NEW
JERSEY
|
22-1463699
|
(State
of other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
206
Van Vorst Street
|
Jersey
City, New Jersey
|
07302
|
(Address
of principal executive offices)
|
(Zip
Code)
|
BEL
FUSE INC.
|
||||
INDEX
|
||||
Page
|
||||
Part
I
|
Financial Information | |||
Item
1.
|
Financial
Statements
|
1
|
||
Consolidated
Balance Sheets as of June 30, 2006 (unaudited) and December 31,
2005
|
2
-
3
|
|||
Consolidated
Statements of Operations for the Three and Six Months Ended June
30, 2006
and 2005 (unaudited)
|
4
|
|||
Consolidated
Statements of Stockholders' Equity for the Years ended December
31, 2005
and 2004 and the Six Months Ended June 30, 2006
(unaudited)
|
5
-
6
|
|||
Consolidated
Statements of Cash Flows for the Six Months Ended June 30, 2006
and 2005
(unaudited)
|
7
-
9
|
|||
Notes
to Consolidated Financial Statements (unaudited)
|
10
- 32
|
|||
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
33
- 52
|
||
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
53
|
||
Item
4.
|
Controls
and Procedures
|
54
|
||
Part
II
|
Other Information | |||
Item
1.
|
Legal
Proceedings
|
55
- 56
|
||
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
56
|
||
Item
6.
|
Exhibits
|
57
|
||
Signatures
|
58
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||
CONSOLIDATED
BALANCE SHEETS
|
June
30,
|
December
31,
|
||||||
2006
|
2005
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
78,446,271
|
$
|
51,997,634
|
|||
Marketable
securities
|
15,874,250
|
38,463,108
|
|||||
Accounts
receivable - less allowance for doubtful accounts of $777,603
and
$1,107,000 at June 30, 2006 and December 31, 2005,
respectively
|
47,341,622
|
39,304,984
|
|||||
Inventories
|
38,873,293
|
32,947,103
|
|||||
Prepaid
expenses and other current assets
|
2,904,216
|
1,691,017
|
|||||
Deferred
income taxes
|
510,000
|
-
|
|||||
Assets
held for sale
|
848,049
|
828,131
|
|||||
Total
Current Assets
|
184,797,701
|
165,231,977
|
|||||
Property,
plant and equipment - net
|
42,528,691
|
42,379,356
|
|||||
Deferred
income taxes
|
3,986,000
|
3,901,000
|
|||||
Intangible
assets - net
|
2,599,295
|
2,782,188
|
|||||
Goodwill
|
24,189,248
|
22,427,934
|
|||||
Prepaid
pension costs
|
1,655,362
|
1,655,362
|
|||||
Other
assets
|
2,938,523
|
3,678,100
|
|||||
TOTAL
ASSETS
|
$
|
262,694,820
|
$
|
242,055,917
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||
CONSOLIDATED
BALANCE SHEETS
|
|||||||
June
30,
|
December
31,
|
||||||
2006
|
2005
|
||||||
(Unaudited)
|
|||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable
|
$
|
19,771,545
|
$
|
14,560,827
|
|||
Accrued
expenses
|
13,198,695
|
10,667,558
|
|||||
Deferred
income taxes
|
-
|
1,412,000
|
|||||
Income
taxes payable
|
12,301,445
|
9,840,295
|
|||||
Dividends
payable
|
570,000
|
548,000
|
|||||
Total
Current Liabilities
|
45,841,685
|
37,028,680
|
|||||
Long-term
Liabilities:
|
|||||||
Minimum
pension obligation
|
3,822,020
|
3,450,688
|
|||||
Total
Liabilities
|
49,663,705
|
40,479,368
|
|||||
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 2,702,677 and 2,702,677 shares, respectively
(net of 1,072,769
treasury shares)
|
270,268
|
270,268
|
|||||
Class
B common stock, par value $.10 per share - authorized
30,000,000 shares;
outstanding 9,107,453 and 9,013,264 shares, respectively
(net of 3,218,307
treasury shares)
|
910,746
|
901,327
|
|||||
Additional
paid-in capital
|
30,756,822
|
31,713,608
|
|||||
Retained
earnings
|
179,649,971
|
167,991,188
|
|||||
Deferred
stock-based compensation
|
-
|
(3,562,709
|
)
|
||||
Accumulated
other comprehensive income
|
1,443,308
|
4,262,867
|
|||||
Total
Stockholders' Equity
|
213,031,115
|
201,576,549
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
262,694,820
|
$
|
242,055,917
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|||||||||||||
(Unaudited)
|
|||||||||||||
Six
Months Ended
June
30,
|
Three
Months Ended
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
|
|||||||||||||
Net
Sales
|
$
|
121,100,346
|
$
|
102,983,706
|
$
|
66,474,098
|
$
|
57,545,421
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
90,248,564
|
73,380,908
|
50,261,675
|
40,692,097
|
|||||||||
Selling,
general and administrative
|
19,610,167
|
15,839,939
|
10,232,982
|
8,618,636
|
|||||||||
Casualty
loss
|
1,097,271
|
-
|
133,480
|
-
|
|||||||||
110,956,002
|
89,220,847
|
60,628,137
|
49,310,733
|
||||||||||
Income
from operations
|
10,144,344
|
13,762,859
|
5,845,961
|
8,234,688
|
|||||||||
Interest
and financing expense
|
(44,386
|
)
|
(207,469
|
)
|
(17,186
|
)
|
(140,319
|
)
|
|||||
Gain
on sale of marketable securities, net
|
5,151,039
|
-
|
5,239,519
|
-
|
|||||||||
Interest
income
|
1,173,758
|
632,650
|
661,162
|
407,306
|
|||||||||
Earnings
before provision for income taxes
|
16,424,755
|
14,188,040
|
11,729,456
|
8,501,675
|
|||||||||
Income
tax provision
|
3,664,000
|
3,206,000
|
2,966,000
|
1,833,000
|
|||||||||
Net
earnings
|
$
|
12,760,755
|
$
|
10,982,040
|
$
|
8,763,456
|
$
|
6,668,675
|
|||||
Earnings
per common share - basic
|
$
|
1.08
|
$
|
0.96
|
$
|
0.74
|
$
|
0.58
|
|||||
Earnings
per common share - diluted
|
$
|
1.08
|
$
|
0.95
|
$
|
0.74
|
$
|
0.58
|
|||||
Weighted
average common shares outstanding - basic
|
11,768,667
|
11,420,305
|
11,796,484
|
11,468,398
|
|||||||||
Weighted
average common shares outstanding - diluted
|
11,829,885
|
11,519,992
|
11,845,259
|
11,532,455
|
BEL
FUSE INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
||||||||||||||||||||||
(Unaudited)
|
|
Accumulated
|
||||||||||||||||||||||||
|
Other
|
Deferred
|
|||||||||||||||||||||||
Compre-
|
Compre-
|
Class
A
|
Class
B
|
Additional
|
Stock-
|
||||||||||||||||||||
hensive
|
Retained
|
hensive
|
Common
|
Common
|
Paid-In
|
Based
|
|||||||||||||||||||
Total
|
Income
|
Earnings
|
Income
|
Stock
|
Stock
|
Capital
|
Compensation
|
||||||||||||||||||
|
|||||||||||||||||||||||||
Balance,
January 1, 2005
|
$
|
178,461,296
|
$
|
149,949,283
|
$
|
5,386,512
|
$
|
270,268
|
$
|
866,059
|
$
|
21,989,174
|
$
|
-
|
|||||||||||
Exercise
of stock options
|
4,115,508
|
20,028
|
4,095,480
|
||||||||||||||||||||||
Tax
benefits arising from the non-qualified disposition of incentive
stock options
|
429,802
|
429,802
|
-
|
||||||||||||||||||||||
Cash
dividends on Class A common
stock
|
(430,940
|
)
|
(430,940
|
)
|
|||||||||||||||||||||
Cash
dividends on Class B common stock
|
(1,760,432
|
)
|
(1,760,432
|
)
|
|||||||||||||||||||||
Issuance
of restricted common stock
|
5,214,392
|
15,240
|
5,199,152
|
||||||||||||||||||||||
Deferred
stock-based compensation - net of taxes
|
(3,810,840
|
)
|
(3,810,840
|
)
|
|||||||||||||||||||||
Currency
translation adjustment
|
(669,153
|
)
|
$
|
(669,153
|
)
|
(669,153
|
)
|
||||||||||||||||||
Decrease
in unrealized gain or loss on marketable securities -net of
taxes
|
(454,492
|
)
|
(454,492
|
)
|
(454,492
|
)
|
|||||||||||||||||||
Stock-based
compensation expense - net of taxes
|
248,131
|
248,131
|
|||||||||||||||||||||||
Net
earnings
|
20,233,277
|
20,233,277
|
20,233,277
|
||||||||||||||||||||||
Comprehensive
income
|
$
|
19,109,632
|
|||||||||||||||||||||||
Balance,
December 31, 2005
|
201,576,549
|
167,991,188
|
4,262,867
|
270,268
|
901,327
|
31,713,608
|
(3,562,709
|
)
|
BEL
FUSE INC. AND SUBSIDIARIES
|
|||||||||||||||||||||||||
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)
|
|||||||||||||||||||||||||
(Unaudited)
|
|||||||||||||||||||||||||
|
|
Total
|
|
Compre-
hensive
Income
|
|
Retained
Earnings |
|
Accumulated
Other
Compre-
hensive
Income
|
|
Class
A
Common
Stock
|
|
Class
B
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Deferred
Stock-
Based
Compensation
|
|||||||||
Exercise
of stock options
|
1,887,037
|
7,259
|
1,879,778
|
||||||||||||||||||||||
Tax
benefits arising from the non-qualified disposition of incentive
stock
options
|
112,345
|
112,345
|
|||||||||||||||||||||||
Cash
dividends on Class A common stock
|
(215,470
|
)
|
(215,470
|
)
|
|||||||||||||||||||||
Cash
dividends on Class B common stock
|
(886,502
|
)
|
(886,502
|
)
|
|||||||||||||||||||||
Currency
translation adjustment
|
204,968
|
$
|
204,968
|
204,968
|
|||||||||||||||||||||
Decrease
in unrealized gain or loss on marketable securities -net
of
taxes
|
(3,024,527
|
)
|
(3,024,527
|
)
|
(3,024,527
|
)
|
|||||||||||||||||||
Issuance
of restricted common stock
|
-
|
2,160
|
(2,160
|
)
|
|||||||||||||||||||||
Stock-based
compensation expense - net of tax
|
615,960
|
615,960
|
|||||||||||||||||||||||
Adoption
of SFAS 123 (R)
|
-
|
(3,562,709
|
)
|
3,562,709
|
|||||||||||||||||||||
Net
earnings
|
12,760,755
|
12,760,755
|
12,760,755
|
||||||||||||||||||||||
Comprehensive
income
|
$
|
9,941,196
|
|||||||||||||||||||||||
Balance,
June 30, 2006
|
$
|
213,031,115
|
$
|
179,649,971
|
$
|
1,443,308
|
$
|
270,268
|
$
|
910,746
|
$
|
30,756,822
|
$
|
-
|
|
|||||||
Six
Months Ended
June
30,
|
|||||||
2006
|
2005
|
||||||
Cash
flows from operating activities:
|
|||||||
Net
income
|
$
|
12,760,755
|
$
|
10,982,040
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Depreciation
and amortization
|
4,775,968
|
4,502,560
|
|||||
Casualty
loss
|
1,097,271
|
-
|
|||||
Stock-based
compensation
|
790,960
|
-
|
|||||
Excess
tax benefits from share-based payment
arrangements
|
(112,345
|
)
|
-
|
||||
Gain
on sale of marketable securities
|
(5,151,039
|
)
|
-
|
||||
Other
|
441,869
|
531,373
|
|||||
Deferred
income taxes
|
(548,000
|
)
|
(1,423,000
|
)
|
|||
Changes
in operating assets and liabilities (net of
acquisitions)
|
(5,367,143
|
)
|
(650,121
|
)
|
|||
Net
Cash Provided by Operating Activities
|
8,688,296
|
13,942,852
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchase
of property, plant and equipment
|
(4,333,017
|
)
|
(3,405,163
|
)
|
|||
Purchase
of marketable securities
|
(729,088
|
)
|
(643,424
|
)
|
|||
Payment
for acquisitions - net of cash acquired
|
(2,692,974
|
)
|
(20,340,853
|
)
|
|||
Proceeds
from sale of marketable securities
|
24,489,966
|
-
|
|||||
Net
Cash Provided by (Used in) Investing
Activities
|
16,734,887
|
(24,389,440
|
)
|
Six
Months Ended
|
|||||||
June
30,
|
|||||||
2006
|
2005
|
||||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from borrowings
|
-
|
8,000,000
|
|||||
Loan
repayments
|
-
|
(15,360,694
|
)
|
||||
Proceeds
from exercise of stock options
|
1,887,037
|
2,067,330
|
|||||
Dividends
paid to common shareholders
|
(1,104,078
|
)
|
(1,086,095
|
)
|
|||
Excess
tax benefits from share-based payment
arrangements
|
112,345
|
-
|
|||||
Net
Cash Provided By (Used In) Financing
Activities
|
895,304
|
(6,379,459
|
)
|
||||
Effect
of exchange rate changes on cash
|
130,150
|
(320,328
|
)
|
||||
|
|||||||
Net
Increase (decrease) in Cash and Cash
Equivalents
|
26,448,637
|
(17,146,375
|
)
|
||||
Cash
and Cash Equivalents - beginning of year
|
51,997,634
|
71,197,891
|
|||||
Cash
and Cash Equivalents - end of year
|
$
|
78,446,271
|
$
|
54,051,516
|
|||
Changes
in operating assets and liabilities (net of acquisitions) consist
of:
|
|||||||
Increase
in accounts receivable
|
$
|
(7,931,062
|
)
|
$
|
(3,735,125
|
)
|
|
Increase
in inventories
|
(5,853,897
|
)
|
(1,181,135
|
)
|
|||
(Increase)
decrease in prepaid expenses and other current
assets
|
(1,213,199
|
)
|
480,706
|
||||
Increase
in other assets
|
(359,959
|
)
|
(624,818
|
)
|
|||
Increase
in accounts
payable
|
5,193,397
|
3,075,709
|
|||||
Increase
in income taxes payable
|
2,573,495
|
1,925,559
|
|||||
Increase
(decrease) in accrued expenses
|
2,224,082
|
(591,017
|
)
|
||||
$
|
(5,367,143
|
)
|
$
|
(650,121
|
)
|
BEL
FUSE INC. AND SUBSIDIARIES
|
||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Concluded)
|
||||
(Unaudited)
|
Six
Months Ended
|
|||||||
June
30,
|
|||||||
2006
|
2005
|
||||||
Supplementary
information:
|
|||||||
Cash
paid during the year for:
|
|||||||
Income
taxes
|
$
|
1,240,000
|
$
|
2,389,322
|
|||
Interest
|
$
|
44,000
|
$
|
207,469
|
|||
Details
of acquisitions:
|
|||||||
Fair
value of assets acquired (excluding cash acquired of $311,856
in
2005)
|
$
|
-
|
$
|
6,021,377
|
|||
Intangibles
|
446,571
|
2,255,905
|
|||||
Goodwill
|
2,000,000
|
12,546,080
|
|||||
Acquisition
costs
|
2,446,571
|
20,823,362
|
|||||
Less:
Amounts paid (held back) on acquisition
payment
|
514,403
|
(482,509
|
)
|
||||
Amounts
accrued
|
(268,000
|
)
|
-
|
||||
Cash
paid for acquisitions
|
$
|
2,692,974
|
$
|
20,340,853
|
Three
Months
Ended
June
30, 2005
|
Six
Months
Ended
June
30, 2005
|
||||||
Net
earnings - as reported
|
$
|
6,668,675
|
$
|
10,982,040
|
|||
Add:
Stock-based compensation
|
|||||||
expense
included in net income,
|
|||||||
net
of taxes, as reported
|
|||||||
Deduct:
Total stock-based
|
|||||||
employee
compensation expense
|
|||||||
determined
under fair value based
|
|||||||
method
for all awards,
|
|||||||
net
of taxes
|
(160,868
|
)
|
(321,736
|
)
|
|||
Net
earnings- pro forma
|
$
|
6,507,807
|
$
|
10,660,304
|
|||
Earnings
per common share -
|
|||||||
basic-as
reported
|
$
|
0.58
|
$
|
0.96
|
|||
Earnings
per common share -
|
|||||||
basic-pro
forma
|
$
|
0.57
|
$
|
0.93
|
|||
Earnings
per common share -
|
|||||||
diluted-as
reported
|
$
|
0.58
|
$
|
0.95
|
|||
Earnings
per common share -
|
|||||||
diluted-pro
forma
|
$
|
0.56
|
$
|
0.93
|
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Weighted
average shares outstanding - basic
|
11,768,667
|
11,420,305
|
11,796,484
|
11,468,398
|
|||||||||
Dilutive
impact of stock options and
|
|||||||||||||
unvested
restricted stock awards
|
61,218
|
99,687
|
48,775
|
64,057
|
|||||||||
Weighted
average shares oustanding - diluted
|
11,829,885
|
11,519,992
|
11,845,259
|
11,532,455
|
SIx
Months Ended
June
30,
2005
|
||||
Net
sales
|
$
|
108,295
|
||
Net
earnings
|
10,758
|
|||
Earnings
per share - diluted
|
0.93
|
Cash
|
$
|
311,856
|
||
Accounts
receivable
|
3,687,331
|
|||
Inventories
|
2,862,571
|
|||
Prepaid
expenses
|
96,120
|
|||
Income
taxes receivable
|
5,488
|
|||
Property,
plant and equipment
|
1,545,526
|
|||
Other
assets
|
32,083
|
|||
Deferred
tax asset
|
1,392,850
|
|||
Goodwill
|
12,546,080
|
|||
Intangible
assets
|
1,960,000
|
|||
Notes
payable
|
(860,694
|
)
|
||
Accounts
payable
|
(2,129,165
|
)
|
||
Accrued
expenses
|
(465,002
|
)
|
||
Net
assets acquired
|
$
|
20,985,044
|
Total
|
Asia
|
North
America
|
Europe
|
||||||||||
Balance,
January 1, 2005
|
$
|
9,881,854
|
$
|
6,407,435
|
$
|
2,869,092
|
$
|
605,327
|
|||||
Goodwill
allocation
|
|||||||||||||
related
to acquisitions
|
12,546,080
|
-
|
11,543,846
|
1,002,234
|
|||||||||
Balance,
December 31, 2005
|
22,427,934
|
6,407,435
|
14,412,938
|
1,607,561
|
|||||||||
Goodwill
allocation
|
|||||||||||||
related
to acquisitions
|
2,000,000
|
2,000,000
|
-
|
-
|
|||||||||
Reclassification
to intangible asset
|
(670,000
|
)
|
-
|
(670,000
|
)
|
-
|
|||||||
Other
purchase price and foreign
|
|||||||||||||
exchange
adjustments
|
431,314
|
-
|
395,690
|
35,624
|
|||||||||
Balance,
June 30, 2006
|
$
|
24,189,248
|
$
|
8,407,435
|
$
|
14,138,628
|
$
|
1,643,185
|
|
December
31, 2005
|
||||||||||||||||||
Total
|
Asia
|
North
America
|
|||||||||||||||||
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
||||||||||||||
Patents
and Product
|
|||||||||||||||||||
Information
|
$
|
2,935,000
|
$
|
1,812,853
|
$
|
2,653,000
|
$
|
1,634,566
|
$
|
282,000
|
$
|
178,287
|
|||||||
Customer
relationships
|
1,160,000
|
178,833
|
-
|
-
|
1,160,000
|
178,833
|
|||||||||||||
Covenants
not-to-compete
|
5,021,034
|
4,342,160
|
4,221,034
|
3,813,589
|
800,000
|
528,571
|
|||||||||||||
$
|
9,116,034
|
$
|
6,333,846
|
$
|
6,874,034
|
$
|
5,448,155
|
$
|
2,242,000
|
$
|
885,691
|
|
June
30, 2006
|
||||||||||||||||||
|
Total
|
Asia
|
North
America
|
||||||||||||||||
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
|||||||||||||
Patents
and Product
|
|||||||||||||||||||
Information
|
$
|
2,935,000
|
$
|
2,042,808
|
$
|
2,653,000
|
$
|
1,850,397
|
$
|
282,000
|
$
|
192,411
|
|||||||
Customer
relationships
|
1,830,000
|
465,124
|
-
|
-
|
1,830,000
|
465,124
|
|||||||||||||
Covenants
not-to-compete
|
5,467,605
|
5,125,378
|
4,667,605
|
4,408,711
|
800,000
|
716,667
|
|||||||||||||
$
|
10,232,605
|
$
|
7,633,310
|
$
|
7,320,605
|
$
|
6,259,108
|
$
|
2,912,000
|
$
|
1,374,202
|
Year
Ending
December
31,
|
Estimated
Amortization
Expense
|
|||
2006
|
$
|
563,274
|
||
2007
|
809,277
|
|||
2008
|
534,287
|
|||
2009
|
427,596
|
|||
2010
|
134,904
|
5.
|
INVENTORIES
|
June
30,
|
December
31,
|
||||||
2006
|
2005
|
||||||
Raw
materials
|
$
|
21,073,927
|
$
|
19,342,703
|
|||
Work
in progress
|
7,767,316
|
2,515,174
|
|||||
Finished
goods
|
10,032,050
|
11,089,226
|
|||||
$
|
38,873,293
|
$
|
32,947,103
|
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Total
segment revenues
|
|||||||||||||
North
America
|
$
|
39,531,004
|
$
|
37,119,158
|
$
|
21,036,118
|
$
|
19,158,205
|
|||||
Asia
|
88,243,885
|
71,509,916
|
49,338,286
|
40,691,564
|
|||||||||
Europe
|
13,355,532
|
7,414,308
|
7,670,699
|
3,415,866
|
|||||||||
Total
segment revenues
|
141,130,421
|
116,043,382
|
78,045,103
|
63,265,635
|
|||||||||
Reconciling
items:
|
|||||||||||||
Intersegment
revenues
|
(20,030,075
|
)
|
(13,059,676
|
)
|
(11,571,005
|
)
|
(5,720,214
|
)
|
|||||
Net
sales
|
$
|
121,100,346
|
$
|
102,983,706
|
$
|
66,474,098
|
$
|
57,545,421
|
|||||
Income
(loss) from Operations:
|
|||||||||||||
North
America
|
$
|
(927,078
|
)
|
$
|
3,841,040
|
$
|
874,823
|
$
|
2,556,574
|
||||
Asia
|
10,430,590
|
9,799,777
|
4,865,271
|
5,714,850
|
|||||||||
Europe
|
640,832
|
122,042
|
105,867
|
(36,736
|
)
|
||||||||
$
|
10,144,344
|
$
|
13,762,859
|
$
|
5,845,961
|
$
|
8,234,688
|
7.
|
DEBT
|
June
30,
|
December
31,
|
||||||
2006
|
2005
|
||||||
Sales
commissions
|
$
|
2,022,569
|
$
|
1,812,135
|
|||
Investment
banking commissions
|
150,426
|
1,105,510
|
|||||
Subcontracting
labor
|
1,799,445
|
1,597,279
|
|||||
Salaries,
bonuses and
|
|||||||
related
benefits
|
3,382,995
|
2,642,729
|
|||||
Other
|
5,843,260
|
3,509,905
|
|||||
$
|
13,198,695
|
$
|
10,667,558
|
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2006
|
|
2005
|
|
2006
|
|
2005
|
|||||||
Service
cost
|
$
|
486,000
|
$
|
154,000
|
$
|
173,000
|
$
|
55,000
|
|||||
Interest
cost
|
96,000
|
113,000
|
35,000
|
36,000
|
|||||||||
Amortization
of adjustments
|
58,000
|
74,000
|
18,000
|
30,000
|
|||||||||
Total
SERP expense
|
$
|
640,000
|
$
|
341,000
|
$
|
226,000
|
$
|
121,000
|
June
30,
|
December
31,
|
||||||
2006
|
|
2005
|
|||||
Balance
sheet amounts:
|
|||||||
Accrued
pension liability
|
$
|
3,822,020
|
$
|
3,450,688
|
|||
Intangible
asset
|
1,655,362
|
1,655,362
|
Weighted
|
|||||||||||||
Average
|
|||||||||||||
Weighted
|
Remaining
|
Aggregate
|
|||||||||||
Average
|
Contractual
|
Intrinsic
|
|||||||||||
Options
|
Shares
|
Exercise
Price
|
Term
|
Value
|
|||||||||
Outstanding
at January 1, 2006
|
286,013
|
$
|
24.96
|
||||||||||
Granted
|
-
|
||||||||||||
Exercised
|
(72,588
|
)
|
26.00
|
$
|
696,879
|
||||||||
Forfeited
or expired
|
(12,400
|
)
|
29.71
|
||||||||||
Outstanding
at June 30, 2006
|
201,025
|
$
|
24.29
|
1.5
|
$
|
1,712,676
|
|||||||
Exercisable
at June 30, 2006
|
90,025
|
$
|
23.12
|
1.5
|
$
|
872,235
|
Weighted-Average
|
|
||||||
|
|
|
|
Grant-Date
|
|
||
Nonvested
Options
|
|
Options
|
|
Fair
Value
|
|||
Nonvested
at December 31, 2005
|
177,500
|
$
|
24.28
|
||||
Granted
|
-
|
||||||
Vested
|
(54,100
|
)
|
19.84
|
||||
Forfeited
|
(12,400
|
)
|
29.71
|
||||
Nonvested
at June 30, 2006
|
111,000
|
$
|
25.24
|
Weighted
|
|||||||||||||
Weighted
|
Average
|
||||||||||||
Average
|
Remaining
|
Aggregate
|
|||||||||||
Restricted
Stock
|
Award
|
Contractual
|
Intrinsic
|
||||||||||
Awards
|
Shares
|
Price
|
Term
|
Value
|
|||||||||
Outstanding
at January 1, 2006
|
152,400
|
$
|
35.64
|
||||||||||
Granted
|
-
|
||||||||||||
Awarded
|
21,600
|
30.00
|
|||||||||||
Forfeited
|
(4,000
|
)
|
37.00
|
||||||||||
Outstanding
at June 30, 2006
|
170,000
|
34.89
|
4.5
|
$
|
-
|
||||||||
Exercisable
at June 30, 2006
|
-
|
-
|
$
|
-
|
·
|
Voting
- Class A receives one vote per share; Class B is
non-voting;
|
·
|
Dividends
(cash) - Cash dividends are payable at the discretion of the Board
of
Directors and is subject to a 5% provision whereby cash dividends
paid out
to Class B must be at least 5% higher per share annually than Class
A. At
the discretion of the Board of Directors, Class B may receive a
cash
dividend without Class A receiving a cash
dividend.
|
·
|
Dividends
(other than cash) and distributions in connection with any
recapitalization and upon liquidation, dissolution or winding up
of the
Company - Shared equally among Class A and Class B;
|
·
|
Mergers
and consolidations - Equal amount and form of consideration per
share
among Class A and Class B;
|
·
|
Class
B Protection - Any person or group that purchases 10% or more of
the
outstanding Class A (excluding certain shares, as defined) must
make a
public cash tender offer (within 90 days) to acquire additional
shares of
Class B to avoid disproportionate voting rights. Failure to do
so will
result in forfeiture of voting rights for those shares acquired
after the
recapitalization. Alternatively, the purchaser can sell Class A
shares to
reduce the purchaser's holdings below 10% (excluding shares owned
prior to
recapitalization). Above 10%, this protection transaction is triggered
every 5% (i.e., 15%, 20%, 25%,
etc.);
|
·
|
Convertibility
- Not convertible into another class of Common Stock or any other
security
by the Company, unless by resolution by the Board of Directors
to convert
such shares as a result of either class becoming excluded from
quotation
on NASDAQ, or if total outstanding shares of Class A falls below
10% of
the aggregate number of outstanding shares of both classes (in
which case,
all Class B shares will be automatically converted in Class A
shares).
|
·
|
Transferability
and trading - Both Class A and Class B are freely transferable
and
publicly traded on NASDAQ National
Market;
|
·
|
Subdivision
of shares - Any split, subdivision or combination of the outstanding
shares of Class A or Class B must be proportionately split with
the other
class in the same manner and on the same
basis.
|
Six
Months Ended
|
Three
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Net
earnings
|
$
|
12,760,755
|
$
|
10,982,040
|
$
|
8,763,456
|
$
|
6,668,675
|
|||||
Currency
translation adjustment
|
204,968
|
(614,665
|
)
|
113,089
|
(424,138
|
)
|
|||||||
Increase
(decrease) in unrealized
|
|||||||||||||
gain
on marketable securities
|
|||||||||||||
-
net of taxes
|
(3,024,527
|
)
|
(3,143,296
|
)
|
(5,532,198
|
)
|
32,446
|
||||||
Comprehensive
income
|
$
|
9,941,196
|
$
|
7,224,079
|
$
|
3,344,347
|
$
|
6,276,983
|
13.
|
ASSETS
HELD FOR SALE
|
14.
|
NEW
FINANCIAL ACCOUNTING STANDARDS
|
Percentage
of Net Sales
Six
Months Ended
June
30,
|
Percentage
of Net Sales
Three
Months Ended
June
30,
|
||||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
Net
sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||||
Cost
of sales
|
74.5
|
71.3
|
75.6
|
70.7
|
|||||||||
Selling,
general and administrative expenses
|
16.2
|
15.4
|
15.4
|
15.0
|
|||||||||
Casualty
loss
|
0.9
|
-
|
0.2
|
-
|
|||||||||
Interest
income and interest and financing expense
|
0.9
|
0.4
|
1.0
|
0.5
|
|||||||||
Gain
on sale of marketable securities - net
|
4.3
|
-
|
7.9
|
-
|
|||||||||
Earnings
before provision for income taxes
|
13.6
|
13.7
|
17.6
|
14.8
|
|||||||||
Income
tax provision
|
3.0
|
3.1
|
4.5
|
3.2
|
|||||||||
Net
earnings
|
10.5
|
10.6
|
13.2
|
11.6
|
Increase
from
Prior
Period
|
Increase
from
Prior
Period
|
||||||
Six
Months Ended June 30, 2006
compared
with Six Months Ended June
30, 2005
|
Three
Months Ended
June 30, 2006 compared
with Three Months Ended June
30,
2006
|
||||||
Net
sales
|
17.6 | % | 15.5 | % | |||
Cost
of sales
|
23.0 | 23.6 | |||||
Selling,
general and administrative expenses
|
23.8 | 18.7 | |||||
Net
earnings
|
16.2
|
31.4 |
¨ |
The
Company incurred a 4.2% 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 (including new
Power
products in the second half of 2005), which have a higher raw material
content than the Company’s other products, and increased costs for raw
materials such as copper, steel and petroleum-based products and
increased
transportation costs.
|
¨ |
The
Company has also started to pay higher wage rates and benefits to
its
production workers in China. These higher rates and benefits are
reflected
in the Company’s cost of goods sold.
|
¨ |
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 increasing sales also have an impact on the accelerated
write off of intangibles related to contingent purchase price payments
arising from the acquisition of Current
Concepts.
|
¨ |
The
Company incurred a 5.8% 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 (including new
Power
products in the second half of 2005), which have a higher raw material
content than the Company’s other products, and increased costs for raw
materials such as copper, steel and petroleum-based products and
increased
transportation costs.
|
¨ |
The
Company has also started to pay higher wage rates and benefits to
its
production workers in China. These higher rates and benefits are
reflected
in the Company’s cost of goods sold.
|
¨ |
The
Company incurred a pre-tax amortization charge of $289,000 related
to
intangibles acquired in the Power and Insilco
acquisitions.
|
¨ |
The
Company incurred $270,000 of compensation expense pursuant to SFAS
No.
123R that was charged to cost of
sales.
|
¨ |
The
Company has been required to run duplicate ROHS and non-ROHS production
lines to support its customers as they convert to “lead free”
products.
|
¨ |
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 increasing sales also have an impact on the accelerated
write off of intangibles related to contingent purchase price payments
arising from the acquisition of Current
Concepts.
|
Payments
due by period
|
||||||||||||||||
Contractual
Obligations
|
Total
|
Less
than
one
year
|
1-3
years
|
3-5
years
|
More
than
5
years
|
|||||||||||
Capital
expenditure obligations
|
$
|
2,715,548
|
$
|
2,715,548
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Contingent
purchase price commitments
|
2,383,516
|
2,383,516
|
||||||||||||||
Operating
leases
|
3,802,996
|
1,392,957
|
1,546,563
|
863,476
|
||||||||||||
Raw
material purchase obligations
|
19,349,197
|
19,349,197
|
-
|
-
|
-
|
|||||||||||
Total
|
$
|
28,251,257
|
$
|
25,841,218
|
$
|
1,546,563
|
$
|
863,476
|
$
|
-
|
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, and is accumulated and communicated to our
management, including our Chief Executive Officer and our Vice
President
of Finance, as appropriate to allow timely decisions regarding
required
disclosure.
|
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 internal control
over
financial reporting.
|
For
|
Withheld
|
||||||
Howard
Bernstein
|
2,428,653
|
16,326
|
|||||
John
Tweedy
|
2,428,653
|
16,326
|
31.1
|
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.
|
32.1
|
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 |