[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the Quarterly Period Ended September 30, 2011
|
|
or
|
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ___________ to ____________
|
NEW JERSEY
|
22-1463699
|
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|
Yes [X]
|
No [ ]
|
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
|
Yes [X]
|
No [ ]
|
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer [ ]
|
Accelerated filer [X]
|
Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
|
Smaller reporting company [ ]
|
||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
|
Yes [ ]
|
No [X]
|
Title of Each Class
|
Number of Shares of Common Stock Outstanding
as of November 1, 2011
|
|||
Class A Common Stock ($0.10 par value)
|
2,174,912 | |||
Class B Common Stock ($0.10 par value)
|
9,639,443 |
BEL FUSE INC.
|
|||
INDEX
|
|||
Page
|
|||
Part I
|
Financial Information
|
||
Item 1.
|
Financial Statements (unaudited)
|
1
|
|
Condensed Consolidated Balance Sheets as of September 30, 2011
|
|||
and December 31, 2010 (unaudited)
|
2
|
||
Condensed Consolidated Statements of Operations for the Three and Nine
|
|||
Months Ended September 30, 2011 and 2010 (unaudited)
|
3
|
||
Condensed Consolidated Statement of Stockholders' Equity for
|
|||
the Nine Months Ended September 30, 2011 (unaudited)
|
4
|
||
Condensed Consolidated Statements of Cash Flows for the Nine
|
|||
Months Ended September 30, 2011 and 2010 (unaudited)
|
5
|
||
Notes to Condensed Consolidated Financial Statements (unaudited)
|
7 - 15
|
||
Item 2.
|
Management's Discussion and Analysis of
|
||
Financial Condition and Results of Operations
|
16 - 22
|
||
Item 3.
|
Quantitative and Qualitative Disclosures About
|
||
Market Risk
|
23
|
||
Item 4.
|
Controls and Procedures
|
23
|
|
Part II
|
Other Information
|
||
Item 1.
|
Legal Proceedings
|
23
|
|
Item 6.
|
Exhibits
|
25
|
|
Signatures
|
26
|
||
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(dollars in thousands, except share and per share data)
|
||||||||
(Unaudited)
|
||||||||
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 96,503 | $ | 83,829 | ||||
Marketable securities
|
5,745 | 1,706 | ||||||
Accounts receivable - less allowance for doubtful accounts of $789
|
||||||||
and $653 at September 30, 2011 and December 31, 2010, respectively
|
45,891 | 53,312 | ||||||
Inventories
|
54,158 | 56,970 | ||||||
Prepaid expenses and other current assets
|
4,635 | 2,354 | ||||||
Refundable income taxes
|
2,211 | 4,370 | ||||||
Deferred income taxes
|
1,552 | 1,023 | ||||||
Total Current Assets
|
210,695 | 203,564 | ||||||
Property, plant and equipment - net
|
41,042 | 44,793 | ||||||
Restricted cash
|
- | 155 | ||||||
Deferred income taxes
|
2,746 | 3,201 | ||||||
Intangible assets - net
|
11,001 | 11,291 | ||||||
Goodwill
|
4,297 | 4,264 | ||||||
Other assets
|
9,337 | 9,904 | ||||||
TOTAL ASSETS
|
$ | 279,118 | $ | 277,172 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 18,740 | $ | 21,180 | ||||
Accrued expenses
|
23,823 | 22,545 | ||||||
Accrued restructuring costs
|
160 | 160 | ||||||
Income taxes payable
|
632 | 1,584 | ||||||
Dividends payable
|
856 | 799 | ||||||
Total Current Liabilities
|
44,211 | 46,268 | ||||||
Long-term Liabilities:
|
||||||||
Accrued restructuring costs
|
224 | 347 | ||||||
Liability for uncertain tax positions
|
4,053 | 2,874 | ||||||
Minimum pension obligation and unfunded pension liability
|
8,043 | 7,350 | ||||||
Total Long-term Liabilities
|
12,320 | 10,571 | ||||||
Total Liabilities
|
56,531 | 56,839 | ||||||
Commitments and Contingencies
|
||||||||
Stockholders' Equity:
|
||||||||
Preferred stock, no par value, 1,000,000 shares authorized; none issued
|
- | - | ||||||
Class A common stock, par value $.10 per share, 10,000,000 shares
|
||||||||
authorized; 2,174,912 shares outstanding at each date (net of
|
||||||||
1,072,769 treasury shares)
|
217 | 217 | ||||||
Class B common stock, par value $.10 per share, 30,000,000 shares
|
||||||||
authorized; 9,641,443 and 9,527,343 shares outstanding, respectively
|
||||||||
(net of 3,218,307 treasury shares)
|
965 | 953 | ||||||
Additional paid-in capital
|
24,902 | 23,725 | ||||||
Retained earnings
|
196,765 | 195,477 | ||||||
Accumulated other comprehensive loss
|
(262 | ) | (39 | ) | ||||
Total Stockholders' Equity
|
222,587 | 220,333 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 279,118 | $ | 277,172 | ||||
See notes to unaudited condensed consolidated financial statements.
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(dollars in thousands, except share and per share data)
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net Sales
|
$ | 75,903 | $ | 85,041 | $ | 226,479 | $ | 218,842 | ||||||||
Costs and expenses:
|
||||||||||||||||
Cost of sales
|
63,865 | 64,797 | 186,365 | 173,524 | ||||||||||||
Selling, general and administrative
|
9,856 | 11,181 | 30,327 | 30,642 | ||||||||||||
Litigation charges
|
247 | - | 3,471 | - | ||||||||||||
(Gain) loss on sale of property, plant and equipment
|
(3 | ) | (388 | ) | 4 | (369 | ) | |||||||||
73,965 | 75,590 | 220,167 | 203,797 | |||||||||||||
Income from operations
|
1,938 | 9,451 | 6,312 | 15,045 | ||||||||||||
Gain on sale of investment
|
- | - | 119 | - | ||||||||||||
Interest income and other, net
|
120 | 87 | 281 | 325 | ||||||||||||
Earnings before provision for (benefit from) income taxes
|
2,058 | 9,538 | 6,712 | 15,370 | ||||||||||||
Provision for (benefit from) income taxes
|
1,046 | (463 | ) | 3,030 | 699 | |||||||||||
Net earnings
|
$ | 1,012 | $ | 10,001 | $ | 3,682 | $ | 14,671 | ||||||||
Earnings per share:
|
||||||||||||||||
Class A common share - basic and diluted
|
$ | 0.08 | $ | 0.82 | $ | 0.29 | $ | 1.19 | ||||||||
Class B common share - basic and diluted
|
$ | 0.09 | $ | 0.86 | $ | 0.32 | $ | 1.27 | ||||||||
Weighted-average shares outstanding:
|
||||||||||||||||
Class A common share - basic and diluted
|
2,174,912 | 2,174,912 | 2,174,912 | 2,174,912 | ||||||||||||
Class B common share - basic and diluted
|
9,643,641 | 9,528,303 | 9,584,444 | 9,496,367 | ||||||||||||
Dividends paid per share:
|
||||||||||||||||
Class A common share
|
$ | 0.06 | $ | 0.06 | $ | 0.18 | $ | 0.18 | ||||||||
Class B common share
|
$ | 0.07 | $ | 0.07 | $ | 0.21 | $ | 0.21 | ||||||||
See notes to unaudited condensed consolidated financial statements.
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||||||||
(dollars in thousands)
|
||||||||||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||||||||||
|
Accumulated
|
Additional
|
||||||||||||||||||||||||||
Other
|
Class A
|
Class B
|
Paid-In
|
|||||||||||||||||||||||||
Comprehensive
|
Retained
|
Comprehensive
|
Common
|
Common
|
Capital
|
|||||||||||||||||||||||
Total
|
Income
|
Earnings
|
Loss
|
Stock
|
Stock
|
(APIC)
|
||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balance, January 1, 2011
|
$ | 220,333 | $ | 195,477 | $ | (39 | ) | $ | 217 | $ | 953 | $ | 23,725 | |||||||||||||||
Cash dividends declared on Class A common stock
|
(391 | ) | (391 | ) | ||||||||||||||||||||||||
Cash dividends declared on Class B common stock
|
(2,003 | ) | (2,003 | ) | ||||||||||||||||||||||||
Issuance of restricted common stock
|
- | 13 | (13 | ) | ||||||||||||||||||||||||
Termination of restricted common stock
|
- | (1 | ) | 1 | ||||||||||||||||||||||||
Currency translation adjustment
|
350 | $ | 350 | 350 | ||||||||||||||||||||||||
Unrealized holding losses on marketable securities
|
||||||||||||||||||||||||||||
arising during the year, net of taxes of ($305)
|
(499 | ) | (499 | ) | (499 | ) | ||||||||||||||||||||||
Reclassification adjustment for gains included
|
||||||||||||||||||||||||||||
in net earnings, net of taxes of ($45)
|
(74 | ) | (74 | ) | (74 | ) | ||||||||||||||||||||||
Reduction in APIC pool associated with tax
|
||||||||||||||||||||||||||||
deficiencies related to restricted stock awards
|
(86 | ) | (86 | ) | ||||||||||||||||||||||||
Stock-based compensation expense
|
1,275 | 1,275 | ||||||||||||||||||||||||||
Net earnings
|
3,682 | 3,682 | 3,682 | |||||||||||||||||||||||||
Comprehensive income
|
$ | 3,459 | ||||||||||||||||||||||||||
Balance, September 30, 2011
|
$ | 222,587 | $ | 196,765 | $ | (262 | ) | $ | 217 | $ | 965 | $ | 24,902 | |||||||||||||||
See notes to unaudited condensed consolidated financial statements.
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(dollars in thousands)
|
||||||||
(Unaudited)
|
||||||||
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$ | 3,682 | $ | 14,671 | ||||
Adjustments to reconcile net earnings to net
|
||||||||
cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
6,448 | 6,486 | ||||||
Stock-based compensation
|
1,275 | 1,774 | ||||||
Realized gain on sale of investment
|
(119 | ) | - | |||||
Loss (gain) on sale of property, plant and equipment
|
4 | (369 | ) | |||||
Other, net
|
886 | 220 | ||||||
Deferred income taxes
|
180 | 601 | ||||||
Changes in operating assets and liabilities (see below)
|
9,365 | (24,663 | ) | |||||
Net Cash Provided by (Used in) Operating Activities
|
21,721 | (1,280 | ) | |||||
Cash flows from investing activities:
|
||||||||
Purchase of property, plant and equipment
|
(2,196 | ) | (1,536 | ) | ||||
Purchase of marketable securities
|
(5,128 | ) | (1,191 | ) | ||||
Cash transferred from restricted cash
|
162 | - | ||||||
Purchase of company-owned life insurance
|
- | (1,571 | ) | |||||
Payment for acquisition, net of cash acquired
|
- | (40,424 | ) | |||||
Proceeds from sale of marketable securities
|
433 | - | ||||||
Proceeds from sale of property, plant and equipment
|
10 | 586 | ||||||
Net Cash Used in Investing Activities
|
(6,719 | ) | (44,136 | ) | ||||
Cash flows from financing activities:
|
||||||||
Dividends paid to common shareholders
|
(2,336 | ) | (2,324 | ) | ||||
Net Cash Used In Financing Activities
|
(2,336 | ) | (2,324 | ) | ||||
Effect of exchange rate changes on cash
|
8 | (17 | ) | |||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
12,674 | (47,757 | ) | |||||
Cash and Cash Equivalents - beginning of period
|
83,829 | 124,231 | ||||||
Cash and Cash Equivalents - end of period
|
$ | 96,503 | $ | 76,474 | ||||
(Continued)
|
||||||||
See notes to unaudited condensed consolidated financial statements.
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
|
||||||||
(dollars in thousands)
|
||||||||
(Unaudited)
|
||||||||
Nine Months Ended
|
||||||||
September 30,
|
||||||||
2011
|
2010
|
|||||||
Changes in operating assets and liabilities consist of:
|
||||||||
Decrease (increase) in accounts receivable
|
$ | 7,568 | $ | (13,930 | ) | |||
Decrease (increase) in inventories
|
2,924 | (17,901 | ) | |||||
Increase in prepaid expenses and other current assets
|
(2,275 | ) | (681 | ) | ||||
Decrease in other assets
|
1 | 10 | ||||||
(Decrease) increase in accounts payable
|
(2,442 | ) | 3,660 | |||||
Increase in accrued expenses
|
1,330 | 5,515 | ||||||
Cash payments of accrued restructuring costs
|
(123 | ) | (119 | ) | ||||
Increase (decrease) in income taxes payable
|
2,382 | (1,217 | ) | |||||
$ | 9,365 | $ | (24,663 | ) | ||||
Supplementary information:
|
||||||||
Cash paid during the period for:
|
||||||||
Income taxes, net of refunds received
|
$ | 490 | $ | 1,375 | ||||
Interest
|
- | 14 | ||||||
Details of acquisition:
|
||||||||
Fair value of identifiable net assets acquired
|
$ | - | $ | 38,132 | ||||
Goodwill
|
- | 2,349 | ||||||
Fair value of net assets acquired
|
$ | - | $ | 40,481 | ||||
Fair value of consideration transferred
|
$ | - | $ | 40,481 | ||||
Less: Cash acquired in acquisition
|
- | (57 | ) | |||||
Cash paid for acquisition, net of cash acquired
|
$ | - | $ | 40,424 | ||||
See notes to unaudited condensed consolidated financial statements.
|
1.
|
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
|
2.
|
EARNINGS PER SHARE
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net earnings
|
$ | 1,012 | $ | 10,001 | $ | 3,682 | $ | 14,671 | ||||||||
Less Dividends:
|
||||||||||||||||
Class A
|
130 | 130 | 391 | 391 | ||||||||||||
Class B
|
670 | 667 | 2,003 | 1,998 | ||||||||||||
Undistributed earnings
|
$ | 212 | $ | 9,204 | $ | 1,288 | $ | 12,282 | ||||||||
Undistributed earnings allocation - basic and diluted:
|
||||||||||||||||
Class A undistributed earnings
|
$ | 37 | $ | 1,644 | $ | 229 | $ | 2,199 | ||||||||
Class B undistributed earnings
|
175 | 7,560 | 1,059 | 10,083 | ||||||||||||
Total undistributed earnings
|
$ | 212 | $ | 9,204 | $ | 1,288 | $ | 12,282 | ||||||||
Net earnings allocation - basic and diluted:
|
||||||||||||||||
Class A allocated earnings
|
$ | 167 | $ | 1,774 | $ | 620 | $ | 2,590 | ||||||||
Class B allocated earnings
|
845 | 8,227 | 3,062 | 12,081 | ||||||||||||
Net earnings
|
$ | 1,012 | $ | 10,001 | $ | 3,682 | $ | 14,671 | ||||||||
Denominator:
|
||||||||||||||||
Weighted-average shares outstanding:
|
||||||||||||||||
Class A common share - basic and diluted
|
2,174,912 | 2,174,912 | 2,174,912 | 2,174,912 | ||||||||||||
Class B common share - basic and diluted
|
9,643,641 | 9,528,303 | 9,584,444 | 9,496,367 | ||||||||||||
Earnings per share:
|
||||||||||||||||
Class A common share - basic and diluted
|
$ | 0.08 | $ | 0.82 | $ | 0.29 | $ | 1.19 | ||||||||
Class B common share - basic and diluted
|
$ | 0.09 | $ | 0.86 | $ | 0.32 | $ | 1.27 | ||||||||
Nine Months Ended
|
||||
September 30, 2010
|
||||
Revenue
|
$ | 222,511 | ||
Net earnings
|
14,550 | |||
Earnings per Class A common share - basic and diluted
|
1.18 | |||
Earnings per Class B common share - basic and diluted
|
1.26 |
Assets at Fair Value Using
|
||||||||||||||||
Total
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
Significant Other Observable Inputs
(Level 2)
|
Significant Unobservable Inputs
(Level 3)
|
|||||||||||||
As of September 30, 2011
|
||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Investments held in Rabbi Trust
|
$ | 5,777 | $ | 5,777 | $ | - | $ | - | ||||||||
Marketable securities:
|
||||||||||||||||
Publicly-traded equity securities
|
741 | 741 | - | - | ||||||||||||
Fixed income securities
|
5,004 | - | 5,004 | - | ||||||||||||
Total
|
$ | 11,522 | $ | 6,518 | $ | 5,004 | $ | - | ||||||||
As of December 31, 2010
|
||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Investments held in Rabbi Trust
|
$ | 5,924 | $ | 5,924 | $ | - | $ | - | ||||||||
Marketable securities:
|
||||||||||||||||
Publicly-traded equity securities
|
1,706 | 1,706 | - | - | ||||||||||||
Total
|
$ | 7,630 | $ | 7,630 | $ | - | $ | - | ||||||||
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Raw materials
|
$ | 32,180 | $ | 35,157 | ||||
Work in progress
|
6,943 | 5,930 | ||||||
Finished goods
|
15,035 | 15,883 | ||||||
$ | 54,158 | $ | 56,970 | |||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Total segment sales:
|
||||||||||||||||
North America
|
$ | 37,842 | $ | 34,214 | $ | 113,195 | $ | 89,991 | ||||||||
Asia
|
46,501 | 55,660 | 136,638 | 140,381 | ||||||||||||
Europe
|
8,577 | 9,591 | 26,742 | 26,560 | ||||||||||||
Total segment sales
|
92,920 | 99,465 | 276,575 | 256,932 | ||||||||||||
Reconciling item:
|
||||||||||||||||
Intersegment sales
|
(17,017 | ) | (14,424 | ) | (50,096 | ) | (38,090 | ) | ||||||||
Net sales
|
$ | 75,903 | $ | 85,041 | $ | 226,479 | $ | 218,842 | ||||||||
Income (loss) from operations:
|
||||||||||||||||
North America
|
$ | 1,785 | $ | 925 | $ | 6,061 | $ | 2,023 | ||||||||
Asia
|
(143 | ) | 7,691 | (1,272 | ) | 11,935 | ||||||||||
Europe
|
296 | 835 | 1,523 | 1,087 | ||||||||||||
$ | 1,938 | $ | 9,451 | $ | 6,312 | $ | 15,045 | |||||||||
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Sales commissions
|
$ | 1,461 | $ | 1,740 | ||||
Subcontracting labor
|
2,213 | 2,467 | ||||||
Salaries, bonuses and related benefits
|
5,687 | 7,405 | ||||||
Litigation reserve
|
11,346 | 8,103 | ||||||
Other
|
3,116 | 2,830 | ||||||
$ | 23,823 | $ | 22,545 | |||||
Liability at
|
New
|
Cash Payments &
|
Liability at
|
|||||||||||||
December 31, 2010
|
Charges
|
Other Settlements
|
September 30, 2011
|
|||||||||||||
Facility lease obligation
|
$ | 507 | $ | - | $ | (123 | ) | $ | 384 | |||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Service cost
|
$ | 93 | $ | 85 | $ | 279 | $ | 255 | ||||||||
Interest cost
|
101 | 84 | 303 | 252 | ||||||||||||
Amortization of adjustments
|
37 | 33 | 111 | 99 | ||||||||||||
Total SERP expense
|
$ | 231 | $ | 202 | $ | 693 | $ | 606 | ||||||||
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Balance sheet amounts:
|
||||||||
Minimum pension obligation
|
||||||||
and unfunded pension liability
|
$ | 8,043 | $ | 7,350 | ||||
Amounts recognized in accumulated
|
||||||||
other comprehensive loss, pretax:
|
||||||||
Prior service cost
|
$ | 1,143 | $ | 1,143 | ||||
Net gains
|
932 | 932 | ||||||
$ | 2,075 | $ | 2,075 | |||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net earnings
|
$ | 1,012 | $ | 10,001 | $ | 3,682 | $ | 14,671 | ||||||||
Currency translation adjustment
|
(588 | ) | 1,072 | 350 | (383 | ) | ||||||||||
Reclassification adjustment for gains
|
||||||||||||||||
included in net earnings, net of taxes
|
- | - | (74 | ) | - | |||||||||||
(Decrease) increase in unrealized gain on
|
||||||||||||||||
marketable securities, net of taxes
|
(380 | ) | 195 | (499 | ) | 236 | ||||||||||
Comprehensive income
|
$ | 44 | $ | 11,268 | $ | 3,459 | $ | 14,524 | ||||||||
September 30,
|
December 31,
|
|||||||
2011
|
2010
|
|||||||
Currency translation adjustment
|
$ | 1,232 | $ | 882 | ||||
Unrealized holding (losses) gains on available-for-sale
|
||||||||
securities, net of taxes of ($29) and $322 as of
|
||||||||
September 30, 2011 and December 31, 2010
|
(54 | ) | 519 | |||||
Unfunded SERP liability, net of taxes of ($635) as
|
||||||||
of both September 30, 2011 and December 31, 2010
|
(1,440 | ) | (1,440 | ) | ||||
Accumulated other comprehensive loss
|
$ | (262 | ) | $ | (39 | ) | ||
·
|
Revenues – With the rebound of market conditions in 2010, the Company experienced record sales during the third and fourth quarters of 2010, as Bel worked to bring its backlog of orders down to a more typical level. As the backlog has stabilized, the surge in sales volume that occurred during the latter part of 2010 did not continue into 2011 and is not expected to recur during the fourth quarter of 2011.
|
·
|
Product Mix – Sales of the Company’s module products increased from 18% of total sales during the third quarter of 2010 to 31% of total sales during the third quarter of 2011. Module products have a higher material and lower added-value content than the Company’s other product lines. As a result, these products will not have as high a margin as Bel's other products. The Company anticipates that its module product line will continue to grow and will make an increased contribution to the Company's revenue and profits in future periods.
|
·
|
Pricing and Availability of Materials – While the Company has seen component pricing and availability stabilize for most of Bel’s product lines, the Company continues to experience some component shortages in its module product line which limits Bel’s ability to deliver its DC-DC products. Although there has recently been some moderation in commodity prices, higher costs for commodities including gold, copper, and petroleum-based plastics continue to keep manufacturing costs high in comparison to the prior year. Fluctuations in component prices and other commodity prices associated with Bel’s raw materials will have a corresponding impact on Bel’s profit margins. The Company is currently monitoring the supply chain flow for all products potentially affected by recent floods in Thailand and is in the process of locating alternative sources for any potentially impacted components.
|
·
|
Labor Costs – The costs of labor, particularly in the PRC where a significant percentage of Bel’s products are manufactured, have been higher in recent years as a result of government mandates for new higher minimum wage and overtime requirements. The PRC government increased minimum wage levels by 21% in the areas where Bel’s products are manufactured effective May 1, 2010. While Bel has implemented price increases to its customers during 2010 to partially offset the existing increases in labor and material costs, there was an additional government mandate effective March 2011 which increased the minimum wage level by 18% at certain of Bel’s facilities in the PRC. The Company believes that this increase and any additional increases to the minimum wage levels will have a negative impact on Bel’s profit margins in future quarters.
|
·
|
Management of Overhead Costs – The Company has continued to monitor its overall profit margin percentage over the past several quarters and is currently realigning its organization to reduce overhead and other costs. The Company expects to publicly announce its plan, including the anticipated costs and savings associated with it, as part of its fourth quarter earnings report. Future profit margins will be dependent in part upon Bel’s ability to effectively control overhead costs without adversely impacting productivity.
|
·
|
Impact of Pending Lawsuits – As further described in the Company’s Annual Report on Form 10-K and as updated in Item 1. Legal Proceedings of Part II of this quarterly report, the Company is involved in several ongoing lawsuits related to patent infringement claims. A $2.6 million litigation charge related to the Halo lawsuit and a $0.6 million litigation charge related to the SynQor lawsuit were recorded during the second quarter of 2011. During the third quarter of 2011, the Company recorded $0.2 million in costs and interest related to the SynQor lawsuit. The Company is currently appealing the verdict in the SynQor case; however, if the Company is unsuccessful in its appeal, sales of certain of the Company’s existing products may be adversely affected. This would result in decreased sales volume and would have a corresponding impact on the Company’s gross profit.
|
·
|
Acquisition-Related Costs – Bel’s continuing strategy to actively consider potential acquisitions could give rise to significant legal and professional costs in future periods.
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||||||||||||
North America
|
$ | 34,298 | 45 | % | $ | 30,522 | 36 | % | $ | 102,229 | 45 | % | $ | 79,014 | 36 | % | ||||||||||||||||
Asia
|
33,308 | 44 | % | 45,251 | 53 | % | 98,484 | 44 | % | 114,112 | 52 | % | ||||||||||||||||||||
Europe
|
8,297 | 11 | % | 9,268 | 11 | % | 25,766 | 11 | % | 25,716 | 12 | % | ||||||||||||||||||||
$ | 75,903 | 100 | % | $ | 85,041 | 100 | % | $ | 226,479 | 100 | % | $ | 218,842 | 100 | % | |||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Total segment sales:
|
||||||||||||||||
North America
|
$ | 37,842 | $ | 34,214 | $ | 113,195 | $ | 89,991 | ||||||||
Asia
|
46,501 | 55,660 | 136,638 | 140,381 | ||||||||||||
Europe
|
8,577 | 9,591 | 26,742 | 26,560 | ||||||||||||
Total segment sales
|
92,920 | 99,465 | 276,575 | 256,932 | ||||||||||||
Reconciling item:
|
||||||||||||||||
Intersegment sales
|
(17,017 | ) | (14,424 | ) | (50,096 | ) | (38,090 | ) | ||||||||
Net sales
|
$ | 75,903 | $ | 85,041 | $ | 226,479 | $ | 218,842 | ||||||||
Income (loss) from operations:
|
||||||||||||||||
North America
|
$ | 1,785 | $ | 925 | $ | 6,061 | $ | 2,023 | ||||||||
Asia
|
(143 | ) | 7,691 | (1,272 | ) | 11,935 | ||||||||||
Europe
|
296 | 835 | 1,523 | 1,087 | ||||||||||||
$ | 1,938 | $ | 9,451 | $ | 6,312 | $ | 15,045 | |||||||||
Percentage of Net Sales
|
Percentage of Net Sales
|
||||||||||
Three Months Ended
|
Nine Months Ended
|
||||||||||
September 30,
|
September 30,
|
||||||||||
2011
|
2010
|
2011
|
2010
|
||||||||
Net sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||
Cost of sales
|
84.1
|
76.2
|
82.3
|
79.3
|
|||||||
Selling, general and administrative ("SG&A") expenses
|
13.0
|
13.1
|
13.4
|
14.0
|
|||||||
Litigation charges
|
0.3
|
-
|
1.5
|
-
|
|||||||
Gain on sale of property, plant and equipment
|
-
|
0.5
|
-
|
0.2
|
|||||||
Gain on sale of investment
|
-
|
-
|
0.1
|
-
|
|||||||
Interest income and other, net
|
0.2
|
0.1
|
0.1
|
0.1
|
|||||||
Earnings before provision (benefit) for income taxes
|
2.7
|
11.2
|
3.0
|
7.0
|
|||||||
Provision (benefit) for income taxes
|
1.4
|
(0.5)
|
1.3
|
0.3
|
|||||||
Net earnings
|
1.3
|
11.8
|
1.6
|
6.7
|
Decrease from
|
Increase (Decrease) from
|
|||||||
Prior Period
|
Prior Period
|
|||||||
Three Months Ended
|
Nine Months Ended
|
|||||||
September 30, 2011
|
September 30, 2011
|
|||||||
Compared with
|
Compared with
|
|||||||
Three Months Ended
|
Nine Months Ended
|
|||||||
September 30, 2010
|
September 30, 2010
|
|||||||
Net sales
|
(10.7)
|
%
|
3.5
|
%
|
||||
Cost of sales
|
(1.4)
|
7.4
|
||||||
SG&A expenses
|
(11.9)
|
(1.0)
|
||||||
Net earnings
|
(89.9)
|
(74.9)
|
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||||||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||||||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||||||||||||||||||
Interconnect products
|
$ | 27,204 | 36 | % | $ | 27,804 | 33 | % | $ | 83,004 | 37 | % | $ | 74,593 | 34 | % | ||||||||||||||||
Module products
|
23,186 | 31 | % | 15,434 | 18 | % | 69,592 | 31 | % | 41,900 | 19 | % | ||||||||||||||||||||
Magnetic products
|
23,024 | 30 | % | 37,963 | 45 | % | 65,698 | 29 | % | 92,317 | 42 | % | ||||||||||||||||||||
Circuit protection products
|
2,489 | 3 | % | 3,840 | 4 | % | 8,185 | 3 | % | 10,032 | 5 | % | ||||||||||||||||||||
$ | 75,903 | 100 | % | $ | 85,041 | 100 | % | $ | 226,479 | 100 | % | $ | 218,842 | 100 | % | |||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
||||||
September 30,
|
September 30,
|
||||||
2011
|
2010
|
2011
|
2010
|
||||
Material costs
|
51.9%
|
42.0%
|
50.7%
|
43.9%
|
|||
Labor costs
|
11.0%
|
14.3%
|
10.3%
|
14.1%
|
|||
Research and development expenses
|
3.9%
|
3.1%
|
3.9%
|
3.6%
|
|||
Other expenses
|
17.3%
|
16.8%
|
17.4%
|
17.7%
|
|||
Total cost of sales
|
84.1%
|
76.2%
|
82.3%
|
79.3%
|
|||
Item 6. Exhibits
|
|
(a) Exhibits:
|
|
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.
|
101.INS***
|
XBRL Instance Document
|
101.SCH***
|
XBRL Taxonomy Extension Schema Document
|
101.CAL***
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF***
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB***
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.DEF***
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
SIGNATURES
|
BEL FUSE INC.
|
|
November 4, 2011
|
|
By:
|
/s/ Daniel Bernstein
|
Daniel Bernstein
|
|
President and Chief Executive Officer
|
|
By:
|
/s/ Colin Dunn
|
Colin Dunn
|
|
Vice President of Finance and Secretary
|
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.
|
Date: November 4, 2011
|
/s/ Daniel Bernstein
|
Daniel Bernstein
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Bel Fuse Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: November 4, 2011
|
/s/ Daniel Bernstein
|
Daniel Bernstein
|
|
President and Chief Executive Officer
|
|
(2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and consolidated results of operations of the Company for the periods presented.
|
Date: November 4, 2011
|
/s/ Colin Dunn
|
Colin Dunn
|
|
Vice President of Finance and Secretary
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Current Assets | ||
Accounts receivable, allowance for doubtful accounts | $ 789 | $ 653 |
Stockholders' Equity | ||
Preferred stock, no par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, issued (in shares) | 0 | 0 |
Class A [Member] | ||
Stockholders' Equity | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Common stock, outstanding (in shares) | 2,174,912 | 2,174,912 |
Common stock, treasury shares (in shares) | 1,072,769 | 1,072,769 |
Class B [Member] | ||
Stockholders' Equity | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, authorized (in shares) | 30,000,000 | 30,000,000 |
Common stock, outstanding (in shares) | 9,641,443 | 9,527,343 |
Common stock, treasury shares (in shares) | 3,218,307 | 3,218,307 |
Document And Entity Information (USD $) In Millions, except Share data | 9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2011 | Jun. 30, 2010 | Nov. 01, 2011
Class A Common Stock [Member] | Nov. 01, 2011
Class B Common Stock [Member] | |
Entity Information [Line Items] | ||||
Entity Registrant Name | BEL FUSE INC /NJ | |||
Entity Central Index Key | 0000729580 | |||
Current Fiscal Year End Date | --12-31 | |||
Entity Well-known Seasoned Issuer | No | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | Yes | |||
Entity Filer Category | Accelerated Filer | |||
Entity Public Float | $ 177.5 | |||
Entity Common Stock, Shares Outstanding | 2,174,912 | 9,639,443 | ||
Document Fiscal Year Focus | 2011 | |||
Document Fiscal Period Focus | Q3 | |||
Document Type | 10-Q | |||
Amendment Flag | false | |||
Document Period End Date | Sep. 30, 2011 |
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INVENTORIES | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | 5. INVENTORIES The components of inventories are as follows (dollars in thousands):
|
COMPREHENSIVE INCOME | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMPREHENSIVE INCOME | 10. COMPREHENSIVE INCOME Comprehensive income for the three and nine months ended September 30, 2011 and 2010 consists of the following (dollars in thousands):
The components of accumulated other comprehensive loss as of September 30, 2011 and December 31, 2010 are summarized below (dollars in thousands):
|
BASIS OF PRESENTATION AND ACCOUNTING POLICIES | 9 Months Ended | ||
---|---|---|---|
Sep. 30, 2011 | |||
BASIS OF PRESENTATION AND ACCOUNTING POLICIES [Abstract] | |||
BASIS OF PRESENTATION AND ACCOUNTING POLICIES |
The condensed consolidated balance sheet as of September 30, 2011, and the condensed consolidated statements of operations, stockholders' equity and cash flows for the periods presented herein have been prepared by Bel Fuse Inc. (the "Company" or "Bel") and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations, changes in stockholders' equity and cash flows for all periods presented have been made. The results for the three and nine months ended September 30, 2011 should not be viewed as indicative of the Company's annual results or the Company's results for any other period. The information for the condensed consolidated balance sheet as of December 31, 2010 was derived from audited financial statements. These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Bel Fuse Annual Report on Form 10-K for the year ended December 31, 2010. On January 29, 2010, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Cinch Connectors, Inc. (“Cinch U.S.”), Cinch Connectors de Mexico, S.A. de C.V. (“Cinch Mexico”) and Cinch Connectors Ltd. (“Cinch Europe”) (collectively “Cinch”) from Safran S.A. Accordingly, as of January 29, 2010, all of the assets acquired and liabilities assumed were recorded at their fair values and the Company's condensed consolidated results of operations for the nine months ended September 30, 2010 include Cinch's operating results from January 29, 2010 through September 30, 2010. In accordance with the accounting guidance for business combinations, the results of operations and cash flows for the three and nine months ended September 30, 2010 have been adjusted retrospectively to reflect measurement period adjustments as if they had been recorded on the date of acquisition. The measurement period adjustments did not have a significant impact on our condensed consolidated statement of operations or cash flows for the three or nine months ended September 30, 2010. Recent Accounting Pronouncements The Company's significant accounting policies are summarized in Note 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2010. There were no significant changes to these accounting policies during the nine months ended September 30, 2011. Recent accounting pronouncements that will impact future periods are as follows: Accounting Standards Update No. 2011-05 – Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU No. 2011-05”) ASU No. 2011-05 amends existing guidance by allowing only two options for presenting the components of net income and other comprehensive income: (1) in a single continuous statement of comprehensive income or (2) in two separate but consecutive financial statements, consisting of an income statement followed by a separate statement of other comprehensive income. Also, items that are reclassified from other comprehensive income to net income must be presented on the face of the financial statements. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. This ASU requires retrospective application, and it is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company will implement the provisions of ASU 2011-05 by presenting the components of net income and other comprehensive income in two separate but consecutive financial statements beginning in the first quarter of 2012. Accounting Standards Update No. 2011-08 – Testing Goodwill for Impairment (Topic 350): Intangibles-Goodwill and Other (“ASU No. 2011-08”) ASU No. 2011-08 updates existing guidance regarding testing of goodwill for impairment. This ASU gives entities the option to perform a qualitative assessment to first assess whether the fair value of a reporting unit is less than its carrying amount. If an entity determines it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. This ASU is effective during the first quarter of 2012, with early adoption permitted. The adoption of this standard during the first quarter of 2012 is not expected to have a material impact on the Company's results of operations or financial condition. |
INCOME TAXES | 9 Months Ended |
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Sep. 30, 2011 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | 7. INCOME TAXES As of September 30, 2011 and December 31, 2010, the Company has approximately $4.1 million and $3.8 million, respectively, of liabilities for uncertain tax positions ($0 and $0.9 million, respectively, included in income taxes payable and $4.1 million and $2.9 million, respectively, included in liability for uncertain tax positions) all of which, if reversed, would reduce the Company's effective tax rate. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is no longer subject to U.S. federal examinations by tax authorities for years before 2007 and for state examinations before 2005. Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before 2003 in Asia and generally 2005 in Europe. During September 2010 and April 2011, the Company was notified of an Internal Revenue Service (“IRS”) tax audit for the years ended December 31, 2004 through 2009. The Company believes the audit is a result of various carryback claims to the years ended December 31, 2004, 2005 and 2006. As the statute of limitations for the years 2004, 2005 and 2006 has expired, any tax adjustment proposed by the IRS for these years would be limited to the amount of the carryback claims of approximately $2.5 million. As a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized benefits for tax positions taken regarding previously filed tax returns may change materially from those recorded as liabilities for uncertain tax positions in the Company's condensed consolidated financial statements. At September 30, 2011, a total of $1.0 million of previously recorded liabilities for uncertain tax positions relates to the 2007 tax year. The statute of limitations related to this liability, which was scheduled to expire on September 15, 2011, was extended until the conclusion of the IRS audit discussed above. The Company's policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes. During the nine months ended September 30, 2011 and 2010, the Company recognized $0.2 million and $0.1 million, respectively, in interest and penalties in the condensed consolidated statements of operations. The Company has approximately $0.6 million and $0.4 million accrued for the payment of interest and penalties at September 30, 2011 and December 31, 2010, respectively, which is included in both income taxes payable and liability for uncertain tax positions in the condensed consolidated balance sheets. In connection with the Cinch acquisition, the Company acquired certain tax assets and liabilities. Cinch Europe had net operating loss and capital loss carryforwards in the amounts of $0.6 million and $0.2 million, respectively, as of the acquisition date. The related tax benefits were $0.2 million and $0.1 million, respectively. The capital loss carryforward was acquired with a valuation allowance, which the Company maintained at September 30, 2011. During the year ended December 31, 2010, the entire $0.6 million net operating loss was utilized. Additionally, Cinch Europe had a deferred tax liability in the amount of $0.1 million for various timing differences and $0.1 million in refundable income taxes. At the time of the acquisition, Cinch U.S. had a deferred tax asset in the amount of $0.1 million relating to vacation accruals. Cinch Mexico was acquired with a refundable income tax in the amount of $0.1 million, which was applied to current year income tax for 2010. The Company has received a fair market value report of property, plant and equipment, and intangibles related to Cinch Europe and Cinch Mexico which resulted in the establishment of deferred tax liabilities at the date of acquisition in the amounts of $0.4 million and an immaterial amount, respectively. At September 30, 2011, a deferred tax liability of $0.3 million remains on the condensed consolidated balance sheet. None of the reversals of the deferred tax asset or deferred tax liabilities or use of NOL carryforwards acquired from the Cinch acquisition will impact the condensed consolidated statement of operations. The Company has made an election under IRC Section 338(h)(10) to step-up the tax basis of the Cinch U.S. assets and IRC Section 338(g) to step-up the tax basis of assets for the Cinch Mexico and Cinch U.K. entities acquired to fair value. The elections made under Section 338(h)(10) and Section 338(g) only affect U.S. income taxes (not those of the foreign countries where non-U.S. Cinch entities are incorporated). On August 10, 2010, President Obama signed into law the “Education Jobs & Medicaid Assistance Act” (H.R. 1586) (the “Act”). The Act's international tax provisions place certain restrictions on the use of foreign tax credits. The Company has evaluated the newly-enacted international tax provisions and determined that they do not materially affect the Company's operating results or financial condition. The Company continues to monitor proposed legislation affecting the taxation of transfers of U.S. intangible property and other potential tax law changes. |
RELATED PARTY TRANSACTIONS | 9 Months Ended |
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Sep. 30, 2011 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | 12. RELATED PARTY TRANSACTIONS As of September 30, 2011, the Company has $2.0 million invested in a money market fund with GAMCO Investors, Inc., a current stockholder of the Company, with holdings of its Class A stock of approximately 31.6%. |
ACCRUED EXPENSES | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accrued Expenses [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES | 8. ACCRUED EXPENSES Accrued expenses consist of the following (dollars in thousands):
Accrued Restructuring Costs Activity and liability balances related to restructuring charges for the nine months ended September 30, 2011 are as follows (these charges are associated with the 2008 closure of the Company's facility in Westborough, Massachusetts):
The Company has included the current portion of $0.2 million in accrued restructuring costs in the condensed consolidated balance sheet at September 30, 2011, and has classified the remaining $0.2 million of the liability related to the facility lease obligation as noncurrent |
BUSINESS SEGMENT INFORMATION | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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BUSINESS SEGMENT INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS SEGMENT INFORMATION | 6. BUSINESS SEGMENT INFORMATION The Company operates in one industry with three reportable operating segments, which are geographic in nature. The segments consist of North America, Asia and Europe. The primary criteria by which financial performance is evaluated and resources are allocated are sales and income from operations. The following is a summary of key financial data (dollars in thousands):
The following items are included in the income (loss) from operations presented above: Litigation Charges – During the three and nine months ended September 30, 2011, the Company recorded $0.2 million and $3.5 million, respectively, of litigation charges related to ongoing lawsuits, as further described in Note 11. These charges primarily impacted the Company's Asia operating segment. Cinch Acquisition – Sales for the nine months ended September 30, 2010 include Cinch results after January 29, 2010. Cinch's January 2011 revenue accounted for $5.5 million of the increase in Bel's total net sales for the first nine months of 2011. Cinch sales relate primarily to the North America operating segment and to a lesser extent in the Europe operating segment. Segment Sales – Segment sales are attributed to individual segments based on the geographic source of the billing for such customer sales. Transfers between geographic areas include finished products manufactured in foreign countries which are then transferred to the United States and Europe for sale; finished goods manufactured in the United States which are transferred to Europe and Asia for sale; and semi-finished components manufactured in the United States which are sold to Asia for further processing. Income (loss) from operations represents net sales less operating costs and expenses. |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (Parenthetical) (USD $) In Thousands | 9 Months Ended |
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Sep. 30, 2011 | |
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) [Abstract] | |
Unrealized holding losses on marketable securities, tax effect | $ (305) |
Reclassification adjustment for gains included in net earnings, tax effect | $ (45) |
EARNINGS PER SHARE | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS PER SHARE |
The Company utilizes the two-class method to report its earnings per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and participation rights in undistributed earnings. The Company's Certificate of Incorporation, as amended, states that Class B common shares are entitled to dividends at least 5% greater than dividends paid on Class A common shares, resulting in the two-class method of computing earnings per share. In computing earnings per share, the Company has allocated dividends declared to Class A and Class B based on amounts actually declared for each class of stock and 5% more of the undistributed earnings has been allocated to Class B shares than to the Class A shares on a per share basis. Basic earnings per common share is computed by dividing net earnings by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share, for each class of common stock, are computed by dividing net earnings by the weighted-average number of common shares and potential common shares outstanding during the period. There were no potential common shares outstanding during the three or nine months ended September 30, 2011 or 2010 which would have had a dilutive effect on earnings per share. The earnings and weighted-average shares outstanding used in the computation of basic and diluted earnings per share are as follows (dollars in thousands, except share and per share data):
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ACQUISITION | 9 Months Ended | |||||||||||||||||||||||||||||||||||
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ACQUISITION [Abstract] | ||||||||||||||||||||||||||||||||||||
ACQUISITION | 3. ACQUISITION On January 29, 2010 (the “Acquisition Date”), the Company completed its acquisition of 100% of the issued and outstanding capital stock of Cinch from Safran S.A. Bel paid $39.7 million in cash and assumed an additional $0.8 million of expenses in exchange for the net assets acquired. The transaction was funded with cash on hand. Cinch is headquartered in Lombard, Illinois and has manufacturing facilities in Vinita, Oklahoma; Reynosa, Mexico; and Worksop, England. Cinch manufactures a broad range of interconnect products for customers in the military and aerospace, high-performance computing, telecom/datacom, and transportation markets. The addition of Cinch's well-established lines of connector and cable products and extensive clientele has enabled Bel to broaden its customer base to include aerospace and military markets. The acquisition of Cinch has also created the opportunity for expense reduction and the elimination of redundancies. The combination of these factors has given rise to $2.3 million of goodwill ($1.2 million allocated to the Company's North America operating segment and $1.1 million allocated to the Company's Europe operating segment). During the three and nine months ended September 30, 2010, the Company expensed $0 and $0.3 million, respectively, of acquisition-related costs. These costs are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. Cinch's results of operations have been included in the Company's condensed consolidated financial statements for the period subsequent to the Acquisition Date. Cinch contributed revenues of $40.3 million and estimated net earnings of $1.9 million to the Company for the period from the Acquisition Date through September 30, 2010. The unaudited pro forma information presents the combined operating results of the Company and Cinch. The following unaudited pro forma consolidated results of operations assume that the acquisition of Cinch was completed as of January 1, 2010 (in thousands):
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LEGAL PROCEEDINGS | 9 Months Ended |
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Sep. 30, 2011 | |
LEGAL PROCEEDINGS [Abstract] | |
LEGAL PROCEEDINGS | 11. LEGAL PROCEEDINGS The Company is, from time to time, a party to litigation arising in the normal course of its business, including various claims of patent infringement. See the Company's Annual Report on Form 10-K for the year ended December 31, 2010 for the details of Bel's material pending lawsuits. Updates to pending litigation since the Company's Form 10-K filing are described below. The Company is a defendant in a lawsuit captioned SynQor, Inc. v. Artesyn Technologies, Inc., et al. brought in the United States District Court, Eastern District of Texas in November 2007.The plaintiff alleged that eleven defendants, including Bel, infringed its patents covering certain power products. With respect to the Company, the plaintiff claimed that the Company infringed its patents related to unregulated bus converters and/or point-of-load (POL) converters used in intermediate bus architecture power supply systems. The case went to trial in December 2010 and a partial judgment was entered on December 29, 2010 based on the jury verdict. The jury found that certain products of the defendants directly and/or indirectly infringe the SynQor patents. The jury awarded damages of $8.1 million against the Company, which was recorded by the Company as a litigation charge in the statement of operations in the fourth quarter of 2010. On July 11, 2011, the Court awarded supplemental damages of $2.5 million against the Company. Of this amount, $1.9 million is covered through an indemnification agreement with one of Bel's customers and the remaining $0.6 million was recorded as an expense by the Company during the second quarter of 2011. During the third quarter of 2011, the Company recorded costs and interest associated with this lawsuit of $0.2 million. A final judgment in the case was entered on August 17, 2011. The Company is in the process of appealing the verdict and judgment and filed a notice of appeal with the Federal Circuit Court of Appeals on October 28, 2011. The Company was advised that the full amount of the damage award plus costs and interest would need to be posted as a supersedeas bond upon filing of the notice of appeal. In November 2011, the Company posted a $13.0 million supersedeas bond to the Court in the Eastern District of Texas while the case is on appeal to the Federal Circuit. In a related matter, on September 29, 2011, the United States District Court for the Eastern District of Texas ordered SynQor, Inc.'s continuing causes of action for post-injunction damages to be severed from the original action and assigned to a new case number. The new action captioned SynQor, Inc. v. Artesyn Technologies, Inc., et al. (Case Number 2:11cv444) is a patent infringement action for damages in the form of lost profits and reasonable royalties for the period starting January 24, 2011. SynQor, Inc. also seeks enhanced damages. The Company has an indemnification agreement in place with one of its customers specifically covering post-injunction damages related to this case. As a result, the Company does not anticipate that its consolidated statement of operations will be materially impacted by any potential post-injunction damages. The Company was a defendant in a lawsuit captioned Halo Electronics, Inc. (“Halo”) v. Bel Fuse Inc., Pulse Engineering, Inc. and Technitrol, Inc. brought in Nevada Federal District Court. The plaintiff claimed that the Company had infringed its patents covering certain surface mount discrete magnetic products made by the Company. Halo sought unspecified damages, which it claimed should be trebled. In December 2007, this case was dismissed by the Nevada Federal District Court for lack of personal jurisdiction. Halo then re-filed this suit, with similar claims against the Company, in the Northern California Federal District Court, captioned Halo Electronics, Inc. v. Bel Fuse Inc., Elec & Eltek (USA) Corporation, Wurth Electronics Midcom, Inc., and Xfmrs, Inc. In August 2011, a settlement agreement was signed by the Company and Halo with regard to this lawsuit, whereby the Company has agreed to pay Halo a royalty on past sales. The Company recorded a $2.6 million liability related to past sales during the second quarter of 2011. This is included as a litigation charge in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2011. Bel has also agreed to take a license with respect to the Halo patents at issue in the lawsuit and pay an 8% royalty on all net worldwide sales of the above-mentioned products from June 7, 2011 through August 10, 2015. The Company was a plaintiff in a lawsuit captioned Bel Fuse Inc. v. Halo Electronics, Inc. brought in the United States District Court of New Jersey during June 2007. The Company claimed that Halo infringed a patent covering certain integrated connector modules made by Halo. The Company was seeking an unspecified amount of damages plus interest, costs and attorney fees. In August 2011, a settlement agreement was signed by the Company and Halo with regard to this lawsuit, whereby Halo has agreed to pay the Company a 10% royalty related to its net worldwide sales of its integrated connector modules in exchange for a fully paid-up license of the Bel patent. This royalty income has been included in net sales in the accompanying condensed consolidated statement of operations for the nine months ended September 30, 2011. |
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FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | 4. FAIR VALUE MEASUREMENTS Fair value is defined as an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. Entities are required to use a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1 – Observable inputs such as quoted market prices in active markets Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable Level 3 – Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions As of September 30, 2011 and December 31, 2010, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of the Company's investments in a Rabbi Trust, which are intended to fund the Company's Supplemental Executive Retirement Plan (“SERP”) obligations, and other marketable securities described below. These are categorized as available-for-sale securities and are included as other assets in the accompanying condensed consolidated balance sheets at September 30, 2011 and December 31, 2010. During 2010, the Company purchased equity securities at a purchase price of $1.2 million. During the nine months ended September 30, 2011, the Company purchased additional marketable equity securities at a purchase price of $0.1 million and invested $5.0 million in a mutual fund categorized as a fixed income available-for-sale marketable security. As of September 30, 2011 and December 31, 2010, these marketable securities had a combined fair value of $5.7 million and $1.7 million, respectively, and gross unrealized (losses) gains of ($0.3) million and $0.5 million, respectively. Such unrealized (losses) gains are included, net of tax, in accumulated other comprehensive loss. The fair value of the equity securities is determined based on quoted market prices in public markets and is categorized as Level 1. The fair value of the fixed income securities is determined based on other observable inputs, and are therefore categorized as Level 2 in the table below. The Company does not have any financial assets measured at fair value on a recurring basis categorized as Level 3, and there were no transfers in or out of Level 1, Level 2 or Level 3 during the nine months ended September 30, 2011 and 2010. There were no changes to the Company's valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during the nine months ended September 30, 2011. The following table sets forth by level, within the fair value hierarchy, the Company's financial assets accounted for at fair value on a recurring basis as of September 30, 2011 and December 31, 2010 (dollars in thousands).
The Level 2 fixed income securities noted in the table above represent the Company's investment in a fund that consists of debt securities (bonds), primarily U.S. government securities, corporate bonds, asset-backed securities and mortgage-backed securities. The value of the fund is determined based on quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company has other financial instruments, such as cash equivalents, accounts receivable, accounts payable and accrued expenses, which are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature. The Company did not have any other financial liabilities within the scope of the fair value disclosure requirements as of September 30, 2011 or December 31, 2010. Nonfinancial assets and liabilities, such as goodwill, indefinite-lived intangible assets and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment on the occurrence of a triggering event or, in the case of goodwill and indefinite-lived intangible assets, on at least an annual basis. There were no triggering events that occurred during the nine months ended September 30, 2011 or 2010 that would warrant interim impairment testing. |
RETIREMENT FUND AND PROFIT SHARING PLAN | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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RETIREMENT FUND AND PROFIT SHARING PLAN [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RETIREMENT FUND AND PROFIT SHARING PLAN | 9. RETIREMENT FUND AND PROFIT SHARING PLAN The Company maintains a domestic 401(k) plan, which consists of profit sharing, contributory stock ownership and individual voluntary savings to provide non-defined retirement benefits for plan participants. The expense for the three months ended September 30, 2011 and 2010 amounted to approximately $0.3 million and $0.2 million, respectively. The expense for the nine months ended September 30, 2011 and 2010 amounted to approximately $0.7 million and $0.4 million, respectively. As of September 30, 2011, the plans owned 15,926 and 238,599 shares of Bel Fuse Inc. Class A and Class B common stock, respectively. The Company's subsidiaries in Asia have a non-defined retirement fund covering substantially all of their Hong Kong-based full-time employees. The expense for the three months ended September 30, 2011 and 2010 amounted to approximately $0.1 million in each period and the expense for the nine months ended September 30, 2011 and 2010 amounted to approximately $0.2 million in each period. As of September 30, 2011, the plan owned 3,323 and 17,342 shares of Bel Fuse Inc. Class A and Class B common stock, respectively. The SERP is designed to provide a limited group of key management and highly compensated employees of the Company with supplemental retirement and death benefits. The components of SERP expense are as follows (dollars in thousands):
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