BEL FUSE INC NJ

Previous wording

We operate through three product group segments. In the six months ended June 30, 2024,45% of our revenues were derived from Power Solutions and Protection, 43% from our Connectivity Solutions and 12% from our Magnetic Solutions operating segment.

Current wording

We operate through three product group segments. In the nine months ended September 30, 2024,43% of our revenues were derived from Power Solutions and Protection, 44% from our Connectivity Solutions and 13% from our Magnetic Solutions operating segment.

Previous wording

We believe that in addition torecent global inflationary pressures on the costs of goods and services in general, and ongoing conflicts/political unrest includingin or near the countries in which Bel operates, the key factors affecting and/or potentially affecting our results for the six months ended June 30, 2024 and/or future results include the following:

Current wording

We believe that in addition torecent global inflationary pressures on the costs of goods and services in general, and ongoing conflicts/political unrest includingin or near the countries in which Bel operates, the key factors affecting and/or potentially affecting our results for the nine months ended September 30, 2024 and/or future results include the following:

Previous wording

Our revenue and gross margin by operating segment for the three and six months ended June 30, 2024 and 2023 were as follows:

Current wording

Our revenue and gross margin by operating segment for the three and nine months ended September 30, 2024 and 2023 were as follows:

Previous wording

Sales of our Power Solutions and Protection products were lower by $28.5 million (32.8%) and $51.5 million (30.3%) during the three and six months ended June 30, 2024, respectively, as compared to the same periods of 2023. The decrease resulted primarily from a decline in sales of our power products into networking applications of $15.8 million (46.3%) during the second quarter of 2024 and $33.2 million (47.8%) during the first six months of 2024 as compared to the same periods of 2023. Sales of our CUI products were down by $6.3 million (43.1%) and $11.1 million (38.1%) during the three and six months that ended June 30, 2023, respectively, as compared to the same periods of 2024. Sales of products into the eMobility end market decreased by $4.5 million and $5.7 million, and our circuit protection products declined by $1.2 million and $2.1 million during the second quarter and first half of 2024 compared to the corresponding periods of 2023. Further, raw material expedite fee revenue for our Power segment declined by $5.7 million and $13.4 million during the three and six months ended June 30, 2024, respectively, as compared to the same periods of 2023. These areas of decline were partially offset by a $3.2 million and $6.5 million increase in sales of our rail products during the second quarter and first half of 2024 compared to the same periods of 2023.

Current wording

Sales of our Power Solutions and Protection products were lower by $26.2 million (35.0%) and $77.7 million (31.7%) during the three and nine months ended September 30, 2024, respectively, as compared to the same periods of 2023. The decrease resulted primarily from a decline in sales of our power products into networking applications of $15.9 million (52.0%) during the third quarter of 2024 and $49.1 million (49.1%) during the nine months ended September 30, 2024 as compared to the same periods of 2023. Sales of our CUI products were down by $6.1 million (50.5%) and $17.2 million (41.7%) during the three and nine months ended September 30, 2024, respectively, as compared to the same periods of 2023. Sales of products into the eMobility end market decreased by $3.3 million and $9.0 million, and our circuit protection products declined by $0.2 million and $2.3 million during the third quarter and nine months ended September 30, 2024, respectively, compared to the corresponding periods of 2023. These areas of decline were partially offset by a $2.6 million and $9.1 million increase in sales of our rail products during the third quarter and nine months ended September 30, 2024, respectively, compared to the same periods of 2023.

Previous wording

Our gross margin for the Power segment improved in the 2024 periods presented compared to those from the same periods of 2023 despite the challenge of a lower sales volume. This improvement resulted from our strategic pricing actions, favorable exchange rates with the Chinese Renminbi versus the U.S. dollar, a lower volume of low-margin expedite fees, and a favorable shift in product mix.

Current wording

Our gross margin for the Power segment declined in the third quarter of 2024 compared to the same period of 2023 due to lower sales and an unfavorable shift in product mix. This decline was result of lower sales volume, partially offset with the favorable exchange rates with the Chinese Renminbi versus the U.S. dollar.

Previous wording

Sales of our Connectivity Solutions products incr eased by$3.0 million (5.4%) and $3.9 million (3.6%) during the three and six months ended June 30,2024, respectively, as compared to the same periods of 2023. This increase was primarily due to increased volume of Connectivity Solutions products sold through our distribution channels during thesecond quarter of 2024, providing incremental growth of $2.5 million (13.4%) during thesecond quarter and $3.1 million (8.0%) during the first quarter of 2024, as compared to the same periods of 2023. Sales of Connectivity products intothe military end market also grew by $0.2 million (2.0%) and $0.6 million (2.6%) during the three andsix months ended June 30,2024, respectively, as compared to the same periods of 2023. Gross margins for the 2024 periods presented above were favorably impacted by pricing actionson certain contract renewalsand operational efficiencies from the facility consolidations completed in 2023, partially offset by higher wage rates in Mexico and an unfavorable fluctuation in exchange rates between the U.S. dollar and Mexican peso in the 2024 periods as compared to the 2023 periods presented.

Current wording

Sales of our Connectivity Solutions products incr eased by$3.9 million (7.6%) and $7.8 million (4.9%) during the three and nine months ended September 30, 2024, respectively, as compared to the same period of 2023. This increase was primarily due to increased volume of Connectivity Solutions products sold through our distribution channels, providing incremental growth of $1.2 million (6.1%) during thethird quarter and $4.3 million (7.3%) during the nine-month period ended September 30, 2024, as compared to the same periods of 2023. Sales of Connectivity products intothe military end market grew $0.5 million (1.5%) during the nine months ended September 30,2024, as compared to the same period of 2023. Gross margins for the 2024 periods presented above were favorably impacted by pricing actionson certain contract renewalsand operational efficiencies from the facility consolidations completed in 2023, partially offset by higher wage rates in Mexico and an unfavorable fluctuation in exchange rates between the U.S. dollar and Mexican peso in the 2024 periods as compared to the 2023 periods presented.

Previous wording

Sales of our Magnetic Solutions products declined by $10 million (37.3%) and $32.2 million (51.5%) during the three and six months ended June 30,2024, respectively, as compared to the same periods of 2023. Reduced demand for our Magnetic Solutions products from our networking customers and through our distribution channels has been the primary driver of the lower demand as we believe by these customers continue to work through inventory on hand. The lower sales volume, partially offset by favorable exchange rates with the Chinese Renminbi versus the U.S. dollar, were the primary drivers of gross margin reduction for this product group during the first half of 2024 as compared to the same period of 2023.

Current wording

Sales of our Magnetic Solutions products declined by$12.8 million (40.0%) and $45.0 million (47.6%) during the three and nine months ended September 30, 2024, respectively, as compared to the same periods of 2023. Reduced demand for our Magnetic Solutions products from our networking customers and through our distribution channels has been the primary driver of the lower demand as we believe by these customers continue to work through inventory on hand. The lower sales volume, partially offset by favorable exchange rates with the Chinese Renminbi versus the U.S. dollar, were the primary drivers of gross margin reduction for this product group during the first nine months of 2024 as compared to the same period of 2023.

Previous wording

Cost of sales as a percentage of revenue for thethree and six months ended June 30, 2024 and 2023 consisted of the following:

Current wording

Cost of sales as a percentage of revenue for thethree and nine months ended September 30, 2024 and 2023 consisted of the following:

Previous wording

Material costs as a percentage of sales during the three andsix months ended June 30, 2024 were lower compared to the same periods of 2023, due to the stabilization of raw material pricing, shorter lead times, a shift in product mix and better procurement efforts. Labor costs in the 2024 periods as a percentage of sales have increased compared to the each of second quarter and first half of 2023 due lower sales volume, a shift in product mix, an unfavorable fluctuation of the Mexican Peso exchange rate versus the U.S. Dollar in 2024 compared to the previous year, and the increase in statutory minimum wage rate in Mexico. This increase in labor cost was partially offset by lower labor costs in China due to the favorable fluctuation in the Chinese Renminbi exchange rate versus the U.S. Dollar.

Current wording

Material costs as a percentage of sales during the three andnine months ended September 30, 2024 were lower compared to the same periods of 2023, due to a shift in production mix, the stabilization of raw material pricing, shorter lead times, and better procurement efforts. Labor costs in the 2024 periods as a percentage of sales have increased compared to the each of the third quarter and first nine months of 2023 due to lower sales volume, a shift in product mix, an unfavorable fluctuation of the Mexican Peso exchange rate versus the U.S. Dollar in 2024 compared to the previous year, and the increase in statutory minimum wage rate in Mexico. This increase in labor cost was partially offset by lower labor costs in China due to the favorable fluctuation in the Chinese Renminbi exchange rate versus the U.S. Dollar.

Previous wording

The other expenses noted in the table above include fixed cost items such as support labor and fringe, depreciation and amortization, and facility costs (rent, utilities, insurance). The percentage of other expenses as a cost of sales has increased during the three and six months ended June 30, 2024, due to the lower sales volume in the 2024 periods presented as compared to the same periods of 2023.

Current wording

The other expenses noted in the table above include fixed cost items such as support labor and fringe, depreciation and amortization, and facility costs (rent, utilities, insurance). The percentage of other expenses as a cost of sales has increased during the three and nine months ended September 30, 2024 relative to the corresponding 2023 periods, due to the lower sales volume in the 2024 periods presented as compared to the same periods of 2023.

Previous wording

SG&A expenses were $24.1 million for the second quarter of 2024, down from $25.1 million in the second quarter of 2023. This decrease in SG&A was largely the result ofa $1.2 million decline in legal and professional fees, as the second quarter of 2023 included costs associated with the MPS patent infringement lawsuit further described in Note 15, "Commitments and Contingencies", which did not recur in the second quarter of 2024. Commissions were also lower by $0.1 million in the second quarter of 2024 as compared to the second quarter of 2023 due to the lower sales base in the 2024 period. These declines were largely offset by higher salaries and fringe benefits of $1.2 million and an increase of $0.3 million in a variety of other expenses, including amortization, advertising and travel.

Current wording

SG&A expenses were $26.7 million for the third quarter of 2024, an increase from $23.7 million in the third quarter of 2023. This increase in SG&A was largely the result ofa $4.3 million increase in professional fees related to the acquisition of Enercon expected to close in the fourth quarter of 2024. Salaries and fringe benefits also increased by $0.7 million and there was an increase of $0.4 million in a variety of other expenses, including amortization, advertising and travel. These increases were largely offset by lower variable organizational compensation by $0.7 million and lower business promotion expenses of $0.3 million in the third quarter of 2024 as compared to the third quarter of 2023 due to the lower sales base in the 2024 period.

Previous wording

SG&A expenses were $49.1 million for the first half of 2024, down from $50.4 million in the first half of 2023. This decrease in SG&A was largely the result of a $2.4 million decline in legal and professional fees, largely due to costs associated with the aforementioned MPS patent infringement lawsuit, which did not recur in the first half of 2024. Commissions were also lower by $0.6 million in the six months ended June 30 2024, as compared to the same period of 2023 due to the lower sales base in the 2024 period. These declines were largely offset by higher salaries and fringe benefits of $2.1 million and an increase of $0.7 million in a variety of other expenses, including amortization, advertising and travel.

Current wording

SG&A expenses were $75.8 million for the first nine months of 2024, up from $74.1 million in the same period of 2023. This increase in SG&A was largely the result of a $4.3 million increase in professional fees related to the acquisition of Enercon, offset by a $3.7 million decline in legal fees largely due to costs associated with the aforementioned MPS patent infringement lawsuit further described in Note 15, "Commitments and Contingencies", which did not recur in the first nine months of 2024. Salaries and fringe benefits increased by of $2.8 million and there was also an increase of $0.4 million in a variety of other expenses, including amortization, advertising and travel in the first nine months of 2024 as compared to same period of 2023. These increases were offset by a decline of $1.3 million in commissions and a $0.5 million decline in business promotion expenses during the nine months ended September 30 2024, as compared to the same period of 2023 due to the lower sales base in the 2024 period.

Previous wording

Other (expense)/income, net was$0.5 million and $0.3 million for the three months ended June 30, 2024 and 2023, respectively. The year-over-year change within this line item was largely driven by themarket fluctuations in our SERP investments which resulted in a gain of $0.1 million and $0.4 million during the three months ended June 30, 2024 and 2023, respectively. The Company also recorded losses of $0.3 million and $0.4 million associated with its investment in innolectric during thesecond quarters of 2024 and 2023, respectively. We also realized foreign exchange transactional loss of $0.3 million during each of the three month periods ended June 30, 2024 and 2023 due to the fluctuation of the spot rates of certain currencies in effect when translating our balance sheet accounts at June 30, versus those in effect at March 31, each year.

Current wording

Other (expense) income, netwas ($1.3) million and ($0.1) million for the three months ended September 30, 2024 and 2023, respectively. The year-over-year change within this line item was largely driven by themarket fluctuations in our SERP investments which resulted in a gain of $0.5 million and loss of $0.5 million during the three months ended September 30, 2024 and 2023, respectively. The Company also recorded losses of $0.2 million and $0.3 million associated with its investment in innolectric during thethird quarters of 2024 and 2023, respectively. We also realized foreign exchange transactional losses of $1.6 million during the three-month period ended September 30, 2024 versus a gain of $0.2 million for the same period in 2023 due to the fluctuation of the spot rates of certain currencies in effect when translating our balance sheet accounts at September 30, versus those in effect at June 30, of each year.

Previous wording

Other (expense)/income, net was$1.3 million and $0.1 million for the six months ended June 30, 2024 and 2023, respectively. The year-over-year change within this line item was largely driven by themarket fluctuations in our SERP investments which resulted in a gain of $0.8 million during each of the six months ended June 30, 2024 and 2023. The Company also recorded $0.1 million of loss associated with its investment in innolectric during thefirst half of 2024. We also realized foreign exchange transactional gains of $0.4 million during the six months ended June 30, 2024, due to the fluctuation of the spot rates of certain currencies in effect when translating our balance sheet accounts at June 30, 2024 versus those in effect at December 31, 2023. This compares to foreign exchange transactional losses of $0.5 million recorded during the first half of 2023.

Current wording

Other (expense) income, net was less than$0.1 million and ($0.3) million for the nine months ended September 30, 2024 and 2023, respe ctively. The year-over-year change within this line item was largely driven by themarket fluctuations in our SERP investments which resulted in a gain of $1.3 million during the nine months ended September 30, 2024 and a gain of $0.3 million during the same period in 2023. The Company also recorded $0.3 million of loss associated with its investment in innolectric during thenine months ended September 30, 2024. We also realized foreign exchange transactional losses of $1.3 million during the nine months ended September 30, 2024, due to the fluctuation of the spot rates of certain currencies in effect when translating our balance sheet accounts at September 30, 2024 versus those in effect at December 31, 2023. This compares to foreign exchange transactional losses of $0.1 million recorded during the nine months ended September 30, 2023.

Previous wording

The provision for (benefit from) income taxes for the three months ended June 30, 2024 and 2023 was $4.1 million and ($0.5) million, respectively. The Company’s earnings before income taxes for the three months ended June 30, 2024, were $4.4 million lower when compared with the same period in 2023, primarily attributable to a decrease in income from the North America and Asia regions, partially offset by an increase in the Europe region. The Company’s effective tax rate was 17.8% and (1.8%) for the three months ended June 30, 2024 and 2023, respectively. The change in the effective tax rate during the three months ended June 30, 2024 as compared to the same period in 2023, is primarily attributable to an increase in tax expense relating to valuation allowances and prior period accruals as well as a decrease in the tax benefit relating to the reversal of uncertain tax positions resulting from the expiration of certain statute of limitations. See Note 12, “Income Taxes”.

Current wording

The provision for income taxes for the three months ended September 30, 2024 and 2023 was $3.1 million and $4.3 million, respectively. The Company’s earnings before income taxes for the three months ended September 30, 2024, were $12.6 million lower when compared with the same period in 2023, primarily attributable to a decrease in income from all of the regions. The Company’s effective tax rate was 27.8% and 18.2% for the three months ended September 30, 2024 and 2023, respectively. The change in the effective tax rate during the three months ended September 30, 2024 as compared to the same period in 2023, is primarily attributable to an increase in tax expense relating to prior period accruals, as well as a decrease in the tax benefit relating to the reversal of uncertain tax positions resulting from the expiration of certain statute of limitations. See Note 12, “Income Taxes”.

Previous wording

The provision for income taxes for the six months ended June 30, 2024 and 2023 was $8.6 million and $3.7 million, respectively. The Company’s earnings before income taxes for the six months ended June 30, 2024, were $2.8 million lower when compared with the same period in 2023, primarily attributable to decrease in income from the North America and Asia regions, partially offset by an increase in the Europe region. The Company’s effective tax rate was 19.8% and 8.0% for the six months ended June 30, 2024 and 2023, respectively. The change in the effective tax rate during the three months ended June 30, 2024 as compared to the same period in 2023, is primarily attributable to an increase in tax expense relating to valuation allowances and prior period accruals as well as a decrease in the tax benefit relating to the reversal of uncertain tax positions resulting from the expiration of certain statute of limitations. See Note 12, “Income Taxes”.

Current wording

The provision for income taxes for the nine months ended September 30, 2024 and 2023 was $11.7 million and $8.0 million, respectively. The Company’s earnings before income taxes for the nine months ended September 30, 2024, were approximately $15.4 million lower when compared with the same period in 2023, primarily attributable to decrease in income from the North America and Asia regions, partially offset by an increase in the Europe region. The Company’s effective tax rate was 21.4% and 11.5% for the nine months ended September 30, 2024 and 2023, respectively. The change in the effective tax rate during the nine months ended September 30, 2024 as compared to the same period in 2023, is primarily attributable to an increase in tax expense relating to valuation allowances and prior period accruals as well as a decrease in the tax benefit relating to the reversal of uncertain tax positions resulting from the expiration of certain statute of limitations. See Note 12, “Income Taxes”.

Previous wording

Our principal sources of liquidity include $85.0 million of cash and cash equivalents at June 30, 2024, $58.8 million of held to maturity investments in U.S. Treasury securities, cash provided by operating activities and borrowings available under our credit facility. We expect to use this liquidity for operating expenses, investments in working capital, capital expenditures, interest, taxes, dividends, purchases of common stock under our Repurchase Program, and debt obligations and other long-term liabilities. Our liquidity may also be utilized to fund potential acquisitions in future periods. We believe that our current liquidity position and future cash flows from operations will enable us to fund our operations, both in the next twelve months and in the longer term.

Current wording

Our principal sources of liquidity include $134.3 million of cash and cash equivalents at September 30, 2024, $29.5 million of held to maturity investments in U.S. Treasury securities, cash provided by operating activities and borrowings available under our credit facility. We expect to use this liquidity for operating expenses, investments in working capital, capital expenditures, interest, taxes, dividends, purchases of common stock under our Repurchase Program, and debt obligations and other long-term liabilities. Our liquidity may also be utilized to fund potential acquisitions in future periods. We believe that our current liquidity position and future cash flows from operations will enable us to fund our operations, both in the next twelve months and in the longer term.

Previous wording

During the six months ended June 30, 2024, our cash and cash equivalents decreased by $4.4 million. This decrease was primarily due to the following:

Current wording

During the nine months ended September 30, 2024, our cash and cash equivalents increased by $44.9 million. This increase was primarily due to the following:

Previous wording

During the six months ended June 30, 2024, our accounts receivable decreased by $2.8 million due to lower sales volume in the second quarter. Days sales outstanding (DSO) was 55 days at each of June 30, 2024 and at December 31, 2023. Inventory decreased by $8.0 million at June 30, 2024 compared to December 31, 2023, as component availability has started to ease and we have worked to consume our inventory on hand. Inventory turns were 2.8 at June 30, 2024 as compared to 3.1 at December 31, 2023.

Current wording

During the nine months ended September 30, 2024, our accounts receivable decreased by $8.4 million due to lower sales volume in the third quarter. Days sales outstanding (DSO) was 57 days at September 30, 2024 and 55 days at December 31, 2023. Inventory decreased by $12.3 million at September 30, 2024 compared to December 31, 2023, as component availability has started to ease and we have worked to consume our inventory on hand. Inventory turns were 2.6 at September 30, 2024 as compared to 3.1 at December 31, 2023.

Previous wording

Cash and cash equivalents, held to maturity U.S. Treasury securities and accounts receivable comprised approximately 39.6% and 36.9% of our total assets at each of June 30, 2024 and at December 31, 2023. Our current ratio (i.e., the ratio of current assets to current liabilities) was 4.2 to 1 at June 30, 2024 and 3.4 to 1 at December 31, 2023. At June 30, 2024 and December 31, 2023, $41.4 million and $40.9 million, respectively (or 49% and 46%, respectively), of our cash and cash equivalents was held by our foreign subsidiaries. We repatriated $11 million from outside of the U.S. during the six months ended June 30, 2024. We continue to analyze our global working capital and cash requirements and the potential tax liabilities attributable to further repatriation, and we have yet to make any further determination regarding repatriation of funds from outside the U.S. to fund our U.S. operations in the future. In the event these funds were needed for our U.S. operations, we would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds.

Current wording

Cash and cash equivalents, held to maturity U.S. Treasury securities and accounts receivable comprised approximately 41.0% and 36.9% of our total assets at September 30, 2024 and at December 31, 2023, respectively. Our current ratio (i.e., the ratio of current assets to current liabilities) was 4.0 to 1 at September 30, 2024 and 3.4 to 1 at December 31, 2023. At September 30, 2024 and December 31, 2023, $50.5 million and $40.9 million, respectively (or 38% and 46%, respectively), of our cash and cash equivalents was held by our foreign subsidiaries. We repatriated $11 million from outside of the U.S. during the nine months ended September 30, 2024. We continue to analyze our global working capital and cash requirements and the potential tax liabilities attributable to further repatriation, and we have yet to make any further determination regarding repatriation of funds from outside the U.S. to fund our U.S. operations in the future. In the event these funds were needed for our U.S. operations, we would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds.

Previous wording

We expect foreseeable liquidity and capital resource requirements in the ordinary course to be met through existing cash and cash equivalents and anticipated cash flows from operations, as well as borrowings available under our revolving credit facility, if needed. Our material cash requirements arising in the normal course of business are outlined in Item 7A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. There were no material changes to our future cash requirements during the six months ended June 30, 2024.

Current wording

We expect foreseeable liquidity and capital resource requirements in the ordinary course to be met through existing cash and cash equivalents and anticipated cash flows from operations, as well as borrowings available under our revolving credit facility, if needed. Our material cash requirements arising in the normal course of business are outlined in Item 7A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Other than cash requirements arising from the Enercon acquisition pursuant to the Enercon Purchase Agreement expected to close in the fourth quarter of 2024 as described in the immediately following paragraph, there were no material changes to our future cash requirements during the nine months ended September 30, 2024.

Previous wording

In September 2021, we entered into the CSA, as further described in Note 11, "Debt". During January 2023, we amended our CSA and related interest rate swap agreements to transition the reference rate from LIBOR to a Secured Overnight Financing Rate ("SOFR") effective January 31, 2023. The CSA contains customary representations and warranties, covenants and events of default. In addition, the CSA contains financial covenants that measure (i) the ratio of our total funded indebtedness, on a consolidated basis, less the aggregate amount of all unencumbered cash and cash equivalents, to the amount of our consolidated EBITDA (“Leverage Ratio”) and (ii) the ratio of the amount of our consolidated EBITDA to our consolidated fixed charges (“Fixed Charge Coverage Ratio”). If an event of default occurs, the lenders under the CSA would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor. At June 30, 2024, we were in compliance with our debt covenants, including the most restrictive covenant, the Fixed Charge Coverage Ratio. The unused credit available under the credit facility at June 30, 2024 was$115.0 million, all of which we had the ability to borrow without violating our Leverage Ratio covenant based on our existing consolidated EBITDA.

Current wording

In September 2021, we entered into the Existing Credit Agreement, as further described in Note 11, "Debt". During January 2023, we amended the Existing Credit Agreement and related interest rate swap agreements to transition the reference rate from LIBOR to a Secured Overnight Financing Rate ("SOFR") effective January 31, 2023. The Existing Credit Agreement contains customary representations and warranties, covenants and events of default. In addition, the Existing Credit Agreement contains financial covenants that measure (i) the ratio of our total funded indebtedness, on a consolidated basis, less the aggregate amount of all unencumbered cash and cash equivalents, to the amount of our consolidated EBITDA (“Leverage Ratio”) and (ii) the ratio of the amount of our consolidated EBITDA to our consolidated fixed charges (“Fixed Charge Coverage Ratio”). If an event of default occurs, the lenders under the Existing Credit Agreement would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor.