NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated balance sheets, statements of operations, comprehensive (loss) income, 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 months ended September 30, ~~2018~~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, ~~2017.~~

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~~these 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, ~~2017.~~2018. There were no significant changes to these accounting policies during the nine months ended September 30, ~~2018,~~2019, except as discussed in ~~Note 2, Revenue, related to the adoption of the new revenue standards.~~

“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 May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ ("ASU 2014-09"), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. Subsequently, the FASB issued several other updates related to revenue recognition (collectively with ASU 2014-09, the "new revenue standards" or "ASC 606"). We adopted the guidance under the new revenue standards effective January 1, 2018 using the modified retrospective approach by recognizing the cumulative effect of initially applying the new standard as an increase to the opening balance of retained earnings.

Upon adoption, the new revenue standards replaced most existing revenue recognition guidance in U.S. GAAP. Based on our review of representative samples of contracts and other forms of agreements with customers globally and our evaluation of the provisions under the five-step model specified by the new revenue standards, the Company has implemented changes with respect to timing of revenue recognition primarily related to arrangements for which the customer takes the Company's products from a facility holding consignment inventory.

In connection with the modified retrospective application of the new revenue standards, we recorded an adjustment to increase retained earnings of $3.4 million upon the January 1, 2018 adoption date. Apart from this adjustment and the inclusion of additional required disclosures in Note 2, the adoption of the new revenue standards did not have a material impact on the Company's condensed consolidated financial statements.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~. This guidance primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new guidance, entities will be required to measure certain equity investments at fair value and recognize any changes in fair value in net earnings, unless the investments qualify for the new practicability exception. The new standard was effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2017. We adopted this guidance on January 1, 2018. The adoption of this guidance did not have a material impact on the Company's condensed consolidated financial statements.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~. This guidance addresses diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This accounting guidance was effective for annual reporting periods beginning after December 31, 2017, including interim reporting periods within those annual reporting periods, and should be applied retrospectively to all periods presented. This ~~guidance was adopted by the Company effective January 1, 2018 and it did not have any impact on the Company's condensed consolidated statement of cash flows in the periods presented.~~

~~Return to Index~~

~~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 was 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 was adopted by the Company effective January 1, 2018 and it did not have a material impact on the Company's condensed consolidated financial position or results of operations.

~~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 adopted ASU 2017-01 on January 1, 2018, and the guidance will be applied on a prospective basis.

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~ ("ASU 2017-07"). This guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost. ASU 2017-07 requires employers to present the service cost component of the net periodic benefit cost in the same income statement line as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service costs and actuarial gains/losses, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. The guidance also specifies that the amount of costs that can be capitalized will be limited to service cost only. The Company adopted the guidance of ASU 2017-07 on January 1, 2018 and elected to apply the practical expedient and use the amounts disclosed in Note 9 to the financial statements included in Part I, Item 1 of the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 as the basis for applying the retrospective application required by the standard. The amounts reclassified within the statement of operations for the three-month and nine-month periods ended September 30, 2017 were not material.

~~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, and interim periods within those annual periods, beginning after December 15, 2017. The Company adopted ASU 2017-09 on January 1, 2018, and the guidance within this update will be applied to any future award modifications.

~~Accounting Standards Issued But Not Yet Adopted~~

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.

The ~~updated guidance requires a~~Company adopted ASU 2016-02, as amended, effective January 1, 2019 using the modified retrospective ~~adoption. We plan~~approach. In connection with the adoption, we elected to ~~adopt~~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, ~~on January 1, 2019.~~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 assessing~~implemented a new lease system to facilitate the ~~impact that~~requirements of the new standard ~~will have on~~and completed the necessary changes to our ~~consolidated~~accounting policies, processes, disclosures and internal control over financial ~~statements, which will consist primarily~~reporting.

Adoption of the new standard resulted in the recording of 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.~~

~~In January 2017, the FASB issued~~ ~~ASU 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ ("ASU 2017-04"). ASU 2017-04 simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Early adoption is permitted for interim and annual goodwill impairment tests performed on testing dates aftersheet as of January 1, ~~2017.~~2019. The ~~Company is required to adopt~~standard did not materially affect the Company’s consolidated net earnings or have any impact on cash flows. See Note 13, Leases, for Topic 842 disclosures in connection with the adoption of 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.~~

2016-02.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This guidance allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act, which was enacted on December 22, 2017. This guidance is effective for all entities for fiscal years 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. ~~Early~~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 ~~is permitted.~~ ~~We are currently in~~of this guidance did not have a material impact on the ~~process~~Company’s condensed consolidated financial statements.

Table of ~~evaluating this new standard update.~~

~~Return to Index~~Contents

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, 2018, including interim periods within that year. ~~We are~~This guidance was adopted by the Company effective January 1, 2019 and did not have a material impact on the Company’s condensed consolidated financial 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”). 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 elected to early adopt ASU 2017-04 effective July 1, 2019, and accounted for the goodwill impairment charge discussed in Note 4 under this guidance.

Accounting Standards Issued But Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The new guidance will broaden the 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 expected losses rather than incurred losses. The amendment is currently ineffective for public entities for annual reporting periods beginning after December 15, 2019, with early adoption permitted. Management is currently assessing the ~~process~~impact of ~~evaluating this new standard update.~~

ASU 2016-13, but it is not expected to have a material impact on the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – 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): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). This guidance removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and ~~added~~adds additional disclosures. The standard is effective for fiscal years ending after December 15, 2020. The amendments in ASU 2018-14 would need to be applied on a retrospective basis. ~~We are~~The Company is currently assessing the impact the new guidance will have on ~~our~~its disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other-Internal-Use Software (Subtopic 350-40): ~~Customer's~~Customer’s Accounting for 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, 2019, and early adoption is permitted. The Company is currently evaluating the impacts that adoption of this ASU will have on its consolidated financial statements.

Table of Contents

REVENUE

~~Significant Accounting Policy~~

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under ASC 605. The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the transfer of control of the Company's goods and services and provides financial statement readers with enhanced disclosures related to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these goods and services.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

~~Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of sales.~~

~~Nature of Goods and Services~~

~~Our revenues are substantially derived from sales of our products.~~

In our connectivity solutions product group, we provide connectors and cable assemblies to the aerospace, military/defense, commercial, rugged harsh environment and communication markets. This group also includes passive jacks, plugs and cable assemblies that provide connectivity in networking equipment, as well as modular plugs and cable assemblies used within the structured cabling system, known as premise wiring.

~~Return to Index~~

In our power solutions and protection group, we provide AC-DC and DC-DC power conversion devices and circuit protection products. Applications range from board-mount power to system-level architectures for servers, storage, networking, industrial and transportation.

In our magnetic solutions group, we provide an extensive line of integrated connector modules (ICM), where an Ethernet magnetic solution is integrated into a connector package. Products within the Company's magnetic solutions group are primarily used in networking and industrial applications.

The Company also provides incremental services to our customers in the form of training, technical support, special tooling, and other support as deemed necessary from time to time. For purposes of ASC 606, all such incremental services were concluded to be immaterial in the context of the contracts.

~~Types of Contracts~~

~~Substantially all of the Company's revenue is derived from contracts with its customers under one of the following types of contracts:~~

~~Direct with customer:~~ This includes contracts with original equipment manufacturers (OEMs), original design manufacturers (ODMs), and contract manufacturers (CMs). The nature of Bel's products are such that they represent components which are installed in various end applications (i.e. servers, aircraft, missiles and rail applications). The OEM, ODM or CM that purchases our product for further installation are our end customers. Contracts with these customers are broad-based and cover general terms and conditions. Details such as order volume and pricing are typically contained in individual purchase orders, and as a result, we view each product on each purchase order as an individual performance obligation. Incremental services included in the contracts, such as training, tooling and other customer support are determined to be immaterial in the context of the contract, both individually and in the aggregate. Revenue under these contracts is generally recognized at a point in time, generally upon shipping or delivery, which closely mirrors the shipping terms dictated by the applicable contract.

~~Distributor:~~ Distribution customers buy product directly from Bel and sell it in the marketplace to end customers. Bel contracts directly with the distributor. These contracts are typically global in nature and cover a variety of our product groups. Similar to contracts with OEMs, ODMs and CMs, each product on each purchase order is considered an individual performance obligation. Revenue is recognized at a point in time, generally upon shipping or delivery, which closely mirrors the shipping terms dictated by the applicable contract.

~~Consignment:~~ These customers operate under a type of concession agreement whereby the Company ships goods to a warehouse or hub, where they will be pulled by the customer at a later date. The terms specified in the consignment contracts specify that the Company will not invoice the customer for product until it is pulled from the warehouse or hub. Once product arrives at the hub, it is generally not returned to Bel unless there is a warranty issue (see "Warranties" section below). Similar to the contracts described above, each product on each purchase order is considered an individual performance obligation. Under ASC 606, it was determined that the majority of these hubs are customer-controlled, and therefore control transfers to the customer upon either delivery from Bel's warehouse, or arrival at the customer-controlled hub, depending upon the applicable shipping terms. Effective January 1, 2018, revenue is recognized as control of the product is transferred to the customer (for customer-controlled hubs, this is at the time product is shipped to the hub). This gives rise to an unbilled receivable balance, as we do not have the right to invoice the customer until product is pulled from the hub.

~~Licensing Agreements:~~ License agreements are only applicable to our Power Solutions and Protection product group, and include provisions for Bel to receive sales-based royalty income related to the licensing of Bel's patents or other intellectual property (IP) utilized by a third-party entity. Income related to these agreements is tracked by the licensee throughout the year based on their sales of product that utilize Bel's IP, and that data is reported to Bel either on a quarterly or annual basis, with payment generally received within 30 days of the reporting date. Our performance obligation is satisfied upon delivery of the IP at the beginning of the license period, as the licenses are functional in nature. However, the recognition of revenue associated with these licenses is subject to the sales- or usage-based constraint on variable consideration. As such, the Company records a constrained estimate of this variable consideration as royalty income in the period of the underlying customers' product sales, with adjustments made as actual licensee sales data becomes available.

~~Return to Index~~

~~Warranties~~

Warranties vary by product line and are competitive for the markets in which the Company operates. Warranties generally extend for one to three years from the date of sale, providing customers with assurance that the related product will function as intended. The Company reviews its warranty liability quarterly based on an analysis of actual expenses and failure rates accompanied with estimated future costs and projected failure rate trends. Factors taken into consideration when evaluating our warranty reserve are (i) historical claims for each product, (ii) volume increases, (iii) life of warranty, (iv) historical warranty repair costs and (v) other factors. To the extent that actual experience differs from our estimate, the provision for product warranties will be adjusted in future periods. Actual warranty repair costs are charged against the reserve balance as incurred. See Note 7, "Accrued Expenses."

~~Product Returns~~

We estimate product returns, including product exchanges under warranty, based on historical experience. In general, the Company is not contractually obligated to accept returns except for defective product or in instances where the product does not meet the Company's product specifications. However, the Company may permit its customers to return product for other reasons. In certain instances, the Company would generally require a significant cancellation penalty payment by the customer. The Company estimates such returns, where applicable, based upon management's evaluation of historical experience, market acceptance of products produced and known negotiations with customers. Such estimates are deducted from sales and provided for at the time revenue is recognized. Distribution customers often receive what is referred to as "ship and debit" arrangements, whereby Bel will invoice them at an agreed upon unit price upon shipment of product and a price reduction may be granted if the market price of the product declines after shipment. Distributors may also be entitled to special pricing discount credits, and certain customers are entitled to return allowances based on previous sales volumes. Bel deducts estimates for anticipated credits, refunds and returns from sales each quarter based on historical experience.

~~Significant Payment Terms~~

Contracts with customers indicate the general terms and conditions in which business will be conducted for a set period of time. Individual purchase orders state the description, quantity and price of each product purchased. Payment for products sold under direct contracts with customers or contracts with distributors is typically due in full within 30-90 days from the transfer of title to customer. Payment for products sold under consignment contracts is typically due within 60 days of the customer pulling the product from the hub. Payment due related to our licensing agreements is generally within 30 days of receiving the licensee sales data, which is either on a quarterly or annual basis.

Since the customer agrees to a stated price for each product on each purchase order, the majority of contracts are not subject to variable consideration. However, the "ship and debit" arrangements with distributors, royalty income associated with our licensing agreements, and the product returns described above are each deemed to be variable consideration which requires the Company to make constrained estimates based on historical data.

~~Disaggregation of 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 September 30, 2019								Nine Months Ended September 30, 2019
	North								North
	America		Asia		Europe		Consolidated		America		Asia		Europe		Consolidated

*By Product Group:*
Connectivity solutions	$	33,929	$	2,510	$	8,092	$	44,531	$	97,273	$	9,012	$	25,069	$	131,354
Magnetic solutions		8,241		29,576		1,842		39,659		26,662		85,834		6,109		118,605
Power solutions and protection		23,608		7,868		8,813		40,289		73,495		21,709		32,121		127,325
	$	65,778	$	39,954	$	18,747	$	124,479	$	197,430	$	116,555	$	63,299	$	377,284

*By Sales Channel:*
Direct to customer	$	44,110	$	34,837	$	12,397	$	91,344	$	133,432	$	98,672	$	41,903	$	274,007
Through distribution		21,668		5,117		6,350		33,135		63,998		17,883		21,396		103,277
	$	65,778	$	39,954	$	18,747	$	124,479	$	197,430	$	116,555	$	63,299	$	377,284

	Three Months Ended September 30, 2018								Nine Months Ended September 30, 2018
	North								North
	America		Asia		Europe		Consolidated		America		Asia		Europe		Consolidated

*By Product Group:*
Connectivity solutions	$	34,919	$	5,293	$	8,314	$	48,526	$	100,797	$	13,533	$	26,043	$	140,373
Magnetic solutions		10,586		40,100		2,286		52,972		28,795		100,769		7,184		136,748
Power solutions and protection		25,149		8,135		11,707		44,991		71,759		23,760		32,811		128,330
	$	70,654	$	53,528	$	22,307	$	146,489	$	201,351	$	138,062	$	66,038	$	405,451

*By Sales Channel:*
Direct to customer	$	46,802	$	46,965	$	15,184	$	108,951	$	128,754	$	119,294	$	45,368	$	293,416
Through distribution		23,852		6,563		7,123		37,538		72,597		18,768		20,670		112,035
	$	70,654	$	53,528	$	22,307	$	146,489	$	201,351	$	138,062	$	66,038	$	405,451

Three Months Ended September 30, 2018
North
America Asia Europe Consolidated

By Product Group:
Connectivity solutions $ 34,919 $ 5,293 $ 8,314 $ 48,526
Magnetic solutions 10,586 40,100 2,286 52,972
Power solutions and protection 25,149 8,135 11,707 44,991
$ 70,654 $ 53,528 $ 22,307 $ 146,489

By Sales Channel:
Direct to customer $ 46,802 $ 46,965 $ 15,184 $ 108,951
Through distribution 23,852 6,563 7,123 37,538
$ 70,654 $ 53,528 $ 22,307 $ 146,489

~~Return to Index~~

Nine Months Ended September 30, 2018
North
America Asia Europe Consolidated

By Product Group:
Connectivity solutions $ 100,797 $ 13,533 $ 26,043 $ 140,373
Magnetic solutions 28,795 100,769 7,184 136,748
Power solutions and protection 71,759 23,760 32,811 128,330
$ 201,351 $ 138,062 $ 66,038 $ 405,451

By Sales Channel:
Direct to customer $ 128,754 $ 119,294 $ 45,368 $ 293,416
Through distribution 72,597 18,768 20,670 112,035
$ 201,351 $ 138,062 $ 66,038 $ 405,451

~~The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of ASC 606 were as follows:~~

Balance at Adjustments Balance at
December 31, Due to January 1,
2017 ASC 606 2018
Balance Sheet
Unbilled receivables $ - $ 14,536 $ 14,536
Inventory 107,719 (11,044 ) 96,675
Other current liabilities 6,204 43 6,247
Retained earnings 147,807 3,449 151,256

In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our balance sheet as of September 30, 2018 and consolidated statement of operations for the three and nine months ended September 30, 2018 was as follows:

As of September 30, 2018
Balances Effect of
As Without Adoption Change
Reported of ASC 606 Higher/(Lower)

Balance Sheet
Assets

Unbilled receivables $ 16,553 $ - $ 16,553
Inventories 114,434 126,737 (12,303 )

Liabilities

Other current liabilities 3,836 3,715 121

Equity

Retained earnings 165,518 161,389 4,129

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Balances Effect of Balances Effect of
As Without Adoption Change As Without Adoption Change
Reported of ASC 606 Higher/(Lower) Reported of ASC 606 Higher/(Lower)

Statement of Operations
Net sales $ 146,489 $ 145,523 $ 966 $ 405,451 $ 403,434 $ 2,017
Cost of sales 117,282 116,312 970 326,096 324,837 1,259
Operating income 10,499 10,503 (4 ) 21,603 20,845 758
(Benefit from) Provision for income taxes (2,201 ) (2,163 ) (38 ) 523 445 78
Net earnings 11,352 11,318 34 16,684 16,004 680

~~Return to Index~~

~~Contract Assets and Contract Liabilities~~:

A contract asset results when goods or services have been transferred to the customer but payment is contingent upon a future event, other than passage of time. In the case of our consignment arrangements, we are unable to invoice the customer until product is pulled from the hub by the customer, which generates an unbilled receivable (a contract asset) when revenue is initially recognized.

A contract liability results when cash payments are received or due in advance of our performance obligation being met. We have certain customers who provide payment in advance of product being shipped, which results in deferred revenue (a contract liability).

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

	September 30,		December 31,
	2019		2018

Contract assets - current (unbilled receivable)	$	14,868	$	15,799
Contract liabilities - current (deferred revenue)	$	1,004	$	1,036

September 30, January 1,
2018 2018

Contract assets - current (unbilled receivable) $ 16,553 $ 14,536
Contract liabilities - current (deferred revenue) $ 776 $ 855

The change in balance of our unbilled receivables from ~~January 1,~~December 31, 2018 to September 30, ~~2018~~2019 primarily relates to a timing difference between the ~~Company's~~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).

~~A tabular presentation of the activity within the deferred revenue account for the nine months ended September 30, 2018 is presented below:~~

Nine Months Ended
September 30, 2018
Balance, January 1 $ 855
New advance payments received 6,180
Recognized as revenue during period (6,251 )
Currency translation (8 )
Balance, September 30 $ 776

~~Transaction Price Allocated to Future Obligations~~:

The aggregate amount of transaction price allocated to remaining performance obligations that have not been satisfied as of September 30, ~~2018~~2019 related to contracts that exceed one year in duration amounted to ~~$17.6~~$15.7 million, with expected contract expiration dates that range from ~~2019~~2020 - ~~2024.~~2025. It is expected that ~~14%~~20% of this aggregate amount will be recognized in ~~the fourth quarter of 2019, 52%~~2020, 57% will be recognized in ~~2020~~2021 and the remainder will be recognized in years beyond ~~2020. The majority~~2021.

Table of the Company's total backlog of orders at September 30, 2018 is related to contracts that have an original expected duration of one year or less, for which the Company is electing to utilize the practical expedient available within the guidance, and are excluded from the transaction price related to these future obligations. The Company will generally satisfy the remaining performance obligations as we transfer control of the products ordered to our customers. The transaction price related to these future obligations also excludes variable consideration consisting of sales or usage-based royalties earned on licensing agreements. The variability related to these sales or usage-based royalties will be resolved in the periods when the licensee generates sales related to the licensed intellectual property.Contents

~~Other Practical Expedients:~~

~~In the application of the recognition and measurement principles of ASC 606, the Company elected to utilize the following additional practical expedients which are provided for within the guidance:~~

· 3.	~~Financing Components~~: Bel has elected the practical expedient which enables management to disregard the effects of a financing component if the time difference between delivery of goods or services and payment for the goods or services is within one year.

~~Costs to Obtain a Contract~~: As part of negotiations, Bel may incur incremental costs to obtain a contract. Incremental costs are only those costs that would not have been incurred if the contract had not been obtained (e.g. sales commissions). Bel has elected the practical expedient that allows incremental costs to obtain a contract to be expensed as incurred when the expected amortization period is one year or less.

~~Return to Index~~

3.	(LOSS) EARNINGS PER SHARE

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

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019			2018		2019			2018

Numerator:
Net (loss) earnings	$	(6,490	)	$	11,352	$	(2,391	)	$	16,684
Less dividends declared:
Class A		131			130		392			391
Class B		710			689		2,124			2,079
Undistributed (loss) earnings	$	(7,331	)	$	10,533	$	(4,907	)	$	14,214

Undistributed (loss) earnings allocation - basic and diluted:
Class A undistributed (loss) earnings	$	(1,243	)	$	1,812	$	(834	)	$	2,461
Class B undistributed (loss) earnings		(6,088	)		8,721		(4,073	)		11,753
Total undistributed (loss) earnings	$	(7,331	)	$	10,533	$	(4,907	)	$	14,214

Net (loss) earnings allocation - basic and diluted:
Class A net (loss) earnings	$	(1,112	)	$	1,942	$	(442	)	$	2,852
Class B net (loss) earnings		(5,378	)		9,410		(1,949	)		13,832
Net (loss) earnings	$	(6,490	)	$	11,352	$	(2,391	)	$	16,684

Denominator:
Weighted-average shares outstanding:
Class A - basic and diluted		2,173			2,175		2,174			2,175
Class B - basic and diluted		10,139			9,972		10,113			9,891

Net (loss) earnings per share:
Class A - basic and diluted	$	(0.51	)	$	0.89	$	(0.20	)	$	1.31
Class B - basic and diluted	$	(0.53	)	$	0.94	$	(0.19	)	$	1.40

   Three Months Ended Nine Months Ended
   September 30, September 30,
2018 2017 2018 2017

Numerator:
Net earnings $ 11,352 $ 5,024 $ 16,684 $ 8,890
Less dividends declared:
     Class A 130 131 391 392
     Class B 689 691 2,079 2,079
Undistributed earnings $ 10,533 $ 4,202 $ 14,214 $ 6,419

Undistributed earnings allocation - basic and diluted:
     Class A undistributed earnings $ 1,812 $ 729 $ 2,461 $ 1,115
     Class B undistributed earnings 8,721 3,473 11,753 5,304
     Total undistributed earnings $ 10,533 $ 4,202 $ 14,214 $ 6,419

Net earnings allocation - basic and diluted:
     Class A net earnings $ 1,942 $ 860 $ 2,852 $ 1,507
     Class B net earnings 9,410 4,164 13,832 7,383
     Net earnings $ 11,352 $ 5,024 $ 16,684 $ 8,890

Denominator:
Weighted-average shares outstanding:
     Class A - basic and diluted 2,175 2,175 2,175 2,175
     Class B - basic and diluted 9,972 9,864 9,891 9,856

Net earnings per share:
     Class A - basic and diluted $ 0.89 $ 0.40 $ 1.31 $ 0.69
     Class B - basic and diluted $ 0.94 $ 0.42 $ 1.40 $ 0.75

4.~~FAIR VALUE MEASUREMENTS~~

F~~air~~

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:

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 30, 2019 and December 31, ~~2017, 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 gross unrealized gains associated with the investment~~These securities ~~held in the rabbi trust were $0.2 million at December 31, 2017. Such unrealized gains~~ are included, net of tax, in accumulated other comprehensive loss. During the nine months ended September 30, 2018, the Company sold its securities and realized a gain on sale of $0.2 million. The proceeds of $1.3 million were reinvested in other securities within the rabbi trust.

~~As of September 30, 2018 and December 31, 2017, our securities primarily consisted of investments held in a rabbi trust of $1.3 million and $1.5 million, respectively, which were~~ measured at fair value using quoted prices in active markets for identical assets (Level 1) ~~inputs.~~inputs and amounted to $1.2 million at September 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 months ended September 30, ~~2018~~2019 or September 30, ~~2017. Excluding the changes made in accordance with the Company's adoption of ASU 2016-01, there~~2018. There were no ~~additional~~ changes to the ~~Company's~~Company’s valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during the nine months ended September 30, ~~2018.~~

~~Return to Index~~2019 or September 30, 2018

There were no financial assets accounted for at fair value on a nonrecurring basis as of September 30, ~~2018~~2019 or December 31, ~~2017.~~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 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the estimated fair value of total debt was ~~$116.9~~$116.8 million and ~~$124.8~~$117.9 million, respectively, compared to a carrying amount of ~~$114.8~~$112.3 million and ~~$122.7~~$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 30, ~~2018.~~

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~~event. We review goodwill for impairment on a reporting unit basis annually during the fourth quarter of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. As weakened market conditions from earlier in 2019 continued into the third quarter without a visible rebound in incoming orders, the Company’s actual revenue and margin levels in 2019 were significantly lower than the financial projections utilized in the ~~case~~annual goodwill impairment analysis (performed as of October 1, 2018), and were not projected to rebound to those levels in 2019. The Company determined that current business conditions, and the resulting decrease in the Company’s projected undiscounted and discounted cash flows, together with the accompanying stock price decline, constituted a triggering event, which required the Company to perform interim impairment tests related to its long-lived assets and goodwill during the third quarter of 2019. The Company’s interim test on its long-lived assets indicated that the carrying value of its long-lived assets was recoverable and that no impairment existed as of the July 31, 2019 testing date.

The Company’s Level 3 fair value analysis related to the interim test for goodwill impairment was supported by a weighting of two generally accepted valuation approaches, the income approach and the market approach, as further described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. These approaches include numerous assumptions with respect to future circumstances, such as industry and/or local market conditions, which might directly impact each of the reporting units’ operations in the future, and are therefore uncertain. These approaches are utilized to develop a range of fair values and a weighted average of these approaches is utilized to determine the best fair value estimate within that range.

The July 31, 2019 interim impairment test related to the Company's goodwill was performed by reporting unit (North America and Europe). The valuation test, which heavily weights future discounted cash flow projections, indicated impairment of the goodwill associated with the Company’s North America reporting unit. As a result, the Company recorded a non-cash goodwill impairment charge of $8.9 million ($8.5 million after-tax) during the third quarter of 2019. The Company’s goodwill associated with its North America reporting unit originated from several of Bel’s prior acquisitions, primarily Power Solutions and Connectivity Solutions. The carrying value of the Company's goodwill was $19.8 million at December 31, 2018. The remaining goodwill as of September 30, 2019 has a carrying value of $10.8 million related solely to the Company's Europe reporting unit. See Note 5, Goodwill.

Detailed below is a table of key underlying assumptions utilized in the fair value estimate calculation for the interim test performed as of July 31, 2019 as compared to those assumptions utilized during the annual valuation performed as of October 1, 2018. The table below shows the assumptions utilized for the North America reporting unit.

	Goodwill Impairment Analysis
	Key Assumptions
	2019 - Interim			2018 - Annual

Income Approach - Discounted Cash Flows:
Revenue 5-year compound annual growth rate (CAGR)		1.5	%		2.6	%
2019 EBITDA margins		3.9	%		7.6	%
Cost of equity capital		15.4	%		14.2	%
Cost of debt capital		4.0	%		3.7	%
Weighted average cost of capital		14.0	%		13.0	%

Market Approach - Multiples of Guideline Companies:
Net operating revenue multiples used		0.3			0.4
Operating EBITDA multiples used		7.0 - 8.0			5.1 - 5.7
Invested capital control premium		25	%		25	%

Weighting of Valuation Methods:
Income Approach - Discounted Cash Flows		75	%		75	%
Market Approach - Multiples of Guideline Companies		25	%		25	%

The Company had also performed an interim impairment analysis of its indefinite-lived intangible assets as of July 31, 2019. The Company tests indefinite-lived intangible assets for impairment using a fair value approach, the relief-from-royalty method (a form of the income approach). At December 31, 2018, the Company’s indefinite-lived intangible assets related to the trademarks acquired in the Power Solutions, Connectivity Solutions, Cinch and Fibreco acquisitions. The Company's interim test on its indefinite-lived intangible assets indicated that the carrying value of its long-lived assets was recoverable and that no impairment existed as of the July 31, 2019 testing date.

GOODWILL

The changes in the carrying value of goodwill ~~on at least an annual basis. There were no triggering events that occurred during~~classified by reportable operating segment for the nine months ended September 30, ~~2018 that would warrant interim impairment testing.~~2019 are as follows:

	Total			North America			Asia			Europe

Balance at January 1, 2019
Goodwill, gross	$	148,408		$	63,364		$	54,508		$	30,536
Accumulated impairment charges		(128,591	)		(54,473	)		(54,508	)		(19,610	)
Goodwill, net		19,817			8,891			-			10,926

Impairment charge (see Note 4)		(8,891	)		(8,891	)		-			-
Foreign currency translation		(122	)		-			-			(122	)
Measurement period adjustment		(26	)		-			-			(26	)

Balance at September 30, 2019:
Goodwill, gross		148,260			63,364			54,508			30,388
Accumulated impairment charges		(137,482	)		(63,364	)		(54,508	)		(19,610	)
Goodwill, net	$	10,778		$	-		$	-		$	10,778

5.~~INVENTORIES~~

6.	INVENTORIES

The components of inventories are as follows:

	September 30,		December 31,
	2019		2018
Raw materials	$	50,431	$	63,348
Work in progress		28,514		21,441
Finished goods		31,264		35,279
Inventories	$	110,209	$	120,068

September 30, December 31,
2018 2017
Raw materials $ 62,373 $ 46,712
Work in progress 21,602 17,688
Finished goods 30,459 43,319
Inventories $ 114,434 $ 107,719

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	September 30,			December 31,
	2019			2018
Land	$	1,426		$	2,251
Buildings and improvements		29,341			30,119
Machinery and equipment		128,766			126,747
Construction in progress		6,363			4,687
		165,896			163,804
Accumulated depreciation		(123,426	)		(119,872	)
Property, plant and equipment, net	$	42,470		$	43,932

September 30, December 31,
2018 2017
Land $ 2,256 $ 2,259
Buildings and improvements 30,572 30,761
Machinery and equipment 124,160 122,773
Construction in progress 4,133 1,511
161,121 157,304
Accumulated depreciation (118,127 ) (113,809 )
Property, plant and equipment, net $ 42,994 $ 43,495

Depreciation expense for the three months ended September 30, ~~2018~~2019 and ~~2017~~2018 was ~~$2.8~~$2.5 million and ~~$3.6~~$2.8 million, respectively. Depreciation expense for the nine months ended September 30, 2019 and 2018 was $7.5 million and $8.9 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 second quarter of 2019, the Company transitioned 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 sold its Inwood, New York property during the second quarter of 2019, which resulted in net proceeds of $5.8 million. The accompanying condensed consolidated statements of operations for the nine months ended September 30, ~~2018 and 2017 was $8.9~~2019 includes a related gain on sale of $4.3 million ~~and $10.6 million, respectively.~~(pre-tax).

~~Return to Index~~Table of Contents

ACCRUED EXPENSES

Accrued expenses consist of the following:

	September 30,		December 31,
	2019		2018
Sales commissions	$	2,503	$	2,609
Subcontracting labor		914		1,550
Salaries, bonuses and related benefits		15,808		18,275
Warranty accrual		1,577		1,078
Other		10,267		8,778
	$	31,069	$	32,290

September 30, December 31,
2018 2017
Sales commissions $ 2,685 $ 2,461
Subcontracting labor 1,542 1,408
Salaries, bonuses and related benefits 19,177 16,531
Warranty accrual 1,104 1,769
Other 8,025 8,339
$ 32,533 $ 30,508

~~A tabular presentation of the activity within the~~

The change in warranty accrual ~~account for~~during the nine months ended September 30, ~~2018~~2019 primarily related to repair costs incurred and ~~2017 is presented below:~~adjustments to pre-existing warranties. There were no new material warranty charges incurred during the nine months ended September 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 nine months ended September 30, 2019 are as follows:

			Nine Months Ended
			September 30, 2019
	Liability at				Cash Payments			Liability at
	December 31,		New		and Other			September 30,
	2018		Charges		Settlements			2019
Severance costs	$	-	$	663	$	(663	)	$	-
Other restructuring costs		-		988		(943	)		45
Total	$	-	$	1,651	$	(1,606	)	$	45

During the nine months ended September 30, 2019, the Company’s restructuring charges included $1.1 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 restructuring charges related to the realignment of our R&D resources dedicated to our Power Solutions and Protection group and other restructuring activities in Asia.

Nine Months Ended September 30,
2018 2017
Balance, January 1 $ 1,769 $ 2,718
Charges and costs accrued - 211
Adjustments related to pre-existing warranties
(including changes in estimates) (494 ) (779 )
Less repair costs incurred (181 ) (173 )
Currency translation 10 66
Balance, September 30 $ 1,104 $ 2,043

DEBT

The Company has a Credit and Security Agreement with KeyBank National Association (as amended, the ~~"CSA"~~“CSA”). The CSA consists of (i) a term loan, with outstanding borrowings of ~~$116.7~~$113.8 million and ~~$125.0~~$116.0 million at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively and (ii) a $75 million revolving credit facility ~~("Revolver"~~(“Revolver”), with no outstanding borrowings at September 30, ~~2018~~2019 or December 31, ~~2017.~~2018. The CSA has a maturity date of December 11, 2022. At September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the carrying value of the debt on the condensed consolidated balance sheet is reflected net of ~~$1.9~~$1.4 million and ~~$2.3~~$1.8 million, respectively, of deferred financing costs. During the nine months ended September 30, ~~2018,~~2019, the Company ~~made voluntary prepayments~~borrowed $12.0 million from its revolver, all of ~~$6.0 million. Per the terms of the CSA, such voluntary prepayments reduce the amount of future scheduled payments on a pro rata basis.~~

which was repaid by September 30, 2019.

The weighted-average interest rate in effect was ~~4.25%~~3.81% at September 30, ~~2018~~2019 and ~~3.38%~~4.31% at December 31, ~~2017~~2018 and consisted of LIBOR plus the ~~Company's~~Company’s credit spread, as determined per the terms of the CSA. The Company incurred ~~$1.4~~$1.3 million and ~~$1.5~~$1.4 million of interest expense during the three months ended September 30, 2019 and September 30, 2018 ~~and September 30, 2017,~~, respectively, and ~~$3.9~~$4.1 million and ~~$4.5~~$3.9 million of interest expense during the nine months ended September 30, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively.

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 30, ~~2018,~~2019, the Company was in compliance with its debt covenants, including its most restrictive covenant, the Fixed Charge Coverage Ratio.

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9.~~INCOME TAXES~~

10.	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 ~~2015~~2016 and for state examinations before ~~2012.~~2013. Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before 2008 in Asia and generally ~~2010~~2011 in Europe.

~~Return to Index~~

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 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~~Company’s consolidated financial statements at September 30, ~~2018.~~2019. The ~~Company's~~Company’s liabilities for uncertain tax positions totaled ~~$28.2~~$28.6 million and ~~$30.4~~$28.9 million at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, of which ~~$1.1~~$2.1 million and ~~$2.5~~$1.4 million is included in other current liabilities at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. These amounts, if recognized, would reduce the ~~Company's~~Company’s effective tax rate. As of September 30, ~~2018,~~2019, approximately ~~$2.5~~$2.1 million of the ~~Company's~~Company’s liabilities for uncertain tax positions ~~were~~are expected to be resolved during ~~2018~~2019 by way of expiration of the related statute of limitations.

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 months ended September 30, ~~2018~~2019 and ~~2017,~~2018, the Company recognized ~~$0.7~~$0.5 million and ~~$0.6~~$0.7 million, respectively, in interest and penalties in the condensed consolidated statements of operations. During the ~~three and~~ nine months ended September 30, 2019 and 2018, the Company recognized a benefit of $0.7 million and a benefit of $0.3 million, ~~and $0.7 million,~~ respectively, for the reversal of such interest and penalties, relating to the ~~expiration of statutes of limitations and~~ settlement of the ~~acquired~~ liability for uncertain tax positions. ~~There were no reversals of interest or penalties in the three or nine months ended September 30, 2017.~~ The Company has approximately ~~$3.1~~$4.7 million and ~~$3.2~~$3.8 million accrued for the payment of interest and penalties at September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, which is included in both income taxes payable and liability for uncertain tax positions in the condensed consolidated balance sheets.

~~Tax Reform~~

The ~~Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act reduces~~Company continues to monitor the impacts of the U.S. ~~federal corporate~~ tax ~~rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred~~reform and ~~creates new taxes on certain foreign sourced earnings.~~supplementary guidance as it becomes available. At December 31, ~~2017, we had not completed our accounting for~~2018, the tax effects of enactment of the Act; however, we had made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax in which we recognized a provisional amount of $18.1 million, which was included as a component of income tax expense from continuing operations. During the nine months ended September 30, 2018, the Company has made measurement-period adjustments related to foreign earnings and profits computations and foreign income tax calculations for the Company's non-U.S. subsidiaries. The Company's measurement-period adjustment reduced its estimateremaining balance of the deemed repatriation tax ~~by $2.6 million, resulting~~was included in other current liabilities on the ~~reduction~~Company’s condensed consolidated balance sheet. At September 30, 2019, the majority of the ~~Company's provisional estimate from $18.1 million to $15.5 million. The Company plans to pay the tax in installments in accordance with the Act.~~ The Company's estimates of the effects of the Act were calculated using currently available information; however, the Company is continuing to evaluate the underlying documentation and revisions to the current calculation may occur.

Effective January 1, 2018, the Act subjects a U.S. shareholder to current tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries. The Company has elected an accounting policy to provide for the tax expense related to the GILTI in the period thedeemed repatriation tax is ~~incurred.~~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.

~~10.RETIREMENT FUND AND PROFIT SHARING PLAN~~

11.	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 30, ~~2018~~2019 and ~~2017~~2018 amounted to $0.3 million in both periods. The expense for the nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 amounted to $0.8 million ~~and $0.9 million, respectively.~~in both periods. The ~~Company's~~Company’s matching contribution is made in the form of Bel Fuse Inc. Class A common stock. As of September 30, ~~2018,~~2019, the plan owned ~~111,393~~153,352 and ~~137,700~~109,442 shares of Bel Fuse Inc. Class A and Class B common stock, respectively.

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 30, ~~2018~~2019 and ~~2017~~2018 amounted to $0.1 million in both periods. The expense for the nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 amounted to $0.3 million in both periods. As of September 30, ~~2018,~~2019, the plan owned 3,323 and 17,342 shares of Bel Fuse Inc. Class A and Class B common stock, respectively.

The Company maintains a SERP, which is designed to provide a limited group of key management and other key employees of the Company with supplemental retirement and death benefits. As discussed in Note 4 above, the Company has investments in a rabbi trust which are intended to fund the obligations of the SERP.

~~Return to Index~~

The components of SERP expense are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018
Service cost	$	144	$	183	$	432	$	549
Interest cost		185		166		555		498
Net amortization		48		111		144		332
Net periodic benefit cost	$	377	$	460	$	1,131	$	1,379

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Service cost $ 183 $ 175 $ 549 $ 525
Interest cost 166 168 498 505
Net amortization 111 94 332 281
Net periodic benefit cost $ 460 $ 437 $ 1,379 $ 1,311

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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,
	2019		2018
Prior service cost	$	783	$	918
Net loss		1,968		1,977
	$	2,751	$	2,895

September 30, December 31,
2018 2017
Prior service cost $ 943 $ 1,135
Net loss 3,591 3,732
$ 4,534 $ 4,867

~~11.ACCUMULATED OTHER COMPREHENSIVE LOSS~~

12.	ACCUMULATED OTHER COMPREHENSIVE LOSS

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

	September 30,			December 31,
	2019			2018

Foreign currency translation adjustment, net of taxes of ($739) at September 30, 2019 and ($751) at December 31, 2018	$	(25,489	)	$	(22,635	)
Unrealized holding gains on available-for-sale securities, net of taxes of $0 at September 30, 2019 and $0 at December 31, 2018		12			12
Unfunded SERP liability, net of taxes of ($184) at September 30, 2019 and ($680) at December 31, 2018		(2,568	)		(2,215	)

Accumulated other comprehensive loss	$	(28,045	)	$	(24,838	)

September 30, December 31,
2018 2017

Foreign currency translation adjustment, net of taxes of ($790) at
  September 30, 2018 and ($801) at December 31, 2017 $ (21,000 ) $ (16,537 )
Unrealized holding (losses) gains on available-for-sale securities, net of taxes of
  $67 at September 30, 2018 and $85 at December 31, 2017 (56 ) 145
Unfunded SERP liability, net of taxes of ($1,558) at September 30, 2018
  and ($1,635) at December 31, 2017 (2,977 ) (3,233 )

Accumulated other comprehensive loss $ (24,033 ) $ (19,625 )

Changes in accumulated other comprehensive loss by component during the nine months ended September 30, ~~2018~~2019 are as follows. All amounts are net of tax.

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

Balance at January 1, 2019	$	(22,635	)	$	12	$	(2,215	)		$	(24,838	)
Other comprehensive (loss) income before reclassifications		(2,854	)		-		16				(2,838	)
Amount reclassified from accumulated other comprehensive loss		-			-		94		(a)		94
Net current period other comprehensive (loss) income		(2,854	)		-		110				(2,744	)

Effect of adoption of ASU 2018-02 (Topic 220)		-			-		(463	)			(463	)
Balance at September 30, 2019	$	(25,489	)	$	12	$	(2,568	)		$	(28,045	)

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

13.

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.

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

Balance at January 1, 2018 $ (16,537 ) $ 145 $ (3,233 ) $ (19,625 )
     Other comprehensive (loss) income before reclassifications (4,463 ) (31 ) 39 (4,455 )
     Amount reclassified from accumulated other
          comprehensive loss - (170 ) 217 (a) 47
     Net current period other comprehensive (loss) income (4,463 ) (201 ) 256 (4,408 )

Balance at September 30, 2018 $ (21,000 ) $ (56 ) $ (2,977 ) $ (24,033 )

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

Table of Contents

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		Nine Months Ended
	September 30, 2019		September 30, 2019
Amortization of ROU assets - finance leases	$	33	$	100
Interest on lease liabilities - finance leases		12		36
Operating lease cost (cost resulting from lease payments)		1,950		5,931
Short-term lease cost		1		101
Variable lease cost (cost excluded from lease payments)		64		194
Sublease income		-		-
Total lease cost	$	2,060	$	6,362

Supplemental cash flow information related to leases are as follows:

	Nine Months Ended
	September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,958
Operating cash flows from finance leases		36
Finance cash flows from finance leases		86
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		21,783
Finance leases		-

Supplemental balance sheet information related to leases was as follows:

	September 30, 2019
Operating Leases:
Operating lease right-of-use assets	$	16,296
Operating lease liability, current		6,039
Operating lease liability, long-term		10,713
Total operating lease liabilities		16,752

Finance Leases:
Property, plant and equipment, gross	$	860
Accumulated depreciation		(225	)
Property, plant and equipment, net		635
Other current liabilities		97
Other long-term liabilities		529
Total finance lease liabilities	$	626

	September 30, 2019
Weighted-Average Remaining Lease Term:
Operating leases (in years)	3.22
Finance leases (in years)	5.1

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

Table of Contents

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 September 30, 2019:

Year Ending	Operating			Finance
September 30,	Leases			Leases
2020	$	6,712		$	160
2021		5,310			159
2022		3,681			159
2023		2,031			159
2024		326			159
Thereafter		438			26
Total undiscounted cash flows		18,498			822
Less imputed interest		(1,746	)		(196	)
Present value of lease liabilities	$	16,752		$	626

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

~~Return to Index~~

~~12.COMMITMENTS AND CONTINGENCIES~~

14.	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 30, ~~2018~~2019 and December 31, ~~2017.~~

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 the Regional Court of 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 final judgment in the infringement case pending resolution of the nullity lawsuit in the Federal Patents Courts in Munich, Germany. The Federal Patents Courts issued its preliminary opinion regarding the patent-in-suit on March 29, 2018 stating that it considers the patent-in-suit to not be novel over the prior art documents presented in the case. The parties agreed to withdraw from the pending infringement and nullity proceedings and entered into a settlement agreement on June 29, 2018. The Company paid Setec 75,000 Euro in exchange for a perpetual, worldwide royalty-free license to the patent-in-suit and all its counterparts.

~~In 2015,~~ one of the Company's subsidiaries in the PRC, Dongguan Transpower Electric Products Co., Ltd. ("Dongguan Transpower"), was provided notice of a claim by DG Yu Shing Industrial Development Company Limited against Dongguan Transpower and three other defendants for past due construction costs of approximately $3.2 million. In April 2018, the 3^rd People Court of Dongguan ruled and provided an unfavorable judgment against Dongguan Transpower and two of the other defendants requiring payment of the aforementioned amount. The defendants were held to be jointly and severally liable for approximately $3.2 million in costs. Due to the fact that none of the other defendants had sufficient funds to pay the damages amount, the Court ordered the entire amount (CNY 20,133,174.10) to be paid by Dongguan Transpower. On May 25, 2018, the Court enforced its order and withdrew the damages amount from Dongguan Transpower's bank accounts. On May 31, 2018, Dongguan Transpower filed an action against the other defendants in CP Court to recoup the damages amount paid pursuant to an indemnification letter dated October 16, 2015. The Court heard arguments on July 2, 2018 and rendered a verdict on July 9, 2018 ordering the Jinmei entities (defendants) to pay CNY 20,133,174 back to Dongguan Transpower together with the incurred interest. On August 27, 2018, Dongguan Transpower received payment of CNY 20,430,203 (approximately $3.2 million) from the defendants and this case was closed.

On June 1, 2018, the Company filed an action against Unipower, LLC in the United States District Court for the Southern District of New York for breach of contract. Specifically, the Company alleges in its Complaint that Unipower has willfully violated the Master Services Agreement ("MSA") entered into by the parties on January 23, 2015 by failing to make payment for the products it contracted for under the MSA. The Company is claiming irreparable harm and substantial damages in excess of $1.0 million. The case is currently in the discovery phase of the litigation.

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.

Table of Contents

~~13.SEGMENTS~~

15.

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:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net Sales to External Customers:
North America	$	65,778		$	70,654		$	197,430		$	201,351
Asia		39,954			53,528			116,555			138,062
Europe		18,747			22,307			63,299			66,038
	$	124,479		$	146,489		$	377,284		$	405,451

Net Sales:
North America	$	68,190		$	73,932		$	205,113		$	211,105
Asia		59,561			78,008			184,933			204,152
Europe		23,761			25,398			76,359			77,341
Less intercompany net sales		(27,033	)		(30,849	)		(89,121	)		(87,147	)
	$	124,479		$	146,489		$	377,284		$	405,451

(Loss) Income from Operations:
North America	$	(8,406	)	$	3,360		$	(6,526	)	$	6,021
Asia		2,463			5,753			3,746			10,987
Europe		1,320			1,386			5,925			4,595
	$	(4,623	)	$	10,499		$	3,145		$	21,603

~~Return to Index~~

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Net Sales to External Customers:
    North America $ 70,654 $ 59,537 $ 201,351 $ 184,873
    Asia 53,528 45,919 138,062 127,801
    Europe 22,307 20,930 66,038 58,997
$ 146,489 $ 126,386 $ 405,451 $ 371,671

Net Sales:
North America $ 73,932 $ 62,348 $ 211,105 $ 193,473
Asia 78,008 66,534 204,152 193,364
Europe 25,398 23,633 77,341 67,434
Less intercompany net sales (30,849 ) (26,129 ) (87,147 ) (82,600 )
$ 146,489 $ 126,386 $ 405,451 $ 371,671

Income from Operations:
North America $ 3,360 $ 366 $ 6,021 $ 2,566
Asia 5,753 5,408 10,987 11,759
Europe 1,386 1,020 4,595 2,090
$ 10,499 $ 6,794 $ 21,603 $ 16,415

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~~

Goodwill Impairment - As discussed in Note 4, Fair Value Measurements, the Company recorded an $8.9 million non-cash impairment charge related to its North America goodwill in the third quarter of 2019. This charge impacted income from operations for the North America segment in the three- and nine-month periods ended September 30, 2019.

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

~~14.SUBSEQUENT EVENT~~

16.	SUBSEQUENT EVENT

On ~~October 1, 2018,~~November 11, 2019, the Company ~~completed~~entered into an Asset Purchase Agreement with CUI Global Inc. (the "Seller") to acquire the ~~acquisition~~majority of ~~BCMZ Precision Engineering Limited, a UK manufacturer~~the power supply products business of ~~precision machined components, for approximately $2.6 million in cash. The final~~the Seller ("CUI Power") at an aggregate purchase price ~~remains~~of $32.0 million, subject to ~~certain adjustments related~~working capital adjustments. The acquisition, which is subject to ~~working capital. The transaction was~~customary closing conditions, is expected to close in the fourth quarter of 2019 and will be funded with cash on ~~hand. The purchase price allocation was still in progress~~hand, some or all of which may be sourced from the Company's revolving credit facility. CUI Power designs and ~~was not available at the time of filing of this Quarterly Report.~~

~~BCMZ has~~markets a ~~diversified~~broad portfolio of ~~customers~~AC/DC and DC/DC power supplies and board level components. CUI Power is headquartered in ~~the automotive, aerospace, defense, telecommunication, fibre-optic~~Tualatin, Oregon and ~~medical industrial sectors and has been a long-term key supplier~~had trailing-twelve month sales through September 30, 2019 of precision machined components for our Cinch Connectivity Solutions UK business. BCMZ is additionally expected to give Cinch the capability to continue to support key defense and industrial customers across Europe with localized in-house machining ability.approximately $37.0 million.

~~Return to Index~~Table of Contents

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 ~~2017~~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 ~~2017~~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 months ended September 30, ~~2018, 50%~~2019, 52% of the ~~Company's~~Company’s revenues were derived from North America, ~~34%~~31% from Asia and ~~16%~~17% from its Europe operating segment. By product group, ~~34%~~35% of sales for the nine months ended September 30, ~~2018~~2019 related to the ~~Company's~~Company’s connectivity solutions products, 34% ~~in magnetic solutions products and 32%~~ in power solutions and protection products and 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).

We have little visibility into the ordering habits of our customers and we can be subjected to large and unpredictable variations in demand for our products. Accordingly, we must continually recruit and train new workers to replace those lost to attrition and be able to address peaks in demand that may occur from time to time. These recruiting and training efforts and related inefficiencies, and overtime required in order to meet any increase in demand, can add volatility to the labor costs incurred by us.

Key Factors Affecting our Business

The Company believes the key factors affecting ~~Bel's~~Bel’s results for the ~~three and~~ nine months ended September 30, ~~2018~~2019 and/or future results include the following:

•

Revenues – The ~~Company's~~Company’s revenues ~~increased~~decreased by ~~$33.8~~$28.2 million ~~or 9.1%,~~(or 6.9%) in the first nine months of ~~2018~~2019 as compared to the same period of ~~2017, despite a $5.1 million~~2018. The sales decline ~~in sales related to the NPS divestiture. Sales growth~~ was seen across all of our major product groups ~~as certain project wins from 2017 are~~and was largely due to an over-inventoried supply channel at our customers and distributors following the high volume of purchases in ~~full production~~2018 in advance of the tariffs that went into effect in 2018 and ~~we continue to see strength in sales through our distribution partners.~~2019.

•

Backlog – Our backlog ~~reached $185.1~~of orders amounted to $143.3 million at September 30, ~~2018, representing an increase~~2019, a decline of ~~$38.6~~$27.9 million, or ~~26%~~16%, from December 31, ~~2017.~~2018. Since year-end, we saw a ~~65%~~9% increase ~~at Magnetic Solutions, driven by a strong position with our integrated connector modules~~ in ~~next-generation switching products. The~~the backlog for our Connectivity Solutions products, ~~increased by 21%,~~primarily driven by ~~recent awards on key~~additional orders from our military ~~programs, and heightened structured cabling demand~~customers. The backlog of orders for our ~~passive connectors. Our~~ Power Solutions and Protection ~~backlog grew~~products declined by ~~9%, led by higher demand~~26% and backlog for our ~~power supplies for~~Magnetic Solutions products was down 33% from year-end 2018 levels. Order volumes were lower in the first nine months of 2019 as a ~~variety~~result of ~~datacenter applications.~~slowdowns in certain markets coupled with customers working down 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, 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.

~~Return to Index~~Table of Contents

•

Pricing and Availability of Materials – ~~There~~While material cost and availability for certain components have ~~been recent supply constraints~~started to ease, the higher raw material costs which were in place during 2018, particularly related to ~~components that constitute raw materials in our manufacturing processes, particularly with~~ resistors, capacitors and mosfets, are still running through our supply chain as we ship the balance of our inventory on hand from 2018. Lead times continue to be extended for certain mosfets and ~~printed circuit boards. Lead times have been extended and the reduction in supply has also caused an increase in prices~~costs for ~~certain of these components.~~those components remain elevated. As a result, the ~~Company's~~Company’s material costs as a percentage of sales increased to ~~42.0%~~44.1% during the first nine months of ~~2018~~2019 from ~~39.7%~~42.0% during the ~~first nine months~~same period of ~~2017.~~ 2018.

•

Labor Costs – Labor costs ~~during the first nine months of 2018 increased~~decreased from ~~10.4%~~11.5% of sales during the first nine months of ~~2017~~2018 to ~~11.5%~~10.4% of sales during the ~~first nine months~~same period of ~~2018, primarily due~~2019, as a more favorable exchange rate environment in 2019 related to the ~~appreciation~~Chinese Renminbi offset the overall impact of ~~the Renminbi against the U.S. Dollar, particularly during the first half of 2018,~~minimum wage increases in Mexico which went into effect on January 1, 2019 as well as minimum wage increases in the PRC and growth in sales of our labor-intensive integrated connector module (ICM) products. Effective February 1, 2018, the PRC government issued an increase to the minimum wage in a region where one of Bel's factories is located. Effective July 1, 2018, government-mandated minimum wage increaseswhich went into effect ~~at Bel's other three manufacturing facilities~~ in the ~~PRC.~~first and third quarters of 2018.

•

Restructuring – The Company continues to implement restructuring programs to increase operational ~~efficiencies. While the Company~~efficiencies and incurred ~~minimal~~$1.7 million in restructuring ~~charges~~costs during the first nine months of 2018, additional restructuring efforts are expected to continue during the fourth quarter of 2018 as we realign our R&D resources dedicated to our power solutions and protection group. By the end of the third quarter, we had completed the transition of one of our product lines from a third party factory in Malaysia to an existing Bel facility in the PRC. Annual savings of approximately $1.4 million are expected from the initiatives completed during2019. During the first nine months of ~~2018 (primarily~~2019, we implemented cost savings measures that are expected to result in total annualized cost savings of $4.6 million, primarily within cost of ~~sales).~~sales. We began to realize the benefits of approximately half of this amount in the third quarter of 2019, with the balance expected to be realized starting in the fourth quarter. Further actions are underway in the fourth quarter related to additional restructuring efforts identified in Asia, and these are expected to yield incremental annualized cost savings of $1.1 million beginning in the first quarter of 2020. The preceding sentences represent Forward-Looking Statements. See “Cautionary Notice Regarding Forward-Looking Information.”

•

Impact of Foreign Currency – During the first nine months of 2019, labor and overhead costs were $3.9 million lower than the same period of 2018 ~~the~~due to a favorable foreign exchange environment. The Company ~~incurred~~also realized foreign exchange transactional gains of ~~$2.4~~$0.5 million ~~and higher labor and overhead costs of $2.5 million related to unfavorable fluctuation in exchange rates versus~~during the ~~first~~ nine months ~~of 2017.~~ended September 30, 2019. Since we are a U.S. domiciled company, we translate our foreign currency-denominated financial results into U.S. dollars. Due to the changes in the value of foreign currencies relative to the U.S. dollar, translating our financial results and the revaluation of certain intercompany as well as third-party transactions to and from foreign currencies to U.S. dollars may result in a favorable or unfavorable impact to our consolidated statements of operations and cash flows. The Company was ~~unfavorably~~favorably impacted by transactional foreign exchange ~~losses during~~gains in the first nine months of ~~2018~~2019 due to the ~~appreciation~~depreciation of the Euro, Pound, and Renminbi against the U.S. dollar as compared to exchange rates in effect during ~~the first nine months of 2017.~~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 ~~$2.5~~$3.9 million ~~higher~~lower in the first nine months of ~~2018.~~2019 as compared to the same period of 2018. The Company monitors changes in foreign currencies and may implement pricing actions to help mitigate the impact that changes in foreign currencies may have on its consolidated operating results.

•

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. and ~~Europe's~~Europe’s tax rates are generally equivalent; and Asia has the lowest tax rates of the ~~Company's~~Company’s three geographical segments. See Note ~~9, "Income Taxes"~~10, “Income Taxes”.

~~Our third quarter 2018~~

After record bookings ~~reached its highest quarterly amount in~~throughout 2018, the ~~last four years, representing a 28% increase from~~Company has experienced slower bookings during the ~~third quarter~~first nine months of ~~last year. This growth in orders received was seen across all of our major product groups,~~2019 as customers work through their inventory on hand. The Company has also experienced margin pressure throughout 2019 due to lower sales volumes and ~~is an encouraging data point for our top line as we look to 2019. On the cost side, higher labor and~~high material costs have had a more visible impact on our margins this quarter as the cost of finished goods that were sold during the quarter were impacted by both higher raw material costs and increased minimum wage rates associated with production labor in the PRC. Sales growth and price stabilization will help to mitigate these margin pressures. Wefrom 2018 which continue to ~~evaluate opportunities~~run through the Company’s statement of operations. As a result of these ongoing factors, the Company expects the balance of 2019 to ~~grow our business through acquisitions that would provide access to new markets~~remain challenging from both a sales and ~~customers while being accretive to the overall business.~~

margin perspective. The preceding sentence represents a 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 months ended September 30, ~~2018~~2019 and ~~2017~~2018 were as follows:

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2019				2018				2019				2018
North America	$	65,778	53	%	$	70,654	48	%	$	197,430	52	%	$	201,351	50	%
Asia		39,954	32	%		53,528	37	%		116,555	31	%		138,062	34	%
Europe		18,747	15	%		22,307	15	%		63,299	17	%		66,038	16	%
	$	124,479	100	%	$	146,489	100	%	$	377,284	100	%	$	405,451	100	%

Table of Contents

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
    North America $ 70,654 48 % $ 59,537 47 % $ 201,351 50 % $ 184,873 50 %
    Asia 53,528 37 % 45,919 36 % 138,062 34 % 127,801 34 %
    Europe 22,307 15 % 20,930 17 % 66,038 16 % 58,997 16 %
$ 146,489 100 % $ 126,386 100 % $ 405,451 100 % $ 371,671 100 %

~~The growth~~

Sales declines in North America sales in 2018 was largely due to increased demand for our passive connector products from our premise wiring customers, strength in our connectivity products within key military programs, and higher saleseach of our ~~transformer products~~segments during the third quarter of 2019 reflected lower sales into ~~medical applications.~~our distribution channel as our distribution partners continue to work down their level of inventory on hand. Sales of our Power Solutions products have also increased in 2018 with heightened demand for our power supplies for use in various datacenter applications. The increases in Asia sales noted above for the 2018 periods primarily relate to higher sales of our integrated connector modules for next-generation switching platforms. Sales in Europe increased in both 2018 periods presented as a result of higher demand for our Stewart and Cinch connector products ~~in that region, coupled with strong sales of our power products~~ into ~~rail applications. There was~~military applications were also ~~a favorable impact on our European sales in general~~lower during the ~~nine-month period ended September 30, 2018 as a portion~~third quarter of ~~those sales are invoiced in Euros or Pounds, which had appreciated against the U.S. Dollar particularly during the first half of 2018 as~~2019 compared to the same period of ~~2017.~~

~~Return~~2018, impacting our North America segment sales. Sales in our Asia segment in the third quarter of 2019 were down versus 2018 as a result of customers working down heightened inventory levels which had been built up during 2018 in response to ~~Index~~new product launches and the tariffs that went into effect in 2018

and 2019.

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

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Total segment sales:
     North America $ 73,932 $ 62,348 $ 211,105 $ 193,473
     Asia 78,008 66,534 204,152 193,364
     Europe 25,398 23,633 77,341 67,434
Total segment sales 177,338 152,515 492,598 454,271
Reconciling item:
     Intersegment sales (30,849 ) (26,129 ) (87,147 ) (82,600 )
Net sales $ 146,489 $ 126,386 $ 405,451 $ 371,671

Income from operations:
    North America $ 3,360 $ 366 $ 6,021 $ 2,566
    Asia 5,753 5,408 10,987 11,759
    Europe 1,386 1,020 4,595 2,090
$ 10,499 $ 6,794 $ 21,603 $ 16,415

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Total segment sales:
North America	$	68,190		$	73,932		$	205,113		$	211,105
Asia		59,561			78,008			184,933			204,152
Europe		23,761			25,398			76,359			77,341
Total segment sales		151,512			177,338			466,405			492,598
Reconciling item:
Intersegment sales		(27,033	)		(30,849	)		(89,122	)		(87,147	)
Net sales	$	124,479		$	146,489		$	377,283		$	405,451

(Loss) income from operations:
North America	$	(8,406	)	$	3,360		$	(6,526	)	$	6,021
Asia		2,463			5,753			3,746			10,987
Europe		1,320			1,386			5,925			4,595
	$	(4,623	)	$	10,499		$	3,145		$	21,603

Income from operations declined across all segments during the third quarter of 2019 as compared with the same quarter of 2018 primary due to lower sales volume. The ~~improvement in~~Company recorded an $8.9 million goodwill impairment charge during the third quarter of 2019 related to its North America operating segment, which impacted (loss) income from operations ~~within~~for the three- and nine-month periods ended September 30, 2019. Our Asia and North America segments were also impacted by $0.1 million and $0.2 million, respectively, of restructuring charges during the third quarter of 2019. During the nine months ended September 30, 2019, (loss) income from operations for our North America segment was ~~largely~~unfavorably impacted by $1.1 million of restructuring costs associated with the transition of manufacturing and warehouse operations from our Inwood, New York facility to other existing Bel facilities, and higher labor costs in Mexico due to ~~higher sales volumes~~an increase in ~~the 2018 periods, partially offset by increased material costs~~minimum wage rates which went into effect on ~~purchased components. The income from operations at~~January 1, 2019 and our Asia segment ~~for both 2018 periods presented~~ was impacted by ~~higher labor costs driven by increased minimum wage rates at~~$0.5 million of restructuring charges related to realignment of our factories in the PRC, higher raw material costs during 2018 and the unfavorable appreciation of the Renminbi particularly during the first half of 2018 compared to the same period of 2017. The increase in income from operations fromR&D resources for our ~~Europe segment are consistent with the increase in sales for that segment.~~

Power Solutions business.

Net Sales

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

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Magnetic solutions $ 52,972 36 % $ 44,002 35 % $ 136,748 34 % $ 122,468 33 %
Connectivity solutions 48,526 33 % 42,837 34 % 140,373 34 % 128,350 35 %
Power solutions and protection 44,991 31 % 39,547 31 % 128,330 32 % 120,853 32 %
$ 146,489 100 % $ 126,386 100 % $ 405,451 100 % $ 371,671 100 %

~~Return to Index~~

~~Magnetic~~

	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2019				2018				2019				2018
Connectivity solutions	$	44,531	36	%	$	48,526	33	%	$	131,428	35	%	$	140,373	34	%
Magnetic solutions		39,659	32	%		52,972	36	%		118,767	31	%		136,748	34	%
Power solutions and protection		40,289	32	%		44,991	31	%		127,089	34	%		128,330	32	%
	$	124,479	100	%	$	146,489	100	%	$	377,284	100	%	$	405,451	100	%

Connectivity Solutions:

~~Our Magnetic~~

Sales of our Connectivity Solutions ~~group continued to benefit from a strong position on next-generation switching~~ products ~~which utilize our integrated connector modules. This accounted for $7.5 million and $11.4 million of the sales growth~~ during the third quarter ~~and nine-month period~~ of ~~2018 versus 2017. Our Signal Transformer business also contributed with an increase in sales of $1.6~~2019 declined $4.0 million ~~and $3.2 million during the~~primarily due to lower demand from military customers as compared to last year's third 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 nine-month period ~~of 2018, as orders~~ended September 30, 2019, which declined $8.9 million from ~~new programs within industrial applications remained strong throughout the third quarter.~~

~~Connectivity Solutions:~~

~~Our connectivity solutions products showed an overall improvement in sales of $5.7 million and $12.0 million during the third quarter and first nine months of 2018, respectively, compared to~~ the same ~~periods~~period of ~~2017. Sales of our Stewart passive connectors were very strong in the~~ 2018 ~~periods with increases of $3.6 million and $7.1 million~~, partially offset by higher sales to commercial aerospace customers during the three and nine months ended September 30, 2018 as compared to 2017. This was largely led by higher demand from our premise wiring customers in North America and Europe in response to improved economic conditions in the construction industry. We have also had a greater level2019.

Table of ~~focus on our distribution channel in 2018 and our Stewart products have benefited from the increased exposure through our distribution base.~~ Contents

Magnetic Solutions:

Sales of our ~~Cinch~~Magnetic Solutions products during the three and nine months ended September 30, 2019 were ~~also~~down $13.3 million and $18.0 million, respectively, from the same periods of 2018 while inventory levels built up in advance of a customer's new program launch during 2018 (by $2.1 million for the third quarter and by $5.0 million for the nine-month period) primarily from the military sector for our optical and copper products used in encryption, communications and flight-grade applications and for our micro-miniature copper connectivity products in relation to key defense programs.

are worked through.

Power Solutions and Protection:

~~Year-over-year sales growth from~~

Sales of our Power Solutions and Protection ~~group continued~~products were $4.7 million lower in the third quarter of ~~2018. Sales of our Power Solutions products increased by $5.7 million and $7.8 million during the third quarter and nine-month period of 2018, respectively,~~2019 compared to the same ~~periods~~quarter of ~~2017. Excluding the effects~~2018. Sales of ~~NPS divestiture, sales for the~~our Bel Power Solutions ~~business increased~~products into datacenter applications decreased by ~~$7.1~~$3.8 million ~~for the third quarter~~ and by $12.9 million for the first nine months of 2018 compared to the prior year periods. Our circuit protection products continue to experience top line growth as more of these products are introduced into our distribution channels and our DC/DC product sales were also strong during the 2018 periods. These growth drivers were offset in part by lower sales of our ~~custom module~~Circuit Protection products ~~(which~~ were ~~down~~$0.9 million lower as compared to last year’s third quarter. These decreases were partially offset by ~~$1.3~~a $0.5 million ~~and $2.3 million~~increase in sales of our Custom Module products. Sales during the ~~three and nine month periods~~nine-month period ended September 30, ~~2018, respectively). In addition, shipments~~2019 decreased by $1.2 million from the same period of ~~our AC/DC converter products were strong in 2017 in response to a program which did not recur in 2018. This led to a reduction in~~2018, as stronger sales ~~for this product line~~into datacenter applications during the first quarter of ~~$1.4 million for~~2019 lessened the impact of sales declines during the second and third ~~quarter and $2.2 million for the nine-month period.~~

quarters of 2019.

Cost of Sales

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

Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Material costs 43.0 % 38.2 % 42.0 % 39.7 %
Labor costs 11.5 % 11.0 % 11.5 % 10.4 %
Research and development expenses 4.7 % 5.4 % 5.3 % 5.5 %
Other expenses 20.9 % 23.5 % 21.6 % 22.8 %
Total cost of sales 80.1 % 78.1 % 80.4 % 78.4 %

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Material costs		44.9	%		43.0	%		44.1	%		42.0	%
Labor costs		9.2	%		11.5	%		10.4	%		11.5	%
Research and development expenses		5.0	%		4.7	%		5.4	%		5.3	%
Other expenses		22.9	%		20.9	%		22.6	%		21.6	%
Total cost of sales		82.0	%		80.1	%		82.5	%		80.4	%

Material costs as a percentage of sales ~~increased~~were higher during the ~~2018 periods noted above~~three and nine months ended September 30, 2019 compared to the same periods of ~~2017~~2018 primarily due to the industry-wide supply constraints related to certain of our purchased components ~~throughout 2018. This has had an unfavorable impact in~~during 2018. The finished goods shipped during the ~~form~~third quarter of ~~higher~~2019 still contained some of the higher-cost raw material ~~costs across most of our product lines.~~

components.

Labor costs as a percentage of sales ~~also increased~~declined during the ~~third quarter~~three and ~~first~~ nine months ~~of 2018~~ended September 30, 2019 compared to the same periods of ~~2017 due primarily~~2018 as a more favorable exchange rate environment related to ~~two factors. Effective February 1, 2018,~~the Chinese Renminbi offset the overall impact of minimum wage increases in the PRC ~~issued an increase to~~and Mexico. The PRC government increased the minimum wage in ~~a region~~the regions where ~~one~~Bel’s factories are located in February and July of ~~Bel's factories is located, and effective July 1,~~ 2018. The minimum wage ~~increases went into effect at our remaining facilities~~rates in the PRC. This contributed to the higher labor costs in both 2018 periods presented above. The other factor impacting the nine-month period above relates to the appreciation of the Renminbi against the U.S. Dollar, particularly during the first half of 2018. This drove labor costs as a percentage of sales higher during the earlier part of 2018, as the majority of our Asia sales are invoiced in U.S. Dollars, while our manufacturing staff at PRC locations are paid in local currency.

Mexico increased effective January 1, 2019.

Included in cost of sales is research and development ("(“R~~&D"~~&D”) expense of $6.2 million and $6.9 million for ~~each of~~ the three months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively, and $20.2 million and $21.6 million ~~and $20.3 million~~ for the nine months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The ~~majority of the increase during the nine-month period relates to a weaker U.S. Dollar earlier~~lower R&D expenses in 2018 relative to the local currencies in the countries in which our engineers are located. Approximately 85% of our global engineering staff is located outside of the U.S. and is paid in either Euros, Pounds, Swiss Francs or Renminbi, each of which appreciated against the U.S. Dollar in the first two quarters of 20182019 as compared to the ~~same quarters~~respective 2018 periods is largely reflective of ~~2017.~~

~~Return~~cost savings related to ~~Index~~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, depreciation and amortization, and facility costs (rent, utilities, insurance). In total, these other expenses ~~increased~~decreased during the three and nine months ended September 30, ~~2018~~2019 by ~~$1.1~~$2.1 million and ~~$3.1~~$2.6 million, respectively, as compared to the same periods of ~~2017. This included higher~~2018, primarily due to lower support labor ~~costs of $1.5 million~~ and ~~$3.0 million, respectively, partially offset by lower depreciation and amortization~~fringe expense ~~of $0.4 million and $0.9 million during the three and nine-month periods ending September 30, 2018 as compared to the same periods of 2017.~~

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

SG&A expense decreased $2.2 million and $5.9 million during the three and nine months ended September 30, 2018, respectively, as compared with the same periods of 2017. This primarily related to a favorable fluctuation in foreign currency exchange rates on the remeasurement of foreign currency transactions, which accounted for $2.1 million and $5.1 million, respectively, of the decrease noted from the 2017 periods. Other offsetting factors that affected the variance in the third quarter periods included a decline in legal and professional fees of $0.5 million and lower depreciation and amortization expense of $0.4 million, partially offset by $0.6 million of higher fringe benefit expense. Other factors contributing to the reduction in SG&A during the nine-month period were lower legal and professional fees of $1.3 million and a reduction in depreciation and amortization expense in the 2019 periods.

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

SG&A expenses during the third quarter of ~~$1.1 million. These factors~~2019 were ~~partially offset by an increase~~$17.9 million, down from $18.7 million in ~~bad debt expense~~the third quarter of 2018. Included within SG&A expenses is a foreign exchange gain of $0.6 million ~~higher~~in the third quarter of 2019 compared to a foreign exchange gain of $1.5 million in the third quarter of 2018. Excluding the effects of foreign exchange gains, SG&A expense was down $1.7 million in the third quarter of 2019 as compared to the same period of 2018, led by lower salaries and fringe ~~benefit~~ expense of ~~$0.6~~$1.1 million and ~~a $0.4~~reductions in legal and professional fees of $0.7 million ~~increase in sales commissions~~from last year’s third quarter.

SG&A expenses during the first nine months of ~~2018.~~2019 were $56.5 million, down from $57.7 million in the same period of 2018. Included within SG&A expenses is a foreign exchange gain of $0.5 million in the nine months ended September 30, 2019 compared to a foreign exchange gain of $2.4 million in the same period of 2018. Excluding the effects of foreign exchange gains, SG&A expense was down $3.1 million in the first nine months of 2019 as compared to the same period of 2018. Factors contributing to the lower SG&A expense in the 2019 period were lower salaries and fringe expense of $2.3 million and a reduction in legal and professional fees of $1.4 million.

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Provision 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. and ~~Europe's~~Europe’s tax rates are generally equivalent; and Asia has the lowest tax rates of the ~~Company's~~Company’s three geographical segments. See Note ~~9, "Income Taxes"~~10, “Income Taxes”.

The provision (benefit) ~~provision~~ for income taxes for the three months ended September 30, ~~2018~~2019 and ~~2017~~2018 was $0.6 million and ($2.2) million, ~~and less than $0.1 million,~~ respectively. The ~~Company's~~Company’s earnings before income taxes for the three months ended September 30, ~~2018,~~2019, were approximately ~~$4.1~~$15.1 million ~~higher~~lower than the same period in ~~2017,~~2018, primarily attributable to ~~significantly higher~~the $8.9 million impairment of goodwill in North America, as well as lower earnings in the North America and Asia segments. The ~~Company's~~Company’s effective tax rate was ~~(24.1%~~(10.0%) and ~~1.2%~~(24.1%) for the three months ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The change in the effective tax rate during the three months ended September 30, ~~2018~~2019 as compared to the same period in ~~2017,~~2018, is primarily attributable to a decrease in U.S. taxes relating to income from foreign subsidiaries taxed in the U.S. as part of the Tax Cuts and Jobs Act. Additionally, the change in the tax rate during the three months ended September 30, 2019 compared to the same period in 2018 is attributable to a decrease in tax expense in the North America segment due to the reduction in the estimated transition tax on ~~post 1986~~post-1986 untaxed accumulated foreign earnings ~~a reduction in the U.S. tax rate from 35% in 2017 to 21% in 2018,~~ as well as a decrease in the taxes related to uncertain tax ~~positions. This decrease was partially offset by an increase in U.S. taxes relating to income from foreign subsidiaries taxed in~~positions during the ~~U.S. as part of the~~ ~~Tax Cuts and Jobs Act~~.2018 period. See Note ~~9, "Income~~10, “Income Taxes."

”

The provision for income taxes for the nine months ended September 30, ~~2018~~2019 and ~~2017~~2018 was ~~$0.5~~$1.0 million and ~~$2.3~~$0.5 million, respectively. The ~~Company's~~Company’s earnings before income taxes for the nine months ended September 30, ~~2018~~2019 were approximately ~~$6.0~~$18.5 million ~~higher~~lower than the same period in ~~2017,~~2018, primarily attributable to ~~increases~~the $8.9 million impairment of goodwill in ~~income~~North America, as well as lower earnings in the ~~Europe and~~ North America and Asia segments. The ~~Company's~~Company’s effective tax rate was ~~3.0%~~(78.2%) and ~~20.8%~~3.0% for the ~~nine month~~nine-month periods ended September 30, ~~2018~~2019 and ~~2017,~~2018, respectively. The change in the effective tax rate during the nine months ended September 30, ~~2018~~2019 as compared to the same period of ~~2017,~~2018, is primarily attributable to ~~a decrease in tax expense in~~ the ~~North America segment due~~same factors noted above related to the ~~reduction in the estimated transition tax on post 1986 untaxed accumulated foreign earnings, a reduction in the U.S. tax rate from 35% in 2017 to 21% in 2018,~~third quarter, as well as ~~a decrease in taxes related to uncertain~~the impact from permanent tax ~~positions. This decrease was partially offset by an increase in~~differences on U.S. ~~taxes relating to income from foreign subsidiaries taxed in the U.S. as part of the~~ ~~Tax Cuts and Jobs Act~~. Additionally, the decrease in the effective tax rate for the nine months ended September 30, 2018 as compared to the same period in 2017, is attributable to U.S. and foreign taxes accrued for gains recognized on a Bel Fuse legal entity restructuring transactiontax-exempt activities during the ~~2017 period.~~

first quarter of 2019.

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.

~~Return to Index~~

At September 30, ~~2018~~2019 and December 31, ~~2017, $45.9~~2018, $25.2 million and ~~$50.5~~$46.3 million, respectively (or ~~85%~~39% and ~~73%~~86%, respectively), of cash and cash equivalents was held by foreign subsidiaries of the Company. During the ~~third quarter~~first nine months of ~~2018,~~2019, the Company repatriated ~~$12.2~~$29.3 million of funds from outside of the U.S., with minimal incremental tax liability. Of this amount, approximately $9 million was utilized to pay down intercompany balances that have been generating foreign exchange gains/losses in our consolidated statement of operations. Management currently intends to repatriate an additional $1.8 million in the fourth quarter of 2018 and an incremental $5 to $8 million in the first quarter of 2019, with minimal incremental tax liability. We continue to analyze our global working capital and cash requirements and the potential tax liabilities attributable to further repatriation, and we have yet to make any further determination regarding repatriation of funds from outside the U.S. to fund the ~~Company's~~Company’s U.S. operations in the future. In the event these funds were needed for ~~Bel's~~Bel’s U.S. operations, the Company would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds.

Cash and cash equivalents, marketable securities and accounts receivable comprised approximately ~~33.9%~~33.1% of the ~~Company's~~Company’s total assets at September 30, ~~2018~~2019 and ~~34.4~~%32.9% of total assets at December 31, ~~2017.~~2018. The ~~Company's~~Company’s current ratio (i.e., the ratio of current assets to current liabilities) was ~~2.9~~3.2 to 1 at September 30, ~~2018~~2019 and ~~3.0~~2.7 to 1 at December 31, ~~2017.~~

2018.

In June 2014, the Company entered into a senior Credit and Security Agreement, which was subsequently amended in March 2016, and further amended and refinanced in December 2017. The Credit and Security Agreement contains customary representations and warranties, covenants and events of default and financial covenants that measure (i) the ratio of the Company's total funded indebtedness, on a consolidated basis, to the amount of the ~~Company's~~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 ("(“Fixed Charge Coverage ~~Ratio"~~Ratio”). If an event of default occurs, the lenders under the Credit and Security Agreement would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor. At September 30, ~~2018,~~2019, the Company was in compliance with its debt covenants, including its most restrictive covenant, the Fixed Charge Coverage Ratio. The unused credit available under the credit facility at September 30, ~~2018~~2019 was $75.0 million, of which we had the ability to borrow ~~$34.1~~$40.6 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 Enterprise Resource Planning system ~~("ERP"~~(“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 2020. We currently estimate total costs over the course of this ~~project~~system implementation to be approximately ~~$6.0~~$7.0 million. The preceding sentence represents a Forward-Looking Statement. See “Cautionary Notice Regarding Forward-Looking Information.” Since inception of the project, we have incurred a cumulative amount of ~~$4.4~~$6.8 million in connection with this implementation, of which ~~$0.3~~$0.2 million and ~~$1.5~~$1.6 million in implementation costs was incurred during the three and nine months ended September 30, ~~2018,~~2019, respectively. These costs are included in SG&A on the condensed consolidated financial statements. ~~Upon completion~~The first phase of the ERP implementation project was completed in the first quarter of2019 with the Power Solutions business going live on the new ~~ERP,~~system effective January 1, 2019. In relation to this first phase completed, we ~~anticipate lower maintenance and lower external information and technology support fees resulting in annual~~started realizing annualized cost savings of approximately ~~$2 million.~~$1.3 million in the second quarter of 2019. The preceding sentence represents a Forward-Looking Statement. See ~~"Cautionary~~“Cautionary Notice Regarding Forward-Looking ~~Statements."~~Information.”

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Cash Flows

Nine ~~months~~Months Ended September 30, ~~2018~~2019

During the nine months ended September 30, 2019, the Company’s cash and cash equivalents increased by $10.9 million. This increase was primarily due to the following:

•

net cash provided by operating activities of $18.9 million; partially offset by

•

purchases of property, plant and equipment of $8.2 million;

•

dividend payments of $2.4 million; and

•

repayments of long-term debt of $2.2 million

During the nine months ended September 30, 2019, accounts receivable decreased by $12.4 million primarily due to lower sales during the third quarter of 2019 as compared to the fourth quarter of 2018. Days sales outstanding (DSO) decreased slightly to 58 days at September 30, 2019 from 59 days at December 31, 2018. Inventory decreased by $8.4 million at September 30, 2019 compared to December 31, 2018. Inventory turns were 3.7 at each of September 30, 2019 and December 31, 2018.

Nine Months Ended September 30,2018

During the nine months ended September 30, 2018, the ~~Company's~~Company’s cash and cash equivalents decreased by $15.1 million. This decrease was primarily due to the following:

•

purchases of property, plant and equipment of ~~$8.8~~$8.8 million;

•

repayments of long-term debt of ~~$8.3~~$8.3 million; and

•

dividend payments of ~~$2.4~~$2.4 million; partially offset by

•

net cash provided by operations of ~~$4.2~~$4.2 million.

During the nine months ended September 30, 2018, accounts receivable increased by $19.0 million primarily due to higher sales volume in the third quarter of 2018 as compared to the fourth quarter of 2017. Days sales outstanding (DSO) increased to 61 days at September 30, 2018 from 60 days at December 31, 2017. Effective January 1, 2018, the Company implemented a change in the timing of revenue recognition (and related release of inventory from our books) in connection with the adoption of ASC ~~606, as described in Note 2.~~606. Excluding the adoption adjustment related to this accounting change, inventory increased by $20.1 million at September 30, 2018 compared to December 31, 2017, primarily in raw materials. The increased raw materials balance was driven by a higher volume of raw materials purchased to accommodate increased demand for our products, coupled with higher material costs in 2018 resulting from constraints in component availability. Inventory turns increased from 3.6 at December 31, 2017 to 4.0 at September 30, 2018, primarily due to the change in revenue recognition accounting noted above.

~~Return to Index~~

~~Nine months Ended September 30, 2017~~

~~During the nine months ended September 30, 2017, the Company's cash and cash equivalents decreased by $11.3 million primarily due to the following factors:~~

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

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

·	~~repayments of long-term debt of $25.2 million; partially offset by~~

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

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

During the nine months ended September 30, 2017, accounts receivable increased by $7.9 million primarily due to higher sales volume in the third quarter of 2017 as compared to the fourth quarter of 2016. Days sales outstanding (DSO) increased to 60 days at September 30, 2017 from 54 days at December 31, 2016, primary due the extension of credit terms with one of our large customers, as well as the increase in revenue (and resulting accounts receivable balance) in our Asia segment where DSO tends to be higher as compared to our other geographic segments. Inventory levels were up by $3.3 million at September 30, 2017 compared to December 31, 2016 as work in progress and finished goods balances increased from year-end levels to accommodate the increase in demand for our products in 2017.

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. During the first nine months of ~~2018,~~2019, the U.S. Dollar was ~~in a weakened position (compared to the first nine months of 2017)~~stronger against most other currencies in which the Company pays its expenses. In comparing average exchange rates during the first nine months of ~~2018~~2019 versus those during the ~~first nine months~~same period of ~~2017,~~2018, the Euro ~~appreciated~~depreciated by 7%6%, the Pound ~~appreciated~~depreciated by 6%, the Peso depreciated by 1% and the Renminbi ~~appreciated~~depreciated by 4%5% against the U.S. Dollar. The Company estimates that the ~~appreciation~~depreciation in these foreign currencies led to ~~$2.5 million in higher~~lower operating costs ~~for the nine-month period~~of $3.9 million, as the majority of our expenses in the PRC, Europe and Mexico are paid in local currency. ~~In addition~~Foreign exchange gains were also recognized in the first nine months of 2019 of $0.5 million on translation of local currency balance sheet accounts to the foreign exchange losses recognized, the Company recorded foreign exchange gains of $1.5 million and $2.4 million during the three and nine months ended September 30, 2018, respectively, on remeasurement ofU.S. Dollar in consolidation, resulting from foreign currency transactions. This compares to foreign exchange losses recorded during the three and nine months ended September 30, 2017 of $0.6 million and $2.7 million, respectively, resulting from remeasurement of foreign currency transactions.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, ~~2017~~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.

~~Return to Index~~

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, 2018~~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 1214 "Commitments and Contingencies" 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, ~~2017.~~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.

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, ~~2018:~~

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

July 1 - July 31, 2018 8,873 $ 21.32 8,873 $ -
August 1 - August 31, 2018 1,761 24.15 1,761 607,464
September 1 - September 30, 2018 12,052 23.29 12,052 326,727

Total 22,686 $ 22.59 22,686 $ 326,727

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. 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 the2019:


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

July 1 - July 31, 2019		-	$	-		-	$	-
August 1 - August 31, 2019		-		-		-		-
September 1 - September 30, 2019		30,000		14.93		-		-

Total		30,000	$	14.93		-	$	-

Item 3. Defaults Upon Senior 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 maximum dollar amount for cumulative purchases under the 10b5-1 Plan during the plan period (August 20, 2018 to November 30, 2018) will not exceed $650,000.~~

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

~~As previously disclosed, on August 16, 2018, the trustees~~Table of the Employees' Savings Plan adopted a plan (the "10b5-1 Plan") in accordance with guidelines specified by Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, pursuant to which KeyBanc Capital Markets Inc. was engaged to purchase shares of the Class A common stock of Bel Fuse Inc. ("Bel") to implement the Employees' Savings Plan's requirements that matching contributions be invested in shares of Bel's Class A common stock. While it was originally expected that purchases under the 10b5-1 Plan would be completed by November 30, 2018, as a sufficient number of shares of Class A common stock have been purchased already to meet the requirements of the "match" for 2018, the 10b5-1 Plan was terminated effective November 7, 2018.Contents

~~Return to Index~~

Item 6. Exhibits

(a)Exhibits:


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

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

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.

~~Return to Index~~Table of Contents

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 ~~7, 2018~~12, 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)

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended September 30, ~~2018~~2019
or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________ to ____________

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 every Interactive Data File required to be submitted 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 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.

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

Title of Each Class		Number of Shares of Common Stock Outstanding as of November 1, ~~2018~~ 2019
Class A Common Stock ($0.10 par value)		~~2,174,912~~ 2,144,912
Class B Common Stock ($0.10 par value)		~~10,072,352~~ 10,128,602

			Page
Part I		Financial Information
			~~Page~~
~~Part I~~		~~Financial Information~~

	Item 1.	Financial Statements (unaudited)	2

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

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

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

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

		Condensed Consolidated Statements of Cash Flows for the Nine
		Months Ended September 30, 2019 and 2018 ~~and 2017~~ (unaudited)	5 7

		Notes to Condensed Consolidated Financial Statements (unaudited)	6 8 - 1918

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation	19 - 25

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

	Item 4.	Controls and Procedures	25

Part II		Other Information

	Item 1.	Legal Proceedings	25

	Item 1A.	Risk Factors	25

	Item 2.	~~Management's Discussion~~Unregistered Sales of Equity Securities and ~~Analysis~~Use of Proceeds
		~~Financial Condition and Results of Operations~~	~~20 - 26~~25

	Item 3.	~~Quantitative and Qualitative Disclosures About~~Defaults Upon Senior Securities
		~~Market Risk~~	2625

	Item 4.	~~Controls and Procedures~~Mine Safety Disclosures	26

~~Part II~~		~~Other Information~~

	~~Item 1.~~	~~Legal Proceedings~~	27

	~~Item 1A.~~	~~Risk Factors~~	27

	~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	2725

	Item 5.	Other Information	2725

	Item 6.	Exhibits	28 26

	Signatures		29 27

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

	September 30,			December 31,
	2018			2017
ASSETS
Current Assets:
Cash and cash equivalents	$	54,296		$	69,354
Accounts receivable, net of allowance for doubtful accounts of $2,191
in 2018 and $1,745 in 2017		97,577			78,808
Unbilled receivables		16,553			-
Inventories		114,434			107,719
Other current assets		9,626			10,218
Total current assets		292,486			266,099

Property, plant and equipment, net		42,994			43,495
Intangible assets, net		64,161			69,366
Goodwill		19,135			20,177
Deferred income taxes		2,083			4,155
Other assets		27,044			27,973
Total assets	$	447,903		$	431,265

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	62,415		$	47,947
Accrued expenses		32,533			30,508
Current portion of long-term debt		2,507			2,641
Other current liabilities		3,836			6,204
Total current liabilities		101,291			87,300

Long-term Liabilities:
Long-term debt		112,331			120,053
Liability for uncertain tax positions		27,180			27,948
Minimum pension obligation and unfunded pension liability		19,943			19,134
Deferred income taxes		1,472			1,567
Other liabilities		12,375			17,303
Total liabilities		274,592			273,305

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: 10,072,352 in 2018 and 9,859,352
in 2017 (net of 3,218,307 treasury shares)		1,007			986
Additional paid-in capital		30,602			28,575
Retained earnings		165,518			147,807
Accumulated other comprehensive loss		(24,033	)		(19,625	)
Total stockholders' equity		173,311			157,960
Total liabilities and stockholders' equity	$	447,903		$	431,265

See accompanying notes to unaudited condensed consolidated financial statements.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017

Net sales	$	146,489		$	126,386		$	405,451		$	371,671
Cost of sales		117,282			98,686			326,096			291,481
Gross profit		29,207			27,700			79,355			80,190

Selling, general and administrative expenses		18,691			20,906			57,690			63,604
Restructuring charges		17			-			62			171
Income from operations		10,499			6,794			21,603			16,415

Interest expense		(1,391	)		(1,466	)		(3,917	)		(4,476	)
Interest income and other, net		43			(244	)		(479	)		(720	)
Earnings before provision for income taxes		9,151			5,084			17,207			11,219

(Benefit from) provision for income taxes		(2,201	)		60			523			2,329
Net earnings available to common stockholders	$	11,352		$	5,024		$	16,684		$	8,890


Net earnings per common share:
Class A common share - basic and diluted	$	0.89		$	0.40		$	1.31		$	0.69
Class B common share - basic and diluted	$	0.94		$	0.42		$	1.40		$	0.75

Weighted-average number of shares outstanding:
Class A common share - basic and diluted		2,175			2,175			2,175			2,175
Class B common share - basic and diluted		9,972			9,864			9,891			9,856

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.

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017

Net earnings available to common stockholders	$	11,352		$	5,024		$	16,684		$	8,890

Other comprehensive income (loss):
Currency translation adjustment, net of taxes of ($1) in the three months
ended September 30, 2018, $101 in the three months ended September 30, 2017, $11 in
the nine months ended September 30, 2018 and $285 in the nine months ended
September 30, 2017		(1,032	)		3,476			(4,463	)		11,047
Unrealized losses on marketable securities arising during the period,
net of taxes of $3 in the three months ended September 30, 2018, ($21) in the
three months ended September 30, 2017, ($17) in the nine months ended September 30,
2018 and ($191) in the nine months ended September 30, 2017		(170	)		(33	)		(201	)		(300	)
Change in unfunded SERP liability, net of taxes of $25 in the three months
ended September 30, 2018, $32 in the three months ended September 30, 2017, $76 in
the nine months ended September 30, 2018 and $97 in the nine months ended
September 30, 2017		85			61			256			184
Other comprehensive income (loss)		(1,117	)		3,504			(4,408	)		10,931

Comprehensive income	$	10,235		$	8,528		$	12,276		$	19,821


See accompanying notes to unaudited condensed consolidated financial statements.

							Accumulated
							Other			Class A			Class B			Additional
				Retained			Comprehensive			Common			Common			Paid-In
	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		1,131			1,131			-			-			-			-
Dividends declared:
Class A Common Stock, $0.06/share		(130	)		(130	)		-			-			-			-
Class B Common Stock, $0.07/share		(708	)		(708	)		-			-			-			-
Forfeiture of restricted common stock		-			-			-			-			(1	)		1
Foreign currency translation adjustment, net of taxes of $17		540			-			540			-			-			-
Stock-based compensation expense		813			-			-			-			-			813
Change in unfunded SERP liability, net of taxes of ($11)		37			-			37			-			-			-
Effect of adoption of ASU 2018-02 (Topic 220)		-			463			(463	)		-			-			-
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

Net loss		(6,490	)		(6,490	)		-			-			-			-
Dividends declared:
Class A Common Stock, $0.06/share		(131	)		(131	)		-			-			-			-
Class B Common Stock, $0.07/share		(710	)		(710	)		-			-			-			-
Forfeiture of restricted common stock		-			-			-			-			(1	)		1
Repurchase of Class A common stock		(448	)		-			-			(3	)		-			(445	)
Foreign currency translation adjustment, net of taxes of ($13)		(2,561	)		-			(2,561	)		-			-			-
Stock-based compensation expense		667			-			-			-			-			667
Change in unfunded SERP liability, net of taxes of ($11)		37			-			37			-			-			-
Balance at September 30, 2019	$	170,640		$	164,252		$	(28,045	)	$	214		$	1,013		$	33,206

	Balance at		Adjustments			Balance at
	December 31,		Due to			January 1,
	2017		ASC 606			2018
Balance Sheet
Unbilled receivables	$	-	$	14,536		$	14,536
Inventory		107,719		(11,044	)		96,675
Other current liabilities		6,204		43			6,247
Retained earnings		147,807		3,449			151,256

	As of September 30, 2018
			Balances		Effect of
	As		Without Adoption		Change
	Reported		of ASC 606		Higher/(Lower)

Balance Sheet
Assets
Unbilled receivables	$	16,553	$	-	$	16,553
Inventories		114,434		126,737		(12,303	)

Liabilities
Other current liabilities		3,836		3,715		121

Equity
Retained earnings		165,518		161,389		4,129

	Nine Months Ended
	September 30, 2018
Balance, January 1	$	855
New advance payments received		6,180
Recognized as revenue during period		(6,251	)
Currency translation		(8	)
Balance, September 30	$	776

	Nine Months Ended September 30,
	2018			2017
Balance, January 1	$	1,769		$	2,718
Charges and costs accrued		-			211
Adjustments related to pre-existing warranties
(including changes in estimates)		(494	)		(779	)
Less repair costs incurred		(181	)		(173	)
Currency translation		10			66
Balance, September 30	$	1,104		$	2,043

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

Balance at January 1, 2018	$	(16,537	)	$	145		$	(3,233	)		$	(19,625	)
Other comprehensive (loss) income before reclassifications		(4,463	)		(31	)		39				(4,455	)
Amount reclassified from accumulated other
comprehensive loss		-			(170	)		217		(a)		47
Net current period other comprehensive (loss) income		(4,463	)		(201	)		256				(4,408	)

Balance at September 30, 2018	$	(21,000	)	$	(56	)	$	(2,977	)		$	(24,033	)

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