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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q PRIVATE
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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
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BEL FUSE INC.
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(Exact name of registrant as specified in its charter)
NEW JERSEY 22-1463699
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
198 VAN VORST STREET
JERSEY CITY, NEW JERSEY 07302
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(Address of principal executive offices)
(Zip Code)
201-432-0463
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(Registrant's telephone number, including area code)
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(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, 1999, there were 2,613,570 shares of Class A Common Stock,
$.10 par value, outstanding and 2,623,570 shares of Class B Common Stock, $.10
par value, outstanding.
<PAGE>
BEL FUSE INC.
INDEX
Page Number
-----------
Part I.--FINANCIAL INFORMATION
Item 1. Financial Statements 1
Consolidated Balance Sheets as of
June 30, 1999 (unaudited) and
December 31, 1998 2 - 3
Consolidated Statements of Operations
and Comprehensive Income for the
Three and Six Months Ended
June 30, 1999 and 1998 (unaudited) 4 - 5
Consolidated Statements of
Cash Flows for the
Six Months Ended June 30, 1999
and 1998 (unaudited) 6 - 7
Notes to Consolidated Financial
Statements (unaudited) 8 - 10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11 - 16
Item 3. Quantitative and Qualitative
Disclosures About Market Risk 16
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote
of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
<PAGE>
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, 1998.
The results of operations for the six month period ended June 30, 1999 are
not necessarily indicative of the results for the entire fiscal year or for any
other period.
-1-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
1999 1998
------------ ------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 15,806,562 $ 14,923,685
Accounts receivable, less allowance
for doubtful accounts of $317,000 20,335,259 17,072,537
Inventories 27,797,241 21,847,563
Prepaid expenses and other current
assets 696,202 353,869
Deferred income taxes 90,000 284,000
------------ ------------
Total Current Assets 64,725,264 54,481,654
Property, plant and equipment - net 36,128,176 35,471,498
Goodwill-net of amortization of
$1,279,906 and $523,423 12,509,486 13,222,223
Other assets 415,639 449,253
------------ ------------
TOTAL ASSETS $113,778,565 $103,624,628
============ ============
(Continued)
See notes to consolidated financial statements.
-2-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1999 1998
------------ -------------
(unaudited)
Current Liabilities:
Accounts payable $ 5,601,562 $ 4,985,840
Accrued expenses 7,416,896 8,416,051
Income taxes payable 1,186,176 10,247
Dividends payable 262,357 260,331
------------ ------------
Total Current Liabilities 14,466,991 13,672,469
Deferred income taxes 814,000 1,146,000
------------ ------------
Total Liabilities 15,280,991 14,818,469
------------ ------------
Stockholders' Equity:
Preferred stock, no par value--
authorized 1,000,000 shares;
none issued -- --
Class A common stock, par value
$.10 per share--authorized
10,000,000 shares; outstanding
2,613,570 and 2,603,310 shares
(net of 1,072,770 treasury shares) 261,357 260,331
Class B common stock, par value
$.10 per share--authorized
10,000,000 shares; outstanding
2,623,570 and 2,603,310 shares
(net of 1,072,770 treasury shares) 262,357 260,331
Additional paid-in capital 8,926,426 8,561,421
Retained earnings 89,042,920 79,728,787
Cumulative other comprehensive
income (loss) 4,514 (4,711)
------------ ------------
Total Stockholders' Equity 98,497,574 88,806,159
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $113,778,565 $103,624,628
============ ============
See notes to consolidated financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $59,210,700 $39,046,355 $28,451,932 $19,531,655
----------- ----------- ----------- -----------
Costs and Expenses:
Cost of sales 38,253,853 26,024,635 17,939,247 12,846,907
Selling, general and
administrative expenses 9,648,344 7,033,510 4,843,473 3,646,028
----------- ----------- ----------- -----------
47,902,197 33,058,145 22,782,720 16,492,935
----------- ----------- ----------- -----------
Income from operations 11,308,503 5,988,210 5,669,212 3,038,720
Other income--net 331,109 893,983 179,367 477,985
----------- ----------- ----------- -----------
Earnings before income taxes 11,639,612 6,882,193 5,848,579 3,516,705
Income tax provision 1,801,000 877,000 1,131,000 478,000
----------- ----------- ----------- -----------
Net earnings $ 9,838,612 $ 6,005,193 $ 4,717,579 $ 3,038,705
=========== =========== =========== ===========
Basic earnings per common share $1.88 $1.16 $ .90 $ .59
===== ===== ===== =====
Diluted earnings per common share $1.83 $1.15 $ .88 $ .58
===== ===== ===== =====
Weighted average number of
common shares outstanding--basic 5,224,149 5,158,028 5,234,847 5,184,994
=========== =========== =========== ===========
Weighted average number of
common shares outstanding and
potential common shares--diluted 5,379,500 5,222,613 5,376,411 5,212,584
=========== =========== =========== ===========
</TABLE>
(Continued)
See notes to consolidated financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
------------------------- -------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net earnings $ 9,838,612 $ 6,005,193 $ 4,717,579 $ 3,038,705
Other comprehensive income
(expense), net of income
taxes:
Foreign currency
translation adjustment 9,225 (20,126) 2,278 (1,511)
----------- ----------- ----------- -----------
Comprehensive income $ 9,847,837 $ 5,985,067 $ 4,719,857 $ 3,037,194
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
-5-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30,
----------------------------
1999 1998
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Cash flows from operating activities:
Net income $ 9,838,612 $ 6,005,193
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,982,029 1,662,700
Other (78,000) 196,000
Changes in operating assets and
liabilities (8,791,097) 1,569,259
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Net Cash Provided by Operating
Activities 3,951,544 9,433,152
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Cash flows from investing activities:
Purchase of property, plant and
equipment (2,872,939) (1,837,547)
Payment for acquisition (43,806) --
Purchase of marketable securities -- (2,830,415)
Proceeds from repayment by contractors 64,500 82,531
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Net Cash Used in Investing
Activities (2,852,245) (4,585,431)
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Cash flows from financing activities:
Proceeds from exercise of stock options 308,057 832,137
Dividends (524,479) --
----------- ----------
Net Cash (Used in) Provided by
Financing Activities (216,422) 832,137
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Net increase in Cash 882,877 5,679,858
Cash and Cash Equivalents -
beginning of period 14,923,685 29,231,967
----------- ----------
Cash and Cash Equivalents -
end of period $15,806,562 $34,911,825
=========== ==========
(Continued)
See notes to consolidated finacial statements.
-6-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
(unaudited)
Six Months Ended
June 30,
----------------------------
1999 1998
----------- -----------
Changes in operating assets and
liabilities consist of:
Increase in accounts receivable $(3,262,722) $(1,016,160)
(Increase) decrease in inventories (5,949,678) 2,347,951
Increase in prepaid expenses and
other current assets (406,833) (363,378)
Decrease in other assets 33,614 89,566
Increase (decrease) in accounts payable 615,722 (285,771)
Increase (decrease) in accrued expenses (999,155) 872,639
Increase (decrease) in
income taxes payable 1,175,929 (75,588)
Increase in dividends payable 2,026
----------- -----------
$(8,791,097) $ 1,569,259
=========== ===========
Supplementary information:
Cash paid during the period for:
Interest $ -- $ --
=========== ===========
Income taxes $ 726,000 $ 432,000
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See notes to consolidated financial statements.
-7-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet as of June 30, 1999, and the consolidated
statements of operations and comprehensive income 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 comprehensive income and cash flows for all periods presented
have been made. Certain items in the June 30, 1998 financial statements have
been reclassified to conform to 1999 classifications. The information for
December 31, 1998 was derived from audited financial statements.
2. Earnings Per Share - Basic earnings per common share are computed using the
weighted average number of common shares outstanding during the period. Diluted
earnings per common share are computed using the weighted average number of
common shares and potential common shares outstanding during the period.
3. Acquisition
On October 2, 1998, the Company acquired the manufacturing assets,
primarily consisting of inventory and fixed assets, of Lucent Technologies,
Inc.'s ("Lucent") signal transformer product line in exchange for approximately
$27 million in cash plus acquisition costs of approximately $500,000. Under the
terms of the agreement, the Company, among other things, will continue to supply
certain of Lucent's telecom magnetics requirements up to forty-two months. The
Company is moving the majority of the manufacturing for this business to the
Republic of China. Lucent and the Company entered into a Transition Services
Agreement whereby Lucent has agreed to provide contract labor and transitional
services to the Company for an agreed price until the earlier of September 30,
1999 or the date on which Signal Transformer Manufacturing operations and the
purchased assets are relocated.
The acquisition has been accounted for under the purchase method of
accounting and includes the results of operations of the acquired entity from
the date of acquisition. Intangible assets and goodwill which arose in
connection with the acquisition in the amount of $13.5 million, are being
amortized over three and one-half to 15 years using the straight line method.
Proforma unaudited results of operations for the six months ended June 30, 1998
reflect the consolidated operations of the Company assuming the acquisition
occurred on January 1, 1998. Proforma adjustments have been made for
amortization of intangibles, depreciation, reduction of interest income and
income taxes. The proforma results are as follows:
-8-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Six Months Ended Three Months Ended
June 30, 1998 June 30, 1998
---------------- ------------------
(Dollars in thousands except per share data)
Sales $57,411 $28,858
Net earnings (1) 10,337 5,080
Diluted earnings per
common share $1.98 $ .97
- ----------
(1) In arriving at net earnings, income taxes were estimated based upon
assumptions as to the geographic area in which the operating income would
have been earned by the Company.
4. Inventories consist of the following:
June 30, 1999 December 31, 1998
------------- -----------------
Raw materials $15,736,928 $11,459,928
Work-in-process 120,581 139,166
Finished goods 11,939,732 10,248,469
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$27,797,241 $21,847,563
========== ===========
5. Property, plant and equipment consists of the following:
June 30, 1999 December 31, 1998
------------- ----------------
Land $ 1,164,436 $ 1,164,436
Buildings and improvements 14,037,278 13,901,108
Machinery and equipment 49,404,615 46,658,618
Idle property held for sale 935,000 935,000
----------- -----------
65,541,329 62,659,162
Less accumulated
depreciation and
amortization 29,413,153 27,187,664
----------- -----------
Net property, plant and
equipment $36,128,176 $35,471,498
=========== ===========
-9-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Business Segment Information
The Company does not have reportable operating segments as defined in
Statement of Financial Accounting Standards No.131, "Disclosures about Segments
of an Enterprise and Related Disclosures". The method for attributing revenues
for interim purposes is based on total shipments from the country of origination
less intergeographic revenues. The Company operates facilities in the United
States, Europe and the Far East. The primary criteria by which financial
performance is evaluated and resources are allocated include revenues and
operating income. The following is a summary of key financial data:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Total Revenues:
United States $ 38,346,172 $ 19,818,878 $ 18,538,709 $ 10,888,789
Asia 53,958,049 35,520,190 25,437,471 17,787,480
Less intergeographic
revenues (33,093,521) (16,292,713) (15,524,248) (9,144,614)
------------ ------------ ------------ ------------
$ 59,210,700 $ 39,046,355 $ 28,451,932 $ 19,531,655
============ ============ ============ ============
Income from Operations:
United States $ 5,017,358 $ 1,566,151 $ 2,789,626 $ 1,090,870
Asia 6,291,145 4,422,059 2,879,586 1,947,850
------------ ------------ ------------ ------------
$ 11,308,503 $ 5,988,210 $ 5,669,212 $ 3,038,720
============ ============ ============ ============
</TABLE>
-10-
<PAGE>
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
--------------------------------------------
Six Months Ended Three Months Ended
June 30, June 30,
------------------ -------------------
1999 1998 1999 1998
------ ------ ------- ------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 64.6 66.7 63.0 65.8
Selling, general and
administrative expenses 16.3 18.0 17.0 18.7
Other income, net of
interest expense .6 2.3 .6 2.5
Earnings before income
tax provision 19.6 17.6 20.6 17.9
Income tax provision 3.0 2.2 4.0 2.4
Net earnings 16.6 15.4 16.6 15.6
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
-------------------------------------------
Six Months Ended Three Months Ended
June 30, 1999 June 30, 1999
compared with 1998 compared with 1998
------------------ ------------------
Net sales 51.6% 45.7%
Cost of sales 47.0 39.6
Selling, general and
administrative
expenses 37.2 32.8
Other income - net (63.0) (62.5)
Earnings before
income tax provision 69.1 66.3
Income tax provision 105.4 136.6
Net earnings 63.8 55.2
On October 2, 1998, the Company acquired Lucent Technologies' signal
transformer product line and the related manufacturing assets, primarily
consisting of inventory and fixed assets. See Note 3 of the Notes to
Consolidated Financial Statements. This transaction was accounted for as a
purchase and the results of operations of this acquisition have been included in
results of operations since the date of acquisition. The 1998 periods described
do not reflect this acquisition.
-11-
<PAGE>
SIX MONTHS 1999 VS. SIX MONTHS 1998
NET SALES
Net sales increased 51.6% from $39,046,355 during the first six months of
1998 to $59,210,700 during the first six months of 1999. The Company attributes
this increase primarily to sales growth of telecom magnetic products of the
signal transformer product line recently acquired from Lucent, and increased
fuse sales.
COST OF SALES
Cost of sales as a percentage of net sales decreased 2.1 % to 64.6 % during
the first six months of 1999 from 66.7 % during the first six months of 1998.
The decrease in the cost of sales percentage is primarily attributable to lower
material content offset in part by higher overhead, principally attributed to
increased depreciation expense and increased overheads associated with the
telecom magnetic product line. The Company is moving the telecom magnetic
product line to China and expects to complete the move during the third quarter
of 1999. The Company's statement regarding the completion of this transition
represents a Forward Looking Statement under the Private Securities Litigation
Reform Act of 1995 (a "Forward - Looking Statement"). Actual results could
differ materially from the Company's estimate as a result of a variety of
factors, including but not limited to unanticipated logistical problems related
to the transfer, the effect of business and economic conditions, capacity and
supply constraints and the regulatory and trade environment.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The percentage relationship of selling, general and administrative
expenses to net sales decreased from 18.0 % for the first six months of 1998 to
16.3 % for the first six months of 1999. The Company attributes the percentage
decrease primarily to increased sales. Selling, general and administrative
expenses increased in dollar amount by 37.2 %. The Company attributes the
increase in dollar amount of such expenses primarily to increases in sales and
marketing salaries and other sales related expenses and amortization of goodwill
resulting from the acquisition of the signal transformer product line recently
acquired from Lucent.
OTHER INCOME AND EXPENSES
Other income, consisting principally of interest earned on cash equivalents
and marketable securities, decreased by approximately $563,000 during the first
six months of 1999 compared to the first six months of 1998. The decrease is
primarily due to the use of cash and cash equivalents in the acquisition of the
signal transformer business from Lucent.
PROVISION FOR INCOME TAXES
The provision for income taxes for the first six months of 1999 was
$1,801,000 as compared to $877,000 for the first six months of 1998. The
increase in the provision is due primarily to higher United States and foreign
earnings in 1999 versus 1998.
-12-
<PAGE>
THREE MONTHS 1999 VS. THREE MONTHS 1998
SALES
Sales increased 45.7% to $28,451,932 during the second quarter of 1999 from
$19,531,655 during the second quarter of 1998. The Company attributes the
increase primarily to the reasons set forth in the six month analysis.
COST OF SALES
Cost of sales as a percentage of net sales decreased 2.8% to 63.0% during
the second quarter of 1999 from 65.8% during the second quarter of 1998. The
Company attributes the decrease primarily to the reasons set forth in the six
month analysis.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The percentage relationship of selling, general and administrative
expenses to net sales decreased 1.7% to 17.0% during the second quarter of 1999
from 18.7% during the second quarter of 1998. Selling, general and
administrative expenses increased in dollar amount by $1,197,000. The Company
attributes the decrease in such percentage relationship and the increase in
dollar amount to the reasons set forth in the six month analysis.
OTHER INCOME AND EXPENSE
Other income increased for the second quarter of 1999 compared to the
second quarter of 1998 due to the reasons set forth in the six month analysis.
PROVISION FOR INCOME TAXES
The provision for income taxes increased to $1,131,000 for the second
quarter of 1999 from $478,000 for the second quarter of 1998. The Company
attributed the increase in the provision to the reasons set forth in the six
month analysis.
-13-
<PAGE>
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 June 30, 1999,
in the aggregate amount of $14 million, of which $12 million is from domestic
banks and $2 million is from foreign banks.
During the first six months of 1999, the Company's cash and cash
equivalents increased by approximately $.9 million, reflecting approximately $4
million provided by operating activities and approximately $.3 million from the
exercise of stock options, offset, in part, by approximately $2.9 million in
purchases of plant and equipment and approximately $.5 million in dividends.
Cash and cash equivalents and accounts receivable comprised approximately
31.8 % and 30.9 % of the Company's total assets at June 30, 1999 and December
31, 1998, respectively. The Company's current ratio (i.e., the ratio of current
assets to current liabilities) was 4.5 to 1 and 4.0 to 1 at June 30, 1999 and
December 31, 1998, respectively.
OTHER MATTERS
Year 2000
BACKGROUND
The Year 2000 issue is the result of computer programs being written
using two digits (rather than four) to define the applicable years. Any of the
Company's programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000, which could result in
miscalculations or system failures.
The Company relies heavily on computer technologies to operate its
business. In 1997, the Company conducted an initial assessment of its
information technology to determine which Year 2000 related problems might cause
processing errors or computer system failures. The Company also did a complete
analysis of its computer system. Based on the results of that analysis, the
management began to focus on the Year 2000 issue as a top corporate priority and
established a group to develop a solution. Based on the group's evaluation,
management decided to upgrade the entire computer system at the same time as
addressing the Year 2000 issue. Though the cost of the Year 2000 issue is not
material, the estimate for upgrading the computer system, including the solution
for the Year 2000 issue, is approximately $350,000.
-14-
<PAGE>
The following discussion of the implications of the Year 2000 issue for
the Company contains numerous Forward-Looking Statements based on inherently
uncertain information. The cost of the project and the date on which the Company
plans to complete its internal Year 2000 modifications are based on management's
best estimates, which were derived utilizing a number of assumptions of future
events including the continued availability of internal and external resources,
third party modifications and other factors. However, there can be no guarantee
that these estimates will be achieved, and actual results could differ.
Moreover, although the Company believes it will be able to make the necessary
modifications in advance, there can be no guarantee that failure to modify the
systems would not have a material adverse effect on the Company.
In addition, the Company places a high degree of reliance on computer
systems of third parties, such as customers, trade suppliers and computer
hardware and commercial software suppliers. Although the Company is assessing
the readiness of these third parties and preparing contingency plans, there can
be no guarantee that the failure of these third parties to modify their systems
in advance of December 31, 1999, would not have a material adverse effect on the
Company.
Inasmuch as the Company has international operations, Y2K issues arising
in foreign locations could have a material adverse effect on the Company. The
Company cannot provide an opinion that Y2K problems outside the U.S. will not
impact the Company.
READINESS
The Year 2000 project is intended to ensure that all critical systems,
devices and applications, as well as data exchanged with customers, trade
suppliers and other third parties have been evaluated and will be suitable for
continued use into and beyond the Year 2000.
Responsibility for implementation of the project has been assigned to an
internal group of the Company. General priorities have been defined,
dependencies identified, preliminary delivery dates assigned, detailed project
plans developed, and internal and external technical resources assigned or
hired. In addition, internal management reporting requirements have been
established. Plans and progress against these plans are reviewed by the
Company's Chief Financial Officer.
The Company has completed the majority of the project. The Company is
currently conducting a rigorous final level testing under Post-Year 2000
conditions.
Since early 1997, the Company has required Year 2000 compliance statements
from all suppliers of the Company's computer hardware and commercial software.
Regardless of the compliance statements, all third party hardware and software
will also be subjected to testing to reconfirm Year 2000 readiness.
-15-
<PAGE>
COST
The Company estimates that the total cost of achieving Year 2000 readiness
for its internal systems, devices and applications (including the cost of
replacement systems) is approximately $350,000. Year 2000 project costs are
difficult to estimate accurately and the projected cost could change due to
unanticipated technological difficulties and Year 2000 readiness of third
parties. Through June 30, 1999 approximately $325,000 has been expended.
CONTINGENCY PLANS
In the event that the efforts of the Company's Year 2000 project do not
address all potential systems problems, the Company is currently developing
business interruption contingency plans, including maintaining the Company's old
computer system which was not subject to the Year 2000 problem. The Company
believes, however, that due to the widespread nature of potential Year 2000
issues, the contingency planning process is an ongoing one which will require
further modifications as the Company obtains additional information regarding
(1) the Company's internal systems during the remediation and testing phases of
its Year 2000 project and (2) the status of third party Year 2000 readiness.
Contingency planning for possible Year 2000 disruptions will continue to be
defined, improved and implemented.
RISKS
The Company believes that completed and planned modifications and
conversions of its critical systems, devices and applications will allow it to
be Year 2000 compliant in a timely manner. There can be no assurances, however,
that the Company's internal systems, devices and applications or those of third
parties on which the Company relies will be Year 2000 compliant by year 2000 or
that the Company's or third parties' contingency plans will mitigate the effects
of any noncompliance. An interruption of the Company's ability to conduct its
business due to a Year 2000 readiness problem could have a material adverse
effect on the Company.
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 in 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, 1998.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable - no significant changes to the information included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
-16-
<PAGE>
PART II. Other Information
Item 1. LEGAL PROCEEDINGS
See Item 3 of the Company's Form 10-K for the year ended
December 31, 1998.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of security holders was held on
June 11, 1999. At the meeting the following vote was taken:
(1) The Board's nominees were elected to the Board of
Directors for the term of three years. The votes were cast as
follows:
For Withheld
--------- --------
Elliot Bernstein 2,325,054 58,325
Robert Simandl 2,324,204 59,175
There were -0- abstentions and -0- broker non-votes.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
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, 1999.
-17-
<PAGE>
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, 1999
-18-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BEL FUSE
INC. AND SUBSIDIARIES FINANCIAL STATEMENTS AT JUNE 30, 1999 AND THE SIX MONTHS
THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 15,806,562
<SECURITIES> 0
<RECEIVABLES> 20,652,259
<ALLOWANCES> 317,000
<INVENTORY> 27,797,241
<CURRENT-ASSETS> 64,725,264
<PP&E> 65,541,329
<DEPRECIATION> 29,413,153
<TOTAL-ASSETS> 113,778,565
<CURRENT-LIABILITIES> 14,466,991
<BONDS> 0
<COMMON> 523,714
0
0
<OTHER-SE> 97,973,860
<TOTAL-LIABILITY-AND-EQUITY> 113,778,565
<SALES> 59,210,700
<TOTAL-REVENUES> 59,210,700
<CGS> 38,253,853
<TOTAL-COSTS> 47,902,197
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,639,612
<INCOME-TAX> 1,801,000
<INCOME-CONTINUING> 9,838,612
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,838,612
<EPS-BASIC> 1.88
<EPS-DILUTED> 1.83
</TABLE>
