowance
for doubtful
|
||||||||||||||||||||
accounts
|
$ | 1,107 | $ | 707 | $ | 109 | $ | (836 | ) | $ | 1,087 | |||||||||
Allowance
for excess and
|
||||||||||||||||||||
obsolete
inventory
|
$ | 5,017 | $ | 1,470 | $ | (65 | ) | $ | (1,418 | ) | $ | 5,004 |
(a) Write
offs
|
(b) Includes
foreign currency translation
adjustments
|
Item
15.
|
Exhibits, Financial Statement
Schedules
|
|||
Page
|
||||
(a)
|
Financial
Statements
|
|||
1.
|
Financial
statements filed as a part of this Annual Report on Form
10-K:
|
|||
Report
of Independent Registered Public Accounting Firm
|
F-1
– F-2
|
|||
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-3
- F-4
|
|||
Consolidated
Statements of Operations for Each of the Three Years in the Period Ended
December 31, 2008
|
F-5
|
|||
Consolidated
Statements of Stockholders' Equity for Each of the Three Years in the
Period Ended
December 31, 2008
|
F-6
- F-7
|
|||
Consolidated
Statements of Cash Flows for Each of the Three Years in the Period Ended
December
31, 2008
|
F-8
- F-10
|
|||
Notes
to Consolidated Financial Statements
|
F-
11 - F-45
|
|||
Condensed
Selected Quarterly Financial Data - Years Ended December 31, 2008 and 2007
(Unaudited)
|
F-46
|
|||
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 consolidated financial
statements or notes thereto.
|
(b)
|
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.
|
3.2
|
By-laws,
as amended, are 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
|
2002
Equity Compensation Program. Incorporated by reference to the
Registrant’s proxy statement for its 2002 annual meeting of
shareholders.
|
10.3
|
Credit
and Guaranty Agreement, dated as of February 12, 2007, by and among Bel
Fuse, Inc., as Borrower, the Subsidiary Guarantors party thereto and the
Bank of America, N.A., as Lender. Filed as Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on February 16, 2007 and
incorporated herein by reference.
|
10.4
|
Amended
and Restated Bel Fuse Supplemental Executive Retirement Plan, dated as of
April 17, 2007. Filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on April 23, 2007 and incorporated herein by
reference.
|
10.5
|
Contract
for Purchase and Sale of Real Estate dated July 15, 2004 between Bel Fuse
Inc. and Fields Development Group Co. Incorporated by reference
to Exhibit 10.9 of the Company’s Form 10-K for the year ended December 31,
2004.
|
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.
|
14.1
|
Bel
Fuse Inc. Code of Ethics, adopted February 11,
2004. Incorporated by reference to Exhibit 14.1 of the
Company’s Form 10-K for the year ended December 31,
2007.
|
21.1
|
Subsidiaries
of the Registrant.
|
23.1
|
Consent
of Independent Registered Public Accounting Firm.
|
24.1
|
Power
of attorney (included on the signature page)
|
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.
|
Signature
|
Title
|
Date
|
||
/s/ Daniel Bernstein
|
President,
Chief
|
March
13, 2009
|
||
Daniel
Bernstein
|
Executive
Officer and Director
|
|
||
|
|
|||
|
|
|||
/s/ Howard Bernstein
|
Director
|
March
13, 2009
|
||
Howard
B. Bernstein
|
|
|
||
|
|
|||
/s/ Robert H. Simandl
|
Director
|
March
13, 2009
|
||
Robert
H. Simandl
|
|
|
||
|
|
|||
/s/ Peter Gilbert
|
Director
|
March
13, 2009
|
||
Peter
Gilbert
|
|
|
||
|
|
|||
/s/ John Tweedy
|
Director
|
March
13, 2009
|
||
John
Tweedy
|
|
|
||
|
|
|||
/s/ John Johnson
|
Director
|
March
13, 2009
|
||
John
Johnson
|
|
|
||
|
|
|||
/s/ Avi Eden
|
Director
|
March
13, 2009
|
||
Avi
Eden
|
|
|||
|
||||
/s/ Colin
Dunn
|
Vice-President
|
|||
Colin
Dunn
|
Finance
and Secretary
|
March
13,
2009
|
Ex
- 21.1
|
||
Subsidiaries of the
Registrant
|
||
Jurisdiction
of
|
||
Name
|
Incorporation
|
|
Bel
Components Ltd.
|
Hong
Kong
|
|
Bel
Connector Inc.
|
Delaware
|
|
Bel
Fuse Delaware Inc.
|
Delaware
|
|
Bel
Fuse Europe Ltd.
|
United
Kingdom
|
|
Bel
Fuse Limited
|
Hong
Kong
|
|
Bel
Fuse Macau LDA
|
Macao
|
|
Bel
Fuse (Macao Commerical
|
||
Offshore)
Limited
|
Macao
|
|
Bel
Power (Hangzhou) Co. Ltd.
|
PRC
|
|
Bel
Sales (Hong Kong) Ltd.
|
Hong
Kong
|
|
Bel
Stewart GmbH
|
Germany
|
|
Bel
Stewart Limited
|
Hong
Kong
|
|
Bel
Stewart Net s.r.o.
|
Czech
Republic
|
|
Bel
Transformer Inc.
|
Delaware
|
|
Bel
Ventures Inc.
|
Delaware
|
|
Bel
Power Inc.
|
Massachusetts
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Signal
Dominicana, S.A.
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Dominican
Republic
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Stewart
Connector Systems de
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||
Mexico,
S.A. de C.V.
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Mexico
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Top
East Corporation Limited
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Hong
Kong
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(a)
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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
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(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 (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
(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.
|
Date: March 13, 2009 | |||
|
By:
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/s/ Daniel Bernstein | |
Daniel Bernstein | |||
President and Chief Executive Officer | |||
(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 (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
(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.
|
Date: March 13, 2009 | |||
|
By:
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/s/ Colin Dunn | |
Colin Dunn | |||
Vice President - Finance and Secretary | |||
Date: March 13, 2009 | |||
|
By:
|
/s/ Daniel Bernstein | |
Daniel Bernstein | |||
President and Chief Executive Officer | |||
|
By:
|
/s/ Colin Dunn | |
Colin Dunn | |||
Vice President - Finance and Secretary | |||