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, 2000
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, 2000, there were 2,638,310 shares of Class A Common Stock, $.10
par value, outstanding and 7,941,141 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
March 31, 2000 (unaudited) and
December 31, 1999 ................................... 2 - 3
Consolidated Statements of Opera-
tions and Comprehensive Income
for the Three Months Ended
March 31, 2000 and 1999 (unaudited) ................. 4 - 5
Consolidated Statements of
Cash Flows for the Three
Months Ended March 31,
2000 and 1999 (unaudited) ........................... 6 - 7
Notes to Consolidated Financial
Statements (unaudited) .............................. 8 - 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations ....................................... 10 - 13
Item 3. Quantitative and Qualitative
Disclosures About Market Risk ....................... 13
Part II. Other Information
Item 1. Legal Proceedings ................................... 14
Item 6. Exhibits and Reports on Form 8-K .................... 14
Signatures ............................................................ 15
<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, 1999.
The results of operations for the three month period ended March 31, 2000
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
March 31, December 31,
2000 1999
------------ -----------
(Unaudited)
Current Assets:
Cash and cash equivalents ................. $ 38,764,852 $31,382,629
Marketable securities ..................... 359,357 2,253,039
Accounts receivable, less allowance
for doubtful accounts of $670,000
and $661,000 ............................. 16,733,813 18,815,513
Inventories ............................... 24,876,550 24,210,654
Prepaid expenses and other current
assets ................................... 741,158 334,820
Deferred income taxes ..................... 223,000 111,000
------------ -----------
Total Current Assets ................. 81,698,730 77,107,655
Property, plant and equipment - net ........... 36,040,131 36,021,708
Goodwill-net of amortization of
$2,418,606 and $2,042,008 ................ 11,370,846 11,747,444
Other assets .................................. 376,235 372,475
------------ ------------
TOTAL ASSETS ......................... $129,485,942 $125,249,282
============ ============
(Continued)
See notes to consolidated financial statements.
-2-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2000 1999
------------ ------------
(unaudited)
Current Liabilities:
Accounts payable ............................ $ 4,076,752 $ 4,375,915
Accrued expenses ............................ 9,232,280 9,021,672
Income taxes payable ........................ 866,594 241,850
Dividends payable ........................... 395,356 393,908
------------ ------------
Total Current Liabilities .............. 14,570,982 14,033,345
Deferred income taxes ........................... 797,000 962,000
------------ ------------
Total Liabilities ...................... 15,367,982 14,995,345
------------ ------------
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
2,637,185 and 2,632,197 shares
(net of 1,072,770 treasury shares) ......... 263,719 263,220
Class B common stock, par value
$.10 per share - authorized
30,000,000 shares; outstanding
7,937,766 and 7,910,306 shares
(net of 1,072,770 treasury shares) ......... 793,777 791,031
Additional paid-in capital .................. 9,106,890 8,811,653
Retained earnings ........................... 103,916,210 99,839,765
Cumulative other comprehensive
income ..................................... 37,364 548,268
------------ ------------
Total Stockholders' Equity ............. 114,117,960 110,253,937
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY ................................ $129,485,942 $125,249,282
============ ============
See notes to consolidated financial statements.
-3-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
Three Months Ended
March 31,
------------------------------
2000 1999
------------ ------------
Sales ....................................... $ 26,133,179 $ 30,758,768
------------ ------------
Costs and Expenses:
Cost of sales ........................... 16,704,445 20,314,606
Selling, general and
administrative expenses ................ 5,169,744 4,804,871
------------- ------------
21,874,189 25,119,477
------------ ------------
Income from operations ...................... 4,258,990 5,639,291
Other income - net .......................... 1,476,811 151,742
------------ ------------
Earnings before income taxes ................ 5,735,801 5,791,033
Income tax provision ........................ 1,264,000 670,000
------------ ------------
Net earnings ................................ $ 4,471,801 $ 5,121,033
============ ============
Basic earnings per common share ............. $ .42 $ .49
==== ====
Diluted earnings per common share ........... $ .41 $ .48
==== ====
Weighted average number of
common shares outstanding-basic ............ 10,556,886 10,426,666
============ ============
Weighted average number of
common shares outstanding and
potential common shares - diluted .......... 10,856,269 10,764,940
============ ============
(Continued)
See notes to consolidated financial statements.
-4-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited)
Three Months Ended
March 31,
------------------------------
2000 1999
---------- ----------
Net earnings .............................. $4,471,801 $5,121,033
Other comprehensive income
(expense), net of income taxes:
Unrealized loss on marketable
securities ............................ (502,912) -
Foreign currency
translation adjustment ................ (7,992) 6,947
---------- ----------
Comprehensive income ...................... $3,960,897 $5,127,980
========== ==========
See notes to consolidated financial statements.
-5-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
March 31,
--------------------------
2000 1999
----------- -----------
Cash flows from operating activities:
Net income ................................... $ 4,471,801 $ 5,121,033
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization ................ 1,588,649 1,469,208
Gain on sale of marketable
securities .................................. (1,012,095) -
Other ........................................ 148,000 (71,000)
Changes in operating assets and
liabilities ................................. 1,506,682 (5,397,316)
----------- -----------
Net Cash Provided by Operating
Activities .............................. 6,703,037 1,121,925
----------- -----------
Cash flows from investing activities:
Purchase of property, plant and
equipment ....................................... (1,246,795) (1,270,983)
Proceeds from sale of marketable
securities ...................................... 2,071,157 -
Proceeds from repayment by contractors ........... 32,250 32,250
---------- -----------
Net Cash (Used in) Provided
by Investing Activities ................. 856,612 (1,238,733)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of stock options .......... 216,482 229,026
Dividends paid to common shareholders ............ (393,908) (260,466)
----------- ----------
Net Cash (Used in)
Financing Activities ........................ (177,426) (31,440)
----------- -----------
Net increase (decrease) in Cash ................... 7,382,223 (148,248)
Cash and Cash Equivalents -
beginning of period .............................. 31,382,629 14,923,685
----------- -----------
Cash and Cash Equivalents -
end of period .................................... $38,764,852 $14,775,437
=========== ===========
(Continued)
See notes to consolidated financial statements.
-6-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(unaudited)
Three Months Ended
March 31,
--------------------------
2000 1999
---------- -----------
Changes in operating assets and
liabilities consist of:
(Increase) decrease in accounts
receivable ................................. $ 2,072,700 $(3,148,854)
(Increase) in inventories ................... (665,896) (1,887,878)
(Increase) in prepaid expenses and
other current assets ....................... (438,588) (352,690)
(Increase) decrease in other assets ......... (3,760) 31,832
Increase (decrease) in accounts payable ..... (299,163) 620,640
Increase (decrease) in accrued expenses ..... 216,645 (1,040,993)
Increase in income taxes payable ............ 624,744 380,627
----------- -----------
................................................ $ 1,506,682 $(5,397,316)
=========== ===========
Supplementary information:
Cash paid during the period for:
Income taxes ................................ $ 370,000 $ 344,000
=========== ===========
Non-cash investing activities:
Unrealized (loss) on marketable
securities ................................. $ (502,912) $ -
=========== ===========
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 March 31, 2000, 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. The information for December 31, 1999 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. Common Stock
On November 5, 1999 the Board of Directors declared a two for one stock
split to be paid in the form of a special dividend of one share of Class B
common stock for each share of Class A and Class B outstanding. The special
dividend was payable on December 1, 1999 to all Class A and Class B shareholders
of record on November 22, 1999. The Board also approved an amendment to the
Company's Certificate of Incorporation increasing the number of authorized
shares of Class B common stock from 10,000,000 shares to 30,000,000 shares. All
shares and per share data have been retroactively adjusted to reflect the two
for one stock split.
4. 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 Information". 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:
-8-
<PAGE>
BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended
March 31,
-----------------------------
2000 1999
----------- -----------
Total Revenues:
United States ........................... $14,066,321 $19,807,466
Asia .................................... 25,997,575 28,520,578
Less intergeographic
revenues ............................... (13,930,717) (17,569,276)
----------- -----------
$26,133,179 $30,758,768
=========== -----------
Income from Operations:
United States ............................ $ 989,732 $ 2,227,732
Asia ..................................... 3,269,258 3,411,559
----------- -----------
$ 4,258,990 $ 5,639,291
=========== ===========
5. On May 10, 2000 the Board of Directors authorized the repurchase of up
to 10% of the Company's outstanding shares.
-9-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company's quarterly and annual operating results are affected by a wide
variety of factors that could materially and adversely affect revenues and
profitability including the following: (a) the risk that the Company may be
unable to respond adequately to rapidly changing technological developments in
its industry, (b) risks associated with its Far East operations described herein
under the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations," (c) the highly competitive nature of the Company's
industry and the impact that competitors' new products and pricing may have upon
the Company, (d) the likelihood that revenues may vary significantly from one
accounting period to another accounting period due to a variety of factors,
including customers' buying decisions, the Company's product mix and general
market and economic conditions, (e) the Company's reliance on certain
substantial customers, and (f) risks associated with the Company's ability to
manufacture and deliver products in a manner that is responsive to its
customers' needs. As a result of these and other factors, the Company may
experience material fluctuations in future operating results on a quarterly or
annual basis, which could materially and adversely affect its business,
financial condition, operating results, and stock prices. Furthermore, this
document and other documents filed by the Company with the Securities and
Exchange Commission (the "SEC") contain certain forward-looking statements under
the Private Securities Litigation Reform Act of 1995 with respect to the
business of the Company. These forward-looking statements are subject to certain
risks and uncertainties, including those mentioned above, and those detailed in
Item 1 of the Company's Annual Report on Form 10-K for the year ended December
31, 1999, which could cause actual results to differ materially from these
forward-looking statements. The Company undertakes no obligation to publicly
release the results of any revisions to these forward-looking statements which
may be necessary to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events. An investment in the Company
involves various risks, including those mentioned above and those which are
detailed from time to time in the Company's SEC filings.
-10-
<PAGE>
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
------------------
Three Months Ended
March 31,
-----------------
2000 1999
------ ------
Net sales ................................... 100.0% 100.0%
Cost of sales ............................... 63.9 66.1
Selling, general and
administrative expenses .................... 19.8 15.6
Other income - net .......................... 5.7 .5
Earnings before income
tax provision .............................. 22.0 18.8
Income tax provision ........................ 4.8 2.2
Net earnings ................................ 17.2 16.6
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
-------------------
Three Months Ended
March 31, 2000
Compared With 1999
-------------------
Net sales .................................. (15.0)%
Cost of sales .............................. (17.8)
Selling, general and
administrative
expenses .................................. 7.6
Other income - net ......................... 873.2
Earnings before
income tax provision ...................... (1.0)
Income tax provision ....................... 88.7
Net earnings ............................... (12.7)
-11-
<PAGE>
THREE MONTHS ENDED MARCH 31, 2000 VS.
THREE MONTHS ENDED MARCH 31, 1999
NET SALES
Net sales decreased 15.0 % from $30,758,768 during the first three months
of 1999 to $26,133,179 during the first three months of 2000. The Company
attributes this decrease to lower sales of magnetic products primarily due to
the impact of a change in the structure of the supply channel by two of the
Company's largest customers offset in part by belMag(TM) and fuse sales.
COST OF SALES
Cost of sales as a percentage of net sales decreased 2.2 % to 63.9 % during
the first three months of 2000 from 66.1 % during the first three months of
1999. The decrease in the cost of sales percentage is primarily attributable to
lower factory overhead expenses due to the move of Telcom production to the Far
East from Texas during the fourth quarter of 1999 and lower raw 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 increased 4.2 % to 19.8 % during the first three months of 2000
from 15.6 % during the first three months of 1999. The Company attributes the
percentage increase primarily to decreased sales. Selling, general and
administrative expenses increased in dollar amount by approximately $365,000.
The Company attributes the increase in dollar amount of such expenses primarily
to increases in sales and marketing salaries and related expenses.
OTHER INCOME AND EXPENSE
Other income, consisting principally of gain on the sale of marketable
securities, during the first three months of 2000, and interest earned on cash
equivalents, increased by approximately $1,325,000 during the first three months
of 2000 compared to the first three months of 1999. The increase is due to the
gain on the sale of marketable securities and higher interest income due to
higher cash and cash equivalent balances.
PROVISION FOR INCOME TAXES
The provision for income taxes for the first three months of 2000 was
$1,264,000 as compared to $670,000 for the first three months of 1999. The
increase in the provision is due primarily to higher United States taxes from
the gain on the sale of marketable securities and higher foreign earnings
subject to taxes in 2000 versus 1999.
-12-
<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 March 31,
2000, in the aggregate amount of $14 million, of which $12 million is from
domestic banks and $2 million is from foreign banks.
The Company has contracted for the renovation and addition of new corporate
offices in Jersey City in the amount of $2.5 million. As of March 31, 2000
approximately $200,000 has been paid towards this contract.
On May 10, 2000 the Board of Directors authorized the repurchase of up to
10% of the Company's outstanding shares.
During the first three months of 2000, the Company's cash and cash
equivalents increased by approximately $7.4 million, reflecting approximately
$6.7 million provided by operating activities and approximately $2.1 million
from the sale of marketable securities, offset, in part, by approximately $1.2
million in purchases of plant and equipment and approximately $.4 million in
dividends paid to common shareholders.
Cash and cash equivalents and accounts receivable comprised approximately
42.9 % and 40.1 % of the Company's total assets at March 31, 2000 and December
31, 1999, respectively. The Company's current ratio (i.e., the ratio of current
assets to current liabilities) was 5.6 to 1 and 5.5 to 1 at March 31, 2000 and
December 31, 1999, respectively.
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, 1999.
-13-
<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, 1999.
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 March 31, 2000.
-14-
<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: May 12, 2000
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BEL FUSE
INC. AND SUBSIDIARIES FINANCIAL STATEMENTS AT MARCH 31, 2000 AND THE THREE
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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 38,764,852
<SECURITIES> 359,357
<RECEIVABLES> 17,403,813
<ALLOWANCES> 670,000
<INVENTORY> 24,876,550
<CURRENT-ASSETS> 81,698,730
<PP&E> 68,944,039
<DEPRECIATION> 32,903,908
<TOTAL-ASSETS> 129,485,942
<CURRENT-LIABILITIES> 14,570,982
<BONDS> 0
<COMMON> 1,057,496
0
0
<OTHER-SE> 113,060,464
<TOTAL-LIABILITY-AND-EQUITY> 129,485,942
<SALES> 26,133,179
<TOTAL-REVENUES> 26,133,179
<CGS> 16,704,445
<TOTAL-COSTS> 21,874,149
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,735,801
<INCOME-TAX> 1,264,000
<INCOME-CONTINUING> 4,471,801
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,471,801
<EPS-BASIC> .42
<EPS-DILUTED> .41
</TABLE>
