UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________

FORM 10-K
(MARK ONE)

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 20132016
or
[    ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ___________ to ____________

Commission File No. 0-11676
_____________________

BEL FUSE INC.

206 Van Vorst Street

Jersey City, NJ  07302

(201) 432-0463

(Address of principal executive offices and zip code)
(Registrant’sRegistrant's telephone number, including area code)

NEW JERSEY 22-1463699
(State of  incorporation) (I.R.S. Employer Identification No.)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class
 
Name of Each Exchange

on which Registered
Class A Common Stock ($0.10 par value) NASDAQ Global Select Market
Class B Common Stock ($0.10 par value) NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [   ]

No [X]
   
Indicate by checkmark if the registrant is not required to file reports to Section 13 or 15(d) of the Act.Yes [   ]No [X]
   
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes [X]No [   ]
   
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes [X]No [   ]
   
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405(§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] 



   
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer  [    ]Accelerated filer [X]
Non-accelerated filer [    ]

(Do not check if a smaller reporting company)
Smaller reporting company [    ]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes [   ]No [X]

The aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates (for this purpose, persons and entities other than executive officers and directors) of the registrant, as of the last business day of the registrant's most recently completed second fiscal quarter (June 30, 2013)2016) was $140.9 million.$189.8 million based on the closing sale price as reported on the NASDAQ Global Select Market.


Title of Each Class
 
Number of Shares of Common Stock
Outstanding as of March 1, 20142017
Class A Common Stock 2,174,912
Class B Common Stock 9,335,6779,851,652

Documents incorporated by reference:DOCUMENTS INCORPORATED BY REFERENCE:

Portions of Bel Fuse Inc.'s Definitive Proxy Statement for the 20142017 Annual Meeting of Stockholders isare incorporated by reference into Part III.III of this Annual Report on Form 10-K.






BEL FUSE INC.
    
INDEX
    
   Page
    
Forward LookingCautionary Notice Regarding Forward-Looking Information1
    
Part I   
    
 Item 1.
Business
12
    
 Item 1A.
Risk Factors
86
    
 Item 1B.
Unresolved Staff Comments
1214
    
 Item 2.
Properties
1315
    
 Item 3.
Legal Proceedings
1315
    
 Item 4.
Mine Safety Disclosures
1315
    
Part II   
    
 Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
 
  
Purchases of Equity Securities
1416
    
 Item 6.
Selected Financial Data
1518
    
 Item 7.
Management's Discussion and Analysis of Financial Condition and Results
 
  
of Operations
1720
    
 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
2932
    
 Item 8.
Financial Statements and Supplementary Data*Data
3032
    
 Item 9.
Changes in and Disagreements withWith Accountants on Accounting and
 
  
Financial Disclosure
3272
    
 Item 9A.
Controls and Procedures
3272
    
 Item 9B.
Other Information
3272
    
Part III  
    
 Item 10.
Directors, Executive Officers and Corporate Governance
3373
    
 Item 11.
Executive Compensation
3373
    
 Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
 
  
Stockholder Matters
3373
    
 Item 13.
Certain Relationships and Related Transactions, and Director Independence
3373
    
 Item 14.
Principal AccountantAccounting Fees and Services
3373
    
Part IV  
    
 Item 15.
Exhibits, Financial Statement Schedules
3474
    
Item 16.
SignaturesForm 10-K Summary
3675
    
* Page F-1 follows page 31Signatures  76



FORWARD LOOKINGCAUTIONARY NOTICE REGARDING FORWARD-LOOKING INFORMATION

The terms “Company”, “Bel”, “we”, “us”the "Company," "Bel," "we," "us," and “our”"our" as used in this Annual Report on Form 10-K ("Form 10-K") refer to Bel Fuse Inc. and its consolidated subsidiaries unless otherwise specified.

The Company’s quarterly and annualCompany's consolidated operating results are affected by a wide variety of factors that could materially and adversely affect revenues and profitability, including the risk factors described in Item 1A of this Annual Report on Form 10-K. As a result of these and other factors, the Company may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect its business, consolidated financial condition, operating results, and common stock prices.  Furthermore, this document and other documents filed by the Company with the Securities and Exchange Commission (the “SEC”("SEC") contain certain forward-looking statements under the Private Securities Litigation Reform Act of 1995 (“("Forward-Looking Statements”Statements") with respect to the business of the Company.  Forward-Looking Statements are necessarily subject to risks and uncertainties, many of which are outside our control, that could cause actual results to differ materially from these statements. Forward-Looking Statements can be identified by such words as "anticipates," "believes," "plans to," "assumes," "could," "should," "estimates," "expects," "intends," "potential," "seek," "predict," "may," "will" and similar expressions. These Forward-Looking Statements are subject to certain risks and uncertainties, including those mentioned above, and those detailed in Item 1A1A. of this Annual Report on Form 10-K, which could cause actual results to differ materially from these Forward-Looking Statements.  The Company undertakes no obligation to publicly release the results of any revisions to these Forward-Looking Statements which may be necessary to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.  An investment inAny Forward-Looking Statement made by the Company involves various risks, including those mentioned aboveis based only on information currently available to us and thosespeaks only as of the date on which are detailed from timeit is made.
1


PART I

Item 1.  Business

General

Bel Fuse Inc. designs, manufactures and markets a broad array of magnetics, modules, circuit protection devicesproducts that power, protect and interconnect products, as further described below.connect electronic circuits.  These products are designed to protect, regulate, connect, isolate or manage the flow of power and data among products primarily used in the networking, telecommunications, computing, military, aerospace, transportation and broadcasting industries.  Bel’sBel's portfolio of products also finds application in the automotive, medical and consumer electronics markets.

On March 9, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of GigaCom Interconnect AB (“GigaCom”).  On July 31, 2012, the Company consummated its acquisition of 100% of the issued and outstanding capital stock of Fibreco Ltd. (“Fibreco”).  On September 12, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Powerbox Italia S.r.L (“Powerbox”).  The acquisitions of GigaCom, Fibreco and Powerbox may hereafter be referred to collectively as either the “2012 Acquisitions” or the “2012 Acquired Companies”.  On March 29, 2013, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Transpower Technologies (HK) Limited (“Transpower”) and certain other tangible and intangible assets related to the Transpower magnetics business of TE Connectivity (“TE”).  The operations acquired are now doing business as TRP Connector (“TRP”).  On August 20, 2013, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Array Connector Corporation (“Array”). The acquisitions of TRP and Array may hereafter be referred to collectively as either the “2013 Acquisitions” or the “2013 Acquired Companies”.

Accordingly, as of the respective acquisition dates, all of the assets acquired and liabilities assumed were recorded at their preliminary fair values and the Company’s consolidated results of operations for the years ended December 31, 2013 and December 31, 2012 include the operating results of the acquired companies from their respective acquisition dates through the respective period end dates.  The accompanying consolidated balance sheet as of December 31, 2012 has been restated to reflect the acquisition-date fair values related to property, plant and equipment, intangible assets and various other balance sheet accounts of the 2012 Acquired Companies as further outlined in Note 2 to the consolidated financial statements contained in this Annual Report.  The consolidated statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2012 reflect immaterial measurement period adjustments related to the 2012 Acquisitions.

With over 6065 years in operation, Bel has reliably demonstrated the ability to succeed in a variety of product areas across multiple industries.a global platform.  The Company has a strong track record of technical innovation working with the engineering teams of market leaders.  Bel has consistently proven itself a valuable supplier to the foremost companies in its chosen industries by developing cost-effective solutions for the challenges of new product development.  By combining our strength in product design with our own specially-designed manufacturing facilities, Bel has established itself as a formidable competitor on a global basis.

The Company, which is organized under New Jersey law, operates in one industry with three reportable operating segments, which are geographic in nature. Bel’sNorth America, Asia and Europe (representing 51%, 34% and 15% of the Company's 2016 sales, respectively). Bel's principal executive offices are located at 206 Van Vorst Street, Jersey City, New Jersey 07302; (201) 432-0463. The Company operates other facilities in North America, Europe and Asia and trades on the NASDAQ Global Select Market (BELFA and BELFB).  For information regarding Bel's three geographic operating segments, see Note 12, "Segments", of the notes to consolidated financial statements.  Hereinafter, all references to "Note" will refer to the notes to consolidated financial statements included in Part II, Item 8. "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Acquisitions have played a critical role in the growth of Bel and the expansion of both our product portfolio and our customer base and continue to be a key element in our growth strategy. We may, from time to time, purchase equity positions in companies that are potential merger candidates.  We frequently evaluate possible merger candidates that would provide an expanded product and technology base that will allow us to expand the breadth of our product offerings to our strategic customers and/or provide an opportunity to reduce overall operating expense as a percentage of revenue.  We also consider whether the merger candidates are positioned to take advantage of our lower cost offshore manufacturing facilities, and whether a cultural fit will allow the acquired company to be integrated smoothly and efficiently.

2014 Acquisitions

On June 19, 2014, we completed the acquisition of the Power Solutions business of Power-One ("Power Solutions") from ABB Ltd. for $109.9 million, net of cash acquired.  Power Solutions is a leading provider of high-efficiency and high-density power conversion products for server, storage and networking equipment, industrial applications and power systems.  Power Solutions offers a premier line of standard, modified-standard and custom designed AC/DC, DC/DC and other specific power conversion products for a variety of technologies in data centers, telecommunications and industrial applications.  The acquisition of Power Solutions brought a complementary, industry-leading power product portfolio to Bel's existing line of power solutions and protection products, expanded our current customer base in the areas of server, storage and networking equipment and added industrial and additional transportation applications to the Company's product offering.

On July 25, 2014, we completed the acquisition of 100% of the issued and outstanding capital stock of the U.S. and U.K. Connectivity Solutions businesses from Emerson Electric Co. ("Emerson").  On August 29, 2014, we completed the acquisition of the Connectivity Solutions business in China from Emerson (collectively with the U.S. and U.K. portion of the transaction, "Connectivity Solutions").  The Company paid a total of $98.8 million for Connectivity Solutions, net of cash acquired and including a working capital adjustment.  Connectivity Solutions is a leading provider of high‑performance RF/Microwave and Harsh Environment Optical Connectors and Assemblies for military, aerospace, wireless communications, data communications, broadcast and industrial applications. The acquisition of Connectivity Solutions enabled the Company to further expand into the aerospace and military markets where long-term product reliability resulting from highly engineered solutions is critical. The acquisition enhanced our position in the expanded beam fiber optic market place and significantly expanded our copper‑based product offerings with the addition of RF/Microwave components and assemblies.

The acquisitions of Power Solutions and Connectivity Solutions may hereafter be referred to collectively as either the "2014 Acquisitions" or the "2014 Acquired Companies".

Products

Bel's three reportable operating segments, North America, Asia and Europe, sell, or participate in the sale of, the following products:

-1-2
Product Groups

The Company has set forth below a description of its product groups as of December 31, 2013.Magnetic Solutions

Bel's Magnetics
·  
MagJack® integrated connector modules
·  Power transformers
·  SMD power inductors
·  Discrete magnetics

offers industry leading products.  The Company’s MagJack®Company's ICM products integrate RJ45 and/or USB connectors with discrete magnetic components to provide a more robust part that allows customers to substantially reduce board space and inventory requirements.  MagJack® provides the signal conditioning, electromagnetic interference suppression and signal isolation for networking, telecommunications, and broadband applications. These connectors are designed for network speeds from 10/100Base-T to 10GBase-T and include options for Power over Ethernet (PoE) capability.  The Company’s recentCompany's 2013 acquisition of the TE wire wound magnetics business broadensbroadened the Company’s MagJackICM product line and providesprovided access to strategically important customer programs.

Power transformer productsTransformers include standard and custom designs produced by the Company’s Signal Transformer subsidiary. This product line is manufactured for use in industrial instrumentation, alarm and security systems, motion control, elevators, and medical products and many other applications. Signal Transformer’s products cover a broad power range from the large 3 phase 120KVA units to the miniature under 1VA PC board mount unit and are available in a variety of mounting configurations including chassis mount, PC board mount, surface mount and toroidal construction. These devicesproducts.  All Power Transformers are designed to comply with international safety standards governing transformers including UL, CSA, VDE, TUV, IEC and CE.

Bel’stransformers.  Bel's SMD power inductors product line offers designersPower Inductors include a selection of over 3,000 standard catalog parts.  With inductance range 0.01uH to 10mH and current up to 70A, this product isparts utilized in power supplies, DC-DC converters, LED lighting and many other electronic applications.

Discrete magnetic components include transformers and chokes for use in networking, telecommunications and broadband applications. TheseComponents are magnetic devices that condition, filter and isolate the signal as it travels through network equipment, helping to ensureensuring accurate data/voice/video transmission.

Modules
·  Product LineFunctionApplicationsBrands Sold Under
Magnetic SolutionsIntegrated Connector Modules (ICMs)Condition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission and provide RJ45 and USB connectivity.Network switches, routers, hubs, and PCs used in 10/100/1000 Gigabit Ethernet, Power over Ethernet (PoE), PoE Plus and home networking applications.
Bel, TRP Connector®, MagJack®
Power TransformersSafety isolation and distribution.Power conversion modulessupplies, alarm, fire detection, and security systems, HVAC, lighting and medical equipment. Class 2, three phase, chassis mount, and PC mount designs available.Signal
·  SMD Power Inductors & SMPS TransformersIntegrated modulesA passive component that stores energy in a magnetic field.  Widely used in analog electronic circuitry.Switchmode power supplies, DC-DC converters, LED lighting, automotive and consumer electronics.Signal
Discrete Components-TelecomCondition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission.Network switches, routers, hubs, and PCs used in 10/100/1000 Gigabit Ethernet and Power over Ethernet (PoE).Bel

Bel’s
Power Solutions & Protection

Bel's power conversion products include AC-DC power supplies, DC-DC converters and battery charging solutions. The DC-DC product offering consists of standard and custom isolated and non-isolated DC-DC converters designed specifically to power low voltage silicon devices or provide regulated mid-bus voltages. The need for converting one DC voltage to another is growing rapidly as developers of integrated circuits commonly adjust the supply voltage as a means of optimizing device performance. The DC-DC converters are used in data networking equipment, distributed power architecture, and telecommunication devices, as well as data storage systems, computers and peripherals. Opportunities for the DC-DC products also extend into industrial applications. The AC-DC product offering includes a range of products from sub 100W to 5kW and are used as front-end power supplies for broadcast equipment, data communication, data storage and data processing systems.  The AC-DC product also extends into industrial applications and LED lighting solutions.

With the acquisition of the Power Solutions business from ABB in 2014, Bel's power solutions product portfolio, R&D capabilities and customer base were significantly expanded.  Already a leader in DC/DC board mount products, since 2014 Bel has offered a sizeable portfolio of AC/DC products with industry leading efficiency and power density.  The Company continues to expand its lineacquisition of integrated modules designed to support data transmission over existing power lines including next generation HomePlug® AV2 PowerlinePower Solutions also added considerable presence in the railway market and broader industrial markets with MelcherTM branded products.  The Melcher brand is well known for reliability and performance in demanding applications. Typically deployed in home-based communication/entertainment devices such as Set Top Boxes (STBs), Broadband Modems and IPTV equipment, Bel’s modules incorporate the silicon required to enable powerline functionality, supporting a lower cost of ownership within a reduced footprint. Bel’s Powerline Modules are also being integrated in many industrial applications in support of Smart Grid deployments as well as transportation communications for military and locomotive vehicles.

The Company continues to pursue market opportunities where it can supply customized, value-added modules that capitalize on the Company’s manufacturing capabilities in surface mount assembly, automatic winding, hybrid fabrication, and component encapsulation.

-2-
Circuit Protection
·  Miniature fuses – cartridge and through hole designs
·  Surface Mount PTC resettable fuses and subminiature fuses
·  Radial PTC resettable fuses and micro through hole fuses

Bel circuit protection products include board level fuses (miniature, micro and surface mount), and Polymeric PTC (Positive Temperature Coefficient) devices, designed for the global electronic and telecommunication markets. Fuses and PTC devices prevent currents in an electrical circuit from exceeding certain predetermined levels, acting as a safety valve to protect expensive components from damage by cutting off high currents before they can generate enough heat to cause smoke or fire. Additionally, PTC devices are resettable and do not have to be replaced before normal operation of the end product can resume.

While the Company continues to manufacture traditional fuse types, it also produces surface mount chip fuses that are used in space-critical applications such as mobile phones and computers. Like all of Bel's fuse products, the chip fuses comply with RoHS6 standards for the elimination of lead and other hazardous materials.

The Company's circuit protection devices are used extensively in products such as televisions, consumer electronics, power supplies, computers, telephones, and networking equipment.

Interconnect

Stewart Interconnect Products:
·  Passive jacks
·  Modular plugs
·  Ethernet and custom cable assemblies

Bel has a comprehensive line of modular connectors including ARJ45, RJ45 and RJ11 passive jacks, plugs, and cable assemblies. Passive jacks serve primarily as the connectivity device in networking equipment such as routers, hubs, switches, wall outlets and patch panels. Modular plugs and cable assemblies are utilized within the structured cabling system, often referred to as premise wiring. The Company’s connector products are designed to meet all major performance standards for Category 5e, 6, 6a, and Category 7a compliant devices used within Gigabit Ethernet and 10Gigabit Ethernet networks.

Cinch Interconnect Products
·  I/O Interconnect – Circular Connectors, Micro D Connectors
·  Fiber Optic Connectors and Cable Assemblies – Harsh Environment Expanded Beam
·  Compression Board to Board, Device to Board Interconnect
·  Custom Modular Enclosures
·  Custom cable assemblies
On January 29, 2010, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Cinch Connectors, Inc. (“Cinch U.S.”), Cinch Connectors de Mexico, S.A. de C.V. (“Cinch Mexico”) and Cinch Connectors Ltd. (“Cinch Europe”) (collectively, “Cinch”) from Safran S.A.  Cinch is a supplier of reliable, high quality standard products for use in a variety of industries. Cinch also possesses various enabling technologies and expertise with which to provide custom solutions and products for strategic accounts within its focus markets. Those focus markets are the commercial aerospace, military communications, industrial/oil and gas and transportation markets for which Cinch offers and continues to develop leading-edge products, and the telecommunications market to which Cinch supplies various standard products as well as a number of new, higher speed devices consistent with the rapidly changing needs in this industry. The 2012 acquisitions of Fibreco and GigaCom contributed a broad range of expanded beam fiber optic products to Cinch’s existing focus markets and provided Cinch with access to new markets such as broadcast communications and undersea exploration.  The Company’s recent acquisition of Array further broadens this product portfolio and expands sales in the strategically important commercial aerospace market.


The following table describes, for each of Bel's product groups, the principal functions and applications associated with such product groups.

Product GroupLineFunctionApplications
MagneticsBrands Sold Under
Power Solutions & Protection
MagJack®
Front-End Power Supplies		Condition, filter,Provides the primary point of isolation between AC main line (input) and isolate the electronic signal to ensure accurate data/voice/video transmission and provide RJ45 and USB connectivity.Network switches, routers, hubs, and PCs used in 10/100/1000 Gigabit Ethernet, Power over Ethernet (PoE), PoE Plus and home networking applications.
Power TransformersSafety isolation and distribution.Power supplies, alarm, fire detection, and security systems, HVAC, lighting and medical equipment. Class 2, three phase, chassis mount, and PC mount designs available.
SMD Power InductorsA passive component that stores energy in a magnetic field.  Widely used in analog electronic circuitry.Switchmode power supplies, DC-DC converters, LED lighting, automotive and consumer electronics.
Discrete ComponentsCondition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission.Network switches, routers, hubs, and PCs used in 10/100/1000 Gigabit Ethernet and Power over Ethernet (PoE).
Modules
Power Conversion Modules
(DC-DC Converters)
Convertlow-voltage DC voltage level to another DC level as required to meet the power needs of low voltage silicon devices.Networking equipment, distributed power architecture, telecom devices, computers, and peripherals.
Power Supply Modules
(AC-DC Power Supplies)
Converts energy provided by power company to a formatoutput that is used by the electronic devices inside equipment.to power all electronics downstreamBroadcast equipment, data communication,Servers, telecommunication, network and data storage and data processing systems.equipmentBel Power Solutions, Power-One
Board-Mount Power ProductsIntegrated ModulesThese are designed to be mounted on a circuit board.  These converters take input voltage and provide localized on-board power to low-voltage electronics.Telecom (central office switches), networking and a broad range of industrial applications
Bel Power Solutions, Power-One, MelcherTM
Industrial Power ProductsConverts between AC main line inputs and a wide variety of DC output voltages.Rail, transportation, automation, test and measurement, medical, military and aerospace applications.
Bel Power Solutions, Power-One, MelcherTM
Module ProductsCondition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission within a highly integrated, reduced footprint.Broadband equipment, Home Networking, Set Top Boxes,home networking, set top boxes, and Telecom Equipmenttelecom equipment supporting ISDN, T1/E1 and DSL Technologies.technologies. Industrial applications include Smart Meters, Smart Grid Communicationcommunication platforms, Vehicle Communicationsvehicle communications and Traffic Management.traffic management.Bel
Circuit Protection
Miniature FusesProtects devices by preventing current in an electrical circuit from exceeding acceptable levels.Power supplies, electronic ballasts, and consumer electronics.
Surface Mount PTC Devices and Subminiature FusesProtects devices by preventing current in an electrical circuit from exceeding acceptable levels. PTC devices can be reset to resume functionality.Cellcell phone chargers, consumer electronics, power supplies, and set top boxes. Also automotive electronics and Ethernet PoE / PoE+ applications.battery protection.Bel


Connectivity Solutions

Bel offers a comprehensive line of high speed and harsh environment copper and optical fiber connectors and integrated assemblies, which provide connectivity for a wide range of applications across multiple industries including commercial aerospace, military communications, network infrastructure, structured building cabling and several industrial applications.   Bel's Stewart Connector business designs and deploys modular connector systems primarily used in high speed Telecom/Datacom applications.  In January 2010, Bel completed the acquisition of Cinch Connectors.   Cinch products are designed and manufactured for high reliablity/harsh enviroment applications.   Cinch also possesses various enabling technologies and expertise with which to provide custom solutions and products.  In 2012, the acquistions of Fiberco and GigaCom further enhanced the Cinch product offering with the addition of fiber optic connector and cable products optomized for harsh envirment applications.   In 2013, the acquisition of Array (a manufacturer of aerospace and military connector products) further broadened the copper based product portfolio and expanded sales within the aerospace market.  The acquisition of Connectivity Solutions in 2014 brought additional products and has strengthened our position with strategic OEM customers in the military, aerospace and networking segments.  Connectivity Solutions is a leading innovator and producer of RF coaxial connectors and cables, harsh environment optical active and passive devices, and microwave components.


 Radial PTCProduct LineFunctionApplicationsBrands Sold Under
Connectivity SolutionsExpanded Beam Fiber Optic Connectors, Cable Assemblies and Active Optical Devices (transceivers and media converters)Harsh-environment, high-reliability, flight-grade optical connectivity for high-speed communications.Military/aerospace, oil and gas well monitoring and exploration, broadcast, communications, RADAR
Stratos®, Fibreco®
Copper-based Connectors / Cable Assemblies-FQISHarsh-environment, high-reliability connectivity and fuel quantity monitoring (FQIS).Commercial aerospace, avionics, smart munitions, communications, navigations and various industrial equipment
Cinch®
RF Connectors, Cable Assemblies, Microwave Devices and Micro FusesLow Loss CableProtects devices by preventing current in an electrical circuit from exceeding acceptable levels. PTC devices can be resetConnectors and cable assemblies designed to resume functionality.provide connectivity within radio frequency (RF) applications.Cell phones, mobile computers, ICMilitary/aerospace, test and battery protection, power supplies,measurement, high-frequency and telecom line cards.wireless communications
Johnson, Trompeter, Midwest MicrowaveTM, Semflex®
Interconnect
Stewart Interconnect Products:
Passive JacksRJ45RJ Connectors and RJ11 connectivity for data/voice/video transmission.Network routers, hubs, switches, and patch panels deployed in Category 5e, 6, 6a, and 7a cable systems.
PlugsRJ45 and RJ11 connectivity for data/voice/video transmission.Network routers, hubs, switches, and patch panels deployed in Category 5e, 6, 6a, and 7a cable systems.
Cable AssembliesRJ45 and RJ11 connectivity for data/voice/video transmission.Structured Category 5e, 6, 6a,Largely Ethernet applications including network routers, hubs, switches, and 7a cable systems (premise wiring).
Cinch Interconnect Products:
patch panels.Compression Interface Connectors-CIN::APSEHigh density and speed board to board parallel interface ATE, RADAR, airborne countermeasures, satellites, avionics and high speed computer applications
Fiber Optic Connectors – EBOSA and FibrecoExpanded beam fiber optic connectors with Active Alignment technology.
Oil & Gas well monitoring and exploration, broadcast, communications, RADAR
I/O Connectors- Omega 26500, Dura-Con, Mil-DTL-5015, Mil-DTL-26482, D38999 and SHSHighly Reliable and  Rugged I/O Connectors
Commercial Aerospace, Avionics, smart munitions, communications, navigations and various industrial equipment
Enclosures- ModICE®
 Environmentally sealed (IP67 and IP69K)  enclosures
Electronic controllers for Truck, Agriculture, Construction and various Industrial equipment
Custom Cable Assemblies-FQISFuel Quantity Indicating SystemsCommercial AerospaceStewart Connector


-4-
4
Acquisitions

Acquisitions have played a critical role in the growth of BelSales and the expansion of both its product portfolio and its customer base and continue to be a key element in the Company’s growth strategy. The Company may, from time to time, purchase equity positions in companies that are potential merger candidates.  The Company frequently evaluates possible merger candidates that would provide an expanded product and technology base that will allow the Company to expand the breadth of its product offerings to its strategic customers and/or provide an opportunity to reduce overall operating expense as a percentage of revenue.  Bel also considers whether the merger candidates are positioned to take advantage of the Company's lower cost offshore manufacturing facilities, and whether a cultural fit will allow the acquired company to be integrated smoothly and efficiently.Marketing

On January 29, 2010, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Cinch from Safran S.A.  Bel paid $39.7 million in cash and assumed an additional $0.8 million of liabilities in exchange for the net assets acquired.  Cinch is headquartered in Lombard, Illinois and had manufacturing facilities in Vinita, Oklahoma; Reynosa, Mexico; and Worksop, England at the time of its acquisition.  Cinch’s manufacturing operations in Vinita, Oklahoma were transitioned to Reynosa and a new facility in McAllen, Texas by early 2013.

On March 9, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of GigaCom with a cash payment of $2.7 million (£1.7 million). GigaCom, located in Gothenburg, Sweden, is a supplier of expanded beam fiber optic technology and a participant in the development of next-generation commercial aircraft components. GigaCom has become part of Bel’s Cinch Connector business. Management believes that GigaCom’s offering of expanded beam fiber optic products will enhance the Company’s position within the growing aerospace and military markets.

On July 31, 2012, the Company consummated its acquisition of 100% of the issued and outstanding capital stock of Fibreco with a cash payment, net of $2.7 million of cash acquired, of $13.7 million (£8.7 million). Fibreco, located in the United Kingdom, is a supplier of a broad range of expanded beam fiber optic components for use in military communications, outside broadcast and offshore exploration applications.  Fibreco has become part of Bel’s interconnect product group under the Cinch Connectors business. Management believes that the addition of Fibreco’s fiber optic-based product line to Cinch’s broad range of copper-based products will increase Cinch’s presence in emerging fiber applications within the military, aerospace and industrial markets. In addition, management believes the acquisition provides access to a range of customers for the recently acquired GigaCom Interconnect EBOSA® product.

On September 12, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Powerbox (now known as Bel Power Europe) with a cash payment, net of $0.2 million of cash acquired, of $3.0 million.  The Company also granted 30,000 restricted shares of the Company’s Class B common stock in connection with this acquisition.  Compensation expense of $0.6 million, equal to the grant date fair value of these restricted shares, is being recorded ratably through September 2014.  Bel Power Europe, located near Milan, Italy, develops high-power AC-DC power conversion solutions targeted at the broadcasting market.  Management believes that the acquisition of Powerbox will allow Bel to expand its portfolio of power product offerings to include AC-DC products and will also establish a European design center located close to several of Bel’s existing customers.

On March 29, 2013, the Company acquired 100% of the outstanding shares of Transpower, certain intellectual property and other tangible assets related to TRP for $22.4 million in cash and additional consideration including the assumption of $0.1 million in liabilities and the grant of a license to TE related to three of the Company’s patents. During the second and third quarters of 2013, the Company paid additional consideration of $6.8 million and $0.1 million, respectively, to TE related to working capital adjustments. Transpower is the sole shareholder of Dongguan Transpower Electronic Products Co., Ltd. in the People's Republic of China.  The Company’s purchase of the TRP magnetics business consisted of the integrated connector module (“ICM”) family of products, including RJ45, 10/100 Gigabit, 10G, PoE/PoE+, MRJ21 and RJ.5, a line of modules for smart-grid applications, and discrete magnetics.

On August 20, 2013, the Company completed its acquisition of Array, a manufacturer of aerospace and mil-spec connector products based in Miami, Florida, for $10.0 million in cash.  The acquisition of Array expands the Company’s portfolio of connector products that can be offered to the combined customer base, and provides an opportunity toWe sell other products that Bel manufactures to Array’s customers.  Array has become part of Bel’s interconnect product group under the Cinch Connectors business.

All of the above-mentioned acquisitions were funded with cash on hand, with the exception of Array, which was funded with borrowings under the Company’s existing credit facility.

See Note 2 to the consolidated financial statements for further details on these acquisitions.

Sales and Marketing

The Company sells itsour products to customers throughout North America, Europe and Asia. Sales are made through one of three channels: direct strategic account managers, regional sales managers working with independent sales representative organizations or authorized distributors. Bel's strategic account managers are assigned to handle major accounts requiring global coordination.

Independent sales representatives and authorized distributors are overseen by the Company's sales management personnel located throughout the world. As of December 31, 2013, the Company2016, we had a sales and support staff of 88221 persons that supported a network of 98 sales representative organizations and non-exclusive distributors. The Company hasWe have written agreements with all of itsour sales representative organizations and most of itsour major distributors. These written agreements, terminable on short notice by either party, are standard in the industry.

Sales support functions have also been established and located in Bel’sour international facilities to provide timely, efficient support for customers. This supplemental level of service, in addition to first-line sales support, enables the Companyus to be more responsive to customers’customers' needs on a global level. The Company’sOur marketing capabilities include product management which drives new product development, application engineering for technical support and marketing communications.  Product marketing managers facilitate technical partnerships for engineering development of IC-compatible components and modules.

For information regarding customer concentrations, see “Management’s"Management's Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Other Matters – Revenue Recognition.”"

Research and Development (“("R&D”&D")

The Company’sOur engineering groups are strategically located around the world to facilitate communication with and access to customers’customers' engineering personnel. This collaborative approach enables partnerships with customers for technical development efforts. On occasion, Bel executeswe execute non-disclosure agreements with customers to help develop proprietary, next generation products destined for rapid deployment.

The CompanyWe also sponsorssponsor membership in technical organizations that allow Bel’sour engineers to participate in developing standards for emerging technologies. It is management’smanagement's opinion that this participation is critical in establishing credibility and a reputable level of expertise in the marketplace, as well as positioning the Company as an industry leader in new product development.

R&D costs are expensed as incurred and are included in cost of sales.sales on the consolidated statements of operations. Generally, R&D is performed internally for the benefit of the Company. R&D costs include salaries, building maintenance and utilities, rents, materials, administrationadministrative costs and miscellaneous other items. R&D expenses for the years ended December 31, 2013, 20122016, 2015 and 20112014 amounted to $14.1$26.7 million, $12.4$27.7 million and $12.0$21.5 million, respectively.

Competition


The Company operatesWe operate in a variety of markets, all of which are highly competitive. There are numerous independent companies and divisions of major companies that manufacture products that are competitive with one or more of Bel’sour products.

The Company'sOur ability to compete is dependent upon several factors including product performance, quality, reliability, depth of product line, customer service, technological innovation, design, delivery time and price. Overall financial stability and global presence also give Belus a favorable position in relation to many of itsour competitors.  Management intends to maintain a strong competitive posture in the Company's markets we serve by continued expansion of the Company’sour product lines and ongoing investment in research, development and manufacturing resources.



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Associates

As of December 31, 2013, the Company had 6,3702016, we employed 7,694 full-time associates, an increasea decrease of approximately 2,200277 full-time associates from December 31, 2012.2015. At December 31, 2013, the Company2016, we employed 1,3601,490 people at itsour North American facilities, 4,8405,385 people at itsour Asian facilities and 170819 people at itsour European facilities, excluding approximately 1,055 workers supplied by independent contractors. The Company'sOur manufacturing facility in New York is represented by a labor union and all factory workers in the PRC, Worksop, England and Reynosa, Mexico are represented by unions. While the majority of our manufacturing associates are members of workers unions, approximately 490 associates worldwide are covered by collective bargaining agreements expiring within one year.  The Company believesWe believe that itsour relations with itsour associates are satisfactory.satisfactory.

SuppliersRaw Materials and Sourcing

The Company hasWe have multiple suppliers for most of the raw materials that it purchases.we purchase.  Where possible, the Company haswe have contractual agreements with suppliers to assure a continuing supply of critical components.

With respect to those items which are purchased from single sources, the Company believeswe believe that comparable items would be available in the event that there was a termination of the Company'sour existing business relationships with any such supplier.  While such a termination could produce a disruption in production, the Company believeswe believe that the termination of business with any one of itsour suppliers would not have a material adverse effect on itsour long-term operations. Actual experience could differ materially from this belief as a result of a number of factors, including the time required to locate an alternative supplier, and the nature of the demand for the Company’sour products.  In the past, the Company haswe have experienced shortages in certain raw materials, such as capacitors, ferrites and integrated circuits (“IC’s”("IC's"), when these materials were in great demand.  Even though the Companywe may have more than one supplier for certain materials, it is possible that these materials may not be available to the Companyus in sufficient quantities or at the times desired by the Company.us.  In the event that the current economic conditions have a negative impact on the financial condition of our suppliers, this may impact the availability and cost of our raw materials.

Backlog

The CompanyWe typically manufacturesmanufacture products against firm orders and projected usage by customers. Cancellation and return arrangements are either negotiated by the Companyus on a transactional basis or contractually determined.  The Company's estimatedWe estimate the value of the backlog of orders as of February 28, 2014 was2017 to be approximately $87.7$137.6 million as compared with a backlog of $80.4$126.1 million as of February 29, 2013.2016.  Management expects that substantially all of the Company's backlog as of February 28, 20142017 will be shipped by December 31, 2014. Such expectation constitutes a Forward-Looking Statement.2017. Factors that could cause the Company to fail to ship all such orders by year-end include unanticipated supply difficulties, changes in customer demand and new customer designs.  Due to these factors, backlog may not be a reliable indicator of the timing of future sales.  See Item 1A of this Annual Report - "Risk Factors - Our backlog figures may not be reliable indicators."

Intellectual Property

The Company hasWe have acquired or been granted a number of patents in the U.S., Europe and Asia and hashave additional patent applications pending relating to itsour products. While the Company believeswe believe that the issued patents are defendable and that the pending patent applications relate to patentable inventions, there can be no assurance that a patent will be obtained from the applications or that itsour existing patents can be successfully defended.  It is management's opinion that the successful continuation and operation of the Company'sour business does not depend upon the ownership of patents or the granting of pending patent applications, but upon the innovative skills, technical competence and marketing and managerial abilities of itsour personnel.  TheOur U.S. design patents have a life of seventeen14 years and our U.S. utility patents have a life of 17 years from the date of issue or twenty20 years from filing of patent applications.  The Company'sOur existing patents expire on various dates from February 2015June 2017 to April 2032.June 2035.

The Company utilizesWe utilize registered trademarks in the U.S., Europe and Asia to identify various products that it manufactures.we manufacture.  The trademarks survive as long as they are in use and the registrations of these trademarks are renewed.

Available Information

The Company maintainsWe maintain a website at www.belfuse.com where it makeswe make available the proxy statements, press releases, registration statements and reports on Forms 3, 4, 8-K, 10-K and 10-Q that itwe and itsour insiders file with the SEC. These forms are made available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Press releases are also issued via electronic transmission to provide access to the Company’sour financial and product news, and the Company provideswe provide notification of and access to voice and internet broadcasts of itsour quarterly and annual results.  The Company’sOur website also includes investor presentations and corporate governance materials.



Item 1A.  Risk Factors

An investment in our common stock involves a high degree of risk.  Investors should carefully consider the
Item 1A.  Risk Factors
The risks described below together with all other information contained in this Annual Reportshould be carefully considered before making an investment decisionsdecision. These are the risk factors that we consider to be the most significant risk factors, but they are not the only risk factors that should be considered in making an investment decision. This Form 10-K also contains Forward-Looking Statements that involve risks and uncertainties. See the "Cautionary Notice Regarding Forward-Looking Information," above. Our business, consolidated financial condition and results of operations could be materially adversely affected by any of the risk factors described below, under "Cautionary Notice Regarding Forward-Looking Information" or with respect to specific Forward-Looking Statements presented herein. The trading price of our common stock.securities could decline due to any of these risks, and investors in our securities may lose all or part of their investment. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also materially adversely affect our business in the future.

We doconduct business in a highly competitive industry.

Our business is largely in a highly competitive worldwide industry, with relatively low barriers to competitive entry. We compete principally on the basis of product performance, quality, reliability, depth of product line, customer service, technological innovation, design, delivery time and price. The industry in which we operate has become increasingly concentrated and globalized in recent years and our major competitors, some of which are larger than Bel, have significant financial resources and technological capabilities.
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or refinance our debt obligations depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness. We may not be able to effect any such alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. Our credit agreement restricts our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due. We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.
In addition, we conduct a substantial portion of our operations through our subsidiaries, certain of which are not guarantors of our indebtedness. Accordingly, repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Unless they are guarantors of our indebtedness, our subsidiaries do not have any obligation to pay amounts due on indebtedness or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity, and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness.
Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our consolidated financial position and results of operations.
If we cannot make scheduled payments on our debt, we will be in default, the lenders under the credit agreement could terminate their commitments to loan money, the lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under our credit facility are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remained the same, and our net earnings and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. As of December 31, 2016, we had $143.8 million of borrowings under our credit facility at a variable interest rate. A 1% increase or decrease in the assumed interest rates on the senior secured credit facilities would result in a $1.4 million increase or decrease in annual interest expense.

Our high level of indebtedness could negatively impact our access to the capital markets and our ability to satisfy financial covenants under our existing credit agreement.

We incurred substantial amounts of indebtedness to fund the acquisitions of Power Solutions and Connectivity Solutions in 2014, and we may need to incur additional indebtedness to finance operations or for other general corporate purposes.  Our consolidated principal amount of outstanding indebtedness was $143.8 million at December 31, 2016, resulting in a leverage ratio of 2.53x adjusted EBITDA, as calculated in accordance with our credit agreement.  Accordingly, our debt service requirements are significant in relation to our net sales and cash flow.  This leverage exposes us to risk in the event of downturns in our business, in our industry or in the economy generally, and may impair our operating flexibility and our ability to compete effectively.  Our current credit agreement requires us to maintain a certain covenant leverage ratio, and the ratio becomes more restrictive at specific dates during the term.  If we do not continue to satisfy this required ratio or receive waivers from our lenders, we will be in default under the credit agreement, which could result in an accelerated maturity of our debt obligations.

Our backlog figures may not be reliable indicators.

Many of the orders that comprise our backlog may be delayed, accelerated or canceled by customers without penalty. Customers may on occasion double order from multiple sources to ensure timely delivery when leadtimeslead times are particularly long. Customers often cancel orders when business is weak and inventories are excessive.  Therefore, we cannot be certain that the amount of our backlog equals or exceeds the level of orders that will ultimately be delivered. Our results of operations could be adversely impacted if customers cancel a material portion of orders in our backlog.

There are several factors which can cause us to lower our prices or otherwise cause our margins to suffer.

Our prices and/or margins could be substantially impacted by the following factors:

a)  The average selling prices for our products tend to decrease rapidly over their life cycles, and customers are increasingly puttingput pressure on suppliers to lower prices even when production costs are increasing. Our profits suffer if we are not able to reduce our costs of production, induceintroduce technological innovations as sales prices decline, or pass through cost increases to customers.

b)  Any drop in demand for our products or increase in supply of ourcompetitive products could cause a dramatic drop in our average sales prices which in turn could result in a decrease in our gross margins.  A shift in product mix could also have aan unfavorable or favorable or unfavorable impact on our gross margins, depending upon the underlying raw material content and labor requirements of the associated products.

c)  Increased competition from low cost suppliers around the world has put further pressures on pricing.  We continually strive to lower our costs, negotiate better pricing for components and raw materials and improve our operating efficiencies.  Profit margins will be materially and adversely impacted if we are not able to reduce our costs of production or introduce technological innovations when sales prices decline.

Our annual effective income tax rate can change materially as a result of changes in our mix of U.S. and foreign earnings and other factors, including changes in tax laws and changes made by regulatory authorities.
Our overall effective income tax rate is equal to our total tax expense as a percentage of total earnings before tax. However, income tax expense and benefits are not recognized on a global basis but rather on a jurisdictional or legal entity basis. Losses in one jurisdiction may not be used to offset profits in other jurisdictions and may cause an increase in our tax rate. Changes in statutory tax rates and laws, as well as ongoing audits by domestic and international authorities, could affect the amount of income taxes and other taxes paid by us. For example, legislative proposals to change U.S. taxation of non-U.S. earnings could increase our effective tax rate. Also, changes in the mix of earnings (or losses) between jurisdictions and assumptions used in the calculation of income taxes, among other factors, could have a significant effect on our overall effective income tax rate. In addition, our effective tax rate would increase if we were unable to generate sufficient future taxable income in certain jurisdictions, or if we were otherwise required to increase our valuation allowances against our deferred tax assets.
We are subject to taxation in multiple jurisdictions. As a result, any adverse development in the tax laws of any of these jurisdictions or any disagreement with our tax positions could have a material adverse effect on our business, consolidated financial condition or results of operations.
We are subject to taxation in, and to the tax laws and regulations of, multiple jurisdictions as a result of the international scope of our operations and our corporate and financing structure. We are also subject to transfer pricing laws with respect to our intercompany transactions, including those relating to the flow of funds among our companies. Adverse developments in these laws or regulations, or any change in position regarding the application, administration or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, consolidated financial condition or results of our operations. In addition, the tax authorities in any applicable jurisdiction, including the United States, may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions. If any applicable tax authorities, including U.S. tax authorities, were to successfully challenge the tax treatment or characterization of any of our transactions, it could have a material adverse effect on our business, consolidated financial condition or consolidated results of our operations.
In the PRC, we are challenged to match availability of workers and maintain leadtimeslead times in line with customer demand for certain of our products, which demand has been highly volatile in recent years.  This volatility can materially adversely affect Bel’sBel's results.

In the PRC, the availability of labor is cyclical and is significantly affected by the migration of workers in relation to the annual Lunar New Year holiday as well as economic conditions in the PRC.  In addition, we have little visibility into the ordering habits of our customers and can be subjected to large and unpredictable variations in demand for our products.  Accordingly, we must continually recruit and train new workers to replace those lost to attrition each year and to address peaks in demand that may occur from time to time.  These recruiting and training efforts and related inefficiencies, as well as overtime required in order to meet demand, can add volatility to the costs incurred by the Company for labor in the PRC. In 2011, we experienced a softening in customer demand for certain of our products, which resulted in underutilized capacity and lower gross margins, as our fixed costs had a lower absorption rate.  After the 2012 Lunar New Year holiday, there was an increase in customer demand which resulted in the hiring and training of new workers and related inefficiencies.  While Bel was not significantly impacted by this volatility in 2013, it remains as a potential risk for future periods.

We are dependent on our ability to develop new products.

Our future operating results are dependent, in part, on our ability to develop, produce and market new and more technologically advanced products. There are numerous risks inherent in this process, including the risks that we will be unable to anticipate the direction of technological change or that we will be unable to timely develop and bring to market new products and applications to meet customers’customers' changing needs.



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Our insurance policies may not cover all operating risks and a casualty loss beyond the limits of our coverage could adversely impact our business.

Our business is subject to operating hazards and risks relating to handling, storing, transporting and use of the products we sell. We maintain insurance policies in amounts and with coverage and deductibles that we believe are reasonable and prudent. Nevertheless, our insurance coverage may not be adequate to protect us from all liabilities and expenses that may arise from claims for personal injury or death or property damage arising in the ordinary course of business, and our current levels of insurance may not be maintained or available in the future at economical prices. If a significant liability claim is brought against us that is not adequately covered by insurance, we may have to pay the claim with our own funds, which could have a material adverse effect on our business, consolidated financial condition or results of operations.

Our acquisitions may not produce the anticipated results.

A significant portion of our growth is fromhas been attributable to acquisitions. We cannot assure you that we will identify or successfully complete transactions with suitable acquisition candidates in the future. If an acquired business fails to operate as anticipated or cannot be successfully integrated with our other businesses, our results of operations, enterprise value, market value and prospects could all be materially and adversely affected.  Integration of new acquisitions into our consolidated operations may result in lower average operating results for the group as a whole, and may divert management’smanagement's focus from the ongoing operations of the Company during the integration period.

Our strategy also focuses on the reduction of selling, general and administrative expenses through the integration or elimination of redundant sales facilities and administrative functions at acquired companies. The Company completed three acquisitions in 2012 and an additional two acquisitions in 2013,2014, as previously described in the Acquisitions sectionItem 1 of this Form 10-K.  If we are unable to achieve our expectations with respect to these or future acquisitions, such inability could have a material and adverse effect on our results of operations.  In connection with the 20122014 Acquisitions, we have recorded $9.1$105.4 million of goodwill and $11.7$73.2 million of other intangible assets.  In addition,During the first half of 2016, due to a decline in general market conditions, which lowered the Company's forecasted revenues and EBITDA growth rates for each of its reporting units, we have preliminarily recorded $4.6recognized impairment charges of $101.7 million ofrelated to goodwill and $7.6$4.3 million of otherrelated to  indefinite-lived intangible assets in connection withassets.  If the 2013 Acquisitions.  If our acquisitions fail to perform up to our expectations, or if the value of goodwill or other intangible assets decreases as a result of weakenedfurther weakening of economic conditions, we could be required to record additional impairment charges.

We may not achieve all of the expected benefits from our restructuring programs.

We have implemented a lossnumber of restructuring programs in recent years and we may continue to restructure or rationalize our operations in future periods. These programs include various cost savings, the consolidation of certain facilities and the reduction of headcount. We make certain assumptions in estimating the anticipated savings we expect to achieve under such programs, which include the estimated savings from the impairmentelimination of certain headcount and the consolidation of facilities. These assumptions may turn out to be incorrect due to a variety of factors. In addition, our ability to realize the expected benefits from these assets.

programs is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. If we wereare unsuccessful in implementing these programs or if we do not achieve our expected results, our results of operations and cash flows could be adversely affected or our business operations could be disrupted.
The global nature of our operations exposes us to undertake a substantial acquisition for cash, the acquisition would either be funded with cash on hand or financednumerous risks that could materially adversely affect our consolidated financial condition and results of operations.
We operate in part through bank borrowings or the issuance of public or private debt or equity. The acquisition15 countries, and our products are distributed in those countries as well as in other parts of the 2012 Acquired Companies was funded with cash on hand and sharesworld. A large portion of our manufacturing operations are located outside of the Company’s Class B common stock.  The acquisitionUnited States and a large portion of our sales are generated outside of the 2013 Acquired Companies was funded with cash on hand and borrowings underUnited States. Operations outside of the Company’s existing credit facility.  IfUnited States, particularly operations in developing regions, are subject to various risks that may not be present or as significant for our U.S. operations. Economic uncertainty in some of the geographic regions in which we borrow money to finance future acquisitions, this would likely decrease our ratio of earnings to fixed charges and adversely affect other leverage criteria andoperate, including developing regions, could result in the impositiondisruption of material commerce and negatively impact cash flows from our operations in those areas.
Risks inherent in our international operations include:
foreign currency exchange controls and tax rates;
foreign currency exchange rate fluctuations, including devaluations;
the potential for changes in regional and local economic conditions, including local inflationary pressures;
restrictive covenants.  Under our existing credit facility, we are required to obtain our lender’s consent for certain additional debt financinggovernmental actions such as those on transfer or repatriation of funds and to comply with other covenants,trade protection matters, including antidumping duties, tariffs, embargoes and prohibitions or restrictions on acquisitions or joint ventures;
changes in laws and regulations, including the applicationlaws and policies of specific financial ratios, and we may be restricted from paying cash dividends on our capital stock. We cannot assure you that the necessary acquisition financing would be available to us on acceptable terms, or at all, when required. If we issue a substantial amount of stock either as consideration for or to finance an acquisition, such issuance may dilute existing stockholders’ ownership and may take the form of capital stock having preferences over our existing common stock.

We are exposed to weaknesses in domestic and international markets and other risks inherent in foreign trade.

We have operations in nine countries around the world outside the United States affecting trade and approximately 73%foreign investment;
the difficulty of enforcing agreements and collecting receivables through certain foreign legal systems;
variations in protection of intellectual property and other legal rights;
more expansive legal rights of foreign unions or works councils;
changes in labor conditions and difficulties in staffing and managing international operations;
•Inability or regulatory limitations on our ability to move goods across borders;
•social plans that prohibit or increase the cost of certain restructuring actions;
the potential for nationalization of enterprises or facilities; and
unsettled political conditions and possible terrorist attacks against U.S. or other interests.

In addition, there are potential tax inefficiencies and tax costs in repatriating funds from our non-U.S. subsidiaries.

On June 23, 2016, the United Kingdom (UK) held a referendum in which voters approved an exit from the European Union (the "EU"), commonly referred to as "Brexit".  As a result of the referendum, it is expected that the British government will begin negotiating the terms of the UK's future relationship with the EU.  Although it is unknown what those terms will be, it is possible that there will be greater restrictions on imports and exports between the UK and EU countries and increased regulatory complexities and that such restrictions could materially adversely impact our Company.

In addition, the U.S. federal government has made explicit statements about its intention to make changes to U.S. trade policy, including signing an executive order to withdraw from the negotiating process of the Trans-Pacific Partnership, renegotiate the terms of NAFTA, and imposing border taxes on imports into the U.S. We manufacture a significant amount of our revenues during 2013 (up from 64%products in 2012) were derived from sales to customers outsideMexico and any legislation enacted that impacts the United States. Somerelationship between the U.S. and Mexico and/or the continuity of the countries in which we operate have in the past experienced and may continue to experience political, economic, and military instability or unrest, medical epidemic and natural disasters.  These conditions could have a material and adverse impact on our ability to operate in these regions and, depending on the extent and severity of these conditions,NAFTA could materially and adversely affect our overallconsolidated financial conditionposition or results of operations. If enacted, any legislation by the U.S. federal government that restricts trade, such as tariffs, trade barriers, and operating results.other protectionist or retaliatory measures taken by governments in Europe, Asia, and other countries, could adversely impact our ability to sell products and services in our foreign markets, and could also impact some of our customers and their demand for our products.

AlthoughFurthermore, a large portion of our operations have traditionally been largely transactedsales outside of the U.S. are denominated in U.S. dollars or U.S. dollar-linked currencies, recent world financial instability may cause additional foreign currency risksdollars. As a result, an increase in the countries in which we operate.  The decouplingvalue of the Chinese Renminbi from the U.S. dollar has increased, and will continue to increase, financial risk, particularly with the acquisition of TRP.  The Company also has exposurerelative to foreign currency risks associated with the British Pound and Mexican Peso as the Company has manufacturing operationscurrencies could make our products less competitive and/or less affordable in Great Britain and Mexico.  The 2012 Acquisitions increased our exposure in Great Britain, the Eurozone and Sweden.foreign markets.

Other risks inherent in doing business internationally include: expropriationThese and nationalization, trade restrictions, transportation delays,other factors may have a material adverse effect on our international operations and, changes in United States laws that may inhibitconsequently, on our consolidated financial position or restrict our ability to manufacture in or sell to any particular country.  For information regarding risks associated with our presence in Asia, see “Item 2 – Properties”results of this Annual Report on Form 10-K.operations.

While we have benefited from favorable tax treatment in many of the countries where we operate, this situation could change if laws or rules in the United States or those foreign jurisdictions change, incentives are changed or revoked, or we are unable to renew current incentives.

The loss of certain substantial customers could materially and adversely affect us.

During the year ended December 31, 2013,2016, sales to two customers eachone direct customer exceeded 10% of our consolidated revenue. One such customer  (Honnet sales. Hon Hai Precision Industry Company Ltd.), a contract manufacturer utilized by various end customers, represented 19.2%12.0% of our revenue and the other (Flextronics International Ltd.) represented 10.4% of our revenue.2016 consolidated net sales. We believe that the loss of either of these customers wouldthis customer could have a material adverse effect on the Company’s results of operations,our consolidated financial position and cash flows.consolidated results of operations.  We have experienced significant concentrations in prior years. See Note 12, of the notes to the Company’s consolidated financial statements"Segments" for additional disclosures related to our significant customers.

The percentage of our revenues derived from our magnetics business increased to nearly 50% during the year ended December 31, 2013; with a concentration of sales in this product line, our profitability could be disproportionately impacted by negative events that impact our magnetics business.

Over the past three years, revenues from our magnetics business have increased from 30% in 2011 to 35% in 2012 and to 49% in 2013, reflecting the growth of our ICM business, primary related to the acquisition of TRP in March 2013.  An increase in concentration in any one of our product lines, including our magnetics product line, exposes us disproportionately to events impacting that product line, and thus could materially adversely impact our results of operations, financial condition and liquidity.

We may experience labor unrest.unrest.

As we implement transfers of certain of our operations, we may experience strikes or other types of labor unrest as a result of lay-offs or termination of employees in higher labor cost countries.  Our manufacturing facilities in New York State, the United Kingdom and Mexico are represented by labor unions and substantially all of our factory workers in the PRC are represented by government-sponsored unions.

We may experience labor shortages.shortages.

Government, economic, social and labor policies in the PRC may cause shortages of factory labor in areas where we have some of our products manufactured.  If we are required to manufacture more of these products outside of the PRC as a result of such shortages, our margins will likely be materially adversely affected.


There are risks related to the implementation of our new global enterprise resource planning system.

We are currently engaged in a multi-year process of conforming the majority of our operations onto one global enterprise resource planning system ("ERP").  The ERP is designed to improve the efficiency of our supply chain and financial transaction processes, accurately maintain our books and records, and provide information important to the operation of the business to our management team. The implementation of the ERP will continue to require significant investment of human and financial resources, and we may experience significant delays, increased costs and other difficulties as a result. Any significant disruption or deficiency in the design and implementation of the ERP could have a material adverse effect on our ability to fulfill and invoice customer orders, apply cash receipts, place purchase orders with suppliers, and make cash disbursements, and could negatively impact data processing and electronic communications among business locations, which may have a material adverse effect on our business, consolidated financial condition or results of operations. We also face the challenge of supporting our older systems and implementing necessary upgrades to those systems while we implement the new ERP system. While we have invested significant resources in planning and project management, significant implementation issues may arise.

Our results of operations may be materially and adversely impacted by environmental and other regulations.

Our manufacturing operations, products and/or product packaging are subject to environmental laws and regulations governing air emissions; wastewater discharges; the handling, disposal and remediation of hazardous substances, wastes and certain chemicals used or generated in our manufacturing processes; employee health and safety labeling or other notifications with respect to the content or other aspects of our processes, products or packaging; restrictions on the use of certain materials in or on design aspects of our products or product packaging; and, responsibility for disposal of products or product packaging. More stringent environmental regulations may be enacted in the future, and we cannot presently determine the modifications, if any, in our operations that any such future regulations might require, or the cost of compliance with these regulations.

We may face risks relating to climate change that could have an adverse impact on our business.

Greenhouse gas (“GHG”("GHG") emissions have increasingly become the subject of substantial international, national, regional, state and local attention.  GHG emission regulations have been promulgated in certain of the jurisdictions in which we operate, and additional GHG requirements are in various stages of development.  Such measures could require us to modify existing or obtain new permits, implement additional pollution control technology, curtail operations or increase our operating costs.  Any additional regulation of GHG emissions, including a cap-and-trade system, technology mandate, emissions tax, reporting requirement or other program, could materially adversely affect our business.

New regulationsRegulations related to conflict minerals will cause the Company to incur additional expenses and may have other adverse consequences.

The SEC has adopted inquiry, diligence and additional disclosure requirements related to certain minerals sourced from the Democratic Republic of the Congo and surrounding countries, or “conflict minerals”"conflict minerals", that are necessary to the functionality of a product manufactured, or contracted to be manufactured, by an SEC reporting company. The minerals that the rules cover are commonly referred to as “3TG”"3TG" and include tin, tantalum, tungsten and gold. These rules became effective in 2013, and they imposeAs a requirement for public companiescompany, Bel was required to make disclosures byits first filing under these new rules on May 2014 relating to 2013 activities. Implementation of31, 2014.  In such filing, Bel described the new disclosure requirements could affect the sourcing and availability of some of the minerals that the Company uses in the manufacturedue diligence it had undertaken of its products. The Company’ssuppliers in an effort to determine the source of any conflict minerals used in its products or components.  These due diligence requirements are ongoing, and Bel will continue to incur additional costs, which could be substantial, related to its due diligence and compliance process.  In addition, the Company's supply chain is complex, and if it is not able to determine with certainty the source and chain of custody for all conflict minerals used in its products that are sourced from the Democratic Republic of the Congo and surrounding countries or determine that its products are “conflict free”"conflict free", then the Company may face reputational challenges with customers, investors or others.  Additionally, asAs there may be only a limited number of suppliers offering “conflict free”"conflict free" minerals, if the Company chooses to use only conflict minerals that are “conflict free”,"conflict free" in its products and components, the Company cannot be sure that it will be able to obtain necessary materials from such suppliers in sufficient quantities or at competitive prices.     Accordingly, the Company could incur significant costs related to the compliance process, including potential difficulty or added costs in satisfying the disclosure requirements.     



-10-

Our results may vary substantially from period to period.

Our revenues and expenses may vary significantly from one accounting period to another accounting period due to a variety of factors, including customers’customers' buying decisions, our product mix, the volatility of raw material costs, the impact of competition, the impact of the Chinese New Year and general market and economic conditions.  Such variations could significantly impact our stock price.

A shortage of availability or an increase in the cost of high-quality raw materials, components and other resources may adversely impact our ability to procure these items at cost effective prices and thus may negatively impact profit margins.

Our results of operations may be materially adversely impacted by difficulties in obtaining raw materials, supplies, power, labor, natural resources and any other items needed for the production of our products, as well as by the effects of quality deviations in raw materials and the effects of significant fluctuations in the prices of existing inventories and purchase commitments for these materials.  Many of these materials and components are produced by a limited number of suppliers and their availability to us may be constrained by supplier capacity.

As product life cycles shorten and during periods of market slowdowns, the risk of materials obsolescence increases and this may materially and adversely impact our financial results.

Rapid shifts in demand for various products may cause some of our inventory of raw materials, components or finished goods to become obsolete.

The life cycles and demand for our products are directly linked to the life cycles and demand for the end products into which they are designed.  Rapid shifts in the life cycles or demand for these end products due to technological shifts, economic conditions or other market trends may result in material amounts of inventory of either raw materials or finished goods inventory becoming obsolete.   While the Company works diligently to manage inventory levels, rapid shifts in demand may result in obsolete or excess inventory and materially adversely impact financial results.

A loss of the services of the Company’sCompany's executive officers or other skilled associates could negatively impact our operations and results.

The success of the Company’sCompany's operations is largely dependent upon the performance of its executive officers, managers, engineers and sales people.  Many of these individuals have a significant number of years of experience within the Company and/or the industry in which we compete and would be extremely difficult to replace.  The loss of the services of any of these associates may materially and adversely impact our results of operations if we are unable to replace them in a timely manner.

Our stock price, like that of many technology companies, has been and may continue to be volatile.

The market price of our common stock may fluctuate as a result of variations in our quarterly operating results and other factors beyond our control.  These fluctuations may be exaggerated if the trading volume of our common stock is low.  The market price of our common stock may rise and fall in response to a variety of other factors, including:

·announcements of technological or competitive developments;
·general market or economic conditions;
·market or economic conditions specific to particular geographical areas in which we operate;
·acquisitions or strategic alliances by us or our competitors;
·the gain or loss of a significant customer or order; or
·changes in estimates of our financial performance or changes in recommendations by securities analysts regarding us or our industry

In addition, equity securities of many technology companies have experienced significant price and volume fluctuations even in periods when the capital markets generally are not distressed.  These price and volume fluctuations often have been unrelated to the operating performance of the affected companies.

Our intellectual property rights may not be adequately protected under the current state of the law.

We cannot assure you we will be successful in protectingOur efforts to protect our intellectual property rights through patent, orcopyright, trademark and trade secret laws in the United States and in other laws.  As a result, other companiescountries may be ablenot prevent misappropriation, and our failure to develop and market similar products whichprotect our proprietary rights could materially and adversely affect our business.business, financial condition, operating results and future prospects. A third party could, without authorization, copy or otherwise appropriate our proprietary information. Our agreements with employees and others who participate in development activities could be breached, we may not have adequate remedies for any breach, and our trade secrets may otherwise become known or independently developed by competitors.



We may be sued by third parties for alleged infringement of their proprietary rights and we may incur defense costs and possibly royalty obligations or lose the right to use technology important to our business.

From time to time, we receive claims by third parties asserting that our products violate their intellectual property rights.  Any intellectual property claims, with or without merit, could be time consuming and expensive to litigate or settle and could divert management attention from administering our business.  A third party asserting infringement claims against us or our customers with respect to our current or future products may materially and adversely affect us by, for example, causing us to enter into costly royalty arrangements or forcing us to incur settlement or litigation costs.   In connection with patent infringement lawsuits discussed in Item 3. Legal Proceedings, the Company incurred expenses of $3.5 million related

12

As a result of protective provisions in the Company’sCompany's certificate of incorporation, the voting power of certain officers, directors and principal shareholders may be increased at future meetings of the Company’sCompany's shareholders.

The Company's certificate of incorporation provides that if a shareholder, other than shareholders subject to specific exceptions, acquires (after the date of the Company’sCompany's 1998 recapitalization) 10% or more of the outstanding Class A common stock and does not own an equal or greater percentage of all then outstanding shares of both Class A and Class B common stock (all of which common stock must have been acquired after the date of the 1998 recapitalization), such shareholder must, within 90 days of the trigger date, purchase Class B common shares, in an amount and at a price determined in accordance with a formula described in the Company’sCompany's certificate of incorporation, or forfeit its right to vote its Class A common shares. As of February 28, 2014,2017, to the Company’sCompany's knowledge, there were two shareholderswas one shareholder of the Company’sCompany's common stock with ownership in excess of 10% of Class A outstanding shares with no ownership of the Company’sCompany's Class B common stock and with no basis for exception from the operation of the above-mentioned provisions. In order to vote their respectiveits shares at Bel’sBel's next shareholders’shareholders' meeting, these shareholdersthis shareholder must either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until theirits Class A holdings are under 10%. As of February 28, 2014,2017, to the Company’sCompany's knowledge, these shareholdersthis shareholder owned 33.6% and 12.5%, respectively,23.2% of the Company’sCompany's Class A common stock and had not taken steps to either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until theirits Class A holdings fall below 10%.  Unless and until this situation is satisfied in a manner permitted by the Company’sCompany's Restated Certificate of Incorporation, the subject shareholdersshareholder will not be permitted to vote theirits shares of common stock.

To the extent that the voting rights of particular holders of Class A common stock are suspended as of times when the Company's shareholders vote due to the above-mentioned provisions, such suspension will have the effect of increasing the voting power of those holders of Class A common shares whose voting rights are not suspended.  As of February 28, 2014,2017, Daniel Bernstein, the Company's chief executive officer, beneficially owned 353,204 Class A common shares (or 30.1%21.1%) of the outstanding Class A common shares whose voting rights were not suspended, Howard Bernstein beneficially owned 140,000 Class A common shares (or 8.4%) of the outstanding Class A common shares whose voting rights were not suspended, the Estate of Elliot Bernstein beneficially owned 82,357 Class A common shares (or 7.0%4.9%) of the outstanding Class A common shares whose voting rights were not suspended and all directors and executive officers as a group (which includes Daniel Bernstein, but does not include Howard Bernstein or the Estate of Elliot Bernstein) beneficially owned 501,095359,187 Class A common shares (or 42.6%21.4%) of the outstanding Class A common shares whose voting rights were not suspended.

We are dependentCyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties with which we do business, could have a material adverse effect on information technologyour business, consolidated financial condition and our systems and infrastructure face certain risks, including cyber security risks and data leakage risks.results of operations.

We are dependent onsubject to an increasing number of various types of information technology systemsvulnerabilities, threats and infrastructure. Any significant breakdown, invasion, destruction or interruption of these systems by employees, others with authorized access to our systems, or unauthorized persons could negatively affect operations. There is alsotargeted computer crimes which pose a risk that we could experience a business interruption, theft of information or reputational damage as a result of a cyber attack, such as an infiltration of a data center, or data leakage of confidential information either internally or at our third-party providers. While we have invested in the protection of our data and information technology to reduce these risks and periodically test the security of our systems and networks and the confidentiality, availability and integrity of our data. Disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber-attacks or security breaches of our networks or systems, could result in the loss of customers and business opportunities, legal liability, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensatory costs, and additional compliance costs, any of which could materially adversely affect our business, financial condition and results of operations. While we attempt to mitigate these risks, our systems, networks, products, solutions and services remain potentially vulnerable to advanced and persistent threats. We also maintain and have access to sensitive, confidential or personal data or information systems network, there can be no assurancein certain of our businesses that is subject to privacy and security laws, regulations and customer controls. Despite our efforts will prevent breakdownsto protect such sensitive, confidential or personal data or information, our facilities and systems and those of our customers and third-party service providers may be vulnerable to security breaches, intheft, misplaced or lost data, programming and/or human errors that could lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, thatsoftware solutions or networks, unauthorized access, use, disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions, which in turn could adversely affect our consolidated financial condition and results of operationsoperations.

As a U.S. Government contractor, we are subject to a number of procurement rules and liquidity.regulations.

We must comply with and are affected by laws and regulations relating to the award, administration, and performance of U.S. Government contracts. Government contract laws and regulations affect how we do business with our customers and, in some instances, impose added costs on our business. A violation of specific laws and regulations could result in the imposition of fines and penalties or the termination of our contracts or debarment from bidding on contracts. These fines and penalties could be imposed for failing to follow procurement integrity and bidding rules, employing improper billing practices or otherwise failing to follow cost accounting standards, receiving or paying kickbacks, or filing false claims. We have been, and expect to continue to be, subjected to audits and investigations by government agencies. The failure to comply with the terms of our government contracts could harm our business reputation. It could also result in our progress payments being withheld.

In some instances, these laws and regulations impose terms or rights that are more favorable to the government than those typically available to commercial parties in negotiated transactions. For example, the U.S. Government may terminate any of our government contracts and, in general, subcontracts, at its convenience as well as for default based on performance. Upon termination for convenience of a fixed-price type contract, we normally are entitled to receive the purchase price for delivered items, reimbursement for allowable costs for work-in-process, and an allowance for profit on work actually completed on the contract or adjustment for loss if completion of performance would have resulted in a loss. Upon termination for convenience of a Federal Government cost reimbursement contract, we normally are entitled to reimbursement of allowable costs plus a portion of the fee. Such allowable costs would normally include our cost to terminate agreements with our suppliers and subcontractors. The amount of the fee recovered, if any, is related to the portion of the work accomplished prior to termination and is determined by negotiation.


Item 1B.Unresolved Staff Comments

Not applicable.None.



Item 2.   Properties

The Company is headquartered in Jersey City, New Jersey, where it currently owns 19,000 square feet of office and warehouse space. In addition to its facilities in Jersey City, New Jersey, the Company leases 97,000166,000 square feet in 1315 facilities and owns properties of 45,000155,000 square feet which are used primarily for management, financial accounting, engineering, sales and administrative support. 

The Company also operated 1521 manufacturing facilities in 67 countries as of December 31, 2013.2016.  Approximately 19%19% of the 2.02.6 million square feet the Company occupies is owned while the remainder is leased.    See Note 16, of the notes to consolidated financial statements "Commitments and Contingencies", for additional information pertaining to leases.

The following is a list of the locations of the Company's principal manufacturing facilities at December 31, 2013:

Location 
Approximate
Square Feet
 
Owned/
Leased
 
Percentage
Used for
Manufacturing
       
Dongguan, People's Republic of China               646,000 Leased 33%
Zhongshan, People's Republic of China               376,000 Leased 72%
Zhongshan, People's Republic of China               118,000 Owned 100%
Zhongshan, People's Republic of China                 78,000 Owned 100%
Pingguo, People's Republic of China               226,000 Leased 77%
Louny, Czech Republic                 11,000 Owned 75%
Dominican Republic                 41,000 Leased 85%
Cananea, Mexico                 42,000 Leased 60%
Reynosa, Mexico                 77,000 Leased 56%
Worksop, England (a)
                 52,000 Leased 28%
Great Dunmow, England                   9,000 Leased 52%
Inwood, New York                 39,000 Owned 40%
Glen Rock, Pennsylvania                 74,000 Owned 60%
McAllen, Texas                 39,000 Leased 56%
Miami, Florida                 29,000 Leased 85%
       
             1,857,000    
       
(a) Approximately 58% of the Worksop facility is designated for manufacturing use, of which 30% is currently idle
2016:


Location 
Approximate
Square Feet
 
Owned/
Leased
 
Percentage
Used for
Manufacturing
 
        
Dongguan, People's Republic of China  650,000 Leased  28%
Pingguo, People's Republic of China  258,000 Leased  69%
Shanghai, People's Republic of China*  32,000 Leased  70%
Shenzhen, People's Republic of China  227,000 Leased  100%
Zhongshan, People's Republic of China  315,000 Leased  86%
Zhongshan, People's Republic of China  118,000 Owned  100%
Zhongshan, People's Republic of China  78,000 Owned  100%
Louny, Czech Republic  11,000 Owned  75%
Dubnica nad Vahom, Slovakia  35,000 Owned  100%
Dubnica nad Vahom, Slovakia  70,000 Leased  100%
Worksop, England  52,000 Leased  28%
Chelmsford, United Kingdom  21,000 Leased  60%
Dominican Republic  41,000 Leased  85%
Cananea, Mexico  42,000 Leased  60%
Reynosa, Mexico  77,000 Leased  56%
Inwood, New York  39,000 Owned  40%
Glen Rock, Pennsylvania  74,000 Owned  60%
Waseca, Minnesota  124,000 Leased  83%
McAllen, Texas  40,000 Leased  56%
Melbourne, Florida  18,000 Leased  64%
Mesa, Arizona  7,000 Leased  100%
          
   2,329,000      

* Subsequent to December 31, 2016, the Company transitioned its Shanghai manufacturing operations to its other facilities in Dongguan, PRC and Waseca, Minnesota noted above, and expects to exit the lease arrangement on the Shanghai facility in 2017.

Of the space described above, 260,000333,000 square feet is used for engineering, warehousing, sales and administrative support functions at various locations and 509,000470,000 square feet is designated for dormitories, canteen and other employee related facilities in the PRC.

The Territory of Hong Kong became a Special Administrative Region (“SAR”("SAR") of the PRC during 1997.  The territory of Macao became a SAR of the PRC at the end of 1999. Management cannot presently predict what future impact, if any, this will have on the Company or how the political climate in the PRC will affect its contractual arrangements in the PRC.  A significant portion of the Company's manufacturing operations and approximately 40% of its identifiable assets are located in Asia.

Item 3.   Legal Proceedings

The information called for by this Item is incorporated herein by reference to the caption “Legal Proceedings”"Legal Proceedings" in Note 16, “Commitments"Commitments and Contingencies” included in Part II, Item 8. “Financial Statements and Supplementary Data.”Contingencies."

Item 4.   Mine Safety Disclosures

Not applicable.





PART II

Item 5.Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

(a) Market Information

The Company’sCompany's voting Class A Common Stock, par value $0.10 per share, and  non-voting Class B Common Stock, par value $0.10 per share (“("Class A”A" and “Class"Class B,”" respectively),  are traded on the NASDAQ Global Select Market under the symbols BELFA and BELFB.  The following table sets forth the high and low sales price range (as reported by The Nasdaq Stock Market Inc.) for the Common Stock on NASDAQ for each quarter during the past two years.

 Class A  Class A  Class B  Class B  Class A  Class B 
 High  Low  High  Low  High  Low  High  Low 
Year Ended December 31, 2013            
Year Ended December 31, 2016            
First Quarter $18.35  $13.80  $20.25  $15.42  $15.87  $9.69  $19.15  $13.33 
Second Quarter  14.49   12.69   16.35   13.38   17.16   12.80   19.35   13.31 
Third Quarter  18.26   13.52   18.42   13.59   20.47   15.00   24.43   16.98 
Fourth Quarter  21.89   17.05   23.03   17.03   26.97   18.27   33.60   23.00 
                                
Year Ended December 31, 2012                
Year Ended December 31, 2015                
First Quarter $22.14  $18.24  $21.00  $16.30  $24.66  $18.17  $27.53  $18.79 
Second Quarter  19.54   16.01   18.83   15.12   23.38   17.33   23.23   17.35 
Third Quarter  19.87   16.78   20.25   16.56   20.95   14.19   23.77   16.46 
Fourth Quarter  18.08   13.70   19.65   14.20   21.80   14.29   23.73   16.16 
                                

(b) Holders

As of February 28, 2014,2017, there were 6251 registered shareholders of the Company’sCompany's Class A Common Stock and 196231 registered shareholders of the Company’sCompany's Class B Common Stock.  As of February 28, 2014,2017, the Company estimates that there were 657632 beneficial shareholders of the Company’sCompany's Class A Common Stock and 2,1012,220 beneficial shareholders of  the Company’sCompany's Class B Common Stock. At February 28, 2014,2017, to the Company’sCompany's knowledge, there were two shareholderswas one shareholder of the Company’sCompany's Class A common stock whose voting rights were suspended.  These two shareholdersThis shareholder owned an aggregate of 46.1%23.2% of the Company’sCompany's outstanding shares of Class A common stock.  SeeFor additional discussion, see Item 1A – Risk"Risk Factors for additional discussion.– As a result of protective provisions in the Company's certificate of incorporation, the voting power of certain officers, directors and principal shareholders may be increased at future meetings of the Company's shareholders".

(c) Dividends

During the years ended December 31, 2013, 20122016, 2015 and 2011,2014, the Company declared dividends on a quarterly basis at a rate of $0.06 per Class A share of common stock and $0.07 per Class B share of common stock totaling $3.1 million, $3.2 million and $3.2 million, respectively.during each year.  There are no contractual restrictions on the Company’sCompany's ability to pay dividends provided the Company is not in default under its credit agreements immediately before such payment and after giving effect to such payment.   On January 30, 2014,February 1, 2017, the Company paid a dividend to all shareholders of record at January 15, 201413, 2017 of Class A and Class B Common Stock in the total amount of $0.1 million ($0.06 per share) and $0.6$0.7 million ($0.07 per share), respectively.  On February 16, 2017, Bel's Board of Directors declared a dividend in the amount of $0.06 per Class A common share and $0.07 per Class B common share which is scheduled to be paid on May 1, 2017 to all shareholders of record at April 14, 2017.   The Company currently anticipates paying dividends quarterly in the future.


(d)Issuer Purchases of Equity SecuritiesCommon Stock Performance Comparisons

In July 2012, Bel’s Board of Directors approved a share buyback program whereby
The following graph shows, for the Company was authorized to repurchase up to $10 million of the Company’s Class B common stock.  In connection with the program, the Company repurchased and retired a total of 368,723 shares of the Company’s Class B common stock at a total cost of $6.6 million during the yearfive years ended December 31, 2012.  During2016, the cumulative total return on an investment of $100 assumed to have been made on December 31, 2011 in our common stock. The graph compares this return ("Bel") with that of comparable investments assumed to have been made on the same date in: (a) the NASDAQ Stock Market (U.S. Companies) and (b) a group of companies within our industry.

Total return for each assumed investment assumes the reinvestment of all dividends on December 31 of the year ended in which the dividends were paid.

Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 31, 2013, the Company repurchased and retired a total of 178,643 shares of the Company’s Class B common stock at a total cost of $3.4 million.  This completed the $10 million buyback program.2016




















-14-
17


Item 6.Selected Financial Data
The following tables set forth selected consolidated financial data as of the dates and for the periods presented.  The selected consolidated balance sheet data as of December 31, 20132016 and 20122015 and the selected consolidated statement of operations data for the years ended December 31, 2013, 20122016, 2015 and 20112014 have been derived from our audited consolidated financial statements and related notes that we have included elsewhere in this Annual Report.Form 10-K. The selected financial data below includes the results of acquired companies from their respective acquisition dates.  The selected consolidated balance sheet data as of December 31, 2011, 20102014, 2013 and 20092012 and the selected consolidated statement of operations data for the years ended December 31, 20102013 and 20092012 have been derived from audited consolidated financial statements that are not presented in this Annual Report.Form 10-K.  The selected consolidated balance sheet data for years presented prior to 2016 have been revised to reflect the retrospective application of accounting pronouncements that the Company adopted effective January 1, 2016.  See Note 1 for further information.  The selected consolidated balance sheet data as of December 31, 20122014 and 2013 and the selected consolidated statement of operations data for the yearyears ended December 31, 2014, 2013 and 2012 have been restatedrevised to reflect immaterial measurement period adjustments related to the 2012, Acquisitions.
The selected historical consolidated financial data as of any date2013 and for any period are not necessarily indicative of the results that may be achieved as of any future date or for any future period. You should read the following selected historical consolidated financial data in conjunction with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes that we have presented elsewhere in this Annual Report.2014 Acquisitions.

For information regarding the Company’sCompany's acquisitions, see Item 1. “Business – Acquisitions.”

  Years Ended December 31, 
  2013  2012  2011  2010  2009 
  (In thousands of dollars, except per share data) 
Selected Statements of Operations Data:               
                
Net sales $349,189  $286,594  $295,121  $302,539  $182,753 
Cost of sales (d)  286,952   240,115   244,749   239,185   161,454 
Selling, general and administrative expenses (e)  45,831   39,362   39,284   40,443   30,055 
Impairment of assets (a)  -   -   -   -   12,875 
Litigation charges (f)  41   26   3,471   8,103   - 
Restructuring charges (b)  1,387   5,245   314   -   413 
(Gain) loss on sale of property, plant and equipment (g)  (69)  183   (93)  (352)  (4,693)
(Loss/impairment charge) gain on investments (c)  98   (917)  119   -   7,129 
Interest expense  (156)  (16)  -   -   - 
Interest income and other, net  176   267   357   420   527 
Earnings (loss) before provision (benefit)                    
  for income taxes  15,165   997   7,872   15,580   (9,695)
Income tax (benefit) provision  (743)  (1,376)  4,108   1,931   (1,385)
Net earnings (loss)  15,908   2,373   3,764   13,649   (8,310)
                     
Earnings (loss) per share:                    
Class A common share - basic and diluted  1.32   0.17   0.28   1.10   (0.71)
Class B common share - basic and diluted  1.41   0.21   0.33   1.18   (0.72)
                     
Cash dividends declared per share:                    
Class A common share  0.24   0.24   0.24   0.24   0.24 
Class B common share  0.28   0.28   0.28   0.28   0.28 
                     
  As of December 31, 
   2013   2012   2011   2010   2009 
  (In thousands of dollars, except percentages) 
Selected Balance Sheet Data and Ratios:                    
                     
Working capital $137,304  $144,530  $165,264  $157,296  $167,833 
Total assets  308,050   275,189   276,911   277,172   245,946 
Stockholders' equity  228,702   215,362   221,080   220,333   208,932 
Return on average total assets (h)  5.38%  0.85%  1.35%  5.22%  (3.32%)
Return on average stockholders' equity (h)  7.33%  1.07%  1.69%  6.37%  (3.88%)



Note 2, "Acquisitions and Disposition."
 
   Years Ended December 31, 
  2016  2015  2014  2013  2012 
   (In thousands of dollars, except per share data) 
Selected Consolidated Statements of Operations Data: (a)               
                
Net sales $500,153  $567,080  $487,076  $349,189  $286,594 
Cost of sales  400,245   458,253   399,721   286,952   240,115 
Selling, general and administrative expenses  71,005   77,952   72,061   45,872   39,388 
Impairment of goodwill and other intangible assets (b)  105,972   -   -   -   - 
(Gain) loss on sale of property, plant and equipment (c)  (2,644)  161   (10)   (69)  183 
Stock-based compensation  2,817   2,815   2,717   1,879   1,767 
Restructuring charges (d)  2,087   2,114   1,832   1,387   5,245 
(Loss) earnings before income taxes  (82,552)  25,732   9,770   15,165   997 
Net (loss) earnings $(64,834) $19,197  $8,603  $15,908  $2,373 
                     
Reconciliation of net earnings to EBITDA (e):                    
Net (loss) earnings $(64,834) $19,197  $8,603  $15,908  $2,373 
Depreciation and amortization (f)  21,778   23,008   20,367   12,382   9,113 
Interest expense  6,662   7,588   3,978   156   16 
Income tax (benefit) provision  (17,718)  6,535   1,167   (743)  (1,376)
EBITDA (e) $(54,112) $56,328  $34,115  $27,703  $10,126 
                     
Net (loss) earnings per share:                    
Class A common share - basic and diluted $(5.25) $1.53  $0.69  $1.32  $0.17 
Class B common share - basic and diluted $(5.48) $1.64  $0.75  $1.41  $0.21 
                     
Cash dividends declared per share:                    
Class A common share $0.24  $0.24  $0.24  $0.24  $0.24 
Class B common share $0.28  $0.28  $0.28  $0.28  $0.28 
                     
   As of December 31, 
   2016   2015   2014   2013   2012 
   (In thousands of dollars, except percentages) 
Selected Consolidated Balance Sheet Data and Ratios:                    
                     
Cash and cash equivalents $73,411  $85,040  $77,138  $62,123  $71,262 
Working capital (g)  163,115   158,619   183,459   134,179   141,535 
Goodwill  17,951   121,634   118,369   18,490   13,559 
Total assets (g)  426,740   578,505   630,372   308,141   275,189 
Total debt (g)  141,245   183,548   227,576   -   - 
Stockholders' equity  158,434   233,122   224,273   228,702   215,362 
Return on average total assets (g)(h)  -13.9%  3.0%  1.8%  5.4%  0.9%
Return on average stockholders' equity (h)  -38.6%  8.2%  3.8%  7.3%  1.1%
-15-
18


(a)During the third quarterSee Item 7, "Management's Discussion and Analysis of 2009, the Company conducted an interim valuation test related to the Company’s goodwill by operating segment based on continued market declines.  AsFinancial Condition and Results of Operations," for a resultdiscussion of the reduction in fair value offactors that contributed to our consolidated operating results and our consolidated cash flows for the Asia operating segment, the Company recorded charges of $12.9 million related to the impairment of goodwill of its Asia operating segment during 2009.three years ended December 31, 2016.

(b)During 2013 and 2012,2016, the Company recorded $1.4 millionan impairment charge related to its goodwill and $5.2 million, respectively, in connection with various restructuring initiatives asother intangible assets of $106.0 million.  See Note 4, "Goodwill and Other Intangible Assets," for further described in Note 3 to the accompanying consolidated financial statements.  During 2011, the Company recorded $0.3 million of restructuring costs associated with the realignment of its Cinch UK operations.  In 2009, the Company incurred $0.4 million of restructuring costs related primarily to the Westborough, Massachusetts facility lease obligation, as the Company ceased its manufacturing operations at that facility in 2008.information.

(c)During 2012,In connection with the sale of certain of its properties in Hong Kong and San Diego, the Company recorded an impairment charge of $0.8 million related to its investment in Pulse Electronics common stock, as well as a $0.1 million realized loss on the ultimate sale of the Pulse shares.  During 2011, the Company realized a gain on the sale of a portion of its investment in Pulse shares.  During 2009, the Company realized a net gain of $7.1$2.6 million related to the sale of its investments in Toko, Inc. and Power-One, Inc., and the final redemptions of its investment in the Columbia Strategic Cash Portfolio.during 2016.

(d)See Note 3, "Restructuring Activities," for further information on restructuring charges incurred during the three years ended December 31, 2016.  During 2009,2012, Bel initiated the closure of its Cinch North American manufacturing facility in Vinita, Oklahoma, and transition of the operations to Reynosa, Mexico and a new facility in McAllen, Texas.  The Company incurred a $2.0recorded $5.2 million licensing feerelated to this restructuring during 2012, comprised primarily of $3.2 million in connection with the settlementseverance costs, $1.4 million related to asset disposals and $0.6 million of a lawsuit.other expenses.

(e)During 2013,
EBITDA is a non‑U.S. GAAP measure that is not a measure of performance under accounting principles generally accepted in the Company incurred $0.9 millionUnited States of America ("U.S. GAAP").  EBITDA has limitations as an analytical tool and should not be considered in costs associatedisolation from or as a substitute for U.S. GAAP information. It does not purport to represent any similarly titled U.S. GAAP information and is not an indicator of our performance under U.S. GAAP. EBITDA may not be comparable with similarly titled measures used by others. Investors are cautioned against placing undue reliance on this non-GAAP measure. Our management may assess our financial results both on a U.S. GAAP basis and on a non-U.S. GAAP basis. Non-U.S. GAAP financial measures provide management with additional means to understand and evaluate the 2013 acquisitions of TRPcore operating results and Array and othertrends in our ongoing acquisition-related activities, in addition to valuation work related to the recent acquisitions.  During 2012, the Company incurred $1.3 million in costs associated with the 2012 acquisitions of GigaCom, Fibreco and Powerbox, and preliminary costs associated with the acquisition of TRP.  During 2009, the Company incurred $0.6 million in acquisition costs related to the acquisitions of Bel Pingguo and Cinch Connectors.  During 2010, the Company incurred an additional $0.3 million of acquisition costs related to Cinch.business.

(f)During 2011,Depreciation and amortization is included in both cost of sales and selling, general and administrative expenses on the Company recorded litigation charges totaling $3.5 million related to the SynQor and Halo lawsuits.  During 2010, the Company recorded a litigation charge in the amountconsolidated statements of $8.1 million in connection with the SynQor lawsuit. Both of these lawsuits are further described in Note 16 to the accompanying consolidated financial statements.operations.

(g)During 2012,The Company adopted accounting standards effective January 1, 2016 related to deferred tax assets and liabilities, and deferred financing costs.  Both standards were applied retrospectively and impacted the Company incurred a $0.3 million loss on disposalpresentation of property, plant and equipment due to storm damage inflicted on its Jersey City, New Jersey and Inwood, New York facilities, partially offset by a $0.2 million gainthese items on the salebalance sheet.  For the December 31, 2014 information presented, working capital, total assets and total debt have been revised to reflect the reclassification of deferred tax assets and liabilities from current to noncurrent, as well as the reclassification of deferred financing costs from other assets to being presented as a buildingreduction of long-term debt.  For the December 31, 2013 and 2012 information presented, working capital was adjusted to reflect the change in Macao.  During 2010, the Company recognized net gains of $0.4 million primarilyaccounting principle related to the salereclassification of a property in Hong Kong.  During 2009, the Company realized a $4.6 million gaindeferred tax assets and liabilities from the sale of property in Jersey City, New Jersey.current to noncurrent.

(h)Returns on average total assets and stockholders’stockholders' equity are computed for each year by dividing net earnings (loss) for such year by the average balances of total assets or stockholders’stockholders' equity, as applicable, on the last day of each quarter during such year and on the last day of the immediately preceding year.



-16-19


Item 7.       Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysisinformation in this MD&A should be read in conjunction with the Company’sCompany's consolidated financial statements and the notes related thereto.  The discussion of results, causes and trends should not be construed to imply any conclusion that such results, causes or trends will necessarily continue in the future. See "Cautionary Notice Regarding Forward-Looking Information" above for further information.  Also, when we cross reference to a "Note," we are referring to our "Notes to Consolidated Financial Statements," unless the context indicates otherwise.  All amounts and percentages are approximate due to rounding.

Overview

Our Company

The Company designs, manufacturesWe design, manufacture and marketsmarket a broad array of magnetics, modules, circuit protection devicesproducts that power, protect and interconnect products.  Bel’sconnect electronic circuits.  These products are primarily used in the networking, telecommunications, computing, military, aerospace, transportation and broadcasting industries.  Bel’sBel's portfolio of products also finds application in the automotive, medical and consumer electronics markets.

Bel’s business is operatedWe operate through three geographic segments:  North America, Asia and Europe.  During 2013, 56%In 2016, 51% of the Company’sCompany's revenues were derived from Asia, 33% from North America, 34% from Asia and 11%15% from its Europe operating segment.  SalesBy product group, 34% of the Company’s magnetics products represented approximately 49% of our total net2016 sales during 2013.  The remaining revenues related to sales of the Company’s interconnect products (32%), module products (16%)Company's power solutions and circuit protection products, (3%).34% in connectivity solutions products and 32% in magnetic products.

The Company’sOur operating expenses are driven principally by the cost of labor where the factories that Bel uses are located, the cost of the materials that it useswe use and itsour ability to effectively and efficiently manage overhead costs.  As labor and material costs vary by product line and region, any significant shift in product mix can have an associated impact on the Company’sour costs of sales.  Costs are recorded as incurred for all products manufactured.  Such amounts are determined based upon the estimated stage of production and include labor cost and fringes and related allocations of factory overhead. The Company’sOur products are manufactured at various facilities in:in the PRC; Glen Rock, Pennsylvania; Inwood, New York; McAllen, Texas; Miami, Florida; Haina,U.S., Mexico, Dominican Republic; ReynosaRepublic, England, Czech Republic, Slovakia and Cananea, Mexico; Louny, Czech Republic; and Worksop and Great Dunmow, England.the PRC.

In the PRC, where the Company we generally entersenter into processing arrangements with several independent third-party contractors and also has itshave our own manufacturing facilities, the availability of labor is cyclical and is significantly affected by the migration of workers in relation to the annual Lunar New Year holiday as well as economic conditions in the PRC.  In addition, the Company haswe have little visibility into the ordering habits of itsour customers and we can be subjected to large and unpredictable variations in demand for itsour products.  Accordingly, the Companywe must continually recruit and train new workers to replace those lost to attrition each year and be able to address peaks in demand that may occur from time to time.  These recruiting and training efforts and related inefficiencies, and overtime required in order to meet demand, can add volatility to the costs incurred by the Companyus for labor in the PRC.

TrendsThe consolidated results included in this MD&A include the results of acquired companies discussed above from their respective acquisition dates.

Key Factors Affecting our Business

The Company believes the key factors affecting Bel’s 2013Bel's 2016 and/or future results include the following:

·
Recent AcquisitionsRevenues ––The Company's revenues declined by $66.9 million (or 11.8%) in 2016 as compared to 2015.  The Company has completed five acquisitions sinceyear-over-year declines in sales were primarily due to missed design cycles within the first quarter of 2012.Power Solutions business and general market softness.  During the years ended December 31, 2013 and 2012, the acquired companies have contributed a combined $79.4 million and $3.2 millionlatter part of 2016, sales respectively, and a combined $10.9 million in income from operations and a $0.1 million loss from operations, respectively.were also impacted by weak sales to distributors, as their inventory levels continued to be high.

·
Revenues – Excluding the revenue contributions from recent acquisitions as described above, the Company’s revenues for the year ended December 31, 2013 decreased by $13.5 million as compared to 2012.  Sales of custom modules decreased by $19.8 million from 2012, primarily due to a steady reduction in orders from one customer in North America since early 2012.  The order volume related to this customer has been relatively flat since the second quarter of 2013.  There were also revenue reductions of $3.3 million resulting from manufacturing inefficiencies associated with the restructuring of Cinch operations.  These reductions in sales were partially offset by increased sales of Bel’s DC-DC products of $7.0 million and magnetic products of $3.1 million. In addition, during the latter part of 2013, Bel implemented price increases for certain products as our pricing structure did not reflect the rising labor costs in the PRC as discussed below.

·  
Product Mix – Material and labor costs vary by product line and any significant shift in product mix between higher- and lower-margin product lines will have a corresponding impact on the Company’sCompany's gross margin percentage.  DuringIn general, our connectivity products have the year ended December 31, 2013,highest contribution margins, our magnetic products are more labor intensive and are therefore less profitable than the Company experienced a favorable shiftconnectivity products and our power products are on the lower end of our profit margin range, due to their high material content.  Fluctuations in the mix of products sold as compared to 2012, which partially mitigated the effects of reduced sales and operational inefficiencies atvolume among our Texas facility.

·  
Pricing and Availability of Materials – Pricing and availability of components that constitute raw materials in our manufacturing processes have been stable for most of the Company’s product lines, although lead times on electrical components are still extended.  We are anticipating some price decreases on these component through the first half of 2014. With regard to commodity pricing, the cost of certain commodities that are contained in components and other raw materials, such as gold and copper, were lower during the year ended December 31, 2013 as compared to 2012. Any fluctuations in component prices and other commodity prices associated with Bel’s raw materialsgroups will have a corresponding impact on Bel’sBel's profit margins.

·
Impairment Charges – Due to continued market weakness, the Company reviewed its goodwill and other intangible assets for impairment in the first and second quarters of 2016.  In connection with this analysis, we recorded a total non-cash impairment charge of $106.0 million related to our goodwill and indefinite-lived trademarks during the first half of 2016.  During the fourth quarter of 2016, we completed our annual goodwill and intangible impairment testing and determined that no impairment existed at that time.

·
Restructuring – The Company substantially completedcontinues to implement restructuring programs to increase operational efficiencies. The Company incurred $2.1 million of restructuring charges during 2016.  In October 2016, the physical transition of the operations ofCompany announced its Cinchdecision to close its manufacturing facility in Vinita, OklahomaShanghai, PRC and transition the operations to other existing Bel facilities.  During the fourth quarter of 2016, the Company recorded pre-tax restructuring charges of $1.4 million associated with the Shanghai closure, consisting primarily of termination benefits.  Annual savings of approximately $2 million are expected from this initiative once fully implemented ($1.0 million within cost of sales and $1.0 million within selling, general and administrative expenses).

·
Impact of Foreign Currency – Since we are a U.S. domiciled company, we translate our foreign currency-denominated financial results into U.S. dollars.  Due to the changes in the value of foreign currencies relative to the U.S. dollar, translating our financial results and the revaluation of certain intercompany as well as third-party transactions to and from foreign currencies to U.S. dollars may result in a favorable or unfavorable impact to our consolidated statements of operations and cash flows.  The Company monitors changes in foreign currencies and may implement pricing actions to help mitigate the impact that changes in foreign currencies may have on its Reynosa, Mexico facility and a new facility in McAllen, Texasconsolidated operating results. The Company believes that its results of operations for the year ended December 31, 2016 were not materially impacted by the end of 2012.  The Company continued its efforts into 2013referendum passed by Great Britain in June 2016 to bringexit the new facility in McAllen, Texas up to full operating capacity.  The Company faced certain challenges withEuropean Union, or the transition, resulting in $3.2 million of unanticipated costs during 2013, primarily during the first halfstrengthening of the year.  These costs included additional overtime, scrap, a higher volumeU.S. dollar to the Great Britain pound to the U.S. dollar.  See Selling, General and Administrative Expense and Item 3. Quantitative and Qualitative Disclosures About Market Risk for further details.  However, long-term effects from the referendum could be materially adverse to the Company.  See "The global nature of purchased materials, expedited freight chargesour operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and other costs.  During the second quarterresults of 2013, the Company initiated restructuring actionsoperations" in additional Bel and Cinch locations which resulted in $1.3 millionItem 1A of severance and other charges in the second quarter.  The Company does not anticipate any significant costs related to restructuring programs during 2014.this Annual Report on 10-K.

·
Labor Costs – Labor costs as a percentage of sales during the year ended December 31, 2013 were slightly lower as compared to 2012. Following the 2012 Lunar New Year holiday, additional recruiting, training and overtime charges were incurred in the PRC; this trend did not recur in 2013.  We are continuing to relocate work within the PRC to a lower-cost manufacturing facility that we operate in Pingguo.  However, rising labor costs in the PRC and the strengthening of the Chinese Renminbi continued to impact our overall profit margins in 2013.  With the addition of TRP, approximately half of Bel’s total sales are now generated from labor-intensive magnetic products, which are primarily manufactured in the PRC.  In February 2013, the PRC government increased the minimum wage by 19% in regions where the factories that Bel uses are located.  This increase was effective May 1, 2013.

·  
Acquisition-Related CostsEffective Tax Rate – The acquisitions of TRP and Array in 2013, the valuations of the 2012 Acquired Companies, and other ongoing activities related to potential acquisitions gave rise to acquisition-related costs of $0.9 million during the year ended December 31, 2013.  Bel’s continuing strategy to actively consider potential acquisitions could result in additional legal and other professional costs in future periods.

·  
Effective Tax Rate – The Company’sCompany's effective tax rate will fluctuate based on the geographic segment in which theour pretax profits are earned.  Of the geographic segments in which the Company operates,we operate, the U.S. has the highest tax rates; Europe’sEurope's tax rates are generally lower than U.S. tax rates; and Asia has the lowest tax rates of the Company’sCompany's three geographical segments. The change in the effective tax rate during the year ended December 31, 2013 is primarily attributable to a significant increase in the pretax income earned in the Asia segment, with minimal tax effect, coupled with pretax losses in North America.  This was partially offset by significantly lower net reversal of liabilities for uncertain tax positions during 2013 compared to 2012.

WithWhile we continued to see general market weakness in our industry throughout the completionfourth quarter of five acquisitions over2016, our pipeline for new opportunities has started to show signs of increasing in recent months.  We anticipate future growth to be driven by product demand related to datacenter and e-Mobility initiatives in our Power Solutions business, and within the past two years, Bel was ablecommercial aerospace segment for our connectivity solutions products.  We have realigned our North American sales organization and restructured our European sales organization to expand its product portfolio, while further securing its position as a market leadercreate more narrow areas of focus for ICMs.  These efforts, coupled with the recent cost containment measures, have positioned Bel for further growtheach team and profitability in 2014. Statements regarding future results constituteto achieve better accountability.  The preceding discussions represent Forward-Looking Statements and could be materially adversely affected by the risk factors identified by the Company in Item 1A of this Annual Report.Statements.  See "Cautionary Notice Regarding Forward-Looking Statements."

Summary by Operating Segment

Net sales to external customers by reportable operating segment for the years ended December 31, 2013, 20122016, 2015 and 20112014 were as follows (dollars in thousands):

 2013  2012  2011  2016  2015  2014 
North America $116,548 33% $126,469 44% $134,804 46% $256,760   51% $304,328   54% $217,258   45%
Asia  193,647 56%  128,319 45%  126,941 43%  168,458   34%  188,146   33%  201,338   41%
Europe  38,994 11%  31,806 11%  33,376 11%  74,935   15%  74,606   13%  68,480   14%
 $349,189 100% $286,594 100% $295,121 100% $500,153   100% $567,080   100% $487,076   100%
                  






Net sales and income (loss) from operations by operating segment for the years ended December 31, 2013, 20122016, 2015 and 20112014 were as followsset forth in the following table (dollars in thousands):.  Segment net sales are attributed to individual segments based on the geographic source of the billing for such customer sales.
 
 2013  2012  2011  2016  2015  2014 
Total segment sales:                  
North America $128,472  $138,966  $149,114  $268,935  $329,304  $248,007 
Asia  225,151   167,756   177,815   256,202   295,751   275,765 
Europe  40,742   33,329   34,597   86,750   148,735   114,748 
Total segment sales  394,365   340,051   361,526   611,887   773,790   638,520 
Reconciling item:                        
Intersegment sales  (45,176)  (53,457)  (66,405)  (111,734)  (206,710)  (151,444)
Net sales $349,189  $286,594  $295,121  $500,153  $567,080  $487,076 
Income (loss) from operations:            
(Loss) income from operations:            
North America $(1,560) $1,336  $9,026  $(35,722) $11,012  $(4,531)
Asia  15,356   (42)  (3,480)  (24,360)  8,175   13,090 
Europe  1,251   369   1,850   (16,430)  9,413   4,913 
 $15,047  $1,663  $7,396  $(76,512) $28,600  $13,472 
            

During 2013,Sales in North America declined during 2016 compared to 2015 primarily due to reductions in power solutions and protection sales of $42.6 million.  See Net Sales, Power Solutions and Protection, below.  North America sales were also impacted by lower military spending for our connectivity solutions products and reduced sales through distributors.  The decline in Asia segment sales in 2016 noted in the recent acquisition oftable above resulted from a reduction in customer demand for our integrated connector module (ICM) and TRP contributed $66.5products in 2016 (producing an $11.2 million reduction in sales), as well as a $6.1 million decrease in sales and $10.9 million of income from operations to the Company’s Asia operating segment. Sales in the Company’s Europe operating segmentour DC/DC products. Net sales were favorably impacted by the acquisitions of Fibreco and Bel Power Europe which occurred in the second half of 2012.  During 2013 and 2012, Fibreco and Bel Power Europe contributed combined revenues of $10.7 million and $3.1 million, respectively, and combined operating income of $1.7 million and $0.3 million, respectively,all segments in 2015 due to the Company’s Europe operating segment.   The decrease in sales in North America primarily related2014 Acquisitions. See Note 12, "Segments," for details on contributions from recent acquisitions to reduced demand in 2013 for Bel’s module products which are manufactured in China. Thus, the decrease in North American sales caused a corresponding decrease in intersegment sales of module products from Asia to North America.  North Americanet sales and income from operations were also impacted by the transition of the operations of Cinch’s manufacturing facility in Vinita, Oklahoma to Reynosa, Mexico and a new manufacturing facility in McAllen, Texas.  Manufacturing inefficiencies resulted in reduced production levels and lower overall sales of Cinch products.  In addition, various other costs associated with the Cinch reorganization further reduced our income from operations in North America.  The decreases noted in North America sales were partially offset by $2.1 million of new sales volume related to the acquisition of Array in late August 2013.segment.

See Note 12 of the notes to consolidated financial statements contained in this Annual Report on Form 10-K for additional segment disclosures.

Our 2013 Results

Sales for 2013 increased by 21.8% to a record $349.2 million from $286.6 million for 2012.  Bel’s operating profit for 2013 was $15.0 million as compared to $1.7 million reported for 2012.  This increase was primarily due to the results of the recent acquisitions and increased demand for legacy-Bel ICMs, which lead to higher efficiency and absorption of fixed costs at the manufacturing facilities in the PRC.  These were partially offset by restructuring charges of $1.4 million.  Net earnings were $15.9 million for 2013 as compared to $2.4 million for 2012.   Additional details related to these factors affecting the 2013 results are described in the Results of Operations section below.



Results of Operations

           The following table sets forth, for the past three years, the percentage relationship to net sales of certain items included in the Company’s consolidated statements of operations.

   Percentage of Net Sales 
   Years Ended December 31, 
   2013 2012 2011 
         
Net sales             100.0 %            100.0 %            100.0%
Cost of sales               82.2               83.8               82.9 
Selling, general and administrative expenses               13.1               13.7               13.3 
Litigation charges                    -                    -                 1.2 
Restructuring charges                 0.4                 1.8                 0.1 
Loss (gain) on disposal of property, plant and equipment                   -                 0.1                    - 
Impairment of investment                    -                 0.3                    - 
Interest income and other, net                 0.1                 0.1                 0.1 
Earnings before (benefit) provision for income taxes                 4.3                 0.3                 2.7 
Income tax (benefit) provision               (0.2)               (0.5)                 1.4 
Net earnings                 4.6                 0.8                 1.3 

Sales

The following table sets forth the year over year percentage increases or decreases of certain items included in the Company's consolidated statements of operations.

   Increase (Decrease) from 
   Prior Period 
  2013 compared 2012 compared
  with 2012 with 2011
         
Net sales                    21.8 %                  (2.9) %
Cost of sales                    19.5                   (1.9) 
Selling, general and administrative expenses                    16.4                     0.2 
Net earnings                  570.7                 (36.2) 


Sales

Net sales increased 21.8% from $286.6 million during 2012 to $349.2 million during 2013.  The Company’s net sales by major product line for the years ended December 31, 2013, 20122016, 2015 and 20112014 were as follows (dollars in thousands):

  Years Ended 
  December 31, 
  2013  2012  2011 
Magnetics $170,166   49% $100,529   35% $87,104   30%
Interconnect  111,653   32%  109,245   38%  107,346   36%
Modules  55,967   16%  66,663   23%  90,475   31%
Circuit protection  11,403   3%  10,157   4%  10,196   3%
  $349,189   100% $286,594   100% $295,121   100%
                         

  Years Ended 
  December 31, 
  2016  2015  2014 
Power solutions and protection $172,176   34% $214,766   38% $159,867   33%
Connectivity solutions  168,845   34%  181,697   32%  152,954   31%
Magnetic solutions  159,132   32%  170,617   30%  174,255   36%
  $500,153   100% $567,080   100% $487,076   100%


20132016 as Compared to 20122015

Power Solutions and Protection:

The Company’s magneticdecline in power solutions and protection products during 2016 as compared to 2015 was primarily attributable to a $34.4 million reduction in Power Solutions product line, which includes Bel’s MagJacksales and the newly-acquired TRP integrated connector module (ICM) products, had strong sales in 2013.  The acquisition of TRP in March 2013 accounted for $66.5 million of the increase from 2012.  The acquisition of Array in late August 2013 contributed $2.1 million of sales to the Company’s interconnectlower DC/DC converter product line during 2013.  Fibreco, acquired in July 2012, contributed sales of $7.5 million$6.1 million.  The power solutions and $2.1 million toprotection product group was impacted by the Company’s interconnect product line during 2013 and 2012, respectively.  The increased sales volume from the Array and Fibreco acquisitions was offset by lower sales of Cinch’s interconnect products early in 2013 due to the transition of Cinch’s manufacturing operations. Sales of Cinch’s products rebounded bygeneral market softness which continued through the fourth quarter of 2013.  2016.  The Power Solutions business is still showing year over year declines as we work through the new design cycles, which we were able to enter again in mid-2015 after quality issues had been resolved.  As the design-to-market cycle for the Power Solutions business is approximately 18 months, we anticipate seeing some growth in this business in 2017. The preceding sentence represents a Forward-Looking Statement.  See "Cautionary Notice Regarding Forward-Looking Statements."
Connectivity Solutions:

Sales declined as a result of general weakness in the Company’s modulemilitary and industrial sectors as well as RF Connector sales through distribution where weakness in broadline distribution offset increases in sales to our value-added distributors.  Sales into the commercial aerospace sector remained solid throughout 2016, and this is an anticipated area of growth for 2017.  The preceding sentence represents a Forward-Looking Statement.  See "Cautionary Notice Regarding Forward-Looking Statements."

Magnetic Solutions:

We experienced reduced customer demand for our ICM/TRP products due to the continued weakness in the macro environment during 2016. This resulted in a decrease of $11.2 million in sales related to these products as compared to 2015 volumes.

2015 as Compared to 2014

Power Solutions and Protection:

The Power Solutions acquisition contributed incremental sales of $60.1 million to the power solutions and protection product line were lowerduring 2015 as compared to 2014.  Excluding the incremental impact of the Power Solutions acquisition, power solutions and protection net sales decreased by $5.2 million, or 8.8% in 20132015 as compared to 2014.  This decrease was primarily due to reduced order volumea reduction in demand of one customer,our DC/DC products in 2015, resulting in a decrease in sales of $8.2 million during 2015 as compared to 2014.  This was partially offset by higheran increase in sales of DC-DC and AC-DCour custom module products.  Automationproducts of certain fuse manufacturing processes increased capacity and output of fuse products and improved delivery lead times, contributing to$2.5 million during the increase in circuit protection sales.same timeframe.

2012 as Compared to 2011

Revenue in Bel’s interconnectConnectivity Solutions:

The Connectivity Solutions acquisition contributed incremental sales of $35.9 million to the connectivity solutions product line during 2015 as compared to 2014.  Excluding the incremental impact of the Connectivity Solutions acquisition, connectivity solutions net sales decreased by $7.1 million, or 6.0%, during 2015 as compared to 2014 reflecting lower demand from our customers for these products.  This decrease was primarily due to declines in 2012 was essentially flat with the prior year, as growth in Cinch’s commercial aerospace business in North America in addition to new sales volumevolumes from Fibreco were fully offset byour passive connector products and Cinch products.

Magnetic Solutions:

The decreases in passive connectors.  Sales of magnetic products, which include Bel’s MagJack® products, increasedsolutions' sales from 2014 to 2015 noted in 2012 subsequent to the 2012 Lunar New Year holiday.  Module salestable above were down in 2012 compared to 2011primarily due to a changereduction in the ordering patternssales volume of two major customers.Bel's ICM products of $2.1 million during 2015 as compared to 2014 due to lower customer demand for these products.

The Company continues to have limited visibility as to future customer requirements and, as such, the Company cannot predict with any degreeCost of certainty sales revenues for 2014.  The Company cannot quantify the extent of sales growth arising from unit sales mix and/or price changes.  Product demand and sales volume will affect how we price our products.  Through the Company's engineering and research effort, the Company has been successful in adding additional value to existing product lines, which tends to increase sales prices initially until that generation of products becomes mature and sales prices experience degradation.  In general, as products become mature, average selling prices decrease.Sales

Cost of Sales

The Company’s cost of sales as a percentage of consolidated net sales for the three years ended December 31, 2013, 2012 and 20112016 consisted of the following:

 Years Ended
 December 31,
 2013 2012 2011
Material42.5% 45.9% 50.4%
Labor14.5% 14.9% 10.9%
Research and development4.0% 4.3% 4.1%
Other expenses21.2% 18.7% 17.5%
   Total cost of sales82.2% 83.8% 82.9%

  Years Ended 
  December 31, 
  2016  2015  2014 
Material costs  41.6%  43.6%  44.9%
Labor costs  10.3%  10.7%  12.1%
Research and development expenses  5.3%  4.9%  4.4%
Other expenses  22.8%  21.6%  20.7%
   Total cost of sales  80.0%  80.8%  82.1%


20132016 as Compared to 20122015

Material costs as a percentage of sales were lower in 2013during 2016 as compared to 2012,2015 primarily due to the shift in product mix noted in “Sales” above.  The reductiondecline in sales within our power solutions and protection group, as those products carry a higher material content than our other product groups.  Other contributing factors of higher-material module products, and increase in sales of lower-material ICM and power products contributed to the decreasedecline in material costs as a percentage of sales.  These factors were partially offset by operational inefficienciessales included a $2.1 million reduction in warranty claims incurred in 2016 as compared to 2015, and other start-up costs at the new manufacturing facility in Texas during the first half of 2013, which resulted in highlower material costs atin the Texas facility relatedPRC due to third-party purchasesthe depreciation of machined parts at premium prices,the renminbi against the U.S. dollar in 2016.  See "Inflation and high volumes of scrap, rejected materials and expedited freight costs.Foreign Currency Exchange" below for further information.

Labor costs as a percentage of sales were slightly lowerdeclined during 20132016 as compared to 2012, as2015 primarily due to the Company incurred excessive recruiting, training and overtime costs following the 2012 Lunar New Year holidayreduction in Asia, which did not recur in 2013.  The new sales volume from TRPof our labor-intensive magnetic products discussed above.  The depreciation of the peso and renminbi versus the U.S. dollar also contributed to the reduction in local labor costs in Mexico and the PRC during 2016.

2015 as Compared to 2014

Material costs as a percentage of sales decreased slightly in 2013, as TRP products have a lower labor cost structure than Bel’s ICM products.  These factors were partially offset by mandatory wage increases in the PRC, which went into effect in May 2013.

The increase in other expenses as a percentage of sales for 20132015 as compared to 2012 primarily related to the inclusion of support labor and fringe costs of the recent acquisitions, and duplication of some indirect labor costs and travel costs during the transition of Cinch manufacturing operations2014.  The decrease resulted from an improvement in early 2013.  There was also an increase in incentive compensation for support labor in 2013.  These factors were partially offset by a reduction in support labor and fringe costs associated with the restructuring actions that took place in 2012 and 2013.

2012 as Compared to 2011

The most significant factor contributing to the increase in cost of sales as a percentage of sales relates to higher labor costs in Asia during 2012.  The increase in other expenses noted in the table above primarily relates to reorganization costs at certain of the manufacturing facilities, offset by savings associated with cost reduction measures in Asia during 2012.  These increases in cost of sales as a percentage of sales were partially offset by a reduction inPower Solutions material costs as a percentage of sales.  As the Company’s module product line has high material content, the reduction in module sales during 2012 resulted2015 (at 52.3%) versus 2014 (at 60%), as warranty claims incurred in athe latter part of 2014 related to the Power Solutions business did not recur in 2015.   A full year of sales related to the Connectivity Solutions business also contributed to lower percentage of material costs as compared to 2011.a percentage of sales on a consolidated basis, as Connectivity Solutions' products carry a lower material content than Bel's other products.

Labor costs as a percentage of sales continued to decline in 2015 as compared to 2014 as a result of a full year of sales of Power Solutions and Connectivity Solutions products during 2015, as the products of the 2014 Acquisitions carry a much lower labor content compared with the Bel's other products.
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Research and Development ("R&D)

Included in cost of sales are research and development (“R&D”)&D expenses of $14.1$26.7 million, $12.4$27.7 million and $12.0$21.5 million for the years ended December 31, 2013, 20122016, 2015 and 2011,2014, respectively.  The reduction in R&D expense from 2015 to 2016 was primarily due to lower fixed costs resulting from R&D facility consolidations.  The majority of the increase over the past two yearsfrom 2014 to 2015 relates to the inclusion of R&D expenses of the 2012 and 20132014 Acquired Companies, which have been included in Bel’sBel's results since their respective acquisition dates.  The Company also incurred expenses during the first quarter of 2012 related to the relocation of Bel’s European R&D headquarters for integrated modules to a new high-technology center in Maidstone, England.


Selling, General and Administrative Expenses (“("SG&A”&A")

For the year ended December 31, 2013, the dollar amount of 2016 as Compared to 2015

SG&A expense was $6.5expenses declined by $6.9 million higherin 2016 as compared to 2012.  Of this increase, $4.82015.  During 2016, SG&A benefited from a reversal of certain value-added and business tax items recorded in connection with the acquisition of Power Solutions of $5.2 million. SG&A in 2016 also benefited from cost savings initiatives in North America and Europe implemented during the latter part of 2015 and earlier part of 2016, and lower sales commissions of $1.2 million relateddue to the inclusion of SG&A expenses of the 2012 and 2013 acquisitions.  Other contributingdecline in sales. These factors includedwere offset in part by a $2.9 million increasedecrease in incentive compensation, unfavorable fluctuations innet foreign currency exchange ratesgains of $0.7$2.0 million and an increase in freight chargesincentive compensation in 2016 of $1.2 million as compared with 2015.

2015 as Compared to 2014

SG&A expenses increased $6.1 million in 2015 as compared to 2014.  This increase was primarily due to the Cinch transitioninclusion of $0.8, partiallya full year of SG&A expenses related to the 2014 Acquisitions, which accounted for an additional $11.5 million in SG&A expenses in 2015.  Bel's legal and professional fees were also higher by $1.3 million in 2015 due to incremental audit and tax work related to the 2014 Acquisitions performed in 2015.  These increased expenses were offset by $0.8 million of insurance proceeds related to Hurricane Sandy, $0.4 million of lowera reduction in acquisition-related costs and a $0.7of $6.9 million reduction in wage and fringe-related items, among other factors.

SG&A expense was essentially flat in 20122015 as compared to 2011 in both overall dollar amount and as a percentage of sales; however, there were several offsetting fluctuations within SG&A.  Increases in 2012 related to salaries and fringes ($0.3 million), office expenses ($0.2 million) and acquisition-related costs ($1.0 million) were due to the additional staffing, offices and costs associated with the addition of the 2012 Acquired Companies.  The anticipated acquisition of the Transpower magnetics business of TE also contributed to the increased acquisition-related costs in 2012.  There was less legal activity in 2012 related to the SynQor case compared to 2011, resulting in a $1.0 million reduction in legal fees in 2012.  There were also favorable fluctuations in foreign currencies of $0.6 million during 2012, primarily related to the British Pound.2014.

Litigation Charges

The Company did not incur material litigation charges during 2013 or 2012.  During 2011, the Company recorded litigation charges totaling $3.5 million related to the SynQor and Halo lawsuits.  Both of these lawsuits are further described in Note 16 to the accompanying consolidated financial statements.

Restructuring Charges

The Company recorded restructuring charges of $1.4$2.1 million in 2016, $2.1 million in 2015 and $5.2$1.8 million during the years ended December 31, 2013 and 2012, respectively,in 2014 in connection with its restructuring programs, as further described inprograms.  See Note 3, of the notes to our consolidated financial statements.  Included in the restructuring charges"Restructuring Activities" for 2012 was a $1.0 million write-off of the building and land located in Vinita, Oklahoma, as Bel donated this property to a local university in December 2012. The Company recorded $0.3 milliondiscussion of restructuring charges incurred in 2011 related to2015 and 2016.  In 2014, the realignment of its Cinch U.K. operations.  These charges were primarilyCompany incurred severance costs associated with severance costs.restructuring of the management and sales teams after the acquisitions of Power Solutions and Connectivity Solutions.

Loss (Gain) on Disposal of Property, Plant and EquipmentInterest Expense

During the year ended December 31, 2012, theThe Company recorded net lossesincurred interest expense of $0.2$6.7 million related to property, plantin 2016, $7.6 million in 2015 and equipment.  This was comprised of losses of $0.4$4.0 million in 2014 primarily due to damage caused by Hurricane Sandy, offset byour outstanding borrowings under the Company's credit and security agreement used to fund the 2014 Acquisitions.  The decline in interest expense in 2016 compared to 2015 was due to mandatory and voluntary repayments made in 2016.  Interest expense for 2014 represents  approximately a $0.2 million gain recorded in connection with a salehalf year of a building in Macao. The Company recorded net gains of $0.1 million during the year ended December 31, 2011, primarily related to a $0.2 million gain on insurance proceeds associated with snow damageexpense, due to the manufacturing facilitytiming of borrowings, versus a full year of expense in Vinita, Oklahoma.  This gain was partially offset by losses recorded in connection with2015.  See "Liquidity and Capital Resources" and Note 10, "Debt," for further information on the disposal of various equipment.Company's outstanding debt.

Gain (Loss/Impairment) on Investment

During the year ended December 31, 2013, the Company realized a $0.1 million gain related to the sale of a portion of its investments that are earmarked for the SERP plan.  During the year ended December 31, 2012, the Company recorded $0.8 million in other-than-temporary impairment charges and a $0.1 million loss on sale related to its investment in Pulse Electronics Corporation (“Pulse”) common stock.  During the year ended December 31, 2011, the Company realized a $0.1 million gain on the partial sale of its investment in Pulse common stock.    

(Benefit) Provision for Income Taxes

The Company’sCompany's effective tax rate will fluctuate based on the geographic segment in which the pretax profits are earned.  Of the geographic segments in which the Company operates, the U.S. has the highest tax rates; Europe’sEurope's tax rates are generally lower than U.S. tax rates; and Asia has the lowest tax rates of the Company’sCompany's three geographical segments.  See Note 9, "Income Taxes."

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The (benefit) for income taxes for the year ended December 31, 2013 and 2012 was ($0.7) million and ($1.4) million, respectively.  The Company’s earnings before income taxes for the year ended December 31, 2013 were approximately $14.2 million higher than in 2012.  The Company’s effective tax rate was (5.0%) and (138.0%) for the year ended December 31, 2013 and 2012, respectively.  The change in the effective tax rate during 2013 is primarily attributable to a $15.5 million increase in pretax income earned in the Asia segment, with minimal tax effect.  Additionally, the Company had a significantly lower net reversal of liabilities for uncertain tax positions and a pretax loss in the U.S. segment for the year ended December 31, 2013 compared to December 31, 2012.  The favorable effective tax rate in 2012 was primarily attributable to the net reversal of liabilities for uncertain tax positions.2015

The (benefit) provision for income taxes for the year ended December 31, 20122016 and 20112015 was ($1.4)17.7) million and $4.1$6.5 million, respectively.  The Company's loss before benefit for income taxes for the year ended December 31, 2016, was primarily attributable to the $106.0 million impairment of goodwill and intangible assets recognized in the first half of 2016.  The Company's effective tax rate was 21.5% and 25.4% for the year ended December 31, 2016 and 2015, respectively.  The change in the effective tax rate during the year ended December 31, 2016 as compared to 2015, was primarily attributable to the tax effect related to the settlement of liabilities for uncertain tax positions and, to a lesser extent, the impairment of the goodwill and intangible assets.  See Note 9, "Income Taxes."

2015 as Compared to 2014

The provision for income taxes for the year ended December 31, 2015 and 2014 was $6.5 million and $1.2 million, respectively.  The Company's earnings before income taxes for the year ended December 31, 20122015 were approximately $6.9$16.0 million lowergreater than in 2011.2014.  The Company’sCompany's effective tax rate was (138.0%)25.4% and 52.2%11.9% for the year ended December 31, 20122015 and 2011,2014, respectively.  The change in the effective tax rate during 2012 is2015 as compared to 2014, was primarily attributableattributed to an increase in U.S. taxes resulting from a significant increase in the net reversal of liabilities forNorth America segment's pre-tax income and an increase in Asia taxes resulting from taxes related to uncertain tax positions and lower pretax income in the U.S. segment, principally due to restructuring charges discussed previously, andpositions. In addition, there was a pretax losssignificant increase in the Europe segment during the year ended December 31, 2012 compared to 2011.  These wereincome offset, in part, by higher pretax incomea decrease in the Asia segment for the year ended December 31, 2012income which resulted in higher foreign taxes during 2015 compared to 2011, as the Asia segment incurred litigation charges in 2011 with minimal tax benefit.2014. See Note 9, "Income Taxes."


Other Tax Matters

The Company has the majoritya portion of its products manufactured on the mainland of the PRC andwhere Bel is not subject to corporate income tax on manufacturing services provided by third parties in the PRC.parties.  Hong Kong has a territorial tax system which imposes corporate income tax at a rate of 16.5 percent16.5% on income from activities solely conducted in Hong Kong.

The Company holds an offshore business license from the government of Macao.  With this license, a Macao offshore company named Bel Fuse (Macao Commercial Offshore) Limited has been established to handle certain of the Company’sCompany's sales to third-party customers in Asia.  Sales by this company primarily consist of legacy-Bel products manufactured in the PRC.  This company is not subject to Macao corporate profit taxes which are imposed at a tax rate of 12%.  Additionally, the Company established TRP International, a China Business Trust (“CBT”("CBT"), when it acquired the TRP group, as previously discussed.  Sales by the CBT consists of TRP products manufactured in the PRC and sold to third partythird-party customers inside and outside Asia.  The CBT is not subject to PRC income taxes, in the PRC, which are generally imposed at a tax rate of 25%.

It is the Company’sCompany's intention to repatriate substantially all net income from its wholly owned PRC subsidiary, Dongguan Transpower Electric Products Co., Ltd, a Chinese Limited Liability Company, to its direct Hong Kong parent Transpower Technologies (Hong Kong) Ltd.  Applicable income and dividend withholding taxes have been reflected in the accompanying consolidated statements of operations for the year ended December 31, 2013.2016.  However, U.S. deferred taxes need not be provided under currentas there is no intention to repatriate such amounts to the U.S. tax law.  Management’sManagement's intention is to permanently reinvest the majority of the remaining earnings of foreign subsidiaries in the expansion of its foreign operations.  Unrepatriated earnings, upon which U.S. income taxes have not been accrued, are approximately $109$100.4 million at December 31, 2013.2016.  Such unrepatriated earnings are deemed by management to be permanently reinvested.  At December 31, 2013,2016, the estimated federal income tax liability (net of estimated foreign tax credits) related to unrepatriated foreign earnings is $26$23.3 million under the current tax law.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes.  During the years ended December 31, 2013 and 2011, the Company recognized an immaterial amount and $0.2 million, respectively, in interest and penalties in the consolidated statements of operations.  During the year ended December 31, 2012, the Company recognized a benefit of $0.5 million for the reversal of such interest and penalties.  The Company has approximately $0.2 million and $0.3 million accrued for the payment of interest and penalties at December 31, 2013 and 2012, respectively, which is included in both income taxes payable and liability for uncertain tax positions in the consolidated balance sheets.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions.  The Company is no longer subject to U.S. federal examinations by tax authorities for years before 2010 and for state examinations before 2007.   Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before 2006 in Asia and generally 2006 in Europe.  During September 2010 and April 2011, the Company was notified of an Internal Revenue Service (“IRS”) tax audit for the years ended December 31, 2004 through 2009.  The Company settled the domestic and international audits with the IRS for an amount due to the IRS of $0.1 million, net of interest income paid by the IRS to the Company.  Additionally, the Company’s wholly-owned subsidiary in Germany was subject to a tax audit for the tax years 2008 through 2010.  This audit has been completed and resulted in a minimal tax assessment.

As a result of the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized benefits for tax positions taken regarding previously filed tax returns may change materially from those recorded as liabilities for uncertain tax positions in the Company’s consolidated financial statements at December 31, 2013.  A total of $1.0 million of previously recorded liabilities for uncertain tax positions relates principally to the 2010 tax year.  The statute of limitations related to these liabilities is scheduled to expire on September 15, 2014.  Additionally, a total of $0.5 million and $2.6 million of previously recorded liabilities for uncertain tax positions, interest and penalties relating to the 2006 and 2009 tax years and the 2007 through 2009 tax years, respectively, were reversed during the year ended December 31, 2013 and 2012, respectively.  This was offset in part by an increase in the liability for uncertain tax positions in the amount of $1.2 million during the year ended December 31, 2012.

Upon the acquisition of TRP, TRP had a deferred tax asset in the amount of $2.2 million arising from various timing differences related to depreciation and accrued expenses.  Upon the acquisition of Array, Array had a deferred tax liability of $0.7 million arising from timing differences related to depreciation and a deferred tax asset of $2.1 million arising from the NOL acquired.  In connection with the 2013 Acquisitions, the Company was required to complete a preliminary fair market value report of property, plant and equipment and intangibles.  As a result of that report, the Company established deferred tax liabilities at the date of acquisition in the amount of $0.6 million and $1.0 million, respectively, for the TRP and Array acquisitions.  At December 31, 2013, a net deferred tax asset of $2.0 million remains on the consolidated balance sheet.

The Company does not intend to make any election to step up the tax basis of the 2013 acquisitions to fair value under IRC Section 338(g) and 338(h).

Upon the acquisition of Fibreco, Fibreco had a deferred tax liability in the amount of $0.1 million arising from various timing differences. In connection with the 2012 Acquisitions, the Company was required to complete a fair market value report of property, plant and equipment and intangibles. As a result of that report, the Company established deferred tax liabilities at the date of acquisition in the amount of $1.7 million, $0.6 and $0.4 million, respectively for the Fibreco, GigaCom and Powerbox acquisitions.  At December 31, 2013, a deferred tax liability of $2.4 million remains on the consolidated balance sheet.
The Company has made elections under Internal Revenue Code (“IRC”) Section 338(g) to step up the tax basis of the 2012 Acquisitions to fair value.  The elections made under Section 338(g) only affect U.S. income taxes (not those of the foreign country where the  acquired entities were incorporated).

On January 2, 2013, President Obama signed the “American Taxpayer Relief Act” (“ATRA”).  Amongst other things, ATRA extends the Research and Experimentation credit (“R&E) which expired at the end of 2011 through 2013 and 2014, respectively. Under Accounting Standards Codification (“ASC”) 740, “Income Taxes”, the effects of the new legislation are recognized upon enactment, which is when the President signs a tax bill into law.  Although the extenders are effective retroactively for 2012, the Company can only consider currently enacted tax law as of the balance sheet date in determining current and deferred taxes.  The Company recognized these retroactive tax effects for 2012 R&E and the tax effect for 2013 R&E in the 2013 financial statements.  The impact of the ATRA on the consolidated statement of operations for the year ended December 31, 2012 resulted in a decrease in the income tax benefit of approximately $0.4 million.  There is no material effect on the Company’s financial position, liquidity or capital resources
The Company continues to monitor proposed legislation affecting the taxation of transfers of U.S. intangible property and other potential tax law changes.
Inflation and Foreign Currency Exchange

During the past three years, we do not believe the effect of inflation on the Company's profitabilityour consolidated financial position and results of operations was not material.  The Company ismaterial to our consolidated financial position or our consolidated results of operations.  We are exposed to market risk primarily from changes in foreign currency exchange rates.  Historically, fluctuationsFluctuations of the U.S. Dollardollar against other major currencies have not significantly affected the Company’sour foreign operations as most sales have beencontinue to be denominated in U.S. Dollarsdollars or currencies directly or indirectly linked to the U.S. Dollar.dollar.  Most significant expenses, including raw materials, labor and manufacturing expenses, are incurred primarily in U.S. Dollarsdollars or the Chinese Renminbi,renminbi, and to a lesser extent in British Poundspounds and Mexican Pesos.pesos.  The Chinese Renminbi appreciatedrenminbi depreciated by approximately 2.0%6.1% in 20132016 as compared to 2012.  Future appreciation of2015 and the Renminbi wouldMexican peso depreciated by 15.1% in 2016 as compared to 2015 .  To the extent the renminbi or peso appreciate in future periods, it could result in the Company’sCompany's incurring higher costs for allmost expenses incurred in the PRC.PRC and Mexico.  The Company’sCompany's European entities, whose functional currencies are Euros,euros, British Poundspounds and Czech Korunas,korunas, enter into transactions which include sales whichthat are denominated principally in Euros,euros, British Poundspounds and various other European currencies, and purchases that are denominated principally in U.S. Dollarsdollars and British Pounds.pounds.  Such transactions, as well as those related to our multi-currency intercompany payable and receivable transactions, resulted in net realized and unrealized currency exchange (losses) gains of ($0.6)$3.1 million, $5.1 million and $0.6$4.3 million for the years ended December 31, 20132016, 2015 and 2012,2014, respectively, which were included in net earnings.  RealizedSG&A expenses on the consolidated statements of operations.  The currency exchange gains recorded in 2016 were primarily due to the favorable impact of the depreciation of the Chinese renminbi and unrealizedeuro against the U.S. dollar. The currency losses duringexchange gains recorded in 2015 and 2014 were primarily due to the year ended December 31, 2011 were not material.favorable impact of the depreciation of the euro against the U.S. dollar on a $34 million multi-currency intercompany loan.  This loan was settled by the end of 2015. Translation of subsidiaries’subsidiaries' foreign currency financial statements into U.S. Dollarsdollars resulted in translation gains (losses)adjustments, net of $1.0taxes, of ($9.7) million, $0.3($10.0) million and ($0.2)11.3) million for the years ended December 31, 2013, 20122016, 2015 and 2011,2014, respectively, which are included in accumulated other comprehensive income (loss). on the consolidated balance sheets.

Liquidity and Capital Resources

Historically,Our primary sources of cash are the Company has financed itscollection of trade receivables generated from the sales of our products and services to our customers and amounts available under our existing lines of credit, including our credit facility. Our primary uses of cash are payments for operating expenses, investments in working capital, capital expenditures, primarily throughinterest, taxes, dividends, debt obligations and other long-term liabilities. We believe that our current liquidity position and future cash flows from operating activities and has financed acquisitions through cash flows from operating activities, borrowings, and the issuance of Bel Fuse Inc. common stock.  Management believes that the cash flow from operations after payments of dividends combined with its existing capital base and the Company’s available line of credit will be sufficientenable us to fund itsour operations, for at leastincluding all of the items mentioned above in the next twelve months.  Such statement constitutes a Forward-Looking Statement.  Factors which could cause the Company to require additional capital include, among other things, a softening in the demand for the Company’s existing products, an inability to respond to customer demand for new products, potential acquisitions (as discussed below) requiring substantial capital, future expansion of the Company’s operations and net losses that would result in net cash being used in operating, investing and/or financing activities which result in net decreases in cash and cash equivalents.  Net losses may impact availability under our credit facility and preclude the Company from raising debt or equity financing in the capital markets on affordable terms or otherwise.

At December 31, 20132016 and 2012, $38.12015, $61.1 million and $45.8$67.9 million, respectively (or 83% and 80%, respectively), of cash and cash equivalents was held by foreign subsidiaries of the Company.  Management’sManagement's intention is to permanently reinvest the majority of these funds outside the U.S. and there are no current plans that would indicate a need to repatriate them to fund the Company’sCompany's U.S. operations.  In the event these funds were needed for Bel’sBel's U.S. operations, the Company would be required to accrue and pay U.S. taxes to repatriate these funds.  See "Income Taxes" above for further details.

On June 19, 2014, the Company entered into a senior Credit and Security Agreement ("CSA") (see Note 10, "Debt," for additional details).  The Company has an unsecured credit agreement inCSA contains customary representations and warranties, covenants and events of default and financial covenants that measure (i) the ratio of the Company's total funded indebtedness, on a consolidated basis, to the amount of $30 million, which was duethe Company's consolidated EBITDA, as defined ("Leverage Ratio"), and (ii) the ratio of the amount of the Company's consolidated EBITDA to expire on June 30, 2014.  In August 2013, the Company borrowed $12.0 millionCompany's consolidated fixed charges ("Fixed Charge Coverage Ratio"). If an event of default occurs, the lenders under the lineCSA would be entitled to take various actions, including the acceleration of credit in connection with its acquisition of Array.amounts due thereunder and all actions permitted to be taken by a secured creditor.  At December 31, 2013,2016, the balance available under the credit agreement was $18.0 million.  There were no previous borrowings under the credit agreement and, as a result, there was no balance outstanding as of December 31, 2012.  The credit agreement bears interest at LIBOR plus 1.00% to 1.50% based on certain financial statement ratios maintained by the Company.  The interest rate in effect on the borrowings outstanding at December 31, 2013 was 1.4%.  As a result of the Company’s recent acquisitions, which resulted in a lower cash balance and increased intangible assets, the Company was not previously in compliance with its tangible net worth debt covenant.  In November 2013, the credit agreement was amended to reflect modifications to the minimum tangible net worth and maximum leverage covenant calculations, and to extend the term of the agreement through October 14, 2016.  The Company was in compliance with its debt covenants, at December 31, 2013, including its most restrictive covenant, the net worth covenant whereby the Company's net worth must be equal to or greater than $160 million.Leverage Ratio.  The unused credit available under the credit facility at December 31, 20132016 was $18$50.0 million, of which we had the ability to borrow inthe full amount without violating our net worth covenant.Leverage Ratio covenant based on the Company's existing consolidated EBITDA.  In January 2017, the Company borrowed $6.0 million from the available credit facility.

In connection with its acquisitions of Power Solutions and Connectivity Solutions (see Note 2, "Acquisitions and Disposition"), the Company borrowed $235.0 million under the CSA during 2014, of which $143.8 million is outstanding as of December 31, 2016.  Scheduled principal payments of the long-term debt outstanding are included in "Contractual Obligations" below and in Note 10, "Debt."
For information regarding further commitments under the Company’sCompany's operating leases, see Note 16, "Commitments and Contingencies." 
We are currently engaged in a multi-year process of conforming the majority of our operations onto one global ERP.  The ERP is designed to improve the efficiency of our supply chain and financial transaction processes, accurately maintain our books and records, and provide information important to the operation of the notesbusiness to our management team. The implementation of the Company’sERP is being conducted by business unit on a three phase approach over the next three years. We currently estimate total costs over the next three years to be between $4 million to $5 million. These costs will be included in SG&A on the consolidated financial statements.  Upon completion of the implementation of the new ERP, we anticipate lower maintenance and lower external information and technology support fees resulting in annual savings of approximately $2 million.  The preceding sentence represents a Forward-Looking Statement.  See "Cautionary Notice Regarding Forward-Looking Statements."

On March 9, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of GigaCom with a cash payment of £1.7 million ($2.7 million).  On July 31, 2012, the Company consummated its acquisition of 100% of the issued and outstanding capital stock of Fibreco with a cash payment, net of $2.7 million of cash acquired, of $13.7 million (£8.7 million).  On September 12, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Powerbox with a cash payment, net of $0.2 million of cash acquired, of $3.0 million.  These acquisitions were funded with cash on hand.Cash Flows

On March 29, 2013,During the Company completed its acquisitionyear ended December 31, 2016, the Company's cash and cash equivalents decreased by $11.6 million.  This decrease was primarily due to repayments of 100%long-term debt of $43.4 million, the issuedpurchase of property, plant and outstanding capital stockequipment of Transpower$8.2 million and certain other tangible$3.2 million for payments of dividends.  These cash outflows were partially offset by net cash provided by operations of $38.6 million and intangible assets related to TRP.  The aggregate purchase price associated withcash proceeds received from the acquisitionsale of TRP, netproperties in Hong Kong and San Diego of cash acquired, was $21.0$5.8 million which was funded with cash on hand.  On August 20, 2013, the Company completed its acquisition of Array, a manufacturer of aerospace and mil-spec connector products based in Miami, Florida, for $10.0.  Cash provided by operating activities decreased by $27.2 million in cash.  As discussed above,2016 as compared to 2015, primarily due to lower earnings on the acquisition of Array was funded through borrowings under the Company’s existing credit agreement.

Cash Flowsreduced sales volume in 2016 and an increase in year-end inventory levels in 2016.

During the year ended December 31, 2013, the Company’s cash and cash equivalents decreased by $9.1 million. This resulted primarily from $31.0 million of net cash payments for the acquisitions of TRP and Array, $6.9 million paid for the purchase of property, plant and equipment, $3.1 million for payments of dividends, $3.4 million for the repurchase of 178,643 shares of the Company’s Class B common stock, and $1.3 million for the purchase of an intangible asset associated with the Radiall agreement (as further described in Note 4 to the consolidated financial statements contained in this Annual Report), partially offset by an increase in short-term borrowings of $12.0 million, a $13.0 million transfer out of restricted cash and $10.6 million provided by operating activities.  As compared with 2012, cash provided by operating activities decreased by $1.0 million.  During 2013, increased accounts receivable resulted in an operating cash outflow of $8.0 million.  The increase in post-acquisition third-party receivables at TRP, which replaced receivables collected from TRP’s pre-acquisition affiliates, accounted for $4.0 million of this increase, while receivables in the legacy-Bel portion of the Asia segment increased by $6.1 million.  These increases were partially offset by lower receivables in North America and Europe.  TRP’s third-party receivables are $4.0 million higher than receivables from its former TE affiliates primarily due to higher gross margin and longer payment terms on third-party sales.  The longer payment terms in TRP customer contracts acquired from the seller led to an increase of 3 days in overall days sales outstanding (DSO).  Management intends to bring TRP payment terms in line with those of Bel’s existing customer base during contract renewals.  The increase in legacy-Bel Asia receivables was largely due to a return to normal payment terms in 2013, following a period of shorter payment terms in connection with a new inventory stocking program that was implemented in 2012. Inventories increased by $6.5 million during 2013 primarily due to the expansion of a new stocking program in Asia, whereby certain customers now have quicker access to commonly-ordered parts.

During the year ended December 31, 2012, the Company’s cash and cash equivalents decreased by $17.0 million. This resulted primarily from a $13.7 million payment for the acquisition of Fibreco, a $3.0 million payment for the acquisition of Powerbox, a $2.7 million payment for the acquisition of GigaCom, $4.7 million paid for the purchase of property, plant and equipment, $3.2 million for payments of dividends and $6.6 million for the repurchase of 368,723 shares of the Company’s Class B common stock, offset by $11.6 million provided by operating activities.  As compared with 2011, cash provided by operating activities decreased by $18.7 million.  Accounts receivable decreased by $0.3 million in 2012 as compared to a decrease in accounts receivable of $14.2 million during 2011, due to lower sales volume in the fourth quarter of 2011. In addition, the Company experienced a $0.3 million increase in inventory levels during 2012, as compared to a decrease in inventory of $3.6 million during 2011.

During the year ended December 31, 2011,2015, the Company's cash and cash equivalents increased by $4.4$7.9 million.  This resulted primarily from $30.3$65.8 million of cash provided by operating activities, $0.4including the impact of the changes in accounts receivable and inventories described below, proceeds of $9.0 million received from the NPS sale and related transactions and $4.2 million received for an acquisition-related settlement payment during 2015.  This increase was partially offset by $23.0 million of proceeds fromnet repayments under the sale of marketable securities and $0.4revolving credit line, $22.4 million of proceeds from the disposalrepayments of property, plant and equipment, offset by $12.8 million transferred to restricted cash related to the SynQor lawsuit, $5.1 million used to purchase marketable securities, $2.9long-term debt, $9.9 million paid for the purchase of property, plant and equipment and $3.2 million for payments of dividends.  As compared to 2014, cash provided by operating activities increased by $43.3 million, partially due to a $10.1 increase in net earnings and a $2.6 increase in depreciation and amortization as 2015 contained a full year of expense for the 2014 Acquired Companies.  Reductions in accounts receivable and inventory balances at December 31, 2015 as compared to December 31, 2014 were also contributing factors to the increase in cash provided by operating activities during 2015.

During the year ended December 31, 2011,2014, the Company's cash and cash equivalents increased by $15.0 million. This resulted primarily from $22.5 million provided by operating activities, $215.0 million of proceeds from long-term debt and $23.0 million of proceeds from borrowing under the revolver, partially offset by, among other items, payments totaling $208.7 million, net of cash acquired, for the acquisitions of Power Solutions and Connectivity Solutions, $12.0 million of repayments under the revolving credit line, $5.4 million of repayments of long-term debt, $5.8 million paid in deferred financing costs, $9.0 million paid for the purchase of property, plant and equipment and $3.2 million for payments of dividends.  As compared to 2013, cash provided by operating activities was $30.3increased by $11.9 million, as compared to $7.6 million for the year ended December 31, 2010.  Accounts receivable decreased by $14.2 million in 2011partially due to a $15.1 million reduction in sales during the fourth quarter of 2011 as compared to the fourth quarter of 2010.  In addition, the Company experienced a $17.6$7.4 million increase in inventory levels during 2010depreciation and amortization related to heightened demand for products, which did not recur in 2011.the inclusion of expense from the 2014 Acquisitions and additional depreciation and amortization on the fair value adjustments to tangible and intangible assets.

Cash and cash equivalents, marketable securities and accounts receivable comprised approximately 40.9%34.6% and 41.4%29.6% of the Company's total assets at December 31, 20132016 and December 31, 2012,2015, respectively. The Company's current ratio (i.e., the ratio of current assets to current liabilities) was 3.12.8 to 1 and 4.12.3 to 1 at December 31, 20132016 and December 31, 2012,2015, respectively.

Accounts receivable, net of allowances, were $63.8 million atDuring the year ended December 31, 2013,2016, accounts receivable decreased $10.8 million primarily due to lower sales volume in the fourth quarter of 2016 as compared with $42.9 million at December 31, 2012.  Approximately $16.2 millionto the fourth quarter of this increase resulted from the inclusion of the accounts receivable of the 2013 Acquired Companies. There was also an increase in the Company’s days2015.  Days sales outstanding (DSO) from 53declined to 54 days at December 31, 2012 to 632016 from 59 days at December 31, 20132015.  Inventories remained flat with the December 31, 2015 level as raw material and work in progress volumes picked up in the fourth quarter of 2016 in response to an increase in customer demand for reasons discussed above.  Inventories were $70.0 millionour products.  Inventory turns decreased to 3.8 times per year at December 31, 2013, as compared with $54.9 million2016 from 4.5 times per year at December 31, 2012.  Approximately $11.0 million of this increase resulted from2015, as year-end inventory levels were high in relation to the inclusion of the inventories of the 2013 Acquired Companies.2016 sales volume.

Contractual Obligations

The following table sets forth at December 31, 20132016 the amounts of payments due under specific types of contractual obligations, aggregated by category of contractual obligation, for the time periods described below.  This table excludes $2.2 million


  Payments due by period (dollars in thousands) 
Contractual Obligations Total  Less than 1 year  
1-3
years
  
3-5
years
  
More than
5 years
 
                
Long-term debt obligations(1)
 $143,798  $12,495  $131,303  $-  $- 
Interest payments due on long-term debt(2)
  9,745   4,337   5,408   -   - 
Capital expenditure obligations  2,807   2,807   -   -   - 
Operating leases(3)
  18,770   6,491   6,403   4,705   1,171 
Raw material purchase obligations  30,968   30,862   106   -   - 
First quarter 2017 quarterly cash dividend declared  781   781   -   -   - 
                     
Total $206,869  $57,773  $143,220  $4,705  $1,171 

(1)Represents the principal amount of the debt required to be repaid in each period.
(2)Includes interest payments required under our CSA related to our term loans and revolver balance.  The interest rate in place under our CSA on December 31, 2016 was utilized and this calculation assumes obligations are repaid when due.
(3)Represents estimated future minimum annual rental commitments primarily under non-cancelable real and personal property leases as of December 31, 2016.

At December 31, 2016, we had liabilities for unrecognized tax benefits and related interest and penalties of $27.8 million, most of which is included in other liabilities and the remaining balance of which is included as ofa reduction to deferred tax assets on our Consolidated Balance Sheet. At December 31, 2013, as2016, we cannot reasonably estimate the Company is unable to make reasonably reliable estimatesfuture period or periods of cash settlement of these liabilities. See Note 9, "Income Taxes," of the period of cash settlements, if any, with the respective taxing authorities.Notes to Consolidated Financial Statements for further discussion.

  Payments due by period (dollars in thousands) 
Contractual Obligations Total  Less than 1 year  
1-3
years
  
3-5
years
  
More than
5 years
 
                
Capital expenditure obligations $3,014  $3,014  $-  $-  $- 
Operating leases  15,305   4,522   5,630   2,654   2,499 
Raw material purchase obligations  23,376   23,288   88   -   - 
                     
Total $41,695  $30,824  $5,718  $2,654  $2,499 

The Company is required to pay SERP obligations at the occurrence of certain events. As of December 31, 2013, $10.82016, $16.9 million is included in long-term liabilities as an unfunded pension obligation on the Company’s Company's consolidated balance sheet.  Included in other assets at December 31, 20132016 is the cash surrender value of company-owned life insurance and marketable securities held in a rabbi trust with an aggregate value of $11.9$12.7 million, which has been designated by the Company to be utilized to fund the Company’sCompany's SERP obligations.

Critical Accounting Policies and Other Matters

The Company’sCompany's consolidated financial statements include certain amounts that are based on management’smanagement's best estimates and judgments.  Estimates are used when accounting for amounts recorded in connection with mergers and acquisitions, including determination of the fair value of assets and liabilities.  Additionally, estimates are used in determining such items as current fair values of goodwill and other intangible assets, as well as provisions related to product returns, bad debts, inventories, intangible assets, investments, SERP expense, income taxes and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions, including in some cases future projections, that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.  The following accounting policies require accounting estimates that have the potential for significantly impacting Bel’sBel's financial statements.

Allowance for Doubtful Accounts
In the normal course of business, we extend credit to our customers if they satisfy pre-defined credit criteria. We maintain an accounts receivable allowance for estimated losses resulting from the likelihood of failure of our customers to make required payments. An additional allowance may be required if the financial condition of our customers deteriorates. The allowance for doubtful accounts is maintained at a level that management assesses to be appropriate to absorb estimated losses in the accounts receivable portfolio. The allowance for doubtful accounts is reviewed at a minimum quarterly, and changes to the allowance are made through the provision for bad debts, which is included in SG&A expenses on our consolidated statements of operations. These changes may reflect changes in economic, business and market conditions. The allowance is increased by the provision for bad debts and decreased by the amount of charge-offs, net of recoveries.
InventoryThe provision for bad debts charged against operating results is based on several factors including, but not limited to, a regular assessment of the collectability of specific customer balances, the length of time a receivable is past due and our historical experience with our customers. In circumstances where a specific customer's inability to meet its financial obligations is known, we record a specific provision for bad debt against amounts due, thereby reducing the receivable to the amount we reasonably assess will be collected. If circumstances change, such as higher than expected defaults or an unexpected material adverse change in a major customer's ability to pay, our estimates of recoverability could be reduced by a material amount.  At December 31, 2016 and 2015, the Company had allowance for doubtful accounts of $1.8 million and $1.7 million, respectively.

Inventory

The Company makes purchasing and manufacturing decisions principally based upon firm sales orders from customers, projected customer requirements and the availability and pricing of raw materials. Future events that could adversely affect these decisions and result in significant charges to the Company’sCompany's operations include miscalculating customer requirements, technology changes which render certain raw materials and finished goods obsolete, loss of customers and/or cancellation of sales orders, stock rotation with distributors and termination of distribution agreements. The Company reduces the carrying value of its inventory by a reserve for estimated obsolescence or unmarketable inventory by an amount equal to the difference between the cost of inventory and the estimated market value based on the aforementioned assumptions. As of December 31, 2013 and 2012, the Company had reserves for excess or obsolete inventory of $3.9 million and $5.5 million, respectively. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Once the carrying value of inventory is reduced to its estimated fair value, its carrying value is never restored to the previous level. When such inventory is subsequently used in the manufacturing process, the lower adjusted cost of the material is charged to cost of sales and the improved gross profit is recognized at the time the completed product is shipped and the sale is recorded.As of December 31, 2016 and 2015, the Company had reserves for excess or obsolete inventory of $6.3 million and $7.1 million, respectively. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Goodwill and Indefinite-Lived Intangible Assets

The assets and liabilities of acquired businesses are recorded under the purchase method of accountingGoodwill is reviewed for possible impairment at their estimated fair values at the dates of acquisition.  Goodwill represents the amount of consideration transferred in excess of fair values assigned to the underlying net assets of acquired businesses.

The Company has historically evaluated its goodwill and other indefinite-lived intangible assets for impairmentleast annually as of December 31 or more frequently if impairment indicators arose in accordance with ASC Topic 350, “Intangibles – Goodwill and Other”. Inon a reporting unit level during the fourth quarter of 2012, the Company changed the date of its annual assessmenteach year. A review of goodwill to October 1may be initiated before or after conducting the annual analysis if events or changes in circumstances indicate the carrying value of each year. The change in testing date for goodwill may no longer be recoverable.

A reporting unit is a change in accounting principle, whichthe operating segment unless, at businesses one level below that operating segment — the "component" level — discrete financial information is prepared and regularly reviewed by management, believes is preferable asand the new datecomponent has economic characteristics that are different from the economic characteristics of the other components of the operating segment, in which case the component is the reporting unit.

While we are permitted to conduct a qualitative assessment while remainingto determine whether it is necessary to perform a two-step quantitative goodwill impairment test, for our annual goodwill impairment tests in the fourth quarter will createof 2016, 2015 and 2014, we performed quantitative tests for all of our reporting units that have goodwill allocated.
The goodwill impairment test involves a more efficient and timely process surroundingtwo-step process. In step one, we compare the impairment tests and will lessen resource constraints at year-end. The change in the assessment date does not delay, accelerate or avoid a potential impairment charge. The Company has determined that it is impracticable to objectively determine projected cash flows and related valuation estimates that would have been used asfair value of each October 1 of priorour reporting periods withoutunits with goodwill to its carrying value, including the use of hindsight. As such, the Company prospectively applied the change in annual goodwill impairment testing date from October 1,  2012.

The Company tests goodwill for impairment using a fair value approach at the reporting unit level.  A reporting unit is an operating segment or one level below an operating segment for  which discrete financial information is available and reviewed regularly by management.  Assets and liabilities of the Company have been assignedallocated to the reporting units to the extent they are employed in or are considered a liability related to the operations of the reporting unit and are considered in determiningunit. If the fair value of the reporting unit.  Reporting units with similar economic characteristics are aggregated for the goodwillunit exceeds its carrying value, there is no indication of impairment test.

The goodwill impairment testand no further testing is a two-step process.required. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired andless than the secondcarrying value, we must perform step two of the impairment test is unnecessary.  If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The secondIn step two, the reporting unit's fair value is allocated to all of the goodwill impairment test, used to measureassets and liabilities of the amount of impairment loss, comparesreporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill associated with eachin the same manner as if the reporting unit withwere being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss.
We use a fair value approach to test goodwill for impairment. We must recognize a non-cash impairment charge for the amount, of that goodwill.  Ifif any, by which the carrying amount of goodwill associated withexceeds its implied fair value. We derive an estimate of fair values for each of our reporting units using a combination of an income approach and an appropriate market approach, each based on an applicable weighting. We assess the applicable weighting based on such factors as current market conditions and the quality and reliability of the data. Absent an indication of fair value from a potential buyer or similar specific transactions, we believe that the use of these methods provides a reasonable estimate of a reporting unit exceedsunit's fair value.
Fair value computed by these methods is arrived at using a number of factors, including projected future operating results, anticipated future cash flows, effective income tax rates, comparable marketplace data within a consistent industry grouping, and the impliedcost of capital. There are inherent uncertainties, however, related to these factors and to our judgment in applying them to this analysis. Nonetheless, we believe that the combination of these methods provides a reasonable approach to estimate the fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.

At December 31, 2013, the Company’s goodwill consisted of $12.5 million related to its Europeour reporting unit, $4.8 million related to its North America reporting unitunits. Assumptions for sales, net earnings and $1.1 million related to its Asia reporting unit.  The annual test utilizes a valuation model which includes assumptions representing management’s best estimate of future events, but would be sensitive to positive or negative changes incash flows for each of the underlying assumptions as well as to an alternative weighting of valuation methods which would result in a potentially higher or lower fair value of the respective reporting unit.  Based upon the completion of our annual test, management has determined that there was no impairment of value and that all reporting units estimated fair value, with the exception of the Europe reporting unit were substantially in excess of their carrying amounts.  Therefore, it is not reasonably likely that significant changes inconsistent among these estimates would result in an impairment charge.methods.

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Income Approach Used to Determine Fair Values

The Company’s Europe reporting unit exceeded its net bookincome approach is based upon the present value by 14%.of expected cash flows. Expected cash flows are converted to present value using factors that consider the timing and risk of the future cash flows. The key assumptionestimate of cash flows used is prepared on an unleveraged debt-free basis. We use a discount rate that drives the estimatedreflects a market-derived weighted average cost of capital. We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting unit's expected long-term operating and cash flow performance. The projections are based upon our best estimates of thisprojected economic and market conditions over the related period including growth rates, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value long-term growth rates, provisions for income taxes, future capital expenditures and changes in future cashless, debt-free working capital.

2016 Annual Goodwill Impairment Test

Critical assumptions that the Company used in performing the income approach for its reporting unit areunits included the revenue and cost projections.  If the revenue projections were not able to be obtained due to lower than anticipated sales from our customersfollowing:

·Applying a compounded annual growth rate for forecasted sales in our projected cash flows through 2021.

Reporting UnitCompounded Annual Growth Rate
North America3.0%
Europe2.8%
·Applying a terminal value growth rate of 2% for our reporting units to reflect our estimate of stable and perpetual growth.
·Determining an appropriate discount rate to apply to our projected cash flow results. This discount rate reflects, among other things, certain risks due to the uncertainties of achieving the cash flow results and the growth rates assigned. The discount rates applied were as follows:

Reporting UnitDiscount Rate
North America11.5%
Europe13.5%
·A weighting of the results of the income approach of 75% of our overall fair value calculation for each reporting unit.

Changes in the military/aerospace industry or if we are unable to obtain projected benefits associated with the 2012 Acquisitions, it would have a negative effect onany of these assumptions could materially impact the estimated fair value of our Europe reporting unit.units. Our forecasts take into account the near and long-term expected business performance, considering the long-term market conditions and business trends within the reporting units. For further discussion of the factors that could result in a change in our assumptions, see "Risk Factors" in this Form 10-K and our other filings with the SEC.
Market Approach Used to Determine Fair Values

AsEach year we consider various relevant market approaches that could be used to determine fair value.

The market approach estimates the fair value of December 31, 2013, the amountreporting unit by applying multiples of goodwill relatedoperating performance measures to the Company’s Europe reporting unit amountedunit's operating performance (the "Public Company Method"). These multiples are derived from comparable publicly-traded companies with similar investment characteristics to $12.5 million.  While management determined that there was no goodwill impairment of this reporting unit as of October 1, 2013, management continues to actively evaluate the current and expected revenue and earnings performance of this reporting unit, and such comparables are reviewed and updated as needed annually. We believe that this approach is actively managingappropriate because it provides a fair value estimate using multiples from entities with operations and economic characteristics comparable to our reporting units and the successful integrationCompany. The second market approach is based on the publicly traded common stock of the 2012 Acquisitions.  ACompany, and the estimate of fair value of the reporting unit is based on the applicable multiples of the Company (the "Quoted Price Method"). The third market approach is based on recent mergers and acquisitions of comparable publicly-traded and privately-held companies in our industries (the "Mergers and Acquisition Method").
The key estimates and assumptions that are used to determine fair value under these market approaches include current and forward 12-month operating performance results and the selection of the relevant multiples to be applied. Under the Public Company and Quoted Price Methods, a control premium, or an amount that a buyer is usually willing to pay over the current market price of a publicly traded company, is applied to the calculated equity values to adjust the public trading value upward for a 100% ownership interest, where applicable.
In order to assess the reasonableness of the calculated fair values of our reporting units, we also compare the sum of the reporting units' fair values to our market capitalization and calculate an implied control premium (the excess of the sum of the reporting units' fair values over the market capitalization). We evaluate the control premium by comparing it to control premiums of recent comparable market transactions. If the implied control premium is not reasonable in light of these recent transactions, we will reevaluate our fair value estimates of the reporting units by adjusting the discount rates and/or other assumptions.
We applied a combined weighting of 25% to the market approach when determining the fair value of these reporting units.
If our assumptions and related estimates change in the future, or if we change our reporting unit structure or other events and circumstances change (such as a sustained decrease in the price of our common stock, a decline in current market multiples, a significant adverse change in legal factors or business climate or a change in strategic direction, impacting the reporting unit’s revenue or earnings, the inability to achieve the revenue and cost projections resulting from the successful integration of the 2012 Acquired Companies, a material negative change in relationships with the reporting unit’s significant customers, unanticipated competition, orclimates, an adverse action or assessment by a regulator, would requireheightened competition, strategic decisions made in response to economic or competitive conditions or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of), we may be required to record impairment charges in future periods. Any impairment charges that we may take in the future could be material to our consolidated results of operations and financial condition.

Due to weakened market conditions in early 2016, which lowered our forecasted results, we performed an interim assessment priorimpairment test related to goodwill.  In connection with that interim test, we recorded an impairment charge of $101.7 million during the next requiredfirst half of 2016.  The Company conducted its annual assessmentgoodwill impairment test as of October 1, 2014.  If management determines2016, and no impairment was identified at that time.  Management has also concluded that the fair value of its goodwill exceeded the associated carrying value at December 31, 2016 and that no impairment exists as of that date. See Note 4, "Goodwill and Other Intangible Assets," for details of our goodwill balance and the impairment wouldgoodwill review performed in 2016.

We will continue to monitor goodwill on an annual basis and whenever events or changes in circumstances, such as significant adverse changes in business climate or operating results, changes in management's business strategy or significant declines in our stock price, indicate that there may be recognized in the period in which it is identified.potential indicator of impairment.

Indefinite-Lived Intangible Assets

The Company annually tests indefinite-lived intangible assets for impairment on October 1, using a fair value approach, the relief-from-royalty method (a form of the income approach  Noapproach).  Due to weakened market conditions in early 2016, which lowered our forecasted results, the Company performed an interim impairment test related to its indefinite-lived intangible assets.  In connection with the interim test, the Company recorded an impairment charge of $4.3 million during the first half of 2016.  The Company conducted its annual impairment test as of October 1, 2016, and no impairment was recognized as a result of the October 1, 2013 testing.  At December 31, 2013, the Company’s indefinite-lived intangible assets related solely to trademarks.identified at that time.  Management has also concluded that the fair value of its trademarks exceeds the associated carrying values at December 31, 20132016 and that no impairment existsexisted as of that date. At December 31, 2016, the Company's indefinite-lived intangible assets related solely to trademarks.

Long-Lived Assets and Other Intangible Assets

Property, plant and equipment represents an important component of the Company’s total assets.  The Company depreciates its property, plant and equipment on a straight-line basis over the estimated useful lives of the assets.  Intangible assets with a finite useful life are amortized on a straight-line basis over the estimated useful lives of the assets.  Management reviews long-lived assets and other intangible assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  An impairment exists when the estimated undiscounted cash flows expected to result from the use of an asset and its eventual disposition are less than its carrying amount.  If an impairment exists, the resulting write-down would be the difference between the fair market value of the long-lived asset and the related net book value.  No material impairments related to long-lived assets or amortized intangible assets were recorded during the years ended December 31, 20132016 or 2011.  During 2012, the Company recorded a total of $1.7 million in write-downs related to property, plant and equipment.  Of this amount, $1.4 million related to the closure of the Vinita, Oklahoma facility and is classified as restructuring costs in the accompanying statement of operations, and $0.3 million related to property, plant and equipment damaged as a result of Hurricane Sandy at our Jersey City, New Jersey and Inwood, New York facilities.2015.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as measured by enacted tax rates that are expected to be in effect in the periods when the deferred tax assets and liabilities are expected to be settled or realized.  Significant judgment is required in determining the worldwide provisions for income taxes.  Valuation allowances are provided for deferred tax assets where it is considered more likely than not that the Company will not realize the benefit of such asset.  In the ordinary course of a global business, the ultimate tax outcome is uncertain for many transactions.  It is the Company’sCompany's policy not to recognize tax benefits arising from uncertain tax positions that may not be realized in future years as a result of an examination by tax authorities.  The Company establishes the provisions based upon management’smanagement's assessment of exposure associated with permanent tax differences and tax credits applied to temporary difference adjustments.  The tax provisions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments to those provisions.  The accounting literature requires significant judgment in determining what constitutes an individual tax position as well as assessing the outcome of each tax position.  Changes in judgment as to recognition or measurement of tax positions can materially affect the estimate of the effective tax rate and, consequently, affect our operating results.

As of December 31, 2013, the Company has gross foreign income tax net operating losses (“NOL”) of $2.7 million and capital loss carryforwards of $0.2 million which amount to a total of $0.6 million of deferred tax assets.  The Company has established valuation allowances totaling $0.6 million against these deferred tax assets.  In addition, the Company has gross federal and state income tax NOLs of $10.7 million, including $5.4 million of NOLs acquired from Array, which amount to $3.2 million of deferred tax assets; capital loss carryforwards of $1.0 million which amount to $0.3 million of deferred tax assets; and tax credit carryforwards of $2.2 million. The Company has established  valuation allowances of $0.2 million, $0.3 million and $1.2 million, respectively, against these deferred tax assets.  The foreign NOL's can be carried forward indefinitely, the NOL acquired from Array expires at various times during 2022 – 2031,  the state NOL's expire at various times during 2014 – 2031 and the tax credit carryforwards expire at various times during 2025 - 2034.



Revenue Recognition

Revenue is recognized when the product has been delivered and title and risk of loss have passed to the customer, collection of the resulting receivable is deemed reasonably assured by management, persuasive evidence of an arrangement exists and the sale price is fixed and determinable.

Historically the Company has been successful in mitigating the risks associated with its revenue.  Such risks include product warranty, creditworthiness of customers and concentration of sales among a few major customers.

The Company is not contractually obligated to accept returns from non-distributor customers except for defective products or in instances where the product does not meet the Company’sCompany's quality specifications.  If these conditions exist, the Company would be obligated to repair or replace the defective product or make a cash settlement with the customer.  Distributors generally have the right to return up to 5% of their purchases overdepending on the previous three to six monthsproduct line for a specified period of time and are obligated to purchase an amount at least equal to the return.  If the Company terminates a relationship with a distributor, the Company is obligated to accept as a return all of the distributor’sdistributor's inventory from the Company.  The Company accrues an estimate for anticipated returns based on historical experience at the time revenue is recognized and adjusts such estimate as specific anticipated returns are identified.  If a distributor terminates its relationship with the Company, the Company is not obligated to accept any inventory returns.

During the year ended December 31, 2013,2016, the Company had two customersone customer with sales in excess of 10% of Bel’sBel's consolidated revenue. Management believes that the individual loss of either of these customers wouldthis individual customer could have a material adverse effect on the Company’s results of operations,our consolidated financial position and cash flows.results of operations.  During the year ended December 31, 2013,2016, the Company had sales of $67.0$59.8 million and $36.3 million, representing 19.2% and 10.4% of Bel’s consolidated revenue, to Hon Hai Precision Industry Company Ltd. and Flextronics International Ltd., respectively.representing 12.0% of Bel's consolidated revenue. Sales to both of these customersthis customer are primarily in the Company’sCompany's Asia operating segment.

Commitments and Contingencies — Litigation

On an ongoing basis, we assess the potential liabilities and costs related to any lawsuits or claims brought against us. We accrue a liability when we believe a loss is probable and when the amount of loss can be reasonably estimated. Litigation proceedings are evaluated on a case-by-case basis considering the available information, including that received from internal and outside legal counsel, to assess potential outcomes. While it is typically very difficult to determine the timing and ultimate outcome of these actions, we use our best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of these matters and whether a reasonable estimation of the probable loss, if any, can be made. In assessing probable losses, we consider insurance recoveries, if any. We expense legal costs, including those legal costs expected to be incurred in connection with a loss contingency, as incurred. We have in the past adjusted existing accruals as proceedings have continued, been settled or otherwise provided further information on which we could review the likelihood of outflows of resources and their measurability, and we expect to do so in future periods. Due to the inherent uncertainties related to the eventual outcome of litigation and potential insurance recovery, it is possible that disputed matters may be resolved for amounts materially different from any provisions or disclosures that we have previously made.

Other Matters

The Company believes that it has sufficient cash reserves to fund its foreseeable working capital needs.  It may, however, seek to expand such resources through bank borrowings, at favorable lending rates, from time to time. If the Company were to undertake aanother substantial acquisition for cash, the acquisition would either be funded with cash on hand or would be financed in part through cash on hand and in part through bank borrowings or the issuance of public or private debt or equity. If the Company borrows additional money to finance acquisitions, this would likelyfurther decrease the Company’sCompany's ratio of earnings to fixed charges, could impact other leverage criteria and could result infurther impact the imposition ofCompany's material restrictive covenants, depending on the size of the borrowing and the nature of the target company. Under its existing credit facility, the Company is required to obtain its lender’slender's consent for certain additional debt financing and to comply with other covenants, including the application of specific financial ratios, and may be restricted from paying cash dividends on its common stock. Depending on the nature of the transaction, the Company cannot assure investors that the necessary acquisition financing would be available to it on acceptable terms, or at all, when required. If the Company issues a substantial amount of stock either as consideration in an acquisition or to finance an acquisition, such issuance may dilute existing stockholders and may take the form of capital stock having preferences over its existing common stock.

New Financial Accounting Standards

The discussion of new financial accounting standards applicable to the Company is incorporated herein by reference to Note 1. “Description1, "Description of Business and Summary of Significant Accounting Policies” included in Part II, Item 8. “Financial Statements and Supplementary Data.”Policies."


Item 7A.7A.  Quantitative and Qualitative Disclosures About Market Risk

Fair Value of Financial Instruments — The estimated fair values of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies.  See Note 1, to the Company’s consolidated financial statements."Description of Business and Summary of Significant Accounting Policies."

The Company has not entered into and does not expect to enter into,any financial instruments for trading or hedging purposes. The Company does not currently anticipate entering into interest rate swaps and/or similar instruments.

The Company's carrying values of cash, cash equivalents, marketable securities, accounts receivable, restricted cash, accounts payable, accrued expenses and notes payable are a reasonable approximation of their fair value.

The Company enters into transactions denominated in U.S. Dollars,dollars, Hong Kong Dollars,dollars, the Chinese Renminbi, Euros,renminbi, euros, British Pounds,pounds, Mexican Pesos,pesos, the Czech Korunakoruna, the Swiss franc and other European currencies.  Fluctuations in the U.S. dollar exchange rate against these currencies could significantly impact the Company's consolidated results of operations.

The Company believes that a changeA hypothetical increase in the interest ratesrate on our outstanding debt of 1% or 2% would not have a material effectresult in incremental annual interest expense of approximately $1.4 million on the Company's consolidated statement of operations or balance sheet.operations.


Item 8.     Financial Statements and Supplementary Data

 See the consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements for the information required by this item.


-29-
32



BEL FUSE INC.
INDEX
    
Financial Statements Page 
    
    
Report of Independent Registered Public Accounting Firm
 F-134 
    
Consolidated Balance Sheets as of- December 31, 20132016 and 20122015
 F-235 
    
Consolidated Statements of Operations for Each of the Three Years Ended
   
   Years in the Period Ended December 31, 20132016
 F-336 
    
Consolidated Statements of Comprehensive (Loss) Income for Each ofthe
  
   the Three Years in the Period Ended December 31, 20132016
 F-437 
    
Consolidated Statements of Stockholders' Equity for Each ofthe Three
   
  the Three Years in the Period Ended December 31, 20132016
 F-538 
    
Consolidated Statements of Cash Flows for Each of the Three Years Ended
39 
  Years in the Period Ended December 31, 20132016
 F-6 
    
Notes to Consolidated Financial Statements
 F-841 


















REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Bel Fuse Inc.
Jersey City, New Jersey

We have audited the accompanying consolidated balance sheets of Bel Fuse Inc. and subsidiaries (the “Company”"Company") as of December 31, 20132016 and 2012,2015, and the related consolidated statements of operations, comprehensive (loss) income, stockholders’stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2013.2016. Our audits also included the financial statement schedule listed in the Index at Item 15. We also have audited the Company’sCompany's internal control over financial reporting as of  December 31, 2013,2016, based on criteria established in Internal Control—Control — Integrated Framework (1992)(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Transpower Technologies (HK) Limited and Array Connector Corporation (collectively the “2013 Acquired Companies”), which were acquired during the year ended December 31, 2013 and whose financial statements constitute 21% of total assets and 20% of net sales of the consolidated financial statement amounts as of and for the year ended December 31, 2013. Accordingly, our audit did not include the internal control over financial reporting of the 2013 Acquired Companies. The Company’sCompany's management is responsible for these consolidated financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’sManagement's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule and an opinion on the Company’sCompany's internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’scompany's internal control over financial reporting is a process designed by, or under the supervision of, the company’scompany's principal executive and principal financial officers, or persons performing similar functions, and effected by the company’scompany's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’scompany's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2)(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’scompany's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Bel Fuse Inc. and subsidiaries as of December 31, 20132016 and 2012,2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013,2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule of Bel Fuse Inc. and subsidiaries, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013,2016, based on the criteria established in Internal Control—Control — Integrated Framework (1992) (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ DELOITTE & TOUCHE LLP

New York, New York
March 13, 2014
10, 2017
BEL FUSE INC. AND SUBSIDIARIES
BEL FUSE INC. AND SUBSIDIARIES
 BEL FUSE INC. AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETSCONSOLIDATED BALANCE SHEETS 
CONSOLIDATED BALANCE SHEETS
 
(dollars in thousands, except share and per share data)(dollars in thousands, except share and per share data) (dollars in thousands, except share and per share data) 
             
  December 31,  December 31,  December 31,  December 31, 
  2013  2012  2016  2015 
    (Revised) 
ASSETSASSETS       
Current Assets:      
Cash and cash equivalents $62,123  $71,262 
Accounts receivable - less allowance for doubtful accounts        
   of $941 and $743 at December 31, 2013 and 2012, respectively  63,849   42,865 
Inventories  70,019   54,924 
Restricted cash, current  -   12,993 
Prepaid expenses and other current assets  3,519   4,482 
Refundable income taxes  1,689   2,955 
Deferred income taxes  2,995   1,437 
    Total Current Assets  204,194   190,918 
         
Property, plant and equipment - net  40,896   35,002 
Current assets:      
Cash and cash equivalents $73,411  $85,040 
Accounts receivable - less allowance for doubtful accounts        
of $1,781 and $1,747 at December 31, 2016 and 2015, respectively  74,416   86,268 
Inventories  98,871   98,510 
Other current assets  8,744   10,653 
Total current assets  255,442   280,471 
Property, plant and equipment, net  48,755   57,611 
Intangible assets, net  74,828   87,827 
Goodwill  17,951   121,634 
Deferred income taxesDeferred income taxes  1,680   1,009   3,410   3,438 
Intangible assets - net  29,472   22,191 
Goodwill  18,360   13,559 
Other assetsOther assets  13,448   12,510   26,354   27,524 
    TOTAL ASSETS $308,050  $275,189 
Total assets $426,740  $578,505 
                 
LIABILITIES AND STOCKHOLDERS' EQUITYLIABILITIES AND STOCKHOLDERS' EQUITY         
Current Liabilities:        
Current liabilities:        
Accounts payable $47,235  $49,798 
Accrued expenses  31,549   38,323 
Current maturities of long-term debt  11,395   24,772 
Other current liabilities  2,148   8,959 
Total current liabilities  92,327   121,852 
Accounts payable $29,518  $18,862         
Long-term liabilities:        
Long-term debt  129,850   158,776 
Liability for uncertain tax positions  27,458   40,295 
Minimum pension obligation and unfunded pension liability  16,900   15,576 
Deferred income taxes  1,460   8,310 
Other long-term liabilities  311   574 
Total liabilities  268,306   345,383 
Accrued expenses  22,453   25,360         
Commitments and contingencies        
Short-term borrowings under revolving credit line  12,000   -         
Stockholders' equity:        
Preferred stock, no par value, 1,000,000 shares authorized; none issued  -   - 
Class A common stock, par value $.10 per share, 10,000,000 shares        
authorized; 2,174,912 shares outstanding at each date (net of        
1,072,769 treasury shares)  217   217 
Class B common stock, par value $.10 per share, 30,000,000 shares        
authorized; 9,851,652 and 9,701,977 shares outstanding, respectivelyauthorized; 9,851,652 and 9,701,977 shares outstanding, respectively     
(net of 3,218,307 treasury shares)  985   970 
Additional paid-in capital  27,242   24,440 
Retained earnings  161,287   229,371 
Accumulated other comprehensive loss  (31,297)  (21,876)
Total stockholders' equity  158,434   233,122 
Total liabilities and stockholders' equity $426,740  $578,505 
Notes payable  739   205         
Income taxes payable  1,394   1,040 
Accrued restructuring costs  -   122 
Dividends payable  786   799 
    Total Current Liabilities  66,890   46,388 
         
Long-term Liabilities:        
Liability for uncertain tax positions  1,218   2,161 
Minimum pension obligation and unfunded pension liability  10,830   11,045 
Other long-term liabilities  410   233 
    Total Long-term Liabilities  12,458   13,439 
    Total Liabilities  79,348   59,827 
         
Commitments and Contingencies        
         
Stockholders' Equity:        
Preferred stock, no par value, 1,000,000 shares authorized; none issued  -   - 
Class A common stock, par value $.10 per share, 10,000,000 shares        
    authorized; 2,174,912 shares outstanding at each date (net of        
    1,072,769 treasury shares)  217   217 
Class B common stock, par value $.10 per share, 30,000,000 shares        
     authorized; 9,335,677 and 9,372,170 shares outstanding, respectively        
     (net of 3,218,307 treasury shares)  933   937 
Additional paid-in capital  18,914   20,452 
Retained earnings  207,993   195,183 
Accumulated other comprehensive income (loss)  645   (1,427)
    Total Stockholders' Equity  228,702   215,362 
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $308,050  $275,189 
         
See notes to consolidated financial statements. 
See accompanying notes to consolidated financial statements.See accompanying notes to consolidated financial statements. 


BEL FUSE INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(dollars in thousands, except per share data) 
          
  Years Ended December 31, 
  2013  2012  2011 
          
Net sales $349,189  $286,594  $295,121 
             
Costs and expenses:            
Cost of sales  286,952   240,115   244,749 
Selling, general and administrative  45,831   39,362   39,284 
Litigation charges  41   26   3,471 
Restructuring charges  1,387   5,245   314 
(Gain) loss on disposal/sale of property, plant and equipment  (69)  183   (93)
   334,142   284,931   287,725 
             
Income from operations  15,047   1,663   7,396 
Impairment of investment  -   (775)  - 
Gain (loss) on sale of investments  98   (142)  119 
Interest expense  (156)  (16)  - 
Interest income and other, net  176   267   357 
             
Earnings before (benefit) provision for income taxes  15,165   997   7,872 
(Benefit) provision for income taxes  (743)  (1,376)  4,108 
             
Net earnings $15,908  $2,373  $3,764 
             
             
Earnings per share:            
Class A common share - basic and diluted $1.32  $0.17  $0.28 
Class B common share - basic and diluted $1.41  $0.21  $0.33 
             
Weighted-average shares outstanding:            
Class A common share - basic and diluted  2,174,912   2,174,912   2,174,912 
Class B common share - basic and diluted  9,239,646   9,624,578   9,597,661 
             
Dividends paid per share:            
Class A common share $0.24  $0.24  $0.24 
Class B common share $0.28  $0.28  $0.28 
             
             
See notes to consolidated financial statements. 

BEL FUSE INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(dollars in thousands, except per share data) 
          
   Year Ended December 31, 
  2016  2015  2014 
          
          
Net sales $500,153  $567,080  $487,076 
Cost of sales  400,245   458,253   399,721 
Gross profit  99,908   108,827   87,355 
             
Selling, general and administrative expenses  71,005   77,952   72,061 
Impairment of goodwill and other intangible assets  105,972   -   - 
(Gain) loss on sale of property, plant and equipment  (2,644)  161   (10)
Restructuring charges  2,087   2,114   1,832 
(Loss) income from operations  (76,512)  28,600   13,472 
             
Interest expense  (6,662)  (7,588)  (3,978)
Interest income and other, net  622   4,720   276 
(Loss) earnings before (benefit) provision for income taxes  (82,552)  25,732   9,770 
             
(Benefit) provision for income taxes  (17,718)  6,535   1,167 
Net (loss) earnings available to common shareholders $(64,834) $19,197  $8,603 
             
             
Net (loss) earnings per common share:            
Class A common shares - basic and diluted $(5.25) $1.53  $0.69 
Class B common shares - basic and diluted $(5.48) $1.64  $0.75 
             
Weighted-average shares outstanding:            
Class A common shares - basic and diluted  2,175   2,175   2,175 
Class B common shares - basic and diluted  9,749   9,698   9,491 
             
Dividends paid per common share:            
Class A common shares $0.24  $0.24  $0.24 
Class B common shares $0.28  $0.28  $0.28 
             
             
See accompanying notes to consolidated financial statements. 




BEL FUSE INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 
(dollars in thousands) 
          
          
  Years Ended December 31, 
  2013  2012  2011 
          
Net earnings $15,908  $2,373  $3,764 
             
Other comprehensive income (loss):            
Currency translation adjustment, net of taxes of $77, $0 and $0  977   281   (236)
Reclassification adjustment for writedown/loss on sale of marketable            
   securities included in net earnings, net of tax of $348  -   569   - 
Reclassification adjustment for gain on sale of marketable securities            
   included in net earnings, net of tax of ($37), $0 and ($45)  (61)  -   (74)
Unrealized holding gains (losses) on marketable securities arising during            
   the period, net of taxes of $45, ($154) and ($310), respectively  87   (251)  (507)
Change in unfunded SERP liability, net of taxes of $457,            
  ($210) and ($306), respectively  1,069   (476)  (694)
Other comprehensive income (loss)  2,072   123   (1,511)
             
Comprehensive income $17,980  $2,496  $2,253 
             
             
See notes to consolidated financial statements. 


 
BEL FUSE INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
 
(dollars in thousands) 
          
          
   Year Ended December 31, 
  2016  2015  2014 
          
          
Net (loss) earnings $(64,834) $19,197  $8,603 
             
Other comprehensive (loss) income:            
Currency translation adjustment, net of taxes of ($648),  ($194) and ($219)  (9,671)  (9,954)  (11,255)
Unrealized holding (losses) gains on marketable securities arising during            
   the period, net of taxes of ($2), $5 and $90  (10)  5   147 
Change in unfunded SERP liability, net of taxes of $71, $2 and            
  ($631), respectively  260   21   (1,485)
Other comprehensive loss  (9,421)  (9,928)  (12,593)
             
Comprehensive (loss) income $(74,255) $9,269  $(3,990)
             
             
See accompanying notes to consolidated financial statements. 
F-4
37


BEL FUSE INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
(dollars in thousands) 
                   
        Accumulated          
        Other  Class A  Class B  Additional 
     Retained  Comprehensive  Common  Common  Paid-In 
  Total  Earnings  (Loss) Income  Stock  Stock  Capital 
                   
Balance, January 1, 2011 $220,333  $195,477  $(39) $217  $953  $23,725 
                         
Cash dividends declared on Class A common stock $(522) $(522)                
Cash dividends declared on Class B common stock  (2,690)  (2,690)                
Issuance of restricted common stock  -              $13  $(13)
Forfeiture of restricted common stock  -               (2)  2 
Foreign currency translation adjustment  (236)     $(236)            
Unrealized holding losses on marketable securities                        
  arising during the year, net of taxes of ($310)  (507)      (507)            
Reclassification adjustment for unrealized holding                        
   gains included in net earnings, net of taxes of ($45)  (74)      (74)            
Reduction in APIC pool associated with tax                        
   deficiencies related to restricted stock awards  (3)                  (3)
Stock-based compensation expense  1,709                   1,709 
Change in unfunded SERP liability, net of taxes of ($306)  (694) ��    (694)            
Net earnings  3,764   3,764                 
                         
Balance, December 31, 2011 $221,080  $196,029  $(1,550) $217  $964  $25,420 
                         
Cash dividends declared on Class A common stock $(522) $(522)                
Cash dividends declared on Class B common stock  (2,697)  (2,697)                
Issuance of restricted common stock  -              $13  $(13)
Forfeiture of restricted common stock  -               (3)  3 
Repurchase/retirement of Class B common stock  (6,644)              (37)  (6,607)
Foreign currency translation adjustment  281      $281             
Unrealized holding losses on marketable securities                        
  arising during the year, net of taxes of ($154)  (251)      (251)            
Reclassification adjustment for unrealized holding                        
   losses included in net earnings, net of taxes of $348  569       569             
Reduction in APIC pool associated with tax                        
   deficiencies related to restricted stock awards  (118)                  (118)
Stock-based compensation expense  1,767                   1,767 
Change in unfunded SERP liability, net of taxes of ($210)  (476)      (476)            
Net earnings  2,373   2,373                 
                         
Balance, December 31, 2012 $215,362  $195,183  $(1,427) $217  $937  $20,452 
                         
Cash dividends declared on Class A common stock $(522) $(522)                
Cash dividends declared on Class B common stock  (2,576)  (2,576)                
Issuance of restricted common stock  -              $16  $(16)
Forfeiture of restricted common stock  -               (2)  2 
Repurchase/retirement of Class B common stock  (3,356)              (18)  (3,338)
Foreign currency translation adjustment  977      $977             
Unrealized holding gains on marketable securities                        
  arising during the year, net of taxes of $45  87       87             
Reclassification adjustment for unrealized holding                        
   gains included in net earnings, net of taxes of ($37)  (61)      (61)            
Reduction in APIC pool associated with tax                        
   deficiencies related to restricted stock awards  (65)                  (65)
Stock-based compensation expense  1,879                   1,879 
Change in unfunded SERP liability, net of taxes of $457  1,069       1,069             
Net earnings  15,908   15,908                 
                         
Balance, December 31, 2013 $228,702  $207,993  $645  $217  $933  $18,914 
                         
See notes to consolidated financial statements. 

BEL FUSE INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
(dollars in thousands) 
                   
        Accumulated          
        Other  Class A  Class B  Additional 
     Retained  Comprehensive  Common  Common  Paid-In 
  Total  Earnings  (Loss) Income  Stock  Stock  Capital 
                   
Balance at December 31, 2013 $228,702  $207,993  $645  $217  $933  $18,914 
                         
Cash dividends declared on Class A common stock  (522)  (522)  -    -    -    -  
Cash dividends declared on Class B common stock  (2,665)  (2,665)  -    -    -    -  
Issuance of restricted common stock  -   -    -    -    38   (38)
Forfeiture of restricted common stock  -   -    -    -    (2)  2 
Foreign currency translation adjustment, net of taxes of ($219)  (11,255)  -    (11,255)  -    -    -  
Unrealized holding gains on marketable securities                        
  arising during the year, net of taxes of $90  147   -    147   -    -    -  
Increase in APIC pool associated with tax                        
   benefits related to restricted stock awards  31   -    -    -    -    31 
Stock-based compensation expense  2,717   -    -    -    -    2,717 
Change in unfunded SERP liability, net of taxes of ($631)  (1,485)  -    (1,485)  -    -    -  
Net earnings  8,603   8,603   -    -    -    -  
                         
Balance at December 31, 2014 $224,273  $213,409  $(11,948) $217  $969  $21,626 
                         
Cash dividends declared on Class A common stock  (522)  (522)  -    -    -    -  
Cash dividends declared on Class B common stock  (2,713)  (2,713)  -    -    -    -  
Issuance of restricted common stock  -   -    -    -    8   (8)
Forfeiture of restricted common stock  -   -    -    -    (7)  7 
Foreign currency translation adjustment, net of taxes of ($194)  (9,954)  -    (9,954)  -    -    -  
Unrealized holding gains on marketable securities              -    -    -  
  arising during the year, net of taxes of $5  5   -    5   -    -    -  
Stock-based compensation expense  2,815   -    -    -    -    2,815 
Change in unfunded SERP liability, net of taxes of $2  21   -    21   -    -    -  
Net earnings  19,197   19,197   -    -    -    -  
                         
Balance at December 31, 2015 $233,122  $229,371  $(21,876) $217  $970  $24,440 
                         
Cash dividends declared on Class A common stock  (522)  (522)  -    -    -    -  
Cash dividends declared on Class B common stock  (2,728)  (2,728)  -    -    -    -  
Issuance of restricted common stock  -   -    -    -    18   (18)
Forfeiture of restricted common stock  -   -    -    -    (3)  3 
Foreign currency translation adjustment, net of taxes of ($648)  (9,671)  -    (9,671)  -    -    -  
Unrealized holding gains on marketable securities                        
  arising during the year, net of taxes of ($2)  (10)  -    (10)  -    -    -  
Stock-based compensation expense  2,817   -    -    -    -    2,817 
Change in unfunded SERP liability, net of taxes of $71  260   -    260   -    -    -  
Net loss  (64,834)  (64,834)  -    -    -    -  
                         
Balance at December 31, 2016 $158,434  $161,287  $(31,297) $217  $985  $27,242 
                         
See accompanying notes to consolidated financial statements. 


BEL FUSE INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(dollars in thousands) 
          
  Years Ended December 31, 
  2013  2012  2011 
          
Cash flows from operating activities:         
Net earnings $15,908  $2,373  $3,764 
Adjustments to reconcile net earnings to net cash            
   provided by operating activities:            
Depreciation and amortization  12,382   9,113   8,667 
Stock-based compensation  1,879   1,767   1,709 
(Gain) loss on disposal/sale of property, plant and equipment  (69)  183   (93)
Impairment/loss on disposal of assets related to restructuring  -   1,389   - 
(Gain) loss on sale of investments  (98)  142   (119)
Impairment of investment  -   775   - 
Other, net  574   97   1,114 
Deferred income taxes  (877)  (1,234)  683 
Changes in operating assets and liabilities (see below)  (19,118)  (2,996)  14,542 
      Net Cash Provided by Operating Activities  10,581   11,609   30,267 
             
Cash flows from investing activities:            
Purchase of property, plant and equipment  (6,940)  (4,744)  (2,928)
Purchase of intangible asset  (1,336)  -   - 
Purchase of marketable securities  -   (24)  (5,135)
Purchase of company-owned life insurance  (2,820)  -   (2,406)
Cash transferred from (to) restricted cash  12,993   -   (12,830)
Payments for acquisitions, net of cash acquired  (30,994)  (19,410)  - 
Proceeds from sale of marketable securities  2,820   5,119   433 
Proceeds from disposal/sale of property, plant and equipment  96   193   386 
       Net Cash Used In Investing Activities  (26,181)  (18,866)  (22,480)
             
Cash flows from financing activities:            
Borrowings under revolving credit line  12,000   -   - 
Dividends paid to common shareholders  (3,111)  (3,225)  (3,205)
Increase (reduction) in notes payable  506   (17)  - 
Purchase and retirement of Class B common stock  (3,356)  (6,644)  - 
      Net Cash Provided By (Used In) Financing Activities  6,039   (9,886)  (3,205)
Effect of exchange rate changes on cash  422   164   (170)
             
Net (Decrease) Increase in Cash and Cash Equivalents  (9,139)  (16,979)  4,412 
             
Cash and Cash Equivalents - beginning of year  71,262   88,241   83,829 
             
Cash and Cash Equivalents - end of year $62,123  $71,262  $88,241 
             
See notes to consolidated financial statements. 

BEL FUSE INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(dollars in thousands) 
          
   Years Ended December 31, 
  2016  2015  2014 
          
Cash flows from operating activities:         
Net (loss) earnings $(64,834) $19,197  $8,603 
Adjustments to reconcile net (loss) earnings to net cash            
   provided by operating activities:            
Impairment of goodwill and other intangible assets  105,972   -   - 
Depreciation and amortization  21,778   23,009   20,367 
Stock-based compensation  2,817   2,815   2,717 
Amortization of deferred financing costs  1,804   1,432   699 
Deferred income taxes  (6,401)  (356)  (2,691)
Realized and unrealized gains on foreign currency revaluation  (3,063)  (5,095)  (4,313)
(Gain) loss on disposal of property, plant and equipment  (2,583)  426   273 
Other, net  864   3,209   389 
Changes in operating assets and liabilities:            
Accounts receivable  10,803   12,187   1,382 
Inventories  (2,794)  12,951   9,121 
Other current assets  (670)  846   693 
Other assets  297   2,161   (450)
Accounts payable  (588)  (10,022)  (3,890)
Accrued expenses  (6,120)  (3,113)  (10,170)
Other liabilities  (16,565)  (295)  423 
Income taxes payable  (2,114)  6,437   (696)
      Net cash provided by operating activities  38,603   65,789   22,457 
             
Cash flows from investing activities:            
Purchase of property, plant and equipment  (8,223)  (9,891)  (9,042)
Purchase of marketable securities  -   -   (2,936)
Purchase of company-owned life insurance  (2,164)  (2,820)  (2,820)
Payments for acquisitions, net of cash acquired  -   -   (208,693)
Proceeds from cash surrender of COLI policies  -   -   5,756 
Proceeds from sale of marketable securities  2,164   2,820   - 
Proceeds from disposal/sale of property, plant and equipment  5,839   77   65 
       Net cash used in investing activities  (2,384)  (9,814)  (217,670)
             
(continued) 
             
See notes to consolidated financial statements. 



BEL FUSE INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) 
(dollars in thousands) 
          
  Years Ended December 31, 
  2013  2012  2011 
          
Changes in operating assets and liabilities consist of:         
          
(Increase) decrease in accounts receivable $(8,025) $260  $14,172 
(Increase) decrease in inventories  (6,538)  (343)  3,561 
Decrease (increase) in prepaid expenses and other current assets  1,702   (273)  (1,746)
Increase in other assets  (62)  (230)  (140)
Increase (decrease) in accounts payable  1,485   (1,422)  (2,683)
(Decrease) increase in accrued expenses  (7,548)  553   501 
Increase in other liabilities  165   11   - 
(Decrease) increase in accrued restructuring costs  (122)  122   (507)
(Decrease) increase in income taxes payable  (175)  (1,674)  1,384 
  $(19,118) $(2,996) $14,542 
             
Supplementary information:            
             
Cash (received) paid during the year for:            
Income taxes, net of refunds received $(474) $1,464  $1,947 
Interest $156  $16  $- 
             
Details of acquisition (see Note 2):            
Fair value of identifiable net assets acquired $34,737  $13,336  $- 
Goodwill  4,616   9,065   - 
     Fair value of net assets acquired $39,353  $22,401  $- 
             
Fair value of consideration transferred $39,353  $22,401  $- 
Less: Cash acquired in acquisition  (8,359)  (2,991)  - 
     Cash paid for acquisition, net of cash acquired $30,994  $19,410  $- 
             
See notes to consolidated financial statements. 




BEL FUSE INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) 
(dollars in thousands) 
          
   Year Ended December 31, 
  2016  2015  2014 
          
Cash flows from financing activities:         
Dividends paid to common shareholders  (3,245)  (3,238)  (3,160)
Deferred financing costs  (718)  (15)  (5,756)
Borrowings under revolving credit line  -   12,500   23,000 
Repayments under revolving credit line  -   (35,500)  (12,000)
Reduction in notes payable  (126)  (123)  (161)
Proceeds from long-term debt  -   -   215,000 
Repayments of long-term debt  (43,389)  (22,438)  (5,375)
      Net cash (used in) provided by financing activities  (47,478)  (48,814)  211,548 
Effect of exchange rate changes on cash  (370)  741   (1,320)
             
Net (decrease) increase in cash and cash equivalents  (11,629)  7,902   15,015 
             
Cash and cash equivalents - beginning of year  85,040   77,138   62,123 
             
Cash and cash equivalents - end of year $73,411  $85,040  $77,138 
             
             
Supplemental cash flow information:            
             
Cash paid during the year for:            
Income taxes, net of refunds received $2,459  $580  $4,686 
Interest payments $4,843  $6,153  $3,210 
             
Details of acquisition (see Note 2):            
Fair value of identifiable net assets acquired $-  $-  $130,747 
Goodwill  -   -   105,402 
     Fair value of net assets acquired $-  $-  $236,149 
             
Fair value of consideration transferred $-  $-  $236,149 
Less: Cash acquired in acquisition  -   -   (27,456)
     Cash paid for acquisition, net of cash acquired $-  $-  $208,693 
             
See accompanying notes to consolidated financial statements. 

F-7
40

BEL FUSE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2016, 2015 AND 2014
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
1.DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Bel Fuse Inc. and subsidiaries (“Bel” or("Bel," the “Company”"Company," "we," "us," and "our") design, manufacture and sell a broad array of products that power, protect and connect electronic circuits.  These products are used in the networking, telecommunication, high-speed data transmission, commercial aerospace, military, broadcasting, transportation and consumer electronic industries around the world.  The Company manages itsWe manage our operations geographically through itsour three reportable operating segments: North America, Asia and Europe.

On March 9, 2012,June 19, 2014, we completed the Company completed its acquisition of 100% of the issued and outstanding capital stock of GigaCom Interconnect AB (“GigaCom”the Power-One Power Solutions business ("Power Solutions"). of ABB Ltd.  On July 31, 2012,25, 2014, we completed the Company consummated its acquisition of 100% of the issued and outstanding capital stock of Fibreco Ltd. (“Fibreco”the U.S. and U.K. Connectivity Solutions businesses from Emerson Electric Co. ("Emerson").  On September 12, 2012,August 29, 2014, we completed the Company completed its acquisition of 100%the Connectivity Solutions business in China from Emerson (collectively with the U.S. and U.K. portion of the issued and outstanding capital stock of Powerbox Italia S.r.L. and its subsidiary, Powerbox Design (collectively, “Powerbox”, now merged to form Bel Power Europe S.r.l.transaction, "Connectivity Solutions").  The acquisitions of GigaCom, FibrecoPower Solutions and PowerboxConnectivity Solutions may hereafter be referred to collectively as either the “2012 Acquisitions”"2014 Acquisitions" or the “2012"2014 Acquired Companies”.

On March 29, 2013, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Transpower Technologies (HK) Limited (“Transpower”) and certain other tangible and intangible assets related to the Transpower magnetics business of TE Connectivity (“TE”).  These operations are now doing business as TRP Connector (“TRP”).  On August 20, 2013, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Array Connector Corporation (“Array”). The acquisitions of TRP and Array may hereafter be referred to collectively as either the “2013 Acquisitions” or the “2013 Acquired Companies”Companies".

Accordingly, as of the respective acquisition dates, all of the assets acquired and liabilities assumed were recorded at their preliminary fair values and the Company’sCompany's consolidated results of operations for the years ended December 31, 20132016, 2015 and 20122014 include the operating results of the acquired companies from their respective acquisition dates through the respective period end dates.  The accompanying consolidated balance sheet as of December 31, 2012 have been restated to reflect the acquisition-date fair values related to property, plant and equipment, intangible assets and various other balance sheet accounts of the 2012 Acquired Companies as further outlined in Note 2 to the consolidated financial statements contained in this Annual Report.  The consolidated statements of operations, stockholders’ equity and cash flows for the year ended December 31, 20122014 reflect immaterial measurement period adjustments related to the 20122014 Acquisitions.  The measurement period adjustments were finalized within the respective measurement periods, and, in the aggregate, were not considered material to the consolidated financial statements.  See Note 2, "Acquisitions and Disposition," for further details.

All amounts included in the tables to these notes to consolidated financial statements, except per share amounts, are in thousands.

Principles of ConsolidationPRINCIPLES OF CONSOLIDATION - The consolidated financial statements include all of the accounts of the Company and its wholly owned subsidiaries, including businesses acquired since their respective dates of acquisition.subsidiaries.  All intercompany transactions and balances have been eliminated.eliminated in consolidation.

Use of EstimatesUSE OF ESTIMATES - The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires the Companyus to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates itswe evaluate our estimates, including but not limited to those related to product returns, provisions for bad debts,debt, inventories, goodwill, intangible assets, investments, Supplemental Executive Retirement Plan (“SERP”("SERP") expense, income taxes, contingencies and litigation. The Company bases itsWe base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

CASH EQUIVALENTSCash Equivalents - Cash equivalents include short-term investments in money market funds and certificates of deposit with an original maturity of three months or less when purchased.

ALLOWANCE FOR DOUBTFUL ACCOUNTSAllowance for Doubtful Accounts - The Company maintains allowancesWe maintain an allowance for doubtful accounts for estimated losses from the inability of itsour customers to make required payments.  The Company determines its allowancesWe determine our allowance by both specific identification of customer accounts where appropriate and the application of historical loss experience to non-specific accounts.  As of December 31, 2013 and 2012, the Company had an allowance for doubtful accounts of $0.9 million and $0.7 million, respectively.

MARKETABLE SECURITIES - The Company generally classifies its equity securities as “available for sale” and, accordingly, reflects unrealized gains and losses, net of deferred income taxes, as a component of accumulated other comprehensive income (loss).  The Company periodically reviews its marketable securities and determines whether the investments are other-than-temporarily impaired.  If the investments are deemed to be other-than-temporarily impaired, the investments are written down to their then current fair market value.  The fair values of marketable securities are based on quoted market prices.  Realized gains or losses from the sale of marketable securities are based on the specific identification method.  During the years ended December 31, 2013, 2012 and 2011, the Company recorded net realized gains (losses) on sales of investments in the amount of $0.1 million, ($0.1) million and $0.1 million, respectively, and an other-than-temporary impairment charge of $0.8 million during the year ended December 31, 2012.

Effects of Foreign CurrencyBUSINESS COMBINATIONS – The Company accounts for business combinations by recognizingIn non-U.S. locations that are not considered highly inflationary, we translate the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquireebalance sheets at the acquisition date, measuredend of period exchange rates with translation adjustments accumulated within stockholders' equity on our consolidated balance sheets. We translate the statements of operations at their fair values as of that date,the average exchange rates during the applicable period.  In connection with limited exceptions specified inforeign currency denominated transactions, including multi-currency intercompany payable and receivable transactions and loans, the accounting literature.  Acquisition-related costs, including restructuring costs,  are recognized separately from the acquisition and will generally be expensed as incurred.

EFFECTS OF FOREIGN CURRENCY - Most of the Company’s significant expenses, including raw materials, labor and manufacturing expenses, areCompany incurred primarily in U.S. Dollars or the Chinese Renminbi, and to a lesser extent in British Pounds and Mexican Pesos.  The Chinese Renminbi appreciated by approximately 2.0% in 2013 as compared to 2012.  Future appreciation of the Renminbi would result in the Company’s incurring higher costs for all expenses incurred in the PRC.  The Company's European entities, whose functional currencies are Euros, British Pounds and Czech Korunas, enter into transactions which include sales denominated principally in Euros, British Pounds and various other European currencies, and purchases that are denominated principally in U.S. Dollars and British Pounds.  Such transactions resulted in net realized and unrealized currency exchange (losses) gains of ($0.6)$3.1 million, $5.1 million and $0.6$4.3 million for the years ended December 31, 20132016, 2015 and 2012,2014, respectively, which were included in net earnings.  Realized and unrealized currency transaction losses duringSG&A expenses on the year ended December 31, 2011 were not material.  The functional currency for some foreign operations is the local currency. Assets and liabilitiesconsolidated statements of foreign operations are translated at exchange rates as of the balance sheet date, and income, expense and cash flow items are translated at the average exchange rate for the applicable period.  Translation adjustments are recorded in other comprehensive income.  The U.S. Dollar is used as the functional currency for certain foreign operations that conduct their business in U.S. Dollars.  Translation of subsidiaries’ foreign currency financial statements into U.S. dollars resulted in translation gains (losses) of $1.0 million, $0.3 million and ($0.2) million for the years ended December 31, 2013, 2012 and 2011, respectively, which are included in accumulated other comprehensive income (loss).operations.

CONCENTRATION OF CREDIT RISKConcentration of Credit Risk - Financial instruments which potentially subject the Companyus to concentrations of credit risk consist principally of accounts receivable and temporary cash investments.  The Company grantsWe grant credit to customers that are primarily original equipment manufacturers and to subcontractors of original equipment manufacturers based on an evaluation of the customer’scustomer's financial condition, without requiring collateral.  Exposure to losses on receivables is principally dependent on each customer’scustomer's financial condition.  The Company controls itsWe control our exposure to credit risk through credit approvals, credit limits and monitoring procedures and establishesestablish allowances for anticipated losses.  See Note 12, of notes to the Company’s consolidated financial statements"Segments," for disclosures regarding significant customers.

The Company places itsWe place temporary cash investments with quality financial institutions and commercial issuers of short-term paper and, by policy, limitslimit the amount of credit exposure in any one financial instrument.

INVENTORIESInventories - Inventories are stated at the lower of weighted-average cost or market.  Costs related to inventories include raw materials, direct labor and manufacturing overhead which are included in cost of sales on the consolidated statements of operations.  The Company utilizes the average cost method in determining amounts to be removed from inventory.

REVENUE RECOGNITIONRevenue Recognition – Revenue is recognized when the product has been delivered and title and risk of loss has passed to the customer, collection of the resulting receivable is deemed reasonably assured by management, persuasive evidence of an arrangement exists and the sales price is fixed and determinable.  Substantially all of the Company'sour shipments are FCA (free carrier), which provides for title to pass upon delivery to the customer's freight carrier.  Some product is shipped DDP/DDU with title passing when the product arrives at the customer's dock.  DDP is defined as Delivered Duty Paid by the Company and DDU is Delivered Duty Unpaid by the Company.

For certain customers, the Company provideswe provide consigned inventory, either at the customer’scustomer's facility or at a third-party warehouse. Sales of consigned inventory are recorded when the customer withdraws inventory from consignment.

The Company typically has a twelve-month warranty policy for workmanship defects.  As the Company has not historically had significant warranty claims, no general reserves for warranties have been established.  The Company is not contractually obligated to accept returns except for defective product or in instances where the product does not meet the Company’sCompany's product specifications.  However, the Company may permit its customers to return product for other reasons.  In these instances, the Company would generally require a significant cancellation penalty payment by the customer.  The Company estimates such returns, where applicable, based upon management's evaluation of historical experience, market acceptance of products produced and known negotiations with customers.  Such estimates are deducted from sales and provided for at the time revenue is recognized.

Product Warranties – Warranties vary by product line and are competitive for the markets in which the Company operates.  Warranties generally extend for one to three years from the date of sale. The Company reviews its warranty liability quarterly based on an analysis of actual expenses and failure rates accompanied with estimated future costs and projected failure rate trends. Factors taken into consideration when evaluating our warranty reserve are (i) historical claims for each product, (ii) volume increases, (iii) life of warranty, (iv) historical warranty repair costs and (v) other factors. To the extent that actual experience differs from our estimate, the provision for product warranties will be adjusted in future periods. Actual warranty repair costs are charged against the reserve balance as incurred.  See Note 11, "Accrued Expenses."

Goodwill and Identifiable Intangible Assets – Goodwill represents the excess of the aggregate of the following (1) consideration transferred, (2) the fair value of any noncontrolling interest in the acquiree and, (3) if the business combination is achieved in stages, the acquisition-date fair value of our previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

Identifiable intangible assets consist primarily of patents, licenses, trademarks, trade names, customer lists and relationships, non-compete agreements and technology based intangibles and other contractual agreements. We amortize finite lived identifiable intangible assets over the shorter of their stated or statutory duration or their estimated useful lives, ranging from 1 to 29 years, on a straight-line basis to their estimated residual values and periodically review them for impairment. Total identifiable intangible assets comprise 17.5% and 15.2% in 2016 and 2015, respectively, of our consolidated total assets.

F-9
42
FINITE-LIVED INTANGIBLE ASSETS – IntangibleWe use the acquisition method of accounting for all business combinations and do not amortize goodwill or intangible assets with finiteindefinite useful lives. Goodwill and intangible assets with indefinite useful lives are stated at cost less accumulated amortization.  Amortization is calculated using the straight-line method over the estimated useful life of the asset.    

GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE ASSETS – The Company evaluates its goodwill and other indefinite-lived intangible assetstested for possible impairment annually asduring the fourth quarter of October 1each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Impairment and Disposal of Long-Lived Assets – For definite-lived intangible assets, such as customer relationships, contracts, intellectual property, and for other long-lived assets, such as property, plant and equipment, whenever impairment indicators ariseare present, we perform a review for impairment. We calculate the undiscounted value of the projected cash flows associated with the asset, or asset group, and compare this estimated amount to the carrying amount. If the carrying amount is found to be greater, we record an impairment loss for the excess of book value over the fair value. In addition, in accordance with Accounting Standards Codification (“ASC”) Topic 350, “Intangibles – Goodwillall cases of an impairment review, we re-evaluate the remaining useful lives of the assets and Other”.modify them, as appropriate.

The Company tests goodwill forFor indefinite-lived intangible assets, such as trademarks and trade names, each year and whenever impairment using a fair value approach at the reporting unit level.  A reporting unit is an operating segment or one level below an operating segment for  which discrete financial information is available and reviewed regularly by management.  Assets and liabilities of the Company have been assigned to the reporting units to the extent theyindicators are employed in or are considered a liability related to the operations of the reporting unit and are considered in determiningpresent, we determine the fair value of the reporting unit.  Reporting units with similar economic characteristics are aggregatedasset and record an impairment loss for purposesthe excess of book value over the goodwillfair value, if any. In addition, in all cases of an impairment test.review we re-evaluate whether continuing to characterize the asset as indefinite-lived is appropriate. See Note 4, "Goodwill and Other Intangible Assets," for additional details.

The goodwill impairment test is a two-step process.  If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary.  If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any.  The second step of the goodwill impairment test, used to measure the amount of impairment loss, compares the implied fair value of goodwill associated with each reporting unit with the carrying amount of that goodwill.  If the carrying amount of goodwill associated with a reporting unit exceeds the implied fair value of that goodwill, an impairment loss shall be recognized in an amount equal to that excess.  No impairment was recognized as a result of the October 1, 2013 and 2012  testing.  See Note 4 of the consolidated financial statements.Depreciation

The Company tests indefinite-lived intangible assets for impairment using the relief-from-royalty method (a form of the income approach).  No impairment was recognized as a result of the October 1, 2013 testing.  See Note 4 of the consolidated financial statements.

DEPRECIATION - Property, plant and equipment are stated at cost less accumulated depreciation and amortization.  Depreciation and amortization are calculated primarily using the straight-line method over the estimated useful life of the asset.  The estimated useful lives primarily range from 2 to 39 years for buildings and leasehold improvements, and from 13 to 1315 years for machinery and equipment.

Income TaxesINCOME TAXES - The Company accountsWe account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.  Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company recordsWe record net deferred tax assets to the extent it believeswe believe these assets will more-likely-than-not be realized.  In making such determination, the Company considerswe consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations.  The Company hasWe have established a valuation allowanceallowances for deferred tax assets that are not likely to be realized.  In the event the Companywe were to determine that itwe would be able to realize itsour deferred income tax assets in the future in excess of itsour net recorded amount, the Companywe would make an adjustment toadjust the valuation allowance, which would reduce the provision for income taxes.

The Company establishesWe establish reserves for tax contingencies when, despite the belief that the Company’sour tax return positions are fully supported, it is probable that certain positions may be challenged and may not be fully sustained. The tax contingency reserves are analyzed on a quarterly basis and adjusted based upon changes in facts and circumstances, such as the conclusion of federal and state audits, expiration of the statute of limitations for the assessment of tax, case law and emerging legislation. The Company’sOur effective tax rate includes the effect of tax contingency reserves and changes to the reserves as considered appropriate by management.

F-10
EARNINGS PER SHAREEarnings per Share  – The Company utilizesWe utilize the two-class method to report itsour earnings per share.  The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and participation rights in undistributed earnings.  The Company’sCompany's Certificate of Incorporation, as amended, states that Class B common shares are entitled to dividends at least 5% greater than dividends paid to Class A common shares, resulting in the two-class method of computing earnings per share.  In computing earnings per share, the Company has allocated dividends declared to Class A and Class B based on amounts actually declared for each class of stock and 5% more of the undistributed earnings have been allocated to Class B shares than to the Class A shares on a per share basis.  Basic earnings per common share are computed by dividing net earnings by the weighted-average number of common shares outstanding during the period.  Diluted earnings per common share, for each class of common stock, are computed by dividing net earnings by the weighted-average number of common shares and potential common shares outstanding during the period. There were no potential common shares outstanding during the years ended December 31, 2013, 20122016, 2015 or 20112014 which would have had a dilutive effect on earnings per share.
The earnings and weighted average shares outstanding used in the computation of basic and diluted earnings per share are as follows (dollars in thousands, except share and per share data):follows:

  2013  2012  2011 
Numerator:         
Net earnings $15,908  $2,373  $3,764 
Less Dividends declared:            
     Class A  522   522   522 
     Class B  2,576   2,697   2,690 
Undistributed earnings (loss) $12,810  $(846) $552 
             
Undistributed earnings (loss) allocation - basic and diluted:         
     Class A undistributed earnings (loss) $2,346  $(150) $98 
     Class B undistributed earnings (loss)  10,464   (696)  454 
     Total undistributed earnings (loss) $12,810  $(846) $552 
             
Net earnings allocation - basic and diluted:            
     Class A net earnings $2,868  $372  $620 
     Class B net earnings  13,040   2,001   3,144 
     Net earnings $15,908  $2,373  $3,764 
             
             
Denominator:            
Weighted average shares outstanding:            
     Class A - basic and diluted  2,174,912   2,174,912   2,174,912 
     Class B - basic and diluted  9,239,646   9,624,578   9,597,661 
             
Earnings per share:            
Class A - basic and diluted $1.32  $0.17  $0.28 
Class B - basic and diluted $1.41  $0.21  $0.33 

  2016  2015  2014 
Numerator:         
Net (loss) earnings $(64,834) $19,197  $8,603 
Less dividends declared:            
     Class A  522   522   522 
     Class B  2,728   2,713   2,665 
Undistributed (loss) earnings $(68,084) $15,962  $5,416 
             
Undistributed (loss) earnings allocation - basic and diluted:         
     Class A undistributed (loss) earnings $(11,930) $2,809  $970 
     Class B undistributed (loss) earnings  (56,154)  13,153   4,446 
     Total undistributed (loss) earnings $(68,084) $15,962  $5,416 
             
Net (loss) earnings allocation - basic and diluted:            
     Class A net (loss) earnings $(11,408) $3,331  $1,492 
     Class B net (loss) earnings  (53,426)  15,866   7,111 
     Net (loss) earnings $(64,834) $19,197  $8,603 
             
Denominator:            
Weighted average shares outstanding:            
     Class A - basic and diluted  2,175   2,175   2,175 
     Class B - basic and diluted  9,749   9,698   9,491 
             
Net (loss) earnings per share:            
Class A - basic and diluted $(5.25) $1.53  $0.69 
Class B - basic and diluted $(5.48) $1.64  $0.75 


Research and Development ("R&D")RESEARCH AND DEVELOPMENT (“R&D”) - The Company’sOur engineering groups are strategically located around the world to facilitate communication with and access to customers’customers' engineering personnel. This collaborative approach enables partnerships with customers for technical development efforts. On occasion, Bel executeswe execute non-disclosure agreements with our customers to help develop proprietary, next generation products destined for rapid deployment.  Research and developmentR&D costs are expensed as incurred, and are included in cost of sales.sales on the consolidated statements of operations. Generally, research and developmentR&D is performed internally for the benefit of the Company. Research and developmentR&D costs include salaries, building maintenance and utilities, rents, materials, administration costs and miscellaneous other items. Research and developmentR&D expenses for the years ended December 31, 2013, 20122016, 2015 and 20112014 amounted to $14.1$26.7 million, $12.4$27.7 million and $12.0$21.5 million, respectively, and are included in costrespectively.  The majority of sales in the accompanying consolidated statements of operations.  The increase in 2013 R&D resulted primarily fromover the past two years relates to the inclusion of resultsR&D expenses of the 20132014 Acquired Companies, and a full year of the 2012 Acquired Companies.

EVALUATION OF LONG-LIVED ASSETS – Property, plant and equipment represent an important component of the Company’s total assets.  The Company depreciates its property, plant and equipment on a straight-line basis over the estimated useful lives of the assets.  Management reviews long-lived assets for potential impairment whenever significant events or changeswhich have been included in circumstances indicate that the carrying amount of an asset may not be recoverable.  An impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value.  The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual disposition of the asset.  If an impairment exists, the resulting writedown would be the difference between fair market value of the long-lived asset and the related net book value.  In connection with the closure of its Vinita, Oklahoma manufacturing facility, the Company recorded $1.4 million of impairment charges related to property, plant and equipment during the year ended December 31, 2012.  Of this amount, $1.0 million related to the carrying value of the building and land, which the Company donated to a local university in 2012.  The Company also recorded $0.3 million in asset writedowns related to property, plant and equipment damaged by Hurricane Sandy at its Jersey City, New Jersey and Inwood, New York facilities in 2012.Bel's results since their respective acquisition dates.

FAIR VALUE MEASUREMENTSFair Value Measurements - The Company utilizesWe utilize the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis or on a nonrecurring basis during the reporting period.  The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date.  The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability.  The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  These tiers are defined as follows:

Level 1 -  Observable inputs such as quoted market prices in active markets

Level 2 -  Inputs other than quoted prices in active markets that are either directly or indirectly observable

Level 3 - Unobservable inputs about which little or no market data exists, therefore requiring an entity to develop its own assumptions

For financial instruments such as cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable, the carrying amount approximates fair value because of the short maturities of such instruments.  See Note 5, "Fair Value Measurements," for additional disclosures related to fair value measurements.
NEW FINANCIAL ACCOUNTING STANDARDSRecently Issued Accounting Standards

Recently Adopted Accounting Standards Update No. 2012-02 – Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment (“ASU No. 2012-02”)

In June 2014, the FASB issued ASU No. 2012-02 amends ASU No. 2011-08, 2014-12, IntangiblesCompensation – GoodwillStock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.  The amendment requires that a performance target that affects vesting and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment, and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impairedcould be achieved after the requisite service period be treated as a basisperformance condition.  A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for determining whethersuch awards.  Compensation cost should be recognized in the period in which it is necessarybecomes probable that the performance target will be achieved and should represent the compensation cost attributable to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwillperiod(s) for which the requisite service has already been rendered.  This guidance was adopted by the Company effective January 1, 2016 and Other - General Intangibles Other than Goodwill. The amendments became effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of ASU No. 2012-02it did not have any impact on the Company’sCompany's consolidated financial position or results of operations.

Accounting Standards Update No. 2013-02In January 2015, the FASB issued ASU 2015-01, Income Statement – ReportingExtraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Amounts Reclassified OutExtraordinary Items. Extraordinary items are events and transactions that are distinguished by their unusual nature and by the infrequency of Accumulated Other Comprehensive Income (“ASU No. 2013-02”)their occurrence.  Eliminating the extraordinary classification simplifies income statement presentation by altogether removing the concept of extraordinary items from consideration.  This guidance was adopted by the Company effective January 1, 2016 and it did not have any impact on the Company's consolidated financial position or results of operations.

In April 2015, the FASB issued ASU No. 2013-022015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The update requires disclosurethat debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability instead of being presented as an asset. Debt disclosures will include the face amount of the debt liability and the effective interest rate. In August 2015, the FASB amended this guidance for debt issuance costs associated with line-of-credit arrangements to reflect that the SEC would not object to the deferral and presentation of debt issuance costs as an asset and subsequent amortization of debt issuance costs over the term of the line-of-credit arrangement, whether or not there are any outstanding borrowings on the line-of-credit arrangement.  The update requires retrospective application and represents a change in accounting principle. This guidance was adopted by the Company effective January 1, 2016 and it was applied retrospectively for all prior periods.  At December 31, 2016 and December 31, 2015, deferred financing costs totaling $2.6 million and $3.6 million, respectively, are reflected as a reduction in the carrying value of the Company's current and long-term debt on the consolidated balance sheet.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement for an acquirer in a business combination to account for measurement period adjustments retrospectively.  Under this guidance, acquirers must recognize measurement period adjustments in the period in which they determine the amounts, reclassified outincluding the effect on earnings of accumulated other comprehensive incomeany amount they would have recorded in previous periods if the accounting had been completed at the acquisition date.  This guidance was adopted by component.  the Company effective January 1, 2016 on a prospective basis as required.  Measurement period adjustments of any future acquisitions will be accounted for under this new guidance.

In addition, an entity is requiredNovember 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires entities to present eitherdeferred tax assets and deferred tax liabilities as noncurrent on the faceconsolidated balance sheet.  The guidance simplifies the current guidance, which requires entities to separately present deferred tax assets and deferred tax liabilities as current and noncurrent on the consolidated balance sheet.  The Company adopted this guidance effective January 1, 2016 and it was applied retrospectively for all prior periods.  The following table summarizes the adjustments made to conform prior period classifications to the new guidance:


  December 31, 2015 
  As Reported  Reclass  Revised 
          
Other current assets $15,636  $(4,983) $10,653 
Long-term deferred income tax assets  3,321   117   3,438 
Other current liabilities  (9,133)  174   (8,959)
Long-term deferred income tax liabilities  (13,002)  4,692   (8,310)

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic - 205-40) ("ASU 2014-15"). This ASU requires management to evaluate whether it is probable that known conditions or events, considered in the aggregate, would raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. If such conditions or events are identified, the standard requires management's mitigation plans to alleviate the doubt or a statement of the consolidated statements of operations orsubstantial doubt about the entity's ability to continue as a going concern to be disclosed in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net earnings but only if the amount reclassified is required to be reclassified to net earningsfinancial statements. The amendments in its entirety in the same reporting period.  For amounts not reclassified in their entirety to net earnings, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts.  ASU No. 2013-02 became2014-15 are effective prospectively for the Company for annualfiscal years, and interim periods within those years, beginning January 1, 2013.after December 15, 2016. We adopted this amendment on December 31, 2016. The adoption of ASU No. 2013-022014-15 did not have a material effectimpact on the Company’s consolidated financial statements.statements

Accounting Standards Update No. 2013-11 – Issued But Not Yet Adopted

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): PresentationIntra-Entity Transfers of Assets Other Than Inventory.  Current GAAP prohibits the recognition of current and deferred income taxes for intra-entity asset transfer until the asset has been sold to an outside party.  The new guidance eliminates the exception and requires an entity to recognize the income tax consequences of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU No. 2013-11”)

ASU No. 2013-11 provides guidance on financial statement presentationintra-entity transfer of an unrecognized tax benefitasset other than inventory when the transfer occurs.  This accounting guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, and should be applied on a net operating loss (“NOL”) carryforward,modified retrospective basis through a similar tax loss, or a tax credit carryforward exists.  The FASB’s objective in issuing this ASU iscumulative-effect adjustment directly to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP.  This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdictionretained earnings as of the reporting date.beginning of the period of adoption. This guidance is not expected to have a material impact on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, to simplify the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows.  Under the new guidance, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit on the statements of operations. Under current GAAP, excess tax benefits are recognized in additional paid-in capital while tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or on the statements of operations.  The new accounting guidance in ASU No. 2013-11 is effective for interim and annual periods beginning after December 15, 2013.  The Company2016.  Certain provisions require retrospective/modified retrospective transition while others are to be applied prospectively. Based on historical results, management does not expect the adoption of this ASUguidance to have a material impact on the Company’s resultsCompany's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), to provide a new comprehensive model for lease accounting.  Under this guidance, lessees and lessors should apply a "right-of-use" model in accounting for all leases (including subleases) and eliminate the concept of operations,operating leases and off-balance sheet leases.  Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. Similar modifications have been made to lessor accounting in-line with revenue recognition guidance. This guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2018.  The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. Early adoption is permitted.  The updated guidance requires a modified retrospective adoption. We are currently in the process of evaluating this new standard update.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.  This guidance primarily affects the accounting for equity investments, financial conditionliabilities under the fair value option, and the presentation and disclosure requirements for financial instruments.  Under the new guidance, entities will be required to measure certain equity investments at fair value and recognize any changes in fair value in net earnings, unless the investments qualify for the new practicability exception.  The new standard is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017.  We  are currently evaluating the impact of adopting this new standard.
In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory, which requires entities to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or cash flows.market.  The update is effective for fiscal years beginning after December 15, 2016, and interim periods therein.  The adoption of this guidance is not expected to have a material impact on the Company's consolidation financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers.

Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations ("ASU 2016-08"); ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing ("ASU 2016-10"); ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients ("ASU 2016-12"); and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers ("ASU 2016-20"). The Company must adopt ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 with ASU 2014-09 (collectively, the "new revenue standards").
In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date which approved a one-year deferral of ASU 2014-09 for annual reporting periods beginning after December 15, 2017.

The new revenue standards become effective for the Company in the first quarter of fiscal year 2018, but allow adoption one year earlier if the Company so chooses. The Company currently plans to adopt this accounting standard in the first quarter of fiscal year 2018. The guidance permits two methods of adoption: full retrospective in which the standard is applied to all of the periods presented or modified retrospective where an entity will have to recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings.  We are currently evaluating the full impact of this new guidance on its consolidated financial statements, including selection of the transition method.

The Company is still in the process of evaluating the effect of the new standard on the Company's historical financial statements. Our efforts to adopt this standard to date have focused on contract analysis at a business unit and regional level. As the Company completes its evaluation of this new standard, new information may arise that could change the Company's current understanding of the impact to revenue and expense recognized. Additionally, the Company will continue to monitor industry activities and any additional guidance provided by regulators, standards setters, or the accounting profession and adjust the Company's assessment and implementation plans accordingly.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. The Company is required to adopt ASU 2017-04 for its annual or any interim goodwill impairment tests for annual periods beginning after December 15, 2019, and the guidance is to be applied on a prospective basis.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"), to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. ASU 2017-01 provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. The Company is required to adopt ASU 2017-01 for periods beginning after December 15, 2017, including interim periods, and the guidance is to be applied on a prospective basis.  Early application is permitted for transactions for which the acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in financial statements that have been issued.

2.ACQUISITIONS AND DISPOSITION

20132014 Acquisitions:

On March 29, 2013,June 19, 2014, the Company completed its acquisition of TRPPower Solutions for $21.0$109.9 million, net of cash acquired.  Power Solutions is a leading provider of high-efficiency and high-density power conversion products for server, storage and networking equipment, industrial applications and power systems. In connection with its acquisition of Power Solutions from ABB Ltd., the Company acquired a 49% interest in a joint venture in the People's Republic of China ("PRC").  The Company’s purchase of TRP consistedCompany has assigned no value to this investment.  See Note 18, "Related Party Transactions," for additional information. At the conclusion of the integrated connector module (“ICM”) familymeasurement period, which was one year after the acquisition date, there were certain working capital and tax related items outstanding with ABB Ltd.  The working capital item was settled with ABB Ltd. during the third quarter of products, including RJ45, 10/100 Gigabit, 10G, PoE/PoE+, MRJ212015, which was after the conclusion of the measurement period and, RJ.5,as a lineresult, the Company recognized $4.2 million of modulesother income on the consolidated statements of operations.  See Note 9, "Income Taxes," for smart-grid applications, and discrete magnetics.further information on the tax related items outstanding with ABB Ltd.
On August 20, 2013,July 25, 2014, the Company completed its acquisition of Array,the U.S. and U.K. entities of Connectivity Solutions. On August 29, 2014, the China portion of the transaction closed.  The Company paid a manufacturertotal of $98.8 million for Connectivity Solutions, net of cash acquired and including a working capital adjustment.  Connectivity Solutions is a leading provider of high‑performance RF/Microwave and Harsh Environment Optical Connectors and Assemblies for military, aerospace, wireless communications, data communications, broadcast and mil-spec connector products based in Miami, Florida, for $10.0 million in cash.  The acquisition of Array expands the Company’s portfolio of connector products that can be offered to the combined customer base, and provides an opportunity to sell other products that Bel manufactures to Array’s customers.  Array has become part of Bel’s Cinch Connector business.industrial applications.

During the years ended December 31, 20132015 and 2012,2014, the Company incurred $0.7$0.6 million and $0.5$7.3 million respectively, of acquisition-related costs, respectively, associated with the 2013 Acquisitions.2014 Acquisitions primarily for audit-related costs, investment banker fees and legal fees.  These costs are included in selling, general and administrative expense inexpenses on the accompanying consolidated statements of operations for the year ended December 31, 2013 and 2012.

While the initialoperations.  The purchase accounting related to the acquisitions of TRP and Array is not complete as of the filing date of this Annual Report on Form 10-K, the following table depicts the Company’s current estimate2014 Acquisitions was finalized within one year of the respective acquisition date fair values of the consideration paid and identifiable net assets acquired (in thousands):

  TRP  Array  2013 Acquisitions 
     Measurement  March 29,     Measurement  August 20,  Acquisition-Date 
  March 29,  Period  2013  August 20,  Period  2013  Fair Values 
  2013  Adjustments  (As adjusted)  2013  Adjustments  (As adjusted)  (As adjusted) 
Cash $8,388  $(29) $8,359  $-  $-  $-  $8,359 
Accounts receivable  11,580   (39)  11,541   994   -   994   12,535 
Inventories  6,258   1,097   7,355   2,588   (1,595)  993   8,348 
Other current assets  1,953   (181)  1,772   83   345   428   2,200 
Property, plant and equipment  4,693   1,097   5,790   2,285   1,225   3,510   9,300 
Intangible assets  -   6,110   6,110   -   1,470   1,470   7,580 
Other assets  1,151   84   1,235   84   1,663   1,747   2,982 
     Total identifiable assets  34,023   8,139   42,162   6,034   3,108   9,142   51,304 
                             
Accounts payable  (8,565)  331   (8,234)  (677)  1   (676)  (8,910)
Accrued expenses  (4,003)  (219)  (4,222)  (206)  (79)  (285)  (4,507)
Other current liabilities  (25)  (791)  (816)  (214)  214   -   (816)
Noncurrent liabilities  -   (586)  (586)  (643)  (1,105)  (1,748)  (2,334)
     Total liabilities assumed  (12,593)  (1,265)  (13,858)  (1,740)  (969)  (2,709)  (16,567)
     Net identifiable assets acquired  21,430   6,874   28,304   4,294   2,139   6,433   34,737 
     Goodwill  8,278   (7,234)  1,044   5,666   (2,094)  3,572   4,616 
     Net assets acquired $29,708  $(360) $29,348  $9,960  $45  $10,005  $39,353 
                             
                             
Cash paid $22,400  $6,948  $29,348  $9,960  $45  $10,005  $39,353 
Assumption of severance payment  109   (109)  -   -   -   -   - 
     Fair value of consideration                            
         transferred  22,509   6,839   29,348   9,960   45   10,005   39,353 
     Deferred consideration  7,199   (7,199)  -   -   -   -   - 
     Total consideration paid $29,708  $(360) $29,348  $9,960  $45  $10,005  $39,353 

The measurement period adjustments noted above primarily relate to adjustments to fair value based on the preliminary appraisals on inventory, property, plant and equipment, and intangible assets.  Various other asset and liability accounts had measurement period adjustments related to deferred taxes.
The preliminary fair value of identifiable intangible assets related to the 2013 Acquired Companies is shown in the table below (dollars in thousands).  For those intangible assets with finite lives, the acquisition-date fair values will be amortized over their respective estimated future lives utilizing the straight-line method.

 Weighted-Average Life Acquisition-Date Fair Value 
TrademarksIndefinite $40 
Technology22 years  1,540 
Customer relationships17.5 years  5,840 
Non-compete agreements2 years  160 
    Total identifiable intangible assets acquired  $7,580 
dates.

The results of operations of the 20132014 Acquired Companies have been included in the Company’sCompany's consolidated financial statements for the period subsequent to their respective acquisition dates.  During the yearyears ended December 31, 2013,2016, 2015 and 2014, the 20132014 Acquired Companies contributed $68.6revenue of $195.6 million, $230.3 million and $134.3 million, respectively, and operating income (loss) of revenueapproximately $3.8 million, $10.3 million and $9.2($2.5) million, of net earningsrespectively, to the Company’sCompany's consolidated financial results.

The following unaudited pro forma information below presents a summary of the combined operating results of operations of the Company and the aggregate results of Power Solutions and Connectivity Solutions for the periods presented as if the 2014 Acquisitions had occurred on January 1, 2013, Acquired Companies.along with certain pro forma adjustments.  These pro forma adjustments give effect to the amortization of certain definite-lived intangible assets, adjusted depreciation based upon estimated fair value of assets acquired, interest expense and amortization of deferred financing costs related to the financing of the business combinations, and related tax effects.  The 2014 unaudited pro forma results are presentednet earnings for illustrative purposes only.  Theythe year ended December 31, 2014 were adjusted to exclude $14.9 million ($9.8 million after tax) of non-recurring expenses, including audit, legal and other transaction fees, IT migration costs and employee-related expenses, which were incurred in connection with the 2014 Acquisitions.  The pro forma results do not reflect the realization of any potential cost savings, or any related integration costs. Certain cost savings may result from the 2013 Acquisitions;these acquisitions; however, there can be no assurance that these cost savings will be achieved. TheseThe unaudited pro forma results doare presented for illustrative purposes only and are not purport to benecessarily indicative of the results that would have actually been obtained if the 2013 Acquisitionsacquisitions had occurred as of January 1, 2012,on the assumed dates, nor is the pro forma data intended to be a projection of results that may be obtained in the future.  The following unaudited pro forma consolidated results of operations assume that the acquisitions of the 2013 Acquired Companies were completed as of January 1, 2012.  The pro forma results noted below for 2012 also include the effects of the 2012 Acquisitions discussed below.  The 2013 unaudited pro forma net earnings were adjusted to exclude $0.9 million of acquisition-related costs ($0.6 million after tax) incurred in 2013 and $0.4 million ($0.4 million after tax) of nonrecurring expense related to the fair value adjustments to acquisition-date inventory.  The 2012 unaudited pro forma net earnings were adjusted to include these charges (dollars in thousands except per share data):

  Year Ended December 31, 
  2013  2012 
       
Revenue $374,153  $376,921 
Net earnings  17,774   8,800 
Earnings per Class A common share - basic and diluted  1.48   0.69 
Earnings per Class B common share - basic and diluted  1.58   0.76 


2012 Acquisitions:
  Year Ended 
  December 31, 
  2014 
    
Revenue $629,132 
Net earnings  11,705 
Earnings per Class A common share - basic and diluted  0.94 
Earnings per Class B common share - basic and diluted  1.02 


Disposition – Sale of NPS

On March 9, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of GigaCom with a cash payment of $2.7 million (£1.7 million). GigaCom, located in Gothenburg, Sweden, is a supplier of expanded beam fiber optic technology. GigaCom has become part of Bel’s Cinch Connector business. Management believes that GigaCom’s offering of expanded beam fiber optic (“EBOSA®”) products will enhance the Company’s position within the growing aerospace and military markets.

On July 31, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Fibreco with a cash payment, net of $2.7 million of cash acquired, of $13.7 million (£8.7 million). Fibreco, located in the United Kingdom, is a supplier of a broad range of expanded beam fiber optic components for use in military communications, outside broadcast and offshore exploration applications.  Fibreco has become part of Bel’s interconnect product group under the Cinch Connector business. Management believes that the addition of Fibreco’s fiber optic-based product line to Cinch’s broad range of copper-based products will increase Cinch’s presence in emerging fiber applications within the military, aerospace and industrial markets. In addition, management believes the acquisition provides access to a range of customers for the recently acquired GigaCom EBOSA® product.

On September 12, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Powerbox, now known as Bel Power Europe, with a cash payment, net of $0.2 million of cash acquired, of $3.0 million.  The Company also granted 30,000 restricted shares of the Company’s Class B common stock in connection with this acquisition.  Compensation expense equal to the grant date fair value of these restricted shares of $0.6 million is being recorded ratably through September 2014.  Bel Power Europe, located near Milan, Italy, develops high-power AC-DC power conversion solutions targeted at the broadcasting market.  The acquisition of Bel Power Europe will allow Bel to expand its portfolio of power product offerings to include AC-DC products and will also establish a European design center located close to several of Bel’s existing customers.

During the years ended December 31, 2013 and 2012, the Company incurred $0.2 million and $0.8 million of acquisition-related costs relating to the 2012 acquisitions.  These costs are included in selling, general and administrative expense in the accompanying consolidated statements of operations for the year ended December 31, 2012.

During the year ended December 31, 2012,January 23, 2015, the Company completed the purchase accounting related to the GigaCom and Fibreco acquisitions.  During the third quarter of 2013, the Company completed the purchase accounting related to its acquisition of Bel Power Europe.  The following table reflects the finalized acquisition date fair valuessale of the consideration transferredNetwork Power Systems ("NPS") product line and identifiablerelated transactions of the acquired Power Solutions business to Unipower LLC ("Unipower") for $9.0 million in cash. The sale also included $1.0 million of escrow pending Unipower's realization of certain sales targets. The net assets acquired relatedproceeds of $9.0 million from the sale were used to repay outstanding borrowings in accordance with the 2012 acquisitions (in thousands):

     Measurement  Acquisition-Date 
  Acquisition-Date  Period  Fair Values 
  Fair Values  Adjustments  (As finalized) 
Cash and cash equivalents $2,991  $-  $2,991 
Accounts receivable  3,750   3   3,753 
Inventories  1,061   (16)  1,045 
Other current assets  90   -   90 
Property, plant and equipment  502   263   765 
Intangible assets  30   11,626   11,656 
     Total identifiable assets  8,424   11,876   20,300 
             
Accounts payable  (1,702)  -   (1,702)
Accrued expenses  (1,736)  -   (1,736)
Notes payable  (216)  -   (216)
Income taxes payable  (264)  (60)  (324)
Deferred income tax liability, current  (70)  -   (70)
Deferred income tax liability, noncurrent  -   (2,700)  (2,700)
Other long-term liabilities  (216)  -   (216)
     Total liabilities assumed  (4,204)  (2,760)  (6,964)
     Net identifiable assets acquired  4,220   9,116   13,336 
     Goodwill  17,965   (8,900)  9,065 
     Net assets acquired $22,185  $216  $22,401 
             
             
Cash paid $22,138   263  $22,401 
Deferred consideration  47   (47)  - 
     Fair value of consideration transferred $22,185  $216  $22,401 
             

provisions of the Credit and Security Agreement (see Note 10, "Debt").  The fair value of identifiable intangible assets relatedtransaction provided that Bel would move processes and people to Unipower under an interim transition services agreement and that Bel would also continue to manufacture the 2012 Acquired Companies is shown in the table below (dollars in thousands).  For those intangible assets with finite lives, the acquisition-date fair values will be amortized over their respective estimated future lives utilizing the straight-line method.NPS products for up to 24 months under a manufacturing services agreement.

 Weighted-Average Life Acquisition-Date Fair Value 
TrademarksIndefinite $1,264 
Technology20 years  6,542 
Customer relationships16 years  3,292 
Non-compete agreements2 years  558 
    Total identifiable intangible assets acquired  $11,656 

The results of operationsAs a result of the 2012 Acquired Companies have been includedsale and related transactions, the Company recorded deferred revenue of $9.0 million.  Of this amount, the Company has recognized net sales of $4.5 million during each of 2016 and 2015.  None of the $1.0 million of escrow was recognized as Unipower did not achieve the sales targets specified in the Company’s consolidated financial statementsagreement. In January 2017, the Company extended the manufacturing services agreement with Unipower through June 2017 at renegotiated pricing by product for the periods subsequent to their respective acquisition dates.  During the years ended December 31, 2013 and 2012, Fibreco and Bel Power Europe contributed combined revenues of $10.7 million and $3.1 million, respectively, and combined net earnings of $1.0 million and $0.2 million, respectively, to the Company’s consolidated financial results.   The acquisition of GigaCom has contributed to Bel’s research and development efforts, and its technology has been incorporated into products now being sold by Fibreco.  GigaCom incurred expenses, primarily related to research and development, of $1.0 million and $0.6 million during the years ended December 31, 2013 and 2012, respectively.that term.


3.RESTRUCTURING ACTIVITIES

During 2012, Bel initiated the closure of its Cinch North American manufacturing facility in Vinita, Oklahoma, and transition of  the operations to Reynosa, Mexico and a new facility in McAllen, Texas.  The Company accrued the full amount of termination benefits related to the Vinita, Oklahoma employees during 2012, as noted in the table below.  During December 2012, the Company donated the Vinita building and land to a local university, and recorded a $1.0 million loss on disposal related to this donation.  The Company also recorded a $0.4 million impairment on certain equipment at the Vinita facility.  These amounts are classified as restructuring charges in the accompanying 2012 consolidated statement of operations.

In addition to the closure of the Vinita, Oklahoma facility, the Company implemented other overhead cost reductions during 2012 and 2013 which contributed to the severance costs noted in the table below.

Activity and liability balances related to restructuring costs for the years ended December 31, 20122015 and 20132016 are as follows:

     2012     2013    
  Liability at     Cash Payments  Liability at     Cash Payments  Liability at 
  December 31,  New  and Other  December 31,  New  and Other  December 31, 
  2011  Charges  Settlements  2012  Charges  Settlements  2013 
Severance costs $-  $3,227  $(3,105) $122  $1,239  $(1,361) $- 
Transportation of equipment  -   528   (528)  -   100   (100)  - 
Set-up costs  -   71   (71)  -   -   -   - 
Impairment/loss on disposal of                            
assets related to restructuring  -   1,389   (1,389)  -   -   -   - 
Other restructuring costs  -   30   (30)  -   48   (48)  - 
     Total $-  $5,245  $(5,123) $122  $1,387  $(1,509) $- 
     2015     2016    
  Liability at     Cash Payments  Liability at     Cash Payments  Liability at 
  December 31,  New  and Other  December 31,  New  and Other  December 31, 
  2014  Charges  Settlements  2015  Charges  Settlements  2016 
Severance costs $-  $1,144  $(1,034) $110  $1,407  $(929) $588 
Other restructuring costs  -   626   (626)  -   2   (2)  - 
     Total $-  $1,770  $(1,660) $110  $1,409  $(931) $588 


During 2016, the year ended December 31, 2011, the Company recorded $0.3 million inCompany's restructuring charges related primarily to severanceincluded costs associated with the reorganizationclosure of Cincha manufacturing facility in Shanghai, PRC and transition of the operations into other existing Bel facilities.  In addition to the U.K.  Thecharges noted above, the Company also settled its remaining lease obligationincurred $0.7 million related to fixed asset disposals, lease acceleration charges, relocation expenses and other costs associated with the Westborough, Massachusettsexit of a leased facility located in Shanghai, China which are included as restructuring charges on the consolidated statement of operations during 2011, which resulted2016.  During 2015, the Company's restructuring charges included costs related to reductions in an immaterial gain.

headcount and consolidation and relocation of certain facilities and offices in North America, Asia and Europe and additional headcount reductions at Cinch US, Array and the U.S. and Asia locations of Connectivity Solutions.
4.GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the purchase price and related acquisition costs over the fair value assigned to the net tangible and other intangible assets acquired in a business acquisition.

The changes in the carrying value of goodwill classified by our segment reporting structure for the years ended December 31, 2016 and 2015 are as follows:

  Total  North America  Asia  Europe 
             
Balance at January 1, 2015            
   Goodwill, gross $145,310  $69,380  $50,052  $25,878 
   Accumulated impairment charges  (26,941)  (14,066)  (12,875)  - 
   Goodwill, net $118,369  $55,314  $37,177  $25,878 
                 
Measurement period adjustments  4,590   (6,016)  4,351   6,255 
Foreign currency translation  (1,325)  -   129   (1,454)
                 
Balance at December 31, 2015:                
   Goodwill, gross  148,575   63,364   54,532   30,679 
   Accumulated impairment charges  (26,941)  (14,066)  (12,875)  - 
   Goodwill, net $121,634  $49,298  $41,657  $30,679 
                 
Impairment charge  (101,650)  (40,408)  (41,633)  (19,609)
Foreign currency translation  (2,033)  -   (24)  (2,009)
                 
Balance at December 31, 2016:                
   Goodwill, gross  146,542   63,364   54,508   28,670 
   Accumulated impairment charges  (128,591)  (54,474)  (54,508)  (19,609)
   Goodwill, net $17,951  $8,890  $-  $9,061 
The goodwill associated with the 2014 acquisitions, as well as the allocation by reporting unit, was finalized by the end of each of the respective measurement periods in 2015, and resulted in an additional $4.6 million of goodwill being recorded in 2015.
As discussed in Note 5, Fair Value Measurements, goodwill is reviewed for impairment on a reporting unit basis annually during the fourth quarter of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable.  The goodwill impairment test involves a two-step process.  In the first step, the fair value of each reporting unit is compared to its carrying value.  If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired and no further testing is required.  If the fair value of the reporting unit is less than the carrying value, the second step of the impairment test must be performed to measure the amount of impairment loss.  In the second step, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination.  If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss and a reduction to goodwill.

We estimated the fair value of these reporting units using a weighting of fair values derived from income and market approaches. Under the income approach, we determine the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit.

2016 Annual Impairment Test

During the fourth quarter of 2016, the Company completed step one of our annual goodwill impairment test for our reporting units.  We concluded that the fair value of each of the Company's reporting units exceeded the respective carrying values and that there was no indication of impairment.

The excess of estimated fair values over carrying value, including goodwill for each of our reporting units that had goodwill as of the 2016 annual impairment test were as follows:
Reporting Unit% by Which Estimated Fair Value Exceeds Carrying Value
North America13%
Europe30%


2016 Interim Impairment Test

During the first quarter of 2016, management determined that sufficient indicators of potential impairment existed to require an interim goodwill impairment analysis for all of the Company's reporting units.  These indicators included the recent business performance of those reporting units, combined with the long-term market conditions and business trends within the reporting units.

Detailed below is a table of key underlying assumptions utilized in the Level 3 fair value estimate calculation for the interim test performed as of March 31, 2016 as compared to those assumptions utilized during the annual valuation performed as of October 1, 2015.  Assumptions may vary by reporting unit.  The table below shows the range of assumptions utilized across the various reporting units.

   Goodwill Impairment Analysis
   Key Assumptions
  2016 - Interim 2015 - Annual
      
Income Approach - Discounted Cash Flows (a):    
 Revenue 5-year compound annual growth rate (CAGR) (9.0%) - (0.6%) 2.6% - 2.7%
 2016 EBITDA margins (b)  5.1% - 6.6%  7.2% - 8.4%
 Cost of equity capital  11.6% - 14.7%  12.3% - 16.5%
 Cost of debt capital  3.6% - 8.5%  2.4% - 5.9%
 Weighted average cost of capital 10.0% - 14.0% 11.0% - 15.0%
      
Market Approach - Multiples of Guideline Companies (a):    
 Net operating revenue multiples used 0.4 - 0.6 0.4 - 0.5
 Operating EBITDA multiples used (b) 5.9 - 6.3 5.0 - 5.3
 Invested capital control premium 25% 25%
      
Weighting of Valuation Methods:    
 Income Approach - Discounted Cash Flows 75% 75%
 Market Approach - Multiples of Guideline Companies 25% 25%
      
 (a) Ranges noted reflect assumptions and multiples used throughout the North America, Asia and Europe reporting units
 (b) EBITDA represents earnings before interest, taxes, depreciation and amortization.  EBITDA margin is calculated by
       dividing EBITDA by net sales.    

The March 31, 2016 interim impairment test related to the Company's goodwill was performed by reporting unit (North America, Asia and Europe).  The valuation test, which heavily weights future discounted cash flow projections, indicated impairment of the goodwill associated with all three of the Company's reporting units.  As a result, the Company recorded a provisional non-cash goodwill impairment charges totaling $104.3 million during the first quarter of 2016.  During the second quarter of 2016, the Company finalized its interim impairment test, which resulted in a $2.6 million reduction to the provisional impairment charge recorded during the first quarter of 2016. The Company's goodwill associated with its reporting units originated from several of Bel's prior acquisitions, primarily Power Solutions acquired in 2014 and Connectivity Solutions acquired in 2014 (which represented $55.5 million and $55.0 million, respectively, of the carrying value of goodwill at the testing date).  The carrying value of the Company's goodwill was $121.6 million at December 31, 2015.

As noted above, the fair value determined under step one of the goodwill impairment test completed in the fourth quarter of 2016 exceeded the carrying value for each reporting unit.  Therefore, there was no impairment of goodwill. However, if the fair value decreases in future periods, the Company may fail step one of the goodwill impairment test and be required to perform step two. In performing step two, the fair value would have to be allocated to all of the assets and liabilities of the reporting unit. Therefore, any potential goodwill impairment charge would be dependent upon the estimated fair value of the reporting unit at that time and the outcome of step two of the impairment test. The fair values of the assets and liabilities of the reporting unit, including the intangible assets, could vary depending on various factors.

The future occurrence of a potential indicator of impairment, such as a decrease in expected net earnings, adverse equity market conditions, a decline in current market multiples, a decline in our common stock price, a significant adverse change in legal factors or business climates, an adverse action or assessment by a regulator, unanticipated competition, strategic decisions made in response to economic or competitive conditions, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could require an interim assessment for some or all of the reporting units before the next required annual assessment. In the event of significant adverse changes of the nature described above, it may be necessary for us to recognize an additional non-cash impairment of goodwill, which could have a material adverse effect on our consolidated financial condition and results of operations.

Based on annual impairment tests performed in prior years, there was no indication of goodwill impairment during 2014 or 2015.

Other Intangible Assets

Other identifiable intangible assets include patents, technology, license agreements, supply agreements, non-compete agreements and trademarks.  Amounts assigned to these intangible assets have been determined by management.  Management considered a number of factors in determining the allocations, including valuations and independent appraisals.  Trademarks have indefinite lives and are reviewed for impairment on an annual basis.  Other intangible assets, excluding trademarks, are being amortized over 1 to 2029 years.

The changes in the carrying value of goodwill classified by reportable operating segment for the years ended December 31, 2013 and 2012 are as follows (dollars in thousands):

  Total  Asia  North America  Europe 
             
Balance at January 1, 2012:            
   Goodwill, gross  31,104   12,875   15,293   2,936 
   Accumulated impairment charges  (26,941)  (12,875)  (14,066)  - 
   Goodwill, net  4,163   -   1,227   2,936 
                 
Goodwill allocation related to acquisition  9,065   -   -   9,065 
Foreign currency translation  331   -   -   331 
                 
Balance at December 31, 2012:                
   Goodwill, gross  40,500   12,875   15,293   12,332 
   Accumulated impairment charges  (26,941)  (12,875)  (14,066)  - 
   Goodwill, net $13,559  $-  $1,227  $12,332 
                 
Goodwill allocation related to acquisition  4,616   1,044   3,572   - 
Foreign currency translation  185   58   -   127 
                 
Balance at December 31, 2013:                
   Goodwill, gross  45,301   13,977   18,865   12,459 
   Accumulated impairment charges  (26,941)  (12,875)  (14,066)  - 
   Goodwill, net $18,360  $1,102  $4,799  $12,459 


During the year ended December 31, 2013, the Company recorded $4.6 million of additional goodwill related to the 2013 Acquisitions.  The goodwill related to the acquisition of TRP was assigned to the Company’s Asia operating segment and the goodwill related to the acquisition of Array was assigned to the Company’s North America operating segment.  During the year ended December 31, 2012, the Company recorded $9.1 million of additional goodwill in connection with the 2012 Acquisitions. The goodwill related to the 2012 Acquired Companies was assigned to the Company’s Europe operating segment.  The Company completed its annual goodwill impairment test during the fourth quarter of 2013, noting no impairment.  Management determined that the fair value of the goodwill at December 31, 2013 exceeded its carrying value and that no impairment existed as of that date.

The Company tests indefinite-lived intangible assets for impairment using a fair value approach, the relief-from-royalty method (a form of the income approach).  At December 31, 2013,2016, the Company’sCompany's indefinite-lived intangible assets related to the trademarks acquired in the Power Solutions, Connectivity Solutions, Cinch and Fibreco acquisitions.

The components of definite and indefinite-lived intangible assets are as follows:


  December 31, 2016  December 31, 2015 
  Gross Carrying  Accumulated  Net Carrying  Gross Carrying  Accumulated  Net Carrying 
  Amount  Amortization  Amount  Amount  Amortization  Amount 
                   
Patents, licenses and technology $38,658  $11,276  $27,382  $39,388  $7,932  $31,456 
Customer relationships  43,821   8,302   35,519   44,894   5,735   39,159 
Non-compete agreements  2,667   2,376   291   2,753   1,838   915 
Trademarks  11,677   41   11,636   16,338   41   16,297 
                         
  $96,823  $21,995  $74,828  $103,373  $15,546  $87,827 

Amortization expense was $7.0 million in each of 2016 and 2015 and $5.4 million in 2014.

Estimated amortization expense for intangible assets for the next five years is as follows:


December 31, Amortization Expense 
    
2017 $6,521 
2018  6,229 
2019  6,229 
2020  6,197 
2021  6,196 

2016 Annual Impairment Test

The Company completed its annual indefinite-lived intangible assets impairment test during the fourth quarter of 2013,2016, noting no further impairment.  Management has concluded that the fair value of these trademarks exceeded the related carrying values at December 31, 20132016 and that there was no impairment existed asindication of that date.

The components of intangible assets other than goodwill are as follows (dollars in thousands):

  December 31, 2013  December 31, 2012 
  Gross Carrying  Accumulated  Net Carrying  Gross Carrying  Accumulated  Net Carrying 
  Amount  Amortization  Amount  Amount  Amortization  Amount 
                   
Patents, licenses and technology $11,919  $1,864  $10,055  $8,900  $873  $8,027 
Customer relationships  11,923   1,191   10,732   5,977   566   5,411 
Non-compete agreements  787   483   304   613   157   456 
Trademarks  8,381   -   8,381   8,297   -   8,297 
                         
  $33,010  $3,538  $29,472  $23,787  $1,596  $22,191 


F-17
impairment.
 
During 2013, the Company paid $1.3 million and received $0.3 million associated with licensing agreements entered into with Radiall SA.  The agreements cover the parties’ respective technologies for EBOSA® fibre optic termini and the EPX® connector range.   The $1.3 million paid by the Company is reflected as an intangible asset and the $0.3 million received by the Company is included in accrued expenses and other long-term liabilities on the accompanying consolidated balance sheet at December 31, 2013.  Each will be amortized over the life of the respective agreement of 20 years.2016 Interim Impairment Test

During the years ended December 31, 2013 and 2012,first quarter of 2016, management determined that sufficient indicators of potential impairment existed to require an interim impairment review of our trademarks.  Based on the Company's analysis, the fair values of all of the Company's trademarks were lower than the respective carrying values.  As a result, in 2016, the Company recorded $7.6a non-cash impairment of $4.3 million which is included in impairment of goodwill and $11.7 million, respectively, of variousother intangible assets on the consolidated statements of operations.

Detailed below is a table of key underlying assumptions utilized in connection with the recent acquisitions.  A listingLevel 3 fair value estimate calculation of the Company's trademarks for the interim test performed as of March 31, 2016 as compared to those assumptions utilized during the annual valuation performed as of October 1, 2015.  Assumptions may vary by individual trademark.  The table below shows the range of assumptions utilized across the Company's various trademarks.


Trademark Impairment Analysis
Key Assumptions
2016 - Interim2015 - Annual
Revenue 5-year compound annual growth rate (CAGR)(0.4%) - 2.7%0.2% - 4.0%
Estimated fair royalty rate 0.25% - 1.5% 0.5% - 2.0%
Discount rate 11.0% - 15.0% 12.0% - 14.0%
Based on annual impairment tests performed in prior years, there was no indication of indefinite-lived intangible assets acquired with the 2012 and 2013 Acquired Companies and the related weighted-average lives of those assets is detailed in Note 2.  Amortization expense was $1.9 million, $0.8 million and $0.4 million for the years ended December 31, 2013, 2012 and 2011, respectively.impairment during 2014 or 2015.

Estimated amortization expenseThe future occurrence of a potential indicator of impairment, such as those described above, could require an interim assessment for intangible assetssome or all of the Company's trademarks. In such a case, it may be necessary for the next five years is as follows (dollars in thousands):

December 31, Amortization Expense 
    
2014 $2,198 
2015  1,668 
2016  1,509 
2017  1,509 
2018  1,506 
us to recognize an additional non-cash impairment charge related to our trademarks, which could have a material adverse effect on our consolidated financial condition and results of operations.


5. FAIR VALUE MEASUREMENTS

As of December 31, 20132016 and 2012,2015, the Company held certain financial assets that are measured at fair value on a recurring basis.  These consisted of securities that are among the Company’sCompany's investments in a rabbi trust which are intended to fund the Company’sCompany's Supplemental Executive Retirement Plan (“SERP”("SERP") obligations, and other marketable securities described below.  The securities that are held in the rabbi trust are categorized as available-for-sale securities and are included as other assets in the accompanying consolidated balance sheets at December 31, 20132016 and 2012.2015.  The gross unrealized gains associated with the investments held in the rabbi trust were $0.4$0.7 million and $0.7 million at each of December 31, 20132016 and December 31, 2012.2015, respectively.  Such unrealized gains are included, net of tax, in accumulated other comprehensive income.

As of December 31, 20132016 and December 31, 2012, the Company had marketable2015, our available-for-sale securities, withwhich primarily consist of investments held in a combinedrabbi trust of $1.7 million and $3.6 million, respectively, are measured at fair value of less than $0.1 million at each date, and gross unrealized gains of less than $0.1 million at each date.  Such unrealized gains are included, net of tax, in accumulated other comprehensive income.  The fair value of the equity securities is determined based onusing quoted market prices in publicactive markets and is categorized as Level 1.for identical assets (Level 1) inputs.  The Company does not have any financial assets measured at fair value on a recurring basis categorized as Level 3, and there were no transfers in or out of Level 1, Level 2 or Level 3 during 20132016 or 2012.2015.  There were no changes to the Company’sCompany's valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during 2013.2016.

The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring basis as of December 31, 2013 and 2012 (dollars in thousands).

     Assets at Fair Value Using 
  Total  Quoted Prices in Active Markets for Identical Assets (Level 1)  Significant Other Observable Inputs (Level 2)  Significant Unobservable Inputs (Level 3) 
As of December 31, 2013            
Available-for-sale securities:            
   Investments held in rabbi trust $3,313  $3,313  $-  $- 
   Marketable securities  3   3   -   - 
   Total $3,316  $3,316  $-  $- 
                 
As of December 31, 2012                
Available-for-sale securities:                
   Investments held in rabbi trust $6,014  $6,014  $-  $- 
   Marketable securities  2   2   -   - 
   Total $6,016  $6,016  $-  $- 




There were no financial assets accounted for at fair value on a nonrecurring basis as of December 31, 20132016 or 2012.2015.

The Company has other financial instruments, such as cash and cash equivalents, accounts receivable, restricted cash, accounts payable, accrued expenses and notes payable, which are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature.  The fair value of the Company's long-term debt is estimated using a discounted cash flow method based on interest rates that are currently available for debt issuances with similar terms and maturities.  At December 31, 2016 and 2015, the estimated fair value of total debt was $144.3 million and $188.1 million, respectively, compared to a carrying amount of $141.2 million and $183.5 million, respectively. The Company did not have any other financial liabilities within the scope of the fair value disclosure requirements as of December 31, 2013.2016.

Nonfinancial assets and liabilities, such as goodwill, indefinite-lived intangible assets and long-lived assets, are accounted for at fair value on a nonrecurring basis.  These items are tested for impairment upon the occurrence of a triggering event or in the case of goodwill, on at least an annual basis.  The Company performed its annual impairment tests related to itsSee Note 4, "Goodwill and Other Intangible Assets," for further information about goodwill and other indefinite-lived intangible assets during the fourth quarter of 2013.  These valuations indicated that the fair value of the Company’s aggregated reporting units and indefinite-live intangible assets exceeded the respective carrying values as of the testing date and the Company has concluded that no impairment exists at December 31, 2013.assets.

6.OTHER ASSETS

At December 31, 20132016 and 2012,2015, the Company has obligations of $10.8$16.9 million and $11.0$15.6 million, respectively, associated with its SERP.  As a means of informally funding these obligations, the Company has invested in life insurance policies related to certain employees and marketable securities held in a rabbi trust.  At December 31, 20132016 and 2012,2015, these assets had a combined fair value of $11.9$12.7 million and $11.1$12.2 million, respectively.

Company-Owned Life Insurance

Investments in company-owned life insurance policies (“COLI”("COLI") were made with the intention of utilizing them as a long-term funding source for the Company’sCompany's SERP obligations.  However, the cash surrender value of the COLI does not represent a committed funding source for these obligations.  Any proceeds from these policies are subject to claims from creditors.  The fair marketcash surrender value of the COLI of $8.6$10.9 million and $5.1$8.5 million at December 31, 20132016 and 2012,2015, respectively, is included in other assets in the accompanying consolidated balance sheets. During 2013,2016 and 2015, the Company sold $2.2 million and $2.8 million, respectively, of other investments, as described below,marketable securities within the rabbi trust and utilized the proceeds to purchase additional COLI policies.COLI.  The volatility in global equity markets in recent years has also had a significantan effect on the cash surrender value of the COLI policies.  The Company recorded income (expense) to account for the increase (decrease) in cash surrender value in the amount of $0.7$0.5 million, $0.3($0.1) million and $(0.1)$0.2 million during the years ended December 31, 2013, 20122016, 2015 and 2011,2014, respectively.  These fluctuations in the cash surrender value were allocated between cost of sales and selling, general and administrative expenses on the consolidated statements of operations for the years ended December 31, 2013, 20122016, 2015 and 2011.2014.  The allocation is consistent with the costs associated with the long-term employee benefit obligations that the COLI is intended to fund.

Other Investments

At December 31, 20132016 and 2012,2015, the Company held, in the aforementioned rabbi trust, available-for-sale investments at a cost of $2.9$1.0 million and $5.6$2.9 million, respectively. Together with the COLI described above, these investments are intended to fund the Company’sCompany's SERP obligations and are classified as other assets in the accompanying consolidated balance sheets.   The Company monitors these investments for impairment on an ongoing basis.  During 2013,As discussed above, the Company sold a portion$2.2 million of theseits SERP investments forduring 2016 and $2.8 million realizing a gain on the sale of $0.1 million.during 2015.  At December 31, 20132016 and 2012,2015, the fair market value of these investments was $3.3$1.7 million and $6.0$3.6 million, respectively.  The gross unrealized gain of $0.4$0.7 million and $0.7 million at each of December 31, 20132016 and 2012,2015, respectively, has been included, net of tax, in accumulated other comprehensive income (loss).



7. INVENTORIES

The components of inventories are as follows (dollars in thousands):follows:

 December 31,  December 31, 
 2013  2012  2016  2015 
Raw materials $29,428  $26,157  $43,376  $42,036 
Work in progress  8,783   8,200   18,008   16,908 
Finished goods  31,808   20,567   37,487   39,566 
 $70,019  $54,924 
Inventories $98,871  $98,510 


8.PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consist of the following (dollars in thousands):following:

 December 31,  December 31, 
 2013  2012  2016  2015 
Land $3,229  $3,234  $2,234  $2,240 
Buildings and improvements  25,216   23,579   30,061   29,346 
Machinery and equipment  82,420   70,384   113,780   116,921 
Construction in progress  4,042   2,340   3,029   4,949 
Assets held for sale  -   14 
  114,907   99,551   149,104   153,456 
Accumulated depreciation  (74,011)  (64,549)  (100,349)  (95,845)
 $40,896  $35,002 
Property, plant and equipment, net $48,755  $57,611 


Depreciation expense for the years ended December 31, 2013, 20122016, 2015 and 20112014 was $10.5$14.8 million, $8.4$16.0 million and $8.0$15.0 million, respectively.

9.INCOME TAXES

At December 31, 2013 and 2012, the Company has approximately $2.2 million and $2.7 million, respectively,  of liabilities for uncertain tax positions ($1.0 million and $0.5 million, respectively, included in income taxes payable and $1.2 million and $2.2 million, respectively, included in liability for uncertain tax positions) all of which, if recognized, would reduce the Company’s effective tax rate.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions.  The Company is no longer subject to U.S. federal examinations by tax authorities for years before 20102013 and for state examinations before 2007.2010.   Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before 2006 in Asia and generally 20062009 in Europe.  During September 2010 and April 2011,At December 31, 2015, the Company was notified of an Internal Revenue Service (“IRS”) tax audit for the years ended December 31, 2004 through 2009.  The Company settled the domestic and international audits with the IRS for an amount due to the IRS of $0.1 million, net of interest income paidunder examination by the IRS to the Company.  Additionally, the Company’s wholly-owned subsidiarytaxing authorities in Germany was subject to a tax audit for the tax years 20082011 through 2010.2013.  This audit has been completedconcluded in April 2016 and resulted in an immaterial amount of incremental tax expense.
At December 31, 2016 and 2015, the Company has approximately $27.8 million and $42.2 million, respectively, of liabilities for uncertain tax positions ($0.4 million and $1.9 million, respectively, is included in other current liabilities on the consolidated balance sheets and $27.4 million and $40.3 million, respectively, is included in liability for uncertain tax positions on the consolidated balance sheets).  These amounts, if recognized, would reduce the Company's effective tax rate.  As of December 31, 2016, approximately $0.4 million of the Company's liabilities for uncertain tax positions are expected to be resolved during the next twelve months by way of expiration of the related statute of limitations.

In connection with the acquisition of the Power Solutions business in 2014, the Company acquired a minimalliability for additional uncertain tax assessment.positions related to various tax matters for the years 2007 through 2013.  During the year ended December 31, 2016, a portion of these tax matters was resolved with the taxing authorities which resulted in a reduction of $13.9 million in the liability for uncertain tax positions, of which $11.1 million related to interest and penalties. The Company is actively pursuing resolution of the remaining tax matters.  From the date of acquisition through December 31, 2016, the Company has recorded $4.5 million of interest and penalties pertaining to this issue, of which $2.6 million was reversed during 2016 in relation to the settlement of the exposure.  The Company will continue to accrue approximately $0.7 million annually until the issues are resolved.

As part of the acquisition of Power Solutions, the Company acquired a $12.0 million liability for uncertain tax positions relating to an ongoing claim by the Arezzo Revenue Agency in Italy concerning certain tax matters related to what was then Power-One Asia Pacific Electronics Shenzhen Co. Ltd. (now Bel Power Solutions Asia Pacific Electronics Shenzhen Co. Ltd.) for the years 2004 through 2006, as further described in Note 16, "Commitments and Contingencies."

As a result of the expiration of the statutestatutes of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized benefits for tax positions taken regarding previously filed tax returns may change materially from those recorded as liabilities for uncertain tax positions in the Company’sCompany's consolidated financial statements at December 31, 2013.  2016.  A total of $1.0$0.4 million of the acquired liability for uncertain tax positions relates to the 2006 tax year and is scheduled to expire on December 31, 2017. Additionally, a total of $0.2 million of previously recorded liabilities for uncertain tax positions relates principallyrelating to the 2010 tax year.  The statute of limitations related to these liabilities is scheduled to expire on September 15, 2014.  Additionally, a total of $0.5 million and $2.6 million of previously recorded liabilities for uncertain tax positions, interest and penalties relating to the 2006 and 2009 tax years and the 2007 through 2009 tax years, respectively,year were reversed during the year ended December 31, 2013 and 2012, respectively.2015.  This was offset in part by an increase into the liability for uncertain tax positions in the amount of $1.2$3.2 million, of which $2.1 million relates to interest and penalties on the uncertain tax positions acquired from Power Solutions, which is included in the consolidated statement of operations during the year ended December 31, 2012.2015.  A total of $0.8 million of previously recorded liabilities for uncertain tax positions relating to 2010 were reversed during the year ended December 31, 2014.

A reconciliation of the beginning and ending amount of the liability for uncertain tax positions, including the portion included in income taxes payable, is as follows (dollars in thousands):

  2013  2012  2011 
Liability for uncertain tax positions - January 1 $2,711  $4,132  $3,835 
Additions based on tax positions            
  related to the current year  28   1,221   297 
Settlement/expiration of statutes of limitations  (550)  (2,642)  - 
Liability for uncertain tax positions - December 31 $2,189  $2,711  $4,132 


  2016  2015  2014 
Liability for uncertain tax positions - January 1 $42,158  $39,970  $2,189 
Additions based on tax positions            
  related to the current year  2,483   3,241   2,732 
Additions relating to acquisitions  -   -   35,874 
Translation adjustment  (881)  (844)  - 
Settlement/expiration of statutes of limitations  (15,932)  (209)  (825)
Liability for uncertain tax positions - December 31 $27,828  $42,158  $39,970 

The Company’sCompany's policy is to recognize interest and penalties related to unrecognized tax benefits arising from uncertain tax positions as a component of the current provision for income taxes.  During the years ended December 31, 20132016, 2015 and 2011,2014, the Company recognized an immaterial amount$1.3 million, $2.5 million and approximately $0.2$1.6 million, respectively, in interest and penalties in the consolidated statements of operations.  During the yearyears ended December 31, 2012,2016, 2015 and 2014, the Company recognized a benefit of $0.5$3.1 million, less than $0.1 million and $0.2 million, respectively, for the reversal of such interest and penalties.penalties, relating to the expiration of statues of limitations and settlement of the acquired liability for uncertain tax positions, respectively.  The Company has approximately $0.2$2.2 million and $4.0 million accrued for the payment of interest and penalties at each of December 31, 20132016 and 2012,2015, respectively, which is included in both income taxes payable and liability for uncertain tax positions in the Company’s consolidated balance sheets.

The Company’sCompany's total (loss) earnings (loss) before (benefit) provision for income taxes included (loss) earnings (loss) from domestic operations of $(1.2)($43.3) million, $0.4$6.1 million and $9.6($9.2) million for 2013, 20122016, 2015 and 2011,2014, respectively, and (loss) earnings (loss) before (benefit) provision for income taxes from foreign operations of $16.3($39.2) million, $0.6$19.6 million and ($1.7)$19.0 million for 2013, 20122016, 2015 and 2011,2014, respectively.

The (benefit) provision for income taxes consists of the following (dollars in thousands):following:

 Years Ended December 31,  Years Ended December 31, 
 2013  2012  2011  2016  2015  2014 
Current:                  
Federal $(1,099) $(459) $2,585  $(1,163) $1,494  $402 
State  18   70   175 
Foreign  1,120   241   478   (10,172)  5,327   3,281 
State  113   76   362 
  134   (142)  3,425   (11,317)  6,891   3,858 
Deferred:                        
Federal  (865)  (807)  599   (6,272)  1,019   (2,698)
State  65   (58)  102   (464)  (64)  (407)
Foreign  (77)  (369)  (18)  335   (1,311)  414 
  (877)  (1,234)  683   (6,401)  (356)  (2,691)
                        
 $(743) $(1,376) $4,108  $(17,718) $6,535  $1,167 
            



A reconciliation of taxes on income computed at the U.S. federal statutory rate to amounts provided is as follows (dollars in thousands):

  Years Ended December 31,
  2013 2012 2011
   $   %   $   %   $   % 
Tax provision computed at the                     
federal statutory rate $5,309   35% $339   34% $2,676   34%
Increase (decrease) in taxes resulting from:                        
Different tax rates and permanent differences                        
applicable to foreign operations  (4,677)  (31%)  (306)  (31%)  1,526   19%
                         
Increase in (reversal of) liability for uncertain                        
tax positions - net  (522)  (3%)  (1,421)  (143%)  297   4%
                         
Utilization of research and development, solar and foreign                     
tax credits  (1,049)  (7%)  -   0%  (762)  (10%)
                         
State taxes, net of federal benefit  117   1%  -   0%  341   4%
                         
Current year valuation allowance - U.S. segment  49   0%  298   30%  -   0%
                         
Permanent differences applicable to U.S. operations,                        
including qualified production activity credits,                        
SERP/COLI income, unrealized foreign exchange gains                        
and amortization of purchase accounting intangibles  (91)  (1%)  (260)  (26%)  44   1%
                         
Other  121   1%  (26)  (3%)  (14)  (0%)
Tax (benefit) provision computed at the Company's                        
effective tax rate $(743)  (5%) $(1,376)  (138%) $4,108   52%
follows:


   Years Ended December 31, 
  2016  2015  2014    
    $   %   $   %   $   % 
Tax (benefit) provision computed at the                     
federal statutory rate $(28,893)  35% $9,006   35% $3,420   35%
Increase (decrease) in taxes resulting from:                        
Different tax rates applicable to foreign operations  (4,427)  5%  (5,353)  (21%)  (4,458)  (46%)
                         
Impairment of goodwill & intangibles  30,445   (37%)  -   0%  -   0%
                         
Increase in (reversal of) liability for uncertain                        
tax positions - net  (13,974)  17%  3,032   12%  1,907   20%
                         
Utilization of research and experimentation, solar and foreign                        
tax credits  (349)  0%  (349)  (1%)  (508)  (5%)
                         
State taxes, net of federal benefit  (420)  1%  56   0%  (183)  (2%)
                         
Current year (reversal) increase in U.S. valuation allowances  -   0%  (343)  (1%)  335   3%
                         
Federal tax on profit of foreign disregarded entities                        
net of deferred tax  -   0%  872   3%  770   8%
                         
Other, including qualified production activity credits, SERP/COLI                     
income, under/(over) accruals, unrealized foreign exchange gains                     
and amortization of purchase accounting intangibles  (100)  0%  (386)  (2%)  (116)  (1%)
Tax (benefit) provision computed at the Company's                        
effective tax rate $(17,718)  21% $6,535   25% $1,167   12%

The Company holds an offshore business license from the government of Macao.  With this license, a Macao offshore company named Bel Fuse (Macao Commercial Offshore) Limited has been established to handle all of the Company’sCompany's sales to third-party customers in Asia.  Sales by this company consist of products manufactured in the PRC.  This company is not subject to Macao corporate profit taxes which are imposed at a tax rate of 12%.  Additionally, the Company established TRP International, a China Business Trust (“CBT”("CBT"), when it acquired the TRP group, as previously discussed.  Sales by the CBT consists of products manufactured in the PRC and sold to third-party customers inside and outside Asia.  The CBT is not subject to PRC income taxes, which are generally imposed at a tax rate of 25%.

As of December 31, 2013,2016, the Company has gross foreign income tax net operating losses (“NOL”("NOL") of $2.7$25.6 million, foreign tax credits of $0.3 million and capital loss carryforwards of $0.2 million which amount to a total of $0.6$6.2 million of deferred tax assets.  The Company has established valuation allowances totaling $0.6$6.1 million against these deferred tax assets.  In addition, the Company has gross federal and state income tax NOLs of $10.7$16.0 million, including $5.4$3.8 million of NOLs acquired from Array and $10.0 million of NOLs acquired from Connectivity Solutions, which amount to $3.2$5.3 million of deferred tax assets; capital loss carryforwards of $1.0 million which amount to $0.3 million of deferred tax assets;assets and tax credit carryforwards of $2.2$2.3 million. The Company has established valuation allowances of $0.2 million, $0.3 million and $1.2 million, respectively, against these deferred tax assets.  The foreign NOL's can be carried forward indefinitely, the NOL acquired from Array expires at various times during 20222026 – 2031,2027, the NOL acquired from Connectivity Solutions expire at various times during 2022-2033, the state NOL's expire at various times during 2014 2017 – 2031 and the tax credit carryforwards expire at various times during 2025 - 2034.

Upon the acquisition of TRP, TRP had a deferred tax asset in the amount of $2.2 million arising from various timing differences related to depreciation and accrued expenses.  Upon the acquisition of Array, Array had a deferred tax liability of $0.7 million arising from timing differences related to depreciation and a deferred tax asset of $0.9 million arising from the NOL acquired.  In connection with the 2013 acquisitions, the Company was required to complete a preliminary fair market value report of property, plant and equipment and intangibles.  As a result of that report, the Company established deferred tax liabilities at the date of acquisition in the amount of $0.6 million and $1.0 million respectively for TRP and Array acquisitions.  At December 31, 2013, a net deferred tax asset of $2.0 million remains on the consolidated balance sheet.

The Company does not intend to make any election to step up the tax basis of the 2013 acquisitions to fair value under IRC Section 338(g) and 338(h).

Upon the acquisition of Fibreco, Fibreco had a deferred tax liability in the amount of $0.1 million arising from various timing differences. In connection with the 2012 Acquisitions, the Company was required to complete a fair market value report of property, plant and equipment and intangibles. As a result of that report, the Company established deferred tax liabilities at the date of acquisition in the amount of $1.7 million, $0.6 and $0.4 million, respectively for the Fibreco, GigaCom and Powerbox acquisitions.  At December 31, 2013, a deferred tax liability of $2.4 million remains on the consolidated balance sheet.

The Company has made elections under Internal Revenue Code (“IRC”) Section 338(g) to step-up the tax basis of the 2012 Acquisitions to fair value.  The elections made under Section 338(g) affect only the U.S. income taxes (not those of the foreign countries where the acquired entities were incorporated).

It is the Company’sCompany's intention to repatriate substantially all net income from its wholly owned PRC subsidiary, DGDongguan Transpower Electric Products Co., Ltd, a Chinese Limited Liability Company, to its direct Hong Kong parent Transpower Technologies (Hong Kong) Ltd.  Applicable income and dividend withholding taxes have been reflected in the accompanying consolidated statements of operations for the year ended December 31, 2013.2016.  However, U.S. deferred taxes need not be provided under currentas there is no intention to repatriate such amounts to the U.S. tax law. Management’sManagement's intention is to permanently reinvest the majority of the remaining earnings of foreign subsidiaries in the expansion of its foreign operations.  Unrepatriated earnings, upon which U.S. income taxes have not been accrued, are approximately $109$100.4 million at December 31, 2013.2016.  Such unrepatriated earnings are deemed by management to be permanently reinvested.  TheAt December 31, 2016, the estimated federal income tax liability (net of estimated foreign tax credits) related to unrepatriated foreign earnings is $26$23.3 million under the current tax law.

Components of deferred income tax assets are as follows (dollars in thousands).
follows:
 December 31,  December 31, 
 2013  2012  2016  2015 
 Tax Effect  Tax Effect  Tax Effect  Tax Effect 
Deferred Tax Assets - current:      
      
Deferred tax assets:      
State tax credits $915  $848  $902  $902 
Unfunded pension liability  1,398   1,327 
Reserves and accruals  2,020   1,334   4,335   4,349 
Federal net operating loss carryforward  790   - 
Other accruals  86   - 
Valuation allowance  (816)  (745)
 $2,995  $1,437 
        
Deferred Tax Assets - noncurrent:        
Unfunded pension liability $668  $1,150 
Federal, state and foreign net operating loss        
and credit carryforwards  12,891   10,953 
Depreciation  (83)  (426)  1,057   880 
Amortization  (4,065)  (2,457)  -   814 
Federal, state and foreign net operating loss        
and credit carryforwards  3,844   1,114 
Restructuring expenses  -   319 
Other accruals  2,455   2,438   8,278   9,622 
Valuation allowances  (1,139)  (1,129)
 $1,680  $1,009 
Total deferred tax assets  28,861   28,847 
Deferred tax liabilities:        
Reserves and accruals  64   64 
Depreciation  3,028   2,391 
Amortization  15,361   23,772 
Other accruals  973   857 
Total deferred tax liabilities  19,426   27,084 
Valuation allowance  7,485   6,635 
Net deferred tax assets/(liabilities) $1,950  $(4,872)


On January 2, 2013, President Obama signed the “American Taxpayer Relief Act” (“ATRA”).  Among other things, ATRA extends the Research and Experimentation credit (“R&E”), which expired at the end of 2011, through 2013 and 2014, respectively. Under ASC 740, Income Taxes, the effects of the new legislation are recognized upon enactment, which is when the President signs a tax bill into law.  Although the extenders were effective retroactively for 2012, the Company could only consider currently enacted tax law as of the balance sheet date in determining current and deferred taxes at December 31, 2012.

The Company continues to monitor proposed legislation affecting the taxation of transfers of U.S. intangible property and other potential tax law changes.




10.DEBT

At December 31, 2012,On June 19, 2014, the Company maintainedentered into a $30 million line of credit,senior Credit and Security Agreement with KeyBank National Association ("KeyBank"), as administrative agent and lender, which was due to expireamended on June 30, 2014.  In August 2013,2014 principally to add a syndicate of additional lenders (as so amended, the "Credit and Security Agreement" or "CSA").  The maturity date of the CSA is June 18, 2019.
The CSA consists of (i) a $50 million revolving credit facility ("Revolver"), (ii) a $145 million term loan facility ("Term Loan") and (iii) a $70 million delayed draw term loan ("DDTL").  Under the terms of the CSA, the Company borrowed $12.0 millionis entitled, subject to the satisfaction of certain conditions, to request additional commitments under the linerevolving credit facility or term loans in the aggregate principal amount of credit in connection with its acquisitionup to $100 million to the extent that existing or new lenders agree to provide such additional commitments and/or term loans.
The obligations of Array.  At December 31, 2013, the balance availableCompany under the credit agreement was $18.0 million.  There were no previous borrowings underCSA are guaranteed by certain of the credit agreementCompany's material U.S. subsidiaries (together with the Company, the "Loan Parties") and as a result, there was no balance outstanding as of December 31, 2012.  Amounts outstanding under this line of credit are collateralized withsecured by a first priority security interest in 100%substantially all of the issuedexisting and outstanding sharesfuture personal property of the capital stockLoan Parties, certain material real property of the Company'sLoan Parties and certain of the Loan Parties' material domesticU.S. subsidiaries, andincluding 65% of all the issued and outstanding shares of thevoting capital stock of certain of the Loan Parties' direct foreign subsidiaries ofsubsidiaries.
The borrowings under the Company.  The credit agreement bearsCSA will bear interest at a rate equal to, at the Company's option, either (1) LIBOR, plus 1.00%a margin ranging from 1.75% per annum to 1.50% based3.00% per annum depending on certain financial statement ratios maintained by the Company.Company's leverage ratio, or (2)(a) an "Alternate Base Rate," which is the highest of (i) the federal funds rate plus 0.50%, (ii) KeyBank's prime rate and (iii) the LIBOR rate with a maturity of one month plus 1.00%, plus (b) a margin ranging from 0.75% per annum to 2.00% per annum, depending on the Company's leverage ratio. The interest rate in effect at December 31, 2016 was 3.06%, which consisted of LIBOR of 0.81% plus the Company's margin of 2.25%.  The interest rate in effect at December 31, 2015 was 3.19%, which consisted of LIBOR of 0.44% plus the Company's margin of 2.75%.
The CSA contains customary representations and warranties, covenants and events of default and financial covenants that measure (i) the ratio of the Company's total funded indebtedness, on a consolidated basis, to the amount of the Company's consolidated EBITDA, as defined, ("Leverage Ratio") and (ii) the ratio of the amount of the Company's consolidated EBITDA to the Company's 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 December 31, 2016, the Company was in compliance with its debt covenants, including its most restrictive covenant, the Leverage Ratio.  The unused credit available under the credit facility at December 31, 2016 was $50.0 million.  In January 2017, the Company borrowed $6.0 million of its available credit under the credit facility.

Concurrent with its entry into the CSA on June 19, 2014, the Company borrowed $145.0 million under the Term Loan to complete its acquisition of Power Solutions.  In July 2014, in connection with the acquisition of Connectivity Solutions, the Company borrowed an additional $90.0 million under the CSA ($70.0 million through the DDTL and $20.0 million under the Revolver).

In March 2016, the Company amended the terms of the CSA to modify (i) the date by which the Company was obligated to make excess cash flow prepayments in 2016 on account of excess cash flow achieved for fiscal year 2015, (ii) the method of application of mandatory and voluntary prepayments related to the Company's loans, and (iii) the maximum Leverage Ratio of the Company allowed under the CSA for the period from the effective date of the amendment through September 2017. In connection with this amendment to the CSA, the Company paid $0.7 million of deferred financing costs, and the modification to the amortization schedule resulted in $0.5 million of existing deferred financing costs to be accelerated and recorded as interest expense during the first quarter of 2016.

The Company recorded a total of $6.5 million in deferred financing costs related to the CSA since 2014, and these costs are being amortized in interest expense over the remaining term of the loan.  At December 31, 2016 and 2015, the carrying value of the debt on the consolidated balance sheets is reflected net of $2.6 million and $3.6 million, respectively, of deferred financing costs as a result of the adoption of accounting guidance effective January 1, 2016.  See Note 1, "Basis of Presentation and Accounting Policies".
In connection with its outstanding borrowings and amortization of the deferred financing costs described above, the Company incurred $6.7 million and $7.6 million of interest expense during the years ended December 31, 2016 and 2015, respectively.  At December 31, 2016 and 2015, borrowings outstanding related to the term loans (Term Loan and DDTL combined) were $143.8 million and $187.2 million, respectively, with no borrowings outstanding under the revolver at either period.

Scheduled principal payments of the total debt outstanding at December 31, 2013 was 1.4%.  Under the terms of the credit agreement, the Company is required2016 are as follows (in thousands):


2017 $12,495 
2018  20,860 
2019  110,443 
Total long-term debt  143,798 
Less: Current maturities of long-term debt  (12,495)
Noncurrent portion of long-term debt $131,303 


11.     ACCRUED EXPENSES

Accrued expenses consist of the following (dollars in thousands):

  Year Ended December 31, 
  2013  2012 
Sales commissions $1,431  $1,295 
Subcontracting labor  2,406   2,408 
Salaries, bonuses and related benefits  13,674   6,023 
Litigation reserve  723   11,549 
Other  4,219   4,085 
  $22,453  $25,360 
following:



  Year Ended December 31, 
  2016  2015 
Sales commissions $2,066  $2,824 
Subcontracting labor  1,370   1,942 
Salaries, bonuses and related benefits  17,587   15,672 
Warranty accrual  2,718   3,659 
Deferred revenue  -   4,500 
Other  7,808   9,726 
  $31,549  $38,323 


A tabular presentation of the activity within the warranty accrual account for the years ended December 31, 2016 and 2015 is presented below:

  Year Ended December 31, 
  2016  2015 
Balance, beginning of year $3,659  $6,032 
Charges and costs accrued  761   2,892 
Adjustments related to pre-existing warranties        
(including changes in estimates)  (1,063)  (1,208)
Less: Repair costs incurred  (544)  (2,932)
Less: Cash settlements  -   (1,000)
Currency translation  (95)  (125)
Balance, end of year $2,718  $3,659 


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60

12.           BUSINESS SEGMENT INFORMATIONSEGMENTS

The Company operates in one industry with three reportable operating segments, which are geographic in nature.  The segments consist of North America, Asia and Europe.  The primary criteria by which financial performance is evaluated and resources are allocated are revenuesnet sales and operating income.income from operations.  The following is a summary of key financial data (dollars in thousands):data:

 2016  2015  2014 
 2013  2012  2011      (Revised)   (Revised) 
Net Sales to External Customers:                  
North America $116,548  $126,469  $134,804  $256,760  $304,328  $217,258 
Asia  193,647   128,319   126,941   168,458   188,146   201,338 
Europe  38,994   31,806   33,376   74,935   74,606   68,480 
 $349,189  $286,594  $295,121  $500,153  $567,080  $487,076 
                        
Net Sales:                        
North America $128,472  $138,966  $149,114  $268,935  $329,304  $248,007 
Asia  225,151   167,756   177,815   256,202   295,751   275,765 
Europe  40,742   33,329   34,597   86,750   148,735   114,748 
Less intergeographic            
revenues  (45,176)  (53,457)  (66,405)
Less intercompany            
net sales  (111,734)  (206,710)  (151,444)
 $349,189  $286,594  $295,121  $500,153  $567,080  $487,076 
                        
Income (Loss) from Operations:            
(Loss) Income from Operations:            
North America $(1,560) $1,336  $9,026  $(35,722) $11,012  $(4,531)
Asia  15,356   (42)  (3,480)  (24,360)  8,175   13,090 
Europe  1,251   369   1,850   (16,430)  9,413   4,913 
 $15,047  $1,663  $7,396  $(76,512) $28,600  $13,472 
                        
Total Assets:                        
North America $117,261  $84,609  $115,552  $168,061  $238,930  $309,516 
Asia  148,689   148,351   148,950   166,028   231,063   251,240 
Europe  42,100   42,229   12,409   92,651   108,512   69,616 
 $308,050  $275,189  $276,911  $426,740  $578,505  $630,372 
                        
Capital Expenditures:                        
North America $2,064  $2,455  $1,121  $2,641  $2,425  $3,862 
Asia  4,551   2,003   1,733   4,329   4,888   4,089 
Europe  325   286   74   1,253   2,578   1,091 
 $6,940  $4,744  $2,928  $8,223  $9,891  $9,042 
                        
Depreciation and Amortization Expense:Depreciation and Amortization Expense:         Depreciation and Amortization Expense:         
North America $4,282  $4,081  $4,046  $10,522  $10,841  $7,986 
Asia  6,540   4,076   4,137   7,976   8,706   8,391 
Europe  1,560   956   484   3,280   3,462   3,990 
 $12,382  $9,113  $8,667  $21,778  $23,009  $20,367 

Net SalesSegment Sales – Segment net sales are attributed to individual segments based on the geographic source of the billing for such customer sales.  Transfers between geographic areasIntercompany sales include finished products manufactured in foreign countries which are then transferred to the United States and Europe for sale; finished goods manufactured in the United States which are transferred to Europe and Asia for sale; and semi-finished components manufactured in the United States which are sold to Asia for further processing. Income (loss) from operations represents net sales less operating costs and expenses.
Recent Acquisitions – During 2013, the acquisition of TRP contributed revenues of $66.1 millionexpenses and income from operations of $10.9 milliondoes not include any amounts related to the Company’s Asia operating segment. During 2013, the acquisition of Array contributed revenues of $2.1 million and a loss from operations of $0.9 million to the Company’s North America operating segment.  During the years ended December 31, 2013 and 2012, Fibreco and Bel Power Europe contributed combined revenues of $10.7 million and $3.1 million, respectively, and combined operating income of $1.7 million and $0.3 million, respectively, to the Company’s Europe operating segment.intercompany transactions.



The following items are included in the income from operationssegment data presented above:

Restructuring ChargesAcquisitions – DuringSince the 2014 Acquisitions occurred mid-year during 2014, Bel's segment net sales and income from operations presented above for the year ended December 31, 2013,2014 only include contributions from the Company incurred $1.4 million in severance costs relatedrespective dates of acquisitions.  The following table indicates the contributions to continued restructuring efforts ($1.0 million innet sales and income (loss) from operations from the Company’s North America operating segment, $0.2 million in the Company’s Asia operating segment and $0.2 million in the Company’s Europe operating segment).  During the year ended December 31, 2012, the Company incurred $5.2 million in restructuring costs related2014 Acquisitions:
  Year Ended December 31, 
  2015  2014 
Net Sales to External Customers:      
North America $189,118  $101,772 
Asia  5,898   5,870 
Europe  35,319   26,694 
Net sales from the 2014 Acquisitions $230,335  $134,336 
         
Income (loss) from operations:        
North America $5,123  $(3,585)
Asia  (2,403)  (3,358)
Europe  7,530   4,406 
Total income (loss) from operations        
from the 2014 Acquisitions $10,250  $(2,537)


LitigationRestructuring Charges – During the year ended December 31, 2011, the Company recorded $3.5 million of litigationThe following restructuring charges related to the SynQor and Halo lawsuits.  These charges impactedare included in income (loss) from operations primarily withinby segment.  See Note 3, "Restructuring Activities," for further information on the Company’s Asia reportable operating segment.Company's restructuring efforts.


  2016  2015  2014 
    North America $692  $1,452  $1,539 
    Asia  1,305   352   - 
    Europe  90   310   293 
  $2,087  $2,114  $1,832 

Loss on Disposal of Property, Plant and EquipmentImpairment Charges – During the year ended December 31, 2012,As discussed in Note 4, Goodwill and Other Intangible Assets, the Company recorded a $0.3$106.0 million loss on disposal of assets in its North America operating segmentnon-cash impairment charge related to the damage caused by Hurricane Sandy at its Jersey City, New Jerseygoodwill and Inwood, New York facilities.  Thistrademarks in 2016.  Of this charge, $44.0 million was partially offset by a $0.2 million pre-tax gain recorded in the Company’sCompany's North America segment, $41.7 million was recorded in its Asia operating segment and $20.3 million was recorded in its Europe segment.  These charges impacted the Company's income from operations for 2016 and the salereduction in goodwill accounted for the majority of a buildingthe decline in Macao.   total assets from December 31, 2015 noted above.

Entity-Wide Information

The following is a summary of entity-wide information related to the Company’sCompany's net sales to external customers by geographic area and by major product line (dollars in thousands).line.

  2016  2015  2014 
Net Sales by Geographic Location:         
          
United States $256,760  $304,328  $217,258 
Macao  163,971   182,248   195,469 
United Kingdom  21,953   27,552   22,852 
Slovakia  17,622   2,807   1,353 
Germany  14,104   16,314   18,663 
Switzerland  14,048   18,050   15,236 
All other foreign countries  11,695   15,781   16,245 
    Consolidated net sales $500,153  $567,080  $487,076 
             
Net Sales by Major Product Line:            
             
Power solutions and protection $172,176  $214,766  $159,867 
Connectivity solutions  168,845   181,697   152,954 
Magnetic solutions  159,132   170,617   174,255 
    Consolidated net sales $500,153  $567,080  $487,076 

  2013  2012  2011 
Net Sales by Geographic Area:         
          
United States $116,548  $126,469  $134,804 
Macao  193,647   128,319   126,941 
Germany  16,585   14,165   17,937 
United Kingdom  16,538   13,203   11,927 
Czech Republic  2,615   3,298   3,512 
Italy  3,252   1,083   - 
Sweden  4   57   - 
    Consolidated net sales $349,189  $286,594  $295,121 
             
Net Sales by Major Product Line:            
             
    Interconnect $111,653  $109,245  $107,346 
    Magnetics  170,166   100,529   87,104 
    Modules  55,967   66,663   90,475 
    Circuit protection  11,403   10,157   10,196 
    Consolidated net sales $349,189  $286,594  $295,121 


Net sales to external customers are attributed to individual countries based on the geographic source of the billing for such customer sales.



F-2662

The following is a summary of long-lived assets by geographic area as of December 31, 20132016 and 2012 (dollars in thousands):2015:

 2013  2012  2016  2015 
Long-lived Assets by Geographic Location:          (Revised) 
            
United States $30,102  $27,552  $29,740  $32,327 
People's Republic of China (PRC)  20,985   16,622   32,666   37,796 
Slovakia  6,574   7,758 
Switzerland  3,593   4,006 
United Kingdom  1,419   2,016 
All other foreign countries  3,257   3,338   1,117   1,232 
Consolidated long-lived assets $54,344  $47,512  $75,109  $85,135 


Long-lived assets consist of property, plant and equipment, net and other assets of the Company that are identified with the operations of each geographic area.

The territory of Hong Kong became a Special Administrative Region (“SAR”("SAR") of the PRC in the middle of 1997. The territory of Macao became a SAR of the PRC at the end of 1999. Management cannot presently predict what future impact this will have on the Company, if any, or how the political climate in the PRC will affect the Company's contractual arrangements in the PRC.  A significant portion of the Company's manufacturing operations and approximately 40% of its identifiable assets are located in Asia.

Net Sales to Major Customers

The Company had net sales to two customersone customer in excess of ten percent of consolidated net sales in 2013.each of 2016, 2015 and 2014.  The combined revenue from these two customers was $103.3 million during the year ended December 31, 2013, representing 29.6% of total sales.  In 2012, the Company had sales to two customers in excess of ten percent of consolidated net sales associated with this customer was $59.8 million in 2012.  The combined revenue from these two customers was $70.62016 (12.0% of sales), $74.8 million during the year ended December 31, 2012, representing 24.6%in 2015 (13.2% of total sales.  In 2011, there were two customers withsales) and $76.4 million in 2014 (15.7% of sales). Net sales in excess of ten percent of consolidated net sales.  The combined revenue from these two customers was $65.7 million during the year ended December 31, 2011, representing 22.3% of total sales.  Sales related to thesethis significant customerscustomer were primarily reflected in the North America and Asia operating segmentssegment during each of the three years discussed.

13.RETIREMENT FUND AND PROFIT SHARING PLAN

The Company maintains the Bel Fuse Inc. Employees’Employees' Savings Plan, a defined contribution plan that is intended to meet the applicable requirements for tax-qualification under sections 401(a) and (k) of the Internal Revenue Code of 1986, as amended (the “Code”"Code"). The Employees’Employees' Savings Plan allows eligible employees to voluntarily contribute a percentage of their eligible compensation, subject to Code limitations, which contributions are matched by the Company. For plan years beginning on and after January 1, 2012, the Company’sCompany's matching contributions are made in cash and are equal to 100% of the first 1% of compensation contributed by participants, and 50% of the next 5% of compensation contributed by participants. For plan years prior to January 1, 2012, the Company’s matching contributions were limited to $350 per participant and the Company made discretionary profit sharing contributions on behalf of eligible participants in amounts determined by the Company’s board of directors. Prior to January 1, 2012, the Company’sCompany's matching and profit sharing contributions were investedmade in the form of shares of Bel Fuse Inc. Class A and Class B common stock. Effective January 1, 2012, Company matching contributions are made in cash and invested in accordance with participant’s instructions in various investment funds offered under the Employees’ Savings Plan other than Bel Fuse Inc. common stock. The expense for the years ended December 31, 2013, 20122016, 2015 and 20112014 amounted to $0.4$1.1 million, $0.5$1.2 million and $0.9$0.8 million, respectively. As of December 31, 2013,2016, the plan owned 14,89913,637 and 190,039159,688 shares of Bel Fuse Inc. Class A and Class B common stock, respectively.  Effective January 1, 2017, the Company's matching contribution will be made in the form of Bel Fuse Inc. Class A common stock.

The Company's subsidiaries in Asia have a retirement fund covering substantially all of their Hong Kong based full-time employees.  Eligible employees contribute up to 5% of salary to the fund.  In addition, the Company must contribute a minimum of 5% of eligible salary, as determined by Hong Kong government regulations.  The Company currently contributes 7% of eligible salary in cash or Company stock.  The expense for the years ended December 31, 2013, 20122016, 2015 and 20112014 amounted to approximately $0.3 million in each year. As of December 31, 2013,2016, the plan owned 3,323 and 17,342 shares of Bel Fuse Inc. Class A and Class B common stock, respectively.

The Company maintains a SERP, which is designed to provide a limited group of key management and highly compensatedother key employees of the Company with supplemental retirement and death benefits.  Participants in the SERP are selected by the Compensation Committee of the Board of Directors.Directors.   The SERP initially became effective in 2002 and was amended and restated in April 2007 to conform with applicable requirements of Section 409A of the Internal Revenue Code and to modify the provisions regarding benefits payable in connection with a change in control of the Company.  The Plan is unfunded.  Benefits under the SERP are payable from the general assets of the Company, but the Company has established a rabbi trust which includes certain life insurance policies in effect on participants as well as other investments to partially cover the Company’sCompany's obligations under the Plan.  See Note 6, "Other Assets," for further information on these assets.

The benefits available under the Plan vary according to when and how the participant terminates employment with the Company.  If a participant retires (with the prior written consent of the Company) on his normal retirement date (65 years old, 20 years of service, and 5 years of Plan participation), his normal retirement benefit under the Plan would be annual payments equal to 40% of his average base compensation (calculated using compensation from the highest five consecutive calendar years of Plan participation), payable in monthly installments for the remainder of his life.  If a participant retires early from the Company (55 years old, 20 years of service, and five years of Plan participation), his early retirement benefit under the Plan would be an amount (i) calculated as if his early retirement date were in fact his normal retirement date, (ii) multiplied by a fraction, with the numerator being the actual years of service the participant has with the Company and the denominator being the years of service the participant would have had if he had retired at age 65, and (iii) actuarially reduced to reflect the early retirement date.  If a participant dies prior to receiving 120 monthly payments  under  the  Plan,  his  beneficiary  would  be  entitled  to  continue  receiving benefits for the shorter of (i) the time necessary to complete 120 monthly payments or (ii) 60 months.  If a participant dies while employed by the Company, his beneficiary would receive, as a survivor benefit, an annual amount equal to (i) 100% of the participant’sparticipant's annual base salary at date of death for one year, and (ii) 50% of the participant’sparticipant's annual base salary at date of death for each of the following four years, each payable in monthly installments.  The Plan also provides for disability benefits, and a forfeiture of benefits if a participant terminates employment for reasons other than those contemplated under the Plan. The expense related to the Plan for the years ended December 31, 2013, 20122016, 2015 and 20112014 amounted to $1.3$1.6 million, $1.1$1.5 million and $0.9$1.3 million, respectively.

Net Periodic Benefit Cost


The net periodic benefit cost related to the SERP consisted of the following components during the years ended December 31, 2013, 20122016, 2015 and 2011 (dollars in thousands):2014:

  2016  2015  2014 
          
Service Cost $593  $552  $542 
Interest Cost  659   567   541 
Net amortization  391   366   182 
   Net periodic benefit cost $1,643  $1,485  $1,265 

  2013  2012  2011 
          
Service Cost $556  $438  $371 
Interest Cost  448   417   404 
Net amortization  307   230   149 
   Net periodic benefit cost $1,311  $1,085  $924 

Obligations and Funded Status



Summarized information about the changes in plan assets and benefit obligation, the funded status and the amounts recorded at December 31, 20132016 and 20122015 are as follows (dollars in thousands):follows:
  2016  2015 
Fair value of plan assets, January 1 $-  $- 
Company contributions  129   85 
Benefits paid  (129)  (85)
Fair value of plan assets, December 31  -   - 
Benefit obligation, January 1  15,576   14,205 
Service cost  593   552 
Interest cost  659   567 
Benefits paid  (129)  (85)
Plan amendments  487   - 
Actuarial (gains) losses  (286)  337 
Benefit obligation, December 31  16,900   15,576 
Underfunded status, December 31 $(16,900) $(15,576)

 
64
  2013  2012 
Fair value of plan assets, January 1 $-  $- 
Company contributions  -   - 
Benefits paid  -   - 
Fair value of plan assets, December 31 $-  $- 
Benefit obligation, January 1  11,045   9,274 
Service cost  556   438 
Interest cost  448   417 
Plan amendments  502   - 
Benefits paid      - 
Actuarial (gains) losses  (1,721)  916 
Benefit obligation, December 31 $10,830  $11,045 
Funded status, December 31 $(10,830) $(11,045)


The Company has recorded the related liability of $10.8 million2016 and $11.0 million2015 underfunded status as a long-term liability in itson the consolidated balance sheets at December 31, 2013 and 2012, respectively.  The plan amendment in 2013 noted above relates to a decision by the Bel Board of Directors to grant past service to certain of the plan participants.sheets.  The accumulated benefit obligation for the SERP was $9.2 million and $9.3$13.8 million as of December 31, 20132016 and 2012, respectively.  $12.7 million as of December 31, 2015.  The aforementioned company-owned life insurance policies and marketable securities held in a rabbi trust had a combined fair value of $11.9$12.7 million and $11.1$12.2 million at December 31, 20132016 and 2012,2015, respectively.  See Note 6, "Other Assets," for additional information on these investments.

The estimated net loss and prior service cost for the defined benefit pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $0 and $0.2 million, respectively.$0.4 million.  The Company does not expectexpects to make any contributions of $0.1 million to the SERP in 2014.2017.  The Company had no net transition assets or obligations recognized as an adjustment to other comprehensive income and does not anticipate any plan assets being returned to the Company during 2014,2017, as the plan has no assets.

The following benefit payments, which reflect expected future service, are expected to be paid (dollars in thousands):paid:

Years Ending      
December 31,      
      
2014 $- 
2015  264 
2016  264 
2017  264  $129 
2018  264   288 
2019 - 2023  3,443 
2019  543 
2020  658 
2021  658 
2022 - 2026  5,160 


The following gross amounts are recognized net of tax in accumulated other comprehensive loss, net of tax (dollars in thousands):

  2013  2012 
Prior service cost $1,230  $877 
Net loss  1,004   2,884 
  $2,234  $3,761 
loss:


  2016  2015 
Prior service cost $1,172  $866 
Net loss  2,970   3,465 
  $4,142  $4,331 


Actuarial Assumptions

The weighted average assumptions used in determining the periodic net cost and benefit obligation information related to the SERP are as follows:

2013 2012 20112016 2015 2014
Net periodic benefit cost          
Discount rate4.00% 4.50% 5.50%4.25% 4.00% 5.00%
Rate of compensation increase3.00% 3.00% 3.00%3.00% 3.00% 3.00%
Benefit obligation          
Discount rate5.00% 4.00% 4.50%4.00% 4.25% 4.00%
Rate of compensation increase3.00% 3.00% 3.00%3.00% 3.00% 3.00%


14.  SHARE-BASED COMPENSATION

The Company has an equity compensation program (the “Program”"Program") which provides for the granting of “Incentive"Incentive Stock Options”Options" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, non-qualified stock options and restricted stock awards.  The Company believes that such awards better align the interest of its employees with those of its shareholders.  The 2011 Equity Compensation Plan provides for the issuance of 1.4 million shares of the Company’sCompany's Class B common stock.  At December 31, 2013, 1.1 million2016, 599,800 shares remained available for future issuance under the 2011 Equity Compensation Plan.
The Company records compensation expense in its consolidated statements of operations related to employee stock-based options and awards.  The aggregate pretax compensation cost recognized for stock-based compensation amounted to approximately $1.9$2.8 million, $1.8$2.8 million and $1.7$2.7 million for the years ended December 31, 2013, 20122016, 2015 and 2011,2014, respectively, and related solely to restricted stock awards.awards.   The Company did not use any cash to settle any equity instruments granted under share-based arrangements during the years ended December 31, 2013, 20122016, 2015 and 2011.2014.  At December 31, 20132016 and 2012,2015, the only instruments issued and outstanding under the Program related to restricted stock awards.

F-29
Restricted Stock Awards

The Company provides common stock awards to certain officers and key employees.  The Company grants these awards, at its discretion, from the shares available under the Program.  Unless otherwise provided at the date of grant or unless subsequently accelerated, the shares awarded are typically earned in 25% increments on the second, third, fourth and fifth anniversaries of the award respectively, and are distributed provided the employee has remained employed by the Company through such anniversary dates; otherwise the unearned shares are forfeited.  The market value of these shares at the date of award is recorded as compensation expense on the straight-line method over the five-year periods from the respective award dates, as adjusted for forfeitures of unvested awards. During 2013, 20122016, 2015 and 2011,2014, the Company issued 162,200180,000 shares, 130,00084,000 shares and 128,300378,000 shares of the Company’sCompany's Class B common stock, respectively, under a restricted stock plan to various officers and employees.

A summary of the restricted stock activity under the Program as of December 31, 20132016 is presented below:

     Weighted Weighted Average      Weighted Average
Restricted Stock     Average Remaining    Weighted Average Remaining
Awards Shares  Award Price Contractual Term Shares  Award Price Contractual Term
                 
Outstanding at January 1, 2013  352,600  $18.83  3.0 years
Outstanding at January 1, 2016  564,025  $22.00  3.2 years
Granted  162,200   19.40    180,000   23.30  
Vested  (82,400)  19.84    (155,100)  20.99  
Forfeited  (20,050)  18.78    (30,325)  23.06  
Outstanding at December 31, 2013  412,350  $18.85  3.4 years
         
Outstanding at December 31, 2016  558,600  $22.64  3.1 years

As of December 31, 2013,2016, there was $5.4$8.7 million of total pretax unrecognized compensation cost included within additional paid-in capital related to non-vested stock based compensation arrangements granted under the restricted stock award plan.  That cost is expected to be recognized over a period of 4.84.9 years.  This expense is recorded in cost of sales and SG&A expense based upon the employment classification of the award recipients.

The Company's policy is to issue new shares to satisfy restricted stock awards.  Currently the Company believes that substantially all restricted stock awards will vest.

15.COMMON STOCK

In July 2012, the Board of Directors of the Company authorized the purchase of up to $10 million of the Company’s outstanding Class B common shares.  As of December 31, 2013, the Company had purchased and retired 547,366 Class B common shares at a cost of approximately $10.0 million.  No shares of Class A or Class B common stock were repurchased during the year ended December 31, 2011.

As of December 31, 2013,2016, according to the Company’s knowledge,regulatory filings, there were two shareholderswas one shareholder of the Company’sCompany's common stock (other than shareholders subject to specific exceptions) with ownership in excess of 10% of Class A outstanding shares with no ownership of the Company’sCompany's Class B common stock.  In accordance with the Company’sCompany's certificate of incorporation, the Class B Protection clause is triggered if a shareholder owns 10% or more of the outstanding Class A common stock and does not own an equal or greater percentage of all then outstanding shares of both Class A and Class B common stock (all of which common stock must have been acquired after the date of the 1998 recapitalization).  In such a circumstance, such shareholder must, within 90 days of the trigger date, purchase Class B common shares, in an amount and at a price determined in accordance with a formula described in the Company’sCompany's certificate of incorporation, or forfeit its right to vote its Class A common shares.  As of December 31, 2013,2016, to the Company’sCompany's knowledge, these shareholdersthis shareholder had not purchased any Class B shares to comply with these requirements.  In order to vote theirits shares at Bel’sBel's next shareholders’shareholders' meeting, these shareholdersthis shareholder must either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until theirits Class A holdings are under 10%.  As of December 31, 2013,2016, to the Company’sCompany's knowledge, these shareholdersthis shareholder owned 33.6% and 12.5%, respectively,23.15% of the Company’sCompany's Class A common stock in the aggregate and had not taken steps to either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until theirits Class A holdings fall below 10%.  Unless and until this situation is satisfied in a manner permitted by the Company’sCompany's Restated Certificate of Incorporation, the subject shareholdersshareholder will not be permitted to vote theirits shares of common stock.

Throughout 2011, 20122016, 2015 and 2013,2014, the Company declared cash dividends on a quarterly basis at a rate of $0.06 per Class A share of common stock and $0.07 per Class B share of common stock.  During the years ended December 31, 2013, 2012 and 2011, theThe Company declared and paid cash dividends totaling $3.1 million, $3.2 million in each of 2016, 2015 and $3.2 million, respectively.2014.  There are no contractual restrictions on the Company's ability to pay dividends, provided that the Company is not in default under its credit agreements immediately before such payment and after giving effect to such payment.  

16.COMMITMENTS AND CONTINGENCIES

Leases

The Company leases various facilities under operating leases expiring through MarchDecember 2023.  Some of these leases require the Company to pay certain executory costs (such as insurance and maintenance).

Future minimum lease payments for operating leases are approximately as follows (dollars in thousands):follows:

Years Ending   
Year Ending   
December 31,      
      
2014 $4,522 
2015  3,267 
2016  2,363 
2017  1,710  $6,491 
2018  944   3,590 
2019  2,813 
2020  2,597 
2021  2,108 
Thereafter  2,499   1,171 
 $15,305  $18,770 

Rental expense for all leases was approximately $4.9$7.9 million, $3.4$8.8 million and $3.3$7.5 million for the years ended December 31, 2013, 20122016, 2015 and 2011,2014, respectively.

Other Commitments

The Company submits purchase orders for raw materials to various vendors throughout the year for current production requirements, as well as forecasted requirements.  Certain of these purchase orders relate to special purpose material and, as such, the Company may incur penalties if an order is cancelled.  The Company had outstanding purchase orders related to raw materials in the amount of $23.4$31.0 million and $18.8$42.6 million at December 31, 20132016 and December 31, 2012,2015, respectively.  The Company also had outstanding purchase orders related to capital expenditures in the amount of $3.0$2.8 million and $1.7$1.5 million at December 31, 20132016 and December 31, 2012,2015, respectively.

Legal Proceedings

The Company iswas a defendant in a lawsuit captioned SynQor, Inc. v. Artesyn Technologies, Inc., et al. brought in the United States District Court Eastern District of Texas in November 2007 (“SynQor I case”).  The plaintiff alleged that eleven defendants, including Bel, infringed its patents covering certain power products. With respect to the Company, the plaintiff claimed that the Company infringed its patents related to unregulated bus converters and/or point-of-load (POL) converters used in intermediate bus architecture power supply systems. The case went to trial in December 2010 and a partial judgment was entered on December 29, 2010 based on the jury verdict.  The jury found that certain products of the defendants directly and/or indirectly infringe the SynQor patents.  The jury awarded damages of $8.1 million against the Company, which was recorded by the Company as a litigation charge in the consolidated statement of operations in the fourth quarter of 2010.  On July 11, 2011, the Court awarded supplemental damages of $2.5 million against the Company.  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 as an expense by the Company during the second quarter of 2011.  During the third quarter of 2011, the Company recorded costs and interest associated with this lawsuit of $0.2 million.  A final judgment in the case was entered on August 17, 2011.  The Company filed a notice of appeal with the Federal Circuit Court of Appeals on October 28, 2011.  In November 2011, the Company posted a $13.0 million supersedeas bond to the Court in the Eastern District of Texas while the case was on appeal to the Federal Circuit.  The amount of the bond was reflected as restricted cash in the accompanying consolidated balance sheet at December 31, 2012.   The United States Court of Appeals for the Federal Circuit (“CAFC”) heard oral argument in the SynQor I case on October 2, 2012 and issued its opinion on March 13, 2013.  In its opinion, the CAFC affirmed the district court’s findings and judgment on all issues up on appeal.  The Company and the other Defendants jointly filed a Petition for Rehearing En Banc with the CAFC on April 12, 2013, which was denied by the CAFC on May 14, 2013.  The Defendants filed a joint petition for certiorari with the Supreme Court on September 23, 2013.  In November 2013, the Supreme Court denied the joint petition for certiorari, and the Company released a payment to SynQor of $10.9 million.  The Company subsequently received a $2.1 million payment from one of its customers related to the aforementioned indemnification agreement and reimbursement of certain legal fees.  The remaining $2.1 million in escrow was released back to the Company in December 2013 and as such, there was no balance in restricted cash remaining on the consolidated balance sheet at December 31, 2013.

In a related matter, on September 29, 2011, the United States District Court for the Eastern District of Texas ordered SynQor, Inc.’s continuing causes of action for post-injunction damages to be severed from the original action and assigned to a new case number.  The new action captioned SynQor, Inc. v. Artesyn Technologies, Inc., et al. (Case Number 2:11cv444) isin September 2011. This was a patent infringement action for damages in the form of lost profits and reasonable royalties for the period beginning January 24, 2011 (“SynQor II case”)(the post-verdict period of a related case).  SynQor, Inc. also seekssought enhanced damages.  The Company hashad an indemnification agreement in place with one of its customers specifically covering post-injunctionpost-verdict damages related to this case.  As a result, the Company does not anticipate that its consolidated statement of operations will be materially impacted by any potential post-injunction damages.  This case went to trial on July 30, 2013.  A decision has yet to beIn April 2014, a final judgment was rendered in this case, whereby the Company was assessed an additional $0.7 million in post-verdict damages.  This amount was paid by the Company in July 2014 and was subsequently reimbursed by one of its customers under the terms of the indemnification agreement referenced above.  SynQor filed an appeal of the final judgment in May 2014. The appeals court heard oral arguments from the parties on this case.matter on March 2, 2015. The matter was settled as to all further damages and claims relating to the appeal in early 2016 with no further payment required from the Company.

The Company is a plaintiff in a lawsuit captioned Bel Fuse Inc. et al. v. Molex Inc. brought in the United District Court of New Jersey in April 2013.  The Company claims that Molex infringed three of the Company’sCompany's patents related to integrated magnetic connector products.  Molex filed a motion to dismiss the complaint on August 6, 2013.  The Company filed an amended complaint and response on August 20, 2013.  Molex withdrew its original Motion to Dismiss and filed a second, revised Motion to Dismiss on September 6, 2013.  The Company filed its response on October 7, 2013.  The Court denied Molex's revised Motion to Dismiss on June 16, 2014.  In June 2014, Molex initiated an Inter Partes Review (IPR) at the U.S. Patent and Trademark Office for one of the three patents associated with this case.  The Company and Molex executed an agreement in September 2014 to terminate the IPR and to withdraw one of the patents from the district court litigation.  The Parties settled the case involving the two remaining patents for $0.5 million in September 2015 and the case was subsequently dismissed by the Court in October 2015.  The Company recognized the settlement amount in net sales on the consolidated statements of operations.
In connection with the acquisition of Power Solutions, there is an ongoing claim by the Arezzo Revenue Agency in Italy concerning certain tax matters related to what was then Power-One Asia Pacific Electronics Shenzhen Co. Ltd. (now Bel Power Solutions Asia Pacific Electronics Shenzhen Co. Ltd, or "BPS China") for the years 2004 to 2006.  In September 2012, the Tax Court of Arezzo ruled in favor of BPS China and cancelled the claim.  In February 2013, the Arezzo Revenue Agency filed an appeal of the Tax Court's ruling. The hearing of the appeal was held on October 2, 2014.  On October 13, 2014, BPS China was informed of the Regional Tax Commission of Florence ruling which was in favor of the Arezzo Revenue Agency and against BPS China.  An appeal was filed on July 18, 2015 before the Regional Tax Commission of Florence and rejected.  On December 5, 2016, the Arezzo Revenue Agency filed an appeal with the Supreme Court and BPS China filed a counter-appeal on January 4, 2017.   The Supreme Court has yet to render its judgment.  The estimated liability related to this matter is approximately $12.0 million and has been included as a liability for uncertain tax positions on the accompanying consolidated balance sheets.  As Bel is fully indemnified in this matter per the terms of the stock purchase agreement with ABB, a corresponding other asset for indemnification is also included in other assets on the accompanying consolidated balance sheets at December 31, 2016 and December 31, 2015.

TheIn 2015, the Company through its subsidiary Cinch Connectors Inc.was provided notice of a potential patent infringement claim by Setec Netzwerke AG ("Setec"), is a defendant in an asbestos lawsuit captioned Richard G. Becker vs. Adience Inc., et al. The lawsuit was filed in the Circuit CourtGerman company, for the Countyalleged infringement of Waynetheir patent EP 306 934 B1.  Setec subsequently filed a lawsuit against the Company and three of its subsidiaries in the State of Michigan. The complaint was amended to include Cinch Connectors Inc. and other defendantsDusseldorf, Germany on August 13, 2012.January 29, 2016 for patent infringement.  The Company filed its answerdefense to theSetec's complaint and a nullity lawsuit against Setec's patent on October 19, 2012.  This case was settledAugust 31, 2016.  The Court hearing on infringement is currently scheduled for a de minimis amount on September 25, 2013.

March 23, 2017.  The Company was a defendantdoes not have enough information at this time in a lawsuit captioned Halo Electronics, Inc. (“Halo”) v. Bel Fuse Inc., Pulse Engineering, Inc. and Technitrol, Inc. brought in Nevada Federal District Court.  The plaintiff claimed that the Company had infringed its patents covering certain surface mount discrete magnetic products made by the Company.  Halo sought unspecified damages, which it claimed should be trebled.  In December 2007, this case was dismissed by the Nevada Federal District Court for lack of personal jurisdiction. Halo then re-filed this suit, with similar claims against the Company, in the Northern California Federal District Court, captioned Halo Electronics, Inc. v. Bel Fuse Inc., Elec & Eltek (USA) Corporation, Wurth Electronics Midcom, Inc., and Xfmrs, Inc.  In June 2011, a memorandum of understanding was signed by the Company and Halo with regardorder to this lawsuit, whereby the Company has agreedmake any further conclusions or assessments as to pay Halo a royalty on past sales.  The Company recorded a $2.6 million liability related to past sales during the second quarter of 2011.  This was included as a litigation charge in the accompanying consolidated statement of operations for the year ended December 31, 2011.  Bel also agreed to take a license with respect to the Halo patents at issue in the lawsuit and pay an 8% royalty on all net worldwide sales of the above-mentioned products from June 7, 2011 through August 10, 2015.

The Company was a plaintiff in a lawsuit captioned Bel Fuse Inc. v. Halo brought in the United States District Court of New Jersey during June 2007.  The Company claimed that Halo infringed a patent covering certain integrated connector modules made by Halo.  The Company was seeking an unspecified amount of damages plus interest, costs and attorney fees.  In August 2011, a settlement agreement was signed by the Company and Halo with regard to this lawsuit, whereby Halo agreed to pay the Company a 10% royalty related to its net worldwide sales of its integrated connector modules in exchange for a fully paid-up license of the Bel patent.  This royalty income was included in net sales in the accompanying consolidated statement of operations for the year ended December 31, 2011.infringement or potential damages.

The Company is not a party to any other legal proceeding, the adverse outcome of which is likely to have a material adverse effect on the Company's consolidated financial condition or results of operations.



17.           ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)LOSS

The components of accumulated other comprehensive income (loss)loss as of December 31, 20132016, 2015 and 20122014 are summarized below (dollars in thousands):

  2013  2012 
       
Foreign currency translation adjustment $1,904  $927 
Unrealized holding gain on available-for-sale        
   securities, net of taxes of $169 and $161 as of        
   December 31, 2013 and 2012  282   256 
Unfunded SERP liability, net of taxes of $(693) and        
   $(1,151) as of December 31, 2013 and 2012  (1,541)  (2,610)
         
Accumulated other comprehensive income (loss) $645  $(1,427)
below:


  2016  2015  2014 
          
Foreign currency translation adjustment $(28,976) $(19,305) $(9,351)
Unrealized holding gain on available-for-sale            
   securities, net of taxes of $263, $265 and $259 as of            
   December 31, 2016, 2015 and 2014  424   434   429 
Unfunded SERP liability, net of taxes of ($1,398), ($1,327)            
   and ($1,325) as of December 31, 2016, 2015 and 2014  (2,745)  (3,005)  (3,026)
             
Accumulated other comprehensive loss $(31,297) $(21,876) $(11,948)

Changes in accumulated other comprehensive loss(loss) income by component during the yearyears ended December 31, 20132016 and 2015 are as follows.  All amounts are net of tax (dollars in thousands).tax.

     Unrealized Holding         
  Foreign Currency  Gains on         
  Translation  Available-for-   Unfunded     
  Adjustment  Sale Securities   SERP Liability   Total 
               
Balance at January 1, 2013 $927  $256   $(2,610)  $(1,427)
     Other comprehensive income (loss) before reclassifications  977   87    761    1,825 
     Amounts reclassified from accumulated other                  
          comprehensive income (loss)  -   (61) (a)  308  (b)  247 
     Net current period other comprehensive income (loss)  977   26    1,069    2,072 
                   
Balance at December 31, 2013 $1,904  $282   $(1,541)  $645 
                   
(a) This reclassification relates to the gain on sale of SERP investments during the third quarter of 2013. This is reflected as      
a gain on sale of investment in the accompanying condensed consolidated statements of operations.           
                   
(b) This reclassification relates to the amortization of prior service costs and gains/losses associated with the Company's SERP plan.    
This expense is allocated between cost of sales and selling, general and administrative expense based upon the employment      
classification of the plan participants.                  
     Unrealized Holding        
  Foreign Currency  Gains on        
  Translation  Available-for-  Unfunded     
  Adjustment  Sale Securities  SERP Liability   Total 
              
Balance at January 1, 2015 $(9,351) $429  $(3,026)  $(11,948)
     Other comprehensive income (loss) before reclassifications  (9,954)  5   (233)   (10,182)
     Amounts reclassified from accumulated other                 
          comprehensive income (loss)  -   -   254  (a)  254 
     Net current period other comprehensive income (loss)  (9,954)  5   21    (9,928)
                  
Balance at December 31, 2015  (19,305)  434   (3,005)   (21,876)
                  
     Other comprehensive income (loss) before reclassifications  (9,671)  (10)  5    (9,676)
     Amounts reclassified from accumulated other                 
          comprehensive income (loss)  -   -    255  (a)  255 
     Net current period other comprehensive income (loss)  (9,671)  (10)  260    (9,421)
                  
Balance at December 31, 2016 $(28,976) $424  $(2,745)  $(31,297)

(a)This reclassification relates to the amortization of prior service costs and gains/losses associated with the Company's SERP plan.  This expense is allocated between cost of sales and selling, general and administrative expense based upon the employment classification of the plan participants.


18.RELATED PARTY TRANSACTIONS

AsThe Company maintains minority ownership in a joint venture in the PRC.  See Note 2, "Acquisitions and Disposition."  The joint venture may purchase raw components and other goods from the Company and may sell finished goods to the Company as well as to other third parties.  The Company purchased $1.5 million and $4.3 million of inventory from the joint venture during the year ended December 31, 2012,2015 and during the period from its acquisition date of June 19, 2014 through December 31, 2014, respectively.  The Company did not purchase any inventory from the joint venture during 2016.  At December 31, 2016, the Company had $2.0owed the joint venture approximately $0.5 million, investedwhich is included in a money market fund with GAMCO Investors, Inc. (“GAMCO”).  This investment was sold in 2013 and as such, there were no holdings with GAMCO at December 31, 2013.  GAMCO is a current shareholder ofaccounts payable on the Company, with holdings of its Class A stock of approximately 33.6%.  However, as discussed in Note 15, GAMCO’s voting rights are currently suspended.accompanying consolidated balance sheet.


 

F-3369


19.SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly results (unaudited) for the yearsyear ended December 31, 20132016 and 20122015 are summarized as follows (in thousands, except per share data):follows:
 
             Total Year 
 Quarter Ended  Ended  2016 
 March 31,  June 30,  September 30,  December 31,  December 31,  First  Second  Third  Fourth 
 2013  2013 (c)  2013 (c)  2013  2013 (a)  Quarter  Quarter  Quarter  Quarter 
                           
Net sales $63,028  $93,981  $101,164  $91,016  $349,189  $121,182  $131,622  $128,809  $118,539 
                                    
Cost of sales  53,932   78,724   81,136   73,160   286,952 
Gross profit  23,074   25,692   26,575   24,579 
                                    
Net (loss) earnings  (558)  1,689   7,380   7,397   15,908   (100,696)(a)  22,776 (a)  9,710   3,377 
                                    
(Loss) earnings per share:                    
Net (loss) earnings per share:                
Class A common share - basic and diluted $(0.05) $0.14  $0.62  $0.61  $1.32  $(8.15) $1.83  $0.78  $0.27 
Class B common share - basic and diluted $(0.05) $0.15  $0.65  $0.65  $1.41  $(8.55) $1.93  $0.82  $0.29 
                                    
                                    
                                    
                 Total Year   2015 
 Quarter Ended  Ended  First  Second  Third  Fourth 
 March 31,  June 30,  September 30,  December 31,  December 31,  
Quarter(b)
  Quarter  Quarter  Quarter 
  2012   2012   2012   2012 (b)   2012 (a)                 
                    
Net sales $65,561  $73,222  $76,059  $71,752  $286,594  $142,015  $145,658  $144,161  $135,246 
                                    
Cost of sales  55,136   61,081   63,472   60,426   240,115 
Gross profit  26,813 (b)  28,560   27,412   26,043 
                                    
Net earnings (loss)  872   1,441   2,492   (2,432)  2,373 
Net earnings  5,320 (b)  6,062   4,920   2,895 
                                    
Earnings (loss) per share:                    
Earnings per share:                
Class A common share - basic and diluted $0.07  $0.11  $0.20  $(0.21) $0.17  $0.43 (b) $0.49  $0.39  $0.23 
Class B common share - basic and diluted $0.08  $0.12  $0.21  $(0.21) $0.21  $0.45 (b) $0.52  $0.42  $0.25 

(a)Quarterly amounts of earnings per share may not agreeIn connection with an interim impairment test related to the total forCompany's goodwill and other intangible assets, provisional non-cash impairment charges totaling $104.3 million were recorded during the year duefirst quarter of 2016.  During the second quarter of 2016, the Company finalized its interim impairment test, which resulted in a $2.6 million reduction to rounding.the provisional impairment charge recorded during the first quarter.

(b)The net loss for the quarter ended December 31, 2012 includes $3.1 million of restructuring charges primarily relatedRevised from 10-Q disclosures to severance charges and the writedown of assets associated with the closure of the Company’s Vinita, Oklahoma manufacturing facility.

(c)  The net earnings for the quarters ended June 30, 2013 and September 30, 2013 have been restated to include the effects ofreflect immaterial measurement period adjustments related to the acquisitions2014 Acquisitions.  First quarter 10-Q reflected gross profit of TRP and Array.  These measurement period adjustments reduced the previously-reported$27.1 million, net earnings by $0.7of $5.6 million, earnings per Class A common share of $0.45 per share and $0.5 million for the quarters ended June 30, 2013 and September 30, 2013, respectively, and primarily related to the step-upearnings per Class B common share of inventory to fair value, and higher depreciation and amortization expense related to the appraised fair values of property, plant and equipment, and the various intangible assets as further described in Note 2.$0.48 per share.



BEL FUSE INC. AND SUBSIDIARIES 
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS 
(Amounts in thousands) 
                
Column A Column B  Column C  Column D  Column E 
                
     Additions       
  Balance at   (1)  (2)    Balance 
  beginning  Charged to costs  Charged to other  Deductions  at end 
Description of period  and expenses  accounts (b)  (a)  of period 
                  
Year ended December 31, 2013:                 
  Allowance for doubtful accounts $743  $325  $50  $(177) $941 
  Allowance for excess and obsolete inventory $5,490  $(85) $7  $(1,471) $3,941 
  Deferred tax assets - valuation allowances $1,874  $308  $-  $(227) $1,955 
                     
                     
Year ended December 31, 2012:                    
  Allowance for doubtful accounts $771  $(123) $109  $(14) $743 
  Allowance for excess and obsolete inventory $4,776  $1,345  $3  $(634) $5,490 
  Deferred tax assets - valuation allowances $1,232  $651  $-  $(9) $1,874 
                     
                     
Year ended December 31, 2011:                    
  Allowance for doubtful accounts $653  $125  $12  $(19) $771 
  Allowance for excess and obsolete inventory $4,607  $1,042  $(3) $(870) $4,776 
  Deferred tax assets - valuation allowances $1,463  $146  $-  $(377) $1,232 
                     
                     
(a)  Write-offs                    
                     
(b) Includes foreign currency translation adjustments                 


S-1

BEL FUSE INC. AND SUBSIDIARIES 
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS 
(Amounts in thousands) 
                
Column A Column B  Column C  Column D  Column E 
                
     Additions       
  Balance at   (1)   (2)     Balance 
  beginning  Charged to costs  Charged to other  Deductions  at end 
Description of period  and expenses  accounts (b)  (a)  of period 
                  
Year ended December 31, 2016:                 
  Allowance for doubtful accounts $1,747  $(163) $281  $(84) $1,781 
  Allowance for excess and obsolete inventory $5,268  $3,513  $185  $(2,703) $6,263 
  Deferred tax assets - valuation allowances $6,635  $887  $-  $(37) $7,485 
                     
Year ended December 31, 2015:                    
  Allowance for doubtful accounts $1,989  $295  $303  $(840) $1,747 
  Allowance for excess and obsolete inventory $6,809  $2,186  $(59) $(3,668) $5,268 
  Deferred tax assets - valuation allowances $6,692  $456  $-  $(513) $6,635 
                     
Year ended December 31, 2014:                    
  Allowance for doubtful accounts $941  $1,434  $-  $(386) $1,989 
  Allowance for excess and obsolete inventory $3,941  $4,438  $(1) $(1,569) $6,809 
  Deferred tax assets - valuation allowances $1,955  $4,766  $-  $(29) $6,692 
                     
(a)  Write-offs                    
                     
(b) Includes foreign currency translation adjustments                 



71

Item 9.Changes in and Disagreements withWith Accountants on Accounting and Financial Disclosures.Disclosures

Not applicableNone.

Item 9A. 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

During the fourth quarter of 2013,2016, the Company’sCompany's management, including the principal executive officer and principal financial officer, evaluatedsupervised and participated in the Company’sevaluation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) related to the recording, processing, summarization, and reporting of information in the Company’sCompany's periodic reports that the Company files with the SEC. These disclosure controls and procedures have been designed to ensure that material information relating to the Company, including its subsidiaries, is made known to the Company’sCompany's management, including these officers, by other of the Company’sCompany's employees, and that this information is recorded, processed, summarized, evaluated, and reported, as applicable, within the time periods specified in the SEC’sSEC's rules and forms.  The Company’s
In designing and evaluating the disclosure controls and procedures, canthe Company recognizes that any controls and procedures, no matter how well designed and operated, provide only provide reasonable, not absolute, assurance that the above objectives have been met.  Notwithstanding these limitations, the Company believes that its disclosure controls and procedures are designed and are operating to provide reasonable assurances of achieving their objectives.
Based on their evaluation as of December 31, 2013,2016, the Company’sCompany's principal executive officer and principal financial officer have concluded that the Company’sCompany's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
Management’sManagement's Annual Report on Internal Control Over Financial Reporting
The Company’sCompany's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act RulesRule 13a-15(f).  Under the supervision and with the participation of the Company’sCompany's management, including the Company’sCompany's principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of the Company’sCompany's internal control over financial reporting based on the framework in Internal Control – Integrated Framework (1992)(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

As discussed in Note 2 to the consolidated financial statements, the Company acquired the 2013 Acquired Companies during the year ended December 31, 2013.  These acquisitions, with combined assets and current year net sales at and for the year ended December 31, 2013 representing 21% and 20%, respectively, of the consolidated financial statement amounts, have been excluded from management’s assessment of internal control over financial reporting.
Based on the Company’sCompany's evaluation under the framework in Internal Control – Integrated Framework (1992)(2013), excluding the 2013 Acquired Companies, the Company’sCompany's management concluded that the Company’sCompany's internal control over financial reporting was effective as of December 31, 2013.2016.

The Company’sCompany's independent registered public accounting firm, Deloitte & Touche LLP, has audited the effectiveness of the Company’sCompany's internal control over financial reporting as of December 31, 20132016 and has expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2016 in their report which is included in Item 8 herein.

Changes in Internal Controls Over Financial Reporting
There were no significant changeshas not been any change in the Company’sour internal control over financial reporting that occurred during the last fiscal quarter of the year to which this Annual Report on Form 10-K relatesthree months ended December 31, 2016 that havehas materially affected, or areis reasonably likely to materially affect, the Company’sour internal control over financial reporting.

Item 9B.Other Information

Not applicable.



None.
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72

Item 10.  Directors, Executive Officers and Corporate Governance

The Registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 20142017 annual meeting of shareholders that is responsive to the information required with respect to this item.

The Registrant has adopted a code of ethics for all of its associates, including directors, executive officers and all other senior financial personnel.  The code of ethics, as amended from time to time,  is available on the Registrant’sRegistrant's website under Corporate Governance.  The Registrant will also make copies of its code of ethics available to investors upon request.  Any such request should be sent by mail to Bel Fuse Inc., 206 Van Vorst Street, Jersey City, NJ  07302 Attn: Colin DunnCraig Brosious or should be made by telephone by calling Colin DunnCraig Brosious at 201-432-0463.

Item 11.Executive Compensation

The Registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 20142017 annual meeting of shareholders that is responsive to the information required with respect to this Item.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The Registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 20142017 annual meeting of shareholders that is responsive to the remaining information required with respect to this Item.

The table below depicts the securities authorized for issuance under the Company’sCompany's equity compensation plans.


Equity Compensation Plan Information

Plan Category
 
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(a)
 
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights
(b)
 
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
(c)
Equity compensation plans approved by security holders:         
     2011 Equity Compensation Plan  -  $-                     1,120,000599,800 
             
Equity compensation plans not approved by security holders  -   -   - 
             
Totals  -  $-                     1,120,000599,800 

Item 13.Certain Relationships and Related Transactions, and Director Independence

The Registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 20142017 annual meeting of shareholders that is responsive to the information required with respect to this Item.

Item 14.  Principal Accountant Fees and Services

The Registrant incorporates by reference herein information to be set forth in its definitive proxy statement for its 20142017 annual meeting of shareholders that is responsive to the information required with respect to this Item.



PART IV

Item 15.
Exhibits, Financial Statement Schedules
(a) Documents filed as a part of this Annual Report on Form 10-K:
(1) Financial Statements
See Index to Consolidated Financial Statements and Schedule of this Form 10-K.
(2) Financial Statement Schedule
See Schedule II — Valuation and Qualifying Accounts — Years Ended December 31, 2016, 2015 and 2014 of this Annual Report on Form 10-K.
(3) Exhibits
   
    Page
 
(a)Financial Statements
Exhibit No.:
  
 
1.Financial Statements filed as part of this Annual Report on Form 10-K:
Report of Independent Registered Public Accounting FirmF-1
Consolidated Balance Sheets as of December 31, 2013 and 2012F-2
Consolidated Statements of Operations for Each of the Three
Years in the Period Ended December 31, 2013F-3
Consolidated Statements of Comprehensive Income for Each of the Three
Years in the Period Ended December 31, 2013F-4
Consolidated Statements of Stockholders' Equity for Each of the
Three Years in the Period Ended December 31, 2013F-5
Consolidated Statements of Cash Flows for Each of the
Three Years in the Period Ended December 31, 2013F-6
Notes to Consolidated Financial StatementsF-8
2.Financial statement schedules filed as part of this report:
Schedule II:  Valuation and Qualifying AccountsS-1
All other schedules are omitted because they are inapplicable, not
required or the information is included in the consolidated financial
statements or notes thereto.

(b)Exhibits
Exhibit No.:
3.1Restated Certificate of Incorporation, as amended, is incorporated by reference to (i) Restated Certificate of Incorporation filed as Exhibit 3.1 of the Company’sCompany's  Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1998 and (ii) Certificate of Amendment to the Company's Restated Certificate of Incorporation filed as Exhibit 3.1 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
  
3.2By-laws, as amended and restated on May 13, 2014, are incorporated by reference to Exhibit 4.23.1 of the Company's Registration StatementQuarterly Report on Form S-2 (Registration No. 33-16703) filed with10-Q for the Securities and Exchange Commission on August 25, 1987.six months ended June 30, 2014.
  
 10.1†
2002 Equity Compensation Program.Program.  Incorporated by reference to the Registrant’sRegistrant's proxy statement for its 2002 annual meeting of shareholders.
  
10.2Credit and Guaranty Agreement, dated as of February 12, 2007, by and among Bel Fuse Inc., as Borrower, the Subsidiary Guarantors party thereto and the Bank of America, N.A., as Lender.  Filed as Exhibit 10.1 to the Company’sCompany's Current Report on Form 8-K filed on February 16, 2007 and incorporated herein by reference.
  
 10.3†
Amended and Restated Bel Fuse Supplemental Executive Retirement Plan, dated as of April 17, 2007.  Filed as Exhibit 10.1 to the Company’sCompany's Current Report on Form 8-K filed on April 23, 2007 and incorporated herein by reference.
 
10.4Stock and Asset Purchase Agreement between Bel Fuse Inc. and Tyco Electronics Corporation, dated as of November 28, 2012.  Filed as Exhibit 2.1 to the Company’sCompany's Current Report on Form 8-K filed on December 4, 2012 and incorporated herein by reference.
  
10.5First Amendment
10.5†
2011 Equity Compensation Program.  Incorporated by reference to Credit and Guarantythe Registrant's proxy statement for its 2011 annual meeting of shareholders.
10.6Stock Purchase Agreement dated as of April 24, 2014, by and among Bel Fuse Inc., Power-One, Inc. and PWO Holdings B.V.  Filed as Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2014 and incorporated herein by reference.
10.7Stock Purchase Agreement dated as of May 16, 2014, by and among Bel Fuse Inc. and Emerson Electric Co.  Filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on May 22, 2014 and incorporated herein by reference.
10.8Credit and Security Agreement dated June 19, 2014, as amended and restated as of June 30, 2008,2014, by and among Bel Fuse Inc., as Borrower, the Subsidiary Guarantors party theretoand KeyBank National Association, as Administrative Agent, Swing Line Lender and Issuing Lender, and the Bank of America, N.A., as Lender.other lenders identified therein.  Filed as Exhibit 10.610.1 to the Company’s AnnualCompany's Current Report on Form 10-K for the year ended December 31, 20098-K filed on July 7, 2014 and incorporated herein by reference.
 
  
10.610.9Second Amendment, dated as of March 21, 2016, to the Credit and GuarantySecurity Agreement dated June 19, 2014, as amended and restated as of June 30, 2009,2014, by and among Bel Fuse Inc., as Borrower, the Subsidiary Guarantors party theretoand KeyBank National Association, as Administrative Agent, Swing Line Lender and Issuing Lender, and the Bank of America, N.A., as Lender.  Filed as Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference.
10.7Third Amendment to Credit and Guaranty Agreement dated as of January 29, 2010, by and among Bel Fuse Inc., as Borrower, the Subsidiary Guarantors party thereto and the Bank of America, N.A., as Lender.  Filed as Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 and incorporated herein by reference.
10.8Fourth Amendment to Credit and Guaranty Agreement dated as of September 27, 2010, by and among Bel Fuse Inc., as Borrower, the Subsidiary Guarantors party thereto and the Bank of America, N.A., as Lender.  Filed as Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference.
10.9Fifth Amendment to Credit and Guaranty Agreement dated as of February 16, 2011, by and among Bel Fuse Inc., as Borrower, the Subsidiary Guarantors party thereto and the Bank of America, N.A., as Lender.  Filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and incorporated herein by reference.
10.10†
2011 Equity Compensation Program.  Incorporated by reference to the Registrant’s proxy statement for its 2011 annual meeting of shareholders.
10.11Sixth Amendment to Credit and Guaranty Agreement dated as of November 8, 2013, by and among Bel Fuse Inc., as Borrower, the Subsidiary Guarantors party thereto and the Bank of America, N.A., as Lender.other lenders identified therein.  Filed as Exhibit 10.1 to the Company’s QuarterlyCompany's Current Report on Form 10-Q for the nine months ended September 30, 20138-K filed on March 22, 2016 and incorporated herein by reference.
  
11.1A statement regarding the computation of earnings per share is omitted because such computation can be clearly determined from the material contained in this Annual Report on Form 10-K.
  
12.1*Computation of Ratio of Earnings to Fixed Charges.
21.1*Subsidiaries of the Registrant.
  
23.1*Consent of Independent Registered Public Accounting Firm.
  
24.1*Power of attorney (included on the signature page)
31.1*Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*Certification of the Vice President of Finance pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 32.1**Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes - Oxley Act of 2002.
 32.2**Certification of the Vice-President of Finance pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS***XBRL Instance Document
101.SCH***XBRL Taxonomy Extension Schema Document
101.CAL***XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF***XBRL Taxonomy Extension Definition Linkbase Document
101.LAB***XBRL Taxonomy Extension Label Linkbase Document
101.PRE***XBRL Taxonomy Extension Presentation Linkbase Document
 

*  Filed herewith.
       ****  Submitted herewith.
      *** XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
†  Management contract or compensatory plan or arrangement.

 
Item 16.  Form 10-K Summary

None.
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75



SIGNATURES

 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BEL FUSE INC.
(Registrant)

By:/s/ Daniel Bernstein
 Daniel Bernstein
 President and Chief Executive Officer
Dated:  March 13, 201410, 2017 


 KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Daniel Bernstein and Colin Dunn as his/her attorney-in-fact and agent, with full power of substitution and resubstitution, for him/her and in his/her name, place, and stead, in any and all capacities, to sign and file any and all amendments to this Annual Report on Form 10-K, with all exhibits thereto and hereto, and other documents with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes, may lawfully do or cause to be done by virtue hereof.

 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date
     
/s/ Daniel Bernstein President, Chief Executive Officer March 13, 201410, 2017
Daniel Bernstein and Director
/s/ Howard BernsteinDirectorMarch 13, 2014
Howard B. Bernstein  
     
/s/ Robert H. Simandl Director March 13, 201410, 2017
Robert H. Simandl    
     
/s/ Peter Gilbert Director March 13, 201410, 2017
Peter Gilbert    
     
/s/ John Tweedy Director March 13, 201410, 2017
John Tweedy
/s/ John JohnsonDirectorMarch 13, 2014
John Johnson    
     
/s/ Avi Eden Director March 13, 201410, 2017
Avi Eden    
     
/s/ Mark Segall Director March 13, 201410, 2017
Mark Segall    
     
/s/ Norman Yeung Director March 13, 201410, 2017
Norman Yeung


/s/ Eric NowlingDirectorMarch 10, 2017
Eric Nowling
/s/ Vincent VellucciDirectorMarch 10, 2017
Vincent Vellucci    
     
/s/ Colin Dunn Vice President of Finance and Secretary March 13, 201410, 2017
Colin Dunn (Principal Financial Officer and Principal
Accounting Officer)  

77
 
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