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Bel Reports Fourth Quarter and 2011 Results
Posted February 9, 2012
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JERSEY CITY, N.J.--(BUSINESS WIRE)--Bel Fuse Inc. (NASDAQ:BELFA) (NASDAQ:BELFB) today announced preliminary unaudited financial results for the fourth quarter and 2011.
Summary
? For the fourth quarter, sales decreased 18.0% to $68.6 million compared to $83.7 million for the fourth quarter of 2010. For 2011, sales decreased 2.5% to $295.1 million compared to $302.5 million for 2010.
? The fourth quarter GAAP net earnings were $82,000, or $0.00 per diluted Class A share and $0.01 per diluted Class B share. Excluding a restructuring charge and a gain on disposal of property, non-GAAP net earnings for the fourth quarter of 2011 were $256,000, or $0.01 per diluted Class A share and $0.02 per diluted Class B share.
? Full year net earnings were $3.8 million, or $0.28 per diluted Class A share and $0.33 per diluted Class B share. Excluding litigation charges and other charges detailed below, non-GAAP net earnings for 2011 were $7.1 million, or $0.56 per diluted Class A share and $0.61 per diluted Class B share.
? Cash and investments were $94.0 million as of December 31, 2011, an increase of $8.4 million since December 31, 2010.
? A new program designed to streamline operations is expected to save $4.4 million annually once fully implemented.
CEO comments
Daniel Bernstein, Bel's President and CEO, said, "Bel earned a non-GAAP operating profit of $1.3 million for the fourth quarter and more than $11 million for 2011, excluding certain charges detailed in the table reconciling GAAP to non-GAAP financial measures attached to this release. This compares with a non-GAAP operating profit of $8.2 million for the fourth quarter of 2010 and $25.1 million for 2010, adjusted for certain charges as detailed in the same reconciliation table. Our cash position increased in a challenging global environment for our business. A 48% increase in sales in our modules group and a 6% increase in interconnect product sales for 2011 compared to 2010 were not enough to offset a 32% decrease in magnetics sales, where competition has had a substantial impact on sales of our MagJack products.
"During the fourth quarter of 2011, Bel incurred $0.3 million of restructuring costs related to the realignment of our Cinch UK operations. This realignment is expected to generate annualized savings of approximately $0.5 million.
"Over the next three quarters, we plan to implement additional streamlining steps to enable Bel to take advantage of a variety of operational efficiencies. We currently anticipate that the pre-tax costs associated with these steps will be approximately $5.4 million, however these estimated costs are primarily dependent upon certain assumptions and the actual cost may change once the plan is completed. We anticipate that these steps will result in annual savings of approximately $4.4 million.
"In addition to streamlining our operations, we have begun to focus our product development efforts on non-commodity products. This major effort will be in the Modular product line in both Power and Value Added products and Mil-AeroSpace products found in our InterConnect product line. Our acquisition strategy is focused on companies that produce such products because we believe they provide the greatest opportunity for Bel's long-term growth and profitability."
Fourth Quarter Results
For the three months ended December 31, 2011, net sales decreased to $68,642,000 compared to $83,697,000 for the fourth quarter of 2010.
Cost of sales increased to 85.1% of sales for the fourth quarter of 2011, compared to 78.5% of sales for the fourth quarter of 2010, primarily due to a shift in the product mix to sales of a higher proportion of modules products, which have higher materials content which will result in lower profit margins than Bel's other product lines.
Bel's effective tax rate was 92.9% for the fourth quarter of 2011 and exceeded 100% for the same quarter in 2010, reflecting losses with minimal tax benefit in Asia, where tax rates are lower, combined with profits in the U.S. and Europe.
Net earnings for the fourth quarter of 2011 were $82,000, which included restructuring charges of $314,000 ($234,000 after tax) and a gain on disposal of property, plant and equipment of $97,000 ($60,000 after tax). This compares to a net loss for the fourth quarter of 2010 of $1,022,000, which included litigation charges associated with the SynQor legal case of $8,103,000 ($8,042,000 after tax), a net benefit from the expiration of tax statutes of limitations of $155,000, and other minor amounts.
Excluding restructuring charges and the above-mentioned gain on disposal of property, plant and equipment, non-GAAP net earnings for the fourth quarter of 2011 were $256,000. This compares to non-GAAP net earnings for the fourth quarter of 2010 of $6,873,000, excluding litigation charges, the net benefit described above and certain minor amounts. A reconciliation of non-GAAP to GAAP financial measures is provided in the table attached to this press release.
Net earnings per Class A common share for the fourth quarter of 2011 were $0.00, compared to a net loss per Class A common share of $0.09 for the fourth quarter of 2010. Adjusted to exclude the amounts referenced above, non-GAAP net earnings per diluted Class A common share were $0.01 for the fourth quarter of 2011, compared to $0.56 for the fourth quarter of 2010.
Net earnings per Class B common share were $0.01 for the fourth quarter of 2011, compared to a net loss per Class B common share of $0.09 for the fourth quarter of 2010. Adjusted to exclude the amounts referenced above, non-GAAP net earnings per diluted Class B common share were $0.02 for the fourth quarter of 2011, compared to $0.59 for the fourth quarter of 2010.
Income from operations was $1,084,000 for the fourth quarter of 2011, as compared to $115,000 for the same period in 2010. Excluding restructuring charges and a gain on disposal of property, plant and equipment, non-GAAP income from operations for the fourth quarter of 2011 was $1,301,000. For the fourth quarter of 2010, adjusted to exclude litigation charges, severance and plant closure costs and other minor amounts, non-GAAP income from operations was $8,208,000.
Balance Sheet Data
As of December 31, 2011, Bel reported working capital of $165,264,000, including cash, cash equivalents, and marketable securities of $93,972,000, a current ratio of 4.8 to 1, total long-term obligations of $13,406,000, and stockholders' equity of $221,080,000. In comparison, as of December 31, 2010, Bel reported working capital of $157,296,000, including cash, cash equivalents, and marketable securities of $85,535,000, a current ratio of 4.4 to 1, total long-term obligations of $10,571,000, and stockholders' equity of $220,333,000.
Twelve Month Results
For the twelve months ended December 31, 2011, net sales decreased to $295,121,000 compared to $302,539,000 for 2010. Net earnings were $3,764,000, compared to net earnings of $13,649,000 for 2010. Results for 2011 include a full year of operations for Cinch Connectors, which was acquired on January 29, 2010. Cinch's January 2011 revenue was $5.5 million.
Net earnings per diluted Class A common share for 2011 were $0.28, compared to $1.10 for 2010. Adjusted to exclude various amounts, detailed in the reconciliation table set forth below, non-GAAP net earnings per diluted Class A common share were $0.56 for 2011, compared to $1.80 for 2010.
Net earnings per diluted Class B common share were $0.33 for 2011, compared to $1.18 for the first nine months of 2010. Adjusted to exclude various amounts detailed in the reconciliation table set forth below, non-GAAP net earnings per diluted Class B common share were $0.61 for 2011, compared to $1.92 for 2010.
SynQor Legal Case
On July 11, 2011, the Court awarded supplemental damages of $2.5 million against Bel in the previously disclosed SynQor litigation. Of this amount, $1.9 million is covered through an indemnification agreement with one of Bel's customers and the remaining $0.6 million was recorded during the second quarter as an expense by the Company. During the third quarter of 2011, Bel recorded costs and interest associated with this lawsuit of $0.2 million. Bel is in the process of appealing the verdict and judgment, and was advised that the full amount of the damage award plus costs and interest must be posted as a supersedeas bond upon filing of the notice of appeal. In October, Bel posted a total of $13.0 million in the form of a supersedeas bond to the Court in the Eastern District of Texas while the case is on appeal to the United States Court of Appeals.
Conference Call
Bel has scheduled a conference call at 11:00 a.m. EST today. To participate in the call, dial (720) 545-0088, conference ID #47678348. A simultaneous webcast is available from theEvents and Presentations link on the Investor Info tab at www.BelFuse.com. The webcast will be available for replay for a period of 20 days at this same Internet address. For a telephone replay, dial (404) 537-3406, conference ID #47678348 after 2:00 p.m. EST.
About Bel
Bel (www.belfuse.com) and its divisions are primarily engaged in the design, manufacture, and sale of products used in networking, telecommunications, high-speed data transmission, commercial aerospace, military, transportation, and consumer electronics. Products include magnetics (discrete components, power transformers and MagJack® connectors with integrated magnetics), modules (DC-DC converters, integrated analog front-end modules and custom designs), circuit protection (miniature, micro and surface mount fuses) and interconnect devices (micro, circular and filtered D-Sub connectors, passive jacks, plugs and high-speed cable assemblies). The Company operates facilities around the world.
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