UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

(MARK ONE)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended ~~September~~June 30, ~~2017~~2019
or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________ to ____________

Commission File No. 0-11676

_____________________

BEL FUSE INC.
206 Van Vorst Street
Jersey City, NJ 07302
(201) 432-0463

(Address of principal executive offices and zip code)

(~~Registrant's~~Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	Yes [X]	No [ ]

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).	Yes [X]	No [ ]

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

Large accelerated filer [ ]	Accelerated filer [X]	Non-accelerated filer [ ] ~~(Do not check if a smaller reporting company)~~	Smaller reporting company ~~[ ]~~[X]	Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.				[ ]

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

Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Class A Common Stock ($0.10 par value)	BELFA	Nasdaq Global Select Market
Class B Common Stock ($0.10 par value)	BELFB	Nasdaq Global Select Market

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

~~[ ]~~

Yes [ ]

No [X]

Title of Each Class		Number of Shares of Common Stock Outstanding as of ~~November~~August 1, ~~2017~~2019
Class A Common Stock ($0.10 par value)		2,174,912
Class B Common Stock ($0.10 par value)		~~9,858,802~~10,141,602

BEL FUSE INC.

INDEX

			Page
Part I		Financial Information

	Item 1.	Financial Statements (unaudited)	2

		Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2019
		and December 31, ~~2016~~2018 (unaudited)	2

		Condensed Consolidated Statements of Operations for the Three and Six
		~~and Nine~~ Months Ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 (unaudited)	3

		Condensed Consolidated Statements of Comprehensive Income (Loss) for
		the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 (unaudited)	4

		Condensed Consolidated Statements of Stockholders' Equity for the Three
		and Six Months Ended June 30, 2019 and 2018 (unaudited)	5

		Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six
		Months Ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 (unaudited)	57

		Notes to Condensed Consolidated Financial Statements (unaudited)	68 - 1418

	Item 2.	Management's Discussion and Analysis of
		Financial Condition and Results of Operations	1519 - 2125

	Item 3.	Quantitative and Qualitative Disclosures About
		Market Risk	2125

	Item 4.	Controls and Procedures	2125

Part II		Other Information

	Item 1.	Legal Proceedings	2125

	Item 1A.	Risk Factors	21

	~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	2225

	Item 6.	Exhibits	2326

	Signatures		2427

Return to Index

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING INFORMATION

The terms the ~~"Company," "Bel," "we," "us,"~~“Company,” “Bel,” “we,” “us,” and ~~"our"~~“our” as used in this report refer to Bel Fuse Inc. and its consolidated subsidiaries unless otherwise specified.

The ~~Company's~~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 our ~~2016~~2018 Annual Report on Form 10-K. As a result of these and other factors, the Company may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect its business, consolidated financial condition, operating results, and common stock prices. Furthermore, this document and other documents filed by the Company with the Securities and Exchange Commission ~~("SEC"~~(“SEC”) contain certain forward-looking statements under the Private Securities Litigation Reform Act of 1995 ("(“Forward-Looking ~~Statements"~~Statements”) with respect to the business of the Company. Forward-Looking Statements are necessarily subject to risks and uncertainties, many of which are outside our control, that could cause actual results to differ materially from these statements. Forward-Looking Statements can be identified by such words as ~~"anticipates," "believes," "plan," "assumes," "could," "should," "estimates," "expects," "intends," "potential," "seek," "predict," "may," "will"~~“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 are Forward-Looking Statements. These Forward-Looking Statements are subject to certain risks and uncertainties, including those detailed in Item 1A of our ~~2016~~2018 Annual Report on Form 10-K, which could cause actual results to differ materially from these Forward-Looking Statements. The Company undertakes no obligation to publicly release the results of any revisions to these Forward-Looking Statements which may be necessary to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 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.

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PART I. Financial Information

Item 1. Financial Statements (Unaudited)

BEL FUSE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)

	June 30,			December 31,
	2019			2018
ASSETS
Current Assets:
Cash and cash equivalents	$	58,395		$	53,911
Accounts receivable, net of allowance for doubtful accounts of $1,694
and $1,638, respectively		84,248			91,939
Inventories		118,209			120,068
Unbilled receivables		11,470			15,799
Other current assets		9,090			8,792
Total current assets		281,412			290,509

Property, plant and equipment, net		42,344			43,932
Right-of-use assets		17,885			-
Intangible assets, net		59,476			62,689
Goodwill		20,017			19,817
Deferred income taxes		1,194			496
Other assets		27,347			26,081
Total assets	$	449,675		$	443,524

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	42,764		$	56,171
Accrued expenses		30,092			32,290
Current portion of long-term debt		3,997			2,508
Operating lease liability, current		6,238			-
Other current liabilities		4,060			15,061
Total current liabilities		87,151			106,030

Long-term Liabilities:
Long-term debt		108,960			111,705
Operating lease liability, long-term		12,121			-
Liability for uncertain tax positions		28,379			27,553
Minimum pension obligation and unfunded pension liability		19,126			18,683
Deferred income taxes		1,061			1,161
Other liabilities		12,601			1,922
Total liabilities		269,399			267,054

Commitments and contingencies

Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued		-			-
Class A common stock, par value $.10 per share, 10,000,000 shares
authorized; 2,174,912 shares outstanding at each date (net of
1,072,769 treasury shares)		217			217
Class B common stock, par value $.10 per share, 30,000,000 shares
authorized; shares outstanding: 10,141,602 in 2019 and 10,092,352
in 2018 (net of 3,218,307 treasury shares)		1,014			1,009
Additional paid-in capital		32,983			31,387
Retained earnings		171,583			168,695
Accumulated other comprehensive loss		(25,521	)		(24,838	)
Total stockholders' equity		180,276			176,470
Total liabilities and stockholders' equity	$	449,675		$	443,524
See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)
(unaudited)

   September 30, December 31,
2017 2016
ASSETS
Current Assets:
Cash and cash equivalents $ 62,106 $ 73,411
Accounts receivable, net of allowance for doubtful accounts of $1,689
  in 2017 and $1,781 in 2016 83,643 74,416
Inventories 104,522 98,871
Other current assets 9,231 8,744
    Total current assets 259,502 255,442

Property, plant and equipment, net 43,664 48,755
Intangible assets, net 70,886 74,828
Goodwill 20,028 17,951
Deferred income taxes 6,511 3,410
Other assets 27,897 26,354
    Total assets $ 428,488 $ 426,740

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 45,493 $ 47,235
Accrued expenses 29,816 31,549
Current portion of long-term debt 15,551 11,395
Other current liabilities 6,751 2,148
    Total current liabilities 97,611 92,327

Long-term Liabilities:
Long-term debt 105,479 129,850
Liability for uncertain tax positions 27,540 27,458
Minimum pension obligation and unfunded pension liability 17,770 16,900
Deferred income taxes 1,670 1,460
Other liabilities 323 311
    Total liabilities 250,393 268,306

Commitments and contingencies

Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued - -
Class A common stock, par value $.10 per share, 10,000,000 shares
    authorized; 2,174,912 shares outstanding at each date (net of
    1,072,769 treasury shares) 217 217
Class B common stock, par value $.10 per share, 30,000,000 shares
     authorized; shares outstanding: 9,860,802 in 2017 and 9,851,652
     in 2016 (net of 3,218,307 treasury shares) 986 985
Additional paid-in capital 27,856 27,242
Retained earnings 169,402 161,287
Accumulated other comprehensive loss (20,366 ) (31,297 )
    Total stockholders' equity 178,095 158,434
    Total liabilities and stockholders' equity $ 428,488 $ 426,740

See accompanying notes to unaudited condensed consolidated financial statements.

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BEL FUSE INC. AND SUBSIDIARIES	BEL FUSE INC. AND SUBSIDIARIES													BEL FUSE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS													CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)	(in thousands, except per share data)													(in thousands, except per share data)
(unaudited)	(unaudited)													(unaudited)

		Three Months Ended						Nine Months Ended							Three Months Ended						Six Months Ended
		September 30,						September 30,							June 30,						June 30,
		2017			2016			2017			2016				2019			2018			2019			2018

Net sales		$	126,386		$	128,809		$	371,671		$	381,614			$	127,416		$	140,710		$	252,805		$	258,961
Cost of sales			98,769			102,234			291,729			306,273				107,532			111,696			209,361			208,814
Gross profit			27,617			26,575			79,942			75,341				19,884			29,014			43,444			50,147

Selling, general and administrative expenses			20,903			19,385			63,858			55,006				18,764			18,306			38,564			38,998
Impairment of goodwill and other intangible assets			-			-			-			105,972
Loss (gain) on disposal of property, plant and equipment			182			(2,099	)		283			(2,083	)
Restructuring charges (credits)			-			(20	)		171			581
Income (loss) from operations			6,532			9,309			15,630			(84,135	)
Gain on sale of property																(4,257	)		-			(4,257	)		-
Restructuring charges																424			41			1,370			45
Income from operations																4,953			10,667			7,767			11,104

Interest expense			(1,466	)		(1,538	)		(4,476	)		(5,243	)			(1,381	)		(1,349	)		(2,820	)		(2,527	)
Interest income and other, net			18			243			65			466				(184	)		(285	)		(389	)		(521	)
Earnings (loss) before provision for (benefit from) income taxes			5,084			8,014			11,219			(88,912	)
Earnings before provision for income taxes																3,388			9,033			4,558			8,056

Provision for (benefit from) income taxes			60			(1,696	)		2,329			(20,701	)
Net earnings (loss) available to common stockholders		$	5,024		$	9,710		$	8,890		$	(68,211	)
Provision for income taxes																421			2,399			460			2,724
Net earnings available to common stockholders															$	2,967		$	6,634		$	4,098		$	5,332


Net earnings (loss) per common share:
Net earnings per common share:
Class A common share - basic and diluted		$	0.40		$	0.78		$	0.69		$	(5.52	)		$	0.23		$	0.52		$	0.31		$	0.41
Class B common share - basic and diluted		$	0.42		$	0.82		$	0.75		$	(5.78	)		$	0.24		$	0.56		$	0.34		$	0.45

Weighted-average number of shares outstanding:
Class A common share - basic and diluted			2,175			2,175			2,175			2,175				2,175			2,175			2,175			2,175
Class B common share - basic and diluted			9,864			9,760			9,856			9,730				10,112			9,844			10,100			9,850

Dividends paid per common share:
Class A common share		$	0.06		$	0.06		$	0.18		$	0.18
Class B common share		$	0.07		$	0.07		$	0.21		$	0.21


See accompanying notes to unaudited condensed consolidated financial statements.	See accompanying notes to unaudited condensed consolidated financial statements.													See accompanying notes to unaudited condensed consolidated financial statements.

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BEL FUSE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)
(unaudited)

   Three Months Ended Nine Months Ended
   September 30, September 30,
2017 2016 2017 2016

Net earnings (loss) available to common stockholders $ 5,024 $ 9,710 $ 8,890 $ (68,211 )

Other comprehensive income (loss):
Currency translation adjustment, net of taxes of $101 in the three months
ended September 30, 2017, $(111) in the three months ended September 30, 2016, $285 in
   the nine months ended September 30, 2017 and $(456) in the nine months ended
   September 30, 2016 3,476 (156 ) 11,047 (3,199 )
Unrealized gains (losses) on marketable securities arising during the period,
net of taxes of $(21) in the three months ended September 30, 2017, $15 in the
three months ended September 30, 2016, $(191) in the nine months ended September 30,
2017 and $74 in the nine months ended September 30, 2016 (33 ) 14 (300 ) 112
Change in unfunded SERP liability, net of taxes of $32 in the three months
ended September 30, 2017, $32 in the three months ended September 30, 2016, $97 in
the nine months ended September 30, 2017 and $136 in the nine months ended
September 30, 2016 61 65 184 566
Other comprehensive income (loss) 3,504 (77 ) 10,931 (2,521 )

Comprehensive income (loss) $ 8,528 $ 9,633 $ 19,821 $ (70,732 )

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018

Net earnings available to common stockholders	$	2,967		$	6,634		$	4,098		$	5,332

Other comprehensive income (loss):
Currency translation adjustment, net of taxes of $16 in the three months
ended June 30, 2019, $37 in the three months ended June 30, 2018, ($1) in
the six months ended June 30, 2019 and $12 in the six months ended
June 30, 2018		(834	)		(7,448	)		(294	)		(3,431	)
Unrealized losses on marketable securities arising during the period,
net of taxes of $0 in the three months ended June 30, 2019, $0 in the
three months ended June 30, 2018, $0 in the six months ended June 30,
2019 and ($20) in the six months ended June 30, 2018		-			-			-			(31	)
Change in unfunded SERP liability, net of taxes of $11 in the three months
ended June 30, 2019, $25 in the three months ended June 30, 2018, $22 in
the six months ended June 30, 2019 and $51 in the six months ended
June 30, 2018		37			85			74			171
Other comprehensive loss		(797	)		(7,363	)		(220	)		(3,291	)

Comprehensive income (loss)	$	2,170		$	(729	)	$	3,878		$	2,041


See accompanying notes to unaudited condensed consolidated financial statements.

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BEL FUSE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)
(unaudited)
   Nine Months Ended
   September 30,
2017 2016

Cash flows from operating activities:
Net earnings (loss) $ 8,890 $ (68,211 )
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation and amortization 15,712 16,370
Stock-based compensation 2,310 2,039
Impairment of goodwill and other intangible assets - 105,972
Amortization of deferred financing costs 993 1,467
Deferred income taxes (3,072 ) (8,115 )
Net unrealized losses (gains) on foreign currency revaluation 2,679 (366 )
Loss (gain) on sale/disposal of property, plant and equipment 283 (2,025 )
Other, net 1,265 364
Changes in operating assets and liabilities:
Accounts receivable, net (7,913 ) 1,785
Inventories (3,306 ) 1,312
Account payable (3,563 ) (2,730 )
Accrued expenses (2,031 ) (3,508 )
Other operating assets/liabilities, net 1,949 (17,564 )
      Net cash provided by operating activities 14,196 26,790

Cash flows from investing activities:
Purchases of property, plant and equipment (3,756 ) (5,590 )
Proceeds from disposal/sale of property, plant and equipment 10 2,129
Purchase of company-owned life insurance (COLI) - (2,164 )
Sale of SERP investments - 2,164
       Net cash used in investing activities (3,746 ) (3,461 )

Cash flows from financing activities:
Repayments of long-term debt (25,208 ) (37,577 )
Dividends paid to common stockholders (2,347 ) (2,314 )
Payment of deferred financing costs - (718 )
Borrowings under revolving credit line 6,000 -
Repayments of revolving credit line (2,000 ) -
Reduction in notes payable (55 ) (115 )
       Net cash used in financing activities (23,610 ) (40,724 )

Effect of exchange rate changes on cash and cash equivalents 1,855 (630 )

Net decrease in cash and cash equivalents (11,305 ) (18,025 )
Cash and cash equivalents - beginning of period 73,411 85,040
Cash and cash equivalents - end of period $ 62,106 $ 67,015

Supplementary information:
Cash paid during the period for:
    Income tax payments, net of refunds received $ 1,688 $ 1,459
    Interest payments $ 3,471 $ 3,776

See accompanying notes to unaudited condensed consolidated financial statements.

BEL FUSE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)


							Accumulated
							Other			Class A		Class B			Additional
				Retained			Comprehensive			Common		Common			Paid-In
Three Months Ended June 30, 2019	Total			Earnings			(Loss) Income			Stock		Stock			Capital

Balance at March 31, 2019	$	178,153		$	169,451		$	(24,724	)	$	217	$	1,008		$	32,201
Net earnings		2,967			2,967			-			-		-			-
Dividends declared:
Class A Common Stock, $0.06/share		(131	)		(131	)		-			-		-			-
Class B Common Stock, $0.07/share		(704	)		(704	)		-			-		-			-
Issuance of restricted common stock		-			-			-			-		7			(7	)
Forfeiture of restricted common stock		-			-			-			-		(1	)		1
Foreign currency translation adjustment, net of taxes of $16		(834	)		-			(834	)		-		-			-
Stock-based compensation expense		788			-			-			-		-			788
Change in unfunded SERP liability, net of taxes of ($11)		37			-			37			-		-			-

Balance at June 30, 2019		180,276			171,583			(25,521	)		217		1,014			32,983


							Accumulated
							Other			Class A		Class B			Additional
				Retained			Comprehensive			Common		Common			Paid-In
Three Months Ended June 30, 2018	Total			Earnings			(Loss) Income			Stock		Stock			Capital


Balance at March 31, 2018	$	164,175		$	149,171		$	(15,553	)	$	217	$	985		$	29,355
Net loss		6,634			6,634			-			-		-			-
Dividends declared:
Class A Common Stock, $0.06/share		(131	)		(131	)		-			-		-			-
Class B Common Stock, $0.07/share		(689	)		(689	)		-			-		-			-
Forfeiture of restricted common stock		-			-			-			-		(1	)		1
Foreign currency translation adjustment, net of taxes of $37		(7,448	)		-			(7,448	)		-		-			-
Stock-based compensation expense		671			-			-			-		-			671
Change in unfunded SERP liability, net of taxes of ($25)		85			-			85			-		-			-

Balance at June 30, 2018	$	163,297		$	154,985		$	(22,916	)	$	217	$	984		$	30,027

See accompanying notes to unaudited condensed consolidated financial statements.

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BEL FUSE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)

							Accumulated
							Other			Class A		Class B			Additional
				Retained			Comprehensive			Common		Common			Paid-In
Six Months Ended June 30, 2019	Total			Earnings			(Loss) Income			Stock		Stock			Capital

Balance at December 31, 2018	$	176,470		$	168,695		$	(24,838	)	$	217	$	1,009		$	31,387
Net earnings		4,098			4,098			-			-		-			-
Dividends declared:
Class A Common Stock, $0.12/share		(261	)		(261	)		-			-		-			-
Class B Common Stock, $0.14/share		(1,412	)		(1,412	)		-			-		-			-
Issuance of restricted common stock		-			-			-			-		7			(7	)
Forfeiture of restricted common stock		-			-			-			-		(2	)		2
Foreign currency translation adjustment, net of taxes of ($1)		(294	)		-			(294	)		-		-			-
Stock-based compensation expense		1,601			-			-			-		-			1,601
Change in unfunded SERP liability, net of taxes of ($22)		74			-			74			-		-			-
Effect of adoption of ASU 2018-02 (Topic 220)		-			463			(463	)		-		-			-

Balance at June 30, 2019		180,276			171,583			(25,521	)		217		1,014			32,983


							Accumulated
							Other			Class A		Class B			Additional
				Retained			Comprehensive			Common		Common			Paid-In
Six Months Ended June 30, 2018	Total			Earnings			(Loss) Income			Stock		Stock			Capital


Balance at December 31, 2017	$	157,960		$	147,807		$	(19,625	)	$	217	$	986		$	28,575
Net earnings		5,332			5,332			-			-		-			-
Dividends declared:
Class A Common Stock, $0.12/share		(261	)		(261	)		-			-		-			-
Class B Common Stock, $0.14/share		(1,390	)		(1,390	)		-			-		-			-
Forfeiture of restricted common stock		-			-			-			-		(2	)		2
Foreign currency translation adjustment, net of taxes of $12		(3,431	)		-			(3,431	)		-		-			-
Unrealized holding losses on marketable securities
arising during the year, net of taxes of $20		(31	)		-			(31	)		-		-			-
Stock-based compensation expense		1,450			-			-			-		-			1,450
Change in unfunded SERP liability, net of taxes of ($51)		171			-			171			-		-			-
Effect of adoption of ASU 2014-09 (Topic 606)		3,497			3,497			-			-		-			-

Balance at June 30, 2018	$	163,297		$	154,985		$	(22,916	)	$	217	$	984		$	30,027

See accompanying notes to unaudited condensed consolidated financial statements.

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BEL FUSE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
	Six Months Ended
	June 30,
	2019			2018

Cash flows from operating activities:
Net earnings	$	4,098		$	5,332
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization		8,216			9,320
Stock-based compensation		1,601			1,450
Amortization of deferred financing costs		232			294
Deferred income taxes		(1,002	)		1,780
Net unrealized losses on foreign currency revaluation		123			(871	)
Gain on sale of property		(4,257	)		-
Other, net		1,316			613
Changes in operating assets and liabilities:
Accounts receivable, net		7,734			(10,541	)
Unbilled receivables		4,329			(1,051	)
Inventories		1,799			(10,629	)
Account payable		(13,350	)		12,082
Accrued expenses		(2,052	)		(1,251	)
Other operating assets/liabilities, net		(1,032	)		(5,286	)
Net cash provided by operating activities		7,755			1,242

Cash flows from investing activities:
Purchases of property, plant and equipment		(5,329	)		(5,870	)
Proceeds from disposal/sale of property, plant and equipment		5,784			53
Net cash provided by (used in) investing activities		455			(5,817	)

Cash flows from financing activities:
Dividends paid to common stockholders		(1,600	)		(1,589	)
Borrowings under revolving credit line		12,000			-
Repayments of revolving credit line		(12,000	)		-
Repayments of long-term debt		(1,487	)		(7,525	)
Net cash used in financing activities		(3,087	)		(9,114	)

Effect of exchange rate changes on cash and cash equivalents		(639	)		65

Net increase (decrease) in cash and cash equivalents		4,484			(13,624	)
Cash and cash equivalents - beginning of period		53,911			69,354
Cash and cash equivalents - end of period	$	58,395		$	55,730


Supplementary information:
Cash paid during the period for:
Income taxes, net of refunds received	$	2,805		$	5,073
Interest payment	$	2,533		$	2,260

See accompanying notes to unaudited condensed consolidated financial statements.

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BEL FUSE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated balance sheets, statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the periods presented herein have been prepared by the Company and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows for all periods presented have been made. The results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 are not necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Bel Fuse Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018.

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America ("(“U.S. ~~GAAP"~~GAAP”) have been condensed or omitted from the following condensed consolidated financial statements pursuant to the rules and regulations, including the interim reporting requirements, of the ~~SEC.~~U.S. Securities and Exchange Commission (“SEC”). The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

The ~~Company's~~Company’s significant accounting policies are summarized in Note 1 of the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2018. There were no significant changes to these accounting policies during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2019, except as discussed in “Recently Adopted Accounting Standards” below.

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

Recently Adopted Accounting Standards

In ~~March 2016, the FASB~~ ~~issued ASU 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~, to simplify the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities and classification on the statements of cash flows. Under the new guidance, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit on the statements of operations. Under current GAAP, excess tax benefits are recognized in additional paid-in capital while tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or on the statements of operations. The Company adopted this guidance effective January 1, 2017. Certain provisions required retrospective/modified retrospective transition while others were applied prospectively. In accordance with this guidance, the Company reclassified $1.7 million of cumulative excess tax benefits from additional paid-in capital to retained earnings within the equity section of the condensed consolidated balance sheet as of January 1, 2017. The Company has elected to continue its method of estimating forfeitures in determining its stock-based compensation expense throughout the year. The adoption of this guidance did not have a material impact on the Company's condensed consolidated financial statements.

~~In July 2015, the FASB issued ASU 2015-11,~~ ~~Simplifying the Measurement of Inventory~~, which requires entities to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The update is effective for fiscal years beginning after December 15, 2016, and interim periods therein. We adopted this guidance on January 1, 2017. The adoption of this guidance did not have a material impact on the Company's condensed consolidated financial statements.

~~In August 2014, the FASB issued ASU 2014-15,~~ ~~Presentation of Financial Statements – Going Concern (Subtopic - 205-40)~~ ("ASU 2014-15"). This ASU requires management to evaluate whether it is probable that known conditions or events, considered in the aggregate, would raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued. If such conditions or events are identified, the standard requires management's mitigation plans to alleviate the doubt or a statement of the substantial doubt about the entity's ability to continue as a going concern to be disclosed in the financial statements. The amendments in ASU 2014-15 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. We adopted this amendment on December 31, 2016. The adoption of ASU 2014-15 did not have a material impact on the financial statements.

~~Accounting Standards Issued But Not Yet Adopted~~

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. Current U.S. GAAP prohibits the recognition of current and deferred income taxes for intra-entity asset transfer until the asset has been sold to an~~ outside party. The new guidance eliminates the exception and requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This accounting guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. This guidance is not expected to have a material impact on our condensed consolidated financial statements.

~~Return to Index~~

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

The ~~updated guidance requires a~~Company adopted ASU 2016-02 as amended effective January 1, 2019 using the modified retrospective ~~adoption.~~approach. In connection with the adoption, we elected to utilize the Comparatives Under 840 Option whereby the Company will continue to present prior period financial statements and disclosures under ASC 840. In addition, we elected the transition package of three practical expedients permitted within the standard, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification and initial direct costs. Further, we elected a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e. leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets. We ~~are currently~~implemented a new lease system to facilitate the requirements of the new standard and completed the necessary changes to our accounting policies, processes, disclosures and internal control over financial reporting.

Adoption of the new standard resulted in the ~~process~~recording of ~~evaluating this new~~right-of-use assets in the amount of $20.7 million and lease liabilities related to our operating leases in the amount of $21.0 million on our consolidated balance sheet as of January 1, 2019. The standard ~~update.~~did not materially affect the Company’s consolidated net earnings or have any impact on cash flows. See Note 12, Leases, for Topic 842 disclosures in connection with the adoption of ASU 2016-02.

In ~~January 2016,~~February 2018, the FASB issued ASU ~~2016-01,~~2018-02, ~~Financial Instruments-Overall (Subtopic 825-10)~~Income Statement – Reporting Comprehensive Income (Topic 220): ~~Recognition and Measurement~~Reclassification of ~~Financial Assets and Financial Liabilities~~Certain Tax Effects from Accumulated Other Comprehensive Income. This guidance ~~primarily affects~~allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the ~~accounting for equity investments, financial liabilities under the fair value option,~~U.S. Tax Cuts and ~~the presentation and disclosure requirements for financial instruments. Under the new~~Jobs Act, which was enacted on December 22, 2017. This guidance entities will be required to measure certain equity investments at fair value and recognize any changes in fair value in net earnings, unless the investments qualify for the new practicability exception. The new standard is effective for all entities for fiscal years ~~including~~beginning after December 15, 2018, and interim periods within those fiscal years and should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the U.S. Tax Cuts and Jobs Act is recognized. This guidance was adopted by the Company effective January 1, 2019. In accordance with this guidance, the Company reclassified $0.5 million of stranded tax effects from accumulated other comprehensive income to retained earnings within the equity section of the condensed consolidated balance sheet as of January 1, 2019. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

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In May 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. This guidance will better align the treatment of share-based payments to nonemployees with the requirements for such share-based payments granted to employees. This guidance is effective for all public entities for fiscal years beginning after December 15, ~~2017. We are currently evaluating~~2018, including interim periods within that year. This guidance was adopted by the Company effective January 1, 2019 and did not have a material impact ~~of adopting this new standard.~~on the Company’s condensed consolidated financial statements.

Accounting Standards Issued But Not Yet Adopted

In ~~May 2014,~~June 2016, the FASB issued ASU No. ~~2014-09,~~2016-13, ~~Revenue from Contracts with Customers~~Financial Instruments – Credit Losses (Topic ~~606)~~ ("326): Measurement of Credit Losses on Financial Instruments (“ASU ~~2014-09"~~2016-13”)~~, which amends~~. The new guidance will broaden the ~~existing accounting standards for revenue recognition. ASU 2014-09~~information that an entity must consider in developing its expected credit loss estimates related to its financial instruments and adds to U.S. GAAP an impairment model that is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. Subsequently, the FASB issued several other updates related to revenue recognition (collectively with ASU 2014-09, the "new revenue standards").

expected losses rather than incurred losses. The ~~Company~~amendment is still in the process of evaluating the financial statement impacts of the new revenue standards. While we have not yet quantified the related impacts, we have completed our initial assessment and anticipate changes with respect to the timing of revenue recognition for certain custom products that have no alternative use for which the Company is entitled to payment as production progresses, as well as the timing of revenue recognition in arrangements for which the customer takes the Company's products from a facility holding consignment inventory. The Company may also see a change related to estimation of variable consideration, among other areas. The Company is also in the process of reviewing its current systems, internal controls and processes, and evaluating any necessary changes to support the implementation of the new revenue standards, which we expect to implement by the end of 2017.

~~The new revenue standards become~~currently effective for the Company in the first quarter of fiscal year 2018. We have elected to use the modified retrospective approach to adopting the new revenue standards where we recognize the cumulative effect of initially applying the new revenue standards as an adjustment to the opening balance of retained earnings.

~~In preparation~~public entities for adoption of the new guidance, we have reviewed representative samples of contracts and other forms of agreements with customers globally and have evaluated the provisions under the five-step model specified by the new revenue standards. In addition, we continue to monitor additional interpretive guidance related to the new revenue standards as it becomes available, as well as comparing our conclusions on specific interpretative issues to other peers in our industry, to the extent that such information is available.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~ ("ASU 2017-01"), to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. ASU 2017-01 provides a framework that gives entities a basis for making reasonable judgments about whether a transaction involves an asset or a business. The Company is required to adopt ASU 2017-01 forannual reporting periods beginning after December 15, ~~2017, including interim periods, and~~2019, with early adoption permitted. Management is currently assessing the ~~guidance~~impact of ASU 2016-13, but it is not expected to ~~be applied~~have a material impact on ~~a prospective basis. Early application is permitted for transactions for which~~ the ~~acquisition date occurs before the issuance date or effective date of the amendments, only when the transaction has not been reported in~~Company’s condensed consolidated financial ~~statements that have been issued.~~statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("“ASU ~~2017-04"~~2017-04”). ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Early adoption is permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is required to adopt ASU 2017-04 for its annual or any interim goodwill impairment tests for annual periods beginning after December 15, 2019, and the guidance is to be applied on a prospective basis.

~~Return to Index~~

In ~~March 2017,~~August 2018, the FASB issued ASU ~~2017-07,~~2018-13, ~~Compensation~~Fair Value Measurement (Topic 820): Disclosure Framework – ~~Retirement Benefits (Topic 715)~~Changes to the Disclosure Requirements for Fair Value Measurement. The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted for any removed or modified disclosures. The Company is currently assessing the timing and impact of adopting the updated provisions.

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): ~~Improving~~Disclosure Framework – Changes to the ~~Presentation of Net Periodic Pension Cost and Net Periodic Postretirement~~Disclosure Requirements for Defined Benefit ~~Cost~~ ("Plans (“ASU ~~2017-07"~~2018-14”). This guidance ~~requires~~removes certain disclosures that ~~an employer disaggregate the service~~are not considered cost ~~component from the other components of net benefit cost.~~beneficial, clarifies certain required disclosures and added additional disclosures. The standard is effective for fiscal years ending after December 15, 2020. The amendments in ASU 2017-07 also provides explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost2018-14 would need to be ~~eligible~~applied on a retrospective basis. The Company is currently assessing the impact the new guidance will have on its disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for ~~capitalization.~~Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Cost. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after December 15, 2017, including interim periods. Certain of the provisions within this guidance will be applied on a retrospective basis, while other aspects will be applied on a prospective basis, in accordance with ASU 2017-07.

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09")~~. This update provides guidance about which changes to the terms or conditions of a share-based payment require an entity to apply modification accounting in Topic 718. This guidance is effective for annual periods,2019, and ~~interim periods within those annual periods, beginning after December 15, 2017. Early~~early adoption is permitted. The ~~amendments in~~Company is currently evaluating the impacts that adoption of this ~~update~~ASU will ~~be applied prospectively~~have on its consolidated financial statements.

Return to ~~any awards modified on or after the adoption date.~~Index

REVENUE

The following table provides information about disaggregated revenue by product group and sales channel, and includes a reconciliation of the disaggregated revenue to our reportable segments:

	Three Months Ended June 30, 2019								Six Months Ended June 30, 2019
	North								North
	America		Asia		Europe		Consolidated		America		Asia		Europe		Consolidated

By Product Group:
Connectivity solutions	$	31,297	$	3,027	$	8,212	$	42,536	$	63,418	$	6,502	$	16,977	$	86,897
Magnetic solutions		9,638		29,168		2,046		40,852		18,583		56,258		4,267		79,108
Power solutions and protection		26,131		7,129		10,768		44,028		49,652		13,841		23,307		86,800
	$	67,066	$	39,324	$	21,026	$	127,416	$	131,653	$	76,601	$	44,551	$	252,805

By Sales Channel:
Direct to customer	$	45,442	$	32,707	$	13,293	$	91,442	$	89,323	$	63,835	$	29,506	$	182,664
Through distribution		21,624		6,617		7,733		35,974		42,330		12,766		15,045		70,141
	$	67,066	$	39,324	$	21,026	$	127,416	$	131,653	$	76,601	$	44,551	$	252,805


	Three Months Ended June 30, 2018								Six Months Ended June 30, 2018
	North								North
	America		Asia		Europe		Consolidated		America		Asia		Europe		Consolidated

By Product Group:
Connectivity solutions	$	34,834	$	4,820	$	9,274	$	48,928	$	65,878	$	8,241	$	17,727	$	91,846
Magnetic solutions		10,158		32,844		2,546		45,548		18,209		60,669		4,898		83,776
Power solutions and protection		26,248		8,250		11,736		46,234		46,609		15,625		21,105		83,339
	$	71,240	$	45,914	$	23,556	$	140,710	$	130,696	$	84,535	$	43,730	$	258,961

By Sales Channel:
Direct to customer	$	44,055	$	39,402	$	15,990	$	99,447	$	81,951	$	72,330	$	30,183	$	184,464
Through distribution		27,185		6,512		7,566		41,263		48,745		12,205		13,547		74,497
	$	71,240	$	45,914	$	23,556	$	140,710	$	130,696	$	84,535	$	43,730	$	258,961

The balances of the Company’s contract assets and contract liabilities at June 30, 2019 and December 31, 2018 are as follows:

	June 30,		December 31,
	2019		2018

Contract assets - current (unbilled receivable)	$	11,470	$	15,799
Contract liabilities - current (deferred revenue)	$	1,763	$	1,036

The change in balance of our unbilled receivables from December 31, 2018 to June 30, 2019 primarily relates to a timing difference between the Company’s performance (i.e. when our product is shipped to a customer-controlled hub) and the point at which the Company can invoice the customer per the terms of the customer contract (i.e. when the customer pulls our product from the customer-controlled hub).

The aggregate amount of transaction price allocated to remaining performance obligations that have not been satisfied as of June 30, 2019 related to contracts that exceed one year in duration amounted to $14.3 million, with expected contract expiration dates that range from 2020 - 2025. It is expected that 21% of this aggregate amount will be recognized in 2020, 54% will be recognized in 2021 and the remainder will be recognized in years beyond 2021.

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3.	EARNINGS ~~(LOSS)~~ PER SHARE

The following table sets forth the calculation of basic and diluted net earnings ~~(loss)~~ per common share under the two-class method for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016:~~2018:

   Three Months Ended Nine Months Ended
   September 30, September 30,
2017 2016 2017 2016

Numerator:
Net earnings (loss) $ 5,024 $ 9,710 $ 8,890 $ (68,211 )
Less dividends declared:
     Class A 131 131 392 392
     Class B 691 683 2,079 2,044
Undistributed earnings (loss) $ 4,202 $ 8,896 $ 6,419 $ (70,647 )

Undistributed earnings (loss) allocation - basic and diluted:
     Class A undistributed earnings (loss) $ 729 $ 1,557 $ 1,115 $ (12,400 )
     Class B undistributed earnings (loss) 3,473 7,339 5,304 (58,247 )
     Total undistributed earnings (loss) $ 4,202 $ 8,896 $ 6,419 $ (70,647 )

Net earnings (loss) allocation - basic and diluted:
     Class A net earnings (loss) $ 860 $ 1,688 $ 1,507 $ (12,008 )
     Class B net earnings (loss) 4,164 8,022 7,383 (56,203 )
     Net earnings (loss) $ 5,024 $ 9,710 $ 8,890 $ (68,211 )

Denominator:
Weighted-average shares outstanding:
     Class A - basic and diluted 2,175 2,175 2,175 2,175
     Class B - basic and diluted 9,864 9,760 9,856 9,730

Net earnings (loss) per share:
     Class A - basic and diluted $ 0.40 $ 0.78 $ 0.69 $ (5.52 )
     Class B - basic and diluted $ 0.42 $ 0.82 $ 0.75 $ (5.78 )

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018

Numerator:
Net earnings	$	2,967	$	6,634	$	4,098	$	5,332
Less dividends declared:
Class A		131		131		261		261
Class B		704		689		1,412		1,390
Undistributed earnings	$	2,132	$	5,814	$	2,425	$	3,681

Undistributed earnings allocation - basic and diluted:
Class A undistributed earnings	$	363	$	1,010	$	412	$	640
Class B undistributed earnings		1,769		4,804		2,013		3,041
Total undistributed earnings	$	2,132	$	5,814	$	2,425	$	3,681

Net earnings allocation - basic and diluted:
Class A net earnings	$	494	$	1,141	$	673	$	901
Class B net earnings		2,473		5,493		3,425		4,431
Net earnings	$	2,967	$	6,634	$	4,098	$	5,332

Denominator:
Weighted-average shares outstanding:
Class A - basic and diluted		2,175		2,175		2,175		2,175
Class B - basic and diluted		10,112		9,844		10,100		9,850

Net earnings per share:
Class A - basic and diluted	$	0.23	$	0.52	$	0.31	$	0.41
Class B - basic and diluted	$	0.24	$	0.56	$	0.34	$	0.45

3.4. FAIR VALUE MEASUREMENTS

Fair value is defined as an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. Entities are required to use a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

~~Return to Index~~

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

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

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

As of ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016, the Company held certain financial assets that are measured at fair value on a recurring basis. These~~2018, our available-for-sale securities primarily consisted of ~~securities that are among the Company's~~ investments held in a rabbi trust which are intended to fund the ~~Company's~~Company’s Supplemental Executive Retirement Plan ~~("SERP"~~(“SERP”) obligations. ~~The~~These securities that are held in the rabbi trust are categorized as available-for-sale securities and are included as other assets in the accompanying condensed consolidated balance sheets at September 30, 2017 and December 31, 2016. The gross unrealized gains associated with the investment securities held in the rabbi trust were $0.2 million and $0.7 million at September 30, 2017 and December 31, 2016, respectively. Such unrealized gains are included, net of tax, in accumulated other comprehensive loss.

~~As of September 30, 2017 and December 31, 2016, our available-for-sale securities, which primarily consist of investments held in a rabbi trust of $1.5 million and $1.7 million, respectively,~~ are measured at fair value using quoted prices in active markets for identical assets (Level 1) ~~inputs.~~inputs and amounted to $1.3 million at June 30, 2019 and $1.4 million at December 31, 2018. The Company does not have any financial assets measured at fair value on a recurring basis categorized as Level 3, and there were no transfers in or out of Level 1, Level 2 or Level 3 during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 or ~~September~~June 30, ~~2016.~~2018. There were no changes to the ~~Company's~~Company’s valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2019 or June 30, 2018.

There were no financial assets accounted for at fair value on a nonrecurring basis as of ~~September~~June 30, ~~2017~~2019 or December 31, ~~2016.~~2018.

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The Company has other financial instruments, such as cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued expenses, ~~and notes payable,~~ which are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature. The fair value of the ~~Company's~~Company’s long-term debt is estimated using a discounted cash flow method based on interest rates that are currently available for debt issuances with similar terms and maturities. At ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, the estimated fair value of total debt was ~~$122.7~~$118.5 million and ~~$144.3~~$117.9 million, respectively, compared to a carrying amount of ~~$121.0~~$113.0 million and ~~$141.2~~$114.2 million, respectively. The Company did not have any other financial liabilities within the scope of the fair value disclosure requirements as of ~~September~~June 30, ~~2017.~~2019.

Nonfinancial assets and liabilities, such as goodwill, indefinite-lived intangible assets and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment upon the occurrence of a triggering event or in the case of goodwill, on at least an annual basis. During the first quarter of 2016, management determined that sufficient indicators of potential impairment existed to require an interim goodwill impairment analysis for all of the Company's reporting units. These indicators included the recent business performance of those reporting units, combined with the long-term market conditions and business trends within the reporting units. As a result, the Company recorded non-cash goodwill and other intangible assets impairment charges totaling $106.0 million during the first half of 2016. There were no triggering events that occurred during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 that would warrant interim impairment testing.

4.5. INVENTORIES

The components of inventories are as follows:

September 30, December 31,
2017 2016
Raw materials $ 43,008 $ 43,376
Work in progress 19,356 18,008
Finished goods 42,158 37,487
Inventories $ 104,522 $ 98,871

~~Return to Index~~

	June 30,		December 31,
	2019		2018
Raw materials	$	53,251	$	63,348
Work in progress		28,548		21,441
Finished goods		36,410		35,279
Inventories	$	118,209	$	120,068

5.6.	PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	September 30,			December 31,			June 30,			December 31,
	2017			2016			2019			2018
Land	$	2,256		$	2,234		$	1,433		$	2,251
Buildings and improvements		30,867			30,061			29,319			30,119
Machinery and equipment		117,523			113,780			129,386			126,747
Construction in progress		1,593			3,029			5,516			4,687
		152,239			149,104			165,654			163,804
Accumulated depreciation		(108,575	)		(100,349	)		(123,310	)		(119,872	)
Property, plant and equipment, net	$	43,664		$	48,755		$	42,344		$	43,932

Depreciation expense for the three months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 was ~~$3.6~~$2.5 million and ~~$3.7~~$2.9 million, respectively. Depreciation expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 was ~~$10.6~~$5.0 million and ~~$11.1~~$6.1 million, respectively. Depreciation expense related to our manufacturing facilities and equipment is included in cost of sales and depreciation expense associated with administrative facilities and office equipment is included in selling, general and administrative expense within the accompanying condensed consolidated statements of operations.

During the first quarter of 2019, the Company finalized its plans to transition its manufacturing and warehousing operations from its Inwood, New York facility to Bel’s existing facilities in Glen Rock, Pennsylvania and the Dominican Republic. In connection with this transition, the Company had classified $1.5 million of property, plant and equipment as held for sale on its condensed consolidated balance sheet at March 31, 2019. The sale of the Inwood, New York property was completed during the second quarter of 2019, resulting in net proceeds of $5.8 million. The resulting gain on sale of $4.3 million (pre-tax) was recorded in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2019.

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6.7.	ACCRUED EXPENSES

Accrued expenses consist of the following:

	September 30,		December 31,		June 30,		December 31,
	2017		2016		2019		2018
Sales commissions	$	2,404	$	2,066	$	2,628	$	2,609
Subcontracting labor		1,437		1,370		1,276		1,550
Salaries, bonuses and related benefits		16,522		17,587		14,918		18,275
Warranty accrual		2,043		2,718		1,329		1,078
Other		7,410		7,808		9,941		8,778
	$	29,816	$	31,549	$	30,092	$	32,290

~~A tabular presentation~~

The change in warranty accrual during the six months ended June 30, 2019 primarily related to repair costs incurred and adjustments to pre-existing warranties. There were no new material warranty charges incurred during the six months ended June 30, 2019.

Restructuring Activities

Included within other accrued expenses in the table above are costs accrued related to the Company’s restructuring activities. Activity and liability balances related to restructuring costs for the six months ended June 30, 2019 are as follows:

			Six Months Ended
			June 30, 2019
	Liability at				Cash Payments			Liability at
	December 31,		New		and Other			June 30,
	2018		Charges		Settlements			2019
Severance costs	$	-	$	311	$	(244	)	$	67
Other restructuring costs		-		809		(107	)		702
Total	$	-	$	1,120	$	(351	)	$	769

During the six months ended June 30, 2019, the Company’s restructuring charges included $0.9 million of costs associated with the Company’s decision to transition manufacturing and warehousing operations from our Inwood, New York facility to other existing Bel facilities. The balance of the ~~activity within~~restructuring charges related to the ~~warranty accrual account for the nine months ended September 30, 2017~~realignment of our R&D resources dedicated to our Power Solutions and ~~2016 is presented below:~~

Nine Months Ended September 30,
2017 2016
Balance, January 1 $ 2,718 $ 3,659
Charges and costs accrued 211 142
Adjustments related to pre-existing warranties
(including changes in estimates) (779 ) (981 )
Less repair costs incurred (173 ) (433 )
Currency translation 66 (18 )
Balance, September 30 $ 2,043 $ 2,369

Protection group and other restructuring activities in Asia.

7.8.

DEBT

The Company has a Credit and Security Agreement with KeyBank National Association (as amended, the ~~"CSA"~~“CSA”) ~~consisting~~. The CSA consists of (i) a term loan, with outstanding borrowings of ~~$118.6~~$114.5 million and ~~$143.8~~$116.0 million at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively and (ii) a ~~$50~~$75 million revolving credit facility ~~("Revolver"~~(“Revolver”), with ~~$4.0 million and $0~~no outstanding borrowings at ~~September~~June 30, ~~2017~~2019 or December 31, 2018. The CSA has a maturity date of December 11, 2022. At June 30, 2019 and December 31, ~~2016, respectively. At September 30, 2017 and December 31, 2016,~~2018, the carrying value of the debt on the condensed consolidated balance sheet is reflected net of $1.5 million and $1.8 million, respectively, of deferred financing ~~costs~~costs. During the six months ended June 30, 2019, the Company borrowed $12.0 million from its revolver, all of ~~$1.6 million and $2.6 million, respectively.~~which was repaid by June 30, 2019.

The weighted-average interest rate in effect was ~~3.25%~~4.19% at ~~September~~June 30, ~~2017~~2019 and ~~3.06%~~4.31% at December 31, ~~2016~~2018 and consisted of LIBOR plus the ~~Company's~~Company’s credit spread, as determined per the terms of the CSA. The Company incurred ~~$1.5 million of interest expense during each of the three months ended September 30, 2017 and 2016, and $4.5~~$1.4 million and ~~$5.2~~$1.3 million of interest expense during the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~June 30, 2018, respectively, and $2.8 million and $2.5 million of interest expense during the six months ended June 30, 2019 and June 30, 2018, respectively.

~~Return to Index~~

The CSA contains customary representations and warranties, covenants and events of default and financial covenants that measure (i) the ratio of the Company's total funded indebtedness, on a consolidated basis, to the amount of the ~~Company's~~Company’s consolidated EBITDA, as defined, ("(“Leverage ~~Ratio"~~Ratio”) and (ii) the ratio of the amount of the ~~Company's~~Company’s consolidated EBITDA to the ~~Company's~~Company’s consolidated fixed charges. If an event of default occurs, the lenders under the CSA would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor. At ~~September~~June 30, ~~2017,~~2019, the Company was in compliance with its debt covenants, including its most restrictive covenant, the ~~Leverage~~Fixed Charge Coverage Ratio.

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8.9. INCOME TAXES

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is no longer subject to U.S. federal examinations by tax authorities for years before ~~2013~~2015 and for state examinations before ~~2010.~~2012. Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before ~~2006~~2008 in Asia and generally ~~2009~~2011 in Europe. The Company is currently under examination by the taxing authorities in Slovakia for the tax year 2014.

As a result of the expiration of the ~~statute~~statutes of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized benefits for tax positions taken regarding previously filed tax returns may change materially from those recorded as liabilities for uncertain tax positions in the ~~Company's condensed~~Company’s consolidated financial statements at ~~September~~June 30, ~~2017.~~2019. The ~~Company's~~Company’s liabilities for uncertain tax positions totaled ~~$30.0~~$28.5 million and ~~$27.8~~$28.9 million at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively, of which ~~$2.5~~$0.1 million and ~~$0.4~~$1.4 million ~~respectively,~~ is included in other current ~~liabilities.~~liabilities at June 30, 2019 and December 31, 2018, respectively. These amounts, if recognized, would reduce the ~~Company's~~Company’s effective tax rate. As of ~~September~~June 30, ~~2017, $0.4~~2019, approximately $0.1 million of the ~~Company's~~Company’s liabilities for uncertain tax positions ~~was reversed and approximately $2.5 million~~ are expected to be ~~reversed~~resolved during ~~the next twelve months~~2019 by way of expiration of the related statute of limitations.

In connection with the acquisition of the Power-One Power Solutions business ("Power Solutions") from ABB Ltd. ("ABB") in 2014, the Company assumed a liability for additional uncertain tax positions related to various tax matters for the years 2007 through 2013. From the date of acquisition through September 30, 2017, the Company has recorded $5.0 million of interest and penalties pertaining to this issue, of which $2.6 million was reversed during 2016 in relation to the settlement of the exposure. The ~~Company will continue to accrue approximately $0.7~~ ~~million annually until the issues are resolved.~~

~~The Company's~~Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income taxes. During the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, the Company recognized ~~$0.6~~$0.3 million and ~~$0.8~~$0.5 million, respectively, in interest and penalties in the condensed consolidated statements of operations. During the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2019 and 2018, the Company recognized a benefit of ~~$3.1~~$0.7 million and a benefit of $0.4 million, respectively, for the reversal of such interest and ~~penalties. There were no reversals~~penalties, relating to the settlement of ~~interest or penalties in~~ the ~~three or nine months ended September 30, 2017.~~liability for uncertain tax positions. The Company has approximately ~~$2.8~~$4.5 million and ~~$2.2~~$3.8 million accrued for the payment of ~~such~~ interest and penalties at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016,~~2018, respectively, which is included in both ~~other current liabilities~~income taxes payable and liability for uncertain tax positions in the condensed consolidated balance sheets.

The Company continues to monitor ~~proposed legislation affecting~~ the ~~taxation~~impacts of ~~transfers~~the U.S. tax reform and supplementary guidance as it becomes available. At December 31, 2018, the remaining balance of ~~U.S. intangible property and~~the deemed repatriation tax was included in other ~~potential~~current liabilities on the Company’s condensed consolidated balance sheet. At June 30, 2019, the majority of the deemed repatriation tax ~~law changes.~~

is included in other long-term liabilities on the Company's condensed consolidated balance sheet due to clarification of an Internal Revenue Service notice received in December 2018.

9.10. RETIREMENT FUND AND PROFIT SHARING PLAN

The Company maintains the Bel Fuse Inc. ~~Employees'~~Employees’ Savings Plan, a defined contribution plan that is intended to meet the applicable requirements for tax-qualification under sections 401(a) and (k) of the Internal Revenue Code of 1986, as amended (the ~~"Code"~~“Code”). The expense for the three months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 amounted to $0.3 million in both periods. The expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 amounted to ~~$0.9~~$0.6 million ~~and $0.8 million, respectively.~~in both periods. The Company’s matching contribution is made in the form of Bel Fuse Inc. Class A common stock. As of ~~September~~June 30, ~~2017,~~2019, the plan owned ~~46,504~~133,280 and ~~144,362~~107,962 shares of Bel Fuse Inc. Class A and Class B common stock, respectively. ~~Effective January 1, 2017, the Company's matching contribution will be made in the form of Bel Fuse Inc. Class A common stock. During 2016, the employer match was made in cash.~~

The Company's subsidiaries in Asia have a retirement fund covering substantially all of their Hong Kong based full-time employees. The expense for the three months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 amounted to $0.1 million in both periods. The expense for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 amounted to ~~$0.3 million and~~ $0.2 million ~~respectively.~~in both periods. As of ~~September~~June 30, ~~2017,~~2019, the plan owned 3,323 and 17,342 shares of Bel Fuse Inc. Class A and Class B common stock, respectively.

~~Return to Index~~

The Company maintains a SERP, which is designed to provide a limited group of key management and other key employees of the Company with supplemental retirement and death benefits. As discussed in Note 3 above, the Company has investments in a rabbi trust which are intended to fund the obligations of the SERP. The SERP expense for the periods and amounts presented below is allocated between cost of sales and selling, general and administrative expense in the condensed consolidated statements of operations based upon the classification of plan participants.

The components of SERP expense are as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Service cost	$	144	$	183	$	288	$	366
Interest cost		185		166		370		332
Net amortization		48		111		96		222
Net periodic benefit cost	$	377	$	460	$	754	$	920

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Service cost $ 175 $ 148 $ 525 $ 445
Interest cost 168 165 505 494
Net amortization 94 98 281 293
Net periodic benefit cost $ 437 $ 411 $ 1,311 $ 1,232

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The service cost component of net benefit cost is presented within cost of sales or selling, general and administrative expense on the accompanying condensed consolidated statements of operations, in accordance with where compensation cost for the related associate is reported. All other components of net benefit cost, including interest cost and net amortization noted above, are presented within other income/expense, net in the accompanying condensed consolidated statements of operations.

The following amounts are recognized net of tax in accumulated other comprehensive loss:

	September 30,		December 31,		June 30,		December 31,
	2017		2016		2019		2018
Prior service cost	$	996	$	1,172	$	828	$	918
Net loss		2,865		2,970		1,971		1,977
	$	3,861	$	4,142	$	2,799	$	2,895

~~10.~~11. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016~~2018 are summarized below:

September 30, December 31,
2017 2016

Foreign currency translation adjustment, net of taxes of ($699) at
  September 30, 2017 and ($984) at December 31, 2016 $ (17,929 ) $ (28,976 )
Unrealized holding gains on available-for-sale securities, net of taxes of
  $71 at September 30, 2017 and $263 at December 31, 2016 124 424
Unfunded SERP liability, net of taxes of ($1,300) at September 30, 2017
  and ($1,398) at December 31, 2016 (2,561 ) (2,745 )

Accumulated other comprehensive loss $ (20,366 ) $ (31,297 )

~~Return to Index~~

	June 30,			December 31,
	2019			2018

Foreign currency translation adjustment, net of taxes of ($752) at
June 30, 2019 and ($751) at December 31, 2018	$	(22,929	)	$	(22,635	)
Unrealized holding gains on available-for-sale securities, net of taxes of
$0 at June 30, 2019 and $0 at December 31, 2018		12			12
Unfunded SERP liability, net of taxes of ($195) at June 30, 2019
and ($680) at December 31, 2018		(2,604	)		(2,215	)

Accumulated other comprehensive loss	$	(25,521	)	$	(24,838	)

Changes in accumulated other comprehensive loss by component during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 are as follows. All amounts are net of tax.

					Unrealized Holding														Unrealized Holding
		Foreign Currency			Gains on											Foreign Currency			Gains on
		Translation			Available-for-			Unfunded								Translation			Available-for-		Unfunded
		Adjustment			Sale Securities			SERP Liability				Total				Adjustment			Sale Securities		SERP Liability				Total

Balance at January 1, 2017		$	(28,976	)	$	424		$	(2,745	)		$	(31,297	)
Balance at January 1, 2019																$	(22,635	)	$	12	$	(2,215	)		$	(24,838	)
Other comprehensive income before reclassifications			11,047			(300	)		1				10,748				(294	)		-		11				(283	)
Amount reclassified from accumulated other
comprehensive loss			-			-			183		(a)		183				-			-		63		(a)		63
Net current period other comprehensive income			11,047			(300	)		184				10,931				(294	)		-		74				(220	)

Balance at September 30, 2017		$	(17,929	)	$	124		$	(2,561	)		$	(20,366	)
Effect of adoption of ASU 2018-02 (Topic 220)																	-			-		(463	)			(463	)
Balance at June 30, 2019																$	(22,929	)	$	12	$	(2,604	)		$	(25,521	)

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

12. LEASES

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. These leases have remaining lease terms ranging from 1 year to 8 years. Certain of the leases contain options to extend the term of the lease and certain of the leases contain options to terminate the lease within a specified period of time. These options to extend or terminate a lease are included in the lease term only when it is reasonably likely that the Company will elect that option. The Company is not a party to any material sublease arrangements.

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The components of lease expense, which are included in cost of sales and selling, general and administrative expense, based on the underlying use of the ROU asset, were as follows:

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Amortization of ROU Assets - Finance Leases	$	33	$	67
Interest on Lease Liabilities - Finance Leases		12		25
Operating Lease Cost (Cost resulting from lease payments)		1,978		3,969
Short-term Lease Cost		31		100
Variable Lease Cost (Cost excluded from lease payments)		61		121
Sublease Income		-		-
Total Lease Cost	$	2,115	$	4,282

Supplemental cash flow information related to leases are as follows:

	Six Months Ended June 30, 2019
Cash paid for amounts included in the measruement of lease liabilities:
Operating cash flows from operating leases	$	3,963
Operating cash flows from finance leases		25
Finance cash flows from finance leases		57
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		21,396
Finance leases		-

Supplemental balance sheet information related to leases was as follows:

	June 30, 2019
Operating Leases:
Operating lease right-of-use assets	$	17,885
Operating lease liability, current		6,238
Operating lease liability, long-term		12,121
Total operating lease liabilities		18,359

Finance Leases:
Property, plant and equipment, gross	$	894
Accumulated depreciation		(202	)
Property, plant and equipment, net		692
Other current liabilities		120
Other long-term liabilities		626
Total finance lease liabilities	$	746

	June 30, 2019
Weighted-Average Remaining Lease Term:
Operating leases	3.65 years
Finance leases	5.82 years

Weighted-Average Discount Rate:
Operating leases		6.0	%
Finance leases		6.5	%

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Our discount rate is based on our incremental borrowing rate, as adjusted based on the geographic regions in which our leases assets are located.

Maturities of lease liabilities were as follows as of June 30, 2019:

Year Ending	Operating			Finance
June 30,	Leases			Leases
2020	$	7,204		$	164
2021		5,549			163
2022		4,206			163
2023		2,440			163
2024		422			163
Thereafter		305			67
Total undiscounted cash flows		20,126			883
Less imputed interest		(1,767	)		(137	)
Present value of lease liabilities	$	18,359		$	746

As of June 30, 2019, the Company did not have any additional operating or financing leases that have not yet commenced.

~~11.~~13. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is party to a number of legal actions and claims, none of which individually or in the aggregate, in the opinion of management, are expected to have a material adverse effect on the ~~Company's~~Company’s consolidated results of operations or financial position.

In connection with the acquisition of Power Solutions, there is an ongoing claim by the Arezzo Revenue Agency in Italy concerning certain tax matters related to what was then Power-One Asia Pacific Electronics Shenzhen Co. Ltd. (now Bel Power Solutions Asia Pacific Electronics Shenzhen Co. Ltd, or ~~"BPS China"~~“BPS China”) for the years 2004 to 2006. In September 2012, the Tax Court of Arezzo ruled in favor of BPS China and cancelled the claim. In February 2013, the Arezzo Revenue Agency filed an appeal of the Tax ~~Court's~~Court’s ruling. The hearing of the appeal was held on October 2, 2014. On October 13, 2014, BPS China was informed of the Regional Tax Commission of Florence ruling which was in favor of the Arezzo Revenue Agency and against BPS China. An appeal was filed on July 18, 2015 before the Regional Tax Commission of Florence and rejected. On December 5, 2016, the Arezzo Revenue Agency filed an appeal with the Supreme Court and BPS China filed a counter-appeal on January 4, 2017. The Supreme Court has yet to render its judgment. The estimated liability related to this matter is approximately $12.0 million and has been included as a liability for uncertain tax positions on the accompanying condensed consolidated balance sheets. As Bel is fully indemnified in this matter per the terms of the stock purchase agreement with ABB, a corresponding other asset for indemnification is also included in other assets on the accompanying condensed consolidated balance sheets at ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016.~~

In 2015, the Company was provided notice of a potential patent infringement claim by Setec Netzwerke AG ("Setec"), a German company, for the alleged infringement of their patent EP 306 934 B1. Setec subsequently filed a lawsuit against the Company and three of its subsidiaries in Dusseldorf, Germany on January 29, 2016 for patent infringement. The Company filed its defense to Setec's complaint and a nullity lawsuit against Setec's patent on August 31, 2016. The Court hearing on infringement took place on March 23, 2017. Upon hearing argument from both parties, the Court issued a decision on April 6, 2017 staying the infringement case pending resolution of the nullity lawsuit. The nullity lawsuit is currently pending before the Patent Court in Munich, Germany. The Company does not have enough information at this time in order to make any further conclusions or assessments as to infringement or any potential damages.2018.

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

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~~12.~~14. SEGMENTS

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

~~Return to Index~~

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Net Sales to External Customers:
North America	$	59,537		$	63,305		$	184,873		$	196,955		$	67,066		$	71,240		$	131,653		$	130,696
Asia		45,919			47,188			127,801			126,673			39,324			45,914			76,601			84,535
Europe		20,930			18,316			58,997			57,986			21,026			23,556			44,551			43,730
	$	126,386		$	128,809		$	371,671		$	381,614		$	127,416		$	140,710		$	252,805		$	258,961

Net Sales:
North America	$	62,348		$	66,503		$	193,473		$	206,232		$	69,450		$	74,602		$	136,923		$	137,173
Asia		66,534			71,334			193,364			197,952			63,062			70,005			125,372			126,144
Europe		23,633			21,417			67,434			67,222			25,734			27,630			52,598			51,942
Less intercompany net sales		(26,129	)		(30,445	)		(82,600	)		(89,792	)		(30,830	)		(31,527	)		(62,088	)		(56,298	)
	$	126,386		$	128,809		$	371,671		$	381,614		$	127,416		$	140,710		$	252,805		$	258,961

Income (Loss) from Operations:
Income from Operations:
North America	$	104		$	693		$	1,781		$	(41,103	)	$	2,373		$	2,963		$	1,880		$	2,661
Asia		5,408			8,332			11,759			(25,026	)		270			5,319			1,283			5,234
Europe		1,020			284			2,090			(18,006	)		2,310			2,385			4,604			3,209
	$	6,532		$	9,309		$	15,630		$	(84,135	)	$	4,953		$	10,667		$	7,767		$	11,104

Net Sales – Segment net sales are attributed to individual segments based on the geographic source of the billing for such customer sales. Intercompany sales include finished products manufactured in foreign countries which are then transferred to the United States and Europe for sale; finished goods manufactured in the United States which are transferred to Europe and Asia for sale; and semi-finished components manufactured in the United States which are sold to Asia for further processing.

Income (loss) from operations represents net sales less operating costs and expenses and does not include any amounts related to intercompany transactions.

~~The following items are included in the segment data presented above:~~

~~Impairment Charges~~ – The Company recorded a $106.0 million non-cash impairment charge related to its goodwill and trademarks during the first half of 2016. Of this charge, $44.0 million was recorded in the Company's North America operating segment, $41.7 million was recorded in its Asia operating segment and $20.3 million was recorded in its Europe operating segment.

~~13.RELATED PARTY TRANSACTIONS~~

~~In connection with its acquisition of Power Solutions, the Company acquired a 49% interest in a joint venture in the People's Republic of China ("PRC").~~ The joint venture may purchase raw components and other goods from the Company and may sell finished goods to the Company as well as to other third parties. The Company did not purchase any inventory from the joint venture during the three or nine months ended September 30, 2017 or 2016. At September 30, 2017, the Company owed the joint venture approximately $0.5 million, which is included in accounts payable on the accompanying condensed consolidated balance sheet. Subsequent to September 30, 2017, the Company divested its 49% interest in the joint venture in exchange for an extinguishment of the accounts payable balance of $0.5 million. As the interest in the joint venture had a carrying value of zero, a $0.5 million gain was recorded within cost of sales during the third quarter of 2017 related to this divestiture.

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Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information in this ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations ("(“MD~~&A"~~&A”) should be read in conjunction with the ~~Company's~~Company’s condensed consolidated financial statements and the related notes set forth in Item 1 of Part I of this quarterly report on Form 10-Q, our MD&A set forth in Item 7 of Part II of our ~~2016~~2018 Annual Report on Form 10-K and our consolidated financial statements and related notes set forth in Item 8 of Part II of our ~~2016~~2018 Annual Report on Form 10-K. See Part II, Item 1A, ~~"Risk~~“Risk Factors,"” below and ~~"Cautionary~~“Cautionary Notice Regarding Forward-Looking Information,"” above, and the information referenced therein, for a description of risks that we face and important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. All amounts and percentages are approximate due to rounding and all dollars in the text are in millions, except per share amounts or where otherwise noted. When we cross-reference to a ~~"Note,"~~“Note,” we are referring to our ~~"Notes~~“Notes to Condensed Consolidated Financial Statements,"” unless the context indicates otherwise. All amounts noted within the tables are in thousands and amounts and percentages are approximate due to rounding.

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, computing, military, aerospace, transportation and broadcasting industries. ~~Bel's~~Bel’s portfolio of products also finds application in the automotive, medical and consumer electronics markets.

We operate through three geographic segments: North America, Asia and Europe. In the ~~nine~~six months ended ~~September~~June 30, ~~2017, 50%~~2019, 52% of the ~~Company's~~Company’s revenues were derived from North America, ~~34%~~30% from Asia and ~~16%~~18% from its Europe operating segment. By product group, 35% of sales for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 related to the ~~Company's~~Company’s connectivity solutions products, ~~32%~~34% in power solutions and protection products and ~~33%~~31% in magnetic solutions products.

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.~~People’s Republic of China (PRC).

~~In the PRC, where we~~ generally enter into processing arrangements with several independent third-party contractors and also have our own manufacturing facilities, the availability of labor is cyclical and is significantly affected by the migration of workers in relation to the annual Lunar New Year holiday as well as economic conditions in the PRC. In addition, weWe 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 ~~each year~~ and be able to address peaks in demand that may occur from time to time. These recruiting and training efforts and related inefficiencies, and overtime required in order to meet any increase in demand, can add volatility to the labor costs incurred by ~~us for labor in the PRC.~~us.

Key Factors Affecting our Business

The Company believes the key factors affecting ~~Bel's~~Bel’s results for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2019 and/or future results include the following:

Revenues – The ~~Company's~~Company’s revenues ~~for the three and nine months ended September 30, 2017 declined~~decreased by ~~$2.4~~$6.2 million (or ~~1.9%~~2.4%) ~~and $9.9 million (or 2.6%), respectively, from~~in the ~~comparable periods~~first half of ~~2016.~~ 2019 as compared to the same period of 2018. The ~~majority of this decrease~~sales decline was seen ~~within the Power Solutions business (acquired in 2014), specifically related to its sales~~across all of ~~Network Power Systems (NPS) products. The Company divested the NPS business in 2015~~our major product groups and was ~~continuing~~largely due to ~~provide product to~~an over-inventoried supply channel at our customers and distributors following the ~~buyer under a 2-year manufacturing services agreement which is winding down. The decline~~high volume of purchases in ~~sales related to the NPS product line accounted for $2.1 million~~2018 in advance of the ~~year-over-year decline for the third quarter of 2017, and $7.2 million of the year-over-year decline for the nine-month period.~~tariffs that went into effect in 2019.

Backlog – Our backlog of orders amounted to $150.9 million at June 30, 2019, a decline of $20.3 million, or 12%, from December 31, 2018. Since year-end, we saw an 8% increase in the backlog for our Connectivity Solutions products, primarily driven by additional orders from our military customers. The backlog of orders for our Power Solutions and Protection products declined by 17% and backlog for our Magnetic Solutions products was down 29% from year-end 2018 levels. Order volumes were lower in the first half of 2019 as a result of slowdowns in certain markets coupled with customers working down heighted inventory levels which had been built up in response to new product launches and the tariffs that went into effect in 2018 and 2019.

Product Mix – Material and labor costs vary by product line and any significant shift in product mix between higher- and lower-margin product lines will have a corresponding impact on the ~~Company's~~Company’s gross margin percentage. In general, our connectivity products have the highest contribution margins, our magnetic products are more labor intensive and are therefore less profitable than the connectivity products and our power products are on the lower end of our profit margin ~~range.~~range, due to their high material content. Fluctuations in sales volume among our product groups will have a corresponding impact on ~~Bel's~~Bel’s profit margins.

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~~Restructuring~~Pricing and Availability of Materials – ByWhile material cost and availability for certain components have started to ease, the ~~end~~higher raw material costs which were in place during 2018, particularly related to resistors, capacitors and mosfets, are still running through our supply chain as we ship the balance of ~~the third quarter of 2017, we implemented headcount reduction measures which will result in annualized cost savings of approximately $1.0 million. We anticipate these savings~~our inventory on hand from 2018. Lead times continue to be ~~realized beginning in~~extended for certain mosfets and costs for those components remain elevated. As a result, the Company’s material costs as a percentage of sales increased to 43.8% during the first ~~quarter~~half of 2019 from 41.4% during the first half of 2018. ~~Any further actions implemented may result in restructuring costs being incurred in future quarters.~~

Labor Costs – Labor costs decreased from 11.4% of sales during the first half of 2018 to 11.0% of sales during the first half of 2019, as a more favorable exchange rate environment in 2019 related to the Chinese Renminbi offset the overall impact of minimum wage increases in Mexico which went into effect on January 1, 2019 as well as minimum wage increases in the PRC which went into effect in the first and third quarters of 2018.

Restructuring – The Company continues to implement restructuring programs to increase operational efficiencies and incurred $1.4 million in restructuring costs during the first half of 2019. During the second quarter, the Company completed the realignment of its R&D resources dedicated to its Power Solutions and Protection group and substantially completed the transition of manufacturing and warehousing operations from its Inwood, New York facility to other existing Bel facilities. The R&D and Inwood initiatives combined are expected to result in annualized cost savings of $2.1 million beginning in the third quarter of 2019. We further identified and have started to implement measures at certain facilities in Asia that are expected to result in annualized cost savings of $1.4 million beginning in the fourth quarter of 2019. Incremental cost reduction measures are expected to follow throughout the third and fourth quarters of 2019 as our remaining sites are reviewed. The preceding sentences represent Forward-Looking Statements. See “Cautionary Notice Regarding Forward-Looking Information.”

Impact of Foreign Currency – During the first six months of 2019, the Company experienced lower labor and overhead costs of $3.2 million related to favorable fluctuations in exchange rates versus 2018, partially offset by foreign exchange transactional losses realized of $0.1 million. Since we are a U.S. domiciled company, we translate our foreign currency-denominated financial results into U.S. dollars. Due to the changes in the value of foreign currencies relative to the U.S. dollar, translating our financial results and the revaluation of certain intercompany as well as third-party transactions to and from foreign currencies to U.S. dollars may result in a favorable or unfavorable impact to our ~~condensed~~ consolidated statements of operations and cash flows. The Company was favorably impacted by transactional foreign exchange gains in the first half of 2019 due to the depreciation of the Euro, Pound, and Renminbi against the U.S. dollar as compared to exchange rates in effect during 2018. The Company has significant manufacturing operations located in the PRC where labor and overhead costs are paid in local currency. As a result, the U.S. Dollar equivalent costs of these operations were $3.2 million lower in the first half of 2019 as compared to the same period of 2018. The Company monitors changes in foreign currencies and ~~implements~~may implement pricing actions to help mitigate the impact that changes in foreign currencies may have on its consolidated operating results. ~~See Selling, General and Administrative Expense below for further details.~~

~~Enterprise Resource Planning ("ERP") System Implementation~~ – We are currently engaged in a multi-year process of conforming the majority of our operations onto one global ERP system. We currently estimate total costs related to this implementation to be between $4 million to $5 million. During the three and nine months ended September 30, 2017, the Company incurred consulting costs in connection with this implementation of $0.4 million and $1.5 million, respectively, which are included in SG&A in the condensed consolidated statements of operations. We anticipate future expenses of approximately $0.5 million per quarter through the end of 2018, and at a reduced level in 2019. See "Liquidity and Capital Resources" below for further information.

Effective Tax Rate – The ~~Company's~~Company’s effective tax rate will fluctuate based on the geographic segment in which our pretax profits are earned. Of the geographic segments in which we operate, the U.S. ~~has the highest tax rates; Europe's~~and Europe’s tax rates are generally ~~lower than U.S. tax rates;~~equivalent; and Asia has the lowest tax rates of the ~~Company's~~Company’s three geographical segments. See Note 9, “Income Taxes”.

~~While third quarter sales were down 1.9% from~~After record bookings throughout 2018, the ~~same~~Company has experienced slower bookings during the first half of 2019 as customers work through their inventory on hand. The Company experienced margin pressure during the second quarter of ~~2016, we~~2019 due to lower sales volumes and high material costs from 2018 which continue to ~~see~~run through the Company’s statement of operations. As a ~~positive book-to-bill ratio for our power~~result of these ongoing factors, the Company expects the balance of 2019 to remain challenging from both a sales and connectivity products. Demand within our Connectivity Solutions business remains strong, largely driven by activity within our military-aerospace accounts and through our distribution partners. Our Power Solutions and Protection business has shown progress in recent quarters with design wins in the areas of e-Mobility, industrial and datacenter applications, which will help to mitigate the declines we've seen with lower spending from some of our traditional networking customers. Until our top line sales showmargin perspective. The preceding sentence represents a ~~steady upward trend, we will continue to assess the cost structure of the overall business to keep our fixed costs as efficient as possible.~~Forward-Looking Statement. See “Cautionary Notice Regarding Forward-Looking Information.”

Summary by Operating Segment

Net sales to external customers by operating segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 were as follows:

	Three Months Ended								Nine Months Ended								Three Months Ended								Six Months Ended
	September 30,								September 30,								June 30,								June 30,
	2017				2016				2017				2016				2019				2018				2019				2018
North America	$	59,537	47	%	$	63,305	49	%	$	184,873	50	%	$	196,955	52	%	$	67,066	53	%	$	71,240	50	%	$	131,653	52	%	$	130,696	50	%
Asia		45,919	36	%		47,188	37	%		127,801	34	%		126,673	33	%		39,324	31	%		45,914	33	%		76,601	30	%		84,535	33	%
Europe		20,930	17	%		18,316	14	%		58,997	16	%		57,986	15	%		21,026	16	%		23,556	17	%		44,551	18	%		43,730	17	%
	$	126,386	100	%	$	128,809	100	%	$	371,671	100	%	$	381,614	100	%	$	127,416	100	%	$	140,710	100	%	$	252,805	100	%	$	258,961	100	%

~~The decline~~

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Sales declines in our North America ~~sales noted above was primarily due to a reduction in Power Solutions sales in North America of $4.6 million~~segment during the ~~three months ended September 30, 2017 and~~second quarter of ~~$10.3 million~~2019 reflected lower sales into our distribution channel as our distribution partners continue to work down their level of inventory on hand. Sales of our connector products into military applications were also lower during the ~~nine months ended September 30, 2017 as~~second quarter of 2019 compared to the same ~~periods~~period of ~~2016.~~2018, impacting our North America and European segment ~~sales were also impacted by a decline~~sales. Sales in ~~sales of~~ our modular plugs and cable assemblies within our Stewart Connector business where two major customers merged and in-sourced much of these products. This resulted in lower sales of $1.3 million during the three months ended September 30, 2017 and of $5.3 million during the nine months ended September 30, 2017 as compared to the same periods of 2016. The increase in sales in Asia ~~noted~~segment in the ~~table above for~~second quarter of 2019 were down versus 2018 as a result of customers working down heighted inventory levels which had been built up during 2018 in response to new product launches and the ~~nine-month period was primarily driven by increased demand for our ICM products which are manufactured~~tariffs that went into effect in ~~that region. See Net Sales, Magnetic Solutions, below. The decline for the three-month period resulted from lower sales of our custom module~~2018 and DC-DC products, offset in part by the increase in ICM sales. The year-over-year sales growth in our Europe segment was led by our Bel Power Europe group in Italy, which we acquired in 2012, as they have been successful in penetrating the marine and industrial markets in Europe with their AC-DC power products.2019.

Net sales and income from operations by operating segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 were as follows. Segment net sales are attributed to individual segments based on the geographic source of the billing for customer sales.

~~Return to Index~~

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Total segment sales:
North America	$	62,348		$	66,503		$	193,473		$	206,232		$	69,450		$	74,602		$	136,923		$	137,173
Asia		66,534			71,334			193,364			197,952			63,062			70,005			125,372			126,144
Europe		23,633			21,417			67,434			67,222			25,734			27,630			52,598			51,942
Total segment sales		152,515			159,254			454,271			471,406			158,246			172,237			314,893			315,259
Reconciling item:
Intersegment sales		(26,129	)		(30,445	)		(82,600	)		(89,792	)		(30,830	)		(31,527	)		(62,088	)		(56,298	)
Net sales	$	126,386		$	128,809		$	371,671		$	381,614		$	127,416		$	140,710		$	252,805		$	258,961

Income from operations:
North America	$	104		$	693		$	1,781		$	(41,103	)	$	2,373		$	2,963		$	1,880		$	2,661
Asia		5,408			8,332			11,759			(25,026	)		270			5,319			1,283			5,234
Europe		1,020			284			2,090			(18,006	)		2,310			2,385			4,604			3,209
	$	6,532		$	9,309		$	15,630		$	(84,135	)	$	4,953		$	10,667		$	7,767		$	11,104

~~The non-cash impairment charge recorded~~Income from operations declined across all segments during the second quarter of 2019 as compared with the same quarter of 2018 primary due to lower sales volume. Our Asia segment was also impacted by $0.4 million of restructuring charges during the second quarter of 2019. During the first half of 2016 related to goodwill and other intangible assets impacted all of the Company's operating segments in the nine-month period ended September 30, 2016. See Note 12, Segments, for the allocation of this charge by operating segment. Excluding this impairment charge,2019, income from operations ~~by operating segment~~ for ~~the nine months ended September 30, 2016 was $2.9 million for~~our North America ~~$16.6~~segment was unfavorably impacted by $0.9 million ~~for Asia~~of restructuring costs associated with the transition of manufacturing and ~~$2.3 million for Europe.~~

~~Excluding the impairment charge, income~~warehouse operations from ~~operations~~our Inwood, New York facility to other existing Bel facilities, and higher labor costs in North America decreased by $1.1 million during the nine months ended September 30, 2017 as compared to the same period of 2016 primarily due to a $3.4 million reduction of value-added tax (VAT) expenses as discussed in the Selling, General and Administrative Expense section below during the 2016 period, which did not occur in 2017. This was partially offset by lower incentive compensation recorded in North America in the nine months ended September 30, 2017 as compared to the same period of 2016. Excluding the impairment charge, Asia operating income was $4.8 million lower in the nine months ended September 30, 2017 largely due to a $1.8 million reduction of VAT expenses in Asia recorded during the nine months ended September 30, 2016, which did not occur in 2017, coupled with lower segment sales in Asia in 2017. The slight decline in Europe operating income during the nine months ended September 30, 2017 as compared to the same period of 2016 was primarilyMexico due to an ~~unfavorable variance~~increase in foreign currency exchange (a loss of $2.3 million in the nine months ended September 30, 2017 as compared to a loss of $0.2 million in the same period of 2016 within the Europe segment), largely offset by margin improvementminimum wage rates which went into effect on ~~flat sales.~~January 1, 2019.

Net Sales

The ~~Company's~~Company’s net sales by major product line for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 were as follows:

	Three Months Ended								Nine Months Ended								Three Months Ended								Six Months Ended
	September 30,								September 30,								June 30,								June 30,
	2017				2016				2017				2016				2019				2018				2019				2018
Connectivity solutions																	$	42,536	33	%	$	48,928	35	%	$	86,897	35	%	$	91,846	35	%
Magnetic solutions	$	44,002	35	%	$	41,449	32	%	$	122,468	33	%	$	116,285	31	%		40,852	32	%		45,548	32	%		79,108	31	%		83,776	33	%
Connectivity solutions		42,837	34	%		41,666	32	%		128,350	35	%		130,009	34	%
Power solutions and protection		39,547	31	%		45,694	36	%		120,853	32	%		135,320	35	%		44,028	35	%		46,234	33	%		86,800	34	%		83,339	32	%
	$	126,386	100	%	$	128,809	100	%	$	371,671	100	%	$	381,614	100	%	$	127,416	100	%	$	140,710	100	%	$	252,805	100	%	$	258,961	100	%

Connectivity Solutions:

Sales of our connectivity solutions products during the second quarter of 2019 declined $6.4 million primarily due to lower demand from military customers during the quarter, and reduced volume of product flowing through our distribution channels as our distribution partners continue to work down inventory levels that had been built up in 2018 ahead of the tariffs. These factors also impacted the six-month period ended June 30, 2019, which declined $4.9 million from the same period of 2018, partially offset by higher sales to aerospace customers during the first quarter of 2019.

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Magnetic Solutions:

~~Demand for~~Sales of our ~~ICM/TRP~~magnetic products ~~remained strong in the third quarter of 2017 for both our established 1-gig and 10-gig ICMs as well as our recently released multi-gig variants. During~~during the second quarter and ~~third quarters~~first half of ~~2017, we benefited~~2019 were down $4.7 million from ~~a majority~~the same periods of ~~the share~~2018 while inventory levels built up in advance of a new ~~product introduction at one of our large OEM customers, which accounted for the majority of the year-over-year increase noted above for the nine-month period.~~

~~Return to Index~~

program launch during 2018 are worked through.

Power Solutions and Protection:

~~The decline in~~Sales of our power solutions and protection products ~~during~~were $2.2 million lower in the ~~third~~second quarter of ~~2017 as~~2019 compared to the same quarter of ~~2016 was primarily attributable to a $4.6 million reduction in~~2018. Sales of our Bel Power Solutions ~~sales. Sales within the Power Solutions business continue~~products into datacenter applications decreased by $1.9 million and sales of our Custom Module products were $0.8 million lower as compared to be challenged as spending levels within our networking and storage customers have declined, while recent project wins in the areas of e-Mobility and datacenters are not yet in full production. This business was also impacted by the phase-out of revenue associated with its NPS product line (sold in 2015), as we transition off of a 2-year manufacturing services agreement. The year-over-year decline waslast year’s second quarter. These decreases were partially offset by a ~~$1.7~~$0.8 million increase in sales of our ~~AC/~~DC/DC ~~converter products at our Bel Power Europe group in Italy (acquired in 2012) and higher circuit protection product~~power products. Sales during the six-month period ended June 30, 2019 increased by $3.5 million from the same period of 2018, as stronger sales ~~of $0.2 million in~~into datacenter applications during the ~~third~~first quarter of ~~2017 as compared to~~2019 lessened the ~~third~~impact of the second quarter ~~of 2016.~~declines on the six-month period.

~~Connectivity Solutions:~~

Sales of our connectivity solutions products were strong in the third quarter of 2017, led by increased activity within key military-aerospace programs. Within our distribution channel, sales of connectivity products continued to have year-over-year growth into the third quarter. These gains in the third quarter were partially offset by lower demand for plugs and structured cabling within our Stewart Connector business where two of our major customers merged and in-sourced much of these products.

Cost of Sales

Cost of sales as a percentage of net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 consisted of the following:

	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2017			2016			2017			2016			2019			2018			2019			2018
Material costs		38.2	%		42.1	%		39.7	%		41.8	%		45.7	%		41.9	%		43.8	%		41.4	%
Labor costs		11.0	%		10.3	%		10.4	%		10.3	%		10.6	%		11.5	%		11.0	%		11.4	%
Research and development expenses		5.4	%		5.1	%		5.5	%		5.2	%		5.4	%		5.2	%		5.6	%		5.7	%
Other expenses		23.5	%		21.9	%		22.9	%		23.0	%		22.7	%		20.8	%		22.4	%		22.1	%
Total cost of sales		78.1	%		79.4	%		78.5	%		80.3	%		84.4	%		79.4	%		82.8	%		80.6	%

Material costs as a percentage of sales ~~were lower~~continued to increase during the ~~three~~second quarter and ~~nine months ended September 30, 2017 as~~first half of 2019 compared to the same ~~period~~periods of ~~2016,~~2018 primarily due to the ~~decline in sales within~~industry-wide supply constraints related to certain of our ~~power solutions and protection group, as those products carry a higher~~purchased components during 2018. The finished goods shipped during the second quarter of 2019 still contained some of the higher-cost raw material ~~content than our other product lines.~~components.

Labor costs as a percentage of sales ~~increased~~also declined during ~~both~~ the ~~three~~second quarter and ~~nine~~first six months ~~ended September 30, 2017 as~~of 2019 compared to the same periods of ~~2016 primarily due~~2018 as a more favorable exchange rate environment related to the ~~increase~~Chinese Renminbi offset the overall impact of minimum wage increases in ~~sales~~the PRC and Mexico. The PRC government increased the minimum wage in the regions where Bel’s factories are located in February and July of ~~our labor-intensive magnetic products.~~2018. Furthermore, the minimum wage rates in Mexico increased effective January 1, 2019 which also drove labor costs higher in the second quarter and first half of 2019.

Included in cost of sales is research and development ("(“R~~&D"~~&D”) expense of $6.9 million and ~~$6.6~~$7.4 million for the three months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively, and ~~$20.3~~$14.0 million and ~~$19.7~~$14.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively. The lower R&D expenses in 2019 as compared to the respective 2018 periods is largely reflective of cost savings related to the realignment of our Power Solutions R&D resources earlier in 2019.

The other expenses noted in the table above include fixed cost items such as support labor and fringe, ~~expense,~~ depreciation and amortization, ~~expense,~~ and facility costs (rent, utilities, insurance). In total, these other expenses ~~increased by $1.6 million during the third quarter of 2017 due to higher tooling, repairs and maintenance and overhead costs during the 2017 period. For the nine-month period, these other expenses~~ decreased by $2.4 million year-over-year due to a $2.0 million decrease in support labor and fringe expense and an $0.8 million reduction in depreciation and amortization expense, partially offset by a $0.9 million increase in tooling and other overhead costs.

~~Return to Index~~

~~Selling, General and Administrative Expense ("SG&A")~~

~~SG&A expense increased $1.5 million and $8.9 million~~ during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019 by $0.2 million and $0.5 million, respectively, ~~as compared with the same periods of 2016. These increases consisted of the following:~~

Increase (Decrease)
Compared to Same Period of 2016
Three Months Ended Nine Months Ended
September 30, 2017 September 30, 2017
VAT expenses $ - $ 5,155
Legal and professional fees 612 789
Sales commissions, advertising and other selling costs 519 148
Net foreign currency exchange gains/losses 357 3,045
ERP system implementation consulting costs 395 1,483
Salaries and fringe benefits 39 (1,336 )
Other (404 ) (432 )
Total increase $ 1,518 $ 8,852

The variance in VAT expenses related to settlement of a tax liability which was originally recorded during the acquisition of the Power Solutions business. This acquired operating tax exposure was settled in full by the end of the second quarter of 2016, resulting in a reversal of these amounts in SG&A.

Legal and professional fees increased year-over-year during both the three- and nine-month periods due to a shift in timing of work related to our annual audit, and incremental consulting costs incurred in connection with the implementation of the new revenue recognition standard (see Note 1, Basis of Presentation and Accounting Policies). Sales commissions and other selling costs increased during both period presented due to the shift in mix of products sold, as higher commissions are incurred on our connectivity sales as compared to sales of our power products. The unfavorable variance in net foreign currency exchange noted above was primarily due to the translation of intercompany balances between U.S. and foreign subsidiaries. For further information related to our ERP system implementation consulting costs, see the Liquidity and Capital Resources section below. Salaries and fringe benefits were lower during the nine-month period of 2017 due to lower compensation costs recorded during the first and second quarters of 2017 as compared to the same periods of ~~2016,~~2018, primarily due to lower depreciation and ~~cost savings realized from recent restructuring efforts.~~amortization expense in the 2019 periods.

~~Impairment~~Selling, General and Administrative Expense (“SG&A”)

SG&A expenses were $18.8 million, up $0.5 million from the second quarter of ~~Goodwill~~2018. Included within SG&A expenses is a foreign exchange gain of $0.5 million in the second quarter of 2019 compared to a foreign exchange gain of $1.9 million in the second quarter of 2018. Excluding the effects of foreign exchange gains, SG&A expense was down $1.0 million in the second quarter of 2019 as compared to the same period of 2018, led by reductions in ERP costs of $0.5 million and ~~Other Intangible Assets~~sales and marketing expenses of $0.3 million from last year’s second quarter.

SG&A expenses were $38.6 million, down from $39.0 million in the first half of 2018. Factors contributing to the lower SG&A expense in the 2019 period were lower legal and professional fees and a reduction in sales and marketing expenses from the 2018 period. These reductions were partially offset by a $1.0 million unfavorable swing in foreign exchange rates (a loss of $0.1 million in the first half of 2019 compared to a foreign exchange gain of $0.9 million in the first half of 2018).

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Provision for Income Taxes

The ~~Company recorded a $106.0 million non-cash impairment charge related to its goodwill and trademarks during the nine months ended September 30, 2016.~~ ~~The impairment charge did not impact our cash expenditures, liquidity, financial performance, compliance with our debt covenants or affect the ongoing business.~~

~~Loss (Gain) on Disposal of Property, Plant and Equipment~~

In July 2016, the Company closed on the sale of a property in Hong Kong which had a net book value of less than $0.1 million. The consideration received related to this sale was $2.1 million. The Company recorded a gain on sale related to this property of $2.1 million during the third quarter of 2016.

~~Provision (Benefit) for Income Taxes~~

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

The provision ~~(benefit)~~ for income taxes for the three months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 was ~~less than $0.1~~$0.4 million and ~~($1.7)~~$2.4 million, respectively. The ~~Company's~~Company’s earnings ~~(loss)~~ before ~~provision (benefit) for~~ income taxes for the three months ended ~~September~~June 30, ~~2017~~2019, were approximately ~~$2.9~~$5.6 million lower than the same period in ~~2016,~~2018, primarily attributable to ~~a decrease~~lower earnings in the Asia ~~segment income.~~and Europe segments. The ~~Company's~~Company’s effective tax rate was ~~1.2%~~12.4% and ~~(21.2%)~~26.6% for the three ~~month periods~~months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively. The change in the effective tax rate during the three months ended ~~September~~June 30, ~~2017~~2019 as compared to the same period in ~~2016 was~~2018, is primarily attributable to ~~increased foreign~~a decrease in U.S. taxes ~~due to the reversal of valuation allowances~~ relating to ~~net operating loss carryforwards~~income from foreign subsidiaries taxed in ~~2016,~~the U.S. as ~~well as an increase in taxes related to uncertain tax positions.~~part of the Tax Cuts and Jobs Act. See Note 9, “Income Taxes.”

The provision ~~(benefit)~~ for income taxes for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 was ~~$2.3~~$0.5 million and ~~($20.7)~~$2.7 million, respectively. The ~~Company's~~Company’s earnings ~~(loss)~~ before ~~benefit for~~ income taxes for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 were approximately ~~$100.1~~$3.5 million ~~higher~~lower than the same period in ~~2016,~~2018, primarily attributable to lower earnings in the ~~$106.0 million impairment of the goodwill~~Asia and ~~intangible assets during the nine months ended September 30, 2016.~~Europe segment. The ~~Company's~~Company’s effective tax rate was ~~20.8%~~10.1% and ~~23.3%~~33.8% for the ~~nine month~~six-month periods ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively. The change in the effective tax rate during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 as compared to the same period of ~~2016,~~2018, is primarily attributable to a decrease in U.S. taxes relating to income from foreign subsidiaries taxed in the ~~tax effect related to the impairment~~U.S. as part of the ~~goodwill~~Tax Cuts and ~~intangible assets, as well as~~Jobs Act and the ~~settlement~~impact of ~~the liability for uncertain~~permanent differences on U.S. tax positions in 2016. Additionally, the increase in the effective tax rate for the nine months ended September 30, 2017 as compared to the same period in 2016, is attributable to U.S. and foreign taxes accrued for gains recognized on a Bel Fuse legal entity restructuring transaction.exempt activities.

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Liquidity and Capital Resources

Our primary sources of cash are the collection of trade receivables generated from the sales of our products and services to our customers and amounts available under our existing lines of credit, including our credit facility. Our primary uses of cash are payments for operating expenses, investments in working capital, capital expenditures, 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 above in the next twelve months.

~~Cash~~At June 30, 2019 and December 31, 2018, $37.6 million and $46.3 million, respectively (or 64% and 86%, respectively), of cash and cash equivalents was held by foreign subsidiaries of the Company. During the first half of 2019, the Company ~~amounted~~repatriated $10.0 million of funds from outside of the U.S., with minimal incremental tax liability, and completed an intercompany loan from one of the Company’s foreign subsidiaries to ~~$54.6~~its U.S. parent entity during the second quarter. Management has current intentions to repatriate an additional $5.0 million ~~at September 30, 2017 and $61.1 million at December 31, 2016 (representing 88% and 83%~~of funds from outside of the U.S., ~~respectively,~~with a minimal incremental tax liability, by the end of ~~total cash~~2019 with the intent of reducing our outstanding debt balance. The preceding sentence represents a Forward-Looking Statement. See “Cautionary Notice Regarding Forward-Looking Information." We continue to analyze our global working capital and cash ~~equivalents at each period-end). Management's intention is~~requirements and the potential tax liabilities attributable to ~~permanently reinvest~~further repatriation, and we have yet to make any further determination regarding repatriation of funds from outside the ~~earnings of its foreign subsidiaries and there are no current plans that would indicate a need to repatriate those earnings~~U.S. to fund the ~~Company's~~Company’s U.S. ~~operations.~~operations in the future. In the event ~~foreign earnings~~these funds were needed ~~to fund the Company's~~for Bel’s U.S. operations, ~~and were repatriated by way of a taxable distribution,~~ the Company would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds.

Cash and cash equivalents, marketable securities and accounts receivable comprised approximately ~~34.0%~~31.7% of the ~~Company's~~Company’s total assets at ~~September~~June 30, ~~2017~~2019 and ~~34.6~~32.9% of total assets at December 31, ~~2016.~~2018. The ~~Company's~~Company’s current ratio (i.e., the ratio of current assets to current liabilities) was ~~2.7~~3.2 to 1 at ~~September~~June 30, ~~2017~~2019 and ~~2.8~~2.7 to 1 at December 31, ~~2016.~~2018.

~~On September 19,~~In June 2014, the Company entered into a senior Credit and Security Agreement, ~~("CSA") (see Note 7, Debt, for additional details).~~which was subsequently amended in March 2016, and further amended and refinanced in December 2017. The ~~CSA, as amended,~~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~~Company’s consolidated EBITDA, as defined ("(“Leverage ~~Ratio"~~Ratio”), and (ii) the ratio of the amount of the ~~Company's~~Company’s consolidated EBITDA to the ~~Company's~~Company’s consolidated fixed ~~charges.~~charges (“Fixed Charge Coverage Ratio”). If an event of default occurs, the lenders under the ~~CSA~~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.

At ~~September~~June 30, ~~2017,~~2019, the Company was in compliance with its debt covenants, including its most restrictive covenant, the ~~Leverage~~Fixed Charge Coverage Ratio. The unused credit available under the credit facility at ~~September~~June 30, ~~2017~~2019 was ~~$46.0~~$75.0 million, of which we had the ability to borrow ~~$29.6~~$37.1 million without violating our Leverage Ratio covenant based on the ~~Company's~~Company’s existing consolidated EBITDA.

We are currently engaged in a multi-year process of conforming the majority of our operations onto one global ~~ERP system.~~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 ~~unit~~units on a ~~three phase~~three-phase approach through ~~2019.~~2020. We currently estimate total costs ~~related to~~over the course of this system implementation to be between $4 million to $5 million. During the three and nine months ended September 30, 2017, the Company incurred consulting costs in connection with this implementation of $0.4 million and $1.5 million, respectively, which are included in SG&A in the condensed consolidated statements of operations. We anticipate future expenses of approximately $0.5 million per quarter through the end of 2018, and at a reduced level in 2019. Upon completion of the implementation of the new ERP, we anticipate lower maintenance and lower external information and technology support fees resulting in annual savings of approximately $2$6.9 million. The preceding sentence represents a Forward-Looking Statement. See ~~"Cautionary~~“Cautionary Notice Regarding Forward-Looking ~~Statements."~~Information.” Since inception of the project, we have incurred a cumulative amount of $6.5 million in connection with this implementation, of which $0.4 million and $1.4 million in implementation costs was incurred during the three and six months ended June 30, 2019, respectively. These costs are included in SG&A on the condensed consolidated financial statements. The first phase of the ERP implementation project was completed in the first quarter of 2019 with the Power Solutions business going live on the new system effective January 1, 2019. In relation to this first phase completed, we started realizing annualized cost savings of approximately $1.3 million in the second quarter of 2019. The preceding sentence represents a Forward-Looking Statement. See “Cautionary Notice Regarding Forward-Looking Information.”

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Cash Flows

Six Months Ended June 30, 2019

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, the ~~Company's~~Company’s cash and cash equivalents increased by $4.5 million. This increase was primarily due to the following:

·	net cash provided by operating activities of $7.8 million;

·	purchases of property, plant and equipment of $5.3 million;

·	dividend payments of $1.6 million; and

·	repayments of long-term debt of $1.5 million

During the six months ended June 30, 2019, accounts receivable decreased by $7.7 million primarily due to lower sales during the second quarter of 2019 as compared to the fourth quarter of 2018. Days sales outstanding (DSO) increased slightly to 60 days at June 30, 2019 from 59 days at December 31, 2018. Inventory decreased by $1.8 million at June 30, 2019 compared to December 31, 2018. Inventory turns were 3.6 at June 30, 2019 as compared to 3.7 at December 31, 2018.

Six Months Ended June 30, 2018

During the six months ended June 30, 2018, the Company’s cash and cash equivalents decreased by ~~$11.3 million~~$13.6 million. This decrease was primarily due to the ~~following factors:~~following:

·	purchases of property, plant and equipment of ~~$3.8~~$5.9 million;

·	~~dividend payments of $2.3 million; and~~

·	repayments of long-term debt of ~~$25.2~~$7.5 million; and

·	dividend payments of $1.6 million; partially offset by

·	net cash provided by ~~operating activities~~operations of ~~$14.2 million; and~~

·	~~net borrowings under our revolving credit line of $4.0 million~~$1.2 million.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, accounts receivable increased by ~~$7.9~~$10.5 million primarily due to higher sales volume in the ~~third~~second quarter of ~~2017~~2018 as compared to the fourth quarter of ~~2016.~~2017. Days sales outstanding (DSO) ~~increased~~declined to 6058 days at ~~September~~June 30, ~~2017~~2018 from 5460 days at December 31, ~~2016, primary due~~2017. Effective January 1, 2018, the ~~extension~~Company implemented a change in the timing of ~~credit terms~~revenue recognition (and related release of inventory from our books) in connection with ~~one~~the adoption of ~~our large customers, as well as~~ASC 606. Excluding the ~~increase in revenue (and resulting accounts receivable balance) in our Asia segment where DSO tends~~adoption adjustment related to ~~be higher as compared to our other geographic segments. Inventory levels were up~~this accounting change, inventory increased by ~~$3.3~~$10.6 million at ~~September~~June 30, ~~2017~~2018 compared to December 31, ~~2016 as work~~2017, primarily in ~~progress and finished goods balances~~raw materials. The increased ~~from year-end levels~~raw materials balance was driven by a higher volume of raw materials purchased to accommodate ~~the increase in~~increased demand for our products, coupled with higher material costs in ~~2017.~~2018 resulting from constraints in component availability. Inventory turns increased from 3.6 at December 31, 2017 to 4.2 at June 30, 2018, primarily due to the change in revenue recognition accounting noted above.

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Critical Accounting Policies

~~Management's~~Management’s discussion and analysis of ~~Bel's~~Bel’s financial condition and results of operations are based upon the ~~Company's~~Company’s condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to product returns, bad debts, inventories, goodwill, intangible assets, investments, warranties, SERP expense, income taxes and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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Recent Accounting Pronouncements

The discussion of new financial accounting standards applicable to the Company is incorporated herein by reference to Note 1 to the ~~Company's~~Company’s Financial Statements, ~~"Basis~~“Basis of Presentation and Accounting Policies,"” included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk primarily from changes in foreign currency exchange rates and changes in interest rates associated with its long-term debt. ~~There have not been any material changes with regard to market risk~~During the first half of 2019, the U.S. Dollar was stronger against most other currencies in which the Company pays its expenses. In comparing average exchange rates during the ~~nine months ended September 30, 2017.~~first half of 2019 versus those during the first half of 2018, the Euro depreciated by 7%, the Pound depreciated by 6%, the Peso depreciated by 1% and the Renminbi depreciated by 6% against the U.S. Dollar. The Company estimates that the depreciation in these foreign currencies led to lower operating costs of $3.2 million, as the majority of our expenses in the PRC, Europe and Mexico are paid in local currency. This offset the foreign exchange loss recognized in the first half of 2019 of $0.1 million on translation of local currency balance sheet accounts to the U.S. Dollar in consolidation, resulting from foreign currency fluctuations since December 31, 2018. Refer to Item 7A, ~~"Management's~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations,"” in the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 for further discussion of market risks.

Item 4. Controls and Procedures

Disclosure controls and procedures: As of the end of the period covered by this report, the Company carried out an evaluation, with the participation of the ~~Company's~~Company’s management, including the ~~Company's~~Company’s Chief Executive Officer and Vice President of Finance, of the effectiveness of the ~~Company's~~Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based on that evaluation, the ~~Company's~~Company’s Chief Executive Officer and Vice President of Finance concluded that the ~~Company's~~Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in internal controls over financial reporting: There ~~has not been any change~~were no significant changes in the ~~Company's~~Company’s internal controls over financial reporting that occurred during the ~~three months ended September 30, 2017~~Company’s last fiscal quarter to which this report relates that ~~has~~have materially affected, or isare reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

PART II. Other Information

Item 1.Legal Proceedings

The information called for by this Item is incorporated herein by reference to Note 1113 of the ~~Company's~~Company’s Condensed Consolidated Financial Statements, under ~~"Legal Proceedings"~~“Legal Proceedings”, as set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q. We are also involved in various other legal actions incidental to our business. We believe, after consulting with counsel, that the disposition of these other legal proceedings and matters will not have a material effect on our condensed consolidated financial condition or results of operations.

Item 1A. Risk Factors

See Part I, Item 1A, ~~"Risk~~“Risk Factors,"” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2018. 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.

2125

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~~Item 2.~~ ~~Unregistered Sales of Equity Securities and Use of Proceeds~~

~~The following table sets forth certain information regarding the Company's purchase of shares of its Class A Common Stock during each calendar month in the quarter ended September 30, 2017:~~

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plan

July 1 - July 31, 2017 - $ - - -
August 1 - August 31, 2017 - - - -
September 1 - September 30, 2017 4,109 24.70 4,109 20,173

Total 4,109 $ 24.70 4,109 20,173

Pursuant to the Bel Fuse Inc. Employees' Savings Plan (the "Employees' Savings Plan"), the Company makes matching contributions of pre-tax elective deferral contributions made by associates. Effective for matching contributions made for years after 2016, the Employees' Savings Plan provides for matching contributions to be invested in shares of the Company's Class A Common Stock. The trustees of the Employees' Savings Plan adopted a "10b5-1 Plan," in accordance with guidelines specified by Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, to make open market purchases of shares of Class A Common Stock with such matching contributions. The purchases in the table above were made under the 10b5-1 Plan. ~~The m~~aximum dollar amount for cumulative purchases under the 10b5-1 Plan during the plan period (September 14, 2017 to February 15, 2018) will not exceed $650,000. The September 30, 2017 closing price was used to calculate the Maximum Number of Shares that May Yet be Purchased Under the Plan.

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Item 6. Exhibits

(a) Exhibits:


31.1*	~~31.1~~*	Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*	~~31.2~~*	Certification of the Principal Financial Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~32.1~~ 32.1***	Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~ 32.2***	Certification of the Principal Financial Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*	XBRL Instance Document

101.SCH*	XBRL Taxonomy Extension Schema Document

101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** ** Submitted herewith.

2326

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	BEL FUSE INC.
~~November~~August 6, ~~2017~~2019
By:	/s/ Daniel Bernstein
	Daniel Bernstein
	President and Chief Executive Officer

By:	/s/ Craig Brosious
	Craig Brosious
	Vice President of Finance and Secretary
	(Principal Financial Officer and Principal Accounting Officer)

	Nine Months Ended September 30,
	2017			2016
Balance, January 1	$	2,718		$	3,659
Charges and costs accrued		211			142
Adjustments related to pre-existing warranties
(including changes in estimates)		(779	)		(981	)
Less repair costs incurred		(173	)		(433	)
Currency translation		66			(18	)
Balance, September 30	$	2,043		$	2,369

	Increase (Decrease)
	Compared to Same Period of 2016
	Three Months Ended			Nine Months Ended
	September 30, 2017			September 30, 2017
VAT expenses	$	-		$	5,155
Legal and professional fees		612			789
Sales commissions, advertising and other selling costs		519			148
Net foreign currency exchange gains/losses		357			3,045
ERP system implementation consulting costs		395			1,483
Salaries and fringe benefits		39			(1,336	)
Other		(404	)		(432	)
Total increase	$	1,518		$	8,852

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plan

July 1 - July 31, 2017		-	$	-		-		-
August 1 - August 31, 2017		-		-		-		-
September 1 - September 30, 2017		4,109		24.70		4,109		20,173

Total		4,109	$	24.70		4,109		20,173