Bel reports massive surge in sales, revenue

JERSEY CITY, N.J. -- Bel Fuse Inc. (NASDAQ: BELFA) announced preliminary unaudited financial results for the third quarter of 2010. The company reported that net sales increased 88% to a record $85.0 million, and net earnings increased to $9.9 million ($0.81 per Class A share and $0.86 per Class B share) compared to a net loss of $10.8 million ($0.90 per Class A share and $0.94 per Class B share) for the third quarter of 2009.

"With solid demand for all of our product groups, we delivered the strongest revenue quarter in Bel's 60-year history and one of our most profitable quarters ever," said Daniel Bernstein, Bel's President and CEO. "Beyond the higher margins associated with our record sales, another major driver of Bel's profitability was the efficiency improvements we have achieved in China. We increased our workforce by 4,500 associates in just the past 14 months, despite a training period of 13 weeks and an employee fallout rate of 50%. We are now close to our target labor force and the increased productivity, combined with a more stable workforce, has cut lead times close to normal levels."

Noting that Cinch Connectors contributed revenue of $15.5 million for the third quarter, Bernstein said, "The integration of Cinch is essentially complete. As we anticipated, Cinch's well-established lines of connectors and cable products fit comfortably into Bel's traditional product menu, and its extensive clientele has enabled Bel to diversify its customer base to include aerospace and military markets for the first time."

Third Quarter Results

For the three months ended September 30, 2010, net sales increased 88% to $84,961,000 compared to $45,283,000 for the third quarter of 2009. This year's third quarter net sales included $15,471,000 from Cinch Connectors, which was acquired on January 29, 2010. Excluding the Cinch Connector sales, net sales increased 54% for this year's third quarter versus the same quarter last year. Net sales increased 11% versus the second quarter of 2010.

Net earnings for the third quarter of 2010 were $9,944,000. The net loss for the third quarter of 2009 was $10,752,000, which included a charge for impairment of goodwill of $12,875,000 ($12,875,000 after tax).

Adjusted to exclude net gains on sale of property, plant and equipment, a net gain from the expiration of tax statutes of limitations and other items, non-GAAP net earnings for the third quarter of 2010 were $8,424,000. This compares to non-GAAP net earnings for the third quarter of 2009 of $118,000, adjusted to exclude goodwill impairment, lawsuit settlement costs, a gain on sale of investments, a net gain from the expiration of tax statutes of limitations and other items. A reconciliation of non-GAAP to GAAP financial measures is provided in the table attached to this press release.

Net earnings per diluted Class A common share for the third quarter of 2010 were $0.81, compared to a net loss per Class A common share of $0.90 for the third quarter of 2009. Adjusted to exclude the items described above, non-GAAP net earnings per diluted Class A common share were $0.69 for this year's third quarter, compared to non-GAAP net earnings per Class A common share of $0.01 for the third quarter of 2009.

Net earnings per diluted Class B common share were $0.86 for the third quarter of 2010, compared to a net loss per Class B common share of $0.94 for the third quarter of 2009. Adjusted to exclude the items described above, non-GAAP net earnings per diluted Class B common share were $0.73 for the third quarter of 2010, compared to non-GAAP net earnings per Class B common share of $0.02 for the third quarter of 2009.

Cost of sales decreased to 76.3% of sales for the third quarter of 2010, compared to 91.7% of sales for the third quarter of 2009.

Income from operations for this year's third quarter was $9,373,000, including operating income of approximately $1,933,000 at Cinch Connectors. This compares to an operating loss of $15,930,000 for the third quarter of 2009. Adjusted to exclude the items described above, non-GAAP income from operations for the third quarter of 2010 increased to $9,062,000, compared to a non-GAAP loss from operations of $822,000 for the third quarter of 2009.

At September 30, 2010, Bel reported working capital of approximately $156,609,000, including cash, cash equivalents, short-term investments and marketable securities of approximately $77,888,000, a current ratio of 4.7, total long-term obligations of $9,589,000, and stockholders' equity of $222,781,000. In comparison, at December 31, 2009, Bel reported working capital of approximately $167,833,000, including cash, cash equivalents, short-term investments and marketable securities of approximately $124,233,000, a current ratio of 7.0, total long-term obligations of $9,017,000, and stockholders' equity of $208,932,000.

Nine Month Results

For the nine months ended September 30, 2010, net sales increased 63% to $218,842,000 compared to $134,088,000 for 2009. Net earnings for the first nine months of 2010 increased to $14,671,000, compared to a net loss of $11,208,000 for the first nine months of 2009.

Net earnings per diluted Class A common share for the first nine months of 2010 were $1.19, compared to a net loss per Class A common share of $0.95 for the same period of 2009. Net earnings per diluted Class B common share for the first nine months of 2010 were $1.27, compared to a net loss per Class B common share of $0.98 for the first nine months of 2009.

Web: www.belfuse.com