Bel Fuse Inc (BELFA) 2002 Q1 法說會逐字稿

Ladies and gentlemen, thanks for standing by. Welcome to Bel Fuse Inc. first quarter results conference call. During the presentation all participants will be in a listen only mode. Afterwards we will conduct a question and answer session. At that time if you have a question, you will need to press the one followed by the four on your telephone.

As a reminder, ladies and gentlemen, this conference is being recorded April 26th, 2002. I would now like to turn the conference over to Mr. Dan Bernstein, President and Chief Executive Officer with Bel Fuse Inc., please go ahead, sir.

I thank you . I would like to welcome you all from conference quarter review first quarter results of 2002. Before we start, I would like to hand over the to the Vice President of Finance, Colin?

Good morning everybody. I would like to preface my comments this morning by saying that everything we discuss today some of the comments we know we know we will be are covered under our statement which is contained in our press release.

Let we will briefly go through that, specifically contains. Today and the matters discussed including statements regarding lack of recovery and future revenue of earnings, performance by the company and all the statements that involve risk and uncertainty. Among the facts has actually brought to bear concerns facing our customers, the continuing viability of segments that rely on our products, the effective business and economic conditions.

To back in strength of disabilities, product development, commercializing of technological trade environment, the of the company's new products and competitively stock for those new products and the risk factors detailed from time to time and with SEC report. Let me start by talking a little bit about the forum. The results in the operating environment which we will talk about this morning, we believe are somewhat similar to what our fears and customers continue to experience.

We continue to see a reasonable amount of interest from customers in new products but the actual orders for the for the quarter and the while improving still we remain somewhat . We will continue with previously announced consolidation of three of our U.S. based R&D facilities and expect that this will be completed in the second half of 2002.

For the quarter, our sales were while very similar to the $16.9 million of the preceding quarter, we are still well on the way to comparable quarter of $33.7 million in 2001. Of all the big decreases are in line until some magnetic start line. Our other products such as computers, were not totally immune to increases and that continues to be still a rather difficult environment.

decreases are returning to more traditional 3 percent where . Although we've noticed where competitors have been thrilled to develop or unable to develop, you generate some products for a quite mature product line, we have been told our competitor close to or below cost. For the quarter our magnetic account of 69 percent of sales fuses with 22 percent and that is and that includes the automatic products from nine percent.

the sales break down as the America's about 51 percent, Asia Pacific 40 percent and U.S. about nine percent. Moving to the As an alternative to sales our products mixed with area, as a percentage of sales our products domestic growth continue to maintain a high percent of the value added products. And this, what I am talking about, value added products, I'm specifically referring here to integrated connected module products and other products which we do not put our as in our category of value added products which include them in with the magnetics area.

And they have a high material content. So except for these, while two for revenue streams and product profitability. Some produce great profit margins as high as our more traditional products. Management continues to closely monitor raw material and finished goods inventory position and again for the quarter there still are no reason to take any further special charges for outbreak material. From the Far East, we had a total of 3,926 as much for everyone at the end of the quarter.

That number at the end of December, the number at the end of December 2001 was 2,967. We have had an increase of almost 1,000 workers in that 90 day period. Also included in our first salary expenses associated with the third two quarters operation of our acquisitions which occurred in May of 2001.

On the SB&A front, where we got to $1.5 million of 27 percent from the same quarter a year ago, this reflects a difference of the head count prior to the and sales related charges that set commission and pace. It's also $1.4 million is 26 percent below the prior quarter and some of that related because as we discussed last year, we had some costs we took related to closing down our R&D facilities.

we continue to actively program to re-evaluate costs and facilities. But we remain determine that any action taken during this downturn were not significantly jeopardize the three percent . We continue to maintain fully focused on price for the future. And in our balance sheet, that cash and equivalent for the end of December and our cash equivalent increases $71.2 million and this was just below the December 2001 balance.

Our receivables are up by $400,000 from December 2001. Our accounts payable for the same period are up $380,000. (Inaudible) that we expect in increase in business that we had since seen. Inventories in our reserves increased half a million dollars above December 2001. Capital spending was minimal at just $550,000 dollars for the quarter and I 2002, it's $11.81.

On the acquisition stocks, we continue to evaluate several possibilities but we don't see anything eminent so we are about start on the battle run. Just some general comments, from the Bel Fuse area, one of our new initiative. We had so far this year. And should launch as many more by the end of the second quarter. We continue to actively engage with many of our major that we have for a our magnetic and are generally being well received.

To date we have 10 confirmed for these new products. As I mentioned earlier, on the R&D consolidation, we all hope to finalize the consolidation of our Dallas, Indianapolis and San Diego facilities in the second quarter. However due to some delays in the acquisition of suitable premises in San Diego, we do not expect to complete that until later in the year.

And just one final note before questions. I just want to make a comment about our computer systems. In the first quarter, we successfully our computer operations worldwide under the new enterprise system of the unified platform. This project went extremely well and it still we enhanced our capability our management systems going forth. From a management team, we especially wish to thank all of our associates in . It's a very successful out there. I will now open it up to questions.

Thank you sir. Ladies and gentlemen. We will now begin the question and answer session. If you have a question, you will need to press the one followed by the star on your telephone. You will hear a acknowledging request. If your question has been answered and you wish to withdraw your phone request, you may do so my pressing the one followed by the three.

If you are on a speaker phone, please pick up your handset before entering your request. One moment please for the first question. Once again ladies and gentlemen if you have a question, please press the one followed by the four at this time. Wayne Bill with . Please go head.

Hi, Colin. Good morning to you. I was wondering if you would give us a little bit of sense of what your customer inventory consignment levels are with some of your customers. Do you have a feel for that? Have they been coming down pretty significantly here? Can you just tell us what is going on?

This is Dan Bernstein.

Hi, Dan.

. I think it is (audible). The inventory has been pretty worked down, pretty . I think it is over the past year so we are starting to see it out there now, a lot of the products were are supporting and ICM products that we have not distributed over the 18 months. But I think we are doing a pretty good job if you . The question is how big of a market it's going to be.

Is that true for companies where you have inventories that are just on consignment.

I tend to think by now. Or even going to get

What happens, Wayne, in a consignment situation, we typically have a provision. So it depends on the . But if the inventory is not being pulled from consignment within a certain period of time, we get the billing.

First of all about the new computer system upgrade you were talking about, do you continue to expect that to trim additional costs from your SB&A line. Do you get a sense of that?

No, there is not going to trimming of the costs. I think it's really an enhancement of that capability. The system we had was about 20 years old, that we were operating on before. And we all got very used to it but it currently has some limitations in today's environment. What this new system does, it certainly gives us a lot more favorability and a more functionality and we were, we basically were running two side by side systems, one for the Far East and one for the U.S. before.

Now it is one completely unified system. So at the moment anybody hits the tee, in China, the data is available and sitting on my desk or Dan's desk or anybody else's. So we will enhance our productivity but I don't see any significant head count reduction from it.

Okay. I'm confused to clarify as why you guys are moving your R&D facilities to San Diego. I know you think it's going to improve your operational assistance there throughout your company and you don't break down R&D, but could you tell us, give us a sense about you do spend on R&D.

Let me tell you the reason, the won't be spent is on the West Coast. By being in San Diego, with our groups, we go after pretty rapidly. Also the in the past that we've been looking at are pretty much in separate products to groups and land groups and the .

And the technology from and as the acquisitions have progressed over the last couple years for the main share customer base. Now there is no land or customer, there is only one customer. So we were out of PR because the who have to disconnect these two red herrings which rarely should put out .

Also I our walk in group is located in San Diego. And they will be ones to responsible for setting priorities for the engineering group. So we feel that we can communicate new products plus be a lot closer to our customer base.

On the tough side, I will always have this debate, what is really R&D. In other words, am I just production engineering and stuff like that goes into it but we could agree on about 6 percent to 8 percent of our revenues in why regard to buyers, is R&D tied to expenses.

So listen, thanks so much, guys. Thanks, and good luck with your new job.

The next question comes from Michael Friday with . Please go ahead.

Good morning, gentlemen. Any updates on the share or purchase program number one place?

The upgrade is that we are not active in the marketplace at the moment. We put it in for a couple reasons, but one the biggest reasons that it put in was that we did not have one and two and three dollars that the share dropped on that 100,000 shares are for sale. And then not having that situation .

And then over the last year or so we found pretty quickly with the Far East purchase program that the whole market was moving. Us buying some shares back was not going to stop the degradation in the price for any one particular day. So we just have not been active in the marketplace recently. It is still there but I do not think we purchased any shares in the last 12 months, and currently have no active plans to buy.

Thank you very much.

Once again, ladies and gentlemen, if you'd like to ask a question, please press the one, followed by the four at this time. Once again, if you'd like a question, please press the one followed by the four at this time. Mr. Bernstein, I show no other questions, please continue with the presentation, or any closing remarks you may have.

Yes, at this time I would like to say one thing. I think one of the statements after 1:00 p.m., eastern daylight time. At 1-800-633-8284, and the regulation number for that is 204-250-95. That's after 1:00 today. And it also will be available at www.companyboardroom.com. Or www.belfuse.com. And I just would like to thank everybody for joining in today.

Ladies and gentlemen, that does conclude our conference call for today, you may all...