-----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, Aco0EncJb3TpV6B0iipx86am1KxAajbK+kTUWhkcqbAzXhcL/rOzCkoZ02+sxRe2 7HPJIFZzgOpKcVE9LKmcFQ== 0000950110-97-001478.txt : 19971119 0000950110-97-001478.hdr.sgml : 19971119 ACCESSION NUMBER: 0000950110-97-001478 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEL FUSE INC /NJ CENTRAL INDEX KEY: 0000729580 STANDARD INDUSTRIAL CLASSIFICATION: 3677 IRS NUMBER: 221463699 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11676 FILM NUMBER: 97710845 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 FORM 10-Q ================================================================================ 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 September 30, 1997 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 November 1, 1997, there were 5,118,545 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 September 30, 1997 (unaudited) and December 31, 1996 ................................. 2 - 3 Consolidated Statements of Operations for the Nine Months and Three Months Ended September 30, 1997 and 1996 (unaudited) .............................. 4 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1997 and 1996 (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, 1996. The results of operations for the nine month period ended September 30, 1997, 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 September 30, December 31, 1997 1996 ----------- ----------- (unaudited) Current Assets: Cash and cash equivalents .................. $24,871,426 $23,498,491 Marketable securities ...................... 2,472,654 2,981,020 Accounts receivable, less allowance for doubtful accounts of $195,000 ........ 9,803,863 8,866,440 Inventories ................................ 11,710,759 8,411,540 Prepaid expenses and other current assets ................................... 628,390 479,012 Deferred income taxes ...................... -- 101,000 ----------- ----------- Total Current Assets .................. 49,487,092 44,337,503 Property, plant and equipment -- net ........... 29,065,283 26,321,014 Other assets ................................... 690,918 955,491 ----------- ----------- TOTAL ASSETS .......................... $79,243,293 $71,614,008 =========== =========== (Continued) See notes to consolidated financial statements. -2- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 1997 1996 ----------- ----------- (unaudited) Current Liabilities: Accounts payable ............................ $ 2,884,470 $ 3,297,825 Accrued expenses ............................ 5,333,445 3,846,626 Income taxes payable ........................ 650,939 320,460 Deferred income taxes ....................... 47,000 -- ----------- ----------- Total Current Liabilities .............. 8,915,854 7,464,911 Deferred income taxes ........................... 904,000 750,000 ----------- ----------- Total Liabilities ...................... 9,819,854 8,214,911 ----------- ----------- 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 5,110,420 and 5,070,820 shares .......................... 511,042 507,082 Additional paid-in capital .................. 7,359,652 6,978,900 Retained earnings ........................... 61,538,300 55,920,836 Cumulative currency translation adjustment ................................ 14,445 (7,721) ----------- ----------- Total Stockholders' Equity ............. 69,423,439 63,399,097 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................... $79,243,293 $71,614,008 =========== =========== See notes to consolidated financial statements. -3- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Nine Months Ended Three Months Ended September 30, September 30, -------------------------- --------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Sales .......................................... $53,119,948 $47,832,403 $18,409,054 $14,426,471 ----------- ----------- ----------- ----------- Costs and Expenses: Cost of sales ................................ 37,165,097 33,984,034 12,687,080 10,620,540 Selling, general and administrative expenses .................... 9,894,632 8,472,248 3,391,348 2,772,584 ----------- ----------- ----------- ----------- 47,059,729 42,456,282 16,078,428 13,393,124 ----------- ----------- ----------- ----------- Income from operations ......................... 6,060,219 5,376,121 2,330,626 1,033,347 Other income -- net ............................ 1,045,245 1,689,997 363,217 237,589 ----------- ----------- ----------- ----------- Earnings before income taxes ................... 7,105,464 7,066,118 2,693,843 1,270,936 Income tax provision ........................... 1,488,000 1,415,000 519,000 39,000 ----------- ----------- ----------- ----------- Net earnings ................................... $ 5,617,464 $ 5,651,118 $ 2,174,843 $ 1,231,936 =========== =========== =========== =========== Earnings per common share ...................... $1.11 $1.12 $.43 $.24 ===== ===== ==== ==== Weighted average number of common shares outstanding .................... 5,078,135 5,061,564 5,089,495 5,070,195 =========== =========== =========== =========== See notes to consolidated financial statements.
-4- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended September 30, --------------------------- 1997 1996 ----------- ----------- Cash flows from operating activities: Net income ................................. $ 5,617,464 $ 5,651,118 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .......... 2,494,566 2,149,570 Deferred income taxes .................. 302,000 (272,000) Tax effect of non-qualifying disposition of stock options ......... 65,000 42,000 Net gain on sale of marketable securities ........................... (1,430) (1,158,957) Changes in operating assets and liabilities .......................... (2,838,361) 3,837,153 ----------- ----------- Net Cash Provided by Operating Activities ....................... 5,639,239 10,248,884 ----------- ----------- Cash flows from investing activities: Purchase of property, plant and equipment ................................. (5,223,321) (1,659,339) Purchase of marketable securities .......... (3,470,829) (2,002,786) Proceeds from sale of marketable securities ............................... 3,982,450 6,258,847 Proceeds from repayment by contractors ..... 125,684 61,750 ----------- ----------- Net Cash (Used in) provided by Investing Activities ............. (4,586,016) 2,658,472 ----------- ----------- Cash flows from financing activities: Proceeds from exercise of stock options .... 319,712 122,562 ----------- ----------- Net Increase in Cash ......................... 1,372,935 13,029,918 Cash and Cash Equivalents -- beginning of period ........................ 23,498,491 8,343,925 ----------- ----------- Cash and Cash Equivalents -- end of period .............................. $24,871,426 $21,373,843 =========== =========== (Continued) See notes to consolidated financial statements. -5- BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (unaudited) Nine Months Ended September 30, --------------------------- 1997 1996 ----------- ----------- Changes in operating assets and liabilities consist of: (Increase) decrease in accounts receivable ... $ (937,423) $ 1,924,144 (Increase) decrease in inventories ........... (3,299,219) 2,213,761 (Increase) in prepaid expenses and other current assets ....................... (275,062) (314,599) Decrease in other assets ..................... 249,059 115,944 (Decrease) in accounts payable ............... (413,355) (1,305,820) Increase in accrued expenses ................. 1,507,160 733,313 Increase in income taxes payable ............. 330,479 470,410 ----------- ----------- $(2,838,361) $ 3,837,153 =========== =========== Supplementary information: Cash paid during the period for: Interest ..................................... $ -- $ 1,573 =========== =========== Income taxes ................................. $ 787,941 $ 778,775 =========== =========== Supplemental disclosures of non-cash activities: Unrealized gains on marketable securities ...... $ -- $ (457,600) =========== =========== 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 September 30, 1997, and the consolidated statements of operations and cash flows for the periods presented herein 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 September 30, 1996 financial statements have been reclassified to conform to September 30, 1997 classifications. The information for December 31, 1996 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 September 30, 1997 and 1996 was not material. 3. Inventories consist of the following: September 30, December 31, 1997 1996 ----------- ----------- Raw materials .................................... $ 7,315,014 $ 5,718,079 Work-in-process .................................. 75,963 89,660 Finished goods ................................... 4,319,782 2,603,801 ----------- ----------- $11,710,759 $ 8,411,540 =========== =========== 4. Property, plant and equipment consists of the following: September 30, December 31, 1997 1996 ----------- ----------- Land ............................................. $ 1,165,821 $ 835,218 Buildings and improvements ....................... 13,963,648 13,510,703 Machinery and equipment .......................... 37,295,872 32,856,003 Idle property held for sale ...................... 935,000 935,000 ----------- ----------- 53,360,341 48,136,924 Less accumulated depreciation and amortization ... 24,295,058 21,815,910 ----------- ----------- Net property, plant and equipment ................ $29,065,283 $26,321,014 =========== =========== -7- BEL FUSE INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (unaudited) 5. RECENT ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share", which establishes new standards for computing and presenting net income per share and replaces the standards previously found in Accounting Principles Board Opinion No. 15, "Earnings Per Share". The Company will begin reporting net income per share according to this new standard in its 1997 annual report on Form 10-K. The Company does not expect the implementation of SFAS No. 128 to have a material effect on the Company's computation of earnings per share. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income", ("SFAS 130") and No. 131 "Disclosure about Segments of an Enterprise and Related Information", ("SFAS 131"). SFAS 130 establishes standards for reporting the display of comprehensive income and its components in a full set of general-purpose financial statements. This Statement requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. SFAS 131 establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. Both of these statements are effective for fiscal periods beginning after December 15, 1997. The Company has not yet determined the impact, if any, of adopting these standards. -8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 ----------------------------------------- Nine Months Ended Three Months Ended September 30, September 30, ----------------- ----------------- 1997 1996 1997 1996 ------ ------ ------ ------ Net sales ......................... 100.0% 100.0% 100.0% 100.0% Cost of sales ..................... 70.0 71.0 68.9 73.6 Selling, general and administrative expenses ......... 18.6 17.7 18.4 19.2 Other income, net of interest expense ................ 2.0 3.5 1.9 1.6 Earnings before income tax provision ................... 13.4 14.8 14.6 8.8 Income tax provision .............. 2.8 3.0 2.8 .3 Net earnings ...................... 10.6 11.8 11.8 8.5 The following table sets forth, for the periods indicated, the percentage increase (decrease) of items included in the Company's consolidated statements of operations. Increase (Decrease) from Prior Period --------------------------------------- Nine Months Ended Three Months Ended September 30, 1997 September 30, 1997 Compared with 1996 Compared with 1996 ------------------ ------------------ Net sales ............................. 11.1% 27.6% Cost of sales ......................... 9.3 19.5 Selling, general and administrative expenses ............................ 16.8 22.3 Other income -- net ................... (38.2) 52.9 Earnings before income tax provision .. .6 112.0 Income tax provision .................. 5.2 * Net earnings .......................... (.6) 76.5 - - ---------- * Percentage not meaningful. -9- NINE MONTHS 1997 VS. NINE MONTHS 1996 SALES Net sales increased 11.1% from $47,832,403 during the first nine months of 1996 to $53,119,948 during the first nine months of 1997. The Company attributes this increase primarily to sales growth in magnetic components for network and fuse products offset, in part, by reduced sales of customer-specific value-added circuits and assemblies. Such reduced sales reflect the termination of certain contracts. Sales growth consisted primarily of growth in unit sales. COST OF SALES Cost of sales as a percentage of net sales decreased 1.0% to 70.0% during the first nine months of 1997 from 71.0% during the first nine months of 1996. The decrease in the cost of sales percentage is primarily attributable to lower material content associated with the current sales mix offset in part by increases in direct labor due to the current sales mix which has higher direct labor associated with it. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The percentage relationship of selling, general and administrative expenses to net sales increased from 17.7% for the first nine months of 1996 to 18.6% for the first nine months of 1997. The Company attributes the increase primarily to increases in sales salaries and sales related expenses. Selling, general and administrative expenses increased in dollar amount by 16.8%. The Company attributes the increase in dollar amount of such expenses primarily to increased sales and increases in sales salaries and sales related expenses. OTHER INCOME AND EXPENSES Other income, consisting of net realized gains on the sale of marketable securities, interest and dividends earned on marketable securities and on cash equivalents, decreased by approximately $644,752 from the first nine months of 1996 to the first nine months of 1997. The decrease is primarily due to the gain on the sale of 112,485 shares of Technitrol, Inc. common stock recognized during the first nine months of 1996 offset in part by higher earnings on invested funds due to greater average balances in 1997 compared to 1996. PROVISION FOR INCOME TAXES The provision for income taxes for the first nine months of 1996 was $1,415,000 as compared to $1,488,000 for the first nine months of 1997. This increase is due primarily to higher pretax earnings for the first nine months of 1997 versus 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. -10- THREE MONTHS 1997 VS. THREE MONTHS 1996 SALES Sales increased 27.6% to $18,409,054 during the third quarter of 1997 from $14,426,471 during the third quarter of 1996. The Company attributes the increase primarily to the reasons set forth in the nine month analysis. COST OF SALES Cost of sales as a percentage of net sales decreased 2.8% during the third quarter of 1997 as compared to the third quarter of 1996. The Company attributes the decrease to the reasons set forth in the nine month analysis. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES The percentage relationship of selling, general and administrative expenses to net sales decreased by .8% during the third quarter of 1997 as compared to 1996. Such decrease reflects the leveraging of certain general and administrative expenses over a greater sales volume. Selling, general and administrative expenses increased in dollar amount by 22.3%. The Company attributes the increase in dollar amount to the reasons set forth in the nine month analysis. OTHER INCOME AND EXPENSE Other income increased for the third quarter of 1997 compared to the third quarter of 1996 due to higher earnings on invested funds due to greater average balances in 1997 than in 1996. PROVISION FOR INCOME TAXES The provision for income taxes increased to $519,000 for the third quarter of 1997 from $39,000 for the third quarter of 1996 primarily due to greater earnings before income taxes and higher United States pretax earnings during the third quarter of 1997 compared to the third quarter of 1996. -11- LIQUIDITY AND CAPITAL RESOURCES Historically, the Company has financed its capital expenditures through cash flows from operating activities. 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. This statement represents a forward-looking statement. Actual results could differ materially from such statement if the Company experiences substantial unanticipated cash requirements. The Company has lines of credit, all of which were unused at September 30, 1997, in the aggregate amount of $7.0 million, of which $5.0 million is from domestic banks and $2.0 million is from foreign banks. During the first nine months of 1997, the Company's cash and cash equivalents increased by $1.4 million, reflecting $5.6 million provided by operating activities (principally reflecting the Company's profitable operations) and $4.0 million from the sale of marketable securities, offset in part by $3.5 million in purchases of marketable securities and $5.2 million in purchases of plant and equipment. The Company has historically followed a policy of reinvesting the earnings of foreign subsidiaries in the Far East. If the unrepatriated earnings were distributed to the parent corporation, such earnings would be subject to United States federal income taxes. No earnings were repatriated during the first nine months of 1997 or 1996. Cash, accounts receivable and marketable securities comprised approximately 46.8% and 49.3% of the Company's total assets at September 30, 1997 and December 31, 1996, respectively. The Company's current ratio (i.e., the ratio of current assets to current liabilities) was 5.6 to 1 and 5.9 to 1 at September 30, 1997 and December 31, 1996, respectively. THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED UNDER THE "BUSINESS", "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS", AND "RISKS AND UNCERTAINTIES" CAPTIONS IN THE COMPANY'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996. -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, 1996. 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 September 30, 1997. -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: November 10, 1997 -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 SEPTEMBER 30, 1997 AND THE NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 9-MOS DEC-31-1997 SEP-30-1997 24,871,426 2,472,654 9,998,863 195,000 11,710,759 49,487,092 53,360,341 24,295,058 79,243,293 8,915,854 0 511,042 0 0 68,912,397 79,243,293 53,119,948 53,119,948 37,165,097 47,059,729 0 0 0 7,105,464 1,488,000 5,617,464 0 0 0 5,617,464 1.11 0
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