-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CJTyqyB3aWmth9oWyvpstgogDm6ZammhcX7E6nY0pW/cCHdeoo2o1vS5l2ISdjze NE7hifOgmxEDJV8TaIr/gg== 0000950110-96-000573.txt : 19960514 0000950110-96-000573.hdr.sgml : 19960514 ACCESSION NUMBER: 0000950110-96-000573 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEL FUSE INC /NJ CENTRAL INDEX KEY: 0000729580 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 221463699 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11676 FILM NUMBER: 96561395 BUSINESS ADDRESS: STREET 1: 198 VAN VORST ST CITY: JERSEY CITY STATE: NJ ZIP: 07302 BUSINESS PHONE: 2014320436 MAIL ADDRESS: STREET 2: 198 VAN VORST STREET CITY: JERSEY CITY STATE: NJ ZIP: 07302 10-Q 1 QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ____________ Commission file number: 0-11676 BEL FUSE INC. (Exact name of registrant as specified in its charter) New Jersey 22-1463699 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 198 Van Vorst Street Jersey City, New Jersey 07302 (Address of principal executive offices) (Zip Code) 201-432-0463 (Registrant's telephone number, including area code) ---------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. At May 1, 1996, there were 5,054,445 shares of Common Stock, $.10 par value, outstanding. BEL FUSE INC. INDEX Page Number ----------- Part I. Financial Information Item 1. Financial Statements ................................. 1 Consolidated Balance Sheets as of March 31, 1996 (unaudited) and December 31, 1995 .................................... 2 - 3 Consolidated Statements of Opera- tions for the Three Months Ended March 31, 1996 and 1995 (unaudited) .......................................... 4 Consolidated Statements of Cash Flows for the Three Months Ended March 31, 1996 and 1995 (unaudited) .......................................... 5 - 6 Notes to Consolidated Financial Statements (unaudited) ............................... 7 - 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ........................................ 9 - 11 Part II. Other Information Item 1. Legal Proceedings .................................... 12 Item 6. Exhibits and Reports on Form 8-K ..................... 12 Signatures ......................................................... 13 PART I. Financial Information Item 1. Financial Statements -------------------- Certain information and footnote disclosures required under generally accepted accounting principles have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. The results of operations for the three month period ended March 31, 1996, are not necessarily indicative of the results to be expected for the entire fiscal year or for any other period. -1- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS March 31, December 31, 1996 1995 ----------- ------------ (unaudited) Current Assets: Cash and cash equivalents .................. $12,052,634 $ 8,343,925 Marketable securities ...................... 5,701,320 5,556,740 Accounts receivable, less allowance for doubtful accounts of $155,000 ......... 10,515,351 11,705,344 Inventories ................................ 10,406,607 10,799,731 Prepaid expenses and other current assets .................................... 524,833 239,511 ----------- ----------- Total Current Assets .................. 39,200,745 36,645,251 Property, plant and equipment - net ............ 26,369,821 26,662,351 Unamortized excess of cost over fair value of assets acquired ...................... 139,747 145,579 Other assets ................................... 960,677 1,022,493 ----------- ----------- TOTAL ASSETS .......................... $66,670,990 $64,475,674 =========== =========== (Continued) See notes to consolidated financial statements. -2- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31, 1996 1995 ---------- ------------ (unaudited) Current Liabilities: Accounts payable ............................. $ 2,717,133 $ 3,374,433 Accrued expenses ............................. 4,086,405 4,049,366 Income taxes payable ......................... 598,895 539,924 Deferred income taxes ........................ 366,000 38,000 ----------- ----------- Total Current Liabilities ............... 7,768,433 8,001,723 Deferred income taxes ............................ 532,000 584,000 ----------- ----------- Total Liabilities ....................... 8,300,433 8,585,723 ----------- ----------- Stockholders' Equity: Preferred stock, no par value - authorized 1,000,000 shares; none issued ................................. -- -- Common stock, par value $.10 per share - authorized 10,000,000 shares; outstanding 5,055,445 and 5,051,445 shares ............................ 505,545 505,145 Additional paid-in capital ................... 6,836,000 6,811,900 Retained earnings ............................ 50,348,215 48,115,306 Net unrealized gain on marketable securities .................................. 680,797 457,600 ----------- ----------- Total Stockholders' Equity .............. 58,370,557 55,889,951 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................. $66,670,990 $64,475,674 =========== =========== See notes to consolidated financial statements. -3- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended March 31, --------------------------- 1996 1995 ---------- ----------- Sales .......................................... $17,262,328 $15,849,971 ----------- ----------- Costs and Expenses: Cost of sales .............................. 12,040,350 11,637,932 Selling, general and administrative expenses .................................. 2,794,291 2,680,975 ----------- ----------- 14,834,641 14,318,907 ----------- ----------- Income from operations ......................... 2,427,687 1,531,064 Other income - net ............................. 166,222 51,395 Interest (expense) ............................. -- (2,887) ----------- ----------- Earnings before income taxes ................... 2,593,909 1,579,572 Income tax provision ........................... 361,000 106,000 ----------- ----------- Net earnings ................................... $ 2,232,909 $ 1,473,572 =========== =========== Earnings per common share ...................... $ .44 $ .30 =========== =========== Weighted average number of common shares outstanding ......................... 5,051,857 4,969,594 =========== =========== See notes to consolidated financial statements. -4- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended March 31, ---------------------------- 1996 1995 ----------- ----------- Cash flows from operating activities: Net income .............................. $ 2,232,909 $ 1,473,572 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ........... 763,745 640,495 Deferred income taxes ................... 104,000 98,000 Net loss on sale of marketable securities ............................. 888 66,702 Changes in operating assets and liabilities ............................ 633,300 (2,162,820) ----------- ----------- Net Cash Provided by Operating Activities ......................... 3,734,842 115,949 ----------- ----------- Cash flows from investing activities: Purchase of property, plant and equipment .................................. (465,383) (1,143,452) Proceeds from sale of marketable securities ............................... 400,000 620,938 Proceeds from repayment by contractor ....... 14,750 7,250 ----------- ----------- Net Cash (used in) Investing Activities ......................... (50,633) (515,264) ----------- ----------- Cash flows from financing activities: Proceeds from exercise of stock options ..... 24,500 33,938 Repayment of borrowings ..................... -- (300,000) ----------- ----------- Net Cash Provided by (used in) Financing Activities ............... 24,500 (266,062) ----------- ----------- Net Increase (Decrease) in Cash .............. 3,708,709 (665,377) Cash and Cash Equivalents - beginning of period ......................... 8,343,925 2,842,894 ----------- ----------- Cash and Cash Equivalents - end of period ............................... $12,052,634 $ 2,177,517 =========== =========== (Continued) See notes to consolidated financial statements. -5- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (unaudited) Three Months Ended March 31, --------------------------- 1996 1995 ----------- ----------- Changes in operating assets and liabilities consist of: Decrease (increase) in accounts receivable .................................. $1,189,993 $(1,942,259) Decrease (increase) in inventories ........... 393,124 (801,546) Decrease (increase) in prepaid expenses and other current assets ........... (301,983) 482,244 Decrease in other assets ..................... 61,819 35,324 Decrease in accounts payable ................. (657,300) (457,517) Increase (decrease) in accrued expenses .................................... (110,824) 520,934 Increase in income taxes payable ............. 58,471 -- ---------- ----------- $ 633,300 $(2,162,820) ========== =========== Supplementary information: Cash paid during the period for: Interest ..................................... $ -- $ 2,887 ========== =========== Income taxes ................................. $ 184,000 $ 11,000 ========== =========== Supplemental disclosures of non-cash activities: Unrealized gains on marketable securities ................................. $ 223,197 $ 740,665 ========== =========== See notes to consolidated financial statements. -6- BEL FUSE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. The consolidated balance sheet as of March 31, 1996, and the consolidated statements of operations and cash flows for the three months ended March 31, 1996 and 1995 have been prepared by the Company 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 and cash flows for all periods presented have been made. Certain items in the March 31, 1995 financial statements have been reclassified to conform to March 31, 1996 classifications. The information for December 31, 1995 was derived from audited financial statements. 2. Earnings Per Share--Earnings per common share are computed using the weighted average number of common shares outstanding during the period. The dilutive effect of outstanding options at March 31, 1996 and 1995 was not material. 3. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation", which is effective for the Company beginning January 1, 1996. SFAS No. 123 requires expanded diclosures of stock-based compensation arrangements with employees in notes to annual financial statements and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply APB Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to its stock based compensation awards to employees and will disclose the required pro forma effect on net income and earnings per share in its annual financial statements. 4. Inventories consist of the following: March 31, 1996 December 31, 1995 -------------- ----------------- Raw materials ................. $ 7,328,712 $ 7,059,330 Work-in-process ............... 67,243 191,518 Finished goods ................ 3,010,652 3,548,883 ----------- ----------- $10,406,607 $10,799,731 =========== =========== -7- BEL FUSE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 5. Property, plant and equipment consists of the following: March 31, 1996 December 31, 1995 -------------- ----------------- Land ................................ $ 835,218 $ 835,218 Buildings and improvements .......... 13,571,011 13,481,550 Machinery and equipment ............. 30,755,561 30,379,639 Idle property held for sale ......... 935,000 935,000 ----------- ----------- 46,096,790 45,631,407 Less accumulated depreciation and amortization ....................... 19,726,969 18,969,056 ----------- ----------- Net property, plant and equipment .......................... $26,369,821 $26,662,351 =========== =========== 6. INCOME TAXES Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes" (SFAS 109), provides for the recognition of deferred assets subject to a valuation allowance. At December 31, 1994, the Company established a valuation allowance equal to the full amount of the tax effect of the net operating loss carryforward. For the three months ended March 31, 1995, the Company recognized $286,000, as a reduction of United States and Far East tax expense. 7. SUBSEQUENT EVENT During April, 1996 the Company sold 112,485 shares of Technitrol, Inc. ("Technitrol") common stock for net proceeds of approximately $3.6 million. -8- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ------------------------------------------------------------------ a. Results of Operations --------------------- The following table sets forth, for the periods indicated, the percentage relationship to net sales of certain items included in the Company's consolidated statements of operations and the percentage increase for such items. Percentage of Net Sales -------------------------- Three Months Ended March 31, --------------------------- 1996 1995 ---------- --------- Net sales ..................................... 100.0% 100.0% Cost of sales ................................. 69.8 73.4 Selling, general and administrative expenses ...................... 16.2 16.9 Other income, net of interest expense ............................. 1.0 .3 Earnings before income tax provision ................................ 15.0 10.0 Income tax provision .......................... * * Net earnings .................................. 12.9 9.3 The following table sets forth, for the periods indicated, the percentage increase of items included in the Company's consolidated statements of operations. Increase from Prior Period ------------------- Three Months Ended March 31, 1996 compared with 1995 ------------------- Net sales ........................................ 8.9% Cost of sales .................................... 3.5 Selling, general and administrative expenses ......................... 4.2 Other income--net ............................... * Earnings before income tax provision ....................................... 64.2 Income tax provision ............................. * Net earnings ..................................... 51.5 * Percentage not meaningful -9- Sales ----- Net sales increased 8.9% from $15,849,971 during the first three months of 1995 to $17,262,328 during the first three months of 1996. The Company attributes this increase primarily to strong demand from OEM customers for network products and increased sales to the automotive industry. Increased network sales are due primarily to a greater focus on certain key OEM accounts and sales growth from improvements in the Company's engineering service and support to major OEM customers. Cost of Sales -------------- Cost of sales as a percentage of net sales decreased 3.6% from 73.4% during the first three months of 1995 to 69.8% during the first three months of 1996. The decrease in the cost of sales percentage is primarily attributable to (i) increased sales, which resulted in better absorption of indirect labor and overhead and (ii) lower material content associated with the current sales mix. Selling, General and Administrative Expenses -------------------------------------------- The percentage relationship of selling, general and administrative expenses to net sales decreased from 16.9% for the first three months of 1995 to 16.2% for the first three months of 1996. The Company attributes the decrease primarily to the increase in sales, as the Company was able to leverage the increase in the dollar amount of such expenses over an increased revenue base. Selling, general and administrative expenses increased in dollar amount by 4.2%. The Company attributes the increase in the dollar amount of such expenses primarily to increases in commissions and other sales related expenses due to higher sales. Other Income and Expenses ------------------------- Other income, consisting of earnings on cash equivalents and marketable securities and net realized losses on the sale of marketable securities, increased by approximately $118,000 from the first three months of 1995 to the first three months of 1996. This increase is primarily due to higher earnings on invested funds due to higher average balances and lower net realized losses in the first three months of 1996 compared to the first three months of 1995. Provision for Income Taxes -------------------------- The provision for income taxes for the first three months of 1996 was $361,000 as compared to $106,000 for the first three months of 1995. The Company attributes this change primarily to the higher earnings before income tax for the first three months of 1996 versus 1995. The Company's effective tax rate has been lower than the statutory United States corporate rate primarily as a result of the lower tax rates in Hong Kong and Macau and the utilization of tax benefits arising from the operating loss carryforward in the United States and the Far East. -10- Liquidity and Capital Resources ------------------------------- Historically, the Company has financed its capital expenditures through operating cash flows. Management believes that the cash flow from operations, combined with its existing capital base and the Company's available lines of credit, will be sufficient to fund its operations for the near term. The Company has lines of credit, all of which were unused at March 31, 1996, in the aggregate amount of $7,000,000, of which $5,000,000 is from domestic banks and $2,000,000 is from foreign banks. During April, 1996 the Company sold 112,485 shares of Technitrol, Inc. ("Technitrol") common stock for net proceeds of approximately $3.6 million. During the first three months of 1996, the Company's cash increased by $3.7 million, principally reflecting $3.7 million provided by operating activities and $400,000 from the sale of marketable securities offset in part by $465,000 in purchases of property, plant and equipment. The Company has historically followed a policy of reinvesting the earnings of foreign subsidiaries in the Far East. If the unrepatriated funds were distributed to the parent corporation, such funds would be subject to United States federal income taxes. No funds were repatriated during the first three months of 1996 or 1995. The Company's shareholders' equity increased by $2.5 million from December 31, 1995 to March 31, 1996, reflecting the Company's first three months profit of $2.2 million, an increase of $223,000 net unrealized gain on marketable securities and the exercise of incentive stock options of $25,000. Cash, accounts receivable and marketable securities comprised approximately 42.4% and 39.7% of the Company's total assets at March 31, 1996 and December 31, 1995, respectively. The Company's current ratio (i.e., the ratio of current assets to current liabilities) was 5.1 to 1 and 4.6 to 1 at March 31, 1996 and December 31, 1995, respectively. -11- PART II. Other Information Item 1. Legal Proceedings ----------------- See Item 3 of the Company's Form 10-K for the year ended December 31, 1995. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits: Exhibit 27.1 Financial Data Schedule. (b) There were no Current Reports on Form 8-K filed by the registrant during the quarter ended March 31, 1996. -12- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BEL FUSE INC. By: /s/ DANIEL BERNSTEIN -------------------- Daniel Bernstein, President (Principal Financial and Accounting Officer) Dated: May 14, 1996 -13- EX-27 2 BEL FUSE INC., FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BEL FUSE INC. AND SUBSIDIARIES FINANCIAL STATEMENTS AT MARCH 31, 1996 AND THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS DEC-31-1996 MAR-31-1996 12,052,634 5,701,320 10,670,351 155,000 10,406,607 39,200,745 46,096,790 19,726,969 66,670,990 7,768,433 0 0 0 505,545 57,865,012 66,670,990 17,262,328 17,262,328 12,040,350 14,834,641 0 0 0 2,593,909 361,000 0 0 0 0 2,232,909 .44 0
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