Good day. And welcome to the Bel Fuse Second Quarter 2014 Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to introduce the host for today's conference, Mr. Dan Bernstein. Please go ahead, sir.

Thank you, Jeanine. I would like to welcome you to our conference call to review Bel's Unaudited Primary (sic) Preliminary Second Quarter 2014 Results. Before we start, I'd like to hand it over to Colin Dunn, our VP of Finance. Colin?

Thanks Dan. Good morning, everybody. I would like to read the following Safe Harbor statement before we start. Except for the historical information contained in this call, the matters discussed on this call including the statements regarding the impact of the company's expertise (Technical Difficulty) projected cost savings associated with the Power Solutions and Connectivity Solutions acquisitions, the potential future growth for the company's shareholders, our forward-looking statements that involve risks and uncertainties. Actual results could differ materially from Bel's projections. Among the factors that could cause actual results to differ materially from such statement are the market concerns facing our customers, the continuing availability of sectors that rely on products, the effects of business and economic conditions, difficulties associated with integrating recently acquired companies, capacity and supply constraints or difficulties, product development, commercialization of technological difficulties, the regulatory and trade environment, risk associated with foreign currencies, uncertainties associated with legal proceedings, the market acceptance of the company new products and the competitive responses to those new products and the risk factors detailed from time to time in the company's SEC reports. In light of the risks and uncertainties, there can be no assurance that any forward-looking statement will in fact prove to be correct. We undertake no obligation to update or revise any forward-looking statements. Now moving on to the report, before I move into our historical results, there were some large transactions that closed subsequent to the June 30, quarter end. On July 25, 2014, Bel closed the acquisition of the Emerson Network Power Connectivity Solutions business or as we calling it at the moment, CS from Emerson. Bel acquired the Connectivity Solutions business for approximately $98 million on a cash and debt-free basis. The small portion of the transaction located and charges expected to close by the…

Thank you, Colin. Jeanine, can we open up the call for questions please?

Thank you. (Operator Instructions) And our first question is from Harsh Kumar with Stephens. Please go ahead.

Hey, Dan. It's Harsh Kumar from Stephens. And Dan and Colin, looks like had a couple of questions, looks like a lot of the issues regarding since costs are behind you and you mentioned you are sort of set for the reorg. I'm curious if you would talk about the benefits you might see in the second half of this year and even beyond both from top line standpoint and also maybe from the cost standpoint more importantly.

Regarding Cinch was the move that we made from Oklahoma down to Texas, McAllen, Texas. We thought from a material traveling standpoint to be substantial greater have everything in close proximity. And then we find that has improved substantially. Our lead time in material has dropped from probably 14 weeks down to 6 weeks. So we are very pleased by that. From an up top growth standpoint – revenue standpoint, it does not affect at all, it just makes us more efficient. However, this product line is really geared to Boeing and everything we hear from Boeing regarding – our major products are going into the 737 and we will also design in on the 37 Max. So as Boeing is doing well, we should follow that trend very nicely with the Cinch product line.

Fair enough, so a lot of benefit sounds like from just a lead time and just efficiency standpoint. And then also Dan, if I could ask you about your Emerson deal, gets you into aerospace defense, RF Microwave, I suspect particularly in the optical piece maybe the margins are a little bit better. Maybe you could talk about the growth dynamics of that those end markets and also maybe potentially the impact on margins?

So, I think again, really it's kind of one for the other because if you look generally you can tell by the purchase price we paid a nice price for that business. We saw it selling to the military space, 41% of their sales are going through distribution. When you do sell through distribution you don't see the price pressure that when you are dealing with large OEMs. And again, also when you are dealing with military and aerospace, there are a lot more concern about higher reliability and that's number driving factor for them. But the other problem we have is, because we book Power-One solutions where we have a lot of material content those margins are a lot less than historically what Bel would have in the ECS business. So if we know we have this proof that has really a lot more better margins is probably going to be offset by the Power-One business that because of the material content doesn't work in such high margin.

That's a totally fair comment. And then also Dan and Colin in your press release you talked about you already talked out I think you mentioned $5 million in savings. I'm curious if they are coming in G&A sales or cost of goods also how long would it take for you to get those maybe?

I think the majority – I think those $5 million are pretty much done already and it definitely came out of salaries, I would say a good chunk of it probably 60% is from the sales and marketing side and the balance is more of overhead in management. We still believe there we have opportunities for streamlining and being more efficient and how we run the company in the savings we can get, as being $700 million company instead of being $300 million company. And those savings should come across the board in so many different areas.

Great guys. Thank you. I will get back in line and let somebody else take the stage. Congratulations again.

Thank you so much.

Our next question is from Sean Hannan with Needham & Company. Sean Hannan - Needham & Company: Yes. Thank you. Good morning. Can you hear me?

Yes, Sean. Sean Hannan - Needham & Company: So just to see if I can clarify some of the comments you just made Dan. When we think about the contributions of both of these businesses to legacy Bel on a blended basis as we look at forward quarters, when we get down to the operating margin outside of additional cost that would be taken out. It sounds to me like there are net-net general similarities to where your business is, if we do see a lift it's not something to be expected to be a great magnitude but really something that would be magnified by the benefit of scale. Is that a fair way of thinking about this?

Yes. I think Sean the – what we are feeling that we have the margins, but if we are on the Power side, it’s going to fairly much mimic what we currently do on our non-Cinch business though what we have traditionally done on our non-Cinch business. It should be fairly representative of that. And we believe going forward that the margins on the connectivity business which we have bought from Emerson and just closed on last Friday that they will more mimic the Cinch margins going forward. Sean Hannan - Needham & Company: Okay. How about if there is a way that we can talk a little bit about how your revenues may flow now with the contribution of both these businesses. I mean obviously you have now effectively doubled the size of your company. The power business at Power-One really went through a pretty good state of decline through early 2013. They didn't have a lot of real clear seasonal patterns and I think in 2013 you got down to about half of what it had in 2010. Can we talk about the demand patterns in that business, do you agree that stabilized your bottom and growing again? And then also if we can talk about these stabilization or growth profile of the CS business as well? Thanks.

Okay. So let's start with Power-One. I think roughly before we bought them trailing, or about $250 million run rate probably down as you said from about $450 million. There might be a negative decline for the next six months, customers somewhat not in the best manner we think. They had certain quality problems and it wasn't addressed properly. So we feel that we are trying to show up as soon as best we can and we have been spending tremendous amount of time trying to improve the situation. But for example, there is key customers that Bel has today, we are the preferred vendor, in the past Power was the supply to these vendors and they were kicked out. We hope once we get comfortable with the quality and that we have changed the company in a positive manner that we can start bringing this business back. And now we can start gaining on it. However, I don't think at this point most likely that we can go back to those customers until about January 1 and then probably getting approval in products will take six to nine months. So that but we do things that is a business that can grow as a business that we think that can grow up back to $350 million to $400 million with the entrees that we have at our key customers. We are not just regaining the business that they lost and reintroducing the new Bel Power Solutions. One of the things that was hard is when we met with the customers we thought initially that the Power-One brand had a great name. And then we met with all the customers and we realized that if we kept the Power-One name then they wouldn't talk to us. But as Bel Power…

I think that was a longwinded question and hopefully I trust most of your questions. Sean Hannan - Needham & Company: Yes. No, that's very helpful color. One more and I will jump into queue here. Can you talk about the – what your expectations are from an SG&A standpoint now that we look to the third quarter so I suppose is a little bit more administrative for Colin and then also impact in terms of taxes and how that should potentially change.

I think just from a SG&A, just from all our view point for both companies we have transition services agreements for IT support, accounting support and other things. Those are really clear up. We are hoping we can get it done by January 31. I think once after that period we have a really good handle on our SG&A and how we are looking forward. So I think now we are probably just – I don't think we even have our roadmap, we are working with both companies and working with our team here and we are driving those transition service agreement, can we get quicker. And once we can determine that then we can determine what support we really need and I think we have a good idea. So I think it's still – I hate to give a number that's going to be constantly changing over the next three or four months for the SG&A side of it. And I'm hoping by end of October when we have our next call that we should at least give you a good idea what it should look like and definitely when we transition service agreements will end.

And Sean on that tax side of it, we are basically the Connectivity Solutions business that primarily a North American business. So that's going to be a fairly bust out U.S. tax rates on most of that. When we go look at the business acquired from Power-One, with our understanding that Power-One had a lot of tax loss carryforwards and its all configuration. And so there was a lot of business booked in North America that was really not North American business, it was activities operating in, in Asia. Customers in Asia, manufacturing in Asia and that's what a business for us would be Asian business we would need to reconfigure that and we are in the process of doing that. But generally we would expect on an overall basis that probably the tax rate would comp up at least a couple of percentage points. Sean Hannan - Needham & Company: Okay. Thanks very much. Very helpful.

The question is questioner is Hendi Susanto with Gabelli & Company. Please go ahead. Hendi Susanto - Gabelli & Company: Good morning, Dan and Colin.

Good morning.

Good morning. Hendi Susanto - Gabelli & Company: Dan, so following like a series of acquisitions, what is your appetite for making further acquisition and how much capacity your balance sheet can handle?

Hendi, my Board was laughing at me, when I told them that I'm hoping to go for a year without buying another company. They don't think it's possible. I'm hoping to really try to get a hand on this acquisition and again I don't have a problem with that. But, I would like to see if we can be comfortable working down the debt. I'm hoping our goal – initially our goal in 2015 was to be $0.5 billion company and then in 2020 to be $1 billion company. I think that we have tremendous amount of organic growth possibilities to get us to $850 million to $900 million. Again, I don't – I mean it has to be a very sweet deal to get me to buy another company. But, I'm not actively pursuing things. I just think it has to be a real great deal for our shareholders, if I buy another company within the next 12 months. Hendi Susanto - Gabelli & Company: And then hypothetically within the 12 months based on the interesting candidate like how much capacity your balance sheet can handle?

I think it's how much – it would depend on the deal on how we can structure it Hendi, it's – could be that big.

And again, if they take stock again, we talked to a lot of companies for example in the past, we talked to Mar, we talked to Emerson when the Power business goes up for sale even considering doing a Mars reverse thrust and picking up $1.2 billion in a company. So, I think again, I don't think the size is an important factor to us. I think more important to us is the value it brings to our shareholders. Hendi Susanto - Gabelli & Company: Okay.

So I think again looking at our Mars reverse thrust gives us tremendous amount of -- using our stock as purchasing power. I don't think – I think we can look at any acquisition at any size. Again, I think the key point being is the value to our shareholders and does it add value to our shareholders. Hendi Susanto - Gabelli & Company: And then post closing of Emerson, could you share what kind of industry breakdown Bel Fuse will have?

I hate to say if it looks like it got to be roughly the same probably because we are offset by Power-One. Power-One is traditionally the Bel products and we have the same customers and Emerson is traditionally the same customers since. So it's probably be like maybe 70:30 split between Bel networking type of customers and then the 30 military aerospace. And again, we were hoping and we are looking to build more in the military aerospace. Hendi Susanto - Gabelli & Company: Got it, yes. Thank you.

The next question is from Lenny Dunn with Freedom Investors. Please go ahead.

Good morning. Good quarter. And you're saying all the right things to the previous caller about shareholder value for future acquisition. So my question Dan there but I'm pleased with the answer given. I just had one question, now that we're – at least a $700 million company on the way, maybe $900 million, without another acquisition. Is it time to give consideration to flattening out the structure on the D&A stack because the bigger companies in this era just have one stack?

Yes. I guess you don't know about Viacom, a Ford Motor company.

One other, there is a few, there is a few but not that many.

I think to be honest our concern again is – and based historically, we did it for two reasons and one from a stakeholder standpoint and not from a stakeholder standpoint, but generally we feel that this gives us a lot more strength. In addition to that, it gives us a lot more flexibility when we do want to buy a company in the past when we were looking and continue to look at companies, if we buy a company and we do use stock and they would end up controlling us, us not controlling them. So again, however, we did have situations in the past when we did an issue, look at Power-One, when we did look at Powers and both times we sent letters to the company stating that if we do a merger that we would sell the AAB stock into one. And however, at this point, I'm not too excited about doing it. I just think it gives us a lot more flexibility. I mean again, I think we had an AMP stock and when our stock is selling for 10 bucks, someone will come in and we had one stock, someone would come in and buy the company, sell the company again and take the $100 million of cash and I think the shareholders would probably get screwed pretty bad. But again, it's something that I think is the right opportunity came and the right acquisition opportunity came, we would look at combining it. So it's always up and the Board always evaluates it at every meeting.

There are distribution but did not buy a stock which if there is any, so you can broaden your fair book which…

I think that's a – I think the Board last year had a lot more, we had more floats though. I think that's our biggest problem. I don't think that's going to do it.

Well, it's good to…

But I can understand your opinion.

Anyhow, I don't know if you heard right, I said but….

So I heard what you said, if you combine we get more float.

Yes. And if you got the share price up substantial, if we are trading at the 40 to close to 50, you can split 2 for 1 and then you have more liquid stock.

Well, as I said we discussed at every Board Meeting and I know it's going to be brought up again so.

Okay. Thank you very much.

Thank you.

Again good quarter and I'm pleased that any acquisitions if you're going to make would be -- really in the shareholders best interest. So thank you.

And the next questioner is Harsh Kumar with Stephens.

Harsh Kumar from Stephens. Hi, Dan, I wanted to ask you a little bit of a broader question. You're pretty deep now into the networking market and got a pretty good foothold into the aerospace and defense market. I'm curious from where you set, what are the underlying trends based on all of the things, economy, IT spending et cetera, et cetera, how would you view your mid to long terms prospects as a company going forward?

I think going forward, I think we definitely have substantially stronger company. Our revenues are more evenly divided. Before these acquisitions we were only doing about $30 million in Europe. And now we're going to be doing – to just seeing an idea of strengthening. We're doing a $100 million in North America, and now we're doing $250 million in North America. Now, we're doing $37 million in Europe, now we're going to be doing $143 million in Europe and Asia we are doing $137 million, now we are doing $312 million. So we really have some really critical mass where we're really picking up tremendous amount of our customer base. I think the key for us is how do we combine our products, how do we go to market, how do we do cross-selling a product. One of the exciting things that Power-One has done and we've done a very poor job is open computing. We have companies like Amazon, Google, Facebook, building their own equipment. And they have entrenched themselves a lot better in this marketplace than we do. Now, hopefully we can piggyback those relationships and look at growing that business. Again, the only thing I know for sure, I think bigger you are, the better you are in the world we live in. The more I can get economies to scale, the more I can do more price sensitive, the more value I can add to our customers. So we're very excited about the opportunities. Now, looking at Russia and looking at Israel, do I see well at night, not really. On the other hand, knowing that people are going to invest throughout the world today, they're looking at America as the best investment that makes me somewhat more comfortable. However, I think I sleep a lot overall though looking at where we were at six months ago or a year ago before these acquisitions and looking at where we are today. There is no question we're a lot stronger, a lot better company going forward and we have tremendous opportunity for organic growth and I think before our opportunities for organic growth wasn't as great and they are substantially greater today.

That's great. Congratulations Dan and Colin, and best of luck and a great job.

All right. Great then. Thank you.

Thanks harsh.

The next question is from Mike Hughes with SGF Capital. Please go ahead.

A couple of questions for you, I'm not sure if you covered this or not, I apologize if you have. Did you state what the long term debt, where it stands now that you closed on the Emerson deal.

We didn't. After the Emerson deal, we've got – it's there in my memory, I will pull by cheap sheet on that. We've got –outside of our credit facility was $265 million, we've taken down $245 million of that. We haven't used it all, some of that sitting as cash with our folks at the moment. Is that the question?

Yes. And did you have a rough cash balance?

At the end of the period, yes we did, the cash – balance sheet right now –

Right after you did the deal kind of roughly where it is now.

Yes. It's about $280 million and $290 million today.

Okay.

Most of that cash is all receipt. So basically we did a good portion of our cash for the acquisitions.

Okay. And then what would be a good interest expense number to use on a go forward basis including kind of deferred financing finance some times that's complicated to calculate. So if you could just give us an idea of what to use on that front?

It's a LIBOR based financing around about 3%.

LIBOR plus 3% or 3%...

I know it's up 3%.

Okay. And then, we can look at the Power-One operating margins historically when it's part of the publicly traded company there were 6% to 7%, is that kind of what you are guiding to that?

I'd hope we can start improving on that, I would hope.

Okay. Out of the box – I'm sorry go ahead.

I'm sorry, I think again, they ran a little more far than we ran, I think the cost we took out and then again, the streamlining we do, so we are hoping to get it to 10%.

Okay. But that will be over time, I assume?

Well, we are hoping we are not – we get 2% quickly, I'm not saying two or three years, I would hope by the end of this year. Once again, we have the transition agreements that we should bet at 10%.

Right. And you anticipated my next question, the transition services agreement, how much would that weigh on the margins there, up 100 basis points or how much is that?

Yes. We are not going to get rid of all of that, of course, we are going to have to replace with some of our own. But, yes, it's a couple of basis – couple of hundred basis points.

Okay. And then, last question for you, you said the what you are calling the CS business or the acquired business rather I should run around Cinch margins, can you remind me where Cinch historically runs?

They are gross profit margins tend to be in the mid 20s. Although G&A tends to run higher, obviously, the engineering side too. So it runs about 200 basis points higher on a operating income number.

200 higher relative to…

Relative to rest of the business.

Okay. So maybe 8% to 9%?

Yes.

Okay, great. Thank you very much.

Thank you.

(Operator Instructors) Next we have a follow-up from Sean Hannan with Needham & Company. Please go ahead. Sean Hannan - Needham & Company: Yes, thanks. Just wanted to ask a little bit about current conditions, Dan you provided a little bit of detail on your views on the Power-One piece of the business but was hoping to see if we could kind of step back talk about the business overall. What we are seeing in terms of demand trends here, as we head into the September quarter?

Just regarding to us, it seems just extremely quite. We don't see any negatives. We don't see any positives. It's just like stay the course. I don't that since that because it's summer time and people are on vacation. But, we just haven't – just seems somewhat flat at this point in time. And I wish I could – I think people and we don't let again, we just don't have any visibility out there for many of our customers. I just think there is – product is too much uncertainty for anybody to commit anything. I don't know if that's a good answer or not for you Sean, but… Sean Hannan - Needham & Company: That's helpful. Thanks. And then in terms of price increases, so you are able to implement some year ago and realize that some of that was selective relevant to certain types of products or categories. Can you talk about the pricing environment today, obviously you are always going to get some degree of pressure but how much of that actually materializes and how much are you able to identify within your own portfolio where you might be able to potential raise prices. Thanks.

I think it's again, at this point in time because things are flat and then substantial to demand out there. I think it would be very difficult to raise price. And this demand stays flat you probably would see price decreases going forward. I think again, it really depends on our success again as – we can design in, we have to do a lot better – we have tremendous amount of engineering capabilities. And then we use those resources what kind of commitments we make to certain customers and they make to us. So again, just so broad based now. I think again, that we haven't seen tremendous price decreases but we have customers that they do want to correlate 2% to 3% price reduction. And we might give them a little less than that. But, nothing either way at this time, we see little pops up. For every pricing increase or opportunity, I see a price decrease. I don't see anything across the board where -- in Germany when things are bad I got five people on my door asking me to approve price decreases. And then we don't see that. Sean Hannan - Needham & Company: Sure. Okay, great. Thanks so much again for the color.

Okay.

The next question is from Lawrence Goldstein with Santa Monica Partners. Please go ahead.

Hi, Dan. So the last 15 years or so that I have been a shareholder, the hallmark of the balance sheet has been cash and no debt. From the way you talk about interest in future acquisitions, now, we have got a bunch of that. Shall we think of the next 50 years as a leverage company?

Larry, you know me well. Look, how would you like to answer that question?

How to answer that question?

I don't think we would be overly leveraged company.

I missed that you aren't clear, the clarity of the…

I think Larry, you know, me well enough for the past 50 years that you know won't be a overly leveraged company.

I see, okay. But we are not at to be any longer a company with a lot of cash…

Pile of cash, I have no problem to have a pile of cash, I think it's my goal to pay off this debt as quickly as possible if I can.

Thank you, Dan.

All right.

I'm showing no further questions in the queue and I would like to turn the conference back for any further remarks.

So once again, we would like to thank everybody for joining us today. Again, this is probably in our 65 year history as a company the most exciting period of our time. And we are excited to the opportunity to bring these companies a more developed use. And make it access to us and to our shareholders, looking forward to a great future. Thank you.

Ladies and gentlemen, thank you for attending today's program. This does conclude the meeting. And you may all disconnect. Everyone have a good day.