CAUTIONARY NOTICE REGARDING FORWARD-LOOKING INFORMATION

The terms the "Company," "Bel," "we," "us," and "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 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 Form 10-K.10-K, and the risk factors described in our other reports and documents filed from time to time with the Securities and Exchange Commission ("SEC"). 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 reports and documents filed by the Company with the Securities and Exchange Commission ("SEC")SEC contain certain forward-looking statements under the Private Securities Litigation Reform Act of 1995 ("Forward-Looking 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," "plan," "assumes," "could," "should," "estimates," "expects," "intends," "potential," "seek," "predict," "may," "will" and similar references to future periods.  All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives and regarding the anticipated impact of COVID-19 are Forward-Looking Statements.  These Forward-Looking Statements are subject to certain risks and uncertainties, including those detailed in Item 1A. of this Form 10-K, and the risk factors described in our other reports and documents filed from time to time with the SEC, 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.  Any Forward-Looking Statement made by the Company is based only on information currently available to us and speaks only as of the date on which it is made.

PART I

Item 1.  Business

Bel Fuse Inc. designs, manufactures and markets a broad array of products that power, protect and connect electronic circuits.  These products are primarily used in the networking, telecommunications,telecommunication, computing, high-speed data transmission, military, commercial aerospace, transportation, e-Mobility and broadcasting industries.  Bel's portfolio of products also finds application in the automotive, medical and consumer electronics markets.

With more than 70 years in operation, Bel has reliably demonstrated the ability to succeedparticipate in a variety of product areas across 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 world-class companies by developing new products with cost effective solutions.

The Company was incorporated in 1949 and is organized under New Jersey law.  Bel's principal executive offices are located at 206 Van Vorst Street, Jersey City, New Jersey 07302, and Bel's telephone number is (201) 432-0463. The Company operates facilities in North America, Europe and Asia and trades on the NASDAQ Global Select Market (ticker symbols BELFA and BELFB).  For information regarding Bel's operating segments, see Note 12,13, "Segments", of the notes to our consolidated financial statements.  Hereinafter, all references to "Note" will refer to the notes to our 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 keyan important element in our growth strategy. The Company may, from time to time, purchase equity positions in companies that are potential merger candidates.  We frequently evaluate possible mergeracquisition candidates that would provide such potential benefits as an expandedexpand our product and technology base that wouldofferings to our customers and/or optimize our overall cost structure. 

On March 31, 2021, the Company completed the acquisition of EOS Power ("EOS") through a stock purchase agreement for $7.8 million, net of cash acquired, including a working capital adjustment.  EOS, located in Mumbai, India, had pro forma sales of $15.4 million and $12.0 million for the years ended December 31, 2021 and 2020, respectively.  EOS will further assist Bel’s penetration of certain industrial and medical markets currently being served by EOS, with a strong line of high-power density and low-profile products with high convection ratings. In addition to new products and customers acquired, this acquisition has diversified Bel's manufacturing footprint in Asia.  The EOS business is part of Bel's Power Solutions and Protection group. 

On January 8, 2021, the Company acquired rms Connectors, Inc. (“rms Connectors” or "rms"), from rms Company Inc., a division of Cretex Companies, Inc., for $9.0 million in cash, including a working capital adjustment.  rms Connectors is a highly regarded connector manufacturer with over 30 years of experience producing harsh environment circular connectors used in a variety of military and aerospace applications. This acquisition complements Bel's existing military and aerospace product portfolio and we anticipate will allow us to expand key customer relationships within these end markets and leverage the breadthcombined manufacturing resources to improve our operational efficiency.  Originally based in Coon Rapids, Minnesota, the rms Connectors business was relocated into Bel's existing facilities during the second quarter of our product offerings to our strategic customers and/or provide an opportunity to reduce overall operating expense as a percentage2021, and is part of revenue.  Other factors such as whether such possible merger candidates are positioned to take advantage of our lower cost offshore manufacturing facilities, and whether a cultural fit would allow the acquired company to be integrated smoothly and efficiently are also considered.Bel's Connectivity Solutions group.   

On December 3, 2019, we completed the acquisition of the majority of the power supply products business of CUI Inc. (the "CUI power business") through an asset purchase agreement with CUI Global Inc. for $29.2 million (after a working capital adjustment), plus the assumption of certain liabilities.  The CUI power business designs and markets a broad portfolio of AC/DC and DC/DC power supplies and board level components.  The CUI power business is headquartered in Tualatin, Oregon and contributed sales of $55.8 million for 2021 and $43.1 million for 2020 and $2.2 million for 2019.2020.  The acquisition of the CUI power business enhanced Bel's existing offering of power products, allowing us to better address more of our customers' power needs.  It also introduced an alternative business model to Bel's, one which carries a higher gross margin profile and lower manufacturing risk.  CUI is part of Bel's Power Solutions and Protection group.

Products

The Company primarily generates revenue through the sale of its products.  Bel offers a broad array of product offerings, which are grouped as follows: Power Solutions & Protection (39%(40% of net sales in 2020)2021), Cinch Connectivity Solutions (32%(30% of net sales in 2020)2021) and Magnetic Solutions (29%(30% of net sales in 2020)2021).  While there are key customers and end markets within each of the three product groups, only one direct customer accounted for more than 10% of our consolidated net sales in 20202021 (this customer represented 11.9%10.6% of our consolidated net sales in 2020)2021).  Our diverse product mix and customer base minimizes our dependence on any one customer or end market. 

Power Solutions and Protection

Bel's power conversion products include internal and external AC/DC power supplies, DC/DC converters and DC/AC inverters. These products provide power conversion solutions for a number of Industrial, Networking and Consumer applications.  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.

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.

Magnetic Solutions

Bel's Magnetics offers industry leading products.  The Company's ICM products integrate RJ45 connectors with discrete magnetic components to provide better performance and a more robust partdevice that allows customers to substantially reduce board space and inventory requirements.optimize performance.  Power Transformers include standard and custom designs for use in a wide array of applications, including industrial instrumentation, alarm and security systems, motion control, elevators, and medical products.

Sales and Marketing

We sell our 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, 2020,2021, we had a sales and support staff of 196201 persons that supported a network of sales representative organizations and non-exclusive distributors. We have written agreements with all of our sales representative organizations and most of our 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 our international facilities to provide timely, efficient support for customers. This supplemental level of service, in addition to first-line sales support, enables us to be more responsive to customers' needs on a global level. Our marketing capabilities include product management which drives new product development, application engineering for technical support and marketing communications.

Market Factors

Competition

We 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 our products.

Our 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 us a favorable position in relation to many of our competitors.  Management intends to maintain a strong competitive posture in the markets we serve by continued expansion of our product lines and ongoing investment in research, development and manufacturing resources.  The preceding sentence represents a Forward-Looking Statement.  See "Cautionary Notice Regarding Forward-Looking Information."

Trends in Market Demand

Product orders, or bookings, received during 20202021 amounted to $448.8$837.7 million, a 3% reductionan 87% increase from 2019.2020.  By product group, orders received for our Power Solutions and Protection products amounted to $183.0$378.5 million in 2020,2021, a 30%107% increase from 2019.  A large portion of this2020.  This increase was partially due to incrementalhigher orders of products serving the e-Mobility end market of $47.6 million, an increase in bookings from the recently-acquiredour CUI business of $43.4 million.  The CUI business had historically strong sales$29.4 million and incremental orders of $19.5 million related to our recently-acquired EOS business.  We also saw in 2020 as demand for adaptors for use in home offices increased significantly due to the COVID-19 pandemic.  We have also seen2021 an increase in demand for our circuit protection products and for our front-end and board mount power products.  Orders received for our Magnetic Solutions products were $258.7 million in 2021, 86% higher than in 2020 and within the e-mobility and industrial markets foras a result of higher demand from our power products.networking customers.  Bookings for our Connectivity Solutions products declinedincreased by 29%58% from 20192020 to $126.9$200.5 million in 2020,2021, largely due to the increased demand from our distribution partners coupled with a reductionrebound in demand from our direct and aftermarket commercial aerospace customers due to low levelswith the gradual resumption of new aircraft production rates and the continued pause in global travel during the ongoing COVID-19 pandemic.  Orders received for our Magnetic Solutions products were $138.9 million in 2020, 3% lower than in 2019.air travel.    

Backlog of Orders

We typically manufacture products against firm orders and projected usage by customers. Cancellation and return arrangements are either negotiated by us on a transactional basis or contractually determined.  We estimate the value of the backlog of orders as of February 28, 20212022 to be approximately $179.6$498.0 million as compared with a backlog of $186.3$179.6 million as of February 29, 2020.28, 2021.  Management estimates that approximately 85%-90%70%-75% of the Company's backlog as of February 28, 20212022 will be shipped by December 31, 2021.2022. 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.  Throughout 2021, Bel has faced macroeconomic and global supply chain challenges, and these conditions are expected to continue in 2022.  Due to these factors, backlog may not be a reliable indicator of the timing of future sales. 

The preceding statements regarding the Company’s backlog, including but not limited to estimates and anticipated timing of shipping, represent Forward-Looking Statements.  See "Cautionary Notice Regarding Forward-Looking Information."

Research and Development ("R&D")

Our engineering groups are strategically located around the world to facilitate communication with and access to customers' engineering personnel. This collaborative approach enables partnerships with customers for technical development efforts. The global capabilities and collaborative approach allows Bel to develop leading edge technological products that support highly complex and evolving markets such as e-mobility,e-Mobility, cloud computing, military, aerospace, and others. On occasion, we execute non-disclosure agreements with customers to help develop proprietary, next generation products destined for rapid deployment.  We also sponsor membership in technical organizations that allow our engineers to participate in developing standards for emerging technologies. It is management'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.  Generally, R&D is performed internally for the benefit of the Company.  R&D costs include salaries, building maintenance and utilities, rents, materials, administrative costs and miscellaneous other items.  

Resources

Raw Materials and Sourcing

We have multiple suppliers for most of the raw materials that we purchase.  Where possible, we have contractual agreements with suppliers to assure a continuing supply of critical components.

With respect to those items which are purchased from single sources, we believe that comparable items would be available in the event that there were a termination of our existing business relationships with any such supplier.  While such a termination could produce a disruption in production, we believe that the termination of business with any one of our suppliers would not have a material adverse effect on our 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 our products.  In the past, we have experienced shortages in certain raw materials, such as capacitors, ferrites and integrated circuits ("IC's"), when these materials were in great demand.  Even though we may have more than one supplier for certain materials, it is possible that these materials may not be available to us in sufficient quantities or at the times desired by 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.

Intellectual Property

We have acquired or been granted a number of patents in the U.S., Europe and Asia and have additional patent applications pending relating to our products. While we 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 our existing patents can be successfully defended.  It is management's opinion that the successful continuation and operation of our 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 our personnel.  Our U.S. design patents have a life of 14 years and our U.S. utility patents have a life of 17 years from the date of issue or 20 years from filing of patent applications.  Our existing patents expire on various dates from March 2021 tothrough January 2039.

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

Government Contracts

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.

Seasonality

In the People's Republic of China ("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.  Each year following the Lunar New Year holiday, we must assess the worker return rate and whether it is adequate to meet the needs of current demand from our customers.  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.  This temporary setback in production has historically resulted in our first quarter sales being the lowest sales quarter of the year.  Further, 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, primarily during the first quarter of the year.

Government Regulations

The Company is subject to various government regulations in the United States as well as various jurisdictions where it operates. These regulations cover several diverse areas including trade compliance, anti-bribery, anti-corruption, money laundering, and data and privacy protection. Regulatory or government authorities where the Company operates may have enforcement powers that can subject the company to legal penalties or other measures and can impose changes or conditions in the way it conducts business.

Human Capital Resources, Strategy and Management

At Bel, our values guide everything we do. We are committed to the highest standards of ethical and legal conduct and have created an environment where open and honest communication is the expectation, not the exception. Failing to do so puts Bel’s name, reputation for integrity and business at risk.  We hold our associates to this standard and offer the same in return. Our Code of Ethics was created to ensure that our associates, officers, directors, partners, contractors, and suppliers follow our commitment to customer satisfaction in accordance with ethical and legal standards, guided by the basic, unchanging principle of integrity.

Our Human Capital Strategy is built around four areas:

Extraordinary Performance

Our associates are a critical driver of Bel’s global business results. On December 31, 2020,2021, Bel employed approximately 6,4006,300 associates, almost all of which are full-time, across 1415 countries, with 23 percent located within North America. Outside of the United States, our largest employee populations were located within Mexico, Slovakia, India and the PRC. We regularly monitor various key performance indicators around the key human capital priorities of attracting, retaining, and engaging our global talent. In addition, we enable the execution of our strategic priorities by providing all associates with access to training and development opportunities to improve critical skill sets.

Great Associates

Bel is committed to fostering an environment that respects and encourages individual differences, diversity of thought, and talent. We strive to create a workplace where associates feel that their contributions are welcomed and valued, allowing them to fully engage their talents and training in their work, while generating personal satisfaction in their role within Bel. Bel has been engaged in a strategy dedicated to evolving our inclusive culture while addressing underrepresentation across ourthe Company.

Across the organization, there are a variety of ways we invest in our people to learn in a variety of ways - on the job, in the classroom, through self-directed learning, or through leadership programs. We have expanded our learning management system to make new content and training available to our associates. The Company has also expanded leadership development programs and continues to expand internship and apprenticeship programs to continue to develop new talent.

Health and Safety

Bel offers a variety of programs globally to protect the health and safety of our associates. While we maintain targets for year-over-year reduction of the total recordable incident rate and serious injuries, our goal is always zero.

In 2020, we focused2021, our focus continued to be on the immediate demands within the context of COVID-19 challenges. Where possible, our associates were movedcontinue to work remotely and in the office on a remote work environment. In addition, we implementedhybrid schedule. There are additional safeguards in our plants consistent with the guidelines provided by the Centers for Disease Control and Prevention (CDC) and other health organizations around the world.  In addition, the Company also invested in variouscontinues to implement a variety of programs globally to support associates' mental and physical health during the pandemic. We will continue to evolve these programs to protect the physical and mental health and safety of our associates through awareness training and wellness programs.  See "The Effects of COVID-19 on Bel’s Business" in Item 7 of this Annual Report on Form 10-K for a discussion of how COVID-19 is currently impacting our business.

Culture

In an increasingly competitive global marketplace, Bel succeeds when we attract and retain the best talent and when our associates reflectthat is reflective of the diversity of our consumers.the communities in which we work and live.

We are committed to increasing the diversity of our workforce by participating in networking and community events and to actively recruitrecruiting and hirehiring veterans, women, minorities, and individuals with disabilities.

As a global leader in delivering reliable solutions, Bel has signed a Statement of Support Program declaration to show support for National Guard and Reserve member associates coordinated by the Department of Defense's Employer Support of the Guard and Reserve (ESGR) program. The intent of the program is to increase employer support by encouraging employers to act as advocates for associate participation in the military.

The employee lifecycle is the foundation for the mission of the Human Resources function within the Company.  The Mission of Human Resources is to “Recruit, Train and Retain the best people.  Create an environment where associates make a difference.  Provide challenging work, a positive work environment and career opportunities.”  

We take prideAs a company that has been in recognizingbusiness for over 70 years, Bel understands the importance of trust, integrity and accountability at all levels of the organization.  Our policies, practices and priorities are continually reviewed to align with the best interests of our associates, aroundshareholders and other stakeholders. 

Environmental Initiatives

We view environmental, social, and governance (“ESG”) as a key component of every facet of our processes and operations and are committed to continual improvement to enhance our environmental performance.  Bel’s commitment to ESG is highlighted by the worldnumerous Bel sites that comply with outside specifications designed to promote sustainable development such as ISO-9001 and the job well done over the last year.ISO-14001.

Available Information

We maintain a website at www.belfuse.com where we make available free of charge the proxy statements, press releases, registration statements and reports on Forms 3, 4, 8-K, 10-K and 10-Q, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act that we (and in the case of Section 16 reports, our 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 our financial and product news, and we provide notification of and access to voice and internet broadcasts of our quarterly and annual results.  Our website also includes investor presentations and corporate governance materials.

Item 1A.  Risk Factors

The risks described below should be carefully considered before making an investment decision. These are the risk factors that we consider to be material, 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 consolidated 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 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.  Except as required by the federal securities law, we undertake no obligation to update or revise any risk factor, whether as a result of new information, future events or otherwise.

STRATEGIC RISKS

We conduct business in a highly competitive industry.

Our business is largelyoperates in a highlyglobally 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.

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

Our efforts to protect our intellectual property rights through patent, copyright, trademark and trade secret laws in the United States and in other countries may not prevent misappropriation, and our failure or inability to protect our proprietary rights could materially adversely affect our 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.

Our acquisitions may not produce the anticipated results.

A significant portion of our growth has been attributable to acquisitions. We cannot assure 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'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.  If we are unable to achieve our expectations with respect to our acquisitions, such inability could have a material and adverse effect on our results of operations.  During the year ended December 31, 2019, we recorded a goodwill impairment charge of $8.9 million due to weakened market conditions in our former North America operating segment.  If the acquisitions fail to perform up to our expectations, or if there is furthera weakening of economic conditions, we could be required to record additional impairment charges.charges on the goodwill associated with our acquisitions. 

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' changing needs.

OPERATIONAL RISKS

Our global operations and demand for our products face risks related to health epidemics such as the coronavirus.

Any outbreaks of contagious diseases and other adverse public health developments in countries where we operate could have a material and adverse effect on our business, consolidated financial condition and consolidated results of operations. In January 2020, the outbreak of COVID-19 was first identified and had an unfavorable impact on our four largest manufacturing facilities,identified.  In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which are located in China,continues to spread throughout the first quarterU.S. and the world. Over the course of 2020.  Travel2020 and 2021, our business was impacted by temporary facility closures, shelter-in-place orders and challenges related to travel restrictions imposed by the local governmental authorities to control the spread of the virus resulted in an extended closure of our facilities in China over the Lunar New Year holiday, with the return of workers delayed after the holiday break.  Our overall worker return rate at our China facilities was approximately 85% by early March 2020 and these factories have been running at near normal productivity levels since that time.authorities.  Our suppliers, customers and our customers’ contract manufacturers were similarly impacted earlierhave experienced similar challenges from time to time throughout the pandemic. The impact from the rapidly changing U.S. and global market and economic conditions due to the COVID-19 outbreak is uncertain, with disruptions to the business of our customers and suppliers, which has, and could continue, to impact our business and consolidated results of operations and financial condition. On March 13, 2022, the PRC government issued a notice whereby effective immediately, certain regions would be temporarily shut down to perform widespread testing in 2020,response to the recent COVID-19 outbreak, which includes our Bel Power Solutions manufacturing facility in Shenzhen, China and our Magnetics TRP manufacturing facility in Changping, China. Both are currently closed for a minimum of 3-5 business days.  COVID-19 remains a potential supply continuity risk due to the majority have returned to near pre-COVID-19 production levels. unknown nature of future outbreaks. 

Throughout the remainder of 2020, many of the jurisdictions in which we operate within North America and Europe had mandated shelter-in-place orders, with the exception of essential businesses.  As of the filing date of this Annual Report on Form 10-K, all of the Company's manufacturing sites were open, with certain locations at reduced workforce levels due to local government mandates.  As the status of the ongoing COVID-19 outbreakpandemic continues to be uncertain, particularly in the U.S. and Europe, additional Bel facilities could become negatively impacted.  In addition, COVID-19 has adversely affectedremains a potential supply continuity risk due to the economies and financial marketsunknown nature of many countries, resulting in an economic downturn that has affected demand for certainfuture outbreaks including as a result of our end customers’ products.the emergence of COVID-19 virus variants.  The extent to which COVID-19 will impact our business and our consolidated financial results will depend on future developments which are highly uncertain and cannot be predicted at the time of the filing of this Annual Report on Form 10-K.  See "The Effects of COVID-19 on Bel’s Business" in Item 7 of this Annual Report on Form 10-K for a discussion of how COVID-19 is currently impacting our business.

We may experience labor unrest.

As we periodically 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 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.

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.  Further, availability of labor in the PRC is cyclical and is significantly affected by the migration of workers in relation to the annual Lunar New Year holiday.  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.

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. Beginning in the third quarter of 2021, pandemic-related issues have created additional port congestion and intermittent supplier shutdowns and delays, resulting in additional expenses to expedite delivery of critical parts.  A recent increase in demand for electronic components within the industry had led to incremental direct and indirect supply chain challenges related to raw material availability and logistics and we expect this environment to continue in 2022.  Any material disruption could materially adversely affect our financial results.  See "Key“The Effects of COVID-19 on Bel’s Business” and "Other Key Factors Affecting our Business" in Item 7 of this Annual Report on Form 10-K for a discussion of how pricing and availability of materials is currently impacting our business.

We have substantial manufacturing operations located in the PRC, which exposes us to significant risks that could materially and adversely affect our business, operations, consolidated financial condition and consolidated results of operations.

The majority of Bel's Magnetic Solutions manufacturing capacity and supplier base is located in the PRC, as is a portion of Bel's Power Solutions and Protection group.  As of December 31, 2021, 62% of our associates, 73% of our owned or leased manufacturing facilities (by square footage) and 26% of our Company’s tangible assets were all located in the PRC.  Our Company’s presence and operations in the PRC expose us to significant risks that could materially and adversely affect our Company and our business, operations, financial position and results of operations.

For example, our significant operational presence in the PRC exposes us to foreign currency exchange risk.  Our PRC-based manufacturing associates’ salaries, and other labor and overhead costs, associated with our PRC operations are paid in the Chinese Renminbi.  As a result, the cost of our operations and our consolidated operating results may be adversely impacted by the effects of fluctuations in the applicable exchange rate for the Renminbi as compared to the U.S dollar.

Our significant labor force based within the PRC subjects us to risks associated with staffing and managing this substantial complement of factory workers and other associates who are important to our Company’s operations and success.  As noted above, factory workers in the PRC are represented by government-sponsored unions, and are participants in a cyclical labor market that may become subject to shortages including as a result of PRC government policies.  See “We may experience labor unrest” and “We may experience labor shortages” above.  Wage rates in the PRC have been gradually increasing in recent years as PRC government-mandated increases in the minimum wage rate have caused an increase in our overall pay scale for our PRC workers. 

The PRC government has broad authority and discretion to regulate the economy, manufacturing, industry, and the technology sector, among other areas generally.  As a result, our activities and operations in PRC and as well as those of our PRC-based suppliers are subject to extensive local government regulation.  Additionally, the PRC government has implemented policies from time to time to regulate economic expansion.  It exercises significant control over its economic growth through the allocation of resources, setting monetary policy and providing preferential treatment to particular industries or companies.  Any additional new regulations or the amendment of previously implemented regulations could require us to change our business plans, increase our costs, or limit our ability to manufacture and sell products domestically and/or otherwise restrict or curtail our operations in the PRC.  To the extent our suppliers in the PRC are negatively impacted by new or amended regulations, any such negative implications could adversely impact our supply chain, including in the form of increased costs, disruptions, shortages or unavailability of product or component parts, and/or other deleterious consequences, which could materially adversely affect our business and operating results.  In 2021, there were power shortages in the PRC, resulting in the rationing of electricity in a number of provinces during peak production hours.  While these events did not have a material impact on our business and are not presently ongoing as of the date of this filing, any prolonged shutdown of our or our supplier’s factories (or other interference or limitation of production capacity resulting from other PRC infrastructure issues or government regulations, policies, mandates or otherwise), could cause significant disruption to our supply chain and/or Bel's ability to manufacture its products, and have a materially adverse effect on our business and operating results.

Our significant manufacturing operations in the PRC also expose us to other risks.  Risks inherent in our PRC operations include the following:

In addition to the risks associated with our PRC operations described above, the global nature of our operations generally subjects us to additional risks.  We conduct operations in 15 countries, and outside of the United States (and the PRC), our largest manufacturing operations and associate populations are located within Mexico, Slovakia, the UK and India.  Please see the Risk Factor appearing below under the caption, “The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and consolidated results of operations.”

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

During the year ended December 31, 2020,2021, approximately 18% of the Company's total net sales were sold to one direct customer exceeded 10% of our consolidated net sales.  This customer, Hon Hai/Foxconn Technology Group, aultimate end-user through various intermediary contract manufacturers.  The largest Bel direct-customer was an intermediary contract manufacturer utilized bythat manufactured and assembled products to various end customers, which represented 11.9%10.6% of our 20202021 consolidated net sales.  We believe that the loss of either of this customerultimate end user and/or this intermediate contract manufacturer could have a material adverse effect on our consolidated financial position and consolidated results of operations.  We have experienced significant concentrations of customers in prior years. See Note 12,13, "Segments" for additional disclosures related to our significant customers.  Furthermore, factors that negatively impact the businesses of our major customers such as the grounding of aircraft at a major commercial aerospace customer, could materially and adversely affect us even if the customer represents less than 10% of our 20202021 consolidated net sales.

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

We have implemented a number 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 elimination 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 programs is subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. If we are 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.

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

We are currentlyhave been 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 implementationWhile this project is substantially complete, the conversion of recent acquisitions onto the new ERP will continue to requiresystem, or any 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 consolidated 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.

FINANCIAL RISKS

There are several factors which can cause our margins to suffer.

Our margins could be substantially impacted by the following factors. 

Profit margins will be materially and adversely impacted if we are not able to reduce our costs of production, introduce technological innovations as sales prices decline, or pass through cost increases to customers.

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 lead times are particularly long. Customers often cancel orders when business is weak and inventories are excessive.  Therefore,Additional factors that could cause the Company to fail to ship orders comprising our backlog include unanticipated supply difficulties, changes in customer demand and new customer designs.  Throughout 2021, Bel has faced macroeconomic and global supply chain challenges, and these conditions are expected to continue in 2022.  Due to the foregoing factors, we cannot be certain that the amount of our backlog equals or exceeds the level of orders that will ultimately be delivered.delivered, and backlog may not be a reliable indicator of the timing of future sales. Our results of operations could be adversely impacted if customers cancel a material portion of orders in our backlog.

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 acquisitions, 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.

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

Our U.S. debt service requirements are significant in relation to our U.S. revenue 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 certain covenant ratios, and the ratios become more restrictive at specific dates during the term.  If we do not continue to satisfy these required ratios 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.  We cannot assure investors that we will be able to access private or public debt or equity on satisfactory terms, or at all.  Any equity financing that could be arranged may dilute existing shareholders and any debt financing that could be arranged may result in the imposition of more stringent financial and operating covenants.

LEGAL, TAX AND REGULATORY RISKS

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.

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 consolidated 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 fiscal or tax laws, regulations or policies, 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 consolidated 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.

Expanding and evolving data privacy laws and regulations could impact our business and expose us to increased liability.

Our global business is subject to complex and changing laws and regulations including but not limited to privacy, data security and data localization. Evolving foreign events, including the effect of the United Kingdom's withdrawal from the European Union, may adversely affect our revenues and could subject us to new regulatory costs and challenges (such as the transfer of personal data between the EU and the United Kingdom), in addition to other adverse effects that we are unable to effectively anticipate. This may impose significant requirements on how we collect, process and transfer personal data, as well as significant financial penalties for non-compliance.  Any inability to adequately address privacy concerns, even if unfounded, or to comply with the more complex privacy or data protection laws, regulations and privacy standards, could lead to significant financial penalties, which may result in a material and adverse effect on our consolidated results of operations.

RISKS RELATED TO OUR COMMON STOCK

As a result of protective provisions in the Company's certificate of incorporation, the voting power of holders of Class A common shares whose voting rights are not suspended (including officers, directors and principal shareholders) may be increased at future meetings of the Company'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'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's certificate of incorporation, or forfeit its right to vote its Class A common shares. As of February 28, 2021,2022, to the Company's knowledge, there was one shareholder of the Company's common stock with ownership in excess of 10% of Class A outstanding shares with no ownership of the Company's Class B common stock and with no basis for exception from the operation of the above-mentioned provisions. In order to vote its shares at Bel's next shareholders' meeting, this shareholder must either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until its Class A holdings are under 10%. As of February 28, 2021,2022, to the Company's knowledge, this shareholder owned 21.6% 19.1% of the Company'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 its Class A holdings fall below 10%.  Unless and until this situation is satisfied in a manner permitted by the Company's Restated Certificate of Incorporation, the subject shareholder will not be permitted to vote its 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, 2021,2022, Daniel Bernstein, the Company's chief executive officer,Chief Executive Officer, beneficially owned 380,686 Class 381,747 Class A common shares (or 22.6%(or 21.9%) of the outstanding Class A common shares whose voting rights were not suspended, and all directors and current executive officers as a group (which includes Daniel Bernstein) beneficially owned 391,534owned 394,702 Class A common shares (or 23.1%22.5%) of the outstanding Class A common shares whose voting rights were not suspended.

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:

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 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. Discussions and proposals related to gas emissions and climate change have increasingly become the subject of substantial attention; additional regulation in this area could have the effect of restricting our business operations or increasing our operating costs.  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.

GENERAL RISKS

The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and consolidated results of operations.

We operate in 15 countries, and our products are distributed in those countries as well as in other parts of the world. A large portion of our manufacturing operations are located outside of the United States and a large portion of our sales are generated outside of the United States. Operations outside of the United 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 operate, including developing regions, could result in the disruption of commerce and negatively impact cash flows from our operations in those areas.

Risks inherent in our international operations include:

As a multi-national company, we are faced with increased complexities due to recent changes to the U.S. corporate tax code relating to our unremitted foreign earnings, potential revisions to international tax law treaties, and renegotiated trade deals.  In addition, other events, such as the United Kingdom's exit from the European Union and the ongoing discussion and negotiations concerning varying levels of tariffs on product imported from the PRC also create a level of uncertainty.  If we are unable to anticipate and effectively manage these and other risks, it could have a material and adverse effect on our business, our consolidated results of operations and consolidated financial condition.

The recent political tensions and armed conflict involving Russia and Ukraine continues to evolve and we are closely monitoring this dynamic situation.  As of the filing date of this Annual Report on Form 10-K, the Company had indefinitely ceased all shipments of product to customers in Russia.  As of February 28, 2022, there were approximately $2 million of orders in our backlog that were impacted by this decision.  The Company's operations in Slovakia have not been, and are not currently expected to be, impacted by the political instability of the Russia-Ukraine conflict as our facility is not in close proximity to the Ukraine border.  We do not currently anticipate any material impact to the Company's financial results.

For additional information regarding risks associated with our operations in the PRC, see the discussion set forth above under the caption, “We have substantial manufacturing operations located in the PRC, which exposes us to significant risks that could materially and adversely affect our business, operations, consolidated financial condition and consolidated results of operations.”

Cyber 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 our business, consolidated financial condition and consolidated results of operations.

Cyber threats are rapidly evolving and are becoming increasingly sophisticated. Our Company expects to continue to experience cyber threats from time to time, which pose a risk to 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, other litigation, regulatory and legal risks and the costs associated therewith, reputational damage, reimbursement or other compensatory costs, remediation costs, increased cybersecurity protection costs, additional compliance costs, increased insurance premiums, and lost revenues, damage to the Company's competitiveness, stock price, and long-term shareholder value, 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 in certain of our businesses that is subject to privacy and security laws and regulations. Despite our efforts to 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, theft, fraud, misplaced or lost data, “Acts of God”, programming and/or human errors that could lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, software 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 consolidated results of operations.

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

The success of the Company's operations is largely dependent upon the performance of its executive officers, managers, engineers and salespeople.salespeople.  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.

Item 1B.   Unresolved Staff Comments

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 occupies 324,000315,000 square feet at 2220 non-manufacturing facilities, which are used primarily for management, financial accounting, engineering, sales and administrative support.  Of this space, the Company leases 216,000209,000 square feet in 1715 facilities and owns properties of 125,000 square feet.

The Company also operated 20 manufacturing facilities in 7 countries as of December 31, 2020.2021.  Approximately 14% of the 2.2 million square feet the Company occupies is owned while the remainder is leased.    See Note 17,18, "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, 2020:2021: 

Of the space described above, 289,000237,000 square feet is used for engineering, warehousing, sales and administrative support functions at various locations and 463,000472,000 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") 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 32.6%35.6% 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" in Note 17,18, "Commitments and Contingencies."

Item 4.   Mine Safety Disclosures

Not applicable.

PART II

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

The Company'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" and "Class B," respectively), are traded on the NASDAQ Global Select Market under the symbols BELFA and BELFB, respectively.

As of February 28, 2021,2022, there were 41were 42 registered shareholders of the Company's Class A Common Stock and 329 registered300 registered shareholders of the Company's Class B Common Stock.  As of February 28, 2021,2022, the Company estimates that there were652 531 beneficial shareholders of the Company's Class A Common StockStock and 2,8722,280 beneficial shareholders of the Company's Class B Common Stock. At February 28, 2021,2022, to the Company's knowledge, there was one shareholder of the Company's Class A common stock whose voting rights were suspended.  This shareholder owned 21.6%owned 19.1% of the Company's outstanding shares of Class A common stock.  For additional discussion, see Item 1A – "Risk Factors – As a result of protective provisions in the Company's certificate of incorporation, the voting power of holders of Class A common shares whose voting rights are not suspended (including officers, directors and principal shareholders) may be increased at future meetings of the Company's shareholders". 

During the years ended December 31, 20202021 and 2019,2020, 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 $3.4 million in 20202021 and $3.4 million in 2019.2020.  There are no contractual restrictions on the Company's ability to pay dividends provided the Company is not in default under its credit agreement immediately before such payment and after giving effect to such payment.   On February 1, 2021,2022, the Company paid a dividend to all shareholders of record at January 15, 20212022 of Class A and Class B Common Stock in the total amount of $0.1 million ($0.06 per share) and $0.7 million ($0.07 per share), respectively.  On February 17, 2021,24, 2022, 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 April 30, 202129, 2022 to all shareholders of record at April 15, 2021.2022.  Determinations regarding future dividend payments will depend, in part, upon the immediate and long-term effects of the coronavirusCOVID-19 pandemic on the Company, its customers and its suppliers.

Not applicable.

Item 6.   Selected Financial Data[Reserved]

Not applicable.

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

The information in this MD&A should be read in conjunction with the Company'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.

Under the SEC's amended definition of a "smaller reporting company," the Company is deemed to be a smaller reporting company.  Accordingly, among other things, the Company is not required to present selected financial data in Item 6 and has reduced the number of years covered by its financial statements in Item 8.

Overview

Our Company

We design, manufacture and market a broad array of products that power, protect and connect electronic circuits.  These products are primarily used in the networking, telecommunications,telecommunication, computing, high-speed data transmission, military, commercial aerospace, transportation, e-Mobility and broadcasting industries.  Bel's portfolio of products also finds application in the automotive, medical and consumer electronics markets.

We operate through three product group segments, in addition to a Corporate segment.  In 20202021, 39%40% of the Company's revenues were derived from Power Solutions and Protection, 32%30% from Cinch Connectivity Solutions and 29%30% from itsour Magnetic Solutions operating segment.  

Our operating expenses are driven principally by the cost of labor where the factories that Bel uses are located, the cost of the materials that we use and our 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 our 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. Our products are manufactured at various facilities in the U.S., Mexico, Dominican Republic, England, Czech Republic, Slovakia and the PRC.

We have little visibility into the ordering habits of our customers and we 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 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 any increase in demand, can add volatility to the labor costs incurred by us.

The Effects of COVID-19 on Bel’s Business

Throughout 2020 and 2021, the Company haswas focused heavily on the continued safety and well-being of its associates around the world in light of COVID-19.  The majorityCOVID-19 and the variants of theCOVID that followed.  A significant amount of products manufactured by Bel are utilized in military, medical and networking applications, and are therefore deemed essential by the various jurisdictions in which we operate. Our management team has been able to effectively respond quickly in implementing our business continuity plans around the world.  Significant protectiveProtective measures, were putwhere possible, remain in place throughout our facilities, including employee screenings, physical partitions, social distancing, use of face coverings, travel and visitor restrictions and work from home policies on a part-time basis where possible as we continue to service our customers.  The majority of our office staff continues to work remotely to avoid a large numberfor part of associates being present in an office setting at any one time.  With the significant increase in the number of staff working remotely, Bel's IT department took a variety of precautionary measures to protect the computer equipment that associates are utilizing in the remote environment.week.  The combination of protective measures at our factories coupled with remote work arrangements have enabled us to maintain operations, including financial reporting systems, internal controls over financial reporting and disclosure controls and procedures. 

Our financial results forDuring 2020, the first half of 2020 reflected the temporary facility closures at certain of our manufacturing locations, particularly in China, Mexico and the Dominican Republic, due to the outbreak of COVID-19 and the related disruption to our supply chain.  This led to an estimated $14-$17 million of shipments scheduled for the first quarter which were ultimately shipped in the second quarter.  The Company also incurred additional indirect COVID-19 related costs, including operational inefficiencies and employee retention programs at its manufacturing facilities in China, throughout 2020, which were offset by $4.9 million of COVID-19 relief funding received from the Chinese government also during the year ended December 31, 2020.

All of our manufacturing sites are operating as of the filing date of this Annual Report on Form 10-K.  Although the majority of our factories in North America, Europe and Asia are currently at 90+% of their normal workforce levels, we are experiencing lower productivity and efficiency rates at certain sites in North America (estimated at 80%-90%, depending on the impacted site) due to a reduced workforce at those sites.  In addition, in order to comply with social distancing requirements, certain of our factory floors have beenare reconfigured to provide additional spacing in production lines, which has resulted in some inefficiencies related to product flow.  Bel has also experienced higher freight costs for products typically shipped by air due to lower cargo capacity with the reduction in commercial air travel.  While there are some delays within the supply chain in the movement of products related to border closures, to date such delays have not materially impacted our ability to operate our business or achieve our business goals.  To date, we have not seen a significant reduction in demand for our products due to COVID-19, as many of our products support military, medical and networking applications, which generally have not been negatively impacted by COVID-19.  However, approximately 5% ofSales into our revenue relates to products utilized incommercial aerospace end markets that havemarket, which had been impacted by COVID-19, such as commercial aerospace.in 2020 with the pause in global air travel, have since started to rebound.  

During the second half of 2021, pandemic-related issues have created additional port congestion and intermittent supplier shutdowns and delays, resulting in additional expenses to expedite delivery of critical parts. In order to better control our costs, the expediting of raw material deliveries has been generally reserved for customer-specific requests for expedited timing whereby our end customer has agreed to pay the incremental fee.  Further, the majority of our product is shipped via air, and we have therefore been minimally impacted by ocean-related logistic constraints.   

On March 13, 2022, the PRC government issued a notice whereby effective immediately, certain regions would be temporarily shut down to perform widespread testing in response to the recent COVID-19 outbreak in those regions and in accordance with Beijing’s zero-tolerance policy.  Our Bel Power Solutions manufacturing facility in Shenzhen, China and our Magnetics TRP manufacturing facility in Changping, China are currently closed as of the filing date of this Annual Report on Form 10-K. These facilities will be closed for a minimum of 3-5 business days while residents undergo testing and will remain closed until further notice from the PRC government.  Further, certain of Bel’s customers and suppliers are also located within these regions, and a temporary disruption in the related supply chain is expected.  Although our other manufacturing sites in Asia, and those in North America and Europe, are currently running at normal workforce levels, COVID-19 remains a potential supply continuity risk due to the unknown nature of future outbreaks. Given the general uncertainty regarding the impact of COVID-19 on our manufacturing capability and on our customers, we are unable to quantify the ultimate impact of COVID-19 on our future results at this time.

Based on our analysis of ASC 350 and ASC 360 during the year ended December 31, 2020,2021, we are currently not aware of any material impairmentspotential triggering events for impairment of our goodwill, indefinite-lived intangible assets or finite-lived assets.  The Company will continue to assess the relevant criteria on a quarterly basis based on updated cash flow and market assumptions.  Unfavorable changes in cash flow or market assumptions could result in impairment of these assets in future periods.

As our operations have continued, albeit at slightly reduced production and efficiency rates, we have not experienced a negative impact on our liquidity to date.  Our balance of cash on hand continues to be strong at $61.8 million at December 31, 2021 as compared to $84.9 million at December 31, 2020, as compareddespite the utilization of $16.8 million in cash to $72.3 million at December 31, 2019, despite voluntary debt paymentsfund acquisitions in the first quarter of $28.2 million made during 2020.2021.  The Company also has availability under its current revolving credit facility; as of December 31, 2020,2021, the Company could borrow an additional $56.6 $62.5 million while still being in compliance with its debt covenants.  However, any further negative impact to our financial results related to COVID-19 would have a related negative impact on our financial covenants outlined in our credit agreement, which would impact the amount available to borrow under our revolving credit facility.  In order to assist with maintaining our liquidity position, the Company implemented several measures during the first quarter ofin early 2020, including the deferral of employer social security taxes under the federal CARES Act (through December 31, 2020), restrictions on new hires, suspension of salary reviews, the near elimination of allnon-essential business travel and restrictions on spending related to capital expenditures.  DuringCertain of these restrictions were lifted in the year ended December 31, 2020, travelsecond quarter of 2021.  Travel expenses incurred by the Company in 2021 were $2.0 million lower than 2019.  Managementcomparable with the reduced levels that the Company experienced in 2020.  The management team closely monitors the changing COVID situation and has developed Phase 2 and Phase 3 ofplans which could be implemented to minimize the Company’s cash conservation/cost savings plan which would be implementedimpact to the Company in the event our liquidity position or financial results become materially impacted by COVID-19.

the situation deteriorates.
 

Our statements regarding the future impact of COVID-19 represent Forward-Looking Statements.  See “Cautionary Notice Regarding Forward-Looking Information.”

Other Key Factors Affecting our Business

The Company believes the key factors affecting Bel's 20202021 and/or future results include the following: 

In January 2021,Looking ahead, we announced the acquisition of rms Connectors and the anticipated acquisition of EOS Power expectedwill continue to close later in the first quarter of 2021.  These two acquisitions fit squarely into Bel's growth strategy by increasing market share while diversifying our product portfolios and geographic footprint.  Visibilityexecute on our base business continueslong-term strategic initiatives to grow revenue, improve margins, and strive for operational excellence.  All parts of the organization will be limited as a result of COVID-19assessed, and long lead times for semiconductorswe are working toward increasing our margin profile over time. Pricing adjustments to offset rising input costs are gradually taking effect in each segment and certain components and these factors may affectnewly-implemented pricing policies will enable us to better react to future cost changes. There will also be an ongoing focus on our organic growth for 2021.  We believe, however, that the incremental contribution from the two new acquisitions coupledoperating footprint to ensure it is aligned with continued actions under our global cost savings initiative will bode well for further profitability in the coming year.goals.  The preceding two sentences represent Forward-Looking Statements.  See "Cautionary Notice Regarding Forward-Looking Information."

Results of Operations - Summary by Operating Segment  

Net Sales and Gross Margin

The Company's net sales and gross margin by major product line for the years ended December 31, 20202021 and 20192020 were as follows (dollars in thousands):

Cinch Connectivity Solutions:

Sales of our Connectivity Solutions products declined $21.6increased by $14.3 million during 2020in 2021 as compared to 2019.2020.  This declineincrease was primarily due to loweran increase in demand from our distribution partners, which resulted in $10.9 million of higher sales.  There was also a partial rebound in demand from direct and after-market commercial aerospace customers partially offset by higher demand for our military products during 2020resulting in an increase of $5.5 million 2021 as compared to 2019.  This2020.   These sales increases were offset by a decline in military sales of $10.5 million during 2021 as compared to the prior year.  The shift in product mix along with the operational cost reductions detailedin addition to higher material and labor costs in the "Restructuring" section above have resulted in improved2021 period offset the benefits of the higher sales volume on the gross margins during 2020 as compared to 2019.margin line. 

Magnetic Solutions:

Sales of our magneticMagnetic Solutions products declinedimproved by $23.0$26.9 million from 2019 duein 2021 as compared to lower demand from a large OEM networking customer.  While orders received2020. Demand for our magneticMagnetic Solutions products has increased in 2020 were down by $4.8 million from 2019 levels,recent quarters and we saw our first indicationthe heightened orders translate into sales during the latter part of recovery2021. The labor market in the fourth quarter of 2020, with an increase in bookings of $8.0 million comparedPRC continues to be competitive, driving wage rates higher.  Further, the fourth quarter of 2019.  The gross margin improvement in 2020 versus 2019 was largely the result of restructuring measures implemented in late 2019 and a shift in product mix within the Magnetic Solutions segment.  These benefits were partially offset by higher labor costs within this product group driven by the appreciation of theChinese Renminbi versushas appreciated against the U.S. dollarDollar in 20202021 as compared to the exchange rates in place throughout 2019.effect during 2020, adding to the higher labor burden in 2021.  During 2020, our ability to manufacture product was temporarily impacted due to the factory closures associated with COVID-19.  Bel received $4.9 million in subsidies from the Chinese government during 2020 to assist in offsetting COVID-related costs and inefficiencies incurred, which aided our gross margin for this group in the 2020 gross margin presented above.

Power Solutions and Protection:

Sales of our Power Solutions and Protection products increasedwere higher by $18.0$36.5 million during 20202021 as compared to 2019.2020.   The CUI business, whichsales increase was acquired in December 2019, contributed incremental salesprimarily due to growth of $41.0$16.7 million in 2020 at a gross margin of 34.1%.  Our circuit protection sales increased by $2.7 million, or 21.0%, from 2019 primarily resulting from a rebound in demand from our catalog distributors.  Sales of ourthe Bel Power Solutions products decreasedbusiness (including $6.2 million of higher sales into e-Mobility applications), a $12.7 million increase in CUI sales, $8.1 million of higher fuse sales, and the $12.4 million contribution from the March 2021 acquisition of EOS.  This sales growth was partially offset by $19.8declines in custom module sales of $8.9 million during 2020 as compared to 20192020 as the Company has discontinued this product line.  Gross margin improved in 2021 versus 2020 as higher sales volume and salesa favorable shift in product mix offset the impact of our modules products were $3.5 million lower than 2019.  These declines were largely due to the elimination of certain low-margin power products.  The gross margin expansion in 2020 versus 2019 is primarily due to the inclusion of higher-margin CUI sales, elimination of low-margin productsincreased material and cost savings that resulted from restructuring efforts implemented in the latter half of 2019.labor costs.

Cost of Sales

Cost of sales as a percentage of net sales for the two years ended December 31, 20202021 consisted of the following:

MaterialThe fluctuations in material costs and labor costs as a percentage of sales decreased during 2020the year ended December 31, 2021 compared to 2019 as the 2019 financials included the remaining sales of high-cost inventory on hand from 2018 when premiumsyear ended December 31, 2020 were paidprimarily due to a shift in classification of certain outsourced manufacturing from labor costs to material shortagescosts in connection with the transition of our legacy Bel businesses onto the new ERP system effective January 1, 2021.  As such, material costs and long lead times.  The elimination of low-margin power products, which carriedlabor costs should be viewed on a high material content, also contributedcombined basis when comparing to this reduction.

Laborthe prior year.  In the aggregate, these variable costs as a percentageincreased from 53.2% of sales declined in 2020 compared to 2019 as a more favorable exchange rate environment related55.2% of sales in 2021.  These higher variable costs are largely attributable to the Mexican Peso coupled with a reduction in labor-intensive production of Magnetic products offset the impacts from minimum wage rate increases at our PRC factories and an unfavorable fluctuation in the PRC, MexicoChinese Renminbi, Mexican Peso and Slovakia that went into effectEuro exchange rates versus the U.S. dollar during 2020.  those periods.  Further, there have been industry-wide shortages on certain raw materials, such as semiconductors and plastic resin, which has led to an increase in material pricing from our suppliers.

The other expenses noted in the table above include fixed cost items such as support labor and fringe, depreciation and amortization, and facility costs (rent, utilities, and insurance).  In total, these other expenses decreasedincreased during 20202021 by $13.0$12.8 million as compared to 2019, primarily2020, due in part to $4.9 million of subsidies received from the Chinese government in 2020 to offset costs and inefficiencies incurred due to a $6.1 million reduction in other overhead expenses as a resultthe temporary closures of our restructuring efforts over the past year.  Other factors contributing to the decline included lowerfactories in China in connection with COVID-19.  Our support labor expenses were also impacted by unfavorable fluctuations in the Chinese Renminbi and fringe expense of $4.5 million, a reductionMexican Peso as compared to exchange rates in utilities expense of $0.8 million and lower depreciation and amortization expense of $0.6 million.place during 2020. 

Research and Development ("R&D")

R&D expenses were $23.6$21.9 million and $26.9$23.6 million for the years ended December 31, 20202021 and 2019,2020, respectively.  The reduction in R&D expenses during 20202021 largely resulted from restructuring efforts during thea full year includingof cost savings related to the closure of the Company's Power R&D facility in Switzerland in August 2020. 

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

SG&A expenses were $86.6 million in 2021 as compared with $78.7 million in 2020 as compared with $77.42020.  SG&A salaries and fringe benefits increased by $5.8 million in 2019.  The acquisition of CUI in December 2019 accounted for $7.0 million in incremental SG&A expense during 2020.  Excluding CUI, SG&A expense was $5.7 million lower compared to 2019.  Notable drivers included a reduction in travel expense of $2.1 million, lower selling-related costs (commissions, advertising and other costs) of $1.5 million, a reduction in legal and professional fees of $1.1were higher by $1.2 million (largely due to elimination of redundant ERP license and support fees), and $1.1 million of lower salaries and fringe benefitsas compared to 2019.  2020.  These costs were partially offset by lower sales commissions of $0.3 million and a reduction in other selling costs of $1.2 million in 2021 as compared to 2020.

Restructuring Charges

The Company recorded $1.2 million of restructuring charges in 2021 related to the consolidation of its DC/DC power product line into a single factory, and the discontinuation of its custom modules product line. The Company recorded $0.6 million of restructuring charges in 2020 related to cost savings measures implemented during the year, including the closure of its Switzerland and Germany facilities, and a portion of its warehouse space in Hong Kong, among other actions.     The Company recorded restructuring charges of $2.6 million in 2019 in connection with the transition of its manufacturing operations from Inwood, New York to other existing Bel facilities, the closure of its office in Shanghai and indirect headcount reductions in Europe and Asia, largely related to its Power segment.    

Interest Expense

The Company incurred interest expense of $3.5 million in 2021 and $4.7 million in 2020 and $5.4 million in 2019 primarily due to ourits outstanding borrowings under the Company's credit and security agreement.  The reduction in interest expense during 20202021 related to lower interest rates on ourthe Company's outstanding balance during 2020,2021, in addition to a lower debt balance throughout most of 20202021 as compared to 2019.2020.  See "Liquidity and Capital Resources" and Note 10, "Debt" of the Notes to our Consolidated Financial Statements - "Debt," for further information on the Company's outstanding debt.

Other (Expense) Income,Expense, Net

Other (expense) income,expense, net was expense of$0.4 million in 2021 compared to $1.8 million in 2020 compared to expense of $0.3 million in 2019.2020.  This line item included a foreign exchange loss of $2.2less than $0.1 million in 20202021 as compared to a foreign exchange gainloss of $0.1$2.2 million in 2019.  Another contributing factor was gains on the Company's SERP investments which amounted to $1.1 million in 2020 as compared to $2.1 million in 2019.  These gains in 2019 were offset by a $2.1 million loss on liquidation of foreign subsidiaries.2020. 

Income Taxes

The Company’s effective tax rate will fluctuate based on the geographic segment in which the pretax profits are earned.  Of the jurisdictions in which the Company operates, the U.S. and Europe’s tax rates are generally equivalent; and Asia has the lowest tax rates of the Company’s three geographic regions.  See Note 9, "Income Taxes" to the Company's Consolidated Financial Statements, “Income Taxes” and the “Tax Reform” discussion below.

Tax Reform

The Tax Cuts and Jobs Act (the “Act”) was enacted on December 22, 2017.  The Act reduced the U.S. federal corporate tax rate from 35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings. 

Effective January 1, 2018, the Act subjects a U.S. shareholder to current tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries.  The Company has elected an accounting policy to provide for the tax expense related to the GILTI in the period the tax is incurred.  On July 20, 2020, the Department of the Treasury and the Internal Revenue Service issued a final regulation under Section 954A as enacted by the 2017 tax reform legislation.  These regulations relate to the treatment of income that is subject to a high rate of foreign tax under the GILTIglobal intangible low-taxed income (GILTI) income regimes.  The final regulations allow taxpayers to exclude certain high-taxed income of a controlled foreign corporation from their GILTI computation on an elective basis and contain modifications on the level at which the estimated tax rate test is applied.  The election can be made annually for tax years that begin after December 31, 2017. 

The Company’s inclusion of approximately $6.8 million of GILTI income for the year ended December 31, 2019 was impacted by the final regulations enacted on July 20, 2020.  The Company reduced the GILTI inclusion for the year ended December 31, 2019 to $3.4 million.  As a result of the NOL carryforward created by the exclusion, the Company recognized a benefit associated with the final regulations of approximately $1.0 million in the year ended December 31, 2020. The Company included $12.5 million of GILTI income for the year ended December 31, 2020. The GILTI income was offset by the Company’s U.S. losses and credits which resulted in no additional U.S. tax expense.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. Certain provisions of the CARES Act impact the 2019 income tax provision computations of the Company and were reflected in the year ended December 31, 2020, or the period of enactment. The CARES Act contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020. The modifications to Section 163(j) increase the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income. This modification would increase the allowable interest expense deduction of the Company and resulted in a net operating loss (“NOL”) for the year ended December 31, 2019.  The Company carried back the NOL to the tax year ended December 31, 2015 and has reflected this impact in the tax provision for the year ended December 31, 2020.  Due to the foregoing, and as a result of the difference in corporate tax rates in the NOL carryback period, the Company recognized a benefit associated with the enactment of the CARES Act of approximately $0.1 million for the year ended December 31, 2020.

20202021 as Compared to 20192020

The (benefit) provision for (benefit from) income taxes for the years ended December 31, 2021 and 2020 and 2019 was $(0.7)$2.5 million and $1.4$(0.7) million, respectively.  The Company’s earnings before income taxes for the year ended December 31, 20202021 were approximately $19.4$15.2 million higher than the same period in 2019,2020, primarily attributable to aan increase in income in the Asia and North America regions, offset by a decrease in the Europe region.  The Company’s effective tax rate was (5.4%)9.2% and (19.7%(5.4%) for the years ended December 31, 20202021 and 2019,2020, respectively. The change in the effective tax rate during the year ended December 31, 20202021 as compared to the same period in 2019year ended December 31, 2020 is primarily attributable to an increase in U.S. tax benefitsexpense resulting from higher U.S. income, as well as an increase in tax expense relating to the federaladdition of uncertain tax law changes regardingpositions. Additionally, the final regulations on GILTI high-tax exception andeffective tax rate in 2020 was favorably impacted by the reversal of uncertain tax positions resulting from the expiration of certain statutesstatues of limitations. Additionally,limitations and federal tax law changes for the effective tax rate of 2019 was unfavorably impacted by the impairment of goodwill in North America. CARES Act.

Other Tax Matters

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

The Company holdsheld an offshore business license from the government of Macao.  With this license, a Macao offshore company named Bel Fuse (Macao Commercial Offshore) Limited hashad been established to handle the Company’s sales to third-party customers in Asia.  Sales by this company primarily consist of products manufactured in the PRC.  This company iswas not subject to Macao corporate profit taxes which are imposed at a tax rate of 12%.  As part of Macau’s commitment to comply with OECD standards, it abolished the existing offshore company (MOC) regime as of January 1, 2021. The existing law and the relevant regulations related to the offshore business will bewas abolished and the operating permit to carry on offshore business will bewas terminated on January 1, 2021. The Company has decided to continue this company’s operations and beginning January 1, 2021 has, and will continue, to pay 12% tax on any profits from this operation.  

Management has no specific plans to indefinitely reinvest the unremitted earnings of our foreign subsidiaries as of December 31, 2020. Applicable income and dividend withholding taxes have been reflected in the accompanying consolidated statements of operations for the year ended December 31, 2020.  Due to the practicality of determining the deferred taxes on outside basis differences in our investments in our foreign subsidiaries, we havemanagement has not provided for deferred taxes on outside basis differences at December 31, 2021 and deemed that these basis differences will be indefinitely reinvested.

Inflation and Foreign Currency Exchange

During the past two years, we do not believe the effect of inflation was material to our consolidated financial position or our consolidated results of operations.  We are exposed to market risk from changes in foreign currency exchange rates.  Fluctuations of the U.S. dollar against other major currencies have not significantly affected our foreign operations as most sales continue to be denominated in U.S. dollars or currencies directly or indirectly linked to the U.S. dollar.  Most significant expenses, including raw materials, labor and manufacturing expenses, are incurred primarily in U.S. dollars or the Chinese Renminbi, and to a lesser extent in British pounds and Mexican pesos.  The Chinese Renminbi and British pound each appreciated by 6%, the Mexican Peso depreciatedappreciated by approximately 11%5% and the Euro appreciated by 3% versus the U.S. dollar in 2020 as2021 compared to 2019.  There were no significant fluctuations in the average exchange rate of the Chinese Renminbi or the British Pound during 2020 as compared to 2019.2020.   To the extent the Renminbi or Peso appreciate in future periods, it could result in the Company's incurring higher costs for most expenses incurred in the PRC and Mexico.  The Company periodically uses foreign currency forward contracts to manage its short-term exposures to fluctuations in operational cash flows resulting from changes in foreign currency exchange rates as further described in Note 12, "Derivative Instruments and Hedging Activities". The Company's European entities, whose functional currencies are Euros, British pounds and Czech Korunas, enter into transactions which include sales that are denominated principally in euros,Euros, British pounds and various other European currencies, and purchases that are denominated principally in U.S. dollars and British 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) gainslosses of ($2.2)less than $0.1 million and $0.1$2.2 million for the years ended December 31, 20202021 and 2019,2020, respectively, which were included in other income/expense, net on the consolidated statements of operations.  The currency exchange losses recorded in 2020 were primarily due to the unfavorable impact of the appreciation of the Chinese Renminbi and Euro against the U.S. dollar. Translation of subsidiaries' foreign currency financial statements into U.S. dollars resulted in translation adjustments, net of taxes, of $6.9($1.8) million and $2.6$6.9 million for the years ended December 31, 20202021 and 2019,2020, respectively, which are included in accumulated other comprehensive loss on the consolidated balance sheets.

Liquidity and Capital Resources

Our primaryprincipal sources of liquidity include $61.8 million of cash are the collection of trade receivables generated from the sales of our products and services to our customerscash equivalents at December 31, 2021, cash provided by operating activities and amountsborrowings available under our existing lines of credit, including our credit facility.  Our primary uses of cash are paymentsWe expect to use this liquidity for operating expenses, investments in working capital, capital expenditures, interest, taxes, dividends, debt obligations and other long-term liabilities. We believe that our current liquidity position and future cash flows from operations will enable us to fund our operations, including all of the items mentioned aboveboth in the next twelve months.months and in the longer term.

At December 31, 2020 and 2019, $57.5 million and $29.1 million, respectively (or 68% and 40%, respectively), of cash and cash equivalents was held by foreign subsidiaries of the Company.  During 2020, the Company repatriated $5.0 million of funds from outside of the U.S., with minimal incremental tax liability.  We continue to analyze our global working capital and cash requirements and the potential tax liabilities attributable to further repatriation, and we have yet to make any further determination regarding repatriation of funds from outside the U.S. to fund the Company's U.S. operations in the future.  In the event these funds were needed for Bel's U.S. operations, the Company would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds.

In June 2014, the Company entered into a senior Credit and Security Agreement, which was subsequently amended in December 2014, March 2016, and further amended and refinanced in December 2017 (see Note 10, "Debt," for additional details).  The Credit and Security Agreement 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 Credit and Security Agreement would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor.  On February 18, 2020, the Company further amended its credit agreement whereby the Company voluntarily prepaid a portion of its term loan under the credit agreement in the amount of $8.2 million. The Amendment also served to modify the interest rate and fees applicable to the loans under the credit agreement and changes certain covenants related to matters including acquisitions, share repurchases and financial ratios.

Cash Flow Summary

The Company was in compliance with its debt covenants as of December 31, 2020, including its most restrictive covenant, the Leverage Ratio.  The unused credit available under the credit facility at December 31, 2020 was $63.0 million, of which we had the ability to borrow $56.6 million without violating our Leverage Ratio covenant based on the Company's existing consolidated EBITDA.

At December 31, 2020, the Company had $116.8 million outstanding under its credit agreement.  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's operating leases, see Note 17, "Commitments and Contingencies." 

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 is being conducted by business units on a three-phase approach through mid-2021.  Since inception of the project, we have incurred costs in a cumulative amount of $7.0 million in connection with this implementation, of which $1.8 million in implementation costs was incurred during 2019.  These costs are included in SG&A on the consolidated financial statements.  No implementation costs were incurred duringDuring the year ended December 31, 2020.  The first phase of2021, the ERP implementation projectCompany's cash and cash equivalents decreased by $23.2 million.  This decrease was completed inprimarily due to the first quarter of 2019 with the Power Solutions business going live on the new system effective January 1, 2019.  The second phase of the project was completed in the first quarter of 2020 with the TRP business going live on the new system effective January 1, 2020.  We've achieved annual cost savings on ERP licensing fees of approximately $2.0 million within SG&A expense which were largely realized in 2019.  We anticipate completing the final phase of this project primarily with in-house resources by mid-2021. The preceding sentence represents a Forward-Looking Statement.  See "Cautionary Notice Regarding Forward-Looking Information."following:

Cash Flows

	•	payments for acquisitions, net of cash acquired, of $16.8 million;
	•	purchases of property, plant and equipment of $9.4 million;

•

dividend payments of $3.4 million; and

	•	repayments of long-term debt of $104.8 million; partially offset by
	•	net cash provided by operating activities of $4.6 million;
	•	proceeds from the sale of property, plant and equipment of $7.3 million; and
	•	revolving credit line borrowings of $100.5 million

During the year ended December 31, 2020, the Company's cash and cash equivalents increased by $12.7 million.  This increase was primarily due to cash provided by operations of $46.1 million and proceeds from the sale of properties of $4.0 million, partially offset by repayments of long-term debt of $28.2 million, the purchase of property, plant and equipment of $5.5 million, and payments of $3.4 million for dividends. Cash provided by operations increased by $21.7 million in 2020 as compared to 2019, primarily due to improved net earnings coupled with lower year-end inventory levels and accounts receivable balances in 2020.

During the year ended December 31, 2019,2021, accounts receivable increased $13.0 million primarily due to the Company's cash and cash equivalents increased by $18.4 million.  This increase was primarily due to cash provided by operationshigher sales volume in the second half of $24.5 million and $32.0 million of net proceeds from borrowing under our revolving credit facility, partially offset by a $29.0 million payment, net of cash acquired, for the acquisition of the CUI power assets, the purchase of property, plant and equipment of $9.9 million, repayments of long-term debt of $3.0 million, and payments of $3.4 million for dividends. Cash provided by operations increased by $14.4 million in 20192021 as compared to 2018, primarily duethe same period of 2020.  Days sales outstanding (DSO) decreased to lower year-end inventory54 days at December 31, 2021 from 57 days at December 31, 2020.  Inventories increased by $34.0 million from the December 31, 2020 level as raw material levels and accounts receivable balanceswere higher in 2019.response to an increase in customer demand for our products.  Inventory turns, excluding R&D, were 3.1 times for the year ended December 31, 2021 as compared to 3.4 times for the year ended December 31, 2020.

Cash and cash equivalents, marketable securities and accounts receivable comprised approximately 34.4%29.1% and 31.6%34.4% of the Company's total assets at December 31, 20202021 and December 31, 2019,2020, respectively. The Company's current ratio (i.e., the ratio of current assets to current liabilities) was 3.22.9 to 1 and 3.13.2 to 1 at December 31, 20202021 and December 31, 2019,2020, respectively.

During the year ended  At December 31, 2021 and 2020, accounts receivable decreased $5.4$42.0 million primarily due to more timely collection of receivables which reduced our DSO by the end of 2020.  Days sales outstanding (DSO) decreased to 57 days at December 31, 2020 from 60 days at December 31, 2019.  Inventories decreased by $9.7and $57.5 million, from the December 31, 2019 level as raw material levels were lower in response to a decrease in customer demand for our products.  Inventory turns, excluding R&D, were 3.4 times per yearrespectively (or 68% at each date), of December 31, 2020cash and December 31, 2019.

cash equivalents was held by foreign subsidiaries of the Company.  During 2021, the Company repatriated $26.3 million of funds from outside of the U.S., with minimal incremental tax liability.  We continue to analyze our global working capital and cash requirements and the potential tax liabilities attributable to further repatriation, and we have yet to make any further determination regarding repatriation of funds from outside the U.S. to fund the Company's U.S. operations in the future.  In the event these funds were needed for Bel's U.S. operations, the Company would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds.

Contractual ObligationsFuture Cash Requirements

The following table sets forth at December 31, 2020 the amounts of payments due under specific types of contractual obligations, aggregated by category of contractual obligation, for the time periods described below.

At December 31, 2020, we had liabilities for unrecognized tax benefits and related interest and penalties of $28.5 million, most of which is included in other liabilities and the remaining balance of which is included in other current liabilities on our Consolidated Balance Sheet. At December 31, 2020, we cannot reasonably estimate the future period or periods of cash settlement of these liabilities. See Note 9, "Income Taxes," of the Notes to Consolidated Financial Statements for further discussion.

The Company expects foreseeable liquidity and capital resource requirements to be met through existing cash and cash equivalents and anticipated cash flows from operations, as well as borrowings available under its revolving credit facility, if needed.  The Company's material cash requirements arising in the normal course of business primarily include:

Debt Obligations and Interest Payments - The Company currently has $112.5 million outstanding under its revolving credit facility as further described below and in Note 10, "Debt".  There are no mandatory principal payments due on the credit facility borrowings within the next twelve months.  The balance of $112.5 million is requireddue upon expiration of the credit facility on September 1, 2026.  Anticipated interest payments due amount to pay SERP obligations$8.6 million, of which $1.8 million is expected to be paid within the next twelve months based on our debt balance and interest rate in place at the occurrence of certain events.December 31, 2021. 

Lease Obligations - The Company has operating leases for its facilities used for manufacturing, research and development, sales and administration.  There are also operating and finance leases related to manufacturing equipment, office equipment and vehicles.  As of December 31, 2020, $24.32021, the Company was contractually obligated to pay future operating lease payments of $24.9 million, of which $7.9 million is includedexpected to be paid within the next twelve months, and future financing lease obligations of $3.0 million, of which $0.6 million is expected to be paid in long-term liabilitiesthe next twelve months.  See Note 17, "Leases" for further information.  Subsequent to year-end, in January 2022, the Company entered into an additional operating lease with aggregate cash requirements of approximately $6.1 million over the term of the lease, of which $0.3 million is expected to be paid in 2022.

Purchase Obligations - 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 unfunded pension obligation onorder is cancelled.  The Company had outstanding purchase orders related to raw materials in the Company's consolidated balance sheet.amount of $119.6 million at December 31, 2021, of which $113.7 million is expected to be paid in the next twelve months.  The Company also had outstanding purchase orders related to capital expenditures which totaled $5.1 million at December 31, 2021, all of which is expected to be paid in 2022.

Pension Benefit Obligations - As further described in Note 14, "Retirement Fund and Profit Sharing Plan", the Company maintains a Supplemental Executive Retirement Plan ("SERP").  At December 31, 2021, estimated future obligations under the plan amounted to $23.6 million.  It is expected that the Company will pay $0.9 million in benefit payments in connection with the SERP during 2022.  Included in other assets at December 31, 20202021 is the cash surrender value of company-owned life insurance and marketable securities held in a rabbi trust with an aggregate value of $15.4 $16.4 million, which has been designated by the Company to be utilized to fund the Company's SERP obligations.

Dividends - The Company has historically paid quarterly dividends on its two classes of common stock, which amounted to $3.4 million in each of 2020 and 2021.  Consistent with the dividend rates declared in prior years, Bel's Board of Directors declared dividends on October 28, 2021 and again on February 24, 2022 on each of our two classes of common stock. These two quarterly payments will be made in the first half of 2022 in the total anticipated amount of $1.7 million.  

Tax Payments - At December 31, 2021, we had liabilities for unrecognized tax benefits and related interest and penalties of $28.4 million, all of which is included in other liabilities on our consolidated balance sheet. At December 31, 2021, we cannot reasonably estimate the future period or periods of cash settlement of these liabilities. See Note 9, "Income Taxes," for further discussion.  Also included on our consolidated balance sheet at December 31, 2021 is $9.1 million of transition tax related to the 2017 U.S. tax reform, of which $1.1 million is expected to be paid in 2022.

Critical Accounting Policies and Other MattersEstimates

The Company's consolidated financial statements include certain amounts that are based on management'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, thecircumstances. The results of whichthese estimates 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 requireDifferent assumptions and judgments could change the estimates used in the preparation of the consolidated financial statements, which, in turn, could change the results from those reported.  Management evaluates its estimates, assumptions and judgments on an ongoing basis.  

Based on the above, we have determined that our most critical accounting estimates that haveare those related to business combinations, inventory valuation, goodwill and other indefinite-lived intangible assets, and those related to our pension benefit obligations.

Business Combinations

In a business combination, we allocate the potential for significantly impacting Bel's financial statements.fair value of purchase price consideration to the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree based on their estimated fair values. The excess of the fair value of purchase price consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customers or earned through the use of acquired trademarks, estimated royalty rates, acquired technology, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

Inventory Valuation

The Company makes purchasing and manufacturing decisions principallyvalues its inventory 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'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.on its cost. The Company reduces the carrying value of its inventory 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. When suchOur reserve calculations are based on historical experience related to slow-moving inventory is subsequently usedin addition to specific known concerns in the manufacturing process, the lower adjusted costcase 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.products going end-of-life or customer cancellations.  As of December 31, 20202021 and 2019,2020, the Company had reserves for excess or obsolete inventory of $12.1 million and $9.9 million, and $9.1respectively.  With the recent increase in demand for our products coupled with higher raw material prices, our value of inventory on hand has increased by $39.3 million respectively. If actual market conditions are less favorable than those projected by management, additionalfrom December 31, 2020 to December 31, 2021.  In the event of a sudden decrease in demand for our products, or a higher incidence of inventory write-downs mayobsolescence, the Company could be required.required to increase its inventory reserve, which would have an unfavorable impact on our gross margin.

Goodwill and Indefinite-Lived Intangible Assets

Goodwill is reviewed for possible impairment at least annually on a reporting unit level during the fourth quarter of each year. A review of goodwill may be initiated before or after conducting the annual analysis if events or changes in circumstances indicate the carrying value of goodwill may no longer be recoverable.

A reporting unit is the operating segment unless discrete financial information is prepared and regularly reviewed by management at businesses one level below that operating segment, the "component" level, and the component 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 to determine whether it is necessary to perform a quantitative goodwill impairment test, for our annual goodwill impairment tests in the fourth quarter of 2020 and 2019, we performed quantitative tests for all of our reporting units that have goodwill allocated.

The goodwill impairment test involves a comparison of the fair value of each of our reporting units with goodwill to its carrying value, including the goodwill allocated to the reporting unit. If the fair value of the reporting unit exceeds its carrying value, there is no indication of impairment and no further testing is required. If the fair value of the reporting unit 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, if any, by which the carrying amount of goodwill exceeds 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'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 cost 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 our reporting units. Assumptions for sales, net earnings and cash flows for each reporting unit were consistent among these methods.

Income Approach Used to Determine Fair Values

The income approach is based upon the present value 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 estimate of cash flows used is prepared on an unleveraged debt-free basis. We use a discount rate that reflects 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 projected 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.  We applied a combined weighting of 75% to the income approach when determining the fair value of our reporting units.

Market Approach Used to Determine Fair Values

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

The market approach estimates the fair value of the reporting unit by applying multiples of operating performance measures to the reporting unit's operating performance (the "Public"Guideline Publicly Traded Company Method"). These multiples are derived from comparable publicly-tradedpublicly traded companies with similar investment characteristics to the reporting unit, and such comparables are reviewed and updated as needed annually. We believe that this approach is appropriate because it provides a fair value estimate using multiples from entities with operations and economic characteristics comparable to our reporting units and the Company. The second market approach is based on the publicly traded common stock of the Company 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").

as a whole. The key estimates and assumptions that are used to determine fair value under thesethis market approachesapproach include current and forward 12-month operating performance results and the selection of the relevant multiples to be applied. Under the PublicGuideline Publicly Traded Company and Quoted Price Methods,Method, 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.

As indicated in Note 4, "Goodwill and Other Intangible Assets", the fair value of each of our three reporting units exceeded their respective carrying values by a large margin (ranging from 40.3% to 136.7%).  If our assumptionsmarket factors change and related estimates changethe discount rate utilized in the future,fair value calculation changes, it would result in a higher or lower fair value of our reporting units.  The discount rates utilized in our October 1, 2021 impairment test ranged from 15.0% to 16.5%.  An increase in the discount rate assumption of 50 basis points would have impacted the fair values of our reporting units, and would have reduced the excess of fair value over carrying value to a revised range of 35.7% to 129.1%.  Further, if we are unable to achieve the projected revenue growth rates or margins assumed in our projections, this would also impact the fair value of our reporting units.  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 climates, an adverse action or assessment by a regulator, heightened 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 consolidated financial condition.

The Company conducted its annual goodwill impairment test as of October 1, 2020,2021, 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, 20202021 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 goodwill review performed in 2020.

2021.  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 a potential indicator of impairment.

Indefinite-Lived Intangible Assets

The Company annually tests indefinite-lived intangible assets for impairment annually on October 1, or upon a triggering event, using a fair value approach, the relief-from-royalty method (a form of the income approach).  The Company conducted its annual impairment tests as of October 1, 20202021 and 2019,2020, and no impairment was identified at either testing date.  Management has also concluded that the fair value of its trademarks exceeds the associated carrying values at December 31, 20202021 and that no impairment existed as of that date. At December 31, 2020,2021, the Company's indefinite-lived intangible assets related solely to trademarks.

Long-Lived Assets and Other Intangible AssetsPension Benefit Obligations

The Company depreciates its property, plantNet periodic benefit cost for the Company's SERP totaled $1.7 million in 2021 and equipment on$1.6 million in 2020.  Benefit plan information for financial reporting purposes is calculated using actuarial assumptions including 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 assetsdiscount rate for potential impairment whenever significant events orplan benefit obligations.  The 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 dispositionnet periodic benefit cost year over year 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, 2020 or 2019.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences betweendemographic changes within 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'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'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 positionplan, as well as assessingany changes to the outcome of each tax position.  Changesdiscount rate or the assumption around the future annual increases in judgment as to recognition or measurement of tax positions can materially affectcompensation.  The discount rate utilized for the estimate of the effective tax rate and, consequently, affect our operating results.

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services.  The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services.  Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.  Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillmentnet periodic benefit cost and are included in cost of sales.

During the year endedwas 2.25% at December 31, 2020, the Company had one direct customer with sales in excess of 10% of Bel's consolidated revenue.  Management believes that the loss of this individual customer could have a material adverse effect on our consolidated financial position2021 and results of operations.  During the year ended3.00% at December 31, 2020,2020.  An increase/decrease in this 2021 discount rate assumption of 25 basis points would have decreased/increased the Company had sales2021 periodic benefit cost by less than $0.1 million.  The discount rate utilized for the pension benefit obligation was 2.75% at December 31, 2021 and 2.25% at December 31, 2020.  An increase/decrease in this 2021 discount rate assumption of $55.225 basis points would have reduced/increased the pension benefit obligation by $0.8 million to this customer, Hon Hai/Foxconn Technology Group, representing 11.9% of Bel's consolidated revenue.  Sales to this customer are primarily in the Company's Magnetic Solutions 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.at December 31, 2021.

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 another 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 further decrease the Company's ratio of earnings to fixed charges, and could further impact the Company'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'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, "Description of Business and Summary of Significant Accounting Policies."

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

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.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and

Board of Directors of and Shareholders

Bel Fuse Inc.
Jersey City, New Jersey

Opinions

Opinion on the Financial Statements and Internal Control over Financial Reporting

financial statements

We have audited the accompanying consolidated balance sheetssheet of Bel Fuse Inc. (a New Jersey corporation) and subsidiaries (the "Company"“Company”) as of December 31, 2020 and 2019,2021, the related consolidated statements of operations, comprehensive income, (loss), stockholders’ equity, and cash flows for each of the two years in the periodyear ended December 31, 2020,2021, and the related notes (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019,2021, and the results of its operations and its cash flows for each of the two years in the periodyear ended December 31, 2020,2021, in conformity with accounting principles generally accepted in the United States of America. Also,

We also have audited, in our opinion,accordance with the standards of the Public Company maintained, in all material respects, effectiveAccounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2020,2021, based on criteria established in the 2013 Internal Control—Integrated Framework (2013) issued by COSO.the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 14, 2022 expressed an unqualified opinion.

Basis for Opinionsopinion

The Company’s management is responsible for theseThese financial statements for maintaining effective internal control over financial reporting, and for its assessmentare the responsibility of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting.Company’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our auditsaudit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

fraud. Our audits of the financial statementsaudit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures tothat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our auditsaudit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill – Connectivity Europe, Power Europe and CUI reporting units

As described further in Notes 1 and 4 to the financial statements, the Company performed a quantitative goodwill impairment assessment as of October 1, 2021, the date of the annual impairment assessment, on three of its reporting units, Connectivity Europe, Power Europe and CUI. These reporting units had goodwill balances totaling $25.8 million as of October 1, 2021. We identified the Company’s quantitative goodwill impairment assessment for the Connectivity Europe, Power Europe and CUI reporting units as a critical audit matter.

The principal considerations for our determination that the quantitative goodwill impairment assessment is a critical audit matter are the significant management estimates and judgments related to forecasts of expected future cash flows used in the estimation of each reporting unit’s fair value. Management’s significant estimates and judgments include the determination of discount rates, revenue growth rates, operating margins, and projected long-term growth rates. This required a high degree of auditor judgment and an increased extent of effort, including professionals with specialized skills and knowledge, in auditing these assumptions made by management.

Our audit procedures related to the quantitative goodwill impairment testing of the Connectivity Europe, Power Europe and CUI reporting units included the following, among others:

   /s/ Grant Thornton LLP

We have served as the Company’s auditor since 2021.

Iselin, New Jersey

March 14, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Bel Fuse Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Bel Fuse Inc. (a New Jersey corporation) and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2021, and our report dated March 14, 2022 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible 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’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit 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 includedrisk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audits provideaudit provides a reasonable basis for our opinions.opinion.

Definition and Limitationslimitations of Internal Controlinternal control over Financial Reporting

financial reporting

A company’s internal control over financial reporting is a process designed 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’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) 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’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters/s/ Grant Thornton LLP

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.Iselin, New Jersey

March14, 2022

Goodwill - Cinch Connectivity Solutions Europe (“CCS”), Power Solutions & Protection Europe (“PSP”), and CUI Power (“CUI”) Reporting Units –Refer to Notes 1 and 4 to the Financial Statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company estimates the fair value of its reporting units using a weighting of fair values derived from income and market approaches, which requires management to make significant estimates and assumptions related to the weighted-average cost of capital (“WACC”), long-term growth rates, forecasts of future revenues and profitability measures, and valuation multiples. Changes in these assumptions could have a significant impact on the fair value. The Company performed their annual impairment assessment of its CCS, PSP and CUI reporting units as of October 1, 2020.  CCS and PSP’s operations are sensitive to changes in the European economy, while CUI’s operations are sensitive to changes in the North America economy.

The goodwillREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

Opinion on the Financial Statements

We have audited the accompanying consolidated balance was $24.0 millionsheet of Bel Fuse Inc. and subsidiaries (the "Company") as of December 31, 2020, the related consolidated statements of which $7.9 million wasoperations, comprehensive income, stockholders’ equity, and cash flows for the period ended December 31, 2020, and the related notes (collectively referred to CCS, $5.2 million was related to PSP, and $10.9 million relating to CUI. The Company determined thatas the fair value of these reporting units exceeded their carrying value. 

Given“financial statements”).  In our opinion, the significant judgments made by management to estimatefinancial statements present fairly, in all material respects, the fair value of its reporting units, performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to WACCs, long-term growth rates, forecasts of future revenues and profitability measures, and valuation multiples, specifically due to the sensitivityfinancial position of the Company’s operations to changes in the global economy, required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to WACCs, long-term growth rates, forecasts of future revenue and profitability measures, and valuation multiples to determine the fair value of the Company’s CCS, PSP and CUI reporting units included the following, among others:

•     We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of CCS, PSP and CUI, such as controls related to management’s selection of the WACCs, long-term growth rates, forecasts of future revenues and profitability measures, selection of guideline public companies, valuation multiples, and application of company specific risk premiums.

•     We evaluated management’s ability to accurately forecast future revenues and profitability measures by comparing actual results to management’s historical forecasts.

•     We evaluated the reasonableness of management’s revenue and profitability forecasts by comparing the forecasts to (1) internal communications to management and the Board of Directors and (2) forecasted information included in Company press releases as well as in analyst and industry reports for the Company and certain of its peer companies.

•     With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, (2) selected WACCs, (3) long-term growth rates and (4) market related assumptions including guideline public companies and valuation multiples by testing the source information underlying the determination of the WACCs, long-term growth rates and market related assumptions and the mathematical accuracy of the calculation.

Indefinite-Lived Intangible Assets – Cinch, Connectivity Solutions and CUI Trademarks —Refer to Notes 1 and 4 to the financial statements

Critical Audit Matter Description

The Company’s evaluation of indefinite-lived intangible assets for impairment involves the comparison of the fair value of each indefinite-lived intangible asset to its carrying value. The Company estimates the fair value of its trademark intangible assets using the relief-from-royalty approach, which requires management to make significant estimates and assumptions related to the WACCs, royalty rates, and long-term growth rates.  Changes in these assumptions could have a significant impact on the fair value.  The Company performed their annual impairment assessment of its trademarks as of October 1, 2020.

The trademark intangible asset balance as of December 31, 2020, was $17.0 million, of which the Cinch Connectivity Solutions trademark was $10.4 million, and the CUI trademark intangible asset was $5 million. The Company determined thatresults of its operations and its cash flows for the fair valueperiod ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of these trademarks exceeded their carrying value.America.

GivenBasis for Opinion

These financial statements are the fair value determinationresponsibility of trademark intangibles requires managementthe Company's management. Our responsibility is to makeexpress an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates and assumptions related to WACCs, royalty rates, and long-term growth rates, performing audit procedures to evaluatemade by management, as well as evaluating the reasonableness of these assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the WACCs, royalty rates, and long-term growth rates for the trademark intangibles included the following, among others:

• We tested the effectiveness of controls over the valuation of trademark intangible assets, including management’s controls over forecasts of projected revenue, and selection of WACCs, royalty rates, long-term growth rates and other valuation assumptions.

• We assessed the reasonableness of management’s forecasts of future revenues by comparing the projections to historical results and certain peer companies.

• With the assistance of our fair value specialists, we evaluated the reasonablenessoverall presentation of the (1) valuation methodology, (2) selected WACCs, (3) royalty rates, and (4) long-term growth rates by testing the source information underlying the determination of the WACCs, royalty rates and long-term growth rates and testing the mathematical accuracy of the calculation.

•financial statements. We evaluated whether the estimated projected revenues and long-term growth rates were consistent with evidence obtained in other areas of the audit.believe that our audit provides a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

New York, New York
March 12, 2021

We have servedbegan serving as the Company's auditor since 1983.  In 2021, we became the predecessor auditor.