belfb20190930

belfb20190930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended March 31, 2021
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________ to ____________

Commission File No. 000-11676

BEL FUSE INC.

206 Van Vorst Street
Jersey City, NJ 07302
(201) 432-0463

(Address of principal executive offices and zip code)

(Registrant’s telephone number, including area code)

New Jersey		22-1463699
(State of incorporation)		(I.R.S. Employer Identification No.)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Class A Common Stock ($0.10 par value)	BELFA	Nasdaq Global Select Market
Class B Common Stock ($0.10 par value)	BELFB	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	Yes ☒	No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).	Yes ☒	No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated

filer ☐

Accelerated
filer ☒

Non-accelerated

filer ☐

Smaller reporting

company ☒

Emerging growth

company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐

No ☒

Title of Each Class

Number of Shares of Common Stock Outstanding

as of May 1, 2021

Class A Common Stock ($0.10 par value)

2,144,912

Class B Common Stock ($0.10 par value)

10,197,602

BEL FUSE INC. AND SUBSIDIARIES

INDEX

			Page
Part I		Financial Information

	Item 1.	Financial Statements (unaudited)	2

		Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 (unaudited)	2

		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (unaudited)	3

		Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020 (unaudited)	4

		Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2021 and 2020 (unaudited)	5

		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (unaudited)	6

		Notes to Condensed Consolidated Financial Statements (unaudited)	7 - 17

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18 - 24

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

	Item 4.	Controls and Procedures	24

Part II		Other Information

	Item 1.	Legal Proceedings	24

	Item 1A.	Risk Factors	24

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

	Item 3.	Defaults Upon Senior Securities	25

	Item 4.	Mine Safety Disclosures	25

	Item 5.	Other Information	25

	Item 6.	Exhibits	26

	Signatures		27

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING INFORMATION

The terms the “Company,” “Bel,” “we,” “us,” and “our” as used in this report refer to Bel Fuse Inc. and its consolidated subsidiaries unless otherwise specified.

The Company’s consolidated operating results are affected by a wide variety of factors that could materially and adversely affect revenues and profitability, including the risk factors described in Item 1A of our 2020 Annual Report on Form 10-K and the risk factors described in this quarterly report. As a result of these and other factors, the Company may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect its business, consolidated financial condition, operating results, and common stock prices. Furthermore, this document and other documents filed by the Company with the Securities and Exchange Commission (“SEC”) contain certain forward-looking statements under the Private Securities Litigation Reform Act of 1995 (“Forward-Looking Statements”) with respect to the business of the Company. Forward-Looking Statements are necessarily subject to risks and uncertainties, many of which are outside our control, that could cause actual results to differ materially from these statements. Forward-Looking Statements can be identified by such words as “anticipates,” “believes,” “plan,” “assumes,” “could,” “should,” “estimates,” “expects,” “intends,” “potential,” “seek,” “predict,” “may,” “will” and similar references to future periods. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives and regarding the anticipated impact of COVID-19 are Forward-Looking Statements. These Forward-Looking Statements are subject to certain risks and uncertainties, including those detailed in Item 1A of our 2020 Annual Report on Form 10-K and in the risk factors described in this quarterly report, which could cause actual results to differ materially from these Forward-Looking Statements. The Company undertakes no obligation to publicly release the results of any revisions to these Forward-Looking Statements which may be necessary to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Any Forward-Looking Statement made by the Company is based only on information currently available to us and speaks only as of the date on which it is made.

PART I. Financial Information

Item 1. Financial Statements (Unaudited)

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

	March 31,			December 31,
	2021			2020
ASSETS
Current Assets:
Cash and cash equivalents	$	74,040		$	84,939
Accounts receivable, net of allowance for doubtful accounts of $819 and $1,036, respectively		74,070			71,372
Inventories		106,737			100,133
Unbilled receivables		12,868			14,135
Assets held for sale		1,635			-
Other current assets		10,010			9,637
Total current assets		279,360			280,216

Property, plant and equipment, net		37,865			34,501
Right-of-use assets		12,615			14,217
Intangible assets, net		64,319			65,789
Goodwill		26,623			23,966
Deferred income taxes		5,774			5,705
Other assets		29,868			29,472
Total assets	$	456,424		$	453,866

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	42,452		$	39,774
Accrued expenses		29,176			28,476
Current portion of long-term debt		6,779			5,286
Operating lease liabilities, current		6,409			6,591
Other current liabilities		6,157			7,409
Total current liabilities		90,973			87,536

Long-term Liabilities:
Long-term debt		107,472			110,294
Operating lease liabilities, long-term		6,532			8,064
Liability for uncertain tax positions		28,737			26,089
Minimum pension obligation and unfunded pension liability		24,807			24,620
Deferred income taxes		1,144			1,030
Other liabilities		10,436			10,434
Total liabilities		270,101			268,067

Commitments and contingencies

Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued		-			-
Class A common stock, par value $.10 per share, 10,000,000 shares authorized; 2,144,912 shares outstanding at each date (net of 1,072,769 treasury shares)		214			214
Class B common stock, par value $.10 per share, 30,000,000 shares authorized; 10,200,602 and 10,208,602 shares outstanding at March 31, 2021 and December 31, 2020, respectively (net of 3,218,307 treasury shares)		1,020			1,021
Additional paid-in capital		36,737			36,136
Retained earnings		168,846			166,491
Accumulated other comprehensive loss		(20,494	)		(18,063	)
Total stockholders' equity		186,323			185,799
Total liabilities and stockholders' equity	$	456,424		$	453,866

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended
	March 31,
	2021			2020

Revenue, net	$	110,643		$	103,978
Cost of sales		86,384			78,220
Gross profit		24,259			25,758

Research and development costs		4,986			6,059
Selling, general and administrative expenses		20,995			20,690
Restructuring charges		-			128
Gain on sale of property		(6,175	)		-
Income (loss) from operations		4,453			(1,119	)

Interest expense		(801	)		(1,351	)
Other income (expense), net		546			(2,106	)
Earnings (loss) before provision for (benefit from) income taxes		4,198			(4,576	)

Provision for (benefit from) income taxes		999			(772	)
Net earnings (loss) available to common stockholders	$	3,199		$	(3,804	)


Net earnings (loss) per common share:
Class A common share - basic and diluted	$	0.24		$	(0.30	)
Class B common share - basic and diluted	$	0.26		$	(0.31	)

Weighted-average number of shares outstanding:
Class A common share - basic and diluted		2,145			2,145
Class B common share - basic and diluted		10,203			10,123

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	Three Months Ended
	March 31,
	2021			2020

Net earnings (loss) available to common stockholders	$	3,199		$	(3,804	)

Other comprehensive income (loss):
Currency translation adjustment, net of taxes of $9 in the three months ended March 31, 2021 and ($27) in the three months ended March 31, 2020		(2,529	)		(2,245	)
Unrealized losses on marketable securities arising during the period, net of taxes of $0 in the three months ended March 31, 2021		(1	)		-
Change in unfunded SERP liability, net of taxes of ($28) in the three months ended March 31, 2021 and ($20) in the three months ended March 31, 2020		99			66
Other comprehensive loss		(2,431	)		(2,179	)

Comprehensive income (loss)	$	768		$	(5,983	)

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except per share data)

(unaudited)

							Accumulated
							Other			Class A		Class B			Additional
				Retained			Comprehensive			Common		Common			Paid-In
	Total			Earnings			(Loss) Income			Stock		Stock			Capital

Balance at December 31, 2020	$	185,799		$	166,491		$	(18,063	)	$	214	$	1,021		$	36,136
Net earnings		3,199			3,199			-			-		-			-
Dividends declared:
Class A Common Stock, $0.06/share		(128	)		(128	)		-			-		-			-
Class B Common Stock, $0.07/share		(716	)		(716	)		-			-		-			-
Forfeiture of restricted common stock		-			-			-			-		(1	)		1
Foreign currency translation adjustment, net of taxes of $9		(2,529	)		-			(2,529	)		-		-			-
Unrealized holding losses on marketable securities		(1	)					(1	)
Stock-based compensation expense		600			-			-			-		-			600
Change in unfunded SERP liability, net of taxes of ($28)		99			-			99			-		-			-
Balance at March 31, 2021	$	186,323		$	168,846		$	(20,494	)	$	214	$	1,020		$	36,737

							Accumulated
							Other			Class A		Class B			Additional
				Retained			Comprehensive			Common		Common			Paid-In
	Total			Earnings			(Loss) Income			Stock		Stock			Capital

Balance at December 31, 2019	$	168,051		$	157,063		$	(24,065	)	$	214	$	1,013		$	33,826
Net loss		(3,804	)		(3,804	)		-			-		-			-
Dividends declared:
Class A Common Stock, $0.06/share		(130	)		(130	)		-			-		-			-
Class B Common Stock, $0.07/share		(709	)		(709	)		-			-		-			-
Forfeiture of restricted common stock		-			-			-			-		(1	)		1
Foreign currency translation adjustment, net of taxes of ($27)		(2,245	)		-			(2,245	)		-		-			-
Stock-based compensation expense		603			-			-			-		-			603
Change in unfunded SERP liability, net of taxes of ($20)		66			-			66			-		-			-
Balance at March 31, 2020	$	161,832		$	152,420		$	(26,244	)	$	214	$	1,012		$	34,430

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Three Months Ended
	March 31,
	2021			2020

Cash flows from operating activities:
Net earnings (loss)	$	3,199		$	(3,804	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization		4,145			4,126
Stock-based compensation		600			603
Amortization of deferred financing costs		165			149
Deferred income taxes		48			(1,322	)
Net unrealized gains on foreign currency revaluation		(361	)		(45	)
Gain on sale of property		(6,175	)		-
Other, net		(941	)		(215	)
Changes in operating assets and liabilities:
Accounts receivable, net		174			6,682
Unbilled receivables		1,267			2,721
Inventories		(1,293	)		2,059
Accounts payable		804			(4,891	)
Accrued expenses		(263	)		(2,884	)
Other operating assets/liabilities, net		397			4,879
Net cash provided by operating activities		1,766			8,058

Cash flows from investing activities:
Purchases of property, plant and equipment		(1,203	)		(1,832	)
Payments for acquisitions, net of cash acquired		(14,759	)		-
Proceeds from disposal/sale of property, plant and equipment		6,724			2
Net cash used in investing activities		(9,238	)		(1,830	)

Cash flows from financing activities:
Dividends paid to common stockholders		(815	)		(806	)
Deferred financing costs		-			(600	)
Repayments of long-term debt		(1,487	)		(8,179	)
Net cash used in financing activities		(2,302	)		(9,585	)

Effect of exchange rate changes on cash and cash equivalents		(1,125	)		(501	)

Net decrease in cash and cash equivalents		(10,899	)		(3,858	)
Cash and cash equivalents - beginning of period		84,939			72,289
Cash and cash equivalents - end of period	$	74,040		$	68,431


Supplementary information:
Cash paid during the period for:
Income taxes, net of refunds received	$	578		$	857
Interest payments	$	627		$	1,266

Details of acquisitions:
Fair value of identifiable net assets acquired	$	17,312		$	-
Goodwill		3,402			-
Fair value of net assets acquired	$	20,714		$	-

Fair value of consideration transferred		20,714			-
Less: Cash acquired in acquisitions		(4,677	)		-
Less: Deferred consideration		(1,278	)
Cash paid for acquisitions, net of cash acquired	$	14,759		$	-

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated balance sheets and statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the periods presented herein have been prepared by the Company and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows for all periods presented have been made. The results for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Bel Fuse Annual Report on Form 10-K for the year ended December 31, 2020.

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations, including the interim reporting requirements, of the U.S. Securities and Exchange Commission (“SEC”). The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

The Company’s significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. There were no significant changes to these accounting policies during the three months ended March 31, 2021, except as discussed in “Recently Adopted Accounting Standards” below.

Reclassifications - During the fourth quarter of 2020, the Company changed its financial statement presentation related to gain/loss on its SERP investments. These gains/losses were previously included within cost of sales and selling, general and administrative expense. The loss on SERP investment in the amount of $2.0 million has been reclassified from cost of sales ($0.6 million) and selling, general and administrative expenses ($1.4 million), to other income (expense), net on the accompanying condensed consolidated statement of operations for the three months ended March 31, 2020.

All amounts included in the tables to these notes to condensed consolidated financial statements, except per share amounts, are in thousands.

Recently Adopted Accounting Standards

In August 2018, the FASB issued ASU