[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the Quarterly Period Ended June 30, 2013
|
|
or
|
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ___________ to ____________
|
NEW JERSEY
|
22-1463699
|
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
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 [X]
|
No [ ]
|
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
|
Yes [X]
|
No [ ]
|
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer [ ]
|
Accelerated filer [X]
|
Non-accelerated filer [ ]
(Do not check if a smaller reporting company)
|
Smaller reporting company [ ]
|
||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
|
Yes [ ]
|
No [X]
|
Title of Each Class
|
Number of Shares of Common Stock Outstanding
as of August 1, 2013
|
|||
Class A Common Stock ($0.10 par value)
|
2,174,912 | |||
Class B Common Stock ($0.10 par value)
|
9,234,927 |
BEL FUSE INC.
|
|||
Page
|
|||
Part I
|
|||
Item 1.
|
1
|
||
2
|
|||
3
|
|||
4
|
|||
5
|
|||
7 - 18
|
|||
Item 2.
|
|||
19 - 25
|
|||
Item 3.
|
|||
25
|
|||
Item 4.
|
25
|
||
Part II
|
|||
Item 1.
|
26
|
||
Item 2.
|
26
|
||
Item 6.
|
27
|
||
28
|
|||
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
(dollars in thousands, except share and per share data)
|
||||||||
(Unaudited)
|
||||||||
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 38,599 | $ | 71,262 | ||||
Accounts receivable - less allowance for doubtful accounts of $1,110
|
||||||||
and $743 at June 30, 2013 and December 31, 2012, respectively
|
62,167 | 43,086 | ||||||
Inventories
|
66,604 | 54,924 | ||||||
Restricted cash
|
12,993 | 12,993 | ||||||
Prepaid expenses and other current assets
|
6,354 | 4,482 | ||||||
Refundable income taxes
|
3,441 | 2,955 | ||||||
Deferred income taxes
|
2,827 | 1,437 | ||||||
Total Current Assets
|
192,985 | 191,139 | ||||||
Property, plant and equipment - net
|
38,268 | 34,988 | ||||||
Deferred income taxes
|
3,614 | 1,404 | ||||||
Intangible assets - net
|
19,710 | 20,949 | ||||||
Goodwill
|
22,231 | 14,218 | ||||||
Other assets
|
12,608 | 12,510 | ||||||
TOTAL ASSETS
|
$ | 289,416 | $ | 275,208 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 29,934 | $ | 18,862 | ||||
Accrued expenses
|
29,746 | 25,360 | ||||||
Accrued restructuring costs
|
1,191 | 122 | ||||||
Notes payable
|
349 | 205 | ||||||
Income taxes payable
|
1,193 | 1,040 | ||||||
Dividends payable
|
823 | 799 | ||||||
Total Current Liabilities
|
63,236 | 46,388 | ||||||
Long-term Liabilities:
|
||||||||
Liability for uncertain tax positions
|
2,175 | 2,161 | ||||||
Minimum pension obligation and unfunded pension liability
|
11,713 | 11,045 | ||||||
Other long-term liabilities
|
258 | 233 | ||||||
Total Long-term Liabilities
|
14,146 | 13,439 | ||||||
Total Liabilities
|
77,382 | 59,827 | ||||||
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; 2,174,912 shares outstanding at each date (net of
|
||||||||
1,072,769 treasury shares)
|
217 | 217 | ||||||
Class B common stock, par value $.10 per share, 30,000,000 shares
|
||||||||
authorized; 9,235,727 and 9,372,170 shares outstanding, respectively
|
||||||||
(net of 3,218,307 treasury shares)
|
924 | 937 | ||||||
Additional paid-in capital
|
17,978 | 20,452 | ||||||
Retained earnings
|
195,550 | 195,202 | ||||||
Accumulated other comprehensive loss
|
(2,635 | ) | (1,427 | ) | ||||
Total Stockholders' Equity
|
212,034 | 215,381 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 289,416 | $ | 275,208 | ||||
See notes to unaudited condensed consolidated financial statements.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(dollars in thousands, except share and per share data)
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Net Sales
|
$ | 93,981 | $ | 73,222 | $ | 157,009 | $ | 138,783 | ||||||||
Costs and expenses:
|
||||||||||||||||
Cost of sales
|
78,041 | 61,081 | 131,959 | 116,218 | ||||||||||||
Selling, general and administrative
|
12,129 | 9,563 | 22,522 | 18,421 | ||||||||||||
Restructuring charges
|
1,263 | 245 | 1,387 | 382 | ||||||||||||
91,433 | 70,889 | 155,868 | 135,021 | |||||||||||||
Income from operations
|
2,548 | 2,333 | 1,141 | 3,762 | ||||||||||||
Impairment of investment
|
- | (478 | ) | - | (478 | ) | ||||||||||
Interest expense
|
(3 | ) | - | (6 | ) | - | ||||||||||
Interest income and other, net
|
69 | 77 | 109 | 153 | ||||||||||||
Earnings before provision (benefit) for income taxes
|
2,614 | 1,932 | 1,244 | 3,437 | ||||||||||||
Provision (benefit) for income taxes
|
187 | 491 | (640 | ) | 1,124 | |||||||||||
Net earnings
|
$ | 2,427 | $ | 1,441 | $ | 1,884 | $ | 2,313 | ||||||||
Earnings per share:
|
||||||||||||||||
Class A common share - basic and diluted
|
$ | 0.20 | $ | 0.11 | $ | 0.15 | $ | 0.18 | ||||||||
Class B common share - basic and diluted
|
$ | 0.22 | $ | 0.12 | $ | 0.17 | $ | 0.20 | ||||||||
Weighted-average shares outstanding:
|
||||||||||||||||
Class A common share - basic and diluted
|
2,174,912 | 2,174,912 | 2,174,912 | 2,174,912 | ||||||||||||
Class B common share - basic and diluted
|
9,213,178 | 9,677,141 | 9,217,119 | 9,654,473 | ||||||||||||
Dividends paid per share:
|
||||||||||||||||
Class A common share
|
$ | 0.06 | $ | 0.06 | $ | 0.12 | $ | 0.12 | ||||||||
Class B common share
|
$ | 0.07 | $ | 0.07 | $ | 0.14 | $ | 0.14 | ||||||||
See notes to unaudited condensed consolidated financial statements.
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||||||||||
(dollars in thousands)
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Net earnings
|
$ | 2,427 | $ | 1,441 | $ | 1,884 | $ | 2,313 | ||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Currency translation adjustment, net of taxes of $5, $0,
|
||||||||||||||||
($216) and $0, respectively
|
231 | (749 | ) | (1,182 | ) | (334 | ) | |||||||||
Reclassification adjustment for write-down of marketable
|
||||||||||||||||
securities included in net earnings, net of tax of $181
|
- | 296 | - | 296 | ||||||||||||
Unrealized holding losses on marketable securities arising during
|
||||||||||||||||
the period, net of taxes of ($63), ($72), ($11) and ($59), respectively
|
(103 | ) | (117 | ) | (18 | ) | (91 | ) | ||||||||
Change in unfunded SERP liability, net of taxes of $24, $18,
|
||||||||||||||||
($4) and $35, respectively
|
53 | 40 | (8 | ) | 80 | |||||||||||
Other comprehensive income (loss)
|
181 | (530 | ) | (1,208 | ) | (49 | ) | |||||||||
Comprehensive income
|
$ | 2,608 | $ | 911 | $ | 676 | $ | 2,264 | ||||||||
See notes to unaudited condensed consolidated financial statements.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(dollars in thousands)
|
||||||||
(Unaudited)
|
||||||||
Six Months Ended
|
||||||||
June 30,
|
||||||||
2013
|
2012
|
|||||||
Cash flows from operating activities:
|
||||||||
Net earnings
|
$ | 1,884 | $ | 2,313 | ||||
Adjustments to reconcile net earnings to net
|
||||||||
cash (used in) provided by operating activities:
|
||||||||
Depreciation and amortization
|
4,871 | 4,270 | ||||||
Stock-based compensation
|
934 | 897 | ||||||
(Gain) loss on disposal of property, plant and equipment
|
(13 | ) | 110 | |||||
Impairment of investment
|
- | 478 | ||||||
Other, net
|
471 | 449 | ||||||
Deferred income taxes
|
(958 | ) | (1,030 | ) | ||||
Changes in operating assets and liabilities (see page 6)
|
(11,050 | ) | (7,258 | ) | ||||
Net Cash (Used in) Provided by Operating Activities
|
(3,861 | ) | 229 | |||||
Cash flows from investing activities:
|
||||||||
Purchase of property, plant and equipment
|
(3,088 | ) | (2,296 | ) | ||||
Payment for acquisition, net of cash acquired (see page 6)
|
(20,932 | ) | (2,695 | ) | ||||
Purchase of marketable securities
|
- | (12 | ) | |||||
Proceeds from disposal of property, plant and equipment
|
13 | 5 | ||||||
Net Cash Used in Investing Activities
|
(24,007 | ) | (4,998 | ) | ||||
Cash flows from financing activities:
|
||||||||
Dividends paid to common shareholders
|
(1,512 | ) | (1,565 | ) | ||||
Increase in notes payable
|
149 | - | ||||||
Purchase and retirement of Class B common stock
|
(3,356 | ) | - | |||||
Net Cash Used In Financing Activities
|
(4,719 | ) | (1,565 | ) | ||||
Effect of exchange rate changes on cash
|
(76 | ) | (78 | ) | ||||
Net Decrease in Cash and Cash Equivalents
|
(32,663 | ) | (6,412 | ) | ||||
Cash and Cash Equivalents - beginning of period
|
71,262 | 88,241 | ||||||
Cash and Cash Equivalents - end of period
|
$ | 38,599 | $ | 81,829 | ||||
(Continued)
|
||||||||
See notes to unaudited condensed consolidated financial statements.
|
BEL FUSE INC. AND SUBSIDIARIES
|
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
|
||||||||
(dollars in thousands)
|
||||||||
(Unaudited)
|
||||||||
Six Months Ended
|
||||||||
June 30,
|
||||||||
2013
|
2012
|
|||||||
Changes in operating assets and liabilities consist of:
|
||||||||
Increase in accounts receivable
|
$ | (7,894 | ) | $ | (4,446 | ) | ||
Increase in inventories
|
(4,886 | ) | (4,152 | ) | ||||
Increase in prepaid expenses and other current assets
|
(1,071 | ) | (1,081 | ) | ||||
Increase in other assets
|
(27 | ) | (171 | ) | ||||
Increase in accounts payable
|
2,487 | 1,257 | ||||||
(Decrease) increase in accrued expenses
|
(428 | ) | 135 | |||||
Increase in other liabilities
|
29 | - | ||||||
Increase in accrued restructuring costs
|
1,069 | - | ||||||
(Decrease) increase in income taxes payable
|
(329 | ) | 1,200 | |||||
$ | (11,050 | ) | $ | (7,258 | ) | |||
Supplementary information:
|
||||||||
Cash paid during the period for:
|
||||||||
Income taxes, net of refunds received
|
$ | 651 | $ | 864 | ||||
Interest
|
6 | - | ||||||
Details of acquisitions:
|
||||||||
Fair value of identifiable net assets acquired
|
$ | 21,913 | $ | 157 | ||||
Goodwill
|
8,193 | 2,577 | ||||||
Fair value of net assets acquired
|
$ | 30,106 | $ | 2,734 | ||||
Fair value of net assets acquired
|
$ | 30,106 | $ | 2,734 | ||||
Less: Cash acquired in acquisition
|
(8,388 | ) | - | |||||
Deferred consideration
|
(786 | ) | (39 | ) | ||||
Cash paid for acquisitions, net of cash acquired
|
$ | 20,932 | $ | 2,695 | ||||
See notes to unaudited condensed consolidated financial statements.
|
1.
|
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
|
2.
|
EARNINGS PER SHARE
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net earnings
|
$ | 2,427 | $ | 1,441 | $ | 1,884 | $ | 2,313 | ||||||||
Less Dividends:
|
||||||||||||||||
Class A
|
131 | 131 | 261 | 261 | ||||||||||||
Class B
|
643 | 680 | 1,275 | 1,355 | ||||||||||||
Undistributed earnings
|
$ | 1,653 | $ | 630 | $ | 348 | $ | 697 | ||||||||
Undistributed earnings allocation - basic and diluted:
|
||||||||||||||||
Class A undistributed earnings
|
$ | 303 | $ | 111 | $ | 64 | $ | 123 | ||||||||
Class B undistributed earnings
|
1,350 | 519 | 284 | 574 | ||||||||||||
Total undistributed earnings
|
$ | 1,653 | $ | 630 | $ | 348 | $ | 697 | ||||||||
Net earnings allocation - basic and diluted:
|
||||||||||||||||
Class A allocated earnings
|
$ | 434 | $ | 242 | $ | 325 | $ | 384 | ||||||||
Class B allocated earnings
|
1,993 | 1,199 | 1,559 | 1,929 | ||||||||||||
Net earnings
|
$ | 2,427 | $ | 1,441 | $ | 1,884 | $ | 2,313 | ||||||||
Denominator:
|
||||||||||||||||
Weighted-average shares outstanding:
|
||||||||||||||||
Class A common share - basic and diluted
|
2,174,912 | 2,174,912 | 2,174,912 | 2,174,912 | ||||||||||||
Class B common share - basic and diluted
|
9,213,178 | 9,677,141 | 9,217,119 | 9,654,473 | ||||||||||||
Earnings per share:
|
||||||||||||||||
Class A common share - basic and diluted
|
$ | 0.20 | $ | 0.11 | $ | 0.15 | $ | 0.18 | ||||||||
Class B common share - basic and diluted
|
$ | 0.22 | $ | 0.12 | $ | 0.17 | $ | 0.20 |
Measurement
|
|||||||||||||
Period
|
March 29, 2013
|
||||||||||||
March 29, 2013
|
Adjustments
|
(As adjusted)
|
|||||||||||
Cash
|
$ | 8,388 | $ | - | $ | 8,388 | |||||||
Accounts receivable
|
11,580 | (39 | ) | 11,541 | |||||||||
Inventories
|
6,258 |
(a)
|
707 | 6,965 | |||||||||
Other current assets
|
1,953 | - | 1,953 | ||||||||||
Property, plant and equipment
|
4,693 |
(b)
|
(165 | ) | 4,528 | ||||||||
Intangible assets
|
- |
(c)
|
- | - | |||||||||
Other assets
|
1,151 | - | 1,151 | ||||||||||
Total identifiable assets
|
34,023 | 503 | 34,526 | ||||||||||
Accounts payable
|
(8,565 | ) | - | (8,565 | ) | ||||||||
Accrued expenses
|
(4,003 | ) | (21 | ) | (4,024 | ) | |||||||
Other current liabilities
|
(25 | ) | 1 | (24 | ) | ||||||||
Total liabilities assumed
|
(12,593 | ) | (20 | ) | (12,613 | ) | |||||||
Net identifiable assets acquired
|
21,430 | 483 | 21,913 | ||||||||||
Goodwill
|
8,278 |
(d)
|
(85 | ) | 8,193 | ||||||||
Net assets acquired
|
$ | 29,708 | $ | 398 | $ | 30,106 | |||||||
Cash paid
|
$ | 22,400 | $ | 6,920 | $ | 29,320 | |||||||
Assumption of severance payment
|
109 | (109 | ) | - | |||||||||
Fair value of grant of license
|
- |
(e)
|
- | - | |||||||||
Fair value of consideration transferred
|
22,509 | 6,811 | 29,320 | ||||||||||
Deferred consideration
|
7,199 |
(f)
|
(6,413 | ) | 786 | ||||||||
Total consideration paid/payable
|
$ | 29,708 | $ | 398 | $ | 30,106 |
(a)
|
The determination of fair value related to the inventory acquired was still in progress as of the date of this filing. The amount above represents only the carrying value of the inventory on TRP’s balance sheet as of the acquisition date. The measurement period adjustment noted above for inventory relates to additional inventory received from TE, as well as inventory on customer consignments that was not previously accounted for.
|
(b)
|
The appraisals related to machinery and equipment acquired were incomplete as of this filing date and, as such, the amount noted above represents only the carrying value of those assets on TRP’s balance sheet as of the acquisition date. The measurement period adjustment noted above for property, plant and equipment relates to equipment that could not be located upon a physical inventory of the assets acquired.
|
(c)
|
The Company has identified certain intangible assets related to the TRP acquisition, including technology, license agreements and customer lists, which are being valued by a third-party appraiser. These appraisals were not complete as of the date of this filing.
|
(d)
|
The amount of goodwill is provisional as of the filing date, as the fair value determination of inventory acquired, and appraisals related to property, plant and equipment and various intangible assets are still underway. As the final amount of goodwill has not yet been determined or allocated by segment, the Company is unable to determine at this time the portion of goodwill, if any, that will be deductible for tax purposes.
|
(e)
|
As part of the consideration paid or payable, the Company granted Tyco a license related to three of the Company’s patents. The valuation related to this license grant was not complete as of the date of this filing.
|
(f)
|
Deferred consideration represents the Company’s estimate of a working capital adjustment which is payable to the seller. Such adjustment must be agreed upon between the Company and the seller, and has not yet been finalized as of the date of this filing.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Revenue
|
$ | 93,981 | $ | 95,066 | $ | 177,510 | $ | 181,461 | ||||||||
Net earnings
|
2,427 | 4,474 | 4,575 | 7,254 | ||||||||||||
Earnings per Class A common share - basic and diluted
|
0.20 | 0.36 | 0.38 | 0.58 | ||||||||||||
Earnings per Class B common share - basic and diluted
|
0.22 | 0.38 | 0.41 | 0.62 |
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 | 3 | 3,753 | |||||||||
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 | 10,593 | 19,017 | |||||||||
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 | 8,236 | 12,456 | |||||||||
Goodwill
|
17,965 | (8,020 | ) | 9,945 | ||||||||
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 |
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 June 30, 2013
|
||||||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Investments held in rabbi trust
|
$ | 5,984 | $ | 5,984 | $ | - | $ | - | ||||||||
Marketable securities
|
3 | 3 | - | - | ||||||||||||
Total
|
$ | 5,987 | $ | 5,987 | $ | - | $ | - | ||||||||
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 | $ | - | $ | - |
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Raw materials
|
$ | 31,164 | $ | 26,157 | ||||
Work in progress
|
10,790 | 8,200 | ||||||
Finished goods
|
24,650 | 20,567 | ||||||
$ | 66,604 | $ | 54,924 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Total segment sales:
|
||||||||||||||||
North America
|
$ | 32,301 | $ | 35,455 | $ | 61,523 | $ | 71,980 | ||||||||
Asia
|
64,036 | 43,795 | 96,760 | 78,642 | ||||||||||||
Europe
|
10,591 | 7,227 | 20,716 | 15,217 | ||||||||||||
Total segment sales
|
106,928 | 86,477 | 178,999 | 165,839 | ||||||||||||
Reconciling item:
|
||||||||||||||||
Intersegment sales
|
(12,947 | ) | (13,255 | ) | (21,990 | ) | (27,056 | ) | ||||||||
Net sales
|
$ | 93,981 | $ | 73,222 | $ | 157,009 | $ | 138,783 | ||||||||
Income (loss) from operations:
|
||||||||||||||||
North America
|
$ | (2,012 | ) | $ | 1,953 | $ | (3,495 | ) | $ | 4,263 | ||||||
Asia
|
4,642 | 523 | 3,977 | (1,039 | ) | |||||||||||
Europe
|
(82 | ) | (143 | ) | 659 | 538 | ||||||||||
$ | 2,548 | $ | 2,333 | $ | 1,141 | $ | 3,762 |
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Sales commissions
|
$ | 1,837 | $ | 1,295 | ||||
Subcontracting labor
|
2,818 | 2,408 | ||||||
Salaries, bonuses and related benefits
|
8,568 | 6,023 | ||||||
Litigation reserve
|
11,550 | 11,549 | ||||||
Consideration payable on Transpower acquisition
|
786 | - | ||||||
Other
|
4,187 | 4,085 | ||||||
$ | 29,746 | $ | 25,360 |
Liability at
|
New
|
Cash Payments and
|
Liability at
|
|||||||||||||
December 31, 2012
|
Charges
|
Other Settlements
|
June 30, 2013
|
|||||||||||||
Severance costs
|
$ | 122 | $ | 1,239 | $ | (170 | ) | $ | 1,191 | |||||||
Transportation of equipment
|
- | 100 | (100 | ) | - | |||||||||||
Other restructuring charges
|
- | 48 | (48 | ) | - | |||||||||||
Total
|
$ | 122 | $ | 1,387 | $ | (318 | ) | $ | 1,191 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Service cost
|
$ | 139 | $ | 109 | $ | 278 | $ | 218 | ||||||||
Interest cost
|
112 | 104 | 224 | 208 | ||||||||||||
Amortization of adjustments
|
77 | 58 | 154 | 116 | ||||||||||||
Total SERP expense
|
$ | 328 | $ | 271 | $ | 656 | $ | 542 |
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Balance sheet amounts:
|
||||||||
Minimum pension obligation
|
||||||||
and unfunded pension liability
|
$ | 11,713 | $ | 11,045 | ||||
Amounts recognized in accumulated
|
||||||||
other comprehensive loss, pretax:
|
||||||||
Prior service cost
|
$ | 968 | $ | 877 | ||||
Net gains
|
2,804 | 2,884 | ||||||
$ | 3,772 | $ | 3,761 |
June 30,
|
December 31,
|
|||||||
2013
|
2012
|
|||||||
Foreign currency translation adjustment, net of taxes of ($216)
|
||||||||
at June 30, 2013
|
$ | (255 | ) | $ | 927 | |||
Unrealized holding gains on available-for-sale
|
||||||||
securities, net of taxes of $150 and $161 as of
|
||||||||
June 30, 2013 and December 31, 2012
|
238 | 256 | ||||||
Unfunded SERP liability, net of taxes of ($1,154) and ($1,151) as
|
||||||||
of June 30, 2013 and December 31, 2012
|
(2,618 | ) | (2,610 | ) | ||||
Accumulated other comprehensive loss
|
$ | (2,635 | ) | $ | (1,427 | ) |
Unrealized Holding
|
|||||||||||||||||
Foreign Currency
|
Gains on
|
||||||||||||||||
Translation
|
Available-for-
|
Unfunded
|
|||||||||||||||
Adjustment
|
Sale Securities
|
SERP Liability
|
Total
|
||||||||||||||
Balance at January 1, 2013
|
$ | 927 | $ | 256 | $ | (2,610 | ) | $ | (1,427 | ) | |||||||
Other comprehensive loss before reclassifications
|
(1,182 | ) | (18 | ) | (162 | ) | (1,362 | ) | |||||||||
Amounts reclassified from accumulated other
|
|||||||||||||||||
comprehensive loss
|
- | - | 154 | 154 |
(a)
|
||||||||||||
Net current period other comprehensive loss
|
(1,182 | ) | (18 | ) | (8 | ) | (1,208 | ) | |||||||||
Balance at June 30, 2013
|
$ | (255 | ) | $ | 238 | $ | (2,618 | ) | $ | (2,635 | ) | ||||||
(a) This reclassification from accumulated other comprehensive loss relates to the amortization of prior service costs and gains/losses
|
|||||||||||||||||
associated with the Company's SERP plan. This expense is allocated between cost of sales and selling, general and administrative
|
|||||||||||||||||
expense based upon the employment classification of the plan participants.
|
·
|
Recent Acquisitions – On March 29, 2013, the Company completed its purchase of the Transpower magnetics business and other tangible and intangible assets of TE Connectivity (“TRP”). The TRP business contributed $22.0 million of sales during the three and six months ended June 30, 2013. The Company also completed three small acquisitions in 2012. Fibreco and Powerbox, both acquired in 2012, contributed a combined $3.0 million and $5.9 million of sales during the three and six months ended June 30, 2013, respectively.
|
·
|
Restructuring Program – The Company had substantially completed its plan to effect operational efficiencies by the end of 2012. The Company continued its efforts in the first half of 2013 to bring the new manufacturing facility in McAllen, Texas up to full operating capacity. The Company faced certain challenges with the transition, resulting in $2.8 million of unanticipated costs during the first half of 2013, of which $1.1 million was incurred during the second quarter. These costs included additional overtime, scrap, a higher volume of purchased materials, expedited freight charges and other costs. During the second quarter of 2013, the Company also initiated additional restructuring actions which resulted in $1.3 million of severance and other charges in the second quarter. The Company does not anticipate any significant costs related to restructuring programs for the foreseeable future.
|
·
|
Revenues – Excluding the revenue contributions from recent acquisitions as described above, the Company’s revenues for the first half of 2013 decreased by $9.6 million as compared to the first half of 2012. The decrease in sales was primarily due to reduced orders of module products from one customer in North America. The order volume related to this customer has now stabilized, but we expect to report large year-over-year decreases (2013 vs. 2012) in our module products group through the end of 2013 as a result of the lower volume in 2013. Revenue reductions resulting from manufacturing inefficiencies associated with the restructuring of Cinch operations described above were partially offset by increases in the sales volume of Bel’s magnetic and DC-DC products. Bel is in the process of implementing price increases for certain products as our current pricing structure does not reflect the rising labor costs in the PRC as discussed below. Management expects the majority of these changes to be in effect by the fourth quarter of 2013.
|
·
|
Product Mix – Material and labor costs vary by product line and any significant shift in product mix between higher- and lower-margin product lines will have a corresponding impact on the Company’s gross margin percentage. During the first half of 2013, the Company experienced a favorable shift in the mix of products sold as compared to the same period of 2012, which partially mitigated the effects of reduced sales and operational inefficiencies at our Texas facility.
|
·
|
Pricing and Availability of Materials – Component pricing and availability have been stable for most of the Company’s product lines, although lead times on electrical components are still extended. With regard to commodities, the Company has experienced some price decreases related to precious metals during the latter part of 2012 and that trend has continued into the first half of 2013. Costs for certain commodities, including gold and copper, were lower in the first half of 2013 as compared to the first half of 2012. Any fluctuations in component prices and other commodity prices associated with Bel’s raw materials will have a corresponding impact on Bel’s profit margins.
|
·
|
Labor Costs – Labor costs as a percentage of sales during the first half of 2013 were essentially flat as compared to the first half of 2012. Following the 2012 Lunar New Year holiday, additional recruiting, training and overtime charges were incurred in the PRC; this trend did not recur in 2013. However, rising labor costs in the PRC and the strengthening of the Chinese Renminbi continue to impact our overall profit margins. With the addition of TRP, approximately half of Bel’s total sales are now generated from labor-intensive magnetic products, which are primarily manufactured in the PRC. In February 2013, the PRC government issued a 19% increase to the minimum wage in regions where the factories that Bel uses are located. This increase was effective May 1, 2013.
|
·
|
Impact of Pending Lawsuits – As further described in Note 11 to the accompanying condensed consolidated financial statements, there has been additional legal activity in 2013 related to the SynQor and Molex lawsuits. Ongoing legal costs related to these lawsuits will impact the profit margins of future quarters.
|
·
|
Acquisition-Related Costs – The acquisition of TRP in 2013 and the valuations of the 2012 Acquired Companies gave rise to acquisition-related costs of $0.5 million during the first six months of 2013. Bel’s continuing strategy to actively consider potential acquisitions could result in additional legal and other professional costs in future periods.
|
·
|
Effective Tax Rate – The Company’s effective tax rate will fluctuate based on the geographic segment in which the pretax profits are earned. Of the geographic segments in which the Company operates, the U.S. has the highest tax rates; Europe’s tax rates are generally lower than U.S. tax rates; and Asia has the lowest tax rates of the Company’s three geographical segments. The change in the effective tax rate during the six months ended June 30, 2013 is primarily attributable to the recognition under the new tax law, ATRA, of $0.4 million in R&E credits, related to the year ended December 31, 2012, which the Company recognized during the first quarter of 2013. In addition, the Company incurred a loss in the North America segment for the six months ended June 30, 2013, compared to a pretax profit for the same period in 2012, which was partially offset by an increase in the Asia segment pretax profit. Additionally, the Company reversed a portion of the liability for uncertain tax positions related to the results of the Internal Revenue Service audit which resulted in a reduction to the tax provision for the six months ended June 30, 2012. It is the Company’s intention to repatriate substantially all net income from its wholly owned PRC subsidiary, DG Transpower, a Chinese Limited Company, to its indirect Hong Kong parent company Transpower Technologies (Hong Kong) Ltd. Applicable income and dividend withholding taxes have been reflected. However, U.S. deferred taxes need not be provided under current U.S. tax law.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||||||||||||||||||
North America
|
$ | 28,628 | 30 | % | $ | 32,059 | 44 | % | $ | 55,444 | 35 | % | $ | 65,496 | 47 | % | ||||||||||||||||
Asia
|
55,157 | 59 | % | 34,412 | 47 | % | 81,573 | 52 | % | 58,889 | 43 | % | ||||||||||||||||||||
Europe
|
10,196 | 11 | % | 6,751 | 9 | % | 19,992 | 13 | % | 14,398 | 10 | % | ||||||||||||||||||||
$ | 93,981 | 100 | % | $ | 73,222 | 100 | % | $ | 157,009 | 100 | % | $ | 138,783 | 100 | % |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||
Total segment sales:
|
||||||||||||||||
North America
|
$ | 32,301 | $ | 35,455 | $ | 61,523 | $ | 71,980 | ||||||||
Asia
|
64,036 | 43,795 | 96,760 | 78,642 | ||||||||||||
Europe
|
10,591 | 7,227 | 20,716 | 15,217 | ||||||||||||
Total segment sales
|
106,928 | 86,477 | 178,999 | 165,839 | ||||||||||||
Reconciling item:
|
||||||||||||||||
Intersegment sales
|
(12,947 | ) | (13,255 | ) | (21,990 | ) | (27,056 | ) | ||||||||
Net sales
|
$ | 93,981 | $ | 73,222 | $ | 157,009 | $ | 138,783 | ||||||||
Income (loss) from operations:
|
||||||||||||||||
North America
|
$ | (2,012 | ) | $ | 1,953 | $ | (3,495 | ) | $ | 4,263 | ||||||
Asia
|
4,642 | 523 | 3,977 | (1,039 | ) | |||||||||||
Europe
|
(82 | ) | (143 | ) | 659 | 538 | ||||||||||
$ | 2,548 | $ | 2,333 | $ | 1,141 | $ | 3,762 |
Percentage of Net Sales
|
Percentage of Net Sales
|
||||||||||
Three Months Ended
|
Six Months Ended
|
||||||||||
June 30,
|
June 30,
|
||||||||||
2013
|
2012
|
2013
|
2012
|
||||||||
Net sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
|||
Cost of sales
|
83.0
|
83.4
|
84.0
|
83.7
|
|||||||
Selling, general and administrative ("SG&A") expenses
|
12.9
|
13.1
|
14.3
|
13.3
|
|||||||
Restructuring charges
|
1.3
|
0.3
|
0.9
|
0.3
|
|||||||
Impairment of investment
|
-
|
(0.7)
|
-
|
(0.3)
|
|||||||
Interest income and other, net
|
0.1
|
0.1
|
0.1
|
0.1
|
|||||||
Earnings before provision (benefit) for income taxes
|
2.8
|
2.7
|
0.8
|
2.5
|
|||||||
Provision (benefit) for income taxes
|
0.2
|
0.7
|
(0.4)
|
0.8
|
|||||||
Net earnings
|
2.6
|
2.0
|
1.2
|
1.7
|
Increase from
|
Increase (Decrease) from
|
|||||||
Prior Period
|
Prior Period
|
|||||||
Three Months Ended
|
Six Months Ended
|
|||||||
June 30, 2013
|
June 30, 2013
|
|||||||
Compared with
|
Compared with
|
|||||||
Three Months Ended
|
Six Months Ended
|
|||||||
June 30, 2012
|
June 30, 2012
|
|||||||
Net sales
|
28.4
|
%
|
13.1
|
%
|
||||
Cost of sales
|
27.8
|
13.5
|
||||||
SG&A expenses
|
26.8
|
22.3
|
||||||
Net earnings
|
68.4
|
(18.5)
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||||||||||||||||||
2013
|
2012
|
2013
|
2012
|
|||||||||||||||||||||||||||||
Magnetic products
|
$ | 48,758 | 52 | % | $ | 24,558 | 34 | % | $ | 70,015 | 45 | % | $ | 43,757 | 32 | % | ||||||||||||||||
Interconnect products
|
27,093 | 29 | % | 27,368 | 37 | % | 53,205 | 34 | % | 54,609 | 39 | % | ||||||||||||||||||||
Module products
|
14,794 | 16 | % | 18,608 | 25 | % | 28,164 | 18 | % | 35,324 | 25 | % | ||||||||||||||||||||
Circuit protection products
|
3,336 | 3 | % | 2,688 | 4 | % | 5,625 | 3 | % | 5,093 | 4 | % | ||||||||||||||||||||
$ | 93,981 | 100 | % | $ | 73,222 | 100 | % | $ | 157,009 | 100 | % | $ | 138,783 | 100 | % |
Three Months Ended
|
Six Months Ended
|
||||||
June 30,
|
June 30,
|
||||||
2013
|
2012
|
2013
|
2012
|
||||
Material costs
|
45.6%
|
45.6%
|
45.9%
|
45.6%
|
|||
Labor costs
|
15.3%
|
15.4%
|
14.2%
|
14.6%
|
|||
Research and development expenses
|
4.0%
|
4.2%
|
4.3%
|
4.5%
|
|||
Other expenses
|
18.1%
|
18.2%
|
19.6%
|
19.0%
|
|||
Total cost of sales
|
83.0%
|
83.4%
|
84.0%
|
83.7%
|
Item 6. Exhibits
|
|
(a) Exhibits:
|
|
31.1*
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2*
|
Certification of the Vice President of Finance pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1**
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2**
|
Certification of the Vice President of Finance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS***
|
XBRL Instance Document
|
101.SCH***
|
XBRL Taxonomy Extension Schema Document
|
101.CAL***
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF***
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB***
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE***
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
BEL FUSE INC.
|
|
August 7, 2013
|
|
By:
|
/s/ Daniel Bernstein
|
Daniel Bernstein
|
|
President and Chief Executive Officer
|
|
By:
|
/s/ Colin Dunn
|
Colin Dunn
|
|
Vice President of Finance and Secretary
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Bel Fuse Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 7, 2013
|
/s/ Daniel Bernstein
|
Daniel Bernstein
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Bel Fuse Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 7, 2013
|
/s/ Daniel Bernstein
|
Daniel Bernstein
|
|
President and Chief Executive Officer
|
(2) The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Company as of the dates presented and consolidated results of operations of the Company for the periods presented.
|
Date: August 7, 2013
|
/s/ Colin Dunn
|
Colin Dunn
|
|
Vice President of Finance and Secretary
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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ACCUMULATED OTHER COMPREHENSIVE LOSS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | 10. ACCUMULATED OTHER COMPREHENSIVE LOSS The components of accumulated other comprehensive loss at June 30, 2013 and December 31, 2012 are summarized below (dollars in thousands):
Changes in accumulated other comprehensive loss by component during the six months ended June 30, 2013 are as follows. All amounts are net of tax (dollars in thousands).
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ACQUISITIONS
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Jun. 30, 2013
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ACQUISITIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS | 3. ACQUISITIONS 2013 Acquisition: On March 29, 2013, the Company acquired 100% of the outstanding shares of Transpower Technology (HK) Limited (“Transpower”), certain intellectual property and other tangible assets related to the Transpower magnetics business of TE Connectivity (“TE”) from Tyco Electronics Corporation (“Tyco”) for $22.4 million in cash and additional consideration including the assumption of $0.1 million in liabilities and the grant of a license to TE related to three of the Company’s patents. During the second quarter of 2013, the Company paid an additional $6.8 million in consideration to TE related to a working capital adjustment and $0.8 million remains accrued at June 30, 2013. Transpower is the sole shareholder of Dongguan Transpower Electronic Products Co., Ltd. in the People's Republic of China. The operations acquired are now doing business as TRP Connector (“TRP”). The Company’s purchase of the TRP magnetics business consisted of 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. During the three and six months ended June 30, 2013, the Company incurred $0.1 million and $0.4 million, respectively, of acquisition-related costs associated with TRP. These costs are included in selling, general and administrative expense in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2013. While the initial accounting related to the TRP acquisition is not complete as of the filing date of this Form 10-Q, the following table depicts the Company’s initial estimate of the acquisition date fair values of the consideration paid or payable and identifiable net assets acquired (in thousands):
The results of operations of TRP have been included in the Company’s consolidated financial statements for the period subsequent to March 29, 2013. During the three and six months ended June 30, 2013, TRP contributed $22.0 million of revenues to the Company. As the Company’s determination and allocation of management fees and TRP-specific overhead charges is still underway, TRP’s contribution to the Company’s net earnings is not yet available. The unaudited pro forma information below presents the combined operating results of the Company and TRP. 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 TRP acquisition; 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 TRP acquisition had occurred as of January 1, 2012, 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 TRP was completed as of January 1, 2012. The pro forma results noted below for the three and six months ended June 30, 2012 also include the effects of the 2012 Acquisitions discussed below (dollars in thousands except per share data):
2012 Acquisitions: On March 9, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of GigaCom with a cash payment of $2.7 million (£1.7 million). GigaCom, 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 has become part of Bel’s Cinch Connector business. Management believes that GigaCom’s offering of expanded beam fiber optic (“EBOSA®”) products will enhance the Company’s position within the growing aerospace and military markets. On July 31, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of 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 EBOSA® product. On September 12, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Powerbox, now known as Bel Power Europe, 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. Bel Power Europe, located near Milan, Italy, develops high-power AC-DC power conversion solutions targeted at the broadcasting market. The acquisition of Bel Power Europe 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. Acquisition-related costs relating to the 2012 Acquisitions amounted to less than $0.1 million during each of the three-month periods ended June 30, 2013 and 2012 and $0.1 million during each of the six-month periods ended June 30, 2013 and 2012. These costs are included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. During the year ended December 31, 2012, the Company completed the purchase accounting related to the GigaCom and Fibreco acquisitions. The initial accounting related to the Bel Power Europe acquisition is not complete as of the filing date of this Form 10-Q; accordingly, the following table reflects the Company’s initial estimate of the acquisition date fair values of the consideration transferred and identifiable net assets acquired related to Bel Power Europe, together with the finalized acquisition date fair values of the consideration transferred and identifiable net assets acquired related to the GigaCom and Fibreco acquisitions (in thousands):
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 three and six months ended June 30, 2013, Fibreco and Bel Power Europe contributed combined revenues of $3.0 million and $5.9 million, respectively, and combined net earnings of $0.1 million and $0.8 million, respectively, to the Company’s consolidated financial results. The acquisition of GigaCom has contributed to the Bel’s research and development efforts and has not resulted in third-party sales. GigaCom incurred expenses, primarily related to research and development, of $0.2 million and $0.5 million during the three and six months ended June 30, 2013, respectively. |
INVENTORIES (Tables)
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Jun. 30, 2013
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INVENTORIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of inventories | The components of inventories are as follows (dollars in thousands):
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COMMITMENTS AND CONTINGENCIES
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6 Months Ended |
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Jun. 30, 2013
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COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES Leases The Company leases various facilities. Some of these leases require the Company to pay certain executory costs (such as insurance and maintenance). At December 31, 2012, the Company’s total future minimum lease payments for operating leases amounted to $11.5 million. The only significant change since December 31, 2012 relates to the inclusion of TRP lease commitments. At June 30, 2013, the additional lease commitments related to TRP amounted to $2.7 million. 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 the order is cancelled. At December 31, 2012, the Company had outstanding purchase orders related to purchase of raw materials in the aggregate amount of $18.8 million and purchase orders related to capital expenditures of $1.7 million. The only significant change since December 31, 2012 relates to the inclusion of TRP purchase orders. At June 30, 2013, the Company had additional purchase orders related to the purchase of raw materials of $4.5 million associated with TRP and additional purchase orders related to capital expenditures of $0.2 million associated with TRP. Legal Proceedings The Company is party to a number of legal actions and claims, none of which individually or in the aggregate, in the opinion of management, are expected to have a material adverse effect on the Company’s results of operations or financial position. See the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for the details of all of Bel’s material pending lawsuits. Certain developments that have arisen in legal proceedings subsequent to the filing of the Company’s Annual Report on Form 10-K are described below. 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 was 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 was on appeal to the Federal Circuit. The amount of the bond was reflected as restricted cash in the accompanying condensed consolidated balance sheets at June 30, 2013 and December 31, 2012. The United States Court of Appeals for the Federal Circuit (“CAFC”) heard oral argument in the SynQor case on October 2, 2012 and issued its opinion on March 13, 2013. In its opinion, the CAFC affirmed the district court’s findings and judgment on all issues up on appeal. The Company and the other Defendants jointly filed a Petition for Rehearing En Banc with the CAFC on April 12, 2013, which was denied by the CAFC on May 14, 2013. The Defendants are in the process of filing a joint petition for certiorari with the Supreme Court. 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 beginning 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. This case went to trial on July 30, 2013. 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 2013. The Company claims that Molex infringed three of the Company’s patents related to integrated magnetic connector products. Molex is scheduled to file its Answer to the Complaint on August 6, 2013. |
RETIREMENT FUND AND PROFIT SHARING PLAN (Tables)
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Jun. 30, 2013
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RETIREMENT FUND AND PROFIT SHARING PLAN [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of SERP expense | The components of SERP expense are as follows (dollars in thousands):
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ACCRUED EXPENSES (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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ACCRUED EXPENSES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued expenses | Accrued expenses consist of the following (dollars in thousands):
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Accrued restructuring costs | New charges noted below relate to severance costs associated with an additional reduction in workforce implemented in the second quarter of 2013.
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INCOME TAXES (Details) (USD $)
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Jun. 30, 2013
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Income Taxes [Line Items] | ||||
Liability for uncertain tax position that would impact effective tax rate | $ 2,700,000 | $ 2,700,000 | $ 2,700,000 | |
Uncertain tax positions included in income taxes payable | 500,000 | 500,000 | 500,000 | |
Liability for uncertain tax positions | 2,200,000 | 2,200,000 | 2,200,000 | |
Prior year liability uncertain tax positions relating to 2007 | 600,000 | 600,000 | ||
Interest and penalties uncertain tax positions recognized | 0 | 0 | ||
Accrued interest and penalties uncertain tax positions | 200,000 | 200,000 | 200,000 | |
Deferred tax liability | 2,175,000 | 2,175,000 | 2,161,000 | |
Increase in income tax benefit | 400,000 | |||
Fibreco and Gigacom [Member]
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Income Taxes [Line Items] | ||||
Deferred tax liability | 2,100,000 | 2,100,000 | 2,200,000 | |
Fibreco [Member]
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Income Taxes [Line Items] | ||||
Deferred tax liability | 100,000 | 100,000 | ||
Deferred tax liabilities at the date of acquisition | 1,700,000 | 1,700,000 | ||
GigaCom [Member]
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Income Taxes [Line Items] | ||||
Deferred tax liabilities at the date of acquisition | 600,000 | 600,000 | ||
TRP [Member]
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Income Taxes [Line Items] | ||||
Deferred tax assets | $ 2,200,000 | $ 2,200,000 | ||
U.S. Federal [Member]
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Income Taxes [Line Items] | ||||
Years not subject to examination by tax authorities | before 2010 | |||
State Jurisdiction [Member]
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Income Taxes [Line Items] | ||||
Years not subject to examination by tax authorities | before 2007 | |||
Foreign jurisdictions [Member] | Asia [Member]
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Income Taxes [Line Items] | ||||
Years not subject to examination by tax authorities | before 2004 | |||
Foreign jurisdictions [Member] | Europe [Member]
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Income Taxes [Line Items] | ||||
Years not subject to examination by tax authorities | before 2006 |
SUBSEQUENT EVENTS (Details) (Subsequent Event [Member], USD $)
In Millions, unless otherwise specified |
1 Months Ended |
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Jul. 31, 2013
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Subsequent Event [Member]
|
|
Subsequent Event [Line Items] | |
Insurance Recoveries | $ 0.7 |
FAIR VALUE MEASUREMENTS (Details) (USD $)
|
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Combined fair value of available-for-sale securities | $ 100,000 | $ 100,000 |
Gross unrealized losses | 100,000 | 100,000 |
Recurring [Member]
|
||
Financial Assets Fair Value [Abstract] | ||
Investments held in rabbi trust | 5,984,000 | 6,014,000 |
Marketable Securities | 3,000 | 2,000 |
Total | 5,987,000 | 6,016,000 |
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
|
||
Financial Assets Fair Value [Abstract] | ||
Investments held in rabbi trust | 5,984,000 | 6,014,000 |
Marketable Securities | 3,000 | 2,000 |
Total | 5,987,000 | 6,016,000 |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
|
||
Financial Assets Fair Value [Abstract] | ||
Investments held in rabbi trust | 0 | 0 |
Marketable Securities | 0 | 0 |
Total | 0 | 0 |
Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
|
||
Financial Assets Fair Value [Abstract] | ||
Investments held in rabbi trust | 0 | 0 |
Marketable Securities | 0 | 0 |
Total | $ 0 | $ 0 |
BUSINESS SEGMENT INFORMATION (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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BUSINESS SEGMENT INFORMATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key financial data | The following is a summary of key financial data (dollars in thousands):
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) (Parenthetical) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Other comprehensive income (loss): | ||||
Currency translation adjustment, tax | $ 5 | $ 0 | $ (216) | $ 0 |
Reclassification adjustment for write-down of marketable securities included in net earnings, tax | 0 | 181 | 0 | 181 |
Unrealized holding gains on marketable securities arising during the period, tax | (63) | (72) | (11) | (59) |
Change in unfunded SERP liability, tax | $ 24 | $ 18 | $ (4) | $ 35 |
BASIS OF PRESENTATION AND ACCOUNTING POLICIES
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2013
|
|||
BASIS OF PRESENTATION AND ACCOUNTING POLICIES [Abstract] | |||
BASIS OF PRESENTATION AND ACCOUNTING POLICIES |
The condensed consolidated balance sheet as of June 30, 2013, and the condensed consolidated statements of operations, comprehensive income and cash flows for the periods presented herein have been prepared by Bel Fuse Inc. (the “Company” or “Bel”) and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for all periods presented have been made. The results for the three and six months ended June 30, 2013 should not be viewed as indicative of the Company’s annual results or the Company’s results for any other period. The information for the condensed consolidated balance sheet as of December 31, 2012 was derived from audited financial statements. These 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, 2012. 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”, now merged to form Bel Power Europe S.r.l.). The acquisitions of GigaCom, Fibreco and Powerbox may hereafter be referred to collectively as either the “2012 Acquisitions” or the “2012 Acquired Companies”. On March 29, 2013, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Transpower Technologies (HK) Limited and certain other tangible and intangible assets related to the Transpower magnetics business of TE Connectivity. Accordingly, 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 condensed consolidated results of operations for the three and six months ended June 30, 2013 and June 30, 2012 include the operating results of the acquired companies from their respective acquisition dates through the respective period end dates. The accompanying condensed consolidated financial statements as of December 31, 2012 and for the three and six months ended June 30, 2012 have been restated to reflect immaterial measurement period adjustments related to the GigaCom and Fibreco acquisitions, as applicable. Recent Accounting Pronouncements 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, 2012. There were no significant changes to these accounting policies during the six months ended June 30, 2013. Recent accounting pronouncements adopted during the first six months of 2013 are as follows: Accounting Standards Update (“ASU”) 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 to first 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 Company adopted ASU No. 2012-02 during the first quarter of 2013. The adoption of this update did not have a material effect on the Company’s condensed consolidated financial statements. 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. The Company adopted ASU No. 2013-02 during the first quarter of 2013. The adoption of this update did not have a material effect on the Company’s condensed consolidated financial statements. Accounting Standards Update No. 2013-11 – Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU No. 2013-11”) ASU No. 2013-11 provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss (“NOL”) carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. The guidance in ASU No. 2013-11 is effective for interim and annual periods beginning after December 15, 2013. The Company does not expect the adoption of this ASU to have a material impact on the Company’s results of operations, financial condition or cash flows. |
FAIR VALUE MEASUREMENTS
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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FAIR VALUE MEASUREMENTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENTS | 4. FAIR VALUE MEASUREMENTS Fair value is defined as 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. Entities are required to use a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: 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 As of June 30, 2013 and December 31, 2012, 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 Supplemental Executive Retirement Plan (“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 condensed consolidated balance sheets at June 30, 2013 and December 31, 2012. The gross unrealized gains associated with the investments held in the rabbi trust were $0.4 million at each of June 30, 2013 and December 31, 2012. Such unrealized gains are included, net of tax, in accumulated other comprehensive loss. As of June 30, 2013 and December 31, 2012, the Company had marketable securities with a combined fair value of less than $0.1 million at each date, and gross unrealized losses of less than $0.1 million at each date. Such unrealized losses are included, net of tax, in accumulated other comprehensive loss. The fair value of the equity securities is determined based on quoted market prices in public markets and is categorized as Level 1. 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 the three months ended June 30, 2013 and 2012. There were no changes to the Company’s valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during the six months ended June 30, 2013. 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 June 30, 2013 and December 31, 2012 (dollars in thousands).
The Company has other financial instruments, such as cash equivalents, accounts receivable, accounts payable, notes payable and accrued expenses, 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 June 30, 2013 or 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 on the occurrence of a triggering event or, in the case of goodwill and indefinite-lived intangible assets, on at least an annual basis. There were no triggering events that occurred during the six months ended June 30, 2013 or 2012 that would warrant interim impairment testing. |
EARNINGS PER SHARE
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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EARNINGS PER SHARE [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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. 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 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. There were no potential common shares outstanding during the three or six months ended June 30, 2013 or 2012 which would have had a dilutive effect on earnings per share. 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):
|
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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ACCUMULATED OTHER COMPREHENSIVE LOSS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of accumulated other comprehensive loss | The components of accumulated other comprehensive loss at June 30, 2013 and December 31, 2012 are summarized below (dollars in thousands):
|
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Changes in accumulated other comprehensive loss by component | Changes in accumulated other comprehensive loss by component during the six months ended June 30, 2013 are as follows. All amounts are net of tax (dollars in thousands).
|
INVENTORIES (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Components of inventories [Abstract] | ||
Raw materials | $ 31,164 | $ 26,157 |
Work in progress | 10,790 | 8,200 |
Finished goods | 24,650 | 20,567 |
Inventories | $ 66,604 | $ 54,924 |
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