-----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, Ai3tjg52Ni2zMXFuTdeNBOQ9lwBMHdqKHZHFpIkUaZp7r6Q+RE2B2uvNL8MtXnvL ZLgDGIWIDlf6grskWY3TBA== 0000950110-96-000866.txt : 19960813 0000950110-96-000866.hdr.sgml : 19960813 ACCESSION NUMBER: 0000950110-96-000866 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEL FUSE INC /NJ CENTRAL INDEX KEY: 0000729580 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COILS, TRANSFORMERS & OTHER INDUCTORS [3677] 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: 96607777 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 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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 August 1, 1996, there were 5,070,195 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 June 30, 1996 (unaudited) and December 31, 1995 ....................................... 2 - 3 Consolidated Statements of Operations for the Six Months and Three Months Ended June 30, 1996 and 1995 (unaudited) ............................................. 4 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 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 - 12 Part II. Other Information Item 1. Legal Proceedings ....................................... 13 Item 6. Exhibits and Reports on Form 8-K ........................ 13 Signatures .......................................................... 14 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 six month period ended June 30, 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 June 30, December 31, 1996 1995 ----------- ----------- (unaudited) Current Assets: Cash and cash equivalents .................. $17,741,231 $ 8,343,925 Marketable securities ...................... 1,591,553 5,556,740 Accounts receivable, less allowance for doubtful accounts of $155,000 ........ 10,593,570 11,705,344 Inventories ................................ 9,516,877 10,799,731 Prepaid expenses and other current assets ................................... 607,390 239,511 ----------- ----------- Total Current Assets .................. 40,050,621 36,645,251 Property, plant and equipment -- net ........... 26,326,591 26,662,351 Other assets ................................... 1,082,574 1,168,072 ----------- ----------- TOTAL ASSETS .......................... $67,459,786 $64,475,674 =========== =========== (Continued) See notes to consolidated financial statements. -2- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 1996 1995 ----------- ----------- (unaudited) Current Liabilities: Accounts payable ............................. $ 1,802,483 $ 3,374,433 Accrued expenses ............................. 4,307,253 4,049,366 Income taxes payable ......................... 1,036,955 539,924 Deferred income taxes ........................ -- 38,000 ----------- ----------- Total Current Liabilities ............... 7,146,691 8,001,723 Deferred income taxes ............................ 297,000 584,000 ----------- ----------- Total Liabilities ....................... 7,443,691 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 5,070,195 and 5,051,445 shares ........................... 507,020 505,145 Additional paid-in capital ................... 6,974,587 6,811,900 Retained earnings ............................ 52,534,488 48,115,306 Net unrealized gain on marketable securities ................................. -- 457,600 ----------- ----------- Total Stockholders' Equity .............. 60,016,095 55,889,951 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................ $67,459,786 $64,475,674 =========== =========== See notes to consolidated financial statements. -3- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Six Months Ended Three Months Ended June 30, June 30, ------------------------- ------------------------- 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Sales .......................................... $33,405,932 $33,960,253 $16,143,604 $18,110,282 ----------- ----------- ----------- ----------- Costs and Expenses: Cost of sales ................................ 23,363,494 25,027,402 11,323,144 13,389,470 Selling, general and administrative expenses.. 5,699,664 5,770,437 2,905,373 3,089,462 ----------- ----------- ----------- ----------- 29,063,158 30,797,839 14,228,517 16,478,932 ----------- ----------- ----------- ----------- Income from operations ......................... 4,342,774 3,162,414 1,915,087 1,631,350 Other income -- net ............................ 1,453,628 115,004 1,287,406 63,609 Interest (expense) ............................. 1,220 3,111 1,220 224 ----------- ----------- ----------- ----------- Earnings before income taxes ................... 5,795,182 3,274,307 3,201,273 1,694,735 Income tax provision ........................... 1,376,000 304,000 1,015,000 198,000 ----------- ----------- ----------- ----------- Net earnings ................................... $ 4,419,182 $ 2,970,307 $ 2,186,273 $ 1,496,735 =========== =========== =========== =========== Earnings per common share ...................... $.87 $.60 $.43 $.30 ==== ==== ==== ==== Weighted average number of common shares outstanding ........................... 5,057,201 4,981,293 5,061,919 4,992,864 ========= ========= ========= =========
See notes to consolidated financial statements. -4- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, --------------------------- 1996 1995 ----------- ----------- Cash flows from operating activities: Net income .............................. $ 4,419,182 $ 2,970,307 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ........... 1,419,396 1,345,912 Deferred income taxes ................... (325,000) 86,000 Tax effect of non-qualifying disposition of stock options .......... 42,000 -- Bad debt reserve ........................ -- 12,000 Inventory obsolescence reserve .......... 300,000 180,000 Net (gain) loss on marketable securities ............................ (1,152,237) 95,086 Changes in operating assets and liabilities ........................... 944,712 (1,480,784) ----------- ----------- Net Cash Provided by Operating Activities ........................ 5,648,053 3,208,521 ----------- ----------- Cash flows from investing activities: Purchase of property, plant and equipment ................................ (1,072,633) (5,652,667) Purchase of marketable securities .......... (1,023,641) -- Proceeds from sale of marketable securities ............................... 5,683,465 2,364,826 Proceeds from repayment by contractor ...... 39,500 14,500 ----------- ----------- Net Cash Provided by (used in) Investing Activities .............. 3,626,691 (3,273,341) ----------- ----------- Cash flows from financing activities: Proceeds from exercise of stock options .... 122,562 216,850 Repayment of borrowings .................... -- (300,000) ----------- ----------- Net Cash Provided by (used in) Financing Activities .............. 122,562 (83,150) ----------- ----------- Net Increase (Decrease) in Cash .............. 9,397,306 (147,970) Cash and Cash Equivalents -- beginning of period ........................ 8,343,925 2,842,894 ----------- ----------- Cash and Cash Equivalents -- end of period .............................. $17,741,231 $ 2,694,924 =========== =========== (Continued) See notes to consolidated financial statements. -5- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (unaudited) Six Months Ended June 30, ---------------------------- 1996 1995 ----------- ----------- Changes in operating assets and liabilities consist of: Decrease (increase) in accounts receivable ............................. $ 1,111,774 $(3,035,616) Decrease (increase) in inventories ....... 982,854 (1,192,106) (Increase) decrease in prepaid expenses and other current assets ...... (409,290) 519,829 Decrease in other assets ................. 74,495 47,879 (Decrease) increase in accounts payable ................................ (1,571,950) 1,085,749 Increase in accrued expenses ............. 257,887 901,637 Increase in income taxes payable ......... 497,031 191,844 ----------- ----------- $ 944,712 $(1,480,784) =========== =========== Supplementary information: Cash paid during the period for: Interest ................................. $ 1,220 $ 3,111 =========== =========== Income taxes ............................. $ 778,775 $ 13,000 =========== =========== Supplemental disclosures of non-cash activities: Unrealized gains (losses) on marketable securities .................. $ (457,600) $ 1,215,921 =========== =========== 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 June 30, 1996, and the consolidated statements of operations and cash flows for the six months ended June 30, 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 June 30, 1995 financial statements have been reclassified to conform to June 30, 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 June 30, 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 disclosures 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: June 30, 1996 December 31, 1995 ------------- ----------------- Raw materials .................. $5,974,799 $ 7,059,330 Work-in-process ................ 53,575 191,518 Finished goods ................. 3,488,503 3,548,883 ---------- ----------- $9,516,877 $10,799,731 ========== =========== -7- BEL FUSE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 5. Property, plant and equipment consists of the following: June 30, 1996 December 31, 1995 ------------- ----------------- Land ................................. $ 835,218 $ 835,218 Buildings and improvements ........... 13,570,013 13,481,550 Machinery and equipment .............. 31,363,620 30,379,639 Idle property held for sale .......... 935,000 935,000 ----------- ----------- 46,703,851 45,631,407 Less accumulated depreciation and amortization ....................... 20,377,260 18,969,056 ----------- ----------- Net property, plant and equipment .......................... $26,326,591 $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 six months ended June 30, 1995, the Company recognized $208,000, as a reduction of United States and Far East tax expense. -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. Percentage of Net Sales ---------------------------------------- Six Months Ended Three Months Ended June 30, June 30, ----------------- ------------------ 1996 1995 1996 1995 ------ ------ ------ ------ Net sales .......................... 100.0% 100.0% 100.0% 100.0% Cost of sales ...................... 69.9 73.7 70.1 73.9 Selling, general and administrative expenses .......... 17.1 17.0 18.0 17.1 Other income, net of interest expense ................. 4.3 .4 7.9 .4 Earnings before income tax provision .................... 17.3 9.7 19.8 9.4 Income tax provision ............... 4.1 .9 6.3 1.1 Net earnings ....................... 13.2 8.8 13.5 8.3 The following table sets forth, for the periods indicated, the percentage increase or decrease of items included in the Company's consolidated statements of operations. Increase (Decrease) from Prior Period ----------------------------------------- Six Months Ended Three Months Ended June 30, 1996 June 30, 1996 compared with 1995 compared with 1995 ------------------ ------------------ Net sales ........................... (1.6)% (10.9)% Cost of sales ....................... (6.6) (15.4) Selling, general and administrative expenses ........... (1.2) (6.0) Other income -- net ................. * * Earnings before income tax provision ......................... 77.0 88.9 Income tax provision ................ 352.6 412.6 Net earnings ........................ 48.8 46.1 - ---------- * Percentage not meaningful -9- Six Months 1996 vs. Six Months 1995 - ----------------------------------- Sales ----- Net sales decreased 1.6% to $33,405,932 during the first six months of 1996 from $33,960,253 during the first six months of 1995. The Company attributes this decrease primarily to a general softening in sales and the elimination of certain low margin products. Cost of Sales ------------- Cost of sales as a percentage of net sales decreased 3.8% to 69.9% during the first six months of 1996 from 73.7% during the first six months of 1995. The decrease in the cost of sales percentage is primarily attributable to lower raw material content associated with the current sales mix and elimination of certain low margin products. Selling, General and Administrative Expenses -------------------------------------------- The percentage relationship of selling, general and administrative expenses to net sales remained relatively constant for the first six months of 1996 compared to the first six months of 1995. Selling, general and administrative expenses decreased in dollar amount by 1.2%. The decrease in the dollar amount of such expenses is the result of the Company's cost containment measures. Other Income and Expenses ------------------------- Other income, consisting of net realized gains on the sale of marketable securities and interest and dividends earned on marketable securities and on cash equivalents increased by $1,338,624 from the first six months of 1995 compared to the first six months of 1996. This increase is primarily due to the gain on the sale of 112,485 shares of Technitrol, Inc. common stock and to higher earnings on invested funds due to higher average balances in the first six months of 1996 compared to the first six months of 1995 offset in part by the loss on other marketable securities. Provision for Income Taxes -------------------------- The provision for income taxes for the first six months of 1996 was $1,376,000 as compared to $304,000 for the first six months of 1995. This increase is due primarily to the higher pretax earnings including the gain on the sale of the Technitrol, Inc. common stock for the first six months of 1996 versus 1995. The 1995 provision for income taxes was reduced by the use of a net operating loss carryforward which was no longer available in 1996. 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- Three Months 1996 vs. Three Months 1995 - --------------------------------------- Sales ----- Sales decreased 10.9% to $16,143,604 during the second quarter of 1996 from $18,110,282 during the second quarter of 1995. The Company attributes this decrease primarily to the reason set forth in the six month analysis. Cost of Sales ------------- Cost of sales as a percentage of net sales decreased 2.8% to 70.1% during the second quarter of 1996 from 73.9% during the second quarter of 1995. The Company attributes this decrease primarily to the reason set forth in the six month analysis. Selling, General and Administrative Expenses -------------------------------------------- The percentage relationship of selling, general and administrative expenses to net sales increased .9% from the second quarter of 1995 to the second quarter of 1996 and selling, general and administrative expenses decreased in dollar amount by 6%. The Company attributes the increase in selling, general and administrative expenses to net sales primarily to lower sales and the decrease in dollar amount of selling, general and administrative expenses primarily to decreases in commissions and other sales related expenses due to lower sales and to those reasons set forth in the six month analysis. Other Income and Expense ------------------------ Other income for the second quarter of 1996 compared to the second quarter of 1995 increased due to those reasons set forth in the six month analysis. Provision for Income Taxes -------------------------- The provision for income taxes increased to $1,015,000 for the second quarter 1996 from $198,000 for the second quarter of 1995 primarily for those reasons set forth in the six month analysis. 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 June 30, 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. -11- Liquidity and Capital Resources (Continued) ------------------------------- During the first six months of 1996, the Company's cash increased by $9.4 million, principally reflecting $5.6 million provided by operating activities and $4.7 from the sale of marketable securities offset in part by $1.1 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 six months of 1996 or 1995. The Company's shareholders' equity increased by $4.1 million from December 31, 1995 to June 30, 1996, reflecting the Company's first six months profit of $4.4 million, and the exercise of incentive stock options of $122,000 offset by a decrease of $400,000 in net unrealized gain on marketable securities as all gains and losses were realized during the second quarter of 1996. Cash, accounts receivable and marketable securities comprised approximately 44.4% and 39.7% of the Company's total assets at June 30, 1996 and December 31, 1995, respectively. The Company's current ratio (i.e., the ratio of current assets to current liabilities) was 5.6 to 1 and 4.6 to 1 at June 30, 1996 and December 31, 1995, respectively. -12- 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 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- The Company's annual meeting of security holders was held on May 29, 1996. At the meeting, the Board's nominees were elected to the Board of Directors for terms of one to three years. The votes were cast as follows: FOR WITHHELD --------- -------- Elliot Bernstein: 4,801,360 12,645 Peter Gilbert: 4,661,960 152,045 John Johnson: 4,793,460 20,545 Robert Simandl: 4,799,660 14,345 John Tweedy: 4,795,760 18,245 There were -0- abstentions and -0- broker non-votes. 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 June 30, 1996. -13- 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: August 13, 1996 -14- 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 JUNE 30, 1996 AND THE SIX MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 YEAR DEC-31-1996 JUN-30-1996 17,741,231 1,591,553 10,748,570 155,000 9,516,877 40,050,621 46,703,851 20,377,260 67,459,786 7,146,691 0 0 0 507,020 59,509,075 67,459,786 33,405,932 33,405,932 23,363,494 29,063,158 0 0 0 5,795,182 1,376,000 0 0 0 0 4,419,182 .87 0
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