UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended September 30, ~~2022~~2023
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________ to ____________

Commission File No. 000-11676

BEL FUSE INC.

(Exact name of registrant as specified in its charter)

206 Van Vorst Street
Jersey City, NJ 07302
(201) 432-0463

~~(Address of principal executive offices and zip code)~~

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

New Jersey		22-1463699
(State of incorporation)		(I.R.S. Employer Identification No.)

300 Executive Drive, Suite 300
West Orange, NJ 07052
(201) 432-0463

(Address of principal executive offices and zip code)

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant (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 ☒	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 ☒	No ☐

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

Large accelerated

filer ☐

Accelerated

filer

☒

Non-accelerated

filer ☐

Smaller reporting

company ☒

Emerging growth

company ☐

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

☐

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

Yes ☐

No ☒

Title of Each Class

Number of Shares of Common Stock Outstanding

as of November 1, ~~2022~~2023

Class A Common Stock ($0.10 par value)

2,141,589

Class B Common Stock ($0.10 par value)

~~10,338,260~~

10,630,760

Table of Contents

BEL FUSE INC. AND SUBSIDIARIES

FORM 10-Q INDEX

			Page
Part I		Financial Information

	Item 1.	Financial Statements (unaudited)	2

		Condensed Consolidated Balance Sheets (unaudited) as of September 30, ~~2022~~ 2023 and December 31, ~~2021 (unaudited)~~2022	2

		Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021 (unaudited)~~2022	3

		Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021 (unaudited)~~2022	4

		Condensed Consolidated Statements of Stockholders' Equity (unaudited) for the Three and Nine Months Ended September 30, ~~2022~~2023 and ~~2021 (unaudited)~~2022	5

		Condensed Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, ~~2022~~2023 and ~~2021 (unaudited)~~2022	6

		Notes to Condensed Consolidated Financial Statements (unaudited)	7- 17

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18- 24

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

	Item 4.	Controls and Procedures	24

Part II		Other Information

	Item 1.	Legal Proceedings	24

	Item 1A.	Risk Factors	24

	Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds,and Issuer Purchases of Equity Securities	25

	Item 3.	Defaults Upon Senior Securities	25

	Item 4.	Mine Safety Disclosures	25

	Item 5.	Other Information	25

	Item 6.	Exhibits	26

	Signatures		27

Table of Contents

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING INFORMATION

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

The Company’s consolidated operating results are affected by a wide variety of factors that could materially and adversely affect revenues and profitability, including the risk factors described in Item 1A of our ~~2021~~ Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (our “2022 Annual Report on Form 10-K”), and the ~~risk~~risks and other factors described in this orand our other Quarterly Reports on Form 10-Q, and in our other reports and documents that we have filed ~~thereafter, and~~or may file from time to time ~~in our other filings~~ with the Securities and Exchange Commission ~~(“SEC”~~("SEC"). As a result of these and other factors, the Company may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect its business, consolidated financial condition, operating results, and common stock prices. Furthermore, this document and other reports and documents filed by the Company with the SEC contain certain forward-looking statements under the Private Securities Litigation Reform Act of 1995 (“("Forward-Looking ~~Statements”~~Statements") with respect to the business of the Company. Forward-Looking Statements are necessarily subject to ~~risks~~risks and uncertainties, many of which are outside our control, that could cause actual results to differ materially from these statements. Forward-Looking Statements can be identified by such words as “anticipates,” “believes,” “plan,” “assumes,” “could,” “should,” “estimates,” “expects,” “intends,” “potential,” “seek,” “predict,” “may,” “will”"anticipates," "believes," "plan," "assumes," "could," "should," "estimates," "forecasts," "projects," "expects," "intends," "potential," "seek," "predict," "may," "will" and similar references to future periods. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives and regarding the anticipated or likely impact of COVID-19 including regarding the continuing, lasting, consequential or related impacts and uncertainties resulting from the associated pandemic are ~~Forward-Looking~~Forward-Looking Statements.

These Forward-Looking Statements are subject to certain risks and uncertainties, including those detailed in Item 1A of our ~~2021~~2022 Annual Report on Form 10-K, and in the ~~risk~~risks and other factors described in this orand our other Quarterly Reports on Form 10-Q, and in our other reports and documents that we have filed ~~thereafter, and~~or may file from time to time ~~in our other filings~~ with the SEC, which could cause actual results to differ materially from these Forward-Looking Statements. Any Forward-Looking Statements are qualified in the entirety by reference to such risk factors discussed throughout our 2022 Annual Report on Form 10-K, in this and our other Quarterly Reports on Form 10-Q and as described in our other reports and documents filed from time to time with the SEC. Some of the risks, uncertainties and assumptions that could cause actual results to differ materially from estimates or projections contained in the Forward-Looking Statements include but are not limited to:

●

the market concerns facing our customers, and risks for the Company’s business in the event of the loss of certain substantial customers;

●

the continuing viability of sectors that rely on our products;

●

the effects of business and economic conditions;

●

the impact of public health crises (such as the ongoing governmental, social and economic effects and ultimate impact of COVID-19);

●

the effects of rising input costs, and cost changes generally, including the potential impact and effects of inflationary pressures;

●

difficulties associated with integrating previously acquired companies;

●

capacity and supply constraints or difficulties, including supply chain constraints or other challenges;

●

difficulties associated with the availability of labor, and the risks of any labor unrest or labor shortages;

●

risks associated with our international operations, including our substantial manufacturing operations in China;

●

risks associated with restructuring programs or other strategic initiatives, including any difficulties in implementation or realization of the expected benefits or cost savings;

●

product development, commercialization or technological difficulties;

●

the regulatory and trade environment;

●

risks associated with fluctuations in foreign currency exchange rates and interest rates;

●

uncertainties associated with legal proceedings;

●

the market's acceptance of the Company's new products and competitive responses to those new products; and

●

the impact of changes to U.S. and applicable foreign legal and regulatory requirements, including tax laws, trade and tariff policies.

The ~~Company undertakes~~foregoing list sets forth some, but not all, of the factors that could affect our ability to achieve results described in any Forward-Looking Statements, which speak only as of the date of this Quarterly Report on Form 10-Q or the date of the document incorporated by reference into this report. Except as required by law, we assume no obligation and expressly disclaim any duty to publicly release the results of any revisions to these Forward-Looking Statements ~~which may be necessary~~or otherwise update any Forward-Looking Statement to reflect events or circumstances after the date ~~hereof~~of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any Forward-Looking Statements contained in this Quarterly Report on Form 10-Q. Any Forward-Looking Statement made by the Company is based only on information currently available to us and speaks only as of the date on which it is made. All Forward-Looking Statements are expressly qualified in their entirety by the cautionary statements contained in this section.

Table of Contents

PART I. Financial Information

Item 1. Financial Statements (Unaudited)

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(unaudited)

	September 30,			December 31,			September 30,			December 31,
	2022			2021			2023			2022
ASSETS
Current Assets:
Cash and cash equivalents	$	70,895		$	61,756		$	100,225		$	70,266
Accounts receivable, net of allowance for doubtful accounts of $1,403 and $1,536, respectively		103,221			87,135
Accounts receivable, net of allowance of $1,233 and $1,552, respectively								94,265			107,274
Inventories		164,381			139,383			139,997			172,465
Unbilled receivables		28,592			28,275			16,654			18,244
Assets held for sale		1,466			1,626			-			1,466
Other current assets		8,810			10,841			11,875			11,693
Total current assets		377,365			329,016			363,016			381,408

Property, plant and equipment, net		35,227			38,210			38,193			36,833
Right-of-use assets		20,828			21,252			21,660			21,551
Related party note receivable								1,905			-
Equity method investment								9,978			-
Intangible assets, net		54,725			60,995			50,662			54,111
Goodwill		23,775			26,651			25,463			25,099
Deferred income taxes		8,965			4,461			11,936			7,281
Other assets		32,931			31,261			36,255			34,183
Total assets	$	553,816		$	511,846		$	559,068		$	560,466

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	66,191		$	65,960		$	43,984		$	64,589
Accrued expenses		42,662			34,453			55,256			50,873
Operating lease liabilities, current		5,904			6,880			6,190			5,870
Other current liabilities		22,325			4,719			12,252			14,972
Total current liabilities		137,082			112,012			117,682			136,304

Long-term Liabilities:
Long-term debt		110,000			112,500			60,000			95,000
Operating lease liabilities, long-term		14,992			14,668			15,551			15,742
Liability for uncertain tax positions		24,007			28,434			19,608			24,798
Minimum pension obligation and unfunded pension liability		24,284			23,909			18,903			18,522
Deferred income taxes		1,026			1,487			973			1,257
Other liabilities		6,392			10,093			4,940			6,497
Total liabilities		317,783			303,103			237,657			298,120

Commitments and contingencies (see Note 14)
Commitments and contingencies (see Note 15)

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; 2,141,589 shares and 2,144,912 shares outstanding at September 30, 2022 and December 31, 2021, respectively (net of 1,072,769 restricted treasury shares)		214			214
Class B common stock, par value $.10 per share, 30,000,000 shares authorized; 10,338,260 and 10,377,102 shares outstanding at September 30, 2022 and December 31, 2021, respectively (net of 3,218,307 restricted treasury shares)		1,034			1,038
Class A common stock, par value $.10 per share, 10,000,000 shares authorized; 2,141,589 shares outstanding at each date (net of 1,072,769 restricted treasury shares)								214			214
Class B common stock, par value $.10 per share, 30,000,000 shares authorized; 10,630,760 and 10,642,760 shares outstanding at September 30, 2023 and December 31, 2022, respectively (net of 3,218,307 restricted treasury shares)								1,063			1,067
Treasury stock (unrestricted, consisting of 3,323 Class A shares and 17,342 Class B shares)		(349	)		-			(349	)		(349	)
Additional paid-in capital		40,095			38,419			43,488			40,772
Retained earnings		224,022			187,935			296,365			237,188
Accumulated other comprehensive loss		(28,983	)		(18,863	)		(19,370	)		(16,546	)
Total stockholders' equity		236,033			208,743			321,411			262,346
Total liabilities and stockholders' equity	$	553,816		$	511,846		$	559,068		$	560,466

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2022			2021			2022			2021			2023			2022			2023			2022

Net sales	$	177,739		$	146,966		$	485,030		$	396,351		$	158,682		$	177,739		$	499,803		$	485,030
Cost of sales		126,205			110,992			354,084			301,234			103,217			126,205			335,137			354,084
Gross profit		51,534			35,974			130,946			95,117			55,465			51,534			164,666			130,946

Research and development costs		4,877			5,918			14,381			16,301			5,292			4,877			16,521			14,381
Selling, general and administrative expenses		22,223			21,188			67,216			64,757			23,717			22,223			74,149			67,216
Restructuring charges		3,969			398			4,000			675			2,091			3,969			6,306			4,000
Gain on sale of property		(1,596	)		(403	)		(1,596	)		(6,578	)
Gains on sale of properties														(147	)		(1,596	)		(3,819	)		(1,596	)
Income from operations		22,061			8,873			46,945			19,962			24,512			22,061			71,509			46,945

Gain on sale of Czech Republic business														(135	)		-			980			-
Interest expense		(944	)		(1,491	)		(2,411	)		(3,014	)		(512	)		(944	)		(2,402	)		(2,411	)
Other (expense) income, net		(429	)		(201	)		(2,926	)		458
Other expense, net														(96	)		(429	)		(286	)		(2,926	)
Earnings before provision for income taxes		20,688			7,181			41,608			17,406			23,769			20,688			69,801			41,608

Provision for income taxes		4,140			1,447			2,959			593			4,321			4,140			8,006			2,959
Net earnings available to common stockholders	$	16,548		$	5,734		$	38,649		$	16,813		$	19,448		$	16,548		$	61,795		$	38,649


Net earnings per common share:
Class A common share - basic and diluted	$	1.27		$	0.44		$	2.95		$	1.29		$	1.46		$	1.27		$	4.63		$	2.95
Class B common share - basic and diluted	$	1.34		$	0.47		$	3.12		$	1.37		$	1.54		$	1.34		$	4.88		$	3.12

Weighted-average number of shares outstanding:
Class A common share - basic and diluted		2,142			2,145			2,144			2,145			2,142			2,142			2,142			2,144
Class B common share - basic and diluted		10,340			10,269			10,358			10,237			10,636			10,340			10,636			10,358

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2022			2021			2022			2021			2023			2022			2023			2022

Net earnings available to common stockholders	$	16,548		$	5,734		$	38,649		$	16,813		$	19,448		$	16,548		$	61,795		$	38,649

Other comprehensive (loss) income:
Currency translation adjustment, net of taxes of ($40), ($12), ($83) and ($336), respectively		(8,372	)		(1,982	)		(16,352	)		(1,971	)
Unrealized gains on interest rate swap cash flow hedge, net of taxes of $0 in all periods presented		2,070			-			6,061			-
Unrealized holding (losses) gains on marketable securities, net of taxes of $0 in all periods presented		(1	)		46			(11	)		45
Change in unfunded SERP liability, net of taxes of ($18), ($28), ($52) and ($83), respectively		61			100			182			299
Other comprehensive income (loss):
Currency translation adjustment, net of taxes of ($13), ($40), ($109) and ($83), respectively														(2,624	)		(8,372	)		(2,857	)		(16,352	)
Unrealized gains (losses) on interest rate swap cash flow hedge, net of taxes of $0 in all periods presented														96			2,070			(9	)		6,061
Unrealized holding (losses) gains on marketable securities, net of taxes of $0 in all periods presented														-			(1	)		1			(11	)
Change in unfunded SERP liability, net of taxes of ($4), ($18), ($12) and ($52), respectively														14			61			41			182
Other comprehensive loss		(6,242	)		(1,836	)		(10,120	)		(1,627	)		(2,514	)		(6,242	)		(2,824	)		(10,120	)

Comprehensive income	$	10,306		$	3,898		$	28,529		$	15,186		$	16,934		$	10,306		$	58,971		$	28,529

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands, except per share data)

(unaudited)

							Accumulated																			Accumulated
							Other			Class A		Class B						Additional								Other			Class A		Class B						Additional
				Retained			Comprehensive			Common		Common			Treasury			Paid-In					Retained			Comprehensive			Common		Common			Treasury			Paid-In
	Total			Earnings			(Loss) Income			Stock		Stock			Stock			Capital		Total			Earnings			(Loss) Income			Stock		Stock			Stock			Capital

Balance at December 31, 2021	$	208,743		$	187,935		$	(18,863	)	$	214	$	1,038		$	-		$	38,419
Balance at December 31, 2022																				$	262,346		$	237,188		$	(16,546	)	$	214	$	1,067		$	(349	)	$	40,772
Net earnings		5,064			5,064			-			-		-			-			-		14,572			14,572			-			-		-			-			-
Dividends declared:
Class A Common Stock, $0.06/share		(129	)		(129	)		-			-		-			-			-		(128	)		(128	)		-			-		-			-			-
Class B Common Stock, $0.07/share		(727	)		(727	)		-			-		-			-			-		(747	)		(747	)		-			-		-			-			-
Forfeiture of restricted common stock		-			-			-			-		(1	)		-			1		-			-			-			-		(1	)		-			1
Foreign currency translation adjustment, net of taxes of ($12)		(1,216	)		-			(1,216	)		-		-			-			-
Foreign currency translation adjustment, net of taxes of $9																					1,998			-			1,998			-		-			-			-
Unrealized losses on interest rate swap cash flow hedge, net of taxes of $0																					(894	)		-			(894	)		-		-			-			-
Unrealized holding gains on marketable securities, net of taxes of $0																					1			-			1			-		-			-			-
Stock-based compensation expense																					902			-			-			-		-			-			902
Change in unfunded SERP liability, net of taxes of ($4)																					13			-			13			-		-			-			-
Balance at March 31, 2023																					278,063			250,885			(15,428	)		214		1,066			(349	)		41,675

Net earnings																					27,775			27,775			-			-		-			-			-
Dividends declared:
Class A Common Stock, $0.06/share																					(128	)		(128	)		-			-		-			-			-
Class B Common Stock, $0.07/share																					(742	)		(742	)		-			-		-			-			-
Issuance of restricted common stock																					-			-			-			-		1			-			(1	)
Forfeiture of restricted common stock																					-			-			-			-		(3	)		-			3
Foreign currency translation adjustment, net of taxes of ($105)																					(2,231	)		-			(2,231	)		-		-			-			-
Unrealized gains on interest rate swap cash flow hedge		2,984			-			2,984			-		-			-			-		789			-			789			-		-			-			-
Stock-based compensation expense		576			-			-			-		-			-			576		950			-			-			-		-			-			950
Change in unfunded SERP liability, net of taxes of ($17)		61			-			61			-		-			-			-
Balance at March 31, 2022		215,356			192,143			(17,034	)		214		1,037			-			38,996
Change in unfunded SERP liability, net of taxes of ($4)																					14			-			14			-		-			-			-
Balance at June 30, 2023																					304,490			277,790			(16,856	)		214		1,064			(349	)		42,627

Net earnings		17,038			17,038			-			-		-			-			-		19,448			19,448			-			-		-			-			-
Dividends declared:
Class A Common Stock, $0.06/share		(129	)		(129	)		-			-		-			-			-		(128	)		(128	)		-			-		-			-			-
Class B Common Stock, $0.07/share		(726	)		(726	)		-			-		-			-			-		(745	)		(745	)		-			-		-			-			-
Forfeiture of restricted common stock		-			-			-			-		(1	)		-			1		-			-			-			-		(1	)		-			1
Repurchase of treasury stock		(349	)		-			-			-		-			(349	)		-
Foreign currency translation adjustment, net of taxes of ($31)		(6,764	)		-			(6,764	)		-		-			-			-
Foreign currency translation adjustment, net of taxes of ($13)																					(2,624	)		-			(2,624	)		-		-			-			-
Unrealized gains on interest rate swap cash flow hedge		1,008			-			1,008			-		-			-			-		96			-			96			-		-			-			-
Unrealized holding losses on marketable securities arising during the year, net of taxes of $0		(12	)		-			(12	)		-		-			-			-
Stock-based compensation expense		512			-			-			-		-			-			512		860			-			-			-		-			-			860
Change in unfunded SERP liability, net of taxes of ($17)		61			-			61			-		-			-			-
Balance at June 30, 2022		225,995			208,326			(22,741	)		214		1,036			(349	)		39,509

Net earnings		16,548			16,548			-			-		-			-			-
Dividends declared:
Class A Common Stock, $0.06/share		(128	)		(128	)		-			-		-			-			-
Class B Common Stock, $0.07/share		(724	)		(724	)		-			-		-			-			-
Forfeiture of restricted common stock		-			-			-			-		(2	)		-			2
Repurchase of Class A common stock		-			-			-			-		-			-			-
Foreign currency translation adjustment, net of taxes of ($40)		(8,372	)		-			(8,372	)		-		-			-			-
Unrealized gains on interest rate swap cash flow hedge		2,070			-			2,070			-		-			-			-
Unrealized holding losses on marketable securities		(1	)		-			(1	)		-		-			-			-
Stock-based compensation expense		584			-			-			-		-			-			584
Change in unfunded SERP liability, net of taxes of ($18)		61			-			61			-		-			-			-
Balance at September 30, 2022	$	236,033		$	224,022		$	(28,983	)	$	214	$	1,034		$	(349	)	$	40,095
Change in unfunded SERP liability, net of taxes of ($4)																					14			-			14			-		-			-			-
Balance at September 30, 2023																				$	321,411		$	296,365		$	(19,370	)	$	214	$	1,063		$	(349	)	$	43,488

							Accumulated																	Accumulated
							Other			Class A		Class B			Additional									Other			Class A		Class B						Additional
				Retained			Comprehensive			Common		Common			Paid-In						Retained			Comprehensive			Common		Common			Treasury			Paid-In
	Total			Earnings			(Loss) Income			Stock		Stock			Capital			Total			Earnings			(Loss) Income			Stock		Stock			Stock			Capital

Balance at December 31, 2020	$	185,799		$	166,491		$	(18,063	)	$	214	$	1,021		$	36,136
Balance at December 31, 2021																		$	208,743		$	187,935		$	(18,863	)	$	214	$	1,038			-		$	38,419
Net earnings		3,199			3,199			-			-		-			-			5,064			5,064			-			-		-			-			-
Dividends declared:
Class A Common Stock, $0.06/share		(128	)		(128	)		-			-		-			-			(129	)		(129	)		-			-		-			-			-
Class B Common Stock, $0.07/share		(716	)		(716	)		-			-		-			-			(727	)		(727	)		-			-		-			-			-
Forfeiture of restricted common stock		-			-			-			-		(1	)		1			-			-			-			-		(1	)		-			1
Foreign currency translation adjustment, net of taxes of $9		(2,529	)		-			(2,529	)		-		-			-
Unrealized holding losses on marketable securities		(1	)		-			(1	)		-		-			-
Foreign currency translation adjustment, net of taxes of ($12)																			(1,216	)		-			(1,216	)		-		-			-			-
Unrealized gains on interest rate swap cash flow hedge																			2,984			-			2,984			-		-			-			-
Stock-based compensation expense		600			-			-			-		-			600			576			-			-			-		-			-			576
Change in unfunded SERP liability, net of taxes of ($28)		99			-			99			-		-			-
Balance at March 31, 2021		186,323			168,846			(20,494	)		214		1,020			36,737

Net earnings		7,880			7,880			-			-		-			-
Dividends declared:
Class A Common Stock, $0.06/share		(129	)		(129	)		-			-		-			-
Class B Common Stock, $0.07/share		(714	)		(714	)		-			-		-			-
Issuance of restricted common stock		-			-			-			-		8			(8	)
Forfeiture of restricted common stock		-			-			-			-		(1	)		1
Foreign currency translation adjustment, net of taxes of ($333)		2,540			-			2,540			-		-			-
Stock-based compensation expense		598			-			-			-		-			598
Change in unfunded SERP liability, net of taxes of ($28)		100			-			100			-		-			-
Balance at June 30, 2021		196,598			175,883			(17,854	)		214		1,027			37,328
Change in unfunded SERP liability, net of taxes of ($17)																			61			-			61			-		-			-			-
Balance at March 31, 2022																			215,356			192,143			(17,034	)		214		1,037			-			38,996

Net earnings		5,734			5,734			-			-		-			-			17,038			17,038			-			-		-			-			-
Dividends declared:
Class A Common Stock, $0.06/share		(129	)		(129	)		-			-		-			-			(129	)		(129	)		-			-		-			-			-
Class B Common Stock, $0.07/share		(719	)		(719	)		-			-		-			-			(726	)		(726	)		-			-		-			-			-
Forfeiture of restricted common stock		-			-			-			-		(1	)		1			-			-			-			-		(1	)		-			1
Foreign currency translation adjustment, net of taxes of ($12)		(1,982	)		-			(1,982	)		-		-			-
Unrealized holding gains on marketable securities		46			-			46			-		-			-
Repurchase of treasury stock																			(349	)		-			-			-		-			(349	)
Foreign currency translation adjustment, net of taxes of ($31)																			(6,764	)		-			(6,764	)		-		-			-			-
Unrealized gains on interest rate swap cash flow hedge																			1,008			-			1,008			-		-			-			-
Unrealized holding losses on marketable securities, net of taxes of $0																			(12	)		-			(12	)		-		-			-			-
Stock-based compensation expense		554			-			-			-		-			554			512			-			-			-		-			-			512
Change in unfunded SERP liability, net of taxes of ($28)		100			-			100			-		-			-
Balance at September 30, 2021	$	200,202		$	180,769		$	(19,690	)	$	214	$	1,026		$	37,883
Change in unfunded SERP liability, net of taxes of ($17)																			61			-			61			-		-			-			-
Balance at June 30, 2022																			225,995			208,326			(22,741	)		214		1,036			(349	)		39,509

Net earnings																			16,548			16,548			-			-		-			-			-
Dividends declared:
Class A Common Stock, $0.06/share																			(128	)		(128	)		-			-		-			-			-
Class B Common Stock, $0.07/share																			(724	)		(724	)		-			-		-			-			-
Forfeiture of restricted common stock																			-			-			-			-		(2	)		-			2
Foreign currency translation adjustment, net of taxes of ($40)																			(8,372	)		-			(8,372	)		-		-			-			-
Unrealized gains on interest rate swap cash flow hedge																			2,070			-			2,070			-		-			-			-
Unrealized holding losses on marketable securities																			(1	)		-			(1	)		-		-			-			-
Stock-based compensation expense																			584			-			-			-		-			-			584
Change in unfunded SERP liability, net of taxes of ($18)																			61			-			61			-		-			-			-
Balance at September 30, 2022																		$	236,033		$	224,022		$	(28,983	)	$	214	$	1,034		$	(349	)	$	40,095

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

BEL FUSE INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Nine Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2023			2022

Cash flows from operating activities:
Net earnings	$	38,649		$	16,813		$	61,795		$	38,649
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		11,604			12,514			9,962			11,604
Stock-based compensation		1,672			1,752			2,712			1,672
Amortization of deferred financing costs		34			1,267			33			34
Deferred income taxes		(5,113	)		(124	)
Net unrealized gains on foreign currency revaluation		(494	)		(373	)
Gains on sale of property		(1,596	)		(6,578	)
Deferred tax benefit								(4,894	)		(5,113	)
Net unrealized losses (gains) on foreign currency revaluation								130			(494	)
Gains on sale of properties								(3,819	)		(1,596	)
Gain on sale of Czech Republic business								(980	)		-
Other, net		360			1,355			(495	)		360
Changes in operating assets and liabilities:
Accounts receivable, net		(17,851	)		(11,893	)		11,931			(17,851	)
Unbilled receivables		(317	)		(13,958	)		1,590			(317	)
Inventories		(32,574	)		(22,831	)		29,313			(32,574	)
Accounts payable		4,884			15,800			(18,674	)		4,884
Accrued expenses		6,678			9,066			4,536			6,678
Accrued restructuring costs		3,628			124			(148	)		3,628
Income taxes payable		6,380			(1,372	)		2,008			6,380
Other operating assets/liabilities, net		8,125			(3,276	)		(13,575	)		8,125
Net cash provided by (used in) operating activities		24,069			(1,714	)
Net cash provided by operating activities								81,425			24,069

Cash flows from investing activities:
Purchases of property, plant and equipment		(5,612	)		(4,154	)		(9,659	)		(5,612	)
Payments for acquisitions, net of cash acquired		-			(16,811	)
Payment for equity method investment								(9,975	)		-
Investment in related-party notes receivable								(1,905	)		-
Proceeds from sale of property, plant and equipment		1,833			7,249			5,403			1,833
Proceeds from sale of Czech Republic business								5,063			-
Net cash used in investing activities		(3,779	)		(13,716	)		(11,073	)		(3,779	)

Cash flows from financing activities:
Dividends paid to common stockholders		(2,470	)		(2,447	)		(2,490	)		(2,470	)
Repayments under revolving credit line								(40,000	)		(2,500	)
Borrowings under revolving credit line								5,000			-
Purchase of treasury stock		(349	)		-			-			(349	)
Deferred financing costs		-			(675	)
Borrowings under revolving credit line		-			115,000
Repayments of revolving credit line		-			(14,500	)
Repayments of long-term debt		(2,500	)		(104,846	)
Net cash used in financing activities		(5,319	)		(7,468	)		(37,490	)		(5,319	)

Effect of exchange rate changes on cash and cash equivalents		(5,832	)		(80	)		(2,903	)		(5,832	)

Net increase (decrease) in cash and cash equivalents		9,139			(22,978	)
Net increase in cash and cash equivalents								29,959			9,139
Cash and cash equivalents - beginning of period		61,756			84,939			70,266			61,756
Cash and cash equivalents - end of period	$	70,895		$	61,961		$	100,225		$	70,895


Supplementary information:
Cash paid during the period for:
Income taxes, net of refunds received	$	7,496		$	2,024		$	18,148		$	7,496
Interest payments	$	2,129		$	1,683		$	3,738		$	2,129
ROU assets obtained in exchange for lease obligations	$	6,111		$	6,382		$	5,887		$	6,111

Details of acquisitions:
Fair value of identifiable net assets acquired	$	-		$	18,215
Goodwill		-			2,499
Fair value of net assets acquired	$	-		$	20,714

Fair value of consideration transferred	$	-		$	20,714
Less: Cash acquired in acquisitions		-			(3,903	)
Cash paid for acquisitions, net of cash acquired	$	-		$	16,811

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

BEL FUSE INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated balance sheets and statements of operations, comprehensive income, stockholders’ equity and cash flows for the periods presented herein have been prepared by the Company and are ~~unaudited.~~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, ~~2022~~2023 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 fiscal year ended December 31, ~~2021~~2022.

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations, including the interim reporting requirements, of the 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 significant accounting policies are summarized in Note 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022. There were no significant changes to these accounting policies during the nine months ended September 30, ~~2022~~2023, except as discussed in “Recently Adopted Accounting Standards” ~~below.~~below and as follows:

Investments

We account for non-marketable investments using the equity method of accounting if the investment gives us the ability to exercise significant influence over, but not control, of an investee. Significant influence generally exists if we have an ownership interest representing between 20% and 50% of the voting stock of the investee. Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and our proportionate share of earnings or losses and distributions.

Equity in earnings of unconsolidated affiliates, in the consolidated statements of operations, reflects our proportionate share of the investee's net income, including any associated affiliate taxes. Our proportionate share of the investee’s other comprehensive income (loss), net of income taxes, is recorded in the consolidated statements of stockholders’ equity and consolidated statements of comprehensive income. In general, the equity investment in our unconsolidated affiliates is equal to our original equity investment plus our share of those entities' undistributed earnings subsequent to our investment .

We evaluate our equity method investments for impairment at least annually or whenever events or changes in circumstances indicate, in management’s judgment, that the carrying value of an investment may have experienced an other-than-temporary decline in value. When evidence of loss in value has occurred, management compares the estimated fair value of the investment to the carrying value of the investment to determine whether an impairment has occurred. If the estimated fair value is less than the carrying value and management considers the decline in value to be other than temporary, the excess of the carrying value over the estimated fair value is recognized in the financial statements as an impairment. See Note 2, "Investment in Innolectric", below, for our discussion on specific equity method investments.

Where we are unable to exercise significant influence over the investee, or when our investment balance is reduced to zero from our proportionate share of losses, the investments are accounted for under the cost method. Under the cost method, investments are carried at cost and adjusted only for other-than-temporary declines in fair value, distributions of earnings, additional investments, or in the case of an observable price change in an orderly transaction for an identical security.

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 ~~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 adds additional disclosures. The Company adopted amendments in ASU~~ ~~2018~~-14 ~~on a retrospective basis effective~~ ~~January 1, 2021.~~ ~~The adoption of this guidance modified the Company's annual disclosures for its defined benefit plan, but did~~ ~~not~~ ~~have any impact on the Company's consolidated financial statements.~~

In ~~December 2019,~~ ~~the FASB issued ASU~~ ~~2019~~-~~12,~~~~Simplifying the Accounting for Income Taxes~~ ~~("ASU~~ ~~2019~~-~~12"~~~~), which modifies ASC~~ ~~740~~ ~~to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. This guidance was adopted by the Company effective~~ ~~January 1, 2021~~ ~~and did~~ ~~not~~ ~~have a material impact on the Company’s consolidated financial statements.~~

~~Accounting Standards Issued But~~ ~~Not~~ ~~Yet Adopted~~

In ~~June 2016,~~ ~~the FASB issued ASU~~ ~~2016~~-~~13,~~~~Financial Instruments~~ – ~~Credit Losses (Topic~~ ~~326~~~~): Measurement of Credit Losses on Financial Instruments~~ ~~(“ASU~~ ~~2016~~-~~13”~~), as amended. 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 effective for the Company for annual reporting periods beginning after ~~December 15, 2022,~~ ~~with early adoption permitted. Management is currently assessing the impact of ASU~~ ~~2016~~-~~13,~~ ~~but it is~~ ~~not~~ ~~expected to have a material impact on the Company’s consolidated financial statements.~~

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 provides temporary optional guidance on contract modifications and hedging accounting to ease the financial reporting burdens of the ~~expected~~ market transition from the London Interbank Offered Rate (“LIBOR”) to alternative reference rates. In January 2021, the FASB issued ASU 2021-01, which ~~refines~~refined the scope of Topic 848 and ~~clarifies~~clarified some of its guidance as part of the FASB’s monitoring of global reference rate activities. ~~The new~~This updated guidance was effective upon issuance, and the Company iswas initially allowed to elect to apply the amendments prospectively through December 31, 2022. ~~Management is currently evaluating~~ In December 2022, the ~~impact~~FASB issued ASU 2022-06,Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848, which extended the date by which companies could elect to apply the amendments to December 31, 2024. During January 2023, the Company amended its credit agreement and related interest rate swap agreements to transition the reference rate from LIBOR to a Secured Overnight Financing Rate ("SOFR") effective January 31, 2023. In connection with these amendments, the Company adopted ASU 2020-04 in the first quarter of 2023 and elected to apply the relevant practical expedients within the guidance. The adoption of this ~~accounting standard update~~guidance did not have a material impact on the Company's consolidated financial ~~statements~~statements.

Table of Contents

In June 2016, the FASB issued ASU 2016-13,Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), as amended. The new guidance broadens the information that an entity must consider in developing its expected credit loss estimates related to its financial instruments and ~~related disclosures.~~

adds to U.S. GAAP an impairment model that is based on expected losses rather than incurred losses. On January 1, 2023, the Company adopted ASU 2016-13. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

2.	~~ACQUISITIONS~~INVESTMENT IN INNOLECTRIC

On February 1, 2023, the Company closed on a noncontrolling (~~rms Connectors~~one-third) investment in Germany-based innolectric AG (“innolectric”) for consideration of €8.0 million (approximately $8.8 million as of the February 2023 closing). Transaction costs associated with the Company's investment in innolectric amounted to $1.3 million and these costs have been recorded as part of the carrying value of the investment. Under the terms of the investment agreement, if innolectric achieves certain EBITDA thresholds within a specified timeframe, the Company would be committed to acquiring the remaining shares of innolectric at that time. The accompanying condensed consolidated balance sheet reflects the fair value as of the February 2023 closing of the initial one-third equity method investment, inclusive of transaction costs, of $11.0 million, and an other liability of $1.0 million associated with the net fair value of the put and call options related to the remaining shares pursuant to the agreement in the event certain profitability thresholds are met.

OnThis passive investment creates a strategic alliance that is focused on Electric Vehicles (“EV”) on-board power electronics, and in particular next generation fast-charging technology. With ~~January 8, 2021,~~ no product overlap, this relationship expands the ~~Company acquired rms Connectors, Inc. (“rms Connectors” or "rms"),~~Bel eMobility Power portfolio, further enhancing Bel's competitive position in this emerging field. Our investment in innolectric is accounted for using the equity method and we have determined that the innolectric investment is not a variable interest entity (VIE). Results from ~~rms Company Inc., a division of Cretex Companies, Inc., for $9.0 million~~this investment have been included in ~~cash, including a working capital adjustment. rms Connectors is a highly regarded connector manufacturer with over~~ 30 ~~years of experience producing harsh environment circular connectors used in a variety of military and aerospace applications. This acquisition complemented~~ Bel's existing military and aerospace product portfolio and enabled us to expand key customer relationships within these end markets and leverage the combined manufacturing resources to improve our operational efficiency. Originally based in Coon Rapids, Minnesota, the rms Connectors business was relocated into Bel's existing facilities during the ~~second~~ ~~quarter of~~ ~~2021,~~ ~~and is part of Bel's Connectivity Solutions group. The transaction was funded with cash on hand.~~

~~EOS Power~~

On ~~March 31, 2021,~~ ~~the Company completed the acquisition of EOS~~ Power ("EOS") through a stock purchase agreement for $7.8 million, net of cash acquired, including a working capital adjustment. EOS, located in Mumbai, India, had sales of $12.0 million for the year ended ~~December 31, 2020.~~ EOS enhances Bel's position related to certain industrial and medical markets historically served by EOS, with a strong line of high-power density and low-profile products with high convection ratings. In addition to new products and customers acquired, this acquisition diversified Bel's manufacturing footprint in Asia. The EOS business is part of Bel’s Power SolutionsSolution and Protection ~~group. The transaction was funded with cash on hand.~~

~~The acquisitions~~segment and amounted to losses of ~~rms Connectors~~$0.3 million and ~~EOS~~ ~~may~~ ~~hereafter be referred to collectively as either the~~ ~~"2021~~ ~~Acquisitions" or the~~ ~~"2021~~ Acquired Companies". As of the respective acquisition dates, all of the assets acquired and liabilities assumed were recorded at their fair values and the Company's condensed consolidated results of operations for$0.7 million during the three and nine months ended September 30, ~~2021~~2023, ~~include~~respectively. The Company adopted a policy to record its share of innolectric's results on a one-month lag on a consistent basis to allow time for innolectric to provide its financial statements to Bel.

Related Party Transactions

From time to time, the ~~operating results of~~Company provides cash loans to innolectric to fund working capital needs and further business development. During the ~~2021~~first ~~Acquired Companies from their respective acquisition dates through~~nine months of 2023, the Company provided loans to innolectric in the aggregate amount of €1.8 million (approximately $1.9 million at the September 30, ~~2021~~2023 ~~. During the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021~~~~, the Company incurred $0.5 million of acquisition-related costs related to the~~ ~~2021~~ ~~Acquisitions. No acquisition-related costs were incurred during the~~ ~~three~~ ~~months ended~~ ~~September 30, 2022~~ or ~~2021~~ ~~or during the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2022~~exchange rate). These ~~costs are included in selling, general and administrative expenses in~~loans bear interest at a rate of 5% per annum. This balance is shown as a related-party note receivable on the accompanying condensed consolidated ~~statements of operations.~~

~~The results of operations of the~~ ~~2021~~ ~~Acquired Companies have been included in the Company’s condensed consolidated financial statements for the periods subsequent to their respective acquisition dates. During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~balance sheet at September 30, ~~2021~~2023~~, the~~ ~~2021~~ Acquired Companies contributed revenues of $4.3 million and $12.4 million, respectively, and estimated net earnings of $0.2 million and $1.6 million, respectively, to the Company since their respective acquisition dates. The unaudited pro forma information below presents the combined operating results of the Company and the ~~2021~~ ~~Acquired Companies assuming that the acquisition of the~~ ~~2021~~ ~~Acquired Companies had occurred as of~~ ~~January 1, 2021.~~ ~~The unaudited pro forma results are presented for illustrative purposes only. They do~~ ~~not~~ ~~reflect the realization of any potential cost savings, or any related integration costs. This unaudited pro forma information does~~ ~~not~~ ~~purport to be indicative of the results that would have actually been obtained if the~~ ~~2021~~ ~~Acquisitions had occurred as of~~ ~~January~~ 1,~~2021,~~ ~~nor is the pro forma data intended to be a projection of results that~~ ~~may~~ ~~be achieved in the future.~~.

~~The following unaudited pro forma consolidated results of operations assume that the acquisition of the~~ ~~2021~~ ~~Acquired Companies was completed as of~~ ~~January~~ 1,~~2021:~~

Three Months Ended

Nine Months Ended

September 30, 2021

September 30, 2021

Revenue, net
$ 146,966 $ 399,372
Net earnings
5,734 17,043
Earnings per Class A common share - basic and diluted
0.44 1.31
Earnings per Class B common share - basic and diluted
0.47 1.39

3.	DIVESTITURE OF SUBSIDIARY

On June 1, 2023, the Company completed its divestment of Bel Stewart s.r.o., a former subsidiary in the Czech Republic which has historically been reported within Bel’s Connectivity Solutions segment. The business was sold to PEI Genesis (“PEI”) for total consideration of $5.1 million, subject to working capital adjustments. The divestment of this non-core business was a strategic decision which allows the Connectivity Solutions segment to focus on its main product categories serving customer end markets such as commercial air, defense, industrial and networking which better align with its long-term growth objectives.

The carrying amounts of the major classes of assets and liabilities included as part of the sale were as follows:

	Total
Cash and cash equivalents	$	2,072
Accounts receivable		1,030
Inventories		1,310
Property, plant and equipment		326
Other assets		48
Accounts payable		(441	)
Accrued expenses		(126	)
Income taxes payable		(100	)
Other current liabilities		(13	)
Other long-term liabilities		(23	)
Total net assets transferred		4,083
Consideration received		5,063
Gain on sale recognized	$	980

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REVENUE

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

	*Three Months Ended September 30, 2022*								*Nine Months Ended September 30, 2022*								Three Months Ended September 30, 2023								Nine Months Ended September 30, 2023
	*Connectivity Solutions*		*Power Solutions and Protection*		*Magnetic Solutions*		*Consolidated*		*Connectivity Solutions*		*Power Solutions and Protection*		*Magnetic Solutions*		*Consolidated*		*Power Solutions and Protection*		*Connectivity Solutions*		*Magnetic Solutions*		*Consolidated*		*Power Solutions and Protection*		*Connectivity Solutions*		*Magnetic Solutions*		*Consolidated*

*By Geographic Region:*												��
North America	$	37,877	$	60,267	$	13,490	$	111,634	$	105,189	$	155,022	$	38,616	$	298,827	$	55,262	$	42,841	$	12,980	$	111,083	$	182,183	$	130,086	$	34,680	$	346,949
Europe		9,327		8,779		2,535		20,641		26,895		29,264		8,128		64,287		13,759		7,500		1,545		22,804		43,266		25,462		6,976		75,704
Asia		3,049		7,387		35,028		45,464		7,978		21,961		91,977		121,916		5,841		1,430		17,524		24,795		19,685		4,462		53,003		77,150
	$	50,253	$	76,433	$	51,053	$	177,739	$	140,062	$	206,247	$	138,721	$	485,030	$	74,862	$	51,771	$	32,049	$	158,682	$	245,134	$	160,010	$	94,659	$	499,803

*By Sales Channel:*
Direct to customer	$	29,974	$	48,765	$	40,362	$	119,101	$	84,571	$	130,210	$	105,619	$	320,400	$	52,507	$	31,369	$	25,021	$	108,897	$	174,143	$	101,063	$	70,700	$	345,906
Through distribution		20,279		27,668		10,691		58,638		55,491		76,037		33,102		164,630		22,355		20,402		7,028		49,785		70,991		58,947		23,959		153,897
	$	50,253	$	76,433	$	51,053	$	177,739	$	140,062	$	206,247	$	138,721	$	485,030	$	74,862	$	51,771	$	32,049	$	158,682	$	245,134	$	160,010	$	94,659	$	499,803

	*Three Months Ended September 30, 2021*								*Nine Months Ended September 30, 2021*								*Three Months Ended September 30, 2022*								*Nine Months Ended September 30, 2022*
	*Connectivity Solutions*		*Power Solutions and Protection*		*Magnetic Solutions*		*Consolidated*		*Connectivity Solutions*		*Power Solutions and Protection*		*Magnetic Solutions*		*Consolidated*		*Power Solutions and Protection*		*Connectivity Solutions*		*Magnetic Solutions*		*Consolidated*		*Power Solutions and Protection*		*Connectivity Solutions*		*Magnetic Solutions*		*Consolidated*

*By Geographic Region:*
North America	$	30,144	$	42,064	$	11,338	$	83,546	$	92,868	$	109,708	$	28,009	$	230,585	$	60,267	$	37,877	$	13,490	$	111,634	$	155,022	$	105,189	$	38,616	$	298,827
Europe		7,916		9,679		2,635		20,230		22,220		29,306		6,126		57,652		8,779		9,327		2,535		20,641		29,264		26,895		8,128		64,287
Asia		2,284		8,538		32,368		43,190		6,358		20,298		81,458		108,114		7,387		3,049		35,028		45,464		21,961		7,978		91,977		121,916
	$	40,344	$	60,281	$	46,341	$	146,966	$	121,446	$	159,312	$	115,593	$	396,351	$	76,433	$	50,253	$	51,053	$	177,739	$	206,247	$	140,062	$	138,721	$	485,030

*By Sales Channel:*
Direct to customer	$	23,476	$	36,154	$	38,022	$	97,652	$	72,898	$	96,759	$	95,104	$	264,761	$	48,765	$	29,974	$	40,362	$	119,101	$	130,210	$	84,571	$	105,619	$	320,400
Through distribution		16,868		24,127		8,319		49,314		48,548		62,553		20,489		131,590		27,668		20,279		10,691		58,638		76,037		55,491		33,102		164,630
	$	40,344	$	60,281	$	46,341	$	146,966	$	121,446	$	159,312	$	115,593	$	396,351	$	76,433	$	50,253	$	51,053	$	177,739	$	206,247	$	140,062	$	138,721	$	485,030

The balances of the Company’s contract assets and contract liabilities at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 are as follows:

	*September 30,*		*December 31,*		*September 30,*		*December 31,*
	*2022*		*2021*		*2023*		*2022*

Contract assets - current (unbilled receivables)	$	28,592	$	28,275	$	16,654	$	18,244
Contract liabilities - current (deferred revenue)	$	11,303	$	2,224	$	2,940	$	8,847

The change in balance of our unbilled receivables from December 31, ~~2021~~2022 to September 30, ~~2022~~2023 primarily relates to a timing difference between the Company’s performance (i.e. when our product is shipped to a customer-controlled hub) and the point at which the Company can invoice the customer per the terms of the customer contract (i.e. when the customer pulls our product from the customer-controlled hub). ~~The increase in our~~Our deferred revenue balance ~~from~~at December 31, ~~2021~~2022 toand September 30, ~~2022~~2023 primarily relates to customer prepayments on ~~raw material~~invoices related to surcharges and expedite fees, which will be ~~recorded~~recorded as revenue in the period in which the related finished goods are shipped to the customer.

~~The aggregate amount of transaction price allocated to remaining performance obligations that have~~ ~~not~~ ~~been satisfied as of~~ ~~September 30, 2022~~ ~~related to contracts that exceed~~ ~~one~~ ~~year in duration amounted to~~ ~~$94.5~~ ~~million, with expected contract expiration dates that range from~~ ~~2023~~ - ~~2026.~~ ~~It is expected that~~ ~~57% of~~ ~~this aggregate amount will be recognized in~~ ~~2023,~~ ~~36%~~ ~~will be recognized in~~ ~~2024~~ ~~and the remainder will largely be recognized in~~ ~~2025.~~

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4.5.

EARNINGS PER SHARE

The following table sets forth the calculation of basic and diluted net earnings per common share under the two-class method for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022:

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2022		2021		2022		2021		2023		2022		2023		2022

Numerator:
Net earnings	$	16,548	$	5,734	$	38,649	$	16,813	$	19,448	$	16,548	$	61,795	$	38,649
Less dividends declared:
Class A		128		129		386		386		128		128		385		386
Class B		724		719		2,176		2,149		745		724		2,235		2,176
Undistributed earnings	$	15,696	$	4,886	$	36,087	$	14,278	$	18,575	$	15,696	$	59,175	$	36,087

Undistributed earnings allocation - basic and diluted:
Class A undistributed earnings	$	2,587	$	811	$	5,941	$	2,375	$	2,989	$	2,587	$	9,522	$	5,941
Class B undistributed earnings		13,109		4,075		30,146		11,903		15,586		13,109		49,653		30,146
Total undistributed earnings	$	15,696	$	4,886	$	36,087	$	14,278	$	18,575	$	15,696	$	59,175	$	36,087

Net earnings allocation - basic and diluted:
Class A net earnings	$	2,715	$	940	$	6,327	$	2,761	$	3,117	$	2,715	$	9,907	$	6,327
Class B net earnings		13,833		4,794		32,322		14,052		16,331		13,833		51,888		32,322
Net earnings	$	16,548	$	5,734	$	38,649	$	16,813	$	19,448	$	16,548	$	61,795	$	38,649

Denominator:
Weighted-average shares outstanding:
Class A - basic and diluted		2,142		2,145		2,144		2,145		2,142		2,142		2,142		2,144
Class B - basic and diluted		10,340		10,269		10,358		10,237		10,636		10,340		10,636		10,358

Net earnings per share:
Class A - basic and diluted	$	1.27	$	0.44	$	2.95	$	1.29	$	1.46	$	1.27	$	4.63	$	2.95
Class B - basic and diluted	$	1.34	$	0.47	$	3.12	$	1.37	$	1.54	$	1.34	$	4.88	$	3.12

5.6.

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.

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As of September 30, ~~2022~~2023 and December 31, ~~2021~~2022, our equity securities primarily consisted of investments held in a rabbi trust which are intended to fund the Company’s Supplemental Executive Retirement Plan (“SERP”) obligations. These securities are measured at fair value using quoted prices in active markets for identical assets (Level 1) inputs and amounted to ~~$0.2~~$0.4 million at September 30, ~~2022~~2023 and ~~$0.3~~$0.1 million at December 31, ~~2021~~2022.

Throughout ~~2022~~2023 and ~~2021~~2022, the Company entered into a series of foreign currency forward contracts, the fair value of which was ($(~~1.0)~~ $0.7) million~~million~~ at September 30, ~~2022~~2023 and ~~less than $0.1~~$0.4 million at December 31, ~~2021~~2022. The estimated fair value of foreign currency forward contracts is based on quotes received from the applicable counterparty, and represents the estimated amount we would receive or pay to settle the contracts, taking into consideration current exchange rates which can be validated through readily observable data from external sources (Level 2).

~~During the~~ ~~fourth~~ ~~quarter of~~ ~~2021,~~ ~~the~~The Company ~~entered into~~is a party to two interest rate swap agreements as ~~further~~further described in Note 9,10, "Derivative Instruments and Hedging Activities". The fair value of the interest rate swap agreements was $~~5.9~~ 5.5 million~~million~~ at each of September 30, ~~2022~~2023 and ~~$0.1 million at~~ December 31, ~~2021~~2022, which was based on market data, and represents the estimated amount we would receive or pay to settle the agreements, taking into consideration current and projected future interest rates as well as the creditworthiness of the parties, all of which can be validated through readily observable data from external sources.

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, ~~2022~~2023 or September 30, ~~2021~~2022. There were no changes to ~~the~~the Company’s valuation techniques used to measure asset fair values on a recurring or nonrecurring basis during the nine months ended September 30, ~~2022~~2023 or September 30, ~~2021~~2022.

There were no financial assets accounted for at fair value on a nonrecurring basis as of September 30, ~~2022~~2023 or December 31, ~~2021~~2022.

The Company has other financial instruments, such as cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, which are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature. The fair value of the Company’s long-term debt is estimated using a discounted cash flow method based on interest rates that are currently available for debt issuances with similar terms and maturities. At September 30, ~~2022~~2023 and December 31, ~~2021~~2022, the estimated fair value of total debt was ~~$110.0~~$60.0 million ~~$112.5~~and $95.0 million, respectively, compared to a carrying amount of ~~$110.0~~$60.0 million ~~$112.5~~and $95.0 million, respectively. The Company did not have any other financial liabilities within the scope of the fair value disclosure requirements as of September 30, ~~2022~~2023.

Nonfinancial assets and liabilities, such as goodwill, indefinite-lived intangible assets, ~~and~~ long-lived assets and the net liability related to the put/call options pursuant to the innolectric investment agreement, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment upon the occurrence of a triggering event or in the case of goodwill, on at least an annual basis. Based on the Company's assessment, it was concluded that no triggering events occurred during the nine months ended September 30, ~~2022~~2023 or September 30, ~~2021~~2022.

During thesecond quarter of 2023, the Company completed its preliminary valuation of the innolectric equity method investment including the valuations of the put and call options noted in the related investment agreement. To estimate the fair value of the put and call options conditional on certain thresholds related to innolectric's EBITDA, a variation of the income approach, known as the real options method was used, where innolectric’s EBITDA and equity were simulated in a risk-neutral framework using Geometric Brownian Motion.

6.7.

INVENTORIES

The components of inventories are as follows:

	September 30,		December 31,		September 30,		December 31,
	2022		2021		2023		2022
Raw materials	$	71,024	$	67,127	$	62,646	$	74,572
Work in progress		44,814		31,103		46,002		44,397
Finished goods		48,543		41,153		31,349		53,496
Inventories	$	164,381	$	139,383	$	139,997	$	172,465

7.8.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	September 30,			December 31,			September 30,			December 31,
	2022			2021			2023			2022
Land	$	1,082		$	1,105		$	1,015		$	1,098
Buildings and improvements		21,058			20,915			22,157			21,529
Machinery and equipment		120,501			120,961			109,524			118,358
Construction in progress		3,135			5,081			2,349			4,239
		145,776			148,062			135,045			145,224
Accumulated depreciation		(110,549	)		(109,852	)		(96,852	)		(108,391	)
Property, plant and equipment, net	$	35,227		$	38,210		$	38,193		$	36,833

Depreciation expense was ~~$2.1~~ $2.2 million and ~~$2.3~~$2.1 million, respectively, for the three months ended September 30, ~~2022~~2023 and ~~2021~~2022, and ~~$6.8~~$6.5 million and ~~$7.2~~$6.8 million, respectively, for the nine months ended September 30, ~~2022~~ 2023and ~~2021~~2022. 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.

At December 31, ~~2021,~~2022, a total of ~~$1.6~~$1.5 million of property was classified as assets held for sale on the accompanying condensed consolidated balance ~~sheet as of such date~~sheets related to our corporate headquarters in Jersey City, New Jersey. On ~~July 21, 2022,~~ ~~the~~The Company closed on the sale of this property during the ~~one~~second quarter of ~~its~~ ~~two~~2023 ~~buildings~~for $5.9 million, resulting in ~~Jersey City, New Jersey. In connection with this sale, the Company received proceeds in the amount of $1.8 million and recognized~~ a gain on sale ~~during the~~ ~~third~~ ~~quarter~~ of~~2022~~ $3.8 million, which is reflected in the ~~amount~~condensed consolidated statement of ~~$1.6 million. The other property in Jersey City, New Jersey continues to be classified as held~~operations for ~~sale at a net book value of $1.5 million.~~ the nine months ended September 30, 2023.

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8.9.

ACCRUED EXPENSES

Accrued expenses consist of the following:

	September 30,		December 31,		September 30,		December 31,
	2022		2021		2023		2022
Salaries, bonuses and related benefits	$	24,718	$	21,342	$	30,683	$	27,422
Deferred revenue						2,940		8,847
Accrued restructuring costs		3,637		9		6,655		6,796
Sales commissions		2,449		2,049		2,388		2,521
Subcontracting labor		1,927		1,622		1,680		1,875
Warranty accrual		1,338		1,056		1,440		1,287
Other		8,593		8,375		9,470		2,125
	$	42,662	$	34,453	$	55,256	$	50,873

The change in warranty accrual during the nine months ended September 30, ~~2022~~2023 primarily related to repair costs incurred and adjustments to pre-existing warranties. There were no new material warranty charges incurred during the nine months ended September 30, ~~2022~~2023.

Restructuring Activities:

Activity and liability balances related to restructuring costs for the nine months ended September 30, ~~2022~~ 2023are as follows:

			Nine Months Ended									Nine Months Ended
			September 30, 2022									September 30, 2023
	Liability at				Cash Payments			Liability at		Liability at				Cash Payments			Liability at
	December 31,		New		and Other			September 30,		December 31,		New		and Other			September 30,
	2021		Charges		Settlements			2022		2022		Charges		Settlements			2023
Severance costs	$	9	$	1,429	$	(372	)	$	1,066	$	3,390	$	5,115	$	(5,951	)	$	2,554
Other restructuring costs		-		2,571		-			2,571		3,406		1,191		(496	)		4,101
Total	$	9	$	4,000	$	(372	)	$	3,637	$	6,796	$	6,306	$	(6,447	)	$	6,655

During the third quarter of 2022, ~~Bel launched~~ a series of initiatives were launched to ~~simplify its~~streamline our operational footprint. ~~Two~~In a project substantially complete with final transitions expected by late 2023,two of ~~the Company's~~our Magnetic Solutions manufacturing facilities in Zhongshan and Pingguo, China, ~~will be~~are being largely consolidated into a single ~~new facility~~centralized site in the Binyang county of Southwestern China ~~with expected~~(the new Bel Guangxi facility). Further, facility consolidation actions within our Connectivity Solutions group have been underway in both the U.S. and Europe. During the first half of 2023, we completed the transition out of our Tempe, Arizona and Sudbury, UK facilities into other existing Bel sites. Our Melbourne, Florida site is in the process of transitioning its manufacturing operations into our existing site in Waseca, Minnesota, scheduled for completion by ~~mid-~~the end of 2023. ~~In connection with the announcement internally, the Company recorded $1.1~~ The $6.3 million of ~~severance costs and $2.6 million of other~~ restructuring ~~costs associated with this initiative. Also~~charges incurred during the ~~third~~ ~~quarter of~~ ~~2022,~~ the Company incurred $0.2 million of severance costs in connection with the reorganization of the Connectivity Solutions' sales and product management teams. These amounts are classified as restructuring charges on the condensed consolidated statements of operations for the ~~three~~ ~~and~~ nine months ended September 30, ~~2022.~~ 2023, and the accrued restructuring costs of $6.7 million at September 30, 2023, are associated with these collective initiatives.

9.10.

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Our primary objective for holding derivative financial instruments is to manage foreign currency exchange rate risk and interest rate risk, when deemed appropriate. We enter into these contracts in the normal course of business to mitigate risks and not for speculative purposes.

Foreign Currency Forward Contracts

Under our risk management strategy, we periodically use foreign currency forward contracts to manage our short-term exposures to fluctuations in operational cash flows resulting from changes in foreign currency exchange rates. These cash flow exposures result from portions of our forecasted operating expenses, primarily compensation and related expenses, which are transacted in currencies other than the U.S. dollar, most notably the Chinese ~~Renminbi~~renminbi and the Mexican ~~Peso.~~peso. These foreign currency forward contracts generally have maturities of no longer than twelve months, although occasionally we will execute a contract that extends beyond twelve months, depending upon the nature of the underlying risk. ~~The foreign currency forward contracts related to the Chinese Renminbi have been designated for hedge accounting.~~

We held outstanding foreign currency forward contracts with notional amounts of $~~14.9~~25.9 million and ~~$17.1~~$25.7 million as of September 30, ~~2022~~2023 and December 31, ~~2021,~~ 2022, respectively.

The Company's foreign currency forward contracts related to the Chinese renminbi are designated as cash flow hedges for accounting purposes and as such, changes in their fair value are recognized in accumulated other comprehensive loss in the consolidated balance sheet and are reclassified into the statement of operations within cost of goods sold in the period in which the hedged transaction affects earnings.

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Interest Rate Swap Agreements

To partially mitigate risks associated with the variable interest rates on the revolver borrowings under the Company's credit agreement ~~(further~~(as defined and described in Note ~~10,~~11, "Debt"), below), in ~~December~~November 2021, we executed a pay-fixed, receive-variable interest rate swap agreement with each of two ~~multinational~~multinational financial institutions under which we, prior to the January 2023 amendment described below which transitioned the reference rate from LIBOR to SOFR, (i) ~~pay~~paid interest at a fixed rate of 1.3055% ~~and receive~~and received variable interest of one-month LIBOR on a notional amount of $30.0 million and (ii) ~~pay~~paid interest at a fixed rate of 1.3180% and ~~receive~~received variable interest of one-month LIBOR on a notional amount of $30.0 million ~~(the~~(as amended to date, the “2021 Swaps”). The effective date of the 2021 Swaps was December 31, 2021, and settlements with the counterparties began on January 31, 2022 and occur on a ~~monthly~~monthly basis. The 2021 Swaps will terminate on August 31, 2026.In January 2023, and in connection with related changes to its credit agreement, the Company amended the 2021 Swaps to transition the related reference rates in these agreements from LIBOR to SOFR, effective January 31, 2023. Under the amended 2021 Swaps, the Company is required to pay interest on the notional amount at the rate of 1.334% and 1.348%, respectively, in exchange for the daily SOFR rate plus 10 basis points.

The 2021 Swaps are designated as cash flow hedges for accounting purposes and as such, changes in their fair value are recognized in accumulated other comprehensive loss in the ~~condensed~~ consolidated balance ~~sheets~~sheet and are reclassified into the ~~condensed consolidated statements~~statement of operations within interest expense in the period in which the hedged transaction affects earnings.

Fair Values of Derivative Financial Instruments

The fair values of our derivative financial instruments and their classifications in our condensed consolidated balance sheets as of September 30, ~~2022~~2023 and December 31,~~2021~~ 2022 were as follows:

	Balance Sheet Classification	September 30, 2022		December 31, 2021		Balance Sheet Classification	September 30, 2023		December 31, 2022
Derivative assets:
Foreign currency forward contracts:
Designated as cash flow hedges	Other current assets	$	-	$	57	Other current assets	$	-	$	359
Non designated as hedging instruments						Other current assets		114		-
Interest rate swap agreements:
Designated as a cash flow hedge	Other assets		5,946		-	Other assets		5,529		5,539
Total derivative assets	Total derivative assets	$	5,946	$	57	Total derivative assets	$	5,643	$	5,898

Derivative liabilities:
Foreign currency forward contracts:
Designated as cash flow hedges	Other current liabilities	$	995	$	-	Other current liabilities	$	782	$	-
Not designated as hedging instruments	Other current liabilities		-		19
Interest rate swap agreements:
Designated as a cash flow hedge	Other long-term liabilities		-		116
Total derivative liabilities	Total derivative liabilities	$	995	$	135	Total derivative liabilities	$	782	$	-

Derivative Financial Instruments in Cash Flow Hedging Relationships

The effects of derivative financial instruments designated as cash flow hedges onaccumulated other comprehensive loss (“AOCL”) ~~and~~and on the ~~condensed~~condensed consolidated statements of operations for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 were as follows:

	Three Months Ended					Nine Months Ended					Three Months Ended						Nine Months Ended
	September 30,					September 30,					September 30,						September 30,
	2022			2021		2022			2021		2023			2022			2023			2022
Net (losses) gains recognized in AOCL:
Net gains (losses) recognized in AOCL:
Foreign currency forward contracts	$	(671	)	$	-	$	(1,196	)	$	-	$	(385	)	$	(671	)	$	(1,837	)	$	(1,196	)
Interest rate swap agreements		2,206			-		5,939			-		698			2,206			1,641			5,939
	$	1,535		$	-	$	4,743		$	-	$	313		$	1,535		$	(196	)	$	4,743

Net (losses) gains reclassified from AOCL to the consolidated statement of operations:
Net gains (losses) reclassified from AOCL to the consolidated statement of operations:
Foreign currency forward contracts	$	(308	)	$	-	$	(381	)	$	-	$	(311	)	$	(308	)	$	(197	)	$	(381	)
Interest rate swap agreements		136			-		(122	)		-		602			136			1,650			(122	)
	$	(172	)	$	-	$	(503	)	$	-	$	291		$	(172	)	$	1,453		$	(503	)

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The losses related to the foreign currency forward contracts are included as a component of currency translation adjustment on the accompanying condensed consolidated statements of comprehensive income atfor the three and nine months ended September 30, ~~2022~~2023 and ~~December 31, 2021.~~ 2022.

Derivative Financial Instruments Not Designated as Hedging Instruments

Gains recognized on derivative financial instruments not designated as hedging instruments in our condensed consolidated statements of operations for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 were as follows:

Three Months Ended

Nine Months Ended

September 30, September 30,

Classification in Consolidated Statements of Operations

2022

2021

2022

2021

Foreign currency forward contracts
Other (expense) income, net
17 31 58 82
$ 17 $ 31 $ 58 $ 82

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
	Classification in Consolidated Statements of Operations	2023		2022		2023		2022
Foreign currency forward contracts	Other (expense) income, net	$	54	$	17	$	88	$	58
		$	54	$	17	$	88	$	58

~~10.~~11.

DEBT

The Company has a Credit and Security Agreement with KeyBank National Association (as amended, the "credit agreement" or the "CSA"). The CSA provides a $175 million 5-year senior secured revolving credit facility ("Revolver"), with a sublimit of up to $10 million available for letters of credit and a sublimit of up to $5 million available for swing line ~~loans.~~loans. The Company had ~~$110.0~~$60 million and ~~$112.5 million~~ $95.0 million in outstanding borrowings under the Revolver at September 30, ~~2022~~2023 and December 31, ~~2021~~2022, respectively. Revolving loans borrowed under the CSA mature on September 1, 2026. During January 2023, the Company amended its CSA and related interest rate swap agreements to transition the reference rate from LIBOR to SOFR effective January 31, 2023.

The weighted-average interest rate in effect for the variable-rate portion of our outstanding ~~borrowings~~borrowings ($~~50.0~~35.0 million at ~~September 30, 2022~~ ~~and $52.5 million at~~ December 31, ~~2021)~~ 2022) was ~~4.37~~% 5.51% at ~~September 30, 2022~~ ~~and 1.60% at~~ December 31, ~~2021~~2022 and consisted of LIBOR plus the Company’s credit spread at December 31, 2022, as determined per the terms of the CSA. No outstanding borrowings were subject to a variable interest rate at September 30, 2023. In order to manage our interest rate exposure on the remaining borrowings, and as further described in Note 9,10, "Derivative Instruments and Hedging Activities", the Company is party to the 2021 Swaps, each with an aggregate notional amount of $30 million, or $60 million in the aggregate, the effect of which is to fix the SOFR portion (or, for periods prior to January 31, 2023, the LIBOR ~~portion~~portion) of the interest rate on ~~a portion of~~ our outstanding debt on our ~~Revolver. The~~Revolver (or such portion thereof up to the aggregate $60 million notional amount of the 2021 Swaps). In periods prior to January 31, 2023, the 2021 Swaps ~~require~~required the Company to pay interest on the notional amount at the rate of 1.3055% and 1.3180%, respectively, in exchange for the one-month LIBOR rate. Effective January 31, 2023, in connection with the Company's transition of its reference rate from LIBOR to SOFR as further described in Recently Adopted Accounting Standards in Note 1,"Basis of Presentation and Accounting Policies", the 2021 Swaps require the Company to pay interest on the notional amount at the rate of 1.334% and 1.348%, respectively, in exchange for the daily SOFR rate plus10 basis points.The effective rate of interest for our outstanding borrowings, including the impact of the 2021 Swaps, was ~~3.38% and 2.92%~~ 2.47% and 3.57%, r ~~respectively, during the~~espectively, as of ~~three~~September 30, 2023 and ~~nine~~December 31, 2022 ~~months ended~~ ~~September 30,~~ ~~2022.~~. The Company incurred $0.5 million and $0.9 ~~million and $1.5~~ million of interest expense during the three months ended September 30, ~~2022~~2023 and ~~September 30, 2021~~2022, respectively, and ~~$2.4~~$2.4 million ~~and $3.0 million~~ during each of the nine ~~months~~month periods ended September 30, ~~2022~~2023 and ~~2021,~~2022, ~~respectively~~ in connection with interest due on its outstanding borrowings under the CSA during each period, including the effects of the 2021 Swaps and amortization of deferred financing costs.

The CSA contains customary representations and warranties, covenants and events of default. In addition, the CSA contains financial covenants that measure (i) the ratio of the Company’s total funded indebtedness, on a consolidated basis, less the aggregate amount of all unencumbered cash and cash equivalents, to the amount of the Company’s consolidated EBITDA (“Leverage Ratio”) and (ii) the ratio of the amount of the Company’s consolidated EBITDA to the Company’s consolidated fixed charges (“Fixed Charge Coverage Ratio”). If an event of default occurs, the lenders under the CSA would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor. At September 30, ~~2022~~2023, the Company was in compliance with its debt covenants, including its most restrictive covenant, the Fixed Charge Coverage Ratio.

~~Subsequent to~~ ~~September 30, 2022,~~ ~~the Company made a voluntary payment of $10.0 million towards its Revolver balance, bringing the outstanding borrowings under the Revolver to $100.0 million as of~~ ~~October 31, 2022.~~

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~~11.~~12.

INCOME TAXES

~~The Company's estimated taxable income in future periods is~~ ~~not~~ ~~on a legal entity basis and therefore income tax expense for the interim period is~~ ~~not~~ ~~measured using the annual effective tax rate ("AETR") method.~~ 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 ~~2018~~2019 and for state examinations before ~~2015.~~2016. Regarding foreign subsidiaries, the Company is no longer subject to examination by tax authorities for years before 2012 in Asia and generally ~~2013~~2014 in Europe.

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 condensed consolidated financial statements atSeptember 30, ~~2022.~~ 2023. The Company’s liabilities for uncertain tax positions totaled ~~$24.0~~$19.6 million and ~~$28.4~~$24.8 million at September 30, ~~2022~~ 2023and December 31, ~~2021,~~ 2022, respectively, of which ~~$4.1~~ $5.3 million isthat was included in other current liabilities at December 31, ~~2021~~ 2022~~and~~ was resolved during ~~2022~~2023 by way of expiration of the related statute of limitations. These amounts, if recognized, would reduce the Company’s effective tax rate.

The Company’s policy is to recognize interest and penalties related to uncertain tax positions as a component of the current provision for income ~~taxes.~~taxes. During the nine months ended September 30, ~~2022~~ 2023and ~~2021,~~2022, the Company recognized ~~$0.4~~ $0.3 million and ~~$0.5~~$0.4 million, respectively, in interest and penalties in the condensed consolidated statements of ~~operations during each period.~~operations. The Company has approximately ~~$3.8~~$2.0 million and ~~$5.0~~$4.0 million ~~respectively,~~ accrued for the payment of interest and penalties at September 30, ~~2022~~ 2023and December 31, ~~2021,~~ 2022, respectively, which is included in ~~both income taxes payable and~~ liability for uncertain tax positions in the condensed consolidated balance sheets.

~~12.~~13.

RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS

The Company maintains the Bel Fuse Inc. 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 expense for the three months ended September 30, ~~2022~~2023 and ~~2021~~2022 amounted to $0.3 million for each period. The expense for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 amounted to $1.0 million ~~and $0.9 milli~~during each period~~on, respectively.~~ . The Company’s matching contribution is made in the form of Bel Fuse Inc. Class A common stock. As of September 30, ~~2022~~2023, the plan ~~owned~~owne ~~313,559~~ d 302,074and ~~93,789~~69,485 shares of Bel Fuse Inc. Class A and Class B common stock, respectively.

The Company also maintains a Nonqualified Deferred Compensation Plan (the "DCP"). With certain exceptions, the Company's contributions to the DCP are discretionary and become fully vested by the participants upon reaching age 65. The expense ~~for~~amounted to less than $0.1 million during each of the three ~~months~~ ~~September 30, 2022~~ ~~and~~ ~~2021~~ ~~amounted to less than $0.1 million during each period. The expense for the~~ ~~nine~~ ~~months~~month periods ended September 30, ~~2022~~2023 and ~~2021~~2022 and amounted to ~~$0.1~~ $0.1 million during each ~~period.~~of the nine month periods ended September 30, 2023 and 2022. As the plan is fully funded, the assets and liabilities related to the DCP were in equal amounts of ~~$0.6~~ $0.8 million at September 30, ~~2022~~2023 and ~~$0.8 million~~ $0.7 million at December 31, ~~2021.~~ 2022. These amounts are included in other assets and other liabilities, respectively, on the accompanying condensed consolidated balance sheets as of each date.

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, ~~2022~~2023 and ~~2021~~2022 amounted to ~~$0.4~~ $0.3 million and ~~$0.6~~$0.4 million, respectively ~~and the~~. The expense for the nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 amounted to ~~$1.3~~$1.2 million and ~~$1.9~~$1.3 million, respectively. As of December 31, 2021, the plan owned 3,323 and 17,342 shares of Bel Fuse Inc. Class A and Class B common stock, respectively. During the second quarter of 2022, the Company repurchased all shares back from the Asia retirement plan and no shares were owned by the plan as of September 30, ~~2022.~~2023 or December 31, 2022.

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 56 above, the Company has investments in a rabbi trust which are intended to fund the obligations of the SERP.

The components of SERP expense are as follows:

	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Service cost	$	126	$	169	$	377	$	508	$	92	$	126	$	277	$	377
Interest cost		159		135		477		405		221		159		664		477
Net amortization		78		127		234		382		18		78		53		234
Net periodic benefit cost	$	363	$	431	$	1,088	$	1,295	$	331	$	363	$	994	$	1,088

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The service cost component of net benefit cost is presented within cost of sales, research and development costs 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 ~~(expense) 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,		September 30,			December 31,
	2022		2021		2023			2022
Prior service cost	$	365	$	460	$	242		$	334
Net loss		1,252		1,391		(2,177	)		(2,216	)
	$	1,617	$	1,851	$	(1,935	)	$	(1,882	)

~~13.~~14.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss at September 30, ~~2022~~2023 and December 31, ~~2021~~2022 are summarized below:

September 30,

December 31,

2022

2021

Foreign currency translation adjustment, net of taxes of ($334) at September 30, 2022 and ($417) at December 31, 2021
$ (31,263 ) $ (14,911 )
Unrealized gains (losses) on interest rate swap cash flow hedge, net of taxes of $0 at September 30, 2022 and $0 at December 31, 2021
5,945 (116 )
Unrealized holding gains on marketable securities, net of taxes of ($7) at September 30, 2022 and ($7) at December 31, 2021
18 29
Unfunded SERP liability, net of taxes of ($451) at September 30, 2022 and ($502) at December 31, 2021
(3,683 ) (3,865 )

Accumulated other comprehensive loss
$ (28,983 ) $ (18,863 )

	September 30,			December 31,
	2023			2022

Foreign currency translation adjustment, net of taxes of ($260) at September 30, 2023 and ($369) at December 31, 2022	$	(25,964	)	$	(23,107	)
Unrealized gains on interest rate swap cash flow hedge, net of taxes of $0 at September 30, 2023 and $0 at December 31, 2022		5,530			5,539
Unrealized holding gains on marketable securities, net of taxes of ($7) at September 30, 2023 and ($7) at December 31, 2022		19			18
Unfunded SERP liability, net of taxes of $891 at September 30, 2023 and $879 at December 31, 2022		1,045			1,004

Accumulated other comprehensive loss	$	(19,370	)	$	(16,546	)

Changes in accumulated other comprehensive loss by component during the nine months ended September 30, ~~2022~~2023 are as follows. All amounts are net of tax.

				Unrealized			Unrealized													Unrealized			Unrealized
	Foreign Currency			Gains (Losses) on			Holding Gains										Foreign Currency			Gains (Losses) on			Holding Gains
	Translation			Interest Rate Swap			(Losses) on			Unfunded							Translation			Interest Rate Swap			on		Unfunded
	Adjustment			Cash Flow Hedge			Marketable Securities			SERP Liability				Total			Adjustment			Cash Flow Hedge			Marketable Securities		SERP Liability			Total

Balance at December 31, 2021	$	(14,911	)	$	(116	)	$	29		$	(3,865	)		$	(18,863	)
Balance at December 31, 2022																	$	(23,107	)	$	5,539		$	18	$	1,004		$	(16,546	)
Other comprehensive (loss) income before reclassifications		(16,733	)		5,939			(11	)		(7	)			(10,812	)		(3,054	)		1,641			1		-			(1,412	)
Amount reclassified from accumulated other comprehensive loss		381			122			-			189		(a)		692			197			(1,650	)		-		41	(a)		(1,412	)
Net current period other comprehensive (loss) income		(16,352	)		6,061			(11	)		182				(10,120	)		(2,857	)		(9	)		1		41			(2,824	)

Balance at September 30, 2022	$	(31,263	)	$	5,945		$	18		$	(3,683	)		$	(28,983	)
Balance at September 30, 2023																	$	(25,964	)	$	5,530		$	19	$	1,045		$	(19,370	)

(a) This reclassification relates to the amortization of prior service costs and gains/losses associated with the Company's SERP Plan. This expense is reflected in other ~~(expense) income,~~expense, net on the accompanying condensed consolidated statements of operations.

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~~14.~~15.

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 consolidated results of operations or consolidated financial position.

On June 23, 2021, a patent infringement lawsuit styled Bel Power Solutions, Inc. v. Monolithic Power Systems, Inc., Case Number 6:21cv00655, was filed in the United States District Court for the Western District of Texas (Waco Division) by Bel Power Solutions, Inc. against Monolithic Power Systems, Inc. ("MPS") for infringement of various patents directed towards systems, methods and articles of manufacture that provide a substantial improvement in power control for circuits, including novel and unique point-of-load regulators. ~~MPS filed a Motion to Dismiss and a Motion to Transfer Venue to the Northern District of California in~~ ~~September 2021.~~ On ~~May 5, 2022,~~July 27, 2023, the Western District of Texas court ~~denied~~filed an Order granting MPS’s motion ~~to dismiss~~for summary judgment of non-infringement. The Court’s memorandum and ~~its efforts to challenge venue. As such, the suit shall remain and continue in the Western District of Texas.~~ opinion is forthcoming. The Company ~~has made a demand~~is evaluating its options for ~~a jury trial.~~appeal.

In connection with the Company's 2014 acquisition of the Power-One Power Solutions business ("Power Solutions") of ABB Ltd., there is an ongoing claim by the Arezzo Revenue Agency in Italy concerning certain tax matters related to what was then Power-One Asia Pacific Electronics Shenzhen Co. Ltd. (now Bel Power Solutions Asia Pacific Electronics Shenzhen Co. Ltd, or “BPS China”) for the years 2004 to 2006. In September 2012, the Tax Court of Arezzo ruled in favor of BPS China and cancelled the claim. In February 2013, the Arezzo Revenue Agency filed an appeal of the Tax Court’s ruling. The hearing of the appeal was held on October 2, 2014. On October 13, 2014, BPS China was informed of the Regional Tax Commission of Florence ruling which was in favor of the Arezzo Revenue Agency and against BPS China. An appeal was filed on July 18, 2015 before the Regional Tax Commission of Florence and rejected. On December 5, 2016, the Arezzo Revenue Agency filed an appeal with the Supreme Court and BPS China filed a counter-appeal on January 4, 2017. The Supreme Court has yet to render its judgment. The estimated liability related to this matter is approximately ~~$12.0~~$12.0 million ~~and~~and has been included as a liability for uncertain tax positions on the accompanying condensed consolidated balance sheets atSeptember 30, ~~2022~~2023and December 31, ~~2021~~2022. 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, 2023 and December 31, 2022.

In connection with the Company's 2021 acquisition of EOS Power ("EOS"), there is an ongoing claim asserted with respect to EOS by the Principal Commissioner of Customs (Preventive), Mumbai related to customs duties and imposed fines and penalties dating back to 1994. The original demand was in the amount of approximately$1.4 million, of which EOS has paid $0.5 million.EOS filed an Appeal in 2016 which is pending with the Customs, Excise and Service Tax Appellate Tribunal in Mumbai related to the $0.9 million balance of the original demand net of EOS' payment. As part of the EOS acquisition agreement entered into in March 2021, the Company is indemnified for this matter for a period of 7 years from the acquisition date. The Company is unable to determine at this time what amount, if any, may ultimately be due in connection with this claim. As such, no estimate was accrued as of September 30, ~~2022~~2023 ~~and~~ ~~December 31, 2021~~.

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 consolidated results of operations.

~~15.~~16.

SEGMENTS

The Company operates in one industry with three reportable operating segments, which represent the Company's three product groups, and a corporate segment. The segments consist of Connectivity Solutions, Power Solutions and Protection, Magnetic Solutions and athe aforementioned Corporate segment. The primary criteria by which financial performance is evaluated and resources are allocated are revenue and gross profit. The following is a summary of key financial data:

	Three Months Ended September 30, 2022															Three Months Ended September 30, 2023
	Connectivity			Power Solutions			Magnetic			Corporate						Power Solutions			Connectivity			Magnetic			Corporate
	Solutions			and Protection			Solutions			Segment			Total			and Protection			Solutions			Solutions			Segment			Total
Revenue	$	50,253		$	76,433		$	51,053		$	-		$	177,739		$	74,862		$	51,771		$	32,049		$	-		$	158,682
Gross Profit		13,099			24,801			15,501			(1,867	)		51,534			31,206			18,510			7,051			(1,302	)		55,465
Gross Profit %		26.1	%		32.4	%		30.4	%		nm			29.0	%		41.7	%		35.8	%		22.0	%		nm			35.0	%

	Three Months Ended September 30, 2021															Three Months Ended September 30, 2022
	Connectivity			Power Solutions			Magnetic			Corporate						Power Solutions			Connectivity			Magnetic			Corporate
	Solutions			and Protection			Solutions			Segment			Total			and Protection			Solutions			Solutions			Segment			Total
Revenue	$	40,344		$	60,281		$	46,341		$	-		$	146,966		$	76,433		$	50,253		$	51,053		$	-		$	177,739
Gross Profit		10,003			15,762			10,722			(513	)		35,974			24,801			13,099			15,501			(1,867	)		51,534
Gross Profit %		24.8	%		26.1	%		23.1	%		nm			24.5	%		32.4	%		26.1	%		30.4	%		nm			29.0	%

	Nine Months Ended September 30, 2022															Nine Months Ended September 30, 2023
	Connectivity			Power Solutions			Magnetic			Corporate						Power Solutions			Connectivity			Magnetic			Corporate
	Solutions			and Protection			Solutions			Segment			Total			and Protection			Solutions			Solutions			Segment			Total
Revenue	$	140,062		$	206,247		$	138,721		$	-		$	485,030		$	245,134		$	160,010		$	94,659		$	-		$	499,803
Gross Profit		37,414			60,775			37,476			(4,719	)		130,946			92,010			57,218			21,814			(6,376	)		164,666
Gross Profit %		26.7	%		29.5	%		27.0	%		nm			27.0	%		37.5	%		35.8	%		23.0	%		nm			32.9	%

Nine Months Ended September 30, 2021

Connectivity

Power Solutions

Magnetic

Corporate

Solutions

and Protection

Solutions

Segment

Total

Revenue
$ 121,446 $ 159,312 $ 115,593 $ - $ 396,351
Gross Profit
32,826 40,917 24,026 (2,652 ) 95,117
Gross Profit %
27.0 % 25.7 % 20.8 % nm 24.0 %

	Nine Months Ended September 30, 2022
	Power Solutions			Connectivity			Magnetic			Corporate
	and Protection			Solutions			Solutions			Segment			Total
Revenue	$	206,247		$	140,062		$	138,721		$	-		$	485,030
Gross Profit		60,775			37,414			37,476			(4,719	)		130,946
Gross Profit %		29.5	%		26.7	%		27.0	%		nm			27.0	%

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

The information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the 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 ~~2021~~2022 Annual Report on Form 10-K and our consolidated financial statements and related notes set forth in Item 8 of Part II of our ~~2021~~2022 Annual Report on Form 10-K. See Part II, Item 1A, “Risk Factors,” below and “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 statements herein regarding the anticipated or likely impact of COVID-19 ~~constitute~~ including regarding the continuing, lasting, consequential or related impacts and uncertainties resulting from the associated pandemic constitute 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,” we are referring to our “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

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

~~The Company operates~~We operate through three product group segments, in addition to a Corporate segment. In the nine months ended September 30, ~~2022, 42%~~2023, 49% of ~~the Company’s~~our revenues were derived from Power Solutions and Protection, ~~29%~~32% from Connectivity Solutions and ~~29%~~19% from ~~its~~our Magnetic Solutions operating ~~segment.~~ segment.

Our operating expenses are driven principally by the cost of labor where the factories that ~~Bel uses~~we use 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 materials, labor cost and fringes and related allocations of factory overhead. Our products are manufactured at various facilities in the ~~U.S.,~~United States, Mexico, Dominican Republic, ~~England, Czech Republic,~~United Kingdom, Slovakia, India and the 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.

The Effects of COVID-19 on Bel’s Business

~~The Company continues~~We continue to be focused on the safety and well-being of ~~its~~our associates around the world in light of COVID-19 and the variants of COVID that have followed. A significant amount of products manufactured by Bel are utilized in military, medical and networking applications, and are therefore deemed essential by many of the jurisdictions in which we operate. Our management team closely monitors the situation at each of ~~Bel's~~our facilities and ~~has been able to effectively respond in implementing our business continuity plans around the world. Protective~~protective measures, where possible and as applicable under governing regulations, remain in place throughout our facilities. The majority of our office staff now follow a hybrid work schedule. The combination of protective measures at our factories coupled with remote work arrangements have enabled us to maintain operations, including financial reporting systems, internal controls over financial reporting and disclosure controls and procedures.

~~On March 13,~~Throughout 2022, the PRC government issued a notice with immediate effect whereby certain regions were temporarily shut down to perform widespread testing in response to a COVID-19 outbreak in those regions and in accordance with Beijing’s "zero-tolerance" policy. Our Bel Power Solutions manufacturing facility in Shenzhen, China and our Magnetics TRP manufacturing facility in Changping, China were closed for approximately one week during the month of March 2022 while residents underwent testing. Further, certain of Bel’s customers and suppliers are also located within these regions, which caused a temporary disruption in the related supply chain. Although all of our manufacturing sites are running at normal workforce levels as of the filing date of this Quarterly Report on Form 10-Q, COVID-19 remains a potential supply continuity risk due to the unknown nature of future outbreaks. Given the general uncertainty regarding the impact of COVID-19 on our manufacturing capability, on our customers and our suppliers, we are unable to quantify the ultimate impact of COVID-19 on our future results at this time.

~~Beginning in the third quarter of 2021,~~ pandemic-related issues ~~have~~ created additional port congestion and intermittent supplier shutdowns and delays, resulting in additional expenses to expedite delivery of critical parts. In order to better control our costs, the expediting of raw material deliveries has been generally reserved for customer-specific requests for expedited timing whereby our end customer has agreed to pay the incremental fee. ~~Further,~~ The requests to expedite shipments has continued into the ~~majority~~first nine months of 2023 but to a lesser extent. Upon the discontinuation of COVID protocols in the PRC in late 2022, we experienced approximately 3-4 weeks between December 2022 and January 2023 where the attendance rate of workers at our factories in the PRC were very low due to COVID outbreaks in the regions in which we operate. As of September 30, 2023, attendance rates at all of our ~~product is shipped via air, and we have therefore been minimally impacted by ocean-related logistic constraints. While there are some delays within the supply chain~~factories in the ~~movement~~PRC were at normal levels. We do not believe the aforementioned low attendance rates had a material impact on Bel's financial results during the first nine months of ~~products related to border closures~~2023. To date, the COVID-related transportation delays and ~~government monitoring/treatment of goods being transported across borders, to date such delays~~local outbreaks have not materially impacted our ability to operate our business or achieve our business goals.

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Based on our analysis of ~~ASC~~Accounting Standards Codification ("ASC") 350 and ASC 360 during the nine months ended September 30, ~~2022,~~ 2023, we are not aware of any potential triggering events for impairment of our goodwill, indefinite-lived intangible assets or finite-lived assets. ~~The Company~~We will continue to assess the relevant criteria on a quarterly basis based on updated cash flow and market assumptions. Unfavorable changes in cash flow or market assumptions could result in impairment of these assets in future periods.

As our operations have continued ~~albeit at slightly reduced production and efficiency rates,~~ we have not experienced a negative impact on our liquidity to date. Our balance of cash on hand continues to be strong at ~~$70.9~~ $100.2 million at September 30, ~~2022~~2023 as compared to ~~$61.8~~$70.3 million atat December 31, ~~2021. The Company~~2022. We also ~~has~~have availability under ~~its~~our current revolving credit facility; as of September 30, ~~2022, the Company~~2023, we could borrow an additional $~~65.0~~ 115.0 m~~million~~illion while still being in compliance with ~~its~~our debt covenants. However, any ~~further pressure or~~significant negative impact to our financial results related to ~~COVID-19~~COVID or otherwise would have a related negative impact on our financial covenants outlined in our credit agreement, which would impact the amount available to borrow under our revolving credit facility. ~~The~~Our management team closely monitors the ~~rapidly changing~~ongoing COVID situation and its continuing and consequential or related effects and uncertainties including upon our industry, suppliers and customers, and has developed plans which could be implemented to minimize the impact to ~~the~~our Company in the event prior or similar pandemic conditions reemerge or recur or the current situation otherwise deteriorates.

Our statements regarding the future impact of COVID-19 including regarding the continuing, lasting, consequential or related impacts and uncertainties resulting from the associated pandemic represent Forward-Looking Statements. See “Cautionary Notice Regarding Forward-Looking Information.”

Other Key Factors Affecting our Business

~~The Company believes~~We believe that, in addition to uncertainties around ~~COVID-19, the Russia-Ukraine conflict~~COVID-19 and resulting pandemic-related uncertainties and effects, recent global inflationary pressures on the costs of goods and services in general, and ongoing conflicts/political unrest in or near the countries in which Bel operates, the key factors affecting ~~Bel’s~~and/or potentially affecting our results for the nine months ended September 30, ~~2022~~2023 and/or future results include the following:

•

Revenues – ~~The Company’s~~Our revenues in the first nine months of ~~2022~~2023 were up ~~$88.7~~$14.8 million, or ~~22.4%,~~ 3.0%as compared to the same period of ~~2021.~~2022. The increase ~~was~~was primarily seen within our Power Solutions and Protection group from incremental revenue associated with the EOS acquisition, increased demand for our CUI and circuit protection products, and recent power design wins moving into production within the e-Mobility end market. In addition, eachhigher sales of our ~~three product groups experienced an increase~~power products utilized in networking and eMobility end applications. Our Connectivity Solutions group was also a significant contributor to our sales growth in the first nine months of 2023, driven by increased sales to customers in the commercial aerospace and military end markets. These increases were offset in part by a decline in sales ~~through~~of our ~~distribution partners~~Magnetic Solutions products during the first nine months of ~~2022 as compared to 2021. Our Connectivity Solutions group is also benefiting from a rebound within the commercial aerospace end market, which contributed to higher sales for this group~~2023 as compared to the ~~first nine months~~same period of ~~2021.~~2022, we believe primarily due to our Magnetic Solutions networking customers continuing to work through inventory on hand.

•

Backlog – Our backlog of orders amounted to ~~$582.8~~$407.6 million at September 30, ~~2022, an increase of $115.0~~2023, a decreaseof $157.8 million, or ~~25%~~27.9%, from December 31, ~~2021.~~2022. From year-end ~~2021~~2022 to September 30, ~~2022,~~2023, we saw a ~~48% increase~~28.5% decrease in the backlog for our Power Solutions and Protection business, ~~due to increased demand across the majority of our Power product lines. At quarter-end, the~~a decline in backlog of ~~orders for~~2.0% in our Connectivity Solutions ~~products grew by 37% from year-end, primarily due to higher demand from our distribution~~business and ~~premise wiring customers and continued recovery~~a 59.2% decrease in ~~demand from our direct and after-market commercial aerospace customers. During the first nine months of 2022, the~~ backlog ~~for~~level at our Magnetic Solutions ~~products decreased by 22% from the 2021 year-end levels, largely driven by the ordering pattern of one large networking customer.~~business. Order volumes in general have been lower in recent quarters which we believe to be due in part to our customers' working through inventory on hand.

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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~~our gross margin percentage. In general, our Connectivity products have historically had the ~~highest contribution~~highest-contribution margins of our three product groups ~~though margins for this group in 2022 have been challenged due to costs~~given the harsh environment and ~~inefficiencies associated with~~high-reliability nature of these products and the ~~ramp-up in commercial aerospace.~~end markets they serve. Our Power products have a ~~higher cost~~higher-cost bill of materials and are impacted to a greater extent by changes in material costs. As our Magnetic Solutions products are more ~~labor intensive~~labor-intensive in nature, margins on these products are impacted to a greater extent by minimum and market-based wage increases in the PRC and fluctuations in foreign exchange rates between the U.S. Dollar and the Chinese Renminbi. Fluctuations in revenue volume among our product groups will have a corresponding impact on ~~Bel’s~~our profit margins. See "Results of Operations - Summary by Operating Segment - Revenue and Gross Margin" below for further details.

•

Pricing and Availability of Materials – ~~– There have~~Over the second half of 2023 to date, while there has been ~~ongoing~~ some stabilization of raw materials pricing, overall our cost of materials remain elevated. With the exception of discrete semiconductors, supply constraints have eased related to components that constitute raw materials in our manufacturing processes, particularly with ~~resistors,~~ capacitors, ~~discrete semiconductors, plastic resin~~resistors and copper. Lead times ~~have been extended and~~are still above normal though suppliers are now meeting the reduction in supply also caused an increase in prices for certain of these components. Beginning in the third quarter of 2022, there has been some stabilization of raw material pricing and availability for a portion of the components that Bel's purchases, but in general supply constraints continue to be a challenge. The Company’sagreed delivery deadlines with more regularity. Our material costs as a percentage of revenue were~~45.9%~~ 41.8% of sales during the first nine months of ~~2022~~,2023, down ~~slightly~~ from ~~46.6%~~45.9% during the same period of ~~2021~~2022 as a result of a favorable shift in product mix and the impact of ~~Bel's recent~~our pricing actions over the past year, offset in part by higher material costs in ~~the 2022 period.~~2023.

	•	Labor Costs – Labor costs represented ~~8.4%~~6.5% of revenue during the first nine months of ~~2022~~2023 as compared to ~~9.0%~~8.4% of revenue during the same period of ~~2021~~2022. The reduction in labor costs as a percentage of sales for the first nine months of ~~2022~~2023 was largely impacted by ~~recent pricing actions~~various internal initiatives taken by our Company over the ~~Company and favorable exchange rate fluctuations~~past year to mitigate the increase in ~~2022~~ ~~leading~~wage rates at our factories that we had absorbed over the past several years. Effective October 1, 2023, the PRC issued a regulation mandating an 18.2% increase to ~~lower~~the minimum wage in a region where two of Bel's factories are located. We anticipate this increase in minimum wage to result in higher labor costs of approximately $0.5 million per year in the aggregate at ~~our PRC factories.~~these facilities going forward. This and any future increases in minimum wage rates will have an unfavorable impact on Bel's profit margins. The preceding two sentences represent Forward-Looking Statements. See "Cautionary Notice Regarding Forward-Looking Information."

	•	Inflationary Pressures - Inflationary pressures could continue to result in higher input costs, including those related to our raw materials, labor, freight, utilities, healthcare and other expenses. Our future operating results will depend, in part, on our continued ability to manage these fluctuations through pricing actions, cost savings initiatives and sourcing decisions. The preceding two sentences represent Forward-Looking Statements. See "Cautionary Notice Regarding Forward-Looking Information."

•

Restructuring – During the third quarter of 2022, we launched a series of initiatives to simplify our operational footprint. In a project expected to be completed by mid-2023, we will initially be consolidating two of our Magnetics sites in Zhongshan and Pingguo, China, spread across 9 manufacturing buildings in total, and bringing them together into a single centralized site in the Binyang county of Southwestern China. Restructuring costs of approximately $9 million are expected related to the China initiative. Of this amount, $3.6 million (including $1.1 million of severance costs) was recognized in the third quarter, and we expect the balance, which is largely severance costs, to be recognized ratably through the third quarter of 2023. Incremental capex spend of approximately $3 million is expected over the next 12 months. We expect to realize annualized cost savings of approximately $3 million on the China initiative, beginning in the fourth quarter of 2023. Within our Connectivity Solutions group, ~~the Company incurred $0.2 million of severance costs in connection with the reorganization of this group's sales and product management teams during the third quarter of 2022. Further,~~ facility consolidation actions ~~are~~have been underway in both the U.S. and Europe. InDuring the ~~U.S.,~~nine months ended September 30, 2023, we completed the transitions our of our Tempe, Arizona and Sudbury, UK sites, moving those operations into other existing Bel facilities. Our Connectivity site in Melbourne, Florida ~~sites will transition their~~is in the process of transitioning its manufacturing operations ~~into~~to our existing site in Waseca, ~~Minnesota. These U.S. actions are expected to result in restructuring costs (largely severance costs), of $0.6 million, primarily over~~Minnesota and this initiative is scheduled for completion by the next two quarters, with estimated incremental capex spend of $0.4 million. We expect to realize annualized cost savings of approximately $1.1 million on this U.S. initiative, beginning in the second quarterend of 2023. ~~In Europe, we plan to exit~~Within our Magnetic Solutions group, our facility consolidation efforts in ~~Sudbury, UK and consolidate those operations into our existing site in Chelmsford, UK. These UK actions are expected to result in restructuring costs~~China were largely complete by the end of approximately $0.3 million spread over the next two quarters with incremental capex spend of $1.0 million. We expect to realize annualized cost savings of approximately $0.7 million on this UK initiative, beginning in the third quarter of ~~2023.~~ ~~The Company~~2023 with the final aspects expected to transition by year-end. Aggregate annual cost savings are estimated at approximately $6.9 million, of which we anticipate to realize approximately $1.6 million in the fourth quarter of 2024. We will ~~continue~~continue to review ~~its~~our operations to optimize ~~the~~our business, which may result in restructuring costs being recognized in future periods. The preceding sentences represent Forward-Looking Statements. See "Cautionary Notice ~~Regardi~~ngRegarding Forward-Looking Information."

•

Impact of Foreign Currency – As further described below, during the nine months ended September 30, ~~2022,~~2023, labor and overhead costs were ~~$2.6~~$0.4 million lower than the ~~same~~corresponding 2022 period ~~of 2021~~primarily due to a favorable foreign exchange environment involving the Chinese Renminbi, ~~and Euro~~largely offset by an unfavorable foreign exchange fluctuations in the Mexican Peso, as compared to the prior year period. ~~Also as described below, the Company~~We realized foreign exchange transactional ~~gains~~losses of ~~$0.5~~$0.1 million during the nine months ended September 30, ~~2022,~~2023, due to the fluctuation of the spot rates of certain currencies in effect when translating our balance sheet accounts at September 30, ~~2022~~2023 versus those in effect at December 31, ~~2021.~~2022. Since we are a U.S. domiciled company, we translate our foreign currency-denominated financial ~~results~~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~~We were favorably impacted by transactional foreign exchange gains in the ~~first~~ nine months of ~~2022~~2023 due to the depreciation of the Chinese Renminbi ~~and Euro~~against the U.S. dollar, which was largely offset by an appreciation of the Mexican Peso against the U.S. dollar, as compared to exchange rates in effect during ~~2021. The Company has~~2022. We have significant manufacturing operations located in in the PRC and Mexico where labor and overhead costs are paid in local currency. As a result, the U.S. Dollar equivalent costs of these operations were ~~$2.6~~approximately $2.5 million lower in the PRC, largely offset by higher costs in Mexico of approximately $1.8 million, in the nine months ended September 30, ~~2022~~2023 as compared to the ~~same~~comparable period ~~of 2021. The Company monitors~~in 2022. We monitor changes in foreign currencies and ~~in 2022~~have historically implemented ~~additional~~ foreign currency forward contracts, and may continue to implement pricing actions to help mitigate the impact that changes in foreign currencies may have on ~~its consolidated~~our consolidated operating results. The preceding sentence represents a Forward-Looking Statement. See "Cautionary Notice Regarding Forward-Looking Information."

•

Effective Tax Rate – ~~The Company’s~~Our effective tax rate will fluctuate based on the geographic regions in which ~~the~~our pretax profits are earned. Of the geographic regions in which ~~the Company operates,~~we operate, the U.S. and Europe’s tax rates are generally equivalent; and Asia has the lowest tax rates of ~~the Company’s~~our three geographical regions. See Note ~~11,~~12, “Income Taxes”.

The strategic initiatives we put in place earlier in the year continue to show steady progress as we look to streamline the way we do business, optimize our operational footprint and drive increased profit margins. The ~~preceding sentences represent Forward-Looking Statements. See “Cautionary Notice Regarding Forward-Looking Information.”~~

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Results of Operations - Summary by Operating Segment

Revenue and Gross Margin

~~The Company’s~~Our revenue and gross margin by operating segment for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 were as follows:

	Three Months Ended										Nine Months Ended										Three Months Ended										Nine Months Ended
	September 30,										September 30,										September 30,										September 30,
	Revenue				Gross Margin						Revenue				Gross Margin						Revenue				Gross Margin						Revenue				Gross Margin
	2022		2021		2022			2021			2022		2021		2022			2021			2023		2022		2023			2022			2023		2022		2023			2022
Power solutions and protection																					$	74,862	$	76,433		41.7	%		32.4	%	$	245,134	$	206,247		37.5	%		29.5	%
Connectivity solutions	$	50,253	$	40,344		26.1	%		24.8	%	$	140,062	$	121,446		26.7	%		27.0	%		51,771		50,253		35.8	%		26.1	%		160,010		140,062		35.8	%		26.7	%
Magnetic solutions		51,053		46,341		30.4	%		23.1	%		138,721		115,593		27.0	%		20.8	%		32,049		51,053		22.0	%		30.4	%		94,659		138,721		23.0	%		27.0	%
Power solutions and protection		76,433		60,281		32.4	%		26.1	%		206,247		159,312		29.5	%		25.7	%
	$	177,739	$	146,966		29.0	%		24.5	%	$	485,030	$	396,351		27.0	%		24.0	%	$	158,682	$	177,739		35.0	%		29.0	%	$	499,803	$	485,030		32.9	%		27.0	%

Power Solutions and Protection:

Sales of our Power Solutions and Protection products were lower by $1.6 million (2.1%) during the third quarter of 2023 compared to the same period of 2022. The decrease resulted primarily from a decline in sales of our CUI products of $8.1 million and a reduction in sales of our circuit protection products by $2.2 million during the third quarter of 2023 compared to the same period of 2022, both of which categories were largely impacted by lower demand from our distribution customers as we believe they continue to work through excess inventory on hand. Further, raw material expedite fee revenue for our Power segment totaled $1.0 million in the third quarter of 2023 as compared to $9.4 million in the third quarter of 2022.These areas of decline were partially offset by higher sales of our front-end power products of $7.5 million and board mount power products of $1.9 million during the third quarter of 2023 compared to the same period of 2022, both of which are used in networking and datacenter applications. Further, sales of product into the eMobility end market increased by $3.8 million (119%) and sales of products into the rail end market increased by $2.5 million (66%) in the third quarter of 2023 as compared to the third quarter of 2022.

Power Solution and Protection sales were up by $38.9 million (18.9%) during the first nine months of 2023 as compared to the same period of 2022. This increase was primarily due to higher sales of our front-end power products and board mount power products of $39.5 million and $7.9 million, respectively, both of which are used in networking and datacenter applications. Further, sales of product into the eMobility end market increased by $9.8 million (79.2%) and sales of product into the rail end market increased by $5.3 million (33.0%) in the first nine months of 2023 as compared to the same period of 2022. These increases were offset in part by a reduction in sales of our CUI products of $8.7 million and a decline in sales of our circuit protection products of $7.4 million, both of which were largely impacted by the lower demand from our distribution customers as noted above.Raw material expedite fee revenue for this segment totaled $14.4 million in the nine months ended September 30, 2023 as compared to $22.0 million in the same period of 2022.

Gross margin improved in the 2023 periods presented versus those from the same periods of 2022 as pricing actions, higher sales volume, favorable exchange rates with the Chinese Renminbi versus the U.S. dollar, a lower volume of low-margin expedite fees and a favorable shift in product mix offset the impact of increased material costs.

Connectivity Solutions:

Sales of our Connectivity Solutions products increased by ~~$9.9~~$1.5 million (3.0%) and ~~$18.6~~$19.9 million (14.2%) during three and nine months ended September 30, ~~2022,~~2023, respectively, as compared to the same periods of ~~2021. This increase was~~2022. These increases were primarily due to ~~the continued rebound~~an increase in ~~demand from direct and after-market~~sales into the commercial aerospace ~~customers~~end market of ~~$5.2~~$3.3 million ~~(135%~~(41.1%) during the ~~three months ended September 30, 2022~~third quarter of 2023 and ~~$10.5~~$19.7 million ~~(83%~~(89.4%) during the first nine months ~~ended September 30, 2022~~of 2023 as compared to the same periods of ~~2021. Other increases~~2022. Sales into our military end market also grew in ~~sales related~~the 2023 periods by $3.6 million (44.5%) during the third quarter and $7.0 million (25.9%) during the first nine months of 2023 as compared to ~~higher demand for our passive connector and cabling products for use in premise wiring applications and~~the same periods of 2022. We also experienced an increased volume of Connectivity Solutions products sold through our distribution ~~channels.~~channels in the 2023 periods compared to last year. These sales increases were ~~partially~~ offset in part by a decline in ~~military~~ sales of ~~$0.9~~passive connector and cabling products used in the industrial premise wiring and 5G/IOT markets of $4.4 million ~~(10%~~(39.6%) during the three months ended September 30, ~~2022~~2023 and a decline ~~in military sales~~ of ~~$3.2~~$8.2 million ~~(11%~~(28.0%) during the nine months ended September 30, ~~2022~~2023 as compared to the prior year periods. Gross margins for the ~~2022~~2023 periods presented above were ~~unfavorably~~favorably impacted by ~~incremental costs~~the higher overall sales volume, pricing actions and operational ~~inefficiencies related~~efficiencies implemented during the first nine months of 2023, partially offset by higher wage rates in Mexico and an unfavorable fluctuation in exchange rates between the U.S. dollar and Mexican peso in the 2023 periods as compared to the ~~ramp-up in commercial aerospace demand.~~2022 periods presented.

Magnetic Solutions:

Sales of our Magnetic Solutions products ~~improved~~declined by ~~$4.7~~$19.0 million (37.2%) and ~~$23.1~~$44.0 million (31.8%) during the three and nine months ended September 30, ~~2022,~~2023, respectively, as compared to the same periods of ~~2021. Demand~~2022. Reduced demand for our Magnetic Solutions products from our networking customers and through our distribution channels has been the primary driver of the ~~sales increase.~~lower demand as we believe by these customers continue to work through inventory on hand. The ~~higher~~lower sales volume, ~~coupled with~~partially offset by pricing actions and favorable exchange rates with the Chinese Renminbi versus the U.S. dollar, were the primary drivers of gross margin ~~improvement~~reduction for this product group from last year's periods.

~~Power Solutions and Protection:~~

Sales of our Power Solutions and Protection products were higher by $16.2 million during the third quarter of 2022 and by $46.9 million during the first nine months of 2022 as compared to the same periods of 2021. The sales increase for the third quarter was primarily driven by $9.4 million in raw material surcharge invoicing, a $2.5 million (104%) increase in sales of product going into the e-Mobility end market, and a $3.0 million (18%) increase in CUI sales. The sales increase for the first nine months of 2022 was led by approximately $22.0 million in raw material surcharge invoicing, the inclusion of EOS, acquired in March 2021, which contributed incremental sales of $5.5 million, a $4.8 million (28%) increase in circuit protection product sales, a $8.6 million (21%) increase in CUI sales, and a $7.3 million (110%) increase in sales of product going into the e-Mobility end market. Gross margin improved in the 2022 periods above as compared to the 2021 periods as pricing actions, higher sales volume, favorable exchange rates with the Chinese Renminbi versus the U.S. dollar, and a favorable shift in product mix offset the impact of increased material costs.

Cost of Sales

Cost of sales as a percentage of revenue for the three and nine months ended September 30, ~~2022~~2023 and ~~2021~~2022 consisted of the following:

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2022			2021			2022			2021			2023			2022			2023			2022
Material costs		46.1	%		47.6	%		45.9	%		46.6	%		40.5	%		46.1	%		41.8	%		45.9	%
Labor costs		7.9	%		8.5	%		8.4	%		9.0	%		6.2	%		7.9	%		6.5	%		8.4	%
Other expenses		17.0	%		19.4	%		18.7	%		20.4	%		18.3	%		17.0	%		18.8	%		18.7	%
Total cost of sales		71.0	%		75.5	%		73.0	%		76.0	%		65.0	%		71.0	%		67.1	%		73.0	%

Material costs as a percentage of sales during the three and nine months ended September 30, ~~2022~~2023 were ~~fairly stable~~down compared to the same periods of ~~2021,~~2022, as ~~recent~~ pricing actions taken over the past year are helping to offset the continued heightened cost of certain raw materials.Labor costs in 2023 as a percentage of sales have decreased significantly from the ~~2021~~2022 periods ~~noted~~presented due to a variety of factors, including the shift in ~~the table above~~product mix resulting in a lower consolidated percentage of sales from of our labor-intensive Magnetic products, lower labor costs in China due to the favorable fluctuation in the Chinese Renminbi exchange rate versus the U.S. ~~Dollar.~~ ~~These lower~~Dollar, and the restructuring and efficiency programs implemented throughout 2023 in our Connectivity Solutions segment. The reduction in labor costs ~~as a percentage~~were partially offset by the unfavorable fluctuation of ~~sales were offset,~~the Mexican Peso exchange rate versus the U.S. Dollar in ~~part, by incremental labor costs at our Connectivity group related to recruiting and training of new factory associates to accommodate~~ the ~~increase in demand from~~2023 periods presented versus the ~~commercial aerospace end market in 2022.~~ prior year periods.

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 during~~expenses decreased by $1.5 million in the three months ended September 30, 2023 as compared to the same period of 2022. The declines were largely related to reductions in support labor and overhead costs as a result of efficiency programs implemented at several of our factories throughout 2023. For the nine months ended September 30, ~~2022~~2023, other expenses increased by ~~$1.9~~$2.4 million ~~and $10.1 million, respectively,~~ as compared to the same ~~periods~~period of ~~2021 due~~2022, as prior to ~~a variety~~the implementation of ~~factors. The recent ramp-up in commercial aerospace demand has resulted in significant headcount increases~~efficiency-related programs at our factories, that support this end market, restoring some of the indirect labor and overhead expenses that had been previously reduced when demand was lower. Further, certain of our other factories have started to run additional shifts to accommodate the increase in demand from our customers, resulting in higher overhead costs. In addition to an increase in support labor headcount,global wage rate increases, both inflationary and government-mandated increases to minimum wage rates, ~~have~~coupled with increased overhead costs to accommodate additional demand from our commercial aerospace customers led to higher fixed costs in the ~~2022 periods~~2023 period as compared to ~~2021.~~2022.

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Research and Development ("R&D") Expense

R&D expense amounted to ~~$4.9~~$5.3 million and ~~$5.9~~$4.9 million for the three months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and $16.5 million and $14.4 million ~~and $16.3 million~~ for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The ~~lower R&D expense in~~increases noted for the ~~2022~~2023 periods ~~as compared to the same periods of 2021 is largely~~were primarily due to ~~the favorable exchange rate environment related to the Euro~~higher salaries, benefits and ~~Chinese Renminbi versus the U.S. Dollar in 2022.~~ product development costs.

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

SG&A expenses were ~~$22.2~~$23.7 million for the third quarter of ~~2022,~~2023, up from ~~$21.2~~$22.2 million in the third quarter of ~~2021. Increases~~2022. This increase in ~~sales commissions to reps~~SG&A was largely the result of ~~$1.0 million and~~ higher ~~SG&A salaries and fringe benefits of $0.4 million were offset in part by a $0.5 million reduction in legal and professional fees as compared to the third quarter of 2021.~~

SG&A expenses were $67.2 million during the nine months ended September 30, 2022, up from $64.8 million during the same period of 2021. Within SG&A, increases in sales commissions to reps of $1.7 million, SG&A salaries and fringe benefits of $1.1 million ~~a $0.7~~and incremental litigation costs of $0.5 million. SG&A expenses were $74.1 million ~~increase in property insurance and $0.6 million of higher advertising costs were partially offset by a $1.6 million reduction in legal and professional fees as compared to~~for the first nine months of ~~2022.~~ 2023, up from $67.2 million in the same period of 2022, primarily due to higher SG&A salaries and fringe benefits of $5.3 million and litigation costs of $2.9 million primarily associated with the MPS patent infringement lawsuit further described in Note 15, "Commitments and Contingencies".

Other ~~(Expense) Income,~~Expense, Net

Other ~~(expense) income,~~expense, net was ~~expense of $0.4~~$0.1 million and ~~$0.2~~$0.4 million for the three months ended September 30, ~~2022~~2023 and ~~2021, respectively,~~2022, respectively. The year-over-year change within this line item was largely driven by the Company recording $0.3 million of losses associated with its investment in innolectric during the third quarter of 2023. Other expense, net was $0.3 million and ~~expense~~$2.9 million for the nine months ended September 30, 2023 and 2022, respectively. The year-over-year fluctuation was primarily due to market fluctuations in our SERP investments which resulted in a gain of $0.3 million in the nine months ended September 30, 2023 versus a loss of $2.9 million ~~and income of $0.6 million for~~in the nine months ended September 30, 2022 and 2021, respectively. The year-over-year movements within this line item were largely driven by market fluctuations in the Company's SERP investments which resulted in losses of $0.6 million and $0.2 million during the three months ended September 30, 2022 and 2021, respectively. During the year-to-date periods, the Company recorded a loss of $2.9 million related to its SERP investments during the nine months ended September 30, 2022 as compared to a gain of $0.8 million for the nine months ended September 30, 2021. .

Provision for Income Taxes

The Company’s effective tax rate will fluctuate based on the geographic regions in which the pretax profits are earned. Of the ~~geographic regions~~jurisdictions in which the Company operates, the U.S. and Europe’s tax rates are generally equivalent; and Asia has the lowest tax rates of the Company’s three ~~geographical~~geographic regions. See Note ~~11,~~12, “Income Taxes”.

The provision for income taxes for the three months ended September 30, 2023 and 2022 ~~and 2021~~ was ~~$4.1~~$4.3 million and ~~$1.4~~$4.1 million, respectively. The Company’s earnings before income taxes for the three months ended September 30, ~~2022,~~2023, were ~~$13.5~~$3.1 million higher ~~than~~when compared with the same period in ~~2021,~~2022, primarily attributable to an increase in ~~the~~ income from the North America and Europe regions, offset by a decrease in the Asia ~~regions.~~region. The Company’s effective tax rate was ~~consistent at~~18.2% and 20.0% ~~and 20.2%~~ for the three months ended September 30, 2023 and 2022, ~~and 2021,~~ respectively. The change in the effective tax rate during the three months ended September 30, 2023 as compared to the same period in 2022, is primarily attributable to a net benefit resulting from the impact of permanent differences on U.S. activities, as well as a decrease in the U.S. tax credits. See Note 12, “Income Taxes.”

The provision for income taxes was $8.0 million and $3.0 million for the nine months ended September 30, ~~2022~~2023 and ~~2021 was $3.0 million and $0.6 million,~~2022, respectively. The Company’s earnings before income taxes for the nine months ended September 30, ~~2022,~~2023, were approximately ~~$24.2~~$28.2 million higher than the same period in ~~2021,~~2022, primarily attributable to an increase in ~~the~~ income ~~from~~in North America and Europe regions, offset by a decrease in the Asia region. The Company’s effective tax rate was ~~7.1%~~ 11.5% and ~~3.4%~~7.1% for the nine months ended September 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The change in the effective tax rate during the nine months ended September 30, ~~2022~~2023 as compared to the same period in ~~2021,~~2022, is primarily attributable to ~~an increase~~a decrease in the ~~U.S. taxes related~~tax benefit resulting from the reversal of valuation allowances in 2023 compared to ~~income from foreign subsidiaries taxed in the U.S. as part of the Tax Cuts and Jobs Act.~~

2022. See Note 12, “Income Taxes.”

Liquidity and Capital Resources

Our principal sources of liquidity include ~~$70.9~~$100.2 million of cash and cash equivalents at September 30, ~~2022,~~2023, cash provided by operating activities and borrowings available under our credit facility. We expect to use this liquidity for operating expenses, investments in working capital, capital expenditures, interest, taxes, dividends, 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, both in the next twelve months and in the longer term.

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Cash Flow Summary

During the nine months ended September 30, ~~2022, the Company’s~~2023, our cash and cash equivalents increased by ~~$9.1~~$30.0 million. This increase was primarily due to the following:

	•	net cash provided by operating activities of ~~$24.1 million; and~~ $81.4 million;
	•	proceeds from the sale of property, plant and equipment of ~~$1.8 million; partially offset by~~$5.4 million
	•	proceeds from the sale of our business in the Czech Republic of $5.1 million; partially offset primarily by
	•	net repayments under our revolving credit facility of $35.0 million; and
	•	payments for our equity method investment in innolectric of $10.0 million;
	•	purchases of property, plant and equipment of ~~$5.6 million;~~

	•	~~dividend payments of $2.5~~$9.7 million; and
	•	~~repayments of long-term debt~~dividend payments of $2.5 million

During the nine months ended September 30, ~~2022, accounts~~2023, our accounts receivable ~~increased~~decreased by ~~$17.9~~$11.9 million due to ~~higher~~lower sales volume in the third quarter. Days sales outstanding (DSO) ~~decreased slightly to 53 days~~was 55 days at September 30, ~~2022~~2023 as compared to 5458 days at December 31, ~~2021.~~2022. Inventory ~~increased~~decreased by ~~$32.6~~$29.3 million at September 30, ~~2022~~2023 compared to December 31, ~~2021,~~2022, as component availability has started to ~~accommodate the continued increase in product orders.~~ease and we have worked to consume our inventory on hand. Inventory turns ~~were 3.1 at each of~~were 2.9 at September 30, ~~2022 and~~2023 as compared to 2.6 at December 31, ~~2021.~~ 2022.

Cash and cash equivalents, marketable securities and accounts receivable comprised approximately ~~31.4%~~34.8% of ~~the Company’s~~our total assets at September 30, ~~2022~~2023 and ~~29.1%~~31.7% of total assets at December 31, ~~2021. The Company’s~~2022. Our current ratio (i.e., the ratio of current assets to current liabilities) was ~~2.8~~ 3.1 to 1 at September 30, ~~2022~~2023 and ~~2.9~~2.8 to 1 at December 31, ~~2021.~~2022. At September 30, ~~2022~~2023 and December 31, ~~2021, $49.9~~2022, $45.6 million and ~~$42.0~~$50.1 million, respectively (or ~~70%~~45% and ~~68%~~71%, respectively), of our cash and cash equivalents was held by our foreign ~~subsidiaries of the Company. During the first nine months of 2022, the Company~~subsidiaries. We repatriated ~~$5.0~~ $33.5 million ~~of funds~~ from outside of the U.S. during the nine months ended September 30, 2023. 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~~our U.S. operations in the future. In the event these funds were needed for ~~Bel’s~~our U.S. operations, ~~the Company~~we would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds.

Future Cash Requirements

~~The Company expects~~We expect foreseeable liquidity and capital resource requirements to be met through existing cash and cash equivalents and anticipated cash flows from operations, as well as borrowings available under ~~its~~our revolving credit facility, if needed. ~~The Company's~~Our material cash requirements arising in the normal course of business are outlined in Item 7A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in ~~the Company’s~~our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. There were no material changes to ~~the Company's~~our future cash requirements during the nine months ended September 30, ~~2022.~~2023.

Credit Facility

In September 2021, ~~the Company~~we entered into the CSA, as further described in Note ~~10,~~11, "Debt". During January 2023, we amended our CSA and related interest rate swap agreements to transition the reference rate from LIBOR to a Secured Overnight Financing Rate ("SOFR") effective January 31, 2023. The CSA contains customary representations and warranties, covenants and events of default. In addition, the CSA contains financial covenants that measure (i) the ratio of ~~the Company’s~~our total funded indebtedness, on a consolidated basis, less the aggregate amount of all unencumbered cash and cash equivalents, to the amount of ~~the Company’s~~our consolidated EBITDA (“Leverage Ratio”) and (ii) the ratio of the amount of ~~the Company’s~~our consolidated EBITDA to ~~the Company’s~~our consolidated fixed charges (“Fixed Charge Coverage Ratio”). If an event of default occurs, the lenders under the CSA would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor. At September 30, ~~2022, the Company was~~2023, we were in compliance with ~~its~~our debt covenants, including ~~its~~the most restrictive covenant, ~~the~~the Fixed Charge Coverage Ratio. The ~~unused~~unused credit available under the credit facility at September 30, ~~2022~~2023 was ~~$65.0~~$115.0 million, all of which we had the ability to borrow without violating our Leverage Ratio covenant based on ~~the Company's~~our existing consolidated EBITDA. Subsequent to September 30, 2022, the Company made a voluntary payment of $10.0 million towards its Revolver balance, bringing the outstanding borrowings under the Revolver to $100.0 million as of October 31, 2022.

Critical Accounting Policies and Estimates

~~The Company's~~Our condensed consolidated financial statements include certain amounts that are based on management's best estimates and judgments. ~~The Company bases its~~We base our estimates on historical experience and on various other assumptions, including in some cases future projections, that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Different assumptions and judgments could change the estimates used in the preparation of the condensed consolidated financial statements, which, in turn, could change the results from those reported. Management evaluates its estimates, assumptions and judgments on an ongoing basis.

Based on the above, we have determined that our most critical accounting estimates are those related to business combinations, inventory valuation, goodwill and other indefinite-lived intangible assets, and those related to our pension benefit obligations. For a detailed discussion of ~~the Company’s~~our critical accounting estimates, refer to “Critical Accounting Estimates” in Item 7 of ~~the Company’s~~our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022. There have been no material changes in ~~the Company’s~~our critical accounting policies, judgments and estimates, including assumptions or estimation techniques utilized, as compared to those disclosed in ~~the Company’s 2021~~our 2022 Annual Report on Form 10-K.

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Recent Accounting Pronouncements

The discussion of new financial accounting standards applicable to ~~the~~our Company is incorporated herein by reference to Note 1 to the Company’s Financial Statements, “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 not required to provide the information called for by this Item as it is a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act.

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 management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in internal controls over financial reporting: There has not been any change in the Company’s internal control over financial reporting that occurred during the Company’s last fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the 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 ~~14,~~15, "Commitments and Contingencies" of the Company’s Condensed Consolidated Financial Statements, under “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

The risk factors described in Part I, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 should be carefully considered before making an investment decision. These are the risk factors that we consider to be the most significant risk factors, but they are not the only risk factors that should be considered in making an investment decision. This Quarterly Report on Form 10-Q also contains Forward-Looking Statements that involve risks and uncertainties. See the "Cautionary Notice Regarding Forward-Looking Information," above. Our business, consolidated financial condition and consolidated results of operations could be materially adversely affected by any of the risk factors described, under "Cautionary Notice Regarding Forward-Looking Information" or with respect to specific Forward-Looking Statements presented herein. The trading price of our securities could decline due to any of these risks, and investors in our securities may lose all or part of their investment. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also materially adversely affect our business in the future. Except as required by the federal securities law, we undertake no obligation to update or revise any risk factor, whether as a result of new information, future events or otherwise.

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

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

The discussion captioned “Overview – Other Key Factors Affecting our Business – Restructuring,” as set forth in Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” above, is hereby incorporated by reference into this Part II, Item 5, of this Quarterly Report on Form 10-Q.Not applicable.

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Item 6. Exhibits

Exhibits:

~~10.1*†~~3.1	~~Offer Letter, dated July 27, 2022, between~~Amended and Restated By-Laws of Bel Fuse Inc. ~~and Kenneth Lai~~(Adopted October 25, 2023), are incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 25, 2023.

31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

32.1**	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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

101.INS*	Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH*	Inline XBRL Taxonomy Extension Schema Document

101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)

* Filed herewith.

** Submitted herewith.

~~† Management contract or compensatory plan or arrangement.~~

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SIGNATURES

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

	BEL FUSE INC.
November 4,3, ~~2022~~2023
By:	/s/ Daniel Bernstein
	Daniel Bernstein
	President and Chief Executive Officer (Principal Executive Officer)

By:	/s/ Farouq Tuweiq
	Farouq Tuweiq
	Chief Financial Officer (Principal Financial Officer)

	Three Months Ended		Nine Months Ended
	September 30, 2021		September 30, 2021
Revenue, net	$	146,966	$	399,372
Net earnings		5,734		17,043
Earnings per Class A common share - basic and diluted		0.44		1.31
Earnings per Class B common share - basic and diluted		0.47		1.39

	Nine Months Ended September 30, 2021
	Connectivity			Power Solutions			Magnetic			Corporate
	Solutions			and Protection			Solutions			Segment			Total
Revenue	$	121,446		$	159,312		$	115,593		$	-		$	396,351
Gross Profit		32,826			40,917			24,026			(2,652	)		95,117
Gross Profit %		27.0	%		25.7	%		20.8	%		nm			24.0	%