Bel Fuse Inc. (NASDAQ:BELFA)(NASDAQ:BELFB) today
announced preliminary unaudited financial results for the third
quarter and first nine months of 2011.
Summary
$
For the third quarter, sales decreased 10.7% to $75.9
million compared to $85.0 million for the third quarter of 2010.
However, for the first nine months of 2011, sales increased 3.5% to
a record $226.5 million compared to $218.8 million for the first
nine months of 2010.
$
Excluding a litigation charge, non-GAAP net earnings for this
year's third quarter were $1.2 million, or $0.10 per diluted Class
A share and $0.11 per diluted Class B share.
$
Cash and investments were $102.2 million as of September 30, 2011,
an increase of $16.7 million since December 31, 2010.
$
Cisco awarded Bel Fuse for "Excellence in
Service and Responsiveness."
CEO comments
Daniel Bernstein, Bel's President and CEO, stated, "In the third
quarter, we earned an operating profit and generated cash in a
difficult environment. Although sales in our modules group were up
more than 50% over 2010 levels, this was not enough to overcome the
decreases in sales of our other three product groups, compared to
the third quarter of 2010. The most significant decrease was in the
magnetics group, where increasing competition has affected sales of
MagJack products. Compared to the second quarter of 2011, sales
declined in all product groups. Because of these results and the
current market outlook, we expect business conditions to remain
challenging and are therefore realigning our organization to
further reduce costs and improve operations. We expect to finalize
and publicly announce our plan, including the anticipated costs and
savings associated with it, as part of Bel's fourth quarter
earnings report.
"In September, Bel received Cisco's prestigious 'Excellence in
Service and Responsiveness' award and was nominated for Cisco's
'Excellence in Technology Alignment' and prestigious 'Supplier of
the Year' award. We were the only Cisco supplier to be nominated in
three separate categories, and are honored to be singled out for
this recognition among Cisco's hundreds of vendors, including many
Fortune 500 companies. Our award for 'Excellence in Service and
Responsiveness' is a tribute to the hard work and dedication of all
Bel associates throughout the world."
"We continue to actively pursue acquisition candidates and
believe strongly that acquiring the right company will further
strengthen Bel for the future."
Third Quarter Results
For the three months ended September 30, 2011, net sales
decreased to $75,903,000 compared to $85,041,000 for the third
quarter of 2010.
Cost of sales increased to 84.1% of sales for the third quarter
of 2011, compared to 76.2% of sales for the third quarter of 2010,
primarily due to a shift in the product mix to sales of a higher
proportion of modules products, which have higher materials content
and lower profit margins than Bel's other product lines.
The increase in Bel's effective tax rate for this year's third
quarter compared to the third quarter of 2010 was primarily caused
by an accounting loss with minimal tax benefit in Asia, where tax
rates are lower, combined with an accounting profit in the US. In
addition, the prior year tax rate reflected a benefit from the
expiration of tax statutes of limitations of $1,196,000 which did
not recur in 2011.
Net earnings for the third quarter of 2011 were $1,012,000,
which included litigation charges of $247,000 ($223,000 after tax).
This compares to net earnings for the third quarter of 2010 of
$10,001,000, which included a benefit from the expiration of tax
statutes of limitations of $1,196,000, a gain on sale of property,
plant and equipment of $388,000 ($389,000 after tax), and severance
and acquisition-related costs of $77,000 ($65,000 after tax)
primarily related to the relocation of manufacturing operations in
China and the Cinch acquisition.
Excluding litigation charges associated with the SynQor legal
case, referenced below and in the comparison of GAAP and non-GAAP
measures, non-GAAP net earnings for the third quarter of 2011 were
$1,233,000. This compares to non-GAAP net earnings for the third
quarter of 2010 of $8,481,000. A reconciliation of non-GAAP to GAAP
financial measures is provided in the table attached to this press
release.
Net earnings per diluted Class A common share for the third
quarter of 2011 were $0.08, compared to net earnings per diluted
Class A common share of $0.82 for the third quarter of 2010.
Adjusted to exclude litigation charges, non-GAAP net earnings per
diluted Class A common share were $0.10 for the third quarter of
2011, compared to non-GAAP net earnings per diluted Class A common
share of $0.69 for the third quarter of 2010.
Net earnings per diluted Class B common share were $0.09 for the
third quarter of 2011, compared to net earnings per diluted Class B
common share of $0.86 for the third quarter of 2010. Adjusted to
exclude litigation charges, non-GAAP net earnings per diluted Class
B common share were $0.11 for the third quarter of 2011, compared
to non-GAAP net earnings per diluted Class B common share of $0.73
for the third quarter of 2010.
Excluding litigation charges, non-GAAP income from operations
for the third quarter of 2011 was $2,182,000. For the third quarter
of 2010, adjusted to exclude a gain on sale of property, plant and
equipment and severance and plant closure charges, non-GAAP income
from operations was $9,140,000.
Balance Sheet Data
As of September 30, 2011, Bel reported working capital of
$166,484,000, including cash, cash equivalents, and marketable
securities of $102,248,000, a current ratio of 4.8 to 1, total
long-term obligations of $12,320,000, and stockholders' equity of
$222,587,000. In comparison, as of December 31, 2010, Bel reported
working capital of $157,296,000, including cash, cash equivalents,
and marketable securities of $85,535,000, a current ratio of 4.4 to
1, total long-term obligations of $10,571,000, and stockholders'
equity of $220,333,000.
Nine Month Results
For the nine months ended September 30, 2011, net sales
increased to a nine-month record $226,479,000 compared to
$218,842,000 for the first nine months of 2010. Net earnings were
$3,682,000 for this year's first nine months, compared to net
earnings of $14,671,000 for the same period last year. Results for
2011 include a full nine months of operations for Cinch, which was
acquired on January 29, 2010. Cinch's January 2011 revenue
accounted for $5.5 million of the increase in Bel's total net sales
for the first nine months of 2011.
Net earnings per diluted Class A common share for the first nine
months of 2011 were $0.29, compared to net earnings per diluted
Class A common share of $1.19 for the first nine months of 2010.
Adjusted to exclude litigation charges, non-GAAP net earnings per
diluted Class A common share were $0.53 for the first nine months
of 2011, compared to non-GAAP net earnings per diluted Class A
common share of $1.24 for the same period last year.
Net earnings per diluted Class B common share were $0.32 for the
first nine months of 2011, compared to net earnings per diluted
Class B common share of $1.27 for the first nine months of 2010.
Adjusted to exclude litigation charges, non-GAAP net earnings per
diluted Class B common share were $0.58 for the first nine months
of 2011, compared to non-GAAP net earnings per diluted Class B
common share of $1.32 for the first nine months of 2010.
SynQor Legal Case
On July 11, 2011, the Court awarded supplemental damages of $2.5
million against Bel in the previously disclosed SynQor litigation.
Of this amount, $1.9 million is covered through an indemnification
agreement with one of Bel's customers and the remaining $0.6
million was recorded during the second quarter as an expense by the
Company. During the third quarter of 2011, Bel recorded costs and
interest associated with this lawsuit of $0.2 million. Bel is in
the process of appealing the verdict and judgment, and has been
advised that the full amount of the damage award plus costs and
interest must be posted as a supersedeas bond upon filing of the
notice of appeal. In October, Bel will post a total of $13.0
million in the form of a supersedeas bond to the Court in the
Eastern District of Texas while the case is on appeal to the United
States Court of Appeals.
Conference Call
Bel has scheduled a conference call at 11:00 a.m EDT today. To
participate in the call, dial (720) 545-0088, conference ID
#20607994. A simultaneous webcast is available from the Events and
Presentations link on the Investor Info tab at www.BelFuse.com. The
webcast will be available for replay, for a period of 20 days, at
this same Internet address. For a telephone replay, dial (404)
537-3406, conference ID #20607994 after 2:00 p.m. EDT.
About Bel
Bel (www.belfuse.com) and its divisions are primarily engaged in
the design, manufacture, and sale of products used in networking,
telecommunications, high-speed data transmission, commercial
aerospace, military, transportation, and consumer electronics.
Products include magnetics (discrete components, power transformers
and MagJack® connectors with integrated magnetics), modules (DC-DC
converters, integrated analog front-end modules and custom
designs), circuit protection (miniature, micro and surface mount
fuses) and interconnect devices (micro, circular and filtered D-Sub
connectors, passive jacks, plugs and high-speed cable assemblies).
The Company operates facilities around the world.
Forward-Looking Statements
Except for historical information contained in this press
release, the matters discussed in this press release (including the
statements regarding future business conditions, Bel's realignment
plan and the potential impact of acquisitions) are forward looking
statements that involve risks and uncertainties. Among the factors
that could cause actual results to differ materially from such
statements are: the market concerns facing our customers; the
continuing viability of sectors that rely on our products; the
effects of business and economic conditions; capacity and supply
constraints or difficulties; product development, commercializing
or technological difficulties; the regulatory and trade
environment; risks associated with foreign currencies;
uncertainties associated with legal proceedings; the market's
acceptance of the Company's new products and competitive responses
to those new products; and the risk factors detailed from time to
time in the Company's SEC reports. In light of the risks and
uncertainties, there can be no assurance that any forward-looking
statement will in fact prove to be correct. We undertake no
obligation to update or revise any forward-looking statements.
BEL FUSE INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (000s omitted, except for per share data)
Three Months Ended
Nine Months Ended September 30, September 30, 2011
2010* 2011
2010* (unaudited) (unaudited)
Net sales $ 75,903 $ 85,041 $ 226,479 $
218,842 Costs and expenses: Cost of sales 63,865
64,797 186,365 173,524 Selling, general and administrative 9,856
11,181 30,327 30,642 Litigation charges 247 -- 3,471 -- Loss (gain)
on sale of property, plant and equipment (3 ) (388 )
4 (369 ) Total costs and expenses 73,965
75,590 220,167 203,797
Income from operations 1,938 9,451 6,312 15,045 Gain on sale
of investment -- -- 119 -- Interest income and other, net
120 87 281 325
Earnings before provision (benefit) for income taxes 2,058 9,538
6,712 15,370 Provision (benefit) for income taxes 1,046
(463 ) 3,030 699 Net
earnings $ 1,012 $ 10,001 $ 3,682 $ 14,671
Earnings per Class A common sharebasic and
diluted
$ 0.08 $ 0.82 $ 0.29 $ 1.19
Weighted average Class A common shares
outstandingbasic and diluted
2,175 2,175 2,175 2,175
Earnings per Class B common sharebasic and diluted $
0.09 $ 0.86 $ 0.32 $ 1.27 Weighted
average Class B common shares outstandingbasic and diluted
9,644 9,528 9,584 9,496
* Prior year amounts have been restated to reflect adjustments
previously reported during the measurement period related to the
Cinch acquisition as if all such adjustments had been recognized on
the date of acquisition.
CONDENSED CONSOLIDATED BALANCE SHEET DATA (000s omitted)
Sep. 30,
Dec. 31,
Sep. 30,
Dec. 31,
ASSETS 2011 2010
LIABILITIES &
EQUITY 2011 2010 (unaudited)
(unaudited)
(unaudited)
(unaudited) Current assets $
210,695 $ 203,564 Current liabilities $ 44,211 $ 46,268 Property,
plant & equipment, net 41,042 44,793 Noncurrent liabilities
12,320 10,571 Goodwill and intangibles 15,298 15,555 Other assets
12,083 13,260 Stockholders' equity 222,587
220,333 Total Assets $ 279,118 $ 277,172 Total
Liabilities & Equity $ 279,118 $ 277,172
BEL FUSE
INC. AND SUBSIDIARIES NON-GAAP MEASURES (unaudited) (000s
omitted, except for per share data)
Three Months Ended September 30, 2011 Nine
Months Ended September 30, 2011
IncomefromOperations
Netearnings(2)
Net earnings perClass A commonshare -
diluted(3)
Net earnings perClass B commonshare -
diluted(3)
IncomefromOperations
Netearnings(2)
Net earnings perClass A commonshare -
diluted(3)
Net earnings perClass B commonshare -
diluted(3)
GAAP measures $ 1,938 $ 1,012 $ 0.08 $ 0.09 $ 6,312 $ 3,682 $ 0.29
$ 0.32 Severance costs -- -- -- -- 135 92 0.01 0.01 Litigation
charges, net 247 223 0.02 0.02 3,071 2,822 0.23 0.24 Costs
associated withPulse proxy initiative -- -- -- -- 267 166 0.01 0.01
Gain on sales of Pulseshares, net of income tax -- -- -- -- -- (74
) (0.01 ) (0.01 ) Loss (gain) on sale ofproperty, plant and
equipment (3 ) (2 ) -- --
4 2 -- --
Non-GAAP measures(1)
$
2,182
$
1,233
$
0.10
$
0.11
$
9,789
$
6,690
$
0.53
$
0.58
Three Months Ended September 30, 2010 Nine
Months Ended September 30, 2010
IncomefromOperations
Netearnings(2)
Net earnings perClass A commonshare -
diluted(3)
Net earnings perClass B commonshare -
diluted(3)
IncomefromOperations
Netearnings(2)
Net earnings perClass A commonshare -
diluted(3)
Net earnings perClass B commonshare -
diluted(3)
GAAP measures $ 9,451 $ 10,001 $ 0.82 $ 0.86 $ 15,045 $ 14,671 $
1.19 $ 1.27 Severance andplant closure costs 44 44 -- -- 1,096
1,000 0.08 0.09 Acquisition-related costs andinventory-related
purchaseaccounting adjustments 33 21 -- -- 1,127 699 0.06 0.06 Gain
on sale of property,plant and equipment (388 ) (389 ) (0.03 ) (0.03
) (369 ) (377 ) (0.03 ) (0.03 ) Expiration of tax statutesof
limitations, net -- (1,196 ) (0.10 )
(0.10 ) -- (732 ) (0.06 )
(0.06 ) Non-GAAP measures(1) $ 9,140 $ 8,481 $ 0.69
$ 0.73 $ 16,899 $ 15,261 $ 1.24
$ 1.32
(1)
The non-GAAP measures presented above are
not measures of performance under accounting principles generally
accepted in the United States of America ("GAAP"). These measures
should not be considered a subsitute for, and the reader should
also consider, income from operations, net earnings, earnings per
share and other measures of performance as defined by GAAP as
indicators of our performance or profitability. Our non-GAAP
measures may not be comparable to other similarly-titled captions
of other companies due to differences in the method of
calculation.
Based upon discussions with investors and analysts, we
believe that the reader's understanding of Bel's performance and
profitability is enhanced by reference to these non-GAAP measures.
Removal of amounts such as gains on sales of investments and real
estate, tax benefits resulting from the expiration of tax statutes
of limitations, charges for severance, factory closure, amounts
charged for litigation, inventory-related purchase accounting
adjustments and acquisition-related costs facilitates comparisons
of our results among reporting periods. We believe that such
amounts are not reflective of the relevant business in the period
in which the gain or charge is recorded for accounting purposes.
(2)
Net of income tax at effective rate in the
applicable tax jurisdictions.
(3)
Individual amounts of earnings per share
may not agree to the total due to rounding.
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