x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
NEW
JERSEY
|
22-1463699
|
|
(State
of other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
07302
|
|
(Address
of principal executive offices)
|
|
(Zip
Code)
|
o
Large
accelerated filer
|
x
Accelerated filer
|
o
Non-accelerated filer
|
BEL
FUSE INC.
|
|||
INDEX
|
Page
|
||||||
Part
I
|
|
|
|
Financial
Information
|
||
|
|
|
|
|||
Item
1.
|
Financial
Statements
|
1
|
||||
|
||||||
Condensed
Consolidated Balance Sheets as of June 30, 2007
|
||||||
(unaudited)
and December 31, 2006
|
2-3
|
|||||
|
||||||
Condensed
Consolidated Statements of Operations for the Three and
|
||||||
Six
Months Ended June 30, 2007 and 2006 (unaudited)
|
4
|
|||||
|
||||||
Condensed
Consolidated Statements of Stockholders' Equity for
|
||||||
the
Year Ended December 31, 2006 and
|
||||||
the
Six Months Ended June 30, 2007 (unaudited)
|
5-6
|
|||||
|
||||||
Condensed Consolidated Statements
of Cash Flows for the Six
|
|
|||||
Months
Ended June 30, 2007 and 2006 (unaudited)
|
7-9
|
|||||
|
||||||
Notes
to Condensed Consolidated Financial Statements
(unaudited)
|
10-29
|
|||||
Item
2.
|
Management's
Discussion and Analysis of
|
|
||||
Financial
Condition and Results of Operations
|
30-49
|
|||||
|
||||||
Item
3.
|
Quantitative
and Qualitative Disclosures About
|
|
||||
Market
Risk
|
50
|
|||||
|
||||||
Item
4.
|
Controls
and Procedures
|
51
|
||||
|
||||||
Part II | Other Information |
|
||||
Item
1.
|
Legal
Proceedings
|
52-53
|
||||
|
||||||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
53
|
||||
|
||||||
Item
6.
|
Exhibits
|
54
|
||||
|
||||||
Signatures
|
55
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
June
30,
|
December
31,
|
||||||
2007
|
2006
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
99,604,067
|
$
|
76,760,543
|
|||
Marketable
securities
|
4,592,921
|
15,576,212
|
|||||
Accounts
receivable - less allowance for doubtful
|
|||||||
accounts
of $912,000 and $1,087,006 at
|
|||||||
June
30, 2007 and December 31, 2006, respectively
|
42,724,499
|
43,765,750
|
|||||
Inventories
|
43,995,494
|
46,297,208
|
|||||
Prepaid
expenses and other current
|
|||||||
assets
|
1,509,979
|
1,382,807
|
|||||
Deferred
income taxes
|
1,463,429
|
1,665,857
|
|||||
Assets
held for sale
|
4,193,720
|
848,049
|
|||||
Total
Current Assets
|
198,084,109
|
186,296,426
|
|||||
Property,
plant and equipment - net
|
40,523,316
|
44,289,159
|
|||||
Restricted
cash
|
4,500,000
|
-
|
|||||
Deferred
income taxes
|
5,380,280
|
3,425,375
|
|||||
Intangible
assets - net
|
1,474,684
|
1,892,417
|
|||||
Goodwill
|
28,117,143
|
28,117,143
|
|||||
Other
assets
|
4,346,216
|
4,476,990
|
|||||
TOTAL
ASSETS
|
$
|
282,425,748
|
$
|
268,497,510
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||
CONDENSED
CONSOLIDATED BALANCE
SHEETS
|
June
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|||
(Unaudited)
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable
|
$
|
15,490,801
|
$
|
17,244,937
|
|||
Accrued
expenses
|
12,892,813
|
12,713,417
|
|||||
Income
taxes payable
|
6,352,909
|
11,094,107
|
|||||
Dividends
payable
|
559,800
|
566,583
|
|||||
Total
Current Liabilities
|
35,296,323
|
41,619,044
|
|||||
Long-term
Liabilities:
|
|||||||
Deferred
gain on sale of property
|
4,665,015
|
||||||
Liability
for uncertain tax positions
|
5,420,000
|
-
|
|||||
Minimum
pension obligation and
|
|||||||
unfunded
pension liability
|
5,206,639
|
4,728,286
|
|||||
Total
Long-term Liabilities
|
15,291,654
|
4,728,286
|
|||||
Total
Liabilities
|
50,587,977
|
46,347,330
|
|||||
Commitments
and Contingencies
|
|||||||
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
|
|||||||
2,635,651
and 2,702,677 shares, respectively
|
|||||||
(net
of 1,072,770 treasury shares)
|
263,565
|
270,268
|
|||||
Class
B common stock, par value
|
|||||||
$.10
per share - authorized
|
|||||||
30,000,000
shares; outstanding 9,271,827
|
|||||||
and
9,167,665 shares, respectively
|
|||||||
(net
of 3,218,310 treasury shares)
|
927,183
|
916,767
|
|||||
Additional
paid-in capital
|
31,174,153
|
31,826,046
|
|||||
Retained
earnings
|
200,001,875
|
190,952,754
|
|||||
Accumulated
other comprehensive
|
|||||||
(loss)
|
(529,005
|
)
|
(1,815,655
|
)
|
|||
Total
Stockholders' Equity
|
231,837,771
|
222,150,180
|
|||||
TOTAL
LIABILITIES AND
|
|||||||
STOCKHOLDERS'
EQUITY
|
$
|
282,425,748
|
$
|
268,497,510
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|||||||||||||
(Unaudited)
|
Six
Months Ended
|
|
Three
Months Ended
|
|
||||||||||
|
|
June
30,
|
|
June
30,
|
|
||||||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
Net
Sales
|
$
|
123,418,921
|
$
|
121,100,346
|
$
|
61,612,245
|
$
|
66,474,098
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
96,489,901
|
90,248,564
|
48,598,575
|
50,261,675
|
|||||||||
Selling,
general and administrative
|
18,661,047
|
19,610,167
|
9,178,527
|
10,232,982
|
|||||||||
Gain
on sale of property, plant and equipment
|
(879,804
|
)
|
-
|
(879,804
|
)
|
-
|
|||||||
Casualty
loss
|
-
|
1,097,271
|
-
|
133,480
|
|||||||||
114,271,144
|
110,956,002
|
56,897,298
|
60,628,137
|
||||||||||
Income
from operations
|
9,147,777
|
10,144,344
|
4,714,947
|
5,845,961
|
|||||||||
Interest
expense and other costs
|
(123,463
|
)
|
(44,386
|
)
|
(1,526
|
)
|
(17,186
|
)
|
|||||
Gain
on sale of marketable securities - net
|
2,507,868
|
5,151,039
|
2,507,868
|
5,239,519
|
|||||||||
Interest
income
|
1,835,939
|
1,173,758
|
1,002,696
|
661,162
|
|||||||||
Earnings
before provision for income taxes
|
13,368,121
|
16,424,755
|
8,223,985
|
11,729,456
|
|||||||||
Income
tax provision
|
3,201,000
|
3,664,000
|
2,066,000
|
2,966,000
|
|||||||||
Net
earnings
|
$
|
10,167,121
|
$
|
12,760,755
|
$
|
6,157,985
|
$
|
8,763,456
|
|||||
Earnings
per share (2006, as restated, see Note 1)
|
|||||||||||||
Earnings
per Class A common share
|
|||||||||||||
Basic
|
$
|
0.81
|
$
|
1.03
|
$
|
0.49
|
$
|
0.71
|
|||||
Diluted
|
$
|
0.81
|
$
|
1.03
|
$
|
0.49
|
$
|
0.71
|
|||||
Weighted
average Class A common shares
|
|||||||||||||
outstanding
- basic
|
2,682,400
|
2,702,677
|
2,661,589
|
2,702,677
|
|||||||||
Weighted
average Class A common shares
|
|||||||||||||
outstanding
- diluted
|
2,682,400
|
2,702,677
|
2,661,589
|
2,702,677
|
|||||||||
Earnings
per Class B common share
|
|||||||||||||
Basic
|
$
|
0.87
|
$
|
1.10
|
$
|
0.52
|
$
|
0.75
|
|||||
Diluted
|
$
|
0.86
|
$
|
1.09
|
$
|
0.52
|
$
|
0.75
|
|||||
Weighted
average Class B common shares
|
|||||||||||||
outstanding
- basic
|
9,203,547
|
9,065,990
|
9,233,397
|
9,093,807
|
|||||||||
Weighted
average Class B common shares
|
|||||||||||||
outstanding
- diluted
|
9,234,319
|
9,127,208
|
9,261,587
|
9,142,582
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||||||||||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITY
|
|||||||||||||||||||||||||
(Unaudited)
|
|
Total
|
Compre-
hensive
Income
|
Retained
Earnings
|
Accumulated
Other
Compre-
hensive
Income
(loss)
|
Class
A
Common
Stock
|
Class
B
Common
Stock
|
Additional
Paid-In
Capital
|
Deferred
Stock- Based
Compensation
|
|||||||||||||||||
Balance,
January 1, 2006
|
$
|
201,576,549
|
$
|
167,991,188
|
$
|
4,262,867
|
$
|
270,268
|
$
|
901,327
|
$
|
31,713,608
|
$
|
(3,562,709
|
)
|
||||||||||
|
|||||||||||||||||||||||||
Exercise
of stock options
|
3,186,587
|
13,280
|
3,173,307
|
||||||||||||||||||||||
Tax
benefits arising from the disposition
of non-qualified incentive stock options
|
336,456
|
336,456
|
-
|
||||||||||||||||||||||
Cash
dividends declared on Class A common stock
|
(430,940
|
)
|
(430,940
|
)
|
|||||||||||||||||||||
Cash
dividends declared on Class B common stock
|
(1,810,847
|
)
|
(1,810,847
|
)
|
|||||||||||||||||||||
Issuance
of restricted common stock
|
-
|
2,160
|
(2,160
|
)
|
|||||||||||||||||||||
Deferred
stock-based compensation
|
(1,403,157
|
)
|
(1,403,157
|
)
|
-
|
||||||||||||||||||||
Currency
translation adjustment
|
387,822
|
$
|
387,822
|
387,822
|
|||||||||||||||||||||
Change
in unrealized gain or loss on marketable securities -net of
taxes
|
(4,819,632
|
)
|
(4,819,632
|
)
|
(4,819,632
|
)
|
|||||||||||||||||||
Stock-based
compensation expense
|
1,570,701
|
1,570,701
|
-
|
||||||||||||||||||||||
Adoption
of SFAS No. 123 (R)
|
-
|
(3,562,709
|
)
|
3,562,709
|
|||||||||||||||||||||
Unfunded
SERP liability-net of taxes upon adoption of SFAS No.
158
|
(1,646,712
|
)
|
(1,646,712
|
)
|
|||||||||||||||||||||
Net
earnings
|
25,203,353
|
25,203,353
|
25,203,353
|
||||||||||||||||||||||
Comprehensive
income
|
$
|
20,771,543
|
|||||||||||||||||||||||
|
|||||||||||||||||||||||||
Balance,
December 31, 2006
|
222,150,180
|
190,952,754
|
(1,815,655
|
)
|
270,268
|
916,767
|
31,826,046
|
-
|
BEL
FUSE INC. AND SUBSIDIARIES
|
||||||||||||||||||||||
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Continued)
|
||||||||||||||||||||||
(Unaudited)
|
|
Total
|
Compre- hensive
Income |
Retained
Earnings
|
Accumulated
Other Compre- hensive Income (loss) |
Class
A
Common Stock |
Class
B
Common Stock |
Additional
Paid-In Capital |
|||||||||||||||
Exercise
of stock options
|
1,034,251
|
4,456
|
1,029,795
|
|||||||||||||||||||
Tax
benefits arising from
the disposition of non-qualified incentive
stock options
|
124,039
|
124,039
|
||||||||||||||||||||
Cash
dividends declared on Class A common
stock
|
(215,470
|
)
|
(215,470
|
)
|
||||||||||||||||||
Cash
dividends declared on Class B common
stock
|
(902,530
|
)
|
(902,530
|
)
|
||||||||||||||||||
Currency
translation adjustment
|
333,820
|
$
|
333,820
|
333,820
|
||||||||||||||||||
Change
in unrealized gain or loss
on marketable securities -net
of taxes
|
952,830
|
952,830
|
952,830
|
|||||||||||||||||||
Issuance
of restricted common stock
|
-
|
7,420
|
(7,420
|
)
|
||||||||||||||||||
Termination
of restricted common stock
|
-
|
(1,460
|
)
|
1,460
|
||||||||||||||||||
Repurchase/retirement
of Class A common
stock
|
(2,477,454
|
)
|
(6,703
|
)
|
(2,470,751
|
)
|
||||||||||||||||
Stock-based
compensation expense
|
670,984
|
670,984
|
||||||||||||||||||||
Net
earnings
|
10,167,121
|
10,167,121
|
10,167,121
|
|||||||||||||||||||
Comprehensive
income
|
$
|
11,453,771
|
||||||||||||||||||||
|
|
|||||||||||||||||||||
Balance,
June 30, 2007
|
$
|
231,837,771
|
$
|
200,001,875
|
$
|
(529,005
|
)
|
$
|
263,565
|
$
|
927,183
|
$
|
31,174,153
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
(Unaudited)
|
Six
Months Ended
|
|
||||||
|
|
June
30,
|
|||||
2007
|
|
2006
|
|||||
Cash
flows from operating
|
|||||||
activities:
|
|||||||
Net
earnings
|
$
|
10,167,121
|
$
|
12,760,755
|
|||
Adjustments
to reconcile net
|
|||||||
income
to net cash provided
|
|||||||
by
operating activities:
|
|||||||
Depreciation
and amortization
|
3,850,398
|
4,775,968
|
|||||
Casualty
loss
|
-
|
1,097,271
|
|||||
Stock-based
compensation
|
682,710
|
790,960
|
|||||
Excess
tax benefits from share-based
|
|||||||
payment
arrangements
|
(124,039
|
)
|
(112,345
|
)
|
|||
Gain
on sale of marketable securities
|
(2,507,868
|
)
|
(5,151,039
|
)
|
|||
Gain
on sale of property, plant
|
|||||||
and
equipment
|
(879,804
|
)
|
-
|
||||
Other
|
478,353
|
441,869
|
|||||
Deferred
income taxes
|
(2,426,000
|
)
|
(548,000
|
)
|
|||
Changes
in operating assets
|
|||||||
and
liabilities
|
2,557,408
|
(5,367,143
|
)
|
||||
Net
Cash Provided by
|
|||||||
Operating
Activities
|
11,798,279
|
8,688,296
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchase
of property, plant
|
|||||||
and
equipment
|
(4,483,357
|
)
|
(4,333,017
|
)
|
|||
Purchase
of marketable
|
|||||||
securities
|
(11,801,386
|
)
|
(729,088
|
)
|
|||
Payment
for acquisitions - net of
|
|||||||
cash
acquired
|
-
|
(2,692,974
|
)
|
||||
Proceeds
from sale of
|
|||||||
marketable
securities
|
27,498,919
|
24,489,966
|
|||||
Proceeds
from sale of property, plant
|
|||||||
and
equipment
|
2,192,103
|
-
|
|||||
Net
Cash Provided by
|
|||||||
Investing
Activities
|
13,406,279
|
16,734,887
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
|
|||||||
(Unaudited)
|
Six
Months Ended
|
|
||||||
|
|
June
30,
|
|||||
|
|
2007
|
|
2006
|
|||
Cash
flows from financing
|
|||||||
activities:
|
|||||||
Proceeds
from exercise of
|
|||||||
stock
options
|
1,034,251
|
1,887,037
|
|||||
Dividends
paid to common
|
|||||||
shareholders
|
(1,124,789
|
)
|
(1,104,078
|
)
|
|||
Purchase
and retire of Class A common stock
|
(2,477,454
|
)
|
-
|
||||
Excess
tax benefits from share-based
|
|||||||
payment
arrangements
|
124,039
|
112,345
|
|||||
Net
Cash (Used In) Provided By
|
|||||||
Financing
Activities
|
(2,443,953
|
)
|
895,304
|
||||
Effect
of exchange rate changes on cash
|
82,919
|
130,150
|
|||||
Net
Increase in
|
|||||||
Cash
and Cash Equivalents
|
22,843,524
|
26,448,637
|
|||||
Cash
and Cash Equivalents
|
|||||||
-
beginning of period
|
76,760,543
|
51,997,634
|
|||||
Cash
and Cash Equivalents
|
|||||||
-
end of period
|
$
|
99,604,067
|
$
|
78,446,271
|
|||
Changes
in operating assets
|
|||||||
and
liabilities consist of:
|
|||||||
Decrease
(increase) in accounts
|
|||||||
receivable
|
$
|
1,157,723
|
$
|
(7,931,062
|
)
|
||
Decrease
(increase) in inventories
|
2,336,755
|
(5,853,897
|
)
|
||||
Increase
in prepaid expenses and other
|
|||||||
current
assets
|
(127,172
|
)
|
(1,213,199
|
)
|
|||
(Increase)
decrease in other assets
|
(680,743
|
)
|
(359,959
|
)
|
|||
(Decrease)
increase in accounts payable
|
(1,759,018
|
)
|
5,193,397
|
||||
Increase
in income taxes payable
|
802,841
|
2,573,495
|
|||||
Increase
in accrued expenses
|
827,022
|
2,224,082
|
|||||
$
|
2,557,408
|
$
|
(5,367,143
|
)
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Concluded)
|
|||||||
(Unaudited)
|
Six
Months Ended
|
|||||||
June
30,
|
|||||||
2007
|
|
2006
|
|||||
Supplementary
information:
|
|||||||
Cash
paid during the quarter for:
|
|||||||
Income
taxes
|
$
|
4,757,000
|
$
|
1,240,000
|
|||
Interest
|
$
|
-
|
$
|
44,000
|
|||
Details
of acquisitions:
|
|||||||
Intangibles
|
$
|
-
|
$
|
446,571
|
|||
Goodwill
|
-
|
2,000,000
|
|||||
Acquisition
costs
|
-
|
2,446,571
|
|||||
Less:
Amounts paid on acquisition payment
|
-
|
514,403
|
|||||
Amounts
accrued
|
-
|
(268,000
|
)
|
||||
Cash
paid for acquisitions
|
$
|
-
|
$
|
2,692,974
|
1.
|
BASIS
OF PRESENTATION AND ACCOUNTING
POLICIES
|
Restatement
of Earnings Per Share
|
|||||||
As
Previously
|
|||||||
Six
Months Ended June
30, 2006
|
Reported
|
As
Restated
|
|||||
Basic
|
$
|
1.08
|
|||||
Diluted
|
$
|
1.08
|
|||||
Class
A - Basic
|
$
|
1.03
|
|||||
Class
B- Basic
|
$
|
1.10
|
|||||
Class
A- Diluted
|
$
|
1.03
|
|||||
Class
B - Diluted
|
$
|
1.09
|
|||||
Three
Months Ended June 30, 2006
|
Reported
|
|
As
Restated
|
||||
Basic
|
$
|
0.74
|
|||||
Diluted
|
$
|
0.74
|
|||||
Class
A - Basic
|
$
|
0.71
|
|||||
Class
B- Basic
|
$
|
0.75
|
|||||
Class
A- Diluted
|
$
|
0.71
|
|||||
Class
B - Diluted
|
$
|
0.75
|
Six
Months Ended
|
Three
Months Ended
|
||||||
June
30,
|
June
30,
|
||||||
2006
|
|
2006
|
|||||
Basic
|
11,768,667
|
11,796,484
|
|||||
Diluted
|
11,829,885
|
11,845,259
|
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
|
2006
|
|||||||||
(As
restated)
|
(As
restated)
|
||||||||||||
Class
A Common Shares
|
|||||||||||||
Weighted
average shares outstanding - basic
|
2,682,400
|
2,702,677
|
2,661,589
|
2,702,677
|
|||||||||
Dilutive
impact of stock options and
|
|||||||||||||
unvested
restricted stock awards
|
-
|
-
|
-
|
-
|
|||||||||
Weighted
average shares oustanding - diluted
|
2,682,400
|
2,702,677
|
2,661,589
|
2,702,677
|
|||||||||
Class
B Common Shares
|
|||||||||||||
Weighted
average shares outstanding - basic
|
9,203,547
|
9,065,990
|
9,233,397
|
9,093,807
|
|||||||||
Dilutive
impact of stock options and
|
|||||||||||||
unvested
restricted stock awards
|
30,772
|
61,218
|
28,190
|
48,775
|
|||||||||
Weighted
average shares oustanding - diluted
|
9,234,319
|
9,127,208
|
9,261,587
|
9,142,582
|
2.
|
GOODWILL
AND OTHER INTANGIBLES
|
June
30,
|
December
31,
|
||||||
2007
|
|
2006
|
|||||
Raw
materials
|
$
|
23,195,804
|
$
|
24,374,438
|
|||
Work
in progress
|
3,586,486
|
3,531,148
|
|||||
Finished
goods
|
17,213,204
|
18,391,622
|
|||||
$
|
43,995,494
|
$
|
46,297,208
|
Six
Months Ended
|
|
Three
Months Ended
|
|
||||||||||
|
|
June
30,
|
|
June
30,
|
|
||||||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
Total
segment revenues
|
|||||||||||||
North
America
|
$
|
39,167,795
|
$
|
39,531,004
|
$
|
20,737,267
|
$
|
21,036,118
|
|||||
Asia
|
88,264,093
|
88,243,885
|
42,227,628
|
49,338,286
|
|||||||||
Europe
|
17,901,465
|
13,355,532
|
8,767,312
|
7,670,699
|
|||||||||
Total
segment revenues
|
145,333,353
|
141,130,421
|
71,732,207
|
78,045,103
|
|||||||||
Reconciling
items:
|
|||||||||||||
Intersegment
revenues
|
(21,914,432
|
)
|
(20,030,075
|
)
|
(10,119,962
|
)
|
(11,571,005
|
)
|
|||||
Net
sales
|
$
|
123,418,921
|
$
|
121,100,346
|
$
|
61,612,245
|
$
|
66,474,098
|
|||||
Income
(loss) from Operations:
|
|||||||||||||
North
America
|
$
|
2,110,649
|
$
|
(19,078
|
)
|
$
|
1,008,638
|
$
|
874,823
|
||||
Asia
|
6,387,378
|
9,705,590
|
3,230,627
|
4,865,271
|
|||||||||
Europe
|
649,750
|
457,832
|
475,682
|
105,867
|
|||||||||
$
|
9,147,777
|
$
|
10,144,344
|
$
|
4,714,947
|
$
|
5,845,961
|
6.
|
DEBT
|
7.
|
INCOME
TAXES
|
June
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|||
Sales
commissions
|
$
|
1,556,896
|
$
|
1,715,816
|
|||
Subcontracting
labor
|
1,797,414
|
2,032,763
|
|||||
Deposits
on future sale of properties
|
1,751,113
|
||||||
Salaries,
bonuses and
|
|||||||
related
benefits
|
3,168,000
|
4,147,135
|
|||||
Other
|
4,619,390
|
4,817,703
|
|||||
$
|
12,892,813
|
$
|
12,713,417
|
Six
Months Ended
|
|
Three
Months Ended
|
|
||||||||||
|
|
June
30,
|
|
June
30,
|
|
||||||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
Service
cost
|
$
|
287,000
|
$
|
486,000
|
$
|
147,000
|
$
|
173,000
|
|||||
Interest
cost
|
54,000
|
96,000
|
27,000
|
35,000
|
|||||||||
Amortization
of adjustments
|
42,000
|
58,000
|
24,000
|
18,000
|
|||||||||
Total
SERP expense
|
$
|
383,000
|
$
|
640,000
|
$
|
198,000
|
$
|
226,000
|
June
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|||
Balance
sheet amounts:
|
|||||||
Minimum
pension obligation
|
|||||||
and
unfunded liability
|
$
|
5,206,639
|
$
|
4,728,286
|
|||
Accumulated
other comprehensive
|
|||||||
income
(loss)
|
1,646,712
|
1,646,712
|
|
|
|
|
Weighted
|
|
|
|
||||||
|
|
|
|
|
|
Average
|
|
|
|
||||
|
|
|
|
Weighted
|
|
Remaining
|
|
Aggregate
|
|
||||
|
|
|
|
Average
|
|
Contractual
|
|
Intrinsic
|
|
||||
Options
|
|
Shares
|
|
Exercise
Price
|
|
Term
|
|
Value
|
|||||
Outstanding
at January 1, 2007
|
137,813
|
$
|
25.59
|
||||||||||
Granted
|
-
|
||||||||||||
Exercised
|
(44,563
|
)
|
23.21
|
$
|
665,826
|
||||||||
Forfeited
or expired
|
(1,500
|
)
|
18.89
|
||||||||||
Outstanding
at June 30, 2007
|
91,750
|
$
|
26.86
|
2.0
|
$
|
699,685
|
|||||||
Exercisable
at June 30, 2007
|
54,750
|
$
|
24.11
|
1.6
|
$
|
563,785
|
|
|
Weighted-Average
|
|
||||
|
|
|
|
Grant-Date
|
|
||
Nonvested
Shares
|
|
Shares
|
|
Fair
Value
|
|||
Nonvested
at December 31, 2006
|
91,000
|
$
|
25.53
|
||||
Granted
|
-
|
-
|
|||||
Vested
|
(52,500
|
)
|
21.92
|
||||
Forfeited
|
(1,500
|
)
|
18.89
|
||||
Nonvested
at June 30, 2007
|
37,000
|
$
|
30.92
|
|
|
|
|
Weighted
|
|
|||||
|
|
|
|
Weighted
|
|
Average
|
|
|||
|
|
|
|
Average
|
|
Remaining
|
|
|||
Restricted
Stock
|
|
|
|
Award
|
|
Contractual
|
|
|||
Awards
|
|
Shares
|
|
Price
|
|
Term
|
||||
Outstanding
at January 1, 2007
|
167,000
|
$
|
34.93
|
3.85
years
|
||||||
Granted
|
74,200
|
36.40
|
||||||||
Awarded
|
-
|
-
|
||||||||
Forfeited
|
(8,800
|
)
|
36.97
|
|||||||
Outstanding
at June 30, 2007
|
232,400
|
35.35 |
3.81
years
|
|||||||
Exercisable
at June 30, 2007
|
-
|
-
|
Six
Months Ended
|
|
Three
Months Ended
|
|
||||||||||
|
|
June
30,
|
|
June
30,
|
|
||||||||
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|||||
Net
earnings
|
$
|
10,167,121
|
$
|
12,760,755
|
$
|
6,157,985
|
$
|
8,763,456
|
|||||
Currency
translation adjustment
|
333,820
|
204,968
|
(24,204
|
)
|
113,089
|
||||||||
Increase
(decrease) in unrealized
|
|||||||||||||
gain
on marketable securities
|
|||||||||||||
-
net of taxes
|
952,830
|
(3,024,527
|
)
|
(3,343,361
|
)
|
(5,532,198
|
)
|
||||||
Comprehensive
income
|
$
|
11,453,771
|
$
|
9,941,196
|
$
|
2,790,420
|
$
|
3,344,347
|
June
30,
|
|
December
31,
|
|
||||
|
|
2007
|
|
2006
|
|||
Foreign
currency translation
|
|||||||
adjustment
|
$
|
1,474,704
|
$
|
1,140,884
|
|||
Unrealized
holding (loss)
|
|||||||
on
available-for-sale securities
|
|||||||
under
SFAS No. 115, net of
|
|||||||
taxes
of $(219,657) and $(802,797)
|
|||||||
as
of June 30, 2007 and December 31, 2006
|
(356,997
|
)
|
(1,309,827
|
)
|
|||
Unfunded
SERP liability net of taxes
|
|||||||
of
$(686,000) as of June 30, 2007
|
|||||||
and
December 31, 2006
|
(1,646,712
|
)
|
(1,646,712
|
)
|
|||
Accumulated
other comprehensive loss
|
$
|
(529,005
|
)
|
$
|
(1,815,655
|
)
|
Percentage
of Net Sales
|
Percentage
of Net Sales
|
||||||||||||
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2007
|
2006
|
2007
|
2006
|
||||||||||
Net
sales
|
100.0%
|
|
|
100.0%
|
|
|
100.0%
|
|
|
100.0%
|
|
||
Cost
of sales
|
|
|
78.2
|
|
|
74.5
|
|
|
78.9
|
|
|
75.6
|
|
Selling,
general and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
administrative
expenses
|
|
|
15.1
|
|
|
16.2
|
|
|
14.9
|
|
|
15.4
|
|
Gain
on sale of property, plant and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equipment
|
|
|
0.7
|
|
|
-
|
|
|
1.4
|
|
|
-
|
|
Casualty
loss
|
|
|
-
|
|
|
0.9
|
|
|
-
|
|
|
0.2
|
|
Interest
income and interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
financing expense
|
|
|
1.4
|
|
|
0.9
|
|
|
1.6
|
|
|
1.0
|
|
Gain
on sale of property and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
marketable
securities
|
|
|
2.0
|
|
|
4.3
|
|
|
4.1
|
|
|
7.9
|
|
Earnings
before provision
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for
income taxes
|
|
|
10.8
|
|
|
13.6
|
|
|
13.3
|
|
|
17.6
|
|
Income
tax provision
|
|
|
2.6
|
|
|
3.0
|
|
|
3.4
|
|
|
4.5
|
|
Net
earnings
|
|
|
8.2
|
|
|
10.5
|
|
|
10.0
|
|
|
13.2
|
|
Increase
(decrease) from
Prior
Period
|
(Decrease)
from Prior
Period
|
||||||
Six
Months Ended
June
30, 2007
compared
with Six
Months
Ended June
30,
2006
|
Three
Months Ended June
30, 2007 compared
with Three Months
Ended June 30,
2006
|
||||||
Net
sales
|
1.9%
|
|
(7.3)%
|
|
|||
|
|||||||
Cost
of sales
|
6.9
|
(3.3)
|
|
||||
|
|||||||
Selling,
general and
|
|
||||||
administrative
expenses
|
(4.8)
|
|
(10.3)
|
|
|||
|
|||||||
Net
earnings
|
(20.3)
|
|
(29.7)
|
|
· |
The
Company established a $1.2 million warranty accrual for a defective
part,
including a $.4 million inventory write-off of materials on hand
related
to this matter which are deemed to be
unusable.
|
· |
The
Company incurred a 3.3% increase in material costs as a percentage
of net
sales. The increase in raw material costs is principally related
to
increased manufacturing of value-added products, which have a higher
raw
material content than the Company’s other products, increased costs for
raw materials such as copper, steel and petroleum-based products
and
increased transportation costs. Since the majority of the manufacturing
is
conducted in the Far East the increased material costs negatively
impact
the operating profits in the Far
East.
|
· |
The
Company is currently paying higher wage rates and benefits to its
production workers in China. These higher rates and benefits are
reflected
in the Company’s cost of sales.
|
· |
Sales
of the Company’s DC-DC power products have increased. While these products
are strategic to Bel’s growth and important to total earnings, they return
lower gross profit percentage margins as a larger percentage of their
bills of materials are purchased components. As these sales continue
to
increase, the Company’s average gross profit percentage will likely
decrease.
|
· |
The
Company established a $1.2 million warranty accrual for a defective
part,
including a $.4 million inventory write-off of materials on hand
related
to this matter which are deemed to be
unusable.
|
· |
The
Company’s material costs as a percentage of net sales remained constant
during the quarter ended June 30, 2007 versus June 30, 2006.
|
· |
The
Company is currently paying higher wage rates and benefits to its
production workers in China. These higher rates and benefits are
reflected
in the Company’s cost of sales.
|
· |
Sales
of the Company’s DC-DC power products have increased. While these products
are strategic to Bel’s growth and important to total earnings, they return
lower gross profit percentage margins as a larger percentage of their
bills of materials are purchased components. As these sales continue
to
increase, the Company’s average gross profit percentage will likely
decrease.
|
Payments
due by period
|
|
|||||||||||||||
Contractual
Obligations
|
|
Total
|
|
Less
than 1 year
|
|
1-3
years
|
|
3-5
years
|
|
More
than
5
years
|
||||||
Capital
expenditure obligations
|
$
|
2,842,993
|
$
|
2,842,993
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Operating
leases
|
5,171,302
|
1,756,697
|
2,200,285
|
1,214,320
|
-
|
|||||||||||
Raw
material purchase obligations
|
14,107,797
|
14,107,797
|
-
|
-
|
-
|
|||||||||||
Total
|
$
|
22,122,092
|
$
|
18,707,487
|
$
|
2,200,285
|
$
|
1,214,320
|
$
|
-
|
a)
|
Disclosure
controls and procedures.
As of the end of the Company’s most recently completed fiscal quarter
covered by this report, the Company carried out an evaluation, with
the
participation of the Company’s management, including the Company’s chief
executive officer and vice president of finance, of the effectiveness
of
the Company’s disclosure controls and procedures pursuant to Securities
Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s chief
executive officer and vice president of finance concluded that the
Company’s disclosure controls and procedures are effective in ensuring
that information required to be disclosed by the Company in the reports
that it files or submits under the Securities Exchange Act is recorded,
processed, summarized and reported, within the time periods specified
in
the SEC’s rules and forms.
|
b.)
|
Changes
in internal controls over financial reporting:
There have been no changes in the Company's internal controls over
financial reporting that occurred during the Company's last fiscal
quarter
to which this report relates that have materially affected, or are
reasonable likely to materially affect, the Company’s internal control
over financial reporting.
|
For
|
|
Withheld
|
|||||
Daniel
Bernstein
|
1,598,270
|
394,919
|
|||||
Peter
Gilbert
|
1,836,669
|
156,520
|
|||||
John
Johnson
|
1,836,669
|
156,520
|
Certification
of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
31.2
|
Certification
of the Vice President of Finance pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
Certification
of the Chief Executive Officer pursuant to Section 906 of the Sarbanes
-
Oxley Act of 2002.
|
|
32.2
|
Certification
of the Vice-President of Finance pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
BEL
FUSE INC.
|
||
|
|
|
By: | /s/ Daniel Bernstein | |
Daniel
Bernstein, President and
Chief
Executive Officer
|
By: | /s/ Colin Dunn | |
Colin
Dunn, Vice President of Finance
|