NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
|
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Bel Fuse Inc. and subsidiaries (“Bel” or the “Company”) design, manufacture and sell products used in the networking, telecommunication, high-speed data transmission, commercial aerospace, military, broadcasting, transportation and consumer electronic industries around the world. The Company manages its operations geographically through its three reportable operating segments: North America, Asia and Europe.
On January 29, 2010, the Company completed its acquisition of Cinch Connectors, Inc. (“Cinch U.S.”), Cinch Connectors de Mexico, S.A. de C.V. (“Cinch Mexico”) and Cinch Connectors Ltd. (“Cinch Europe”) (collectively, “Cinch”) from Safran S.A. The results of Cinch’s business have been included in the Company’s financial statements only for periods subsequent to the completion of the acquisition. Therefore, the Company’s financial results for 2010 do not reflect a full year of Cinch operations.
On March 9, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of GigaCom Interconnect AB (“GigaCom”). On July 31, 2012, the Company consummated its acquisition of 100% of the issued and outstanding capital stock of Fibreco Ltd. (“Fibreco”). On September 12, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Powerbox Italia S.r.L. and its subsidiary, Powerbox Design (collectively, “Powerbox”). The acquisitions of GigaCom, Fibreco and Powerbox may hereafter be referred to collectively as either the “2012 Acquisitions” or the “2012 Acquired Companies”. As of the respective acquisition dates, all of the assets acquired and liabilities assumed were recorded at their preliminary fair values and the Company’s consolidated results of operations for the year ended December 31, 2012 include the operating results of the 2012 Acquired Companies from their respective acquisition dates through December 31, 2012.
PRINCIPLES OF CONSOLIDATION
- The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including businesses acquired since their respective dates of acquisition. All intercompany transactions and balances have been eliminated.
USE OF ESTIMATES
- The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including but not limited to those related to product returns, bad debts, inventories, goodwill, intangible assets, investments, Supplemental Executive Retirement Plan (“SERP”) expense, income taxes, contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
CASH EQUIVALENTS
- Cash equivalents include short-term investments in money market funds and certificates of deposit with an original maturity of three months or less when purchased.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
- The Company maintains allowances for doubtful accounts for estimated losses from the inability of its customers to make required payments. The Company determines its allowances by both specific identification of customer accounts where appropriate and the application of historical loss experience to non-specific accounts. As of December 31, 2012 and 2011, the Company had an allowance for doubtful accounts of $0.7 million and $0.8 million, respectively.
MARKETABLE SECURITIES
- The Company generally classifies its equity securities as "available for sale" and, accordingly, reflects unrealized gains and losses, net of deferred income taxes, as a component of accumulated other comprehensive loss. The Company periodically reviews its marketable securities and determines whether the investments are other-than-temporarily impaired. If the investments are deemed to be other-than-temporarily impaired, the investments are written down to their then current fair market value. The fair values of marketable securities are based on quoted market prices. Realized gains or losses from the sale of marketable securities are based on the specific identification method. During the years ended December 31, 2012 and 2011, the Company recorded net realized (losses) gains on sales of investments in the amount of ($0.1) million and $0.1 million, respectively, and an other-than-temporary impairment charge of $0.8 million during the year ended December 31, 2012.
BUSINESS COMBINATIONS
– The Company accounts for business combinations by recognizing the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the accounting literature. Acquisition-related costs, including restructuring costs, are recognized separately from the acquisition and will generally be expensed as incurred.
EFFECTS OF FOREIGN CURRENCY
- The Company's European entities, whose functional currencies are Euros, British Pounds and Czech Korunas, enter into transactions which include sales denominated principally in Euros, British Pounds and various other European currencies, and purchases that are denominated principally in U.S. Dollars and British Pounds. Such transactions resulted in net realized and unrealized currency exchange gains of $0.6 million for the year ended December 31, 2012 and losses of $0.2 million for the year ended December 31, 2010, which were included in net earnings. Realized and unrealized currency losses during the year ended December 31, 2011 were not material. The functional currency for some foreign operations is the local currency. Assets and liabilities of foreign operations are translated at exchange rates as of the balance sheet date, and income, expense and cash flow items are translated at the average exchange rate for the applicable period. Translation adjustments are recorded in other comprehensive income. The U.S. Dollar is used as the functional currency for certain foreign operations that conduct their business in U.S. Dollars. Translation of subsidiaries’ foreign currency financial statements into U.S. dollars resulted in translation gains (losses) of $0.3 million, ($0.2) million and ($0.9) million for the years ended December 31, 2012, 2011 and 2010, respectively, which are included in accumulated other comprehensive loss.
CONCENTRATION OF CREDIT RISK
- Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable and temporary cash investments. The Company grants credit to customers that are primarily original equipment manufacturers and to subcontractors of original equipment manufacturers based on an evaluation of the customer's financial condition, without requiring collateral. Exposure to losses on receivables is principally dependent on each customer's financial condition. The Company controls its exposure to credit risk through credit approvals, credit limits and monitoring procedures and establishes allowances for anticipated losses. See Note 12 of notes to the Company’s consolidated financial statements for disclosures regarding significant customers.
The Company places its temporary cash investments with quality financial institutions and commercial issuers of short-term paper and, by policy, limits the amount of credit exposure in any one financial instrument.
INVENTORIES
- Inventories are stated at the lower of weighted-average cost or market.
REVENUE RECOGNITION
– Revenue is recognized when the product has been delivered and title and risk of loss has passed to the customer, collection of the resulting receivable is deemed reasonably assured by management, persuasive evidence of an arrangement exists and the sales price is fixed and determinable. Substantially all of the Company's shipments are FCA (free carrier), which provides for title to pass upon delivery to the customer's freight carrier. Some product is shipped DDP/DDU with title passing when the product arrives at the customer's dock. DDP is defined as Delivered Duty Paid by the Company and DDU is Delivered Duty Unpaid by the Company.
For certain customers, the Company provides consigned inventory, either at the customer’s facility or at a third-party warehouse. Sales of consigned inventory are recorded when the customer withdraws inventory from consignment
.
The Company typically has a twelve-month warranty policy for workmanship defects. As the Company has not historically had significant warranty claims, no general reserves for warranties have been established. The Company is not contractually obligated to accept returns except for defective product or in instances where the product does not meet the Company’s product specifications. However, the Company may permit its customers to return product for other reasons. In these instances, the Company would generally require a significant cancellation penalty payment by the customer. The Company estimates such returns, where applicable, based upon management's evaluation of historical experience, market acceptance of products produced and known negotiations with customers. Such estimates are deducted from sales and provided for at the time revenue is recognized.
FINITE-LIVED INTANGIBLE ASSETS
– Intangible assets with finite lives are stated at cost less accumulated amortization. Amortization is calculated using the straight-line method over the estimated useful life of the asset.
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS
– The Company has historically evaluated its goodwill and other indefinite-lived intangible assets for impairment annually as of December 31 or more frequently if impairment indicators arose in accordance with Accounting Standards Codification (“ASC”) Topic 350, “Intangibles – Goodwill and Other”. In the fourth quarter of 2012, the Company changed the date of its annual assessment of goodwill to October 1 of each year. The change in testing date for goodwill is a change in accounting principle, which management believes is preferable as the new date of the assessment, while remaining in the fourth quarter, will create a more efficient and timely process surrounding the impairment tests and will lessen resource constraints at year-end. The change in the assessment date does not delay, accelerate or avoid a potential impairment charge. The Company has determined that it is impracticable to objectively determine projected cash flows and related valuation estimates that would have been used as of each October 1 of prior reporting periods without the use of hindsight. As such, the Company prospectively applied the change in annual goodwill impairment testing date from October 1 2012. No impairment was recognized as a result of the October 1, 2012 testing.
The Company tests goodwill for impairment using a fair value approach at the reporting unit level. A reporting unit is an operating segment or one level below an operating segment for which discrete financial information is available and reviewed regularly by management. Assets and liabilities of the Company have been assigned to the reporting units to the extent they are employed in or are considered a liability related to the operations of the reporting unit and are considered in determining the fair value of the reporting unit. Reporting units with similar economic characteristics are aggregated for purposes of the goodwill impairment test.
The goodwill impairment test is a two-step process. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test, used to measure the amount of impairment loss, compares the implied fair value of goodwill associated with each reporting unit with the carrying amount of that goodwill.
If the carrying amount of goodwill associated with a reporting unit exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess. See Note 4 of the consolidated financial statements.
The Company tests indefinite-lived intangible assets for impairment using the relief-from-royalty method (a form of the income approach). In the fourth quarter of 2012, the Company changed the date of its annual assessment for other indefinite-lived intangible asset impairment from December 31 to October 1. No impairment was recognized as a result of the October 1, 2012 testing. See Note 4 of the consolidated financial statements.
DEPRECIATION
- Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated primarily using the straight-line method over the estimated useful life of the asset. The estimated useful lives primarily range from 3 to 39 years for buildings and leasehold improvements, and from 3 to 13 years for machinery and equipment.
INCOME TAXES
- The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company records net deferred tax assets to the extent it believes these assets will more-likely-than-not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. The Company has established a valuation allowance for deferred tax assets that are not likely to be realized. In the event the Company were to determine that it would be able to realize its deferred income tax assets in the future in excess of its net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.
The Company establishes reserves for tax contingencies when, despite the belief that the Company’s tax return positions are fully supported, it is probable that certain positions may be challenged and may not be fully sustained. The tax contingency reserves are analyzed on a quarterly basis and adjusted based upon changes in facts and circumstances, such as the conclusion of federal and state audits, expiration of the statute of limitations for the assessment of tax, case law and emerging legislation. The Company’s effective tax rate includes the effect of tax contingency reserves and changes to the reserves as considered appropriate by management.
EARNINGS PER SHARE
– The Company utilizes the two-class method to report its earnings per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and participation rights in undistributed earnings (loss). The Company’s Certificate of Incorporation, as amended, states that Class B common shares are entitled to dividends at least 5% greater than dividends paid to Class A common shares, resulting in the two-class method of computing earnings per share. In computing earnings per share, the Company has allocated dividends declared to Class A and Class B based on amounts actually declared for each class of stock and 5% more of the undistributed earnings (loss) have been allocated to Class B shares than to the Class A shares on a per share basis. Basic earnings per common share are computed by dividing net earnings by the weighted average number of common shares outstanding during the period. Diluted earnings per common share, for each class of common stock, are computed by dividing net earnings by the weighted average number of common shares and potential common shares outstanding during the period.
The earnings and weighted average shares outstanding used in the computation of basic and diluted earnings per share are as follows (dollars in thousands, except share and per share data):
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
2,402
|
|
|
$
|
3,764
|
|
|
$
|
13,649
|
|
Less Dividends declared:
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A
|
|
|
522
|
|
|
|
522
|
|
|
|
522
|
|
Class B
|
|
|
2,697
|
|
|
|
2,690
|
|
|
|
2,664
|
|
Undistributed (loss) earnings
|
|
$
|
(817
|
)
|
|
$
|
552
|
|
|
$
|
10,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Undistributed (loss) earnings allocation - basic and diluted:
|
|
|
|
|
|
|
|
|
|
Class A undistributed (loss) earnings
|
|
$
|
(145
|
)
|
|
$
|
98
|
|
|
$
|
1,872
|
|
Class B undistributed (loss) earnings
|
|
|
(672
|
)
|
|
|
454
|
|
|
|
8,591
|
|
Total undistributed (loss) earnings
|
|
$
|
(817
|
)
|
|
$
|
552
|
|
|
$
|
10,463
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings allocation - basic and diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A net earnings
|
|
$
|
377
|
|
|
$
|
620
|
|
|
$
|
2,394
|
|
Class B net earnings
|
|
|
2,025
|
|
|
|
3,144
|
|
|
|
11,255
|
|
Net earnings
|
|
$
|
2,402
|
|
|
$
|
3,764
|
|
|
$
|
13,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A - basic and diluted
|
|
|
2,174,912
|
|
|
|
2,174,912
|
|
|
|
2,174,912
|
|
Class B - basic and diluted
|
|
|
9,624,578
|
|
|
|
9,597,661
|
|
|
|
9,504,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A - basic and diluted
|
|
$
|
0.17
|
|
|
$
|
0.28
|
|
|
$
|
1.10
|
|
Class B - basic and diluted
|
|
$
|
0.21
|
|
|
$
|
0.33
|
|
|
$
|
1.18
|
|
During the year ended December 31, 2010, a weighted average of 14,718 outstanding stock options were not included in the foregoing computation for Class B common shares as their effect would be antidilutive. There were no stock options outstanding during the years ended December 31, 2012 or 2011.
RESEARCH AND DEVELOPMENT
- The Company’s engineering groups are strategically located around the world to facilitate communication with and access to customers’ engineering personnel. This collaborative approach enables partnerships with customers for technical development efforts. On occasion, Bel executes non-disclosure agreements with customers to help develop proprietary, next generation products destined for rapid deployment. Research and development costs are expensed as incurred, and are included in cost of sales. Generally, research and development is performed internally for the benefit of the Company. Research and development costs include salaries, building maintenance and utilities, rents, materials, administration costs and miscellaneous other items. Research and development expenses for the years ended December 31, 2012, 2011 and 2010 amounted to $12.4 million, $12.0 million and $11.4 million, respectively, and are included in cost of sales in the accompanying consolidated statements of operations.
EVALUATION OF LONG-LIVED ASSETS
– Property, plant and equipment represent an important component of the Company’s total assets. The Company depreciates its property, plant and equipment on a straight-line basis over the estimated useful lives of the assets. Management reviews long-lived assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset. If an impairment exists, the resulting write-down would be the difference between fair market value of the long-lived asset and the related net book value. In connection with the closure of its Vinita, Oklahoma manufacturing facility, the Company recorded $1.4 million of impairment charges related to property, plant and equipment during the year ended December 31, 2012. Of this amount, $1.0 million related to the carrying value of the building and land, which the Company donated to a local university in 2012. The Company also recorded $0.3 million in asset write-downs related to property, plant and equipment damaged by Hurricane Sandy at its Jersey City, New Jersey and Inwood, New York facilities in 2012.
FAIR VALUE MEASUREMENTS
- The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers are defined as follows:
Level 1
- Observable inputs such as quoted market prices in active markets
Level 2
- Inputs other than quoted prices in active markets that are either directly or indirectly observable
Level 3
- Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions
For financial instruments such as cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable, the carrying amount approximates fair value because of the short maturities of such instruments. See Note 5 for additional disclosures related to fair value measurements.
NEW FINANCIAL ACCOUNTING STANDARDS
Accounting Standards Update No. 2011-04 – Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS (“ASU No. 2011-04”)
ASU No. 2011-04 clarified some existing concepts, eliminated wording differences between accounting principles generally accepted in the United States of America (“GAAP”) and International Financial Reporting Standards (“IFRS”), and in some limited cases, changed some principles to achieve convergence between U.S. GAAP and IFRS. ASU No. 2011-04 resulted in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU No. 2011-04 also expanded the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. The Company implemented the provisions of ASU No. 2011-04 effective January 1, 2012. The adoption of the provisions of ASU No. 2011-04 did not have a material effect on the Company’s consolidated financial position, results of operations or cash flows, nor did it materially modify or expand the Company’s financial statement footnote disclosures.
Accounting Standards Update No. 2011-05 – Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU No. 2011-05”)
ASU No. 2011-05 amended existing guidance by allowing only two options for presenting the components of net income and other comprehensive income: (1) in a single continuous statement of comprehensive income or (2) in two separate but consecutive financial statements, consisting of an income statement followed by a separate statement of other comprehensive income. ASU No. 2011-05 eliminated the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments in ASU No. 2011-05 did not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. ASU No. 2011-05 required retrospective application, and was effective for the Company on January 1, 2012. The Company implemented the provisions of ASU No. 2011-05 during the first quarter of 2012 by presenting herein the components of net income and other comprehensive income in two separate but consecutive financial statements.
Accounting Standards Update No. 2011-08 – Testing Goodwill for Impairment (Topic 350): Intangibles—Goodwill and Other (“ASU No. 2011-08”)
ASU No. 2011-08 updated existing guidance regarding testing of goodwill for impairment. ASU No. 2011-08 gives entities the option to perform a qualitative assessment to first assess whether the fair value of a reporting unit is less than its carrying amount. If an entity determines it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. ASU No. 2011-08 became effective during the Company’s first quarter of 2012. The adoption of this standard did not have any impact on the Company’s results of operations or financial condition.
Accounting Standards Update No. 2012-02 – Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU No. 2012-02”)
ASU No. 2012-02 amends ASU No. 2011-08,
Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment,
and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30,
Intangibles - Goodwill and Other - General Intangibles Other than Goodwill
. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of ASU No. 2012-02 is not expected to have a material impact on the Company’s financial position or results of operations.
Accounting Standards Update No. 2013-02 – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU No. 2013-02”)
ASU No. 2013-02 requires disclosure of amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the consolidated statements of operations or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net earnings but only if the amount reclassified is required to be reclassified to net earnings in its entirety in the same reporting period. For amounts not reclassified in their entirety to net earnings, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. ASU No. 2013-02 is effective prospectively for the Company for annual and interim periods beginning January 1, 2013. The Company does not expect that the adoption of this update will have a material effect on its consolidated financial statements.
2012 Acquisitions
:
On March 9, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of GigaCom Interconnect AB (“GigaCom Interconnect”) with a cash payment of $2.7 million (£1.7 million). GigaCom Interconnect, located in Gothenburg, Sweden, is a supplier of expanded beam fiber optic technology and a participant in the development of next-generation commercial aircraft components. GigaCom Interconnect has become part of Bel’s Cinch Connector business. Management believes that GigaCom’s offering of expanded beam fiber optic products will enhance the Company’s position within the growing aerospace and military markets.
On July 31, 2012, the Company consummated its acquisition of 100% of the issued and outstanding capital stock of Fibreco Ltd. (“Fibreco”) with a cash payment, net of $2.7 million of cash acquired, of $13.7 million (£8.7 million). Fibreco, located in the United Kingdom, is a supplier of a broad range of expanded beam fiber optic components for use in military communications, outside broadcast and offshore exploration applications. Fibreco has become part of Bel’s interconnect product group under the Cinch Connector business. Management believes that the addition of Fibreco’s fiber optic-based product line to Cinch’s broad range of copper-based products will increase Cinch’s presence in emerging fiber applications within the military, aerospace and industrial markets. In addition, management believes the acquisition provides access to a range of customers for the recently acquired GigaCom Interconnect EBOSA® product.
On September 12, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Powerbox Italia S.r.L. and its subsidiary, Powerbox Design (collectively “Powerbox”), with a cash payment, net of $0.2 million of cash acquired, of $3.0 million. The Company also granted 30,000 restricted shares of the Company’s Class B common stock in connection with this acquisition. Compensation expense equal to the grant date fair value of these restricted shares of $0.6 million is being recorded ratably through September 2014. Powerbox Italy, located near Milan, Italy, develops high-power AC-DC power conversion solutions targeted at the broadcasting market. The acquisition of Powerbox Italy will allow Bel to expand its portfolio of power product offerings to include AC-DC products and will also establish a European design center located close to several of Bel’s existing customers.
During the year ended December 31, 2012, the Company incurred $0.8 million of acquisition-related costs relating to the 2012 Acquisitions. These costs are included in selling, general and administrative expense in the accompanying consolidated statement of operations for the year ended December 31, 2012.
While the initial accounting related to the 2012 Acquisitions is not complete as of the filing date of this Form 10-K, the following table depicts the Company’s estimated acquisition date fair values of the combined consideration transferred and identifiable net assets acquired in these transactions (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Measurement
|
|
|
Acquisition-Date
|
|
|
|
Acquisition-Date
|
|
|
Period
|
|
|
Fair Values
|
|
|
|
Fair Values
|
|
|
Adjustments
|
|
|
(As adjusted)
|
|
Cash and cash equivalents
|
|
$
|
2,991
|
|
|
$
|
-
|
|
|
$
|
2,991
|
|
Accounts receivable
|
|
|
3,750
|
|
|
|
224
|
|
|
|
3,974
|
|
Inventories
|
|
|
1,061
|
|
|
|
(16
|
)
|
|
|
1,045
|
|
Other current assets
|
|
|
90
|
|
|
|
-
|
|
|
|
90
|
|
Property, plant and equipment
|
|
|
502
|
|
|
|
248
|
|
|
|
750
|
|
Intangible assets
|
|
|
30
|
|
|
|
10,358
|
|
|
|
10,388
|
|
Total identifiable assets
|
|
|
8,424
|
|
|
|
10,814
|
|
|
|
19,238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
(1,702
|
)
|
|
|
-
|
|
|
|
(1,702
|
)
|
Accrued expenses
|
|
|
(1,736
|
)
|
|
|
-
|
|
|
|
(1,736
|
)
|
Notes payable
|
|
|
(216
|
)
|
|
|
-
|
|
|
|
(216
|
)
|
Income taxes payable
|
|
|
(264
|
)
|
|
|
(60
|
)
|
|
|
(324
|
)
|
Deferred income tax liability, current
|
|
|
(70
|
)
|
|
|
-
|
|
|
|
(70
|
)
|
Deferred income tax liability, noncurrent
|
|
|
-
|
|
|
|
(2,297
|
)
|
|
|
(2,297
|
)
|
Other long-term liabilities
|
|
|
(216
|
)
|
|
|
-
|
|
|
|
(216
|
)
|
Total liabilities assumed
|
|
|
(4,204
|
)
|
|
|
(2,357
|
)
|
|
|
(6,561
|
)
|
Net identifiable assets acquired
|
|
|
4,220
|
|
|
|
8,457
|
|
|
|
12,677
|
|
Goodwill
|
|
|
17,965
|
|
|
|
(8,241
|
)
|
|
|
9,724
|
|
Net assets acquired
|
|
$
|
22,185
|
|
|
$
|
216
|
|
|
$
|
22,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid
|
|
$
|
22,138
|
|
|
|
263
|
|
|
$
|
22,401
|
|
Deferred consideration
|
|
|
47
|
|
|
|
(47
|
)
|
|
|
-
|
|
Fair value of consideration transferred
|
|
$
|
22,185
|
|
|
$
|
216
|
|
|
$
|
22,401
|
|
Subsequent to the respective acquisition dates of the 2012 Acquired Companies, the Company received additional information related to the Acquisition Date fair values of the net assets acquired. These updates to the purchase price allocation are noted as measurement period adjustments in the above table. While the purchase price allocations related to GigaCom and Fibreco are substantially complete, the allocations are currently under review and are subject to change. The purchase price allocation related to Powerbox Italia was not yet complete as of the filing date of this Annual Report. The Company expects to finalize the purchase price allocations as soon as practicable, but no later than one year from the respective acquisition dates.
During the ongoing valuation process, the Company is utilizing the income, cost, and market approaches in determining the fair values of the assets acquired and liabilities assumed. The fair value measurements are primarily based on significant inputs that are not observable in the market. The income approach is primarily being utilized to value the intangible assets, consisting primarily of trademarks, customer relationships and technology. The income approach indicates value for a subject asset based on the present value of cash flows projected to be generated by the asset. Projected cash flows are discounted at a required market rate of return that reflects the relative risk of achieving the cash flows and the time value of money. The cost approach, which estimates value by determining the current cost of replacing an asset with another of equivalent economic utility, is being utilized as appropriate for property, plant and equipment. The cost to replace a given asset reflects the estimated reproduction or replacement cost for the asset, less an allowance for loss in value due to depreciation.
The fair value of property, plant and equipment (as adjusted) acquired from the 2012 Acquired Companies consists solely of machinery and equipment with an acquisition-date fair value of $0.8 million and a weighted-average useful life of 5 years.
The fair value of identifiable intangible assets noted above (as adjusted) consists of the following:
|
Weighted-Average Life
|
|
Acquisition-Date Fair Value
|
|
Trademarks
|
Indefinite
|
|
$
|
1,264
|
|
Technology
|
20 years
|
|
|
5,464
|
|
Customer relationships
|
16 years
|
|
|
3,142
|
|
Non-compete agreements
|
2 years
|
|
|
518
|
|
Total identifiable intangible assets acquired
|
|
|
$
|
10,388
|
|
The Company is also still in the process of determining the allocation of the goodwill by reportable operating segment. This allocation will be based on those reportable operating segments expected to benefit from the 2012 Acquisitions. The Company is uncertain at this time how much of the goodwill, if any, will be deductible for tax purposes. For purposes of the 2012 annual goodwill impairment test, the Company has tentatively allocated all of the goodwill associated with the 2012 Acquisitions to the Company’s Europe operating segment.
The results of operations of the 2012 Acquired Companies have been included in the Company’s consolidated financial statements for the periods subsequent to their respective acquisition dates. During the year ended December 31, 2012, the 2012 Acquisitions contributed revenues of $3.2 million and estimated net earnings of $0.2 million to the Company since their respective acquisition dates. The unaudited pro forma information below presents the combined operating results of the Company and the 2012 Acquired Companies. The unaudited pro forma results are presented for illustrative purposes only. They do not reflect the realization of any potential cost savings, or any related integration costs. Certain cost savings may result from the 2012 Acquisitions; however, there can be no assurance that these cost savings will be achieved. These pro forma results do not purport to be indicative of the results that would have actually been obtained if the 2012 Acquisitions had occurred as of January 1, 2011, nor is the pro forma data intended to be a projection of results that may be obtained in the future.
The following unaudited pro forma consolidated results of operations assume that the acquisition of the 2012 Acquired Companies was completed as of January 1, 2011 (dollars in thousands except per share data):
|
|
Year Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
293,948
|
|
|
$
|
304,189
|
|
Net earnings
|
|
|
3,465
|
|
|
|
4,623
|
|
Earnings per Class A common share - basic and diluted
|
|
|
0.26
|
|
|
|
0.36
|
|
Earnings per Class B common share - basic and diluted
|
|
|
0.30
|
|
|
|
0.40
|
|
On November 28, 2012, the Company entered into a Stock and Asset Purchase Agreement with Tyco Electronics Corporation pursuant to which the Company has agreed to acquire the Transpower magnetics business of TE from Tyco Electronics Corporation for approximately $22.4 million in cash. Included in the Company's purchase of the Transpower magnetics business are the integrated connector module ("ICM") family of products, including RJ45, 10/100 Gigabit, 10G, PoE/PoE+, MRJ21 and RJ.5, a line of modules for smart-grid applications and discrete magnetics. Bel will also receive a license to produce ICM products using TE's planar embedded magnetics technology. This acquisition is expected to close at the end of the first quarter of 2013.
2010 Acquisition of Cinch
:
On January 29, 2010 (the “Acquisition Date”), the Company completed its acquisition of 100% of the issued and outstanding capital stock of Cinch from Safran S.A. Bel paid $39.7 million in cash and assumed an additional $0.8 million of expenses in exchange for the net assets acquired. The transaction was funded with cash on hand. Cinch is headquartered in Lombard, Illinois and had manufacturing facilities in Vinita, Oklahoma; Reynosa, Mexico; and Worksop, England at the time of its acquisition.
Cinch manufactures a broad range of interconnect products for customers in the military and aerospace, high-performance computing, telecom/datacom, and transportation markets. The addition of Cinch’s well-established lines of connector and cable products and extensive clientele has enabled Bel to broaden its customer base to include aerospace and military markets. The acquisition of Cinch has also created the opportunity for expense reduction and the elimination of redundancies. The combination of these factors has given rise to $2.3 million of goodwill ($1.2 million allocated to the Company’s North America operating segment and $1.1 million allocated to the Company’s Europe operating segment).
During the year ended December 31, 2010, the Company expensed $0.3 million of acquisition-related costs. These costs are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.
3.
|
RESTRUCTURING ACTIVITIES
|
On July 12, 2012, as part of the Company’s 2012 Restructuring Program, Bel announced its plan to close its Cinch North American manufacturing facility in Vinita, Oklahoma by the end of 2012, and move the operation to a new facility in McAllen, Texas. The new facility is just across the Mexican border from Bel’s existing Reynosa factory, where some of the processing for many of the Vinita parts is currently performed. Management believes that having the facilities closer together will lower transportation and logistics costs and improve service for customers by reducing manufacturing cycle times. The Company accrued the full amount of termination benefits related to the Vinita, Oklahoma employees during 2012, as noted in the table below. During December 2012, the Company donated the Vinita building and land to a local university, and recorded a $1.0 million loss on disposal related to this donation. The Company also recorded a $0.4 million impairment on certain equipment at the Vinita facility. These amounts are classified as restructuring charges in the accompanying 2012 consolidated statement of operations.
In May 2012, the Company entered into a new facility lease in McAllen, Texas in conjunction with this transition. The Company’s overall commitment under the terms of the lease is approximately $1.9 million, and will be incurred over the term of the lease, which commenced in September 2012 and is due to expire in March 2023.
The Company also implemented certain overhead cost reductions in Asia during the third quarter of 2012 as part of the Restructuring Program. The Asia portion of the program was completed during the third quarter of 2012.
Activity and liability balances related to restructuring costs for the year ended December 31, 2012 are as follows:
|
|
Liability at
|
|
|
New
|
|
|
Cash Payments and
|
|
|
Liability at
|
|
|
|
December 31, 2011
|
|
|
Charges
|
|
|
Other Settlements
|
|
|
December 31, 2012
|
|
Termination benefits
|
|
$
|
-
|
|
|
$
|
3,227
|
|
|
$
|
(3,105
|
)
|
|
$
|
122
|
|
Transportation of equipment
|
|
|
-
|
|
|
|
528
|
|
|
|
(528
|
)
|
|
|
-
|
|
Set-up costs
|
|
|
-
|
|
|
|
71
|
|
|
|
(71
|
)
|
|
|
-
|
|
Impairment/loss on disposal of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets related to restructuring
|
|
|
-
|
|
|
|
1,389
|
|
|
|
(1,389
|
)
|
|
|
-
|
|
Other restructuring costs
|
|
|
-
|
|
|
|
30
|
|
|
|
(30
|
)
|
|
|
-
|
|
Total
|
|
$
|
-
|
|
|
$
|
5,245
|
|
|
$
|
(5,123
|
)
|
|
$
|
122
|
|
The remaining $0.1 million of accrued restructuring costs at December 31, 2012 consist solely of termination benefits associated with the Vinita, Oklahoma employees, which will be paid in the first quarter of 2013; accordingly, the Company has classified the $0.1 million of accrued restructuring costs as a current liability in the consolidated balance sheet at December 31, 2012.
During the year ended December 31, 2011, the Company recorded $0.3 million in restructuring charges related primarily to severance costs associated with the reorganization of Cinch operations in the U.K. The Company also settled its remaining lease obligation related to the Westborough, Massachusetts facility during 2011, which resulted in an immaterial gain.
4.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
Goodwill represents the excess of the purchase price and related acquisition costs over the fair value assigned to the net tangible and other intangible assets acquired in a business acquisition.
Other intangible assets include patents, technology, license agreements, supply agreements, non-compete agreements and trademarks. Amounts assigned to these intangible assets have been determined by management. Management considered a number of factors in determining the allocations, including valuations and independent appraisals. Trademarks have indefinite lives and are reviewed for impairment on an annual basis. Other intangible assets, excluding trademarks, are being amortized over 1 to 20 years.
The changes in the carrying value of goodwill classified by reportable operating segment for the years ended December 31, 2012 and 2011 are as follows (dollars in thousands):
|
|
Total
|
|
|
Asia
|
|
|
North America
|
|
|
Europe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill, gross
|
|
$
|
31,205
|
|
|
$
|
12,875
|
|
|
$
|
15,293
|
|
|
$
|
3,037
|
|
Accumulated impairment charges
|
|
|
(26,941
|
)
|
|
|
(12,875
|
)
|
|
|
(14,066
|
)
|
|
|
-
|
|
Goodwill, net
|
|
|
4,264
|
|
|
|
-
|
|
|
|
1,227
|
|
|
|
3,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
(101
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill, gross
|
|
|
31,104
|
|
|
|
12,875
|
|
|
|
15,293
|
|
|
|
2,936
|
|
Accumulated impairment charges
|
|
|
(26,941
|
)
|
|
|
(12,875
|
)
|
|
|
(14,066
|
)
|
|
|
-
|
|
Goodwill, net
|
|
|
4,163
|
|
|
|
-
|
|
|
|
1,227
|
|
|
|
2,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill allocation related to acquisition
|
|
|
9,724
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,724
|
|
Foreign currency translation
|
|
|
331
|
|
|
|
-
|
|
|
|
-
|
|
|
|
331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill, gross
|
|
|
41,159
|
|
|
|
12,875
|
|
|
|
15,293
|
|
|
|
12,991
|
|
Accumulated impairment charges
|
|
|
(26,941
|
)
|
|
|
(12,875
|
)
|
|
|
(14,066
|
)
|
|
|
-
|
|
Goodwill, net
|
|
$
|
14,218
|
|
|
$
|
-
|
|
|
$
|
1,227
|
|
|
$
|
12,991
|
|
During the year ended December 31, 2012, the Company recorded $9.7 million of additional goodwill in connection with the 2012 Acquisitions. The goodwill related to the 2012 Acquired Companies was preliminarily assigned to the Company’s Europe operating segment. The Company completed its annual goodwill impairment test during the fourth quarter of 2012, noting no impairment. Management determined that the fair value of the goodwill at December 31, 2012 exceeded its carrying value and that no impairment existed as of that date.
The Company tests indefinite-lived intangible assets for impairment using a fair value approach, the relief-from-royalty method (a form of the income approach) . At December 31, 2012, the Company’s indefinite-lived intangible assets related to the trademarks acquired in the Cinch and Fibreco acquisitions. Management has concluded that the fair value of these trademarks exceeded the related carrying values at December 31, 2012 and that no impairment existed as of that date.
The components of intangible assets other than goodwill are as follows (dollars in thousands):
|
|
December 31, 2012
|
|
|
December 31, 2011
|
|
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
Net Carrying
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patents, licenses and technology
|
|
$
|
7,822
|
|
|
$
|
851
|
|
|
$
|
6,971
|
|
|
$
|
2,719
|
|
|
$
|
1,029
|
|
|
$
|
1,690
|
|
Customer relationships
|
|
|
5,827
|
|
|
|
554
|
|
|
|
5,273
|
|
|
|
2,541
|
|
|
|
301
|
|
|
|
2,240
|
|
Non-compete agreements
|
|
|
573
|
|
|
|
151
|
|
|
|
422
|
|
|
|
40
|
|
|
|
38
|
|
|
|
2
|
|
Trademarks
|
|
|
8,297
|
|
|
|
-
|
|
|
|
8,297
|
|
|
|
6,945
|
|
|
|
-
|
|
|
|
6,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
22,519
|
|
|
$
|
1,556
|
|
|
$
|
20,963
|
|
|
$
|
12,245
|
|
|
$
|
1,368
|
|
|
$
|
10,877
|
|
During the year ended December 31, 2012, the Company recorded $10.4 million of various intangible assets in connection with the 2012 Acquisitions. A listing of intangible assets acquired with the 2012 Acquired Companies and the related weighted-average lives of those assets is detailed in Note 2. The Company also wrote off $0.5 million of fully amortized patents and license agreements during 2012, $1.8 million of fully-amortized customer relationships during 2011 and $0.3 million of fully amortized patents during 2010. Amortization expense was $0.7 million, $0.4 million and $0.6 million for the years ended December 31, 2012, 2011 and 2010, respectively.
Estimated amortization expense for intangible assets for the next five years is as follows (dollars in thousands):
Year Ending
|
|
Estimated
|
|
December 31,
|
|
Amortization Expense
|
|
|
|
|
|
2013
|
|
$
|
1,095
|
|
2014
|
|
|
994
|
|
2015
|
|
|
834
|
|
2016
|
|
|
834
|
|
2017
|
|
|
831
|
|
5.
|
FAIR VALUE MEASUREMENTS
|
As of December 31, 2012 and 2011, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of securities that are among the Company’s investments in a rabbi trust which are intended to fund the Company’s SERP obligations, and other marketable securities described below. The securities that are held in the rabbi trust are categorized as available-for-sale securities and are included as other assets in the accompanying consolidated balance sheets at December 31, 2012 and 2011.
During 2011, the Company purchased additional marketable equity securities at a purchase price of $0.1 million and invested $5.0 million in a mutual fund categorized as a fixed income available-for-sale marketable security. During 2012, the Company sold its investment in the fixed income marketable security, as well as its investment in the publicly-traded equity security. As of December 31, 2012 and December 31, 2011, the Company’s remaining marketable securities had a combined fair value of less than $0.1 million and $5.7 million, respectively, and gross unrealized losses of less than $0.1 million and $0.3 million, respectively. Such unrealized losses are included, net of tax, in accumulated other comprehensive loss. The fair value of the equity securities was determined based on quoted market prices in public markets and was categorized as Level 1. The fair value of the fixed income securities was determined based on other observable inputs, and was therefore categorized as Level 2 in the table below. The Company does not have any financial assets measured at fair value on a recurring basis categorized as Level 3, and there were no transfers in or out of Level 1, Level 2 or Level 3 during 2012 and 2011. There were no changes to the Company’s valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during 2012.
The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring basis as of December 31, 2012 and 2011 (dollars in thousands).
|
|
|
|
|
Assets at Fair Value Using
|
|
|
|
Total
|
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
|
Significant Other Observable Inputs (Level 2)
|
|
|
Significant Unobservable Inputs (Level 3)
|
|
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in rabbi trust
|
|
$
|
6,014
|
|
|
$
|
6,014
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Marketable securities
|
|
|
2
|
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
6,016
|
|
|
$
|
6,016
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments held in rabbi trust
|
|
$
|
5,786
|
|
|
$
|
5,786
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Publicly-traded equity securities
|
|
|
727
|
|
|
|
727
|
|
|
|
-
|
|
|
|
-
|
|
Fixed income securities
|
|
|
5,004
|
|
|
|
-
|
|
|
|
5,004
|
|
|
|
-
|
|
Total
|
|
$
|
11,517
|
|
|
$
|
6,513
|
|
|
$
|
5,004
|
|
|
$
|
-
|
|
The Level 2 fixed income securities noted in the table above as of December 31, 2011 represented the Company’s investment in a fund that consisted of debt securities (bonds), primarily U.S. government securities, corporate bonds, asset-backed securities and mortgage-backed securities. The value of the fund was determined based on quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data.
There were no financial assets accounted for at fair value on a nonrecurring basis as of December 31, 2012 or 2011.
The Company has other financial instruments, such as cash and cash equivalents, accounts receivable, restricted cash, accounts payable, accrued expenses and notes payable, which are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature. The Company did not have any other financial liabilities within the scope of the fair value disclosure requirements as of December 31, 2012.
Nonfinancial assets and liabilities, such as goodwill, indefinite-lived intangible assets and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment upon the occurrence of a triggering event or in the case of goodwill, on at least an annual basis. The Company performed its annual impairment tests related to its goodwill and indefinite-lived intangible assets during the fourth quarter of 2012. These valuations indicated that the fair value of the Company’s aggregated reporting units and indefinite-live intangible assets exceeded the respective carrying values as of the testing date and the Company has concluded that no impairment exists at December 31, 2012.
At December 31, 2012 and 2011, the Company has obligations of $11.0 million and $9.3 million, respectively, associated with its SERP. As a means of informally funding these obligations, the Company has invested in life insurance policies related to certain employees and marketable securities held in a rabbi trust. At December 31, 2012 and 2011, these assets had a combined fair value of $11.1 million and $10.5 million, respectively.
Company-Owned Life Insurance
Investments in company-owned life insurance policies (“COLI”) were made with the intention of utilizing them as a long-term funding source for the Company’s SERP obligations. However, the cash surrender value of the COLI does not represent a committed funding source for these obligations. Any proceeds from these policies are subject to claims from creditors. The fair market value of the COLI of $5.1 million and $4.7 million at December 31, 2012 and 2011, respectively, is included in other assets in the accompanying consolidated balance sheets. The volatility in global equity markets in recent years has had a significant effect on the cash surrender value of the COLI policies. As a result, the Company recorded income (expense) to account for the increase (decrease) in cash surrender value in the amount of $0.3 million, $(0.1) million and $0.2 million during the years ended December 31, 2012, 2011 and 2010, respectively. These fluctuations in the cash surrender value were allocated between cost of sales and selling, general and administrative expenses on the consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010. The allocation is consistent with the costs associated with the long-term employee benefit obligations that the COLI is intended to fund.
Other Investments
At December 31, 2012 and 2011, the Company held, in the aforementioned rabbi trust, available-for-sale investments at a cost of $5.6 million. Together with the COLI described above, these investments are intended to fund the Company’s SERP obligations and are classified as other assets in the accompanying consolidated balance sheets. The Company monitors these investments for impairment on an ongoing basis. At December 31, 2012 and 2011, the fair market value of these investments was $6.0 million and $5.8 million, respectively. The gross unrealized gain of $0.4 million and $0.2 million at December 31, 2012 and 2011, respectively, has been included, net of tax, in accumulated other comprehensive loss.
The components of inventories are as follows (dollars in thousands):
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
Raw materials
|
|
$
|
26,157
|
|
|
$
|
27,975
|
|
Work in progress
|
|
|
8,200
|
|
|
|
7,025
|
|
Finished goods
|
|
|
20,567
|
|
|
|
18,361
|
|
|
|
$
|
54,924
|
|
|
$
|
53,361
|
|
8.
|
PROPERTY, PLANT AND EQUIPMENT
|
Property, plant and equipment consist of the following (dollars in thousands):
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
Land
|
|
$
|
3,234
|
|
|
$
|
3,396
|
|
Buildings and improvements
|
|
|
23,579
|
|
|
|
24,844
|
|
Machinery and equipment
|
|
|
69,987
|
|
|
|
67,823
|
|
Construction in progress
|
|
|
2,340
|
|
|
|
1,487
|
|
Assets held for sale
|
|
|
14
|
|
|
|
-
|
|
|
|
|
99,154
|
|
|
|
97,550
|
|
Accumulated depreciation
|
|
|
(64,166
|
)
|
|
|
(58,136
|
)
|
|
|
$
|
34,988
|
|
|
$
|
39,414
|
|
Depreciation expense for the years ended December 31, 2012, 2011 and 2010 was $8.1 million, $8.0 million and $8.3 million, respectively.
9.
INCOME TAXES
At December 31, 2012 and 2011, the Company has approximately $2.7 million and $4.1 million, respectively, of liabilities for uncertain tax positions ($0.6 million and $0, respectively, included in income taxes payable and $2.1 million and $4.1 million, respectively, included in liability for uncertain tax positions) all of which, if recognized, would reduce the Company’s effective tax rate.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is no longer subject to U.S. federal examinations by tax authorities for years before 2010 and for state examinations before 2007. Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before 2004 in Asia and generally 2006 in Europe. During September 2010 and April 2011, the Company was notified of an Internal Revenue Service (“IRS”) tax audit for the years ended December 31, 2004 through 2009. The Company settled the domestic and international audits with the IRS for an amount due to the IRS of $0.1 million, net of interest income paid by the IRS to the Company. Additionally, the Company’s wholly-owned subsidiary in Germany was subject to a tax audit for the tax years 2008 through 2010. This audit has been completed and resulted in a minimal tax assessment.
As a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized benefits for tax positions taken regarding previously filed tax returns may change materially from those recorded as liabilities for uncertain tax positions in the Company’s consolidated financial statements at December 31, 2012. A total of $0.6 million of previously recorded liabilities for uncertain tax positions relates principally to the 2007 tax year. The statute of limitations related to these liabilities is scheduled to expire on September 15, 2013. Additionally, a total of $2.6 million of previously recorded liabilities for uncertain tax positions, interest, and penalties relating to the 2007 through 2009 tax years were reversed during 2012, as these years have been settled with the IRS and are no longer under audit. This has been offset in part by an increase in the liability for uncertain tax positions in the amount of $1.2 million during 2012.
A reconciliation of the beginning and ending amount of the liability for uncertain tax positions is as follows (dollars in thousands):
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Liability for uncertain tax positions - January 1
|
|
$
|
4,132
|
|
|
$
|
3,835
|
|
|
$
|
4,722
|
|
Additions based on tax positions
|
|
|
|
|
|
|
|
|
|
|
|
|
related to the current year
|
|
|
1,221
|
|
|
|
297
|
|
|
|
948
|
|
Settlement/expiration of statutes of limitations
|
|
|
(2,642
|
)
|
|
|
-
|
|
|
|
(1,835
|
)
|
Liability for uncertain tax positions - December 31
|
|
$
|
2,711
|
|
|
$
|
4,132
|
|
|
$
|
3,835
|
|
The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits arising from uncertain tax positions as a component of the current provision for income taxes. During the years ended December 31, 2012, 2011 and 2010, the Company (reversed) recognized approximately ($0.5) million, $0.2 million and $0.2 million, respectively, of such interest and penalties in the consolidated statements of operations. The Company has approximately $0.2 million and $0.7 million accrued for the payment of interest and penalties at December 31, 2012 and 2011, respectively, which is included in both income taxes payable and liability for uncertain tax positions in the Company’s consolidated balance sheets.
The Company’s total earnings (loss) before provision for income taxes included earnings from domestic operations of $0.4 million, $9.6 million and $3.6 million for 2012, 2011 and 2010, respectively, and earnings (loss) from foreign operations of $0.6 million, ($1.7) million and $12.0 million for 2012, 2011 and 2010, respectively.
The (benefit) provision for income taxes consists of the following (dollars in thousands):
|
|
Years Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Current:
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
(459
|
)
|
|
$
|
2,585
|
|
|
$
|
221
|
|
Foreign
|
|
|
241
|
|
|
|
478
|
|
|
|
803
|
|
State
|
|
|
76
|
|
|
|
362
|
|
|
|
182
|
|
|
|
|
(142
|
)
|
|
|
3,425
|
|
|
|
1,206
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(807
|
)
|
|
|
599
|
|
|
|
(133
|
)
|
State
|
|
|
(58
|
)
|
|
|
102
|
|
|
|
189
|
|
Foreign
|
|
|
(357
|
)
|
|
|
(18
|
)
|
|
|
669
|
|
|
|
|
(1,222
|
)
|
|
|
683
|
|
|
|
725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,364
|
)
|
|
$
|
4,108
|
|
|
$
|
1,931
|
|
A reconciliation of taxes on income computed at the U.S. federal statutory rate to amounts provided is as follows (dollars in thousands):
|
|
Years Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
$
|
|
|
|
%
|
|
|
$
|
|
|
|
%
|
|
|
$
|
|
|
|
%
|
|
Tax provision computed at the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
federal statutory rate
|
|
$
|
353
|
|
|
|
34
|
%
|
|
$
|
2,676
|
|
|
|
34
|
%
|
|
$
|
5,297
|
|
|
|
34
|
%
|
Increase (decrease) in taxes resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Different tax rates and permanent differences
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
applicable to foreign operations
|
|
|
(306
|
)
|
|
|
-29
|
%
|
|
|
1,526
|
|
|
|
19
|
%
|
|
|
(2,377
|
)
|
|
|
-15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in (reversal of) liability for uncertain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
tax positions - net
|
|
|
(1,421
|
)
|
|
|
-137
|
%
|
|
|
297
|
|
|
|
4
|
%
|
|
|
(887
|
)
|
|
|
-6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization of research and development and foreign
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
tax credits
|
|
|
-
|
|
|
|
0
|
%
|
|
|
(762
|
)
|
|
|
-10
|
%
|
|
|
(549
|
)
|
|
|
-4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State taxes, net of federal benefit
|
|
|
-
|
|
|
|
0
|
%
|
|
|
341
|
|
|
|
4
|
%
|
|
|
309
|
|
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year valuation allowance - U.S. segment
|
|
|
298
|
|
|
|
29
|
%
|
|
|
-
|
|
|
|
0
|
%
|
|
|
-
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent differences applicable to U.S. operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
including qualified production activity credits,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SERP/COLI income, unrealized foreign exchange gains
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and amortization of purchase accounting intangibles
|
|
|
(260
|
)
|
|
|
-25
|
%
|
|
|
44
|
|
|
|
1
|
%
|
|
|
(73
|
)
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
(28
|
)
|
|
|
-3
|
%
|
|
|
(14
|
)
|
|
|
0
|
%
|
|
|
211
|
|
|
|
1
|
%
|
Tax (benefit) provision computed at the Company's
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
effective tax rate
|
|
$
|
(1,364
|
)
|
|
|
-131
|
%
|
|
$
|
4,108
|
|
|
|
52
|
%
|
|
$
|
1,931
|
|
|
|
12
|
%
|
As of December 31, 2012, the Company has gross foreign income tax net operating losses (“NOL”) of $3.4 million and capital loss carryforwards of $0.2 million. The Company has established valuation allowances of $0.5 million and $0.1 million, respectively, against these deferred tax assets. In addition, the Company has gross state income tax NOLs of $1.7 million, capital loss carryforwards of $2.7 million and tax credit carryforwards of $1.2 million. The Company has established valuation allowances of $0.2 million, $0.4 million and $0.7 million, respectively, against these deferred tax assets. The foreign NOL's can be carried forward indefinitely and the state NOL's expire at various times during 2013 - 2029.
Upon the acquisition of Fibreco, Fibreco had a deferred tax liability in the amount of $0.1 million arising from various timing differences. In connection with the 2012 Acquisitions, the Company was required to complete a preliminary fair market value report of property, plant and equipment and intangibles. As a result of that report, the Company established deferred tax liabilities at the date of acquisition in the amounts of $1.7 million and $0.6 million, respectively, for the Fibreco and Gigacom acquisitions. At December 31, 2012, a deferred tax liability of $2.3 million remains on the consolidated balance sheet. At December 31, 2012, the Company had no additional deferred tax amounts relating to the Powerbox acquisition as the fair market value report has not been completed. The Company has made elections under IRC Section 338(g) to step-up the tax basis of the 2012 Acquisitions to fair value. The elections made under Section 338(g) only affect the U.S. income taxes (not those of the foreign countries where the acquired entities were incorporated).
Management’s intention is to permanently reinvest the majority of the earnings of foreign subsidiaries in the expansion of its foreign operations. Unrepatriated earnings, upon which U.S. income taxes have not been accrued, are approximately $93.7 million at December 31, 2012. Such unrepatriated earnings are deemed by management to be permanently reinvested. The estimated federal income tax liability (net of estimated foreign tax credits) related to unrepatriated foreign earnings is $20.9 million under the current tax law. The Company repatriated $0.5 million during 2011.
On January 2, 2013, President Obama signed the “American Taxpayer Relief Act” (“ATRA”). Among other things, ATRA extends the Research and Experimentation credit (“R&E”), which expired at the end of 2011, through 2013 and 2014, respectively. Under ASC 740, “Income Taxes”, the effects of the new legislation are recognized upon enactment, which is when the President signs a tax bill into law. Although the extenders are effective retroactively for 2012, the Company can only consider currently enacted tax law as of the balance sheet date in determining current and deferred taxes. The Company will recognize these retroactive tax effects for 2012 R&E and the tax effect for 2013 R&E in the 2013 consolidated financial statements. The impact of the ATRA on the consolidated statement of operations for the year ended December 31, 2012 resulted in a decrease in the income tax benefit of approximately $0.4 million. There is no material effect on the Company’s financial position, liquidity or capital resources. During the quarter ended March 31, 2013, the Company will recognize the $0.4 million R&E credit from 2012 as a reduction in the March 31, 2013 quarterly provision for income taxes.
The Company continues to monitor proposed legislation affecting the taxation of transfers of U.S. intangible property and other potential tax law changes.
Components of deferred income tax assets are as follows (dollars in thousands).
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
Tax Effect
|
|
|
Tax Effect
|
|
Deferred Tax Assets - current:
|
|
|
|
|
|
|
State tax credits
|
|
$
|
845
|
|
|
$
|
766
|
|
Reserves and accruals
|
|
|
1,334
|
|
|
|
1,195
|
|
Valuation allowance
|
|
|
(745
|
)
|
|
|
(666
|
)
|
|
|
$
|
1,434
|
|
|
$
|
1,295
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Assets - noncurrent:
|
|
|
|
|
|
|
|
|
Unfunded pension liability
|
|
$
|
1,150
|
|
|
$
|
941
|
|
Depreciation
|
|
|
(426
|
)
|
|
|
(369
|
)
|
Amortization
|
|
|
(2,063
|
)
|
|
|
243
|
|
Federal, state and foreign net operating loss
|
|
|
|
|
|
|
|
|
and credit carryforwards
|
|
|
1,114
|
|
|
|
566
|
|
Restructuring expenses
|
|
|
319
|
|
|
|
-
|
|
Other accruals
|
|
|
2,438
|
|
|
|
1,999
|
|
Valuation allowances
|
|
|
(1,129
|
)
|
|
|
(566
|
)
|
|
|
$
|
1,403
|
|
|
$
|
2,814
|
|
The Company holds an offshore business license from the government of Macao. With this license, a Macao offshore company named Bel Fuse (Macao Commercial Offshore) Limited has been established to handle all of the Company’s sales to third-party customers in Asia. Sales by this company consist of products manufactured in the People’s Republic of China (“PRC”). This company is not subject to Macao corporate profit taxes which are imposed at a tax rate of 12%.
At December 31, 2012 and 2011, a $30 million line of credit, which expires on June 30, 2014, was available to the Company to borrow. Amounts outstanding under this line of credit are collateralized with a first priority security interest in 100% of the issued and outstanding shares of the capital stock of the Company's material domestic subsidiaries and 65% of all the issued and outstanding shares of the capital stock of certain of the foreign subsidiaries of the Company. There have not been any borrowings under the credit agreement during 2012 or 2011 and, as a result, there was no balance outstanding as of December 31, 2012 or 2011. At those dates, the entire $30 million line of credit was available to the Company to borrow. The credit agreement bears interest at LIBOR plus 0.75% to 1.25% based on certain financial statement ratios maintained by the Company. Under the terms of the credit agreement, the Company is required to maintain certain financial ratios and comply with other financial conditions. As a result of the Company’s recent acquisitions, which resulted in a lower cash balance and increased intangible assets, the Company was not in compliance with its tangible net worth debt covenant as of December 31, 2012. In the event the Company seeks borrowings under this credit agreement, a waiver would need to be obtained from the lender.
11. ACCRUED EXPENSES
Accrued expenses consist of the following (dollars in thousands):
|
|
Year Ended December 31,
|
|
|
|
2012
|
|
|
2011
|
|
Sales commissions
|
|
$
|
1,295
|
|
|
$
|
1,291
|
|
Subcontracting labor
|
|
|
2,408
|
|
|
|
2,343
|
|
Salaries, bonuses and related benefits
|
|
|
6,023
|
|
|
|
5,315
|
|
Litigation reserve
|
|
|
11,549
|
|
|
|
11,549
|
|
Other
|
|
|
4,085
|
|
|
|
2,438
|
|
|
|
$
|
25,360
|
|
|
$
|
22,936
|
|
12. BUSINESS SEGMENT INFORMATION
The Company operates in one industry with three reportable operating segments, which are geographic in nature. The segments consist of North America, Asia and Europe. The primary criteria by which financial performance is evaluated and resources are allocated are revenues and operating income. The following is a summary of key financial data (dollars in thousands):
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Net Sales to External Customers:
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
126,469
|
|
|
$
|
134,804
|
|
|
$
|
111,888
|
|
Asia
|
|
|
128,319
|
|
|
|
126,941
|
|
|
|
156,635
|
|
Europe
|
|
|
31,806
|
|
|
|
33,376
|
|
|
|
34,016
|
|
|
|
$
|
286,594
|
|
|
$
|
295,121
|
|
|
$
|
302,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
138,966
|
|
|
$
|
149,114
|
|
|
$
|
125,383
|
|
Asia
|
|
|
167,756
|
|
|
|
177,815
|
|
|
|
196,243
|
|
Europe
|
|
|
33,329
|
|
|
|
34,597
|
|
|
|
35,150
|
|
Less intergeographic
|
|
|
|
|
|
|
|
|
|
|
|
|
revenues
|
|
|
(53,457
|
)
|
|
|
(66,405
|
)
|
|
|
(54,237
|
)
|
|
|
$
|
286,594
|
|
|
$
|
295,121
|
|
|
$
|
302,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
1,336
|
|
|
$
|
9,026
|
|
|
$
|
4,181
|
|
Asia
|
|
|
(42
|
)
|
|
|
(3,480
|
)
|
|
|
9,357
|
|
Europe
|
|
|
411
|
|
|
|
1,850
|
|
|
|
1,622
|
|
|
|
$
|
1,705
|
|
|
$
|
7,396
|
|
|
$
|
15,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
84,609
|
|
|
$
|
115,552
|
|
|
$
|
110,984
|
|
Asia
|
|
|
148,351
|
|
|
|
148,950
|
|
|
|
155,414
|
|
Europe
|
|
|
42,258
|
|
|
|
12,409
|
|
|
|
10,774
|
|
|
|
$
|
275,218
|
|
|
$
|
276,911
|
|
|
$
|
277,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
2,455
|
|
|
$
|
1,121
|
|
|
$
|
870
|
|
Asia
|
|
|
2,003
|
|
|
|
1,733
|
|
|
|
1,371
|
|
Europe
|
|
|
286
|
|
|
|
74
|
|
|
|
186
|
|
|
|
$
|
4,744
|
|
|
$
|
2,928
|
|
|
$
|
2,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization Expense:
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
4,081
|
|
|
$
|
4,046
|
|
|
$
|
3,862
|
|
Asia
|
|
|
4,076
|
|
|
|
4,137
|
|
|
|
4,513
|
|
Europe
|
|
|
915
|
|
|
|
484
|
|
|
|
461
|
|
|
|
$
|
9,072
|
|
|
$
|
8,667
|
|
|
$
|
8,836
|
|
Net sales from external customers are attributed to individual operating segments based on the geographic source of the billing for such customer sales. Transfers between geographic areas include finished products manufactured in foreign countries which are then transferred to the United States and Europe for sale; finished goods manufactured in the United States which are transferred to Europe and Asia for sale; and semi-finished components manufactured in the United States which are sold to Asia for further processing. Income from operations represents gross profit less operating expenses.
The following items are included in the income from operations presented above:
Restructuring Charges
– During the year ended December 31, 2012, the Company incurred $5.2 million in restructuring costs related to the 2012 Restructuring Program. Of this amount, $4.5 million related to the Company’s North America operating segment, $0.6 million related to its Asia operating segment and $0.1 million related to the Company’s Europe operating segment. The amount incurred in North America primarily related to severance costs and impairment charges on property, plant and equipment related to the closure of its Vinita, Oklahoma manufacturing facility. During 2011, the Company incurred restructuring costs of $0.3 million related to severance costs associated with the reorganization of its Cinch operations in the U.K.
Litigation Charges
– During the year ended December 31, 2011, the Company recorded $3.5 million of litigation charges related to the SynQor and Halo lawsuits. During the year ended December 31, 2010, the Company recorded $8.1 million of litigation charges related to the SynQor lawsuit. These charges impacted income from operations primarily within the Company’s Asia reportable operating segment.
Loss on Disposal of Property, Plant and Equipment
– During the year ended December 31, 2012, the Company recorded a $0.3 million loss on disposal of assets in its North America operating segment related to the damage caused by Hurricane Sandy at its Jersey City, New Jersey and Inwood, New York facilities. This was partially offset by a $0.2 million pre-tax gain recorded in the Company’s Asia operating segment from the sale of a building in Macao.
Entity-Wide Information
The following is a summary of entity-wide information related to the Company’s net sales to external customers by geographic area and by major product line (dollars in thousands).
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
Net Sales by Geographic Area:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
126,469
|
|
|
$
|
134,804
|
|
|
$
|
111,888
|
|
Macao
|
|
|
128,319
|
|
|
|
126,941
|
|
|
|
156,635
|
|
Germany
|
|
|
14,165
|
|
|
|
17,937
|
|
|
|
20,027
|
|
United Kingdom
|
|
|
13,203
|
|
|
|
11,927
|
|
|
|
10,747
|
|
Czech Republic
|
|
|
3,298
|
|
|
|
3,512
|
|
|
|
3,242
|
|
Italy
|
|
|
1,083
|
|
|
|
-
|
|
|
|
-
|
|
Sweden
|
|
|
57
|
|
|
|
-
|
|
|
|
-
|
|
Consolidated net sales
|
|
$
|
286,594
|
|
|
$
|
295,121
|
|
|
$
|
302,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Major Product Line:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interconnect
|
|
$
|
109,245
|
|
|
$
|
107,346
|
|
|
$
|
101,059
|
|
Magnetics
|
|
|
100,529
|
|
|
|
87,104
|
|
|
|
127,664
|
|
Modules
|
|
|
66,663
|
|
|
|
90,475
|
|
|
|
61,092
|
|
Circuit protection
|
|
|
10,157
|
|
|
|
10,196
|
|
|
|
12,724
|
|
Consolidated net sales
|
|
$
|
286,594
|
|
|
$
|
295,121
|
|
|
$
|
302,539
|
|
Net sales from external customers are attributed to individual countries based on the geographic source of the billing for such customer sales.
The following is a summary of long-lived assets by geographic area as of December 31, 2012 and 2011 (dollars in thousands):
|
|
2012
|
|
|
2011
|
|
Long-lived Assets by Geographic Location:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
27,552
|
|
|
$
|
30,204
|
|
People's Republic of China (PRC)
|
|
|
16,622
|
|
|
|
18,611
|
|
All other foreign countries
|
|
|
3,324
|
|
|
|
2,553
|
|
Consolidated long-lived assets
|
|
$
|
47,498
|
|
|
$
|
51,368
|
|
Long-lived assets consist of property, plant and equipment, net and other assets of the Company that are identified with the operations of each geographic area.
The territory of Hong Kong became a Special Administrative Region (“SAR”) of the PRC in the middle of 1997. The territory of Macao became a SAR of the PRC at the end of 1999. Management cannot presently predict what future impact this will have on the Company, if any, or how the political climate in the PRC will affect the Company's contractual arrangements in the PRC. A significant portion of the Company's manufacturing operations and approximately 43% of its identifiable assets are located in Asia.
Net Sales to Major Customers
The Company had sales to two customers in excess of ten percent of consolidated net sales in 2012. The combined revenue from these two customers was $70.6 million during the year ended December 31, 2012, representing 24.6% of total sales. In 2011, there were two customers with sales in excess of ten percent of consolidated net sales. The combined revenue from these two customers was $65.7 million during the year ended December 31, 2011, representing 22.3% of total sales. In 2010, the Company had sales to two customers in excess of ten percent of consolidated net sales. The combined revenue from these two customers was $74.6 million during the year ended December 31, 2010, representing 24.7% of total sales. Sales related to these significant customers were primarily reflected in the North America and Asia operating segments during each of the three years discussed.
13. RETIREMENT FUND AND PROFIT SHARING PLAN
The Company maintains the Bel Fuse Inc. Employees’ Savings Plan, a defined contribution plan that is intended to meet the applicable requirements for tax-qualification under sections 401(a) and (k) of the Internal Revenue Code of 1986, as amended (the “Code”). The Employees’ Savings Plan allows eligible employees to voluntarily contribute a percentage of their eligible compensation, subject to Code limitations, which contributions are matched by the Company. For plan years beginning on and after January 1, 2012, the Company’s matching contributions are equal to 100% of the first 1% of compensation contributed by participants, and 50% of the next 5% of compensation contributed by participants. For plan years prior to January 1, 2012, the Company’s matching contributions were limited to $350 per participant and the Company made discretionary profit sharing contributions on behalf of eligible participants in amounts determined by the Company’s board of directors. Prior to January 1, 2012, the Company’s matching and profit sharing contributions were invested in shares of Bel Fuse Inc. Class A and Class B common stock. Effective January 1, 2012, Company matching contributions are made in cash and invested in accordance with participant’s instructions in various investment funds offered under the Employees’ Savings Plan other than Bel Fuse Inc. common stock. The expense for the years ended December 31, 2012, 2011 and 2010 amounted to $0.5 million, $0.9 million and $0.7 million, respectively. As of December 31, 2012, the plan owned 15,325 and 220,781 shares of Bel Fuse Inc. Class A and Class B common stock, respectively.
The Company's subsidiaries in Asia have a retirement fund covering substantially all of their Hong Kong based full-time employees. Eligible employees contribute up to 5% of salary to the fund. In addition, the Company must contribute a minimum of 5% of eligible salary, as determined by Hong Kong government regulations. The Company currently contributes 7% of eligible salary in cash or Company stock. The expense for the years ended December 31, 2012, 2011 and 2010 amounted to approximately $0.3 million in each year. As of December 31, 2012, the plan owned 3,323 and 17,342 shares of Bel Fuse Inc. Class A and Class B common stock, respectively.
The Supplemental Executive Retirement Plan (the "SERP" or the “Plan”) is designed to provide a limited group of key management and highly compensated employees of the Company with supplemental retirement and death benefits. Participants in the SERP are selected by the Compensation Committee of the Board of Directors. The SERP initially became effective in 2002 and was amended and restated in April 2007 to conform with applicable requirements of Section 409A of the Internal Revenue Code and to modify the provisions regarding benefits payable in connection with a change in control of the Company. The Plan is unfunded. Benefits under the SERP are payable from the general assets of the Company, but the Company has established a rabbi trust which includes certain life insurance policies in effect on participants as well as other investments to partially cover the Company’s obligations under the Plan.
The benefits available under the Plan vary according to when and how the participant terminates employment with the Company. If a participant retires (with the prior written consent of the Company) on his normal retirement date (65 years old, 20 years of service, and 5 years of Plan participation), his normal retirement benefit under the Plan would be annual payments equal to 40% of his average base compensation (calculated using compensation from the highest five consecutive calendar years of Plan participation), payable in monthly installments for the remainder of his life. If a participant retires early from the Company (55 years old, 20 years of service, and five years of Plan participation), his early retirement benefit under the Plan would be an amount (i) calculated as if his early retirement date were in fact his normal retirement date, (ii) multiplied by a fraction, with the numerator being the actual years of service the participant has with the Company and the denominator being the years of service the participant would have had if he had retired at age 65, and (iii) actuarially reduced to reflect the early retirement date. If a participant dies prior to receiving 120 monthly payments under the Plan, his beneficiary would be entitled to continue receiving benefits for the shorter of (i) the time necessary to complete 120 monthly payments or (ii) 60 months. If a participant dies while employed by the Company, his beneficiary would receive, as a survivor benefit, an annual amount equal to (i) 100% of the participant’s annual base salary at date of death for one year, and (ii) 50% of the participant’s annual base salary at date of death for each of the following four years, each payable in monthly installments. The Plan also provides for disability benefits, and a forfeiture of benefits if a participant terminates employment for reasons other than those contemplated under the Plan. The expense related to the Plan for the years ended December 31, 2012, 2011 and 2010 amounted to $1.1 million, $0.9 million and $0.8 million, respectively.
Net Periodic Benefit Cost
The net periodic benefit cost related to the SERP consisted of the following components during the years ended December 31, 2012, 2011 and 2010 (dollars in thousands):
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
Service Cost
|
|
$
|
438
|
|
|
$
|
371
|
|
|
$
|
340
|
|
Interest Cost
|
|
|
417
|
|
|
|
404
|
|
|
|
336
|
|
Net amortization
|
|
|
230
|
|
|
|
149
|
|
|
|
133
|
|
Net periodic benefit cost
|
|
$
|
1,085
|
|
|
$
|
924
|
|
|
$
|
809
|
|
Obligations and Funded Status
Summarized information about the changes in plan assets and benefit obligation, the funded status and the amounts recorded at December 31, 2012 and 2011 are as follows (dollars in thousands):
|
|
2012
|
|
|
2011
|
|
Fair value of plan assets, January 1
|
|
$
|
-
|
|
|
$
|
-
|
|
Company contributions
|
|
|
-
|
|
|
|
-
|
|
Benefits paid
|
|
|
-
|
|
|
|
-
|
|
Fair value of plan assets, December 31
|
|
$
|
-
|
|
|
$
|
-
|
|
Benefit obligation, January 1
|
|
|
9,274
|
|
|
|
7,350
|
|
Service cost
|
|
|
438
|
|
|
|
371
|
|
Interest cost
|
|
|
417
|
|
|
|
404
|
|
Benefits paid
|
|
|
-
|
|
|
|
-
|
|
Actuarial losses
|
|
|
916
|
|
|
|
1,149
|
|
Benefit obligation, December 31
|
|
$
|
11,045
|
|
|
$
|
9,274
|
|
Funded status, December 31
|
|
$
|
(11,045
|
)
|
|
$
|
(9,274
|
)
|
The Company has recorded the related liability of $11.0 million and $9.3 million as a long-term liability in its consolidated balance sheets at December 31, 2012 and 2011, respectively. The accumulated benefit obligation for the SERP was $9.3 million and $7.5 million as of December 31, 2012 and 2011, respectively. The aforementioned company-owned life insurance policies and marketable securities held in a rabbi trust had a combined fair value of $11.1 million and $10.5 million at December 31, 2012 and 2011, respectively. See Note 6 for additional information on these investments.
The estimated net loss and prior service cost for the defined benefit pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $0.2 million and $0.1 million, respectively. The Company does not expect to make any contributions to the SERP in 2013. The Company had no net transition assets or obligations recognized as an adjustment to other comprehensive income and does not anticipate any plan assets being returned to the Company during 2013, as the plan has no assets.
The following benefit payments, which reflect expected future service, are expected to be paid (dollars in thousands):
Years Ending
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2013
|
|
$
|
-
|
|
2014
|
|
|
182
|
|
2015
|
|
|
237
|
|
2016
|
|
|
237
|
|
2017
|
|
|
237
|
|
2018 - 2022
|
|
|
2,732
|
|
The following gross amounts are recognized in accumulated other comprehensive loss, net of tax (dollars in thousands):
|
|
2012
|
|
|
2011
|
|
Prior service cost
|
|
$
|
877
|
|
|
$
|
1,010
|
|
Net loss
|
|
|
2,884
|
|
|
|
2,065
|
|
|
|
$
|
3,761
|
|
|
$
|
3,075
|
|
Actuarial Assumptions
The weighted average assumptions used in determining the periodic net cost and benefit obligation information related to the SERP are as follows:
|
2012
|
|
2011
|
|
2010
|
Net periodic benefit cost
|
|
|
|
|
|
Discount rate
|
4.50%
|
|
5.50%
|
|
6.00%
|
Rate of compensation increase
|
3.00%
|
|
3.00%
|
|
3.00%
|
Benefit obligation
|
|
|
|
|
|
Discount rate
|
4.00%
|
|
4.50%
|
|
5.50%
|
Rate of compensation increase
|
3.00%
|
|
3.00%
|
|
3.00%
|
14. SHARE-BASED COMPENSATION
The Company has an equity compensation program (the "Program") which provides for the granting of "Incentive Stock Options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options and restricted stock awards. The Company believes that such awards better align the interest of its employees with those of its shareholders. The 2002 Equity Compensation Plan, which provided for the issuance of 2.4 million shares, expired in April 2012. The 2011 Equity Compensation Plan provides for the issuance of 1.4 million shares of the Company’s Class B common stock. At December 31, 2012, 1.3 million shares remained available for future issuance under the 2011 Equity Compensation Plan.
The Company records compensation expense in its consolidated statements of operations related to employee stock-based options and awards. The aggregate pretax compensation cost recognized for stock-based compensation amounted to approximately $1.8 million, $1.7 million and $2.2 million for the years ended December 31, 2012, 2011 and 2010, respectively, and related solely to restricted stock awards. The Company did not use any cash to settle any equity instruments granted under share-based arrangements during the years ended December 31, 2012, 2011 and 2010. At December 31, 2012 and 2011, the only instruments issued and outstanding under the Program related to restricted stock awards.
Restricted Stock Awards
The Company provides common stock awards to certain officers and key employees. The Company grants these awards, at its discretion, from the shares available under the Program. Unless otherwise provided at the date of grant or unless subsequently accelerated, the shares awarded are earned in 25% increments on the second, third, fourth and fifth anniversaries of the award, respectively, and are distributed provided the employee has remained employed by the Company through such anniversary dates; otherwise the unearned shares are forfeited. The market value of these shares at the date of award is recorded as compensation expense on the straight-line method over the five-year periods from the respective award dates, as adjusted for forfeitures of unvested awards. During 2012, 2011 and 2010, the Company issued 130,000, 128,300 and 68,900 Class B common shares, respectively, under a restricted stock plan to various officers and employees.
A summary of the restricted stock activity under the Program as of December 31, 2012 is presented below:
|
|
|
|
|
|
|
Weighted Average
|
Restricted Stock
|
|
|
|
|
Weighted Average
|
|
Remaining
|
Awards
|
|
Shares
|
|
|
Award Price
|
|
Contractual Term
|
|
|
|
|
|
|
|
|
Outstanding at January 1, 2012
|
|
|
321,525
|
|
|
$
|
20.48
|
|
3.3 years
|
Granted
|
|
|
130,000
|
|
|
|
17.70
|
|
|
Vested
|
|
|
(74,175
|
)
|
|
|
23.81
|
|
|
Forfeited
|
|
|
(24,750
|
)
|
|
|
19.40
|
|
|
Outstanding at December 31, 2012
|
|
|
352,600
|
|
|
$
|
18.83
|
|
3.0 years
|
As of December 31, 2012, there was $4.5 million of total pretax unrecognized compensation cost included within additional paid-in capital related to non-vested stock based compensation arrangements granted under the restricted stock award plan. That cost is expected to be recognized over a period of 4.7 years.
The Company's policy is to issue new shares to satisfy restricted stock awards. Currently the Company believes that substantially all restricted stock awards will vest.
15. COMMON STOCK
In July 2012, the Board of Directors of the Company authorized the purchase of up to $10 million of the Company’s outstanding Class B common shares. As of December 31, 2012, the Company had purchased and retired 368,723 Class B common shares at a cost of approximately $6.6 million. No shares of Class A or Class B common stock were repurchased during the years ended December 31, 2011 or 2010.
As of December 31, 2012, to the Company’s knowledge, there were two shareholders of the Company’s common stock (other than shareholders subject to specific exceptions) with ownership in excess of 10% of Class A outstanding shares with no ownership of the Company’s Class B common stock. In accordance with the Company’s certificate of incorporation, the Class B Protection clause is triggered if a shareholder owns 10% or more of the outstanding Class A common stock and does not own an equal or greater percentage of all then outstanding shares of both Class A and Class B common stock (all of which common stock must have been acquired after the date of the 1998 recapitalization). In such a circumstance, such shareholder must, within 90 days of the trigger date, purchase Class B common shares, in an amount and at a price determined in accordance with a formula described in the Company’s certificate of incorporation, or forfeit its right to vote its Class A common shares. As of December 31, 2012, to the Company’s knowledge, these shareholders had not purchased any Class B shares to comply with these requirements. In order to vote their shares at Bel’s next shareholders’ meeting, these shareholders must either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until their Class A holdings are under 10%. As of December 31, 2012, to the Company’s knowledge, these shareholders owned 31.6% and 13.3%, respectively, of the Company’s Class A common stock in the aggregate and had not taken steps to either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until their Class A holdings fall below 10%. Unless and until this situation is satisfied in a manner permitted by the Company’s Restated Certificate of Incorporation, the subject shareholders will not be permitted to vote their shares of common stock.
Throughout 2010, 2011 and 2012, the Company declared dividends on a quarterly basis at a rate of $0.06 per Class A share of common stock and $0.07 per Class B share of common stock. During each of the years ended December 31, 2012, 2011 and 2010, the Company declared dividends totaling $3.2 million. There are no contractual restrictions on the Company's ability to pay dividends provided the Company is not in default under its credit agreements immediately before such payment and after giving effect to such payment.
16. COMMITMENTS AND CONTINGENCIES
Leases
The Company leases various facilities under operating leases expiring through March 2023. Some of these leases require the Company to pay certain executory costs (such as insurance and maintenance).
Future minimum lease payments for operating leases are approximately as follows (dollars in thousands):
Years Ending
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
2013
|
|
$
|
2,512
|
|
2014
|
|
|
1,960
|
|
2015
|
|
|
1,740
|
|
2016
|
|
|
1,560
|
|
2017
|
|
|
1,047
|
|
Thereafter
|
|
|
2,645
|
|
|
|
$
|
11,464
|
|
Rental expense for all leases was approximately $3.4 million, $3.3 million and $3.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.
Other Commitments
The Company submits purchase orders for raw materials to various vendors throughout the year for current production requirements, as well as forecasted requirements. Certain of these purchase orders relate to special purpose material and, as such, the Company may incur penalties if an order is cancelled. The Company had outstanding purchase orders related to raw materials in the amount of $18.8 million and $25.2 million at December 31, 2012 and December 31, 2011, respectively. The Company also had outstanding purchase orders related to capital expenditures in the amount of $1.7 million and $1.7 million at December 31, 2012 and December 31, 2011, respectively.
Legal Proceedings
The Company is a defendant in a lawsuit captioned SynQor, Inc. v. Artesyn Technologies, Inc., et al. brought in the United States District Court, Eastern District of Texas in November 2007
.
The plaintiff alleged that eleven defendants, including Bel, infringed its patents covering certain power products. With respect to the Company, the plaintiff claimed that the Company infringed its patents related to unregulated bus converters and/or point-of-load (POL) converters used in intermediate bus architecture power supply systems. The case went to trial in December 2010 and a partial judgment was entered on December 29, 2010 based on the jury verdict. The jury found that certain products of the defendants directly and/or indirectly infringe the SynQor patents. The jury awarded damages of $8.1 million against the Company, which was recorded by the Company as a litigation charge in the consolidated statement of operations in the fourth quarter of 2010. On July 11, 2011, the Court awarded supplemental damages of $2.5 million against the Company. 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 as an expense by the Company during the second quarter of 2011. During the third quarter of 2011, the Company recorded costs and interest associated with this lawsuit of $0.2 million. A final judgment in the case was entered on August 17, 2011. The Company is in the process of appealing the verdict and judgment and filed a notice of appeal with the Federal Circuit Court of Appeals on October 28, 2011. The Company was advised that the full amount of the damage award plus costs and interest would need to be posted as a supersedeas bond upon filing of the notice of appeal. In November 2011, the Company posted a $13.0 million supersedeas bond to the Court in the Eastern District of Texas while the case is on appeal to the Federal Circuit. The United States Court of Appeals for the Federal Circuit (“CAFC”) heard oral argument in the SynQor case on October 2, 2012. The parties are awaiting a ruling by the CAFC as of the filing date of this Annual Report. The amount of the bond is reflected as restricted cash in the accompanying consolidated balance sheet at December 31, 2011 and December 31, 2012.
In a related matter, on September 29, 2011, the United States District Court for the Eastern District of Texas ordered SynQor, Inc.’s continuing causes of action for post-injunction damages to be severed from the original action and assigned to a new case number. The new action captioned SynQor, Inc. v. Artesyn Technologies, Inc., et al. (Case Number 2:11cv444) is a patent infringement action for damages in the form of lost profits and reasonable royalties for the period starting January 24, 2011. SynQor, Inc. also seeks enhanced damages. The Company has an indemnification agreement in place with one of its customers specifically covering post-injunction damages related to this case. As a result, the Company does not anticipate that its consolidated statement of operations will be materially impacted by any potential post-injunction damages.
The Company is a plaintiff in a lawsuit captioned Bel Fuse Inc. et al. v. Molex Inc. brought in the United District Court of New Jersey in April 2012. The Company claims that Molex infringed three of the Company’s patents related to integrated magnetic connector products.
The Company, through its subsidiary Cinch Connectors Inc., is a defendant in an asbestos lawsuit captioned
Richard G. Becker vs. Adience Inc., et al.
The lawsuit was filed in the Circuit Court for the County of Wayne in the State of Michigan. The complaint was amended to include Cinch Connectors Inc. and other defendants on August 13, 2012. The Company filed its answer to the complaint on October 19, 2012.
The Company was a defendant in a lawsuit captioned Halo Electronics, Inc. (“Halo”) v. Bel Fuse Inc., Pulse Engineering, Inc. and Technitrol, Inc. brought in Nevada Federal District Court. The plaintiff claimed that the Company had infringed its patents covering certain surface mount discrete magnetic products made by the Company. Halo sought unspecified damages, which it claimed should be trebled. In December 2007, this case was dismissed by the Nevada Federal District Court for lack of personal jurisdiction. Halo then re-filed this suit, with similar claims against the Company, in the Northern California Federal District Court, captioned Halo Electronics, Inc. v. Bel Fuse Inc., Elec & Eltek (USA) Corporation, Wurth Electronics Midcom, Inc., and Xfmrs, Inc. In June 2011, a memorandum of understanding was signed by the Company and Halo with regard to this lawsuit, whereby the Company has agreed to pay Halo a royalty on past sales. The Company recorded a $2.6 million liability related to past sales during the second quarter of 2011. This was included as a litigation charge in the accompanying consolidated statement of operations for the year ended December 31, 2011. Bel also agreed to take a license with respect to the Halo patents at issue in the lawsuit and pay an 8% royalty on all net worldwide sales of the above-mentioned products from June 7, 2011 through August 10, 2015.
The Company was a plaintiff in a lawsuit captioned Bel Fuse Inc. v. Halo Electronics, Inc. brought in the United States District Court of New Jersey during June 2007. The Company claimed that Halo infringed a patent covering certain integrated connector modules made by Halo. The Company was seeking an unspecified amount of damages plus interest, costs and attorney fees. In August 2011, a settlement agreement was signed by the Company and Halo with regard to this lawsuit, whereby Halo agreed to pay the Company a 10% royalty related to its net worldwide sales of its integrated connector modules in exchange for a fully paid-up license of the Bel patent. This royalty income was included in net sales in the accompanying consolidated statement of operations for the year ended December 31, 2011.
The Company is not a party to any other legal proceeding, the adverse outcome of which is likely to have a material adverse effect on the Company's consolidated financial condition or results of operations.
17. ACCUMULATED OTHER COMPREHENSIVE LOSS
The components of accumulated other comprehensive loss as of December 31, 2012 and 2011 are summarized below (dollars in thousands)
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
$
|
927
|
|
|
$
|
646
|
|
Unrealized holding (loss) gain on available-for-sale
|
|
|
|
|
|
|
|
|
securities, net of taxes of $161 and ($33) as of
|
|
|
|
|
|
|
|
|
December 31, 2012 and 2011
|
|
|
256
|
|
|
|
(62
|
)
|
Unfunded SERP liability, net of taxes of $(1,151) and
|
|
|
|
|
|
|
|
|
$(941) as of December 31, 2012 and 2011
|
|
|
(2,610
|
)
|
|
|
(2,134
|
)
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss
|
|
$
|
(1,427
|
)
|
|
$
|
(1,550
|
)
|
18. RELATED PARTY TRANSACTIONS
As of December 31, 2012, the Company has $2.0 million invested in a money market fund with GAMCO Investors, Inc. (“GAMCO”). GAMCO is a current shareholder of the Company, with holdings of its Class A stock of approximately 31.6%. However, as discussed in Note 15, GAMCO’s voting rights are currently suspended.
19. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly results (unaudited) for the years ended December 31, 2012 and 2011 are summarized as follows (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Year
|
|
|
|
Quarter Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2012
|
|
|
2012
|
|
|
2012 (c)
|
|
|
2012 (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
65,561
|
|
|
$
|
73,222
|
|
|
$
|
76,059
|
|
|
$
|
71,752
|
|
|
$
|
286,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
55,132
|
|
|
|
61,051
|
|
|
|
63,404
|
|
|
|
60,505
|
|
|
|
240,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
876
|
|
|
|
1,463
|
|
|
|
2,600
|
|
|
|
(2,537
|
)
|
|
|
2,402
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common share - basic and diluted
|
|
$
|
0.07
|
|
|
$
|
0.11
|
|
|
$
|
0.20
|
|
|
$
|
(0.21
|
)
|
|
$
|
0.17
|
|
Class B common share - basic and diluted
|
|
$
|
0.08
|
|
|
$
|
0.13
|
|
|
$
|
0.22
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Year
|
|
|
|
Quarter Ended
|
|
|
Ended
|
|
|
|
March 31,
|
|
|
June 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2011
|
|
|
2011 (b)
|
|
|
2011
|
|
|
2011
|
|
|
2011 (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
71,403
|
|
|
$
|
79,173
|
|
|
$
|
75,903
|
|
|
$
|
68,642
|
|
|
$
|
295,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
57,132
|
|
|
|
65,368
|
|
|
|
63,865
|
|
|
|
58,384
|
|
|
|
244,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
|
3,244
|
|
|
|
(574
|
)
|
|
|
1,012
|
|
|
|
82
|
|
|
|
3,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common share - basic and diluted
|
|
$
|
0.26
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.08
|
|
|
$
|
0.00
|
|
|
$
|
0.28
|
|
Class B common share - basic and diluted
|
|
$
|
0.28
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.09
|
|
|
$
|
0.01
|
|
|
$
|
0.33
|
|
(a)
|
Quarterly amounts of earnings per share may not agree to the total for the year due to rounding.
|
(b)
|
The net loss for the quarter ended June 30, 2011 includes $2.8 million of net litigation charges related to the SynQor and Halo lawsuits ($2.6 million after tax).
|
(c)
|
The net loss for the quarter ended December 31, 2012 includes $3.1 million of restructuring charges primarily related to severance charges and the writedown of assets associated with the closure of the Company’s Vinita, Oklahoma manufacturing facility.
|