UNITED
          STATES
 SECURITIES
          AND EXCHANGE COMMISSION
 Washington,
          D.C. 20549
 
 FORM
          10-Q
 (Mark
          One)
 
 **x**
                **QUARTERLY
                    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                    ACT OF
                    1934**
 
 For
          the
          quarterly period ended September
          30, 2008
 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 Number: 0-F11676
 
 BEL
          FUSE
          INC.
 (Exact
          name of registrant as specified in its charter)
 
 NEW
                    JERSEY
                22-1463699(State
                    of other jurisdiction of incorporation or organization)
                (I.R.S.
                    Employer Identification No.)
 
 206
                    Van Vorst Street
                Jersey
                    City, New Jersey
                07302(Address
                    of principal executive offices)
                
                (Zip
                    Code)
  (201)
          432-0463
 (Registrant's
          telephone number, including area code)
  
 (Former
          name, former address and former fiscal year, if changed since last
          report)
 
 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 and 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. x Yes   ̈ No
 
 Indicate
          by checkmark whether the registrant is a large accelerated filer, an accelerated
          filer, a non-accelerated filer or a smaller reporting company. See the
          definitions of “large accelerated filer”, “accelerated filer” and “smaller
          reporting company” in Rule 12b-2 of the Exchange Act.
 
 Large
                    accelerated filer ̈
                Accelerated
                    filerx
                Non-accelerated
                    filer ̈
                Smaller
                    reporting company ̈(Do
                    not check if a smallerreporting
                    company)
 
 Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act).  ̈ Yes  x No
 
 At
          November 6, 2008, there were 2,183,549 shares of Class A Common Stock,
          $0.10 par
          value, outstanding and 9,370,643 shares of Class B Common Stock, $0.10
          par
          value, outstanding.
 
 
 
 BEL
          FUSE
          INC.
 
 INDEX
 
 PagePart
                    I
                
                Financial
                    InformationItem
                    1.
                Financial
                    Statements
                1Condensed
                    Consolidated Balance Sheets as of September 30, 2008 and December
                    31,
                    2007
                2-3Condensed
                    Consolidated Statements of Operations for the Three and Nine
                    Months Ended
                    September 30, 2008 and 2007
                4Condensed
                    Consolidated Statements of Stockholders' Equity for the Year
                    Ended
                    December 31, 2007 and the Nine Months Ended September 30,
                    2008
                5Condensed
                    Consolidated Statements of Cash Flows for the Nine Months Ended
                    September
                    30, 2008 and 2007
                6-7Notes
                    to Condensed Consolidated Financial Statements
                8-25Item
                    1A.
                Risk
                    Factors
                26-27Item
                    2.
                Management's
                    Discussion and Analysis ofFinancial
                    Condition and Results of Operations
                28-43Item
                    3.
                Quantitative
                    and Qualitative Disclosures AboutMarket
                    Risk
                44-45Item
                    4.
                Controls
                    and Procedures
                46Part
                    II
                
                Other
                    InformationItem
                    1.
                Legal
                    Proceedings
                46Item
                    2.
                Unregistered
                    Sales of Equity Securities and Use of Proceeds
                47Item
                    6.
                Exhibits
                48Signatures
                49
 
 
  PART
          I.  Financial
          Information
 
 Item
          1.  Financial
          Statements (Unaudited)
 
 Certain
          information and footnote disclosures required under accounting principles
          generally accepted in the United States of America have been condensed
          or
          omitted from the following condensed consolidated financial statements
          pursuant
          to the rules and regulations of the Securities and Exchange Commission.
          The
          following condensed consolidated financial statements should be read in
          conjunction with the year-end consolidated financial statements and notes
          thereto included in the Company's Annual Report on Form 10-K for the year
          ended
          December 31, 2007.
 
 The
          results of operations for the three and nine months ended September 30,
          2008 and
          2007 are not necessarily indicative of the results for the entire fiscal
          year or
          for any other period.
  -
              1 -
 
 **BEL
          FUSE INC. AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED BALANCE SHEETS**
 **(dollars
          in thousands)**
 
 September 30,
                
                December 31,2008
                
                2007**ASSETS**Current
                    Assets:Cash
                    and cash equivalents
                
                $
                82,771
                
                $
                83,875Marketable
                    securities
                
                
                10,778
                
                
                3,273Short-term
                    investments
                
                
                5,774
                
                
                20,542Accounts
                    receivable - less allowance for doubtfulaccounts
                    of $754 and $977 at September 30,2008
                    and December 31, 2007, respectively
                
                
                47,240
                
                
                52,217Inventories
                
                
                49,136
                
                
                39,049Prepaid
                    expenses and other currentassets
                
                
                1,597
                
                
                1,446Refundable
                    income taxes
                
                
                1,913
                
                
                3,168Deferred
                    income taxes
                
                
                1,251
                
                
                2,661Total
                    Current Assets
                
                
                200,460
                
                
                206,231Property,
                    plant and equipment - net
                
                
                41,307
                
                
                41,113Restricted
                    cash
                
                
                2,315
                
                
                4,553Long-term
                    investments
                
                
                2,459
                
                
                2,536Deferred
                    income taxes
                
                
                7,506
                
                
                4,364Intangible
                    assets - net
                
                
                993
                
                
                1,181Goodwill
                
                
                28,524
                
                
                28,447Other
                    assets
                
                
                4,938
                
                
                5,435TOTAL
                    ASSETS
                
                $
                288,502
                
                $
                293,860
 
 See
          notes
          to condensed consolidated financial statements.
  -
              2 -
 
 **BEL
          FUSE INC. AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED BALANCE SHEETS - CONTINUED**
 **(dollars
          in thousands, except per share data)**
 
 September
                    30,
                
                December 31,2008
                
                2007**LIABILITIES
                    AND STOCKHOLDERS' EQUITY**Current
                    Liabilities:Accounts
                    payable
                
                $
                19,230
                
                $
                16,975Accrued
                    expenses
                
                
                12,918
                
                
                11,283Income
                    taxes payable
                
                
                4,642
                
                
                4,007Dividends
                    payable
                
                
                830
                
                
                795Total
                    Current Liabilities
                
                
                37,620
                
                
                33,060Long-term
                    Liabilities:Deferred
                    gain on sale of property
                
                
                4,623
                
                
                4,645Liability
                    for uncertain tax positions
                
                
                3,543
                
                
                6,930Minimum
                    pension obligation andunfunded
                    pension liability
                
                
                5,182
                
                
                4,698Total
                    Long-term Liabilities
                
                
                13,348
                
                
                16,273Total
                    Liabilities
                
                
                50,968
                
                
                49,333Commitments
                    and ContingenciesStockholders'
                    Equity:Preferred
                    stock, no par value, authorized 1,000,000 Shares; none
                    issued
                
                
                -
                
                
                -Class
                    A common stock, par value $.10 per share - authorized 10,000,000
                    shares;
                    outstanding 2,191,804 and 2,545,644 shares, respectively (net
                    of 1,072,770
                    treasury shares)
                
                
                219
                
                
                255Class
                    B common stock, par value $.10 per share - authorized 30,000,000
                    shares;
                    outstanding 9,370,643 and 9,286,627 shares, respectively (net
                    of 3,218,310
                    treasury shares)
                
                
                937
                
                
                929Additional
                    paid-in capital
                
                
                19,839
                
                
                29,107Retained
                    earnings
                
                
                218,107
                
                
                214,580Accumulated
                    other comprehensive loss
                
                
                (1,568
                )
                
                (344
                )Total
                    Stockholders' Equity
                
                
                237,534
                
                
                244,527TOTAL
                    LIABILITIES ANDSTOCKHOLDERS'
                    EQUITY
                
                $
                288,502
                
                $
                293,860
 
 See
          notes
          to condensed consolidated financial statements.
  -
              3 -
 
 **BEL
          FUSE INC. AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(dollars
          in thousands, except per share data)**
 
 Three Months Ended
                
                Nine Months EndedSeptember 30,
                
                September 30,2008
                
                2007
                
                2008
                
                2007Net
                    Sales
                
                $
                66,964
                
                $
                66,379
                
                $
                200,287
                
                $
                189,798Costs
                    and expenses:Cost
                    of sales
                
                
                56,337
                
                
                52,288
                
                
                165,292
                
                
                148,778Selling,
                    general and administrative
                
                
                8,934
                
                
                8,673
                
                
                27,151
                
                
                27,334Restructuring
                    charge
                
                
                329
                
                
                -
                
                
                329
                
                
                -Gain
                    on sale of property, plant and equipment
                
                
                -
                
                
                (307
                )
                
                -
                
                
                (1,187
                )65,600
                
                
                60,654
                
                
                192,772
                
                
                174,925Income
                    from operations
                
                
                1,364
                
                
                5,725
                
                
                7,515
                
                
                14,873Interest
                    expense and other costs
                
                
                (1
                )
                
                (1
                )
                
                (2
                )
                
                (125
                )(Impairment
                    charge)/gain on sale of investment
                
                
                (1,397
                )
                
                -
                
                
                (4,030
                )
                
                2,508Interest
                    income
                
                
                529
                
                
                1,144
                
                
                2,047
                
                
                2,980Earnings
                    before (benefit) provision for income taxes
                
                
                495
                
                
                6,868
                
                
                5,530
                
                
                20,236Income
                    tax (benefit) provision
                
                
                (1,451
                )
                
                954
                
                
                (394
                )
                
                4,155Net
                    earnings
                
                $
                1,946
                
                $
                5,914
                
                $
                5,924
                
                $
                16,081Earnings
                    per Class A common shareBasic
                
                $
                0.16
                
                $
                0.47
                
                $
                0.47
                
                $
                1.29Diluted
                
                $
                0.16
                
                $
                0.47
                
                $
                0.47
                
                $
                1.29Weighted
                    average Class A common shares outstandingBasic
                
                
                2,325,745
                
                
                2,621,623
                
                
                2,460,550
                
                
                2,661,750Diluted
                
                
                2,325,745
                
                
                2,621,623
                
                
                2,460,550
                
                
                2,661,750Earnings
                    per Class B common shareBasic
                
                $
                0.17
                
                $
                0.50
                
                $
                0.52
                
                $
                1.37Diluted
                
                $
                0.17
                
                $
                0.50
                
                $
                0.51
                
                $
                1.37Weighted
                    average Class B common shares outstandingBasic
                
                
                9,134,643
                
                
                9,275,962
                
                
                9,126,499
                
                
                9,228,038Diluted
                
                
                9,373,347
                
                
                9,292,095
                
                
                9,346,611
                
                
                9,253,930
 
 See
          notes
          to condensed consolidated financial statements.
  -
              4 -
 
 **BEL
          FUSE INC. AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY**
 **(dollars
          in thousands)**
 
 AccumulatedCompre-
                
                
                
                Other
                
                Class A
                
                Class B
                
                Additionalhensive
                
                Retained
                
                Comprehensive
                
                Common
                
                Common
                
                Paid-InTotal
                
                Income
                
                Earnings
                
                Income (loss)
                
                Stock
                
                Stock
                
                CapitalBalance,
                    January 1, 2007
                
                $
                222,150
                
                
                
                
                $
                190,953
                
                $
                (1,816
                )
                $
                270
                
                $
                917
                
                $
                31,826Exercise
                    of stock options
                
                
                1,452
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                6
                
                
                1,446Tax
                    benefits arising from the disposition of non-qualified incentive
                    stock
                    options
                
                
                149
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                149Cash
                    dividends declared on Class A common stock
                
                
                (534
                )
                
                
                
                
                (534
                )Cash
                    dividends declared on Class B common stock
                
                
                (2,175
                )
                
                
                
                
                (2,175
                )Issuance
                    of restricted common stock
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                7
                
                
                (7
                )Termination
                    of restricted common stock
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1
                )
                
                1Repurchase/retirement
                    of Class A common stock
                
                
                (5,733
                )
                
                
                
                
                
                
                
                
                
                
                (15
                )
                
                
                
                
                (5,718
                )Currency
                    translation adjustment
                
                
                960
                
                
                960
                
                
                
                
                
                960Unrealized
                    holding gains on marketablesecurities
                    arising during the year, net of taxes
                
                
                2,077
                
                
                2,077
                
                
                
                
                
                2,077Reclassification
                    adjustment for gainsincluded
                    in net earnings, net of taxes
                
                
                (2,058
                )
                
                (2,058
                )
                
                
                
                
                (2,058
                )Stock-based
                    compensation expense
                
                
                1,410
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,410Change
                    in unfunded SERP liability, net of taxes
                
                
                493
                
                
                493
                
                
                
                
                
                493Net
                    earnings
                
                
                26,336
                
                
                26,336
                
                
                26,336Comprehensive
                    income
                
                
                
                
                $
                27,808Balance,
                    December 31, 2007
                
                $
                244,527
                
                
                
                
                $
                214,580
                
                $
                (344
                )
                $
                255
                
                $
                929
                
                $
                29,107Exercise
                    of stock options
                
                
                312
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3
                
                
                309Tax
                    benefits arising from the dispositionof
                    non-qualified incentive stock options
                
                
                79
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                79Cash
                    dividends declared on Class Acommon
                    stock
                
                
                (448
                )
                
                
                
                
                (448
                )Cash
                    dividends declared on Class Bcommon
                    stock
                
                
                (1,949
                )
                
                
                
                
                (1,949
                )Issuance
                    of restricted common stock
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                6
                
                
                (6
                )Termination
                    of restricted common stock
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1
                )
                
                1Repurchase/retirement
                    of Class Acommon
                    stock
                
                
                (10,785
                )
                
                
                
                
                
                
                
                
                
                
                (36
                )
                
                
                
                
                (10,749
                )Currency
                    translation adjustment
                
                
                (6
                )
                
                (6
                )
                
                
                
                
                (6
                )Unrealized
                    holding losses on marketablesecurities
                    arising during the year, net of taxes
                
                
                (3,460
                )
                
                (3,460
                )
                
                
                
                
                (3,460
                )Reclassification
                    adjustment of unrealized holding losses forimpairment
                    charge included in net earnings, net of taxes
                
                
                2,242
                
                
                2,242
                
                
                
                
                
                2,242Stock-based
                    compensation expense
                
                
                1,098
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,098Net
                    earnings
                
                
                5,924
                
                
                5,924
                
                
                5,924Comprehensive
                    income
                
                
                
                
                $
                4,700Balance,
                    September 30, 2008
                
                $
                237,534
                
                
                
                
                $
                218,107
                
                $
                (1,568
                )
                $
                219
                
                $
                937
                
                $
                19,839
 See
          notes
          to condensed consolidated financial statements.
  -
              5 -
 
 **BEL
          FUSE INC. AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(dollars
          in thousands)**
 
 Nine Months EndedSeptember 30,2008
                
                2007Cash flows from
                    operating activities:Net
                    earnings
                
                $
                5,924
                
                $
                16,081Adjustments
                    to reconcile net earnings to netcash
                    provided by operating activities:Depreciation
                    and amortization
                
                
                5,439
                
                
                5,813Stock-based
                    compensation
                
                
                1,083
                
                
                1,055Excess
                    tax benefits from share-basedpayment
                    arrangements
                
                
                (79
                )
                
                (138
                )Loss
                    (gain) on sale of property, plant and equipment
                
                
                84
                
                
                (1,187
                )Impairment
                    charge (gain on sale) on investment
                
                
                4,030
                
                
                (2,508
                )Unrealized
                    foreign exchange transaction losses
                
                
                141
                
                
                -Other,
                    net
                
                
                607
                
                
                387Deferred
                    income taxes
                
                
                (1,081
                )
                
                (2,018
                )Changes
                    in operating assets and liabilities
                
                
                (3,021
                )
                
                (1,341
                )Net
                    Cash Provided by Operating Activities
                
                
                13,127
                
                
                16,144Cash
                    flows from investing activities:Purchase
                    of property, plant and equipment
                
                
                (5,279
                )
                
                (6,160
                )Purchase
                    of intangible asset
                
                
                (300
                )
                
                -Purchase
                    of marketable securities
                
                
                (12,524
                )
                
                (11,801
                )Proceeds
                    from sale of marketable securities
                
                
                -
                
                
                27,499Proceeds
                    from sale of property, plant and equipment
                
                
                2,256
                
                
                3,628Redemption
                    of investment
                
                
                14,433
                
                
                -Net
                    Cash (Used In) Provided by Investing Activities
                
                
                (1,414
                )
                
                13,166
 
 See
          notes
          to condensed consolidated financial statements.
  -
              6 -
 
 **BEL
          FUSE INC. AND SUBSIDIARIES**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)**
 **(dollars
          in thousands)**
 
 Nine Months EndedSeptember 30,2008
                
                2007Cash
                    flows from financing activities:Proceeds
                    from exercise of stock options
                
                
                312
                
                
                1,336Dividends
                    paid to common shareholders
                
                
                (2,362
                )
                
                (1,685
                )Purchase
                    and retirement of Class Acommon
                    stock
                
                
                (10,785
                )
                
                (4,125
                )Excess
                    tax benefits from share-basedpayment
                    arrangements
                
                
                79
                
                
                138Net
                    Cash Used In Financing Activities
                
                
                (12,756
                )
                
                (4,336
                )Effect
                    of exchange rate changes on cash
                
                
                (61
                )
                
                316Net
                    (Decrease) Increase in Cashand
                    Cash Equivalents
                
                
                (1,104
                )
                
                25,290Cash
                    and Cash Equivalents-
                    beginning of period
                
                
                83,875
                
                
                76,761Cash
                    and Cash Equivalents-
                    end of period
                
                $
                82,771
                
                $
                102,051Changes
                    in operating assetsand
                    liabilities consist of:Decrease
                    (increase) in accounts receivable
                
                $
                4,916
                
                $
                (3,584
                )(Increase)
                    decrease in inventories
                
                
                (10,088
                )
                
                3,888Increase
                    in prepaid expensesand
                    other current assets
                
                
                (158
                )
                
                (84
                )Increase
                    in other assets
                
                
                (64
                )
                
                (2,004
                )Increase
                    in accounts payable
                
                
                2,222
                
                
                1,404Decrease
                    in income taxes
                
                
                (1,496
                )
                
                (2,360
                )Increase
                    in accrued expenses
                
                
                1,647
                
                
                1,399$
                (3,021
                )
                $
                (1,341
                )Supplementary
                    information:Cash
                    paid during the period for income taxes
                
                $
                2,017
                
                $
                8,763
 
 See
          notes
          to condensed consolidated financial statements.
  -
              7 -
  BEL
          FUSE
          INC. AND SUBSIDIARIES
 NOTES
          TO
          UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  1.
                BASIS
                    OF PRESENTATION AND ACCOUNTING
                    POLICIES
 
 The
          condensed consolidated balance sheet as of September 30, 2008, and the
          condensed
          consolidated statements of operations, stockholders' equity and cash flows
          for
          the periods presented herein have been prepared by Bel Fuse Inc. (the "Company"
          or "Bel") and are unaudited. In the opinion of management, all adjustments
          (consisting solely of normal recurring adjustments) necessary to present
          fairly
          the financial position, results of operations, changes in stockholders'
          equity
          and cash flows for all periods presented have been made. The results for
          the
          three and nine months ended September 30, 2008 should not be viewed as
          indicative of the Company’s annual results or the Company’s results for any
          other period. The information for the condensed consolidated balance sheet
          as of
          December 31, 2007 was derived from audited financial statements. These
          financial
          statements should be read in conjunction with the consolidated financial
          statements and footnotes thereto included in the Bel Form 10-K for the
          year
          ended December 31, 2007.
 
 Certain
          reclassifications have been made to prior period amounts to conform to
          the
          current year presentation, principally in the detailed disclosures within
          the
          footnotes pertaining to the business segment information and accrued expenses.
          In addition, a prior year reclassification between accounts payable and
          accrued
          expenses is reflected in the accompanying balance sheet as of December
          31, 2007
          and statement of cash flows for the nine months ended September 30, 2007.
 
 2.
                EARNINGS
                    PER SHARE
 
 The
          Company utilizes the two-class method to report its earnings per share.
          The
          two-class method is an earnings allocation formula that determines earnings
          per
          share for each class of common stock according to dividends declared and
          participation rights in undistributed earnings. The Company’s Certificate of
          Incorporation, as amended, states that Class B common shares are entitled
          to
          dividends at least 5% greater than dividends paid to Class A common shares,
          resulting in the two-class method of computing earnings per share. In computing
          earnings per share, the Company has allocated dividends declared to Class
          A and
          Class B based on amounts actually declared for each class of stock and
          5% more
          of the undistributed earnings have been allocated to Class B shares than
          to the
          Class A shares on a per share basis. Basic earnings per common share are
          computed by dividing net earnings by the weighted average number of common
          shares outstanding during the period. Diluted earnings per common share,
          for
          each class of common stock, are computed by dividing net earnings by the
          weighted average number of common shares and potential common shares outstanding
          during the period. Potential common shares used in computing diluted earnings
          per share relate to restricted Class B common shares and stock options
          for Class
          B common shares which, if exercised, would have a dilutive effect on earnings
          per share.
  -
              8 -
  The
          earnings and weighted average shares outstanding used in the computation
          of
          basic and diluted earnings per share are as follows (dollars in thousands,
          except share and per share data):
 
 Three Months Ended
                
                Nine Months EndedSeptember 30,
                
                September 30,2008
                
                2007
                
                2008
                
                2007Numerator:Net
                    earnings
                
                $
                1,946
                
                $
                5,914
                
                $
                5,924
                
                $
                16,081Less
                    Dividends:Class
                    A
                
                
                142
                
                
                156
                
                
                448
                
                
                383Class
                    B
                
                
                644
                
                
                639
                
                
                1,949
                
                
                1,531Undistributed
                    earnings
                
                $
                1,160
                
                $
                5,119
                
                $
                3,527
                
                $
                14,167Undistributed
                    earnings allocation - basic:Class
                    A undistributed earnings
                
                
                226
                
                
                1,086
                
                
                721
                
                
                3,053Class
                    B undistributed earnings
                
                
                934
                
                
                4,033
                
                
                2,806
                
                
                11,114Total
                    undistributed earnings
                
                $
                1,160
                
                $
                5,119
                
                $
                3,527
                
                $
                14,167Undistributed
                    earnings allocation - diluted:Class
                    A undistributed earnings
                
                
                222
                
                
                1,084
                
                
                707
                
                
                3,046Class
                    B undistributed earnings
                
                
                938
                
                
                4,035
                
                
                2,820
                
                
                11,121Total
                    undistributed earnings
                
                $
                1,160
                
                $
                5,119
                
                $
                3,527
                
                $
                14,167Net
                    earnings allocation - basic:Class
                    A allocated earnings
                
                
                368
                
                
                1,242
                
                
                1,169
                
                
                3,436Class
                    B allocated earnings
                
                
                1,578
                
                
                4,672
                
                
                4,755
                
                
                12,645Net
                    earnings
                
                $
                1,946
                
                $
                5,914
                
                $
                5,924
                
                $
                16,081Net
                    earnings allocation - diluted:Class
                    A allocated earnings
                
                
                364
                
                
                1,240
                
                
                1,155
                
                
                3,429Class
                    B allocated earnings
                
                
                1,582
                
                
                4,674
                
                
                4,769
                
                
                12,652Net
                    earnings
                
                $
                1,946
                
                $
                5,914
                
                $
                5,924
                
                $
                16,081Denominator:Weighted
                    average shares outstanding:Class
                    A - basic and diluted
                
                
                2,325,745
                
                
                2,621,623
                
                
                2,460,550
                
                
                2,661,750Class
                    B - basic
                
                
                9,134,643
                
                
                9,275,962
                
                
                9,126,499
                
                
                9,228,038Dilutive
                    impact of stock options andunvested
                    restricted stock awards
                
                
                238,704
                
                
                16,133
                
                
                220,112
                
                
                25,892Class
                    B - diluted
                
                
                9,373,347
                
                
                9,292,095
                
                
                9,346,611
                
                
                9,253,930Earnings
                    per share:Class
                    A - basic
                
                $
                0.16
                
                $
                0.47
                
                $
                0.47
                
                $
                1.29Class
                    A - diluted
                
                $
                0.16
                
                $
                0.47
                
                $
                0.47
                
                $
                1.29Class
                    B - basic
                
                $
                0.17
                
                $
                0.50
                
                $
                0.52
                
                $
                1.37Class
                    B - diluted
                
                $
                0.17
                
                $
                0.50
                
                $
                0.51
                
                $
                1.37
  -
              9 -
  During
          the three and nine months ended September 30, 2008 and during the three
          and nine
          months ended September 30, 2007, 53,000 and 14,000 outstanding options,
          respectively, were not included in the foregoing computations for Class
          B common
          shares because their effect would be antidilutive.
 
 3.  MARKETABLE
          SECURITIES
 
 At
          September 30, 2008 and December 31, 2007, respectively, marketable securities
          with a cost of approximately $18.2 million and $5.6 million had an estimated
          fair value of approximately $10.8 million and $3.3 million. During the
          three and
          nine months ended September 30, 2008, the Company recorded pre-tax charges
          of
          $1.3 million and $3.6 million, respectively, related to the other-than-temporary
          impairment of its investment in Toko, Inc. (“Toko”). In addition, the Company
          recorded pre-tax charges of $0.1 million and $0.4 million during the three
          and
          nine months ended September 30, 2008, respectively related to the impairment
          of
          its investment in the Columbia Strategic Cash Portfolio (the “Columbia
          Portfolio”). At September 30, 2008 and December 31, 2007, respectively, gross
          unrealized losses on other marketable securities of approximately $3.8
          million
          and $2.3 million are included, net of tax, in accumulated other comprehensive
          income (loss). During the nine months ended September 30, 2007, the Company
          sold
          4,034,000 shares of common stock of Toko on the open market which resulted
          in a
          realized gain of $2.5 million.
 
 Included
          in other assets at September 30, 2008 and December 31, 2007 are marketable
          securities designated for utilization in accordance with the Company’s SERP plan
          with a cost of approximately $4.6 million, and an estimated fair value
          of
          approximately $4.4 million and $4.9 million, respectively. Such unrealized
          net
          gains (losses) are included, net of tax, in accumulated other comprehensive
          loss.
 
 Columbia
          Portfolio :
 
 At
          September 30, 2008, the Company’s investment securities included privately
          placed units of beneficial interests in the Columbia Portfolio, which is
          an
          enhanced cash fund sold as an alternative to money-market funds. During
          the
          latter half of 2007, the Company invested a portion of its cash balances
          on hand
          in this fund. In December 2007, due to adverse market conditions, the fund
          was
          overwhelmed with withdrawal requests from investors and it was closed with
          a
          restriction placed upon the cash redemption ability of its holders. As
          a result,
          the Company redesignated the Columbia Portfolio units from cash equivalents
          (as
          previously classified during the second and third quarters of 2007) to
          short-term investments or long-term investments based upon the liquidation
          schedule provided by the fund. At the time the liquidation was announced,
          the
          Company held 25.7 million units of the Columbia Portfolio at a book value
          of
          $25.7 million.
 
 As
          of
          September 30, 2008, the Company has received total cash redemptions to
          date of
          $16.7 million (including $14.4 million in the nine months ended September
          30,
          2008) at a weighted-average net asset value of $.9785 per unit. As the
          net asset
          value continues to decline, the Company has been recording impairment charges
          on
          this investment. During the three and nine months ended September 30, 2008,
          the
          Company recorded $0.1 million and $0.4 million in impairment charges,
          respectively. As such, the additional realized gains and losses recorded
          at the
          time of the redemptions were minimal. As of September 30, 2008, the Company
          holds 8.6 million units at a book value of $8.2 million. Subsequent to
          September
          30, 2008, the net asset value associated with the Columbia Portfolio continued
          to decline and as of October 31, 2008, the Company recorded additional
          unrealized losses of $0.3 million related to this investment. Information
          and
          the markets relating to these investments remain dynamic, and there may
          be
          further declines in the value of these investments, the value of the collateral
          held by these entities, and the liquidity of the Company’s investments. To the
          extent that the Company determines that there is a further decline in fair
          value, the Company may recognize additional impairment charges in future
          periods
          up to the aggregate amount of these investments.
  -
              10 -
  Toko:
 
 As
          of
          September 30, 2008, the Company owned a total of 1,840,919 shares, or
          approximately 1.9%, of the
          outstanding shares ,
          of the
          common stock of Toko. The Company’s original cost of these shares was $5.6
          million ($3.07 per share). Toko develops, manufactures and sells power
          supply
          related components and radio frequency related components primarily in
          Japan.
          Toko had a market capitalization of approximately $107.3 million as of
          September
          30, 2008. These shares are reflected on the Company’s condensed consolidated
          balance sheets as marketable securities. These marketable securities are
          considered to be available for sale under SFAS No. 115, “Accounting for Certain
          Investments in Debt and Equity Securities”. In accordance with FASB Staff
          Position (“FSP”) 115-1, the Company periodically reviews its marketable
          securities and determines whether the investments are other-than-temporarily
          impaired. During the second quarter of 2008, the Company deemed this investment
          to be other-than-temporarily impaired and recorded a pre-tax impairment
          charge
          of $2.4 million to write this investment to its fair value at June 30,
          2008
          ($1.79 per share). The Company deemed this investment to be
          other-than-temporarily impaired as of September 30, 2008 and has recorded
          a
          pre-tax impairment charge of $1.3 million during the third quarter of 2008
          to
          write down this investment to its fair value at September 30, 2008 ($1.10
          per
          share). The Company reviewed various factors in making its determination,
          including volatility of the Toko share price since June 30, 2008, Toko’s recent
          financial results and the Company’s intention and ability to hold the
          investment. The Toko share price has been highly volatile during the third
          quarter as it declined from $1.79 per share at June 30, 2008 to $1.10 per
          share
          at September 30, 2008. While the Company has the intent and ability to
          hold this
          investment until it is in a gain position, there is no indication that
          the Toko
          stock price will rise above the Company’s adjusted cost basis within the
          foreseeable future.
 
 Power-One,
          Inc. :
 
 On
          February 25, 2008, the Company announced that it had acquired 4,370,052
          shares
          of Power-One, Inc. (“Power-One”) common stock representing, to the Company’s
          knowledge, 5% of Power-One’s outstanding common stock, at a total purchase price
          of $10.1 million ($2.32 per share). Power-One’s common stock is quoted on the
          NASDAQ Global Market. Power-One is a designer and manufacturer of power
          conversion and power management products. As of September 30, 2008, the
          Company
          has recorded an unrealized loss, net of income tax, of approximately $2.3
          million which is included in accumulated other comprehensive loss in
          stockholders’ equity. The Company reviewed various factors in determining
          whether an other-than-temporary impairment exists on its investment in
          Power-One
          at September 30, 2008. These factors included volatility of the Power-One
          share
          price, Power-One’s recent financial results and recent changes made to its
          executive management, as well as the Company’s intention and ability to hold the
          investment. The Power-One share price has been extremely volatile since
          the
          Company’s purchase of this stock, ranging from $1.23 - $3.70, with an average
          closing price of $2.46 during the ownership period. The Company has the
          ability
          and intent to hold this investment until the market improves. In addition,
          during early October, the Company purchased an additional 2,968,946 shares
          of
          Power-One stock representing, to the Company’s knowledge, an additional 3.4% of
          Power-One’s outstanding common stock, at a total purchase price of $14.1
          million. Based on all factors reviewed, the Company does not believe that
          the
          investment in Power-One is other-than-temporarily impaired as of September
          30,
          2008.
 
 -
              11 -
  Stephens,
          Inc. :
 
 During
          June 2008, the Company invested $2.4 million in certificates of deposit
          (CDs)
          with Stephens, Inc., with whom the Company has an investment banking
          relationship. During October 2008, the Company invested an additional $2.5
          million in CDs with Stephen, Inc. These investments are part of the Certificate
          of Deposit Account Registry Service (CDARS) program whereby the funds are
          allocated to various banks in order to achieve FDIC insurance on the full
          invested amount. The CDs have an initial maturity of 26-weeks and an early
          redemption feature with a 30-day interest penalty.
 
 Effective
          January 1, 2008, the Company has adopted the provisions of SFAS 157 for
          its
          financial assets and liabilities. Although this partial adoption of SFAS
          157 had
          no material impact on its financial condition, results of operations or
          cash
          flows, the Company is now required to provide additional disclosures as
          part of
          its financial statements. SFAS 157 clarifies that fair value is an exit
          price,
          representing the price that would be received to sell an asset or paid
          to
          transfer a liability in an orderly transaction between market participants
          at
          the measurement date. The Company utilizes market data or assumptions that
          market participants would use in pricing the asset or liability. SFAS 157
          establishes a three-tier fair value hierarchy, which prioritizes the inputs
          used
          in measuring fair value. These tiers include: Level 1, defined as observable
          inputs such as quoted market prices in active markets; Level 2, defined
          as
          inputs other than quoted prices in active markets that are either directly
          or
          indirectly observable; and Level 3, defined as unobservable inputs about
          which
          little or no market data exists, therefore requiring an entity to develop
          its
          own assumptions.
 
 As
          of
          September 30, 2008, the Company held certain financial assets that are
          measured
          at fair value on a recurring basis. These consisted of the Company’s investments
          in Toko and Power-One stock (categorized as available-for-sale securities)
          and
          the marketable securities designated for utilization in accordance with
          the
          Company’s SERP plan (categorized as a long-term investment in other assets). The
          fair value of these investments is determined based on quoted market prices
          in
          public markets and is categorized as Level 1. The Company does not have
          any
          financial assets measured at fair value on a recurring basis categorized
          as
          Level 2 or Level 3, and there were no transfers in or out of Level 2 or
          Level 3
          during the nine months ended September 30, 2008.
 
 The
          following table sets forth by level, within SFAS 157’s fair value hierarchy, the
          Company’s financial assets accounted for at fair value on a recurring basis as
          of September 30, 2008 (dollars in thousands).
  -
              12 -
  Assets at Fair Value as of September 30, 2008Total
                
                Quoted Prices
                  in Active
                  Markets for
                  Identical
                  Assets
                  (Level 1)
                
                Significant
                  Other
                  Observable
                  Inputs
                  (Level 2)
                
                Significant
                  Unobservable
                  Inputs
                  (Level 3)Available-for-sale
                    securities
                
                $
                10,778
                
                $
                10,778
                
                
                -
                
                
                -Other
                    long-term investments
                
                
                4,388
                
                
                4,388
                
                
                -
                
                
                -Total
                
                $
                15,166
                
                $
                15,166
                
                
                -
                
                
                -
 
 The
          following table sets forth by level within SFAS 157’s fair value hierarchy of
          the Company’s financial assets accounted for at fair value on a nonrecurring
          basis as of September 30, 2008 (dollars in thousands). These consisted
          of the
          Company’s investment in the Columbia Portfolio (categorized as an other
          investment in the table below). The fair value of these investments is
          determined based on significant other observable inputs and is categorized
          as
          Level 2 (dollars in thousands).
 
 Assets at Fair Value as of September 30, 2008
                
                Total Gains (Losses)Total
                
                Quoted Prices
                  in Active
                  Markets for
                  Identical
                  Assets
                  (Level 1)
                
                Significant
                  Other
                  Observable
                  Inputs
                  (Level 2)
                
                Significant
                  Unobservable
                  Inputs
                  (Level 3)
                
                Three Months
                  Ended
                  September 30,
                  2008
                
                Nine Months
                  Ended
                  September30,
                  2008Other
                    investments
                
                $
                8,233
                
                
                -
                
                $
                8,233
                
                
                -
                
                
                ($135
                )
                
                ($412
                )Total
                
                $
                8,233
                
                
                -
                
                $
                8,233
                
                
                -
                
                
                ($135
                )
                
                ($412
                )
 
 There
          were no changes to the Company’s valuation techniques used to measure asset fair
          values on a recurring or nonrecurring basis during the nine months ended
          September 30, 2008 and the Company did not have any financial liabilities
          as of
          September 30, 2008.
 
 4.  INVENTORIES
 
 The
          components of inventories are as follows (dollars in thousands):
 
 September 30,
                
                December 31,2008
                
                2007Raw materials
                
                $
                28,917
                
                $
                24,089Work in progress
                
                
                2,662
                
                
                2,434Finished
                    goods
                
                
                17,557
                
                
                12,526$
                49,136
                
                $
                39,049
  -
              13 -
 
 5.  BUSINESS
          SEGMENT INFORMATION
 
 The
          Company operates in one industry with three reportable segments. The segments
          are geographic and include North America, Asia and Europe. The primary
          criteria
          by which financial performance is evaluated and resources are allocated
          are
          revenues and operating income. The following is a summary of key financial
          data
          (dollars in thousands):
 
 Three Months Ended
                
                Nine Months EndedSeptember 30,
                
                September 30,2008
                
                2007
                
                2008
                
                2007Total
                    segment revenuesNorth
                    America
                
                $
                17,980
                
                $
                22,886
                
                $
                64,993
                
                $
                65,058Asia
                
                
                50,505
                
                
                47,835
                
                
                145,879
                
                
                133,938Europe
                
                
                7,516
                
                
                6,769
                
                
                21,926
                
                
                24,748Total
                    segment revenues
                
                
                76,001
                
                
                77,490
                
                
                232,798
                
                
                223,744Reconciling
                    items:Intersegment
                    revenues
                
                
                (9,037
                )
                
                (11,111
                )
                
                (32,511
                )
                
                (33,946
                )Net
                    sales
                
                $
                66,964
                
                $
                66,379
                
                $
                200,287
                
                $
                189,798Income
                    from Operations:North
                    America
                
                $
                118
                
                $
                793
                
                $
                2,862
                
                $
                2,904Asia
                
                
                1,095
                
                
                4,545
                
                
                3,399
                
                
                10,933Europe
                
                
                151
                
                
                387
                
                
                1,254
                
                
                1,036$
                1,364
                
                $
                5,725
                
                $
                7,515
                
                $
                14,873
 
 6.  DEBT
 
 Short-term
          debt
 
 On
          April
          30, 2008, the Company renewed its unsecured credit agreement in the amount
          of
          $20 million, which expires on September 10, 2011. There have not been any
          borrowings under the credit agreement and as such, there was no balance
          outstanding as of September 30, 2008. At that date, the entire $20 million
          line
          of credit was available to the Company to borrow. The credit agreement
          bears
          interest at LIBOR plus 0.75% to 1.25% based on certain financial statement
          ratios maintained by the Company.
 
 The
          Company’s Hong Kong subsidiary had an unsecured line of credit of approximately
          $2 million which was unused as of September 30, 2008. The line of credit
          expires
          on January 31, 2009. Any borrowing on the line of credit will be guaranteed
          by
          the U.S. parent. The line of credit bears interest at a rate determined
          by the
          bank as the financing is extended.
 
 Included
          in interest expense for the nine months ended September 30, 2007 is the
          write-off of approximately $0.1 million of previously unamortized deferred
          financing charges in connection with the Company’s prior credit
          facility.
 
 -
              14 -
  7.  INCOME
          TAXES
 
 The
          Company adopted the provisions of FASB Interpretation No. 48, Accounting
          for
          Uncertainties in Income Taxes (“FIN 48”), on January 1, 2007. Although the
          implementation of FIN 48 did not impact the total amount of the Company’s
          liabilities for uncertain tax positions, which amounted to $12.4 million
          at
          January 1, 2007, the Company separately recognizes the liability for uncertain
          tax positions on its balance sheet. Included in the liabilities for uncertain
          tax positions at the date of adoption is $1.4 million for interest and
          penalties.
 
 At
          September 30, 2008 and December 31, 2007, the Company has approximately
          $7.6
          million and $9.2 million, respectively, of liabilities for uncertain tax
          positions (including interest and penalties). Of these amounts, the current
          portions of $4.1 million and $2.3 million are included in income tax payable
          and
          the noncurrent portions of $3.5 million and $6.9 million are included in
          liability for uncertain tax positions. These liabilities for uncertain
          tax
          positions, if recognized, would reduce the Company’s effective tax
          rate.
 
 The
          Company and its subsidiaries file income tax returns in the U.S. federal
          jurisdiction and various states and foreign jurisdictions. The Company
          is no
          longer subject to U.S. federal examinations by tax authorities for years
          before
          2005 and for state examinations before 2004. Regarding foreign subsidiaries,
          the
          Company is no longer subject to examination by tax authorities for years
          before
          2001. The Internal Revenue Service (“IRS”) commenced an examination of the
          Company’s U.S. income tax returns for 2004 and reviewed 2003 and 2005 during the
          fourth quarter of 2006. The 2004 statute of limitations expired on September
          15,
          2008.
 
 During
          2008, the Company was audited by the State of New Jersey, Department of
          the
          Treasury, Division of Taxation (“New Jersey”) for the years ended December 31,
          2003 through 2006. The State of New Jersey originally proposed a tax adjustment
          for the years 2003 through 2006 in the amount of $0.2 million. The Company
          challenged the state’s positions on these matters which resulted in a minimal
          tax assessment. During the quarter ended September 30, 2008, the Company
          reversed the $0.2 million tax assessment previously accrued to the minimal
          assessment.
 
 During
          February 2008, the Company received correspondence from the State of California
          Franchise Tax Board. They requested copies of U.S. federal income tax returns
          for the years 2005 and 2006 for further analysis to determine if the tax
          returns
          will be selected for audit. On July 3, 2008 the Company received correspondence
          from the State of California that the tax returns for the years 2005 and
          2006
          will not be audited at this time.
 
 The
          Inland Revenue Department (“IRD”) of Hong Kong commenced an examination of one
          of the Company’s Hong Kong subsidiaries’ income tax returns for the years 2000
          through 2005 and issued a notice of additional assessment during 2007 and
          demand
          for tax in the amount of $3.8 million. This was paid in May and August
          2007.
          There are no interest or penalties in connection with this assessment.
          The IRD
          proposed certain adjustments to the Company’s offshore income tax claim
          position, with which Company management agreed.
 
 During
          the quarter ended September 30, 2008, certain statute of limitations expired
          which resulted in a reversal of a previously recognized liability for uncertain
          tax positions in the amount of $2.3 million. This was offset by certain
          changes
          in estimates for prior year taxes arising from the finalization of the
          2007 tax
          returns, together with the resolution of the Bel Fuse, Inc. State of New
          Jersey
          tax examination in the total amount of $0.5 million. During the quarter
          ended
          September 30, 2007, certain statute of limitations expired which resulted
          in a
          reversal of a previously recognized liability for uncertain tax positions
          in the
          amount of $1.4 million. This was offset by an increase in the liability
          for
          uncertain tax positions of $1.0 million and certain changes in estimates
          for
          prior year taxes which reduced the income tax provision by approximately
          $0.4
          million.
  -
              15 -
  As
          a
          result of the expiration of the statute of limitations for specific
          jurisdictions, it is reasonably possible that the related unrecognized
          benefits
          for tax positions taken regarding previously filed tax returns may change
          materially from those recorded as liabilities for uncertain tax positions
          in the
          Company’s condensed consolidated financial statements at September 30, 2008. It
          is currently estimated that approximately $4.1 million of previously recorded
          liabilities for uncertain tax positions will reverse due to the expiration
          of
          the statute of limitations by September 30, 2009. Nonetheless, the Company
          may
          be required to offset some portion of this reversal to the extent there
          are
          future tax examinations or other tax exposures.
 
 The
          Company’s policy is to recognize interest and penalties related to uncertain tax
          positions as a component of the current provision for income taxes. During
          the
          nine months ended September 30, 2008 and 2007, the Company recognized
          approximately $0.3 million and $0.4 million, respectively in interest and
          penalties in the Condensed Consolidated Statements of Operations. The Company
          has approximately $1.8 million and $1.6 million accrued for the payment
          of
          interest and penalties at September 30, 2008 and December 31, 2007,
          respectively, which is included in both income taxes payable and liability
          for
          uncertain tax positions in the Condensed Consolidated Balance
          Sheets.
 
 8.  ACCRUED
          EXPENSES
 
 Accrued
          expenses consist of the following (dollars in thousands):
 
 September 30,
                
                December 31,2008
                
                2007Sales commissions
                
                $
                1,767
                
                $
                1,903Contract
                    labor
                
                
                3,162
                
                
                1,723Salaries,
                    bonuses andrelated
                    benefits
                
                
                4,398
                
                
                4,082Other
                
                
                3,591
                
                
                3,575$
                12,918
                
                $
                11,283
 
 9.  RETIREMENT
          FUND AND PROFIT SHARING PLAN
 
 The
          Company maintains a domestic profit sharing plan and a contributory stock
          ownership and savings 401(K) plan, which combines stock ownership and individual
          voluntary savings provisions to provide retirement benefits for plan
          participants. The
          expense for the nine months ended September 30, 2008 and 2007 amounted
          to
          approximately $0.3 million and $0.4 million, respectively. The expense
          for the
          three months ended September 30, 2008 and 2007 amounted to approximately
          $0.1
          million for both periods. As of September 30, 2008, the plans owned 17,113
          and
          157,478 shares of Bel Fuse Inc. Class A and Class B common stock,
          respectively.
 
 -
              16 -
  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 nine months ended September 30, 2008 and 2007 amounted
          to
          approximately $0.3 million for both periods. The expense for the three
          months
          ended September 30, 2008 and 2007 amounted to approximately $0.1 million
          for
          both periods. As of September 30, 2008, the plan owned 3,323 and 17,342
          shares
          of Bel Fuse Inc. Class A and Class B common stock, respectively.
 
 The
          Supplemental Executive Retirement Plan (the "SERP" or the “Plan”) is designed to
          provide a limited group of key management and highly compensated employees
          of
          the Company with supplemental
          retirement and death benefits.
 
 The
          components of SERP expense are as follows (dollars in thousands):
  Three Months Ended
                
                Nine Months EndedSeptember 30,
                
                September 30,2008
                
                2007
                
                2008
                
                2007Service
                    cost
                
                $
                73
                
                $
                146
                
                $
                220
                
                $
                437Interest
                    cost
                
                
                76
                
                
                29
                
                
                227
                
                
                86Amortization
                    of adjustments
                
                
                33
                
                
                17
                
                
                100
                
                
                52Total
                    SERP expense
                
                $
                182
                
                $
                192
                
                $
                547
                
                $
                575
 
  September 30,
                
                December 31,2008
                
                2007Balance sheet
                    amounts:Minimum
                          pension obligationand
                    unfunded pension liability
                
                $
                5,182
                
                $
                4,698Accumulated
                    other comprehensive loss
                
                
                (1,154
                )
                
                (1,154
                )
  Included
          in other assets at September 30, 2008 and December 31, 2007 are marketable
          securities designated for utilization in accordance with the Company’s SERP plan
          with a cost of approximately $4.6 million, and an estimated fair value
          of
          approximately $4.4 million and $4.9 million, respectively. Such unrealized
          net
          gains (losses) are included, net of tax, in accumulated other comprehensive
          loss. The
          Company contributed $0.1 million to these investments during the nine months
          ended September 30, 2008.
  10.
          SHARE-BASED COMPENSATION
 
 The
          Company records compensation expense in its Condensed Consolidated Statements
          of
          Operations related to employee stock-based options and awards in accordance
          with
          SFAS No. 123(R) “Share-Based Payment”. The aggregate pretax compensation cost
          recognized in net earnings for stock-based compensation (including incentive
          stock options and restricted stock, as further discussed below) amounted
          to
          approximately $1.1 million for each of the nine month periods ended September
          30, 2008 and 2007. For each of the three month periods ended September
          30, 2008
          and 2007, the aggregate compensation cost recognized in net earnings amounted
          to
          $0.4 million. The Company did not use any cash to settle any equity instruments
          granted under share-based arrangements during the nine months ended September
          30, 2008 and 2007.
  -
              17 -
  Stock
          Options
 
 The
          Company has an
          equity
          compensation program (the
          " Program ")
          which
          provides for the granting of "Incentive Stock Options" within
          the meaning of Section 422 of the Internal Revenue Code of 1986, as
          amended ,
          non-qualified stock options and restricted stock awards .  No
          stock
          options were granted during the nine months ended September 30, 2008 or
          2007.
  Information
          regarding the Company’s stock
          options for the
          nine months ended September 30, 2008 is as follows. All of the stock options
          noted below relate to options to purchase shares of the Company’s Class B common
          stock.
 
 Average
                
                Contractual
                
                IntrinsicOptions
                
                Shares
                
                Exercise Price
                
                Term
                
                Value (000's)Outstanding
                    at January 1, 2008
                
                
                70,000
                
                $
                28.42Granted
                
                
                -Exercised
                
                
                (16,500
                )
                
                18.89Forfeited
                    or expired
                
                
                (500
                )
                
                18.89Outstanding
                    at September 30, 2008
                
                
                53,000
                
                $
                31.48
                
                
                1.5
                    years
                
                $
                -Exercisable
                    at September 30, 2008
                
                
                38,000
                
                $
                32.26
                
                
                1.4
                    years
                
                $
                -
 
 During
          the nine months ended September 30, 2008 and 2007 the Company received
          $0.3
          million and $1.3 million, respectively, from the exercise of stock options
          and
          realized minimal tax benefits during the nine months ended September 30,
          2008
          and $0.1 million in tax benefits during the nine months ended September
          30,
          2007. The total intrinsic value of options exercised during the nine months
          ended September 30, 2008 and 2007 was $0.2 million and $0.9 million,
          respectively. Stock compensation expense applicable to stock options was
          minimal
          for the nine months ended September 30, 2008 and was approximately $0.1
          million
          for the nine months ended September 30, 2007.
  -
              18 -
 
 A
          summary
          of the status of the Company's nonvested stock options as of December 31,
          2007
          and changes during the nine months ended September 30, 2008 is presented
          below:
 
 Weighted-AverageGrant-DateNonvested Stock Options
                
                Shares
                
                Fair ValueNonvested
                    at December 31, 2007
                
                
                33,500
                
                $
                30.28Granted
                
                
                -
                
                
                -Vested
                
                
                (18,500
                )
                
                29.50Forfeited
                
                
                -
                
                
                -Nonvested
                    at September 30, 2008
                
                
                15,000
                
                $
                29.50
 
 At
          September 30, 2008, the Company has recognized all costs related to nonvested
          stock options arrangements under the  Program .
          Currently, the Company believes that substantially all options will vest.
 
 Restricted
          Stock Awards
 
 The
          Company provides common stock awards to certain officers and key associates.
          The
          Company grants these awards, at its discretion, from the shares available
          under
          the Program.
          Unless otherwise provided at the date of grant or unless subsequently
          accelerated, the shares
          awarded vest in 25% increments on the second,
          third, fourth and fifth anniversaries of the award ,
          respectively, and are distributed provided the employee has remained employed
          by
          the Company through such anniversary dates; otherwise the unearned shares
          are
          forfeited. The market value of these shares at the date of award is recorded
          as
          compensation expense on the straight-line method over the five  year
          periods from the respective award dates, as adjusted for forfeitures of
          unvested
          awards. During the nine months ended September 30, 2008 and 2007, the Company
          issued 56,300 and 74,200 Class B common shares, respectively, under a restricted
          stock plan to various employees. Pre-tax compensation expense was $1.1
          million
          and $1.0 million for the nine months ended September 30, 2008 and 2007,
          respectively and $0.4 million for the three months ended September 30,
          2008 and
          2007.
 
 A
          summary
          of the activity under the Restricted Stock Awards Plan as of January 1, 2008 and
          for the nine months ended September 30, 2008 is presented below:
 
 Restricted
                    Stock
                
                
                
                Award
                
                ContractualAwards
                
                Shares
                
                Price
                
                TermOutstanding
                    at January 1, 2008
                
                
                195,400
                
                $
                35.31
                
                
                3.43
                    yearsGranted
                
                
                56,300
                
                
                24.47Vested
                
                
                (4,500
                )
                
                30.67Forfeited
                
                
                (11,200
                )
                
                32.23Outstanding
                    at September 30, 2008
                
                
                236,000
                
                $
                32.96
                
                
                3.13
                    years
 
 -
              19 -
 
 As
          of
          September 30, 2008, there was $4.9 million of total pre-tax unrecognized
          compensation cost included within additional paid-in-capital related to
          non-vested stock based compensation arrangements granted under the restricted
          stock award plan; that cost is expected to be recognized over a period
          of 4.6
          years. The
          Company's policy is to issue new shares to satisfy Restricted Stock Awards
          and
          incentive stock option exercises. In calculating the stock-based compensation
          expense related to stock awards, the Company has estimated that 5% of the
          outstanding unvested stock awards will forfeit each year related to employee
          attrition.
 
 11.
          COMMON STOCK
 
 During
          2000, the Board of Directors of the Company authorized the purchase of
          up to ten
          percent of the Company’s outstanding common shares. As of September 30, 2008,
          the Company had purchased and retired 23,600 Class B common shares at a
          cost of
          approximately $0.8 million and had purchased and retired 510,925 Class
          A common
          shares at a cost of approximately $16.5 million. No shares of Class B common
          stock were repurchased during the nine months ended September 30, 2008
          and
          350,892 shares of Class A common stock were repurchased principally from
          a
          related party during the nine months ended September 30, 2008 at a cost
          of $10.8
          million. Of such shares, 325,396 shares were repurchased during the three
          months
          ended September 30, 2008.
 
 As
          of
          September 30, 2008, there was one shareholder of the Company’s common stock with
          ownership in excess of 10% of Class A outstanding shares with no ownership
          of
          the Company’s Class B common stock. In accordance with the Company’s certificate
          of incorporation, the Class B Protection clause is triggered if a shareholder
          owns 10% or more of the outstanding Class A common stock and does not own
          an
          equal or greater percentage of all then outstanding shares (both Class
          A and
          Class B common stock). If this clause is triggered, the shareholder must
          within
          90 days of the trigger date, purchase Class B common shares, in an amount
          and at
          a price determined in accordance with a formula described in the Company’s
          certificate of incorporation or forfeit its right to vote its Class A common
          shares. As of September 30, 2008, to the Company’s knowledge, this shareholder
          had not purchased any Class B shares to comply with these requirements.
          In order
          to vote its shares at Bel’s next shareholders’ meeting, this shareholder must
          either purchase the required number of Class B common shares or sell or
          otherwise transfer Class A common shares until their Class A holdings are
          under
          10%. As of September 30, 2008, to the Company’s knowledge, this shareholder
          owned 16.9% of the Company’s Class A common stock in the aggregate and had not
          taken steps to either purchase the required number of Class B common shares
          or
          sell or otherwise transfer Class A common shares until its Class A holdings
          fall
          below 10%.
 
 There
          are
          no contractual restrictions on the Company's ability to pay dividends provided
          the Company is not in default immediately before such payment and after
          giving
          effect to such payment. On August 1, 2008, the Company paid a $0.07 per
          share
          dividend to all shareholders of record of Class B Common Stock in the total
          amount of $0.6 million and a $0.06 per share dividend to all shareholders
          of
          record of Class A Common Stock in the total amount of $0.2 million.
  -
              20 -
 
 12.
          COMPREHENSIVE INCOME
  Comprehensive
          (loss) income for the three and nine months ended September 30, 2008 and
          2007
          consists of the following (dollars in thousands):
  Three Months Ended
                
                Nine Months EndedSeptember 30,
                
                September 30,2008
                
                2007
                
                2008
                
                2007Net
                    earnings
                
                $
                1,946
                
                $
                5,914
                
                $
                5,924
                
                $
                16,081Currency
                    translation adjustment
                
                
                (810
                )
                
                152
                
                
                (6
                )
                
                486(Decrease)
                    increase in unrealizedgain
                    on marketable securities-
                    net of taxes
                
                
                (2,123
                )
                
                (267
                )
                
                (3,460
                )
                
                686Reclassification
                    adjustment forimpairment
                    charge included innet
                    earnings, net of tax
                
                
                783
                
                
                -
                
                
                2,242
                
                
                -Comprehensive
                    (loss) income
                
                $
                (204
                )
                $
                5,799
                
                $
                4,700
                
                $
                17,253
 
 The
          components of accumulated other comprehensive loss as of September 30,
          2008 and
          December 31, 2007 are summarized below (dollars in thousands):
 
 September 30,
                
                December 31,2008
                
                2007Foreign
                    currency translation adjustment
                
                $
                2,095
                
                $
                2,101Unrealized
                    holding loss on available-for-salesecurities
                    under SFAS No. 115, net of taxes of$(1,533)
                    and $(789) as of September 30, 2008 andDecember
                    31, 2007
                
                
                (2,509
                )
                
                (1,291
                )Unfunded
                    SERP liability, net of taxes of ($483)as
                    of September 30, 2008 and December 31, 2007
                
                
                (1,154
                )
                
                (1,154
                )Accumulated
                    other comprehensive loss
                
                $
                (1,568
                )
                $
                (344
                )
 
 -
              21 -
 
 13.
          SALE
          OF PROPERTY
 
 During
          May 2007, the Company sold a parcel of land located in Jersey City, New
          Jersey
          for $6.0 million. The Company had previously estimated that approximately
          $0.8
          million of the proceeds would be payable to the State of New Jersey, as
          a
          portion of the property is subject to tideland claims. In December 2007,
          the
          Tidelands Resource Council voted to approve the Bureau of Tideland’s
          Management’s recommendation for a Statement of No Interest. On March 14, 2008,
          the Commissioner of the Department of Environmental Protection signed a
          letter
          to approve the Statement of No Interest. As final approval of the Statement
          of
          No Interest is still pending, the Company has continued to defer the estimated
          gain on sale of the land, in the amount of $4.6 million. Of the $6.0 million
          sales price, the Company received cash of $1.5 million before closing costs,
          and
          $4.6 million (including interest) was being held in escrow pending final
          resolution of the State of New Jersey tideland claim and certain environmental
          costs. During 2007, the Company paid $0.4 million related to environmental
          costs, which approximated the maximum amount for which the Company is liable.
          During May 2008, the title company released $2.3 million of the escrow
          and as
          such, $2.3 million still remains in escrow and has been classified as restricted
          cash as of September 30, 2008. The Company anticipates resolution of this
          sale,
          release of the remaining escrow and corresponding guarantees and recognition
          of
          the gain by the end of fiscal 2008. As the timing of the release of the
          remaining escrow of $2.3 million is not under the Company’s control, it has been
          classified in non-current assets as restricted cash and the deferred gain
          of
          $4.6 million has been classified in deferred gain on the sale of property
          in the
          Condensed Consolidated Balance Sheet as of September 30, 2008 and December
          31,
          2007.
 
 14.  NEW
          FINANCIAL ACCOUNTING STANDARDS
 
 In
          May
          2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
          Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of
          accounting principles and the framework for selecting the principles to
          be used
          in the preparation of financial statements of nongovernmental entities
          that are
          presented in conformity with generally accepted accounting principles (GAAP)
          in
          the United States. This Statement is effective sixty days following the
          SEC’s
          approval of the Public Company Accounting Oversight Board amendments to
          AU
          Section 411, “The Meaning of Present Fairly in Conformity With Generally
          Accepted Accounting Principles.” The Company is currently evaluating the
          potential impact, if any, of the adoption of SFAS No. 162 on its financial
          statements.
 
 In
          March
          2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
          and Hedging Activities”, an amendment of FASB Statement No. 133 (“SFAS No.
          161”). The new standard is intended to improve financial reporting about
          derivative instruments and hedging activities by requiring enhanced disclosures
          to enable investors to better understand their effects on an entity’s financial
          position, financial performance and cash flows. It is effective for financial
          statements issued for fiscal years and interim periods beginning after
          November
          15, 2008. The Company does not believe that SFAS No. 161 will have a material
          impact on its financial statements.
 
 In
          February 2008, the FASB issued FASB Staff Position SFAS 157-1, “Application
          of SFAS No. 157 to SFAS No. 13 and Its Related Interpretative Accounting
          Pronouncements that Address Leasing Transactions” (“FSP SFAS 157-1”) and FASB
          Staff Position SFAS 157-2, “Effective Date of SFAS No. 157” (“FSP SFAS
          157-2”). FSP SFAS 157-1 excludes SFAS No. 13 and its related interpretive
          accounting pronouncements that address leasing transactions from the
          requirements of SFAS No. 157, with the exception of fair value measurements
          of
          assets and liabilities recorded as a result of a lease transaction but
          measured
          pursuant to other pronouncements within the scope of SFAS No. 157. FSP SFAS
          157-2 delays the effective date of SFAS No. 157 for all nonfinancial assets
          and
          nonfinancial liabilities, except those that are recognized or disclosed
          at fair
          value in the financial statements on a recurring basis (at least annually).
          FSP
          SFAS 157-1 and FSP SFAS 157-2 became effective for the Company upon adoption
          of
          SFAS No. 157 on January 1, 2008. The Company will provide the additional
          disclosures required relating to the fair value measurement of nonfinancial
          assets and nonfinancial liabilities when it fully implements SFAS No. 157
          on
          January 1, 2009, as required, and does not believe they will have a significant
          impact on its financial statements.
  -
              22 -
  15.  LEGAL
          PROCEEDINGS
 
 The
          Company is, from time to time, a party to litigation arising in the normal
          course of its business, including various claims of patent infringement.
          See the
          Company’s Annual Report on Form 10-K for the details of all of Bel’s pending
          lawsuits. Updates to pending lawsuits since the Company’s Form 10-K filing are
          described below.
  The
          Company is a plaintiff in a lawsuit captioned Bel Fuse Inc. and Bel Power,
          Inc.
          v. Andrew Ferencz, Gregory Zvonar, Bernhard Schroter, EE2GO, Inc., Howard
          E.
          Kaepplein and William Ng, brought in the Superior Court of the Commonwealth
          of
          Massachusetts.  The Company was granted injunctive relief and is seeking
          damages against the former stockholders of Galaxy Power, Inc., key employees
          of
          Galaxy and a corporation formed by some or all of the individual defendants.
          The
          Company has alleged that the defendants violated their written non-competition,
          non-disclosure and non-solicitation agreements, diverted business and usurped
          substantial business opportunities with key customers, misappropriated
          confidential information and trade secrets, and harmed the Company's
          business.   On October 21, 2008, the court issued an order denying
          Bel's motion for partial summary judgment against the defendants.
  In
          a
          related matter, the Company is a defendant in a lawsuit captioned Robert
          Chimielnski, P.C. on behalf of the stockholder representatives and the
          former
          stockholders of Galaxy Power, Inc. v. Bel Fuse Inc. et al. brought in the
          Superior Court of the Commonwealth of Massachusetts.  This complaint for
          damages and injunctive relief is based on an alleged breach of contract
          and
          other allegedly illegal acts in a corporate context arising out of the
          Company's
          objection to the release of nearly $2.0 million held in escrow under the
          terms
          of the stock purchase agreement between Galaxy and the Company.  On October
          21, 2008, the court issued an order allowing the stockholder's motion for
          summary judgment.  A separate and final judgment will be entered so that
          the escrow deposit can be released to the stockholders. The court also
          ruled
          that Bel will be liable for payment of the plaintiff’s attorney fees related to
          this lawsuit. The amount of these fees has not yet been determined.
  The
          Company cannot predict the outcome of the unresolved matters; however,
          management believes that the ultimate resolution of these matters will
          not have
          a material impact on the Company's consolidated financial condition or
          results
          of operations. As of September 30, 2008, no amounts have been accrued in
          connection with these lawsuits, as the amounts are not determinable.
  -
              23 -
 
 16.  RELATED
          PARTY TRANSACTIONS
 
 As
          of
          September 30, 2008, the Company has $2.0 million invested in a money market
          fund
          with GAMCO Investors, Inc. (“GAMCO”). GAMCO is a current shareholder of the
          Company, with holdings of its Class A stock of approximately 9.4%.
 
 17.  RESTRUCTURING
          ACTIVITY
 
 As
          part
          of the Company’s planning of various strategic initiatives targeted principally
          at reducing costs, enhancing organizational efficiency and consolidating
          and
          rationalizing existing processes and facilities, the Company announced
          on July
          31, 2008 that it will cease manufacturing operations at its Bel Power Inc.
          facility in Westborough, Massachusetts by January 2009. The costs associated
          with this closure are being accounted for under SFAS No. 146 “Accounting for
          Costs Associated with Exit or Disposal Activities”. While the Company has
          decided to discontinue the manufacturing of its power products at the
          Westborough facility, the Company will continue its power product business
          with
          products manufactured primarily in Asia, and sold in all of the Company’s
          regions.
  The
          Company expects to incur severance charges and other costs related to the
          layoff
          of approximately 50 associates aggregating up to $0.7 million of termination
          benefit charges, $0.3 million of which was recorded during the three months
          ended September 30, 2008. The Westborough facility will continue to accept
          new
          orders and manufacture product through December 31, 2008. The cash flows
          expected to be generated from the manufacturing operations in the Westborough
          facility are expected to exceed the current carrying value of the fixed
          assets
          at such facility. However, as the Company finalizes its plans for the transfer
          of inventory and fixed assets to its other existing facilities in Asia,
          it is
          possible that certain of these items will not ultimately be transferred
          and will
          be sold locally. In the event these assets will be sold, the Company will
          reevaluate those inventory items for possible impairment and will revise
          the
          depreciable lives on the related fixed assets accordingly. The current
          carrying
          amount of inventories and fixed assets at the Westborough facility at September
          30, 2008 amount to $1.5 million and $1.3 million, respectively.
  The
          Company is still exploring various options related to its facility lease
          obligation in Westborough, including sublessee opportunities as well as
          the
          consideration of continuing use of the office and lab space within this
          facility
          going forward. At September 30, 2008, the Company is obligated under its
          current
          lease for rent amounting to approximately $1.4 million through February
          28,
          2014.
 
 A
          substantial amount of the remaining costs associated with this activity
          will be
          recorded upon the closure of the facility which is anticipated to occur
          by the
          first quarter of 2009. The current period costs associated with this
          restructuring activity have been included in Restructuring Charges in the
          Condensed Consolidated Statements of Operations for the three and nine
          months
          ended September 30, 2008 and impact the operating profits in the Company’s North
          America reporting segment.
 
 Activity
          and liability balances related to the restructuring activity for the three
          and
          nine months ended September 30, 2008 are as follows:
  -
              24 -
  Initial
                    restructuring accrual:Termination
                    benefit charges
                
                
                329Cash
                    payments
                
                
                (133
                )Balance,
                    September 30, 2008
                
                $
                196
 
 The
          Company has included this amount in accrued expenses in the Condensed
          Consolidated Balance Sheet at September 30, 2008.
 
 18.  SUBSEQUENT
          EVENT
 
 During
          October 2008, the Company purchased an additional 2,968,946 shares of Power-One
          stock representing, to the Company’s knowledge, an additional 3.4% of
          Power-One’s outstanding common stock, at a total purchase price of $14.1
          million.
  -
              25 -
 
 Item
          1A.
          Risk Factors
 
 ***As
          a result of protective provisions in the Company’s certificate of incorporation,
          the voting power of certain officers, directors and principal shareholders
          may
          be increased at future meetings of the Company’s
          shareholders.***
 
 An
          investment in our common stock involves a high degree of risk. Investors
          should
          carefully consider the risk described below, together with all other risk
          factors contained in the Company’s Annual Report on Form 10-K for the year ended
          December 31, 2007.
 
 The
          Company's certificate of incorporation provides that if a shareholder,
          other
          than shareholders subject to specific exceptions, owns 10% or more of the
          outstanding Class A common stock and does not own an equal or greater percentage
          of all then outstanding shares (both Class A and Class B common stock),
          such
          shareholder must within 90 days of the trigger date, purchase Class B common
          shares, in an amount and at a price determined in accordance with a formula
          described in the Company's certificate of incorporation, or forfeit its
          right to
          vote its Class A common shares. As of September 30, 2008, to the Company’s
          knowledge, there was one shareholder of the Company's common stock with
          ownership in excess of 10% of Class A outstanding shares with no ownership
          of
          the Company's Class B common stock and with no basis for exception from
          the
          operation of the above-mentioned provisions. In order to vote its shares
          at
          Bel's next shareholders' meeting, this shareholder must either purchase
          the
          required number of Class B common shares or sell or otherwise transfer
          Class A
          common shares until its Class A holdings are under 10%. As of September
          30,
          2008, to the Company's knowledge, this shareholder owned 16.9% of the Company's
          Class A common stock in the aggregate and had not taken steps to either
          purchase
          the required number of Class B common shares or sell or otherwise transfer
          Class
          A common shares until its Class A holdings fall below 10%.
 
 To
          the
          extent that the voting rights of particular holders of Class A common stock
          are
          suspended as of times when the Company's shareholders vote due to non-compliance
          with the above-mentioned provisions, such suspension will have the effect
          of
          increasing the voting power of those holders of Class A common shares whose
          voting rights are not suspended.  As of September 30, 2008, Daniel
          Bernstein, the Company's chief executive officer, beneficially owned 93,555
          Class A common shares (or 5.1%) of the Class A common shares whose voting
          rights
          were not suspended, the Estate of Elliot Bernstein beneficially owned 251,132
          Class A common shares (or 13.8%) of the Class A common shares whose voting
          rights were not suspended and all directors and executive officers as a
          group
          (including Daniel Bernstein) beneficially owned 243,484 Class A common
          shares
          (or 13.2%) of the Class A common shares whose voting rights were not
          suspended.
 
 -
              26 -
  ***The
          global financial crisis may have impacts on our business and financial
          condition
          that we currently cannot predict.***
 
 The
          continued credit crisis and related turmoil in the global financial
          system may have an impact on our business and our financial condition,
          and we may face challenges if conditions in the financial markets do
          not improve. Changes in economic conditions can result in reductions in
          capital expenditures by end-user customers for our products, the deferral
          or
          delay of purchase commitments for our products and increased competition.
          Continuation or worsening of the current economic conditions, a prolonged
          global, national or regional economic recession or other events that could
          produce major changes in demand patterns, could have a material adverse
          effect
          on our sales, margins and profitability. The economic situation could have
          an impact on our lenders or customers, causing them to fail to meet their
          obligations to us. In addition, the Company believes that several of its
          vendors, particularly those located in Asia, are seeking to shorten established
          credit terms or eliminate credit entirely. In the event that the current
          economic conditions have a negative impact on the financial condition of
          our
          vendors, this may impact the availability and cost of our raw materials.
          Our
          ability to access the capital markets may be restricted at a time when
          we would
          like, or need, to raise additional financing, which could have an impact on
          our flexibility to react to changing economic and business conditions.
          Given the
          extent of the global financial and credit crisis and the ramifications
          for our
          customers, vendors, lenders and competitors, we are not able to predict
          the
          impact the current global financial and credit crisis will have on our
          operations and the industry in general going forward.
  -
              27 -
 
 Item
          2.
          Management’s Discussion and Analysis of Financial Condition and Results of
          Operations
  The
          Company’s quarterly and annual operating results are impacted by a wide variety
          of factors that could materially and adversely affect revenues and
          profitability, including the risk factors described in the Company's Annual
          Report on Form 10-K for the year ended December 31, 2007. 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, financial condition, operating results,
          and stock
          prices. Furthermore, this document and other documents filed by the Company
          with
          the Securities and Exchange Commission (the “SEC”) contain certain
          forward-looking statements under the Private Securities Litigation Reform
          Act of
          1995 (“Forward-Looking Statements”) with respect to the business of the Company.
          These Forward-Looking Statements are subject to certain risks and uncertainties,
          including those detailed in Item 1A of the Company’s Annual Report on Form 10-K
          for the year ended December 31, 2007, which could cause actual results
          to differ
          materially from these Forward-Looking Statements. The Company undertakes
          no
          obligation to publicly release the results of any revisions to these
          Forward-Looking Statements which may be necessary to reflect events or
          circumstances after the date such statements are made or to reflect the
          occurrence of unanticipated events. An investment in the Company involves
          various risks, including those which are detailed from time to time in
          the
          Company’s SEC filings.
  Overview
 
 Bel
          is a
          leading producer of electronic products that help make global connectivity
          a
          reality. The Company designs, manufactures and markets a broad array of
          magnetics, modules (including power products), circuit protection devices
          and
          interconnect products. While these products are deployed primarily in the
          computer, networking and telecommunication industries, Bel’s expanding portfolio
          of products also finds application in the automotive, medical and consumer
          electronics markets. Bel's products are designed to protect, regulate,
          connect,
          isolate or manage a variety of electronic circuits.
 
 The
          Company’s revenues are primarily driven by the designs of its products for
          customer applications and by working closely with its customers’ engineering
          staffs and aligning them with industry standards committees and various
          integrated circuit (IC) manufacturers.
  The
          Company’s sales increased by $0.6 million or 0.9% during the three months ended
          September 30, 2008 as compared to the same period in 2007. The Company’s sales
          increased by $10.5 million or 5.5% during the nine months ended September
          30,
          2008 as compared to the same period in 2007, primarily due to an increase
          in
          module sales of $11.7 million for the nine months ended September 30, 2008,
          as
          compared to the comparable period of 2007. This increase is principally
          due to
          the introduction of new products. In addition, the Company’s interconnect sales
          increased by $5.1 million for the nine months ended September 30, 2008,
          as
          compared to the comparable period of 2007. The increase in sales for the
          nine
          months ended September 30, 2008 was partially offset by a decrease in the
          Company’s magnetic sales of $4.2 million and in circuit protection sales of $2.1
          million from the same period of 2007. The decrease in magnetic sales primarily
          resulted from the production inefficiencies in the PRC referred to below,
          which
          inhibited the Company’s ability to increase product shipments, and together with
          increased orders resulted in an increase in backlog.
 
 -
              28 -
 
 The
          Company’s expenses are driven principally by the cost of labor where Bel’s
          factories are located and the cost of the materials that it uses. As labor
          and
          material costs vary by product line, any significant shift in product mix
          has an
          associated impact on the Company’s costs of sales.
 
 During
          the nine months ended September 30, 2008, the Company has been faced with
          a
          variety of factors surrounding its labor costs. Since the conclusion of
          the
          Lunar New Year holiday in early February, Bel has hired approximately 5,300
          employees (net of turnover) in its facilities in the People’s Republic of China
          (“PRC”) in order to address what was at the time a 40% increase in its magnetic
          product backlog. The
          addition of new workers, particularly surrounding the Lunar New Year, increased
          Bel’s training costs and curtailed Bel’s output, as the new employees had lower
          productivity levels until they became familiar with the Company’s methods of
          production. In addition, PRC officials implemented an increase in wage
          rates
          effective April 1, 2008 in the areas where our products are manufactured,
          including double-time rates for Saturdays and Sundays. During the second
          and
          third quarters of 2008, Bel’s employees worked longer hours at those premium
          overtime rates in order to bring the backlog down to a more appropriate
          level.
          Furthermore, the U.S. dollar continued to fall in value against the PRC
          yuan,
          the currency in which all of Bel’s PRC factory workers and subcontractors are
          paid. The combination of low efficiency of new workers, higher wage rates,
          increased overtime hours worked and unfavorable currency effects resulted
          in
          higher total labor costs. At the end of the third quarter, the Company
          implemented initiatives to reduce the number of overtime hours being worked.
          This reduction in labor costs is expected to be reflected in the Company’s
          results of operations in the fourth quarter of 2008.
 
 Through
          the first six months of 2008, the Company’s sales of its power products had been
          steadily increasing. As the material content associated with those power
          products is more expensive, material costs had been much higher during
          the first
          six months of 2008. In the third quarter of 2008, sales revenue in the
          Company’s
          power products group was $1.9 million lower than the same period of 2007,
          primarily due to a decrease in sales of certain specialized components
          within
          the power products business. This decrease in the proportion of products
          with
          relatively high-cost material content, coupled with the remaining shift
          in
          product mix, resulted in a reduction in material costs equal to approximately
          3%
          of sales during the third quarter of 2008 as compared to the same period
          of
          2007. The reduction in material costs was offset in part by the
          elevated cost of gold, copper and plastics during the three and nine months
          ended September 30, 2008 as compared to 2007 .
 
 On
          July
          31, 2008, the Company announced that it will cease manufacturing operations
          at
          its Bel Power Inc. facility in Westborough, Massachusetts by January 2009.
          The
          Company expects to incur severance charges and other costs related to the
          layoff
          of approximately 50 associates totaling up to $0.7 million of termination
          benefit charges, as well as up to $1.7 million of non-cash asset impairment
          charges. In addition, the Company is still exploring various options related
          to
          its facility lease obligation. In connection with this restructuring, the
          Company incurred $0.3 million of termination benefit charges during the
          three
          months ended September 30, 2008.
  -
              29 -
  While
          the
          Company’s sales increased from 2007, gross profit margins decreased from 20.5%
          for the three months ended September 30, 2007 to 15.5% for the three months
          ended September 30, 2008. Gross profit margins for the nine months ended
          September 30, 2008 were 17.4% as compared to 21.7% for the nine months
          ended
          September 30, 2007. Direct labor costs as a percent of sales increased
          by 8.1%
          during the three months ended September 30, 2008 and by 4.6% for the nine
          months
          ended September 30, 2008 as compared to the comparable periods of 2007,
          as
          discussed above. Material costs as a percent of sales decreased by 2.6%
          during
          the three months ended September 30, 2008 and by 0.6% during the nine months
          ended September 30, 2008 as compared to the same periods of 2007, thereby
          offsetting a portion of the impact of rising labor costs.
 
 Net
          earnings for the nine months ended September 30, 2008 of $5.9 million include
          pre-tax charges related to other-than-temporary impairments of Bel's holdings
          in
          Toko Inc. (TSE: 6801) of $3.6 million and the Columbia Strategic Cash Portfolio
          (“Columbia Portfolio”) of $0.4 million. See “Liquidity and Capital Resources”
for further information regarding these impairment charges.
 
 During
          the quarter ended September 30, 2008, certain statute of limitations expired
          which resulted in a reversal of a previously recognized liability for uncertain
          tax positions in the amount of $2.3 million.
  -
              30 -
 
 Critical
          Accounting Policies
 
 The
          Company’s discussion and analysis of its financial condition and results of
          operations is based upon the Company’s condensed consolidated financial
          statements, which have been prepared in accordance with accounting principles
          generally accepted in the United States of America. The preparation of
          these
          financial statements requires the Company to make estimates and judgments
          that
          affect the reported amounts of assets, liabilities, revenues and expenses,
          and
          related disclosure of contingent assets and liabilities. On an on-going
          basis,
          the Company evaluates its estimates, including those related to product
          returns,
          bad debts, inventories, intangible assets, investments, SERP expense, income
          taxes and contingencies and litigation. The Company bases its estimates
          on
          historical experience and on various other assumptions that are believed
          to be
          reasonable under the circumstances, the results of which form the basis
          for
          making judgments about the carrying values of assets and liabilities that
          are
          not readily apparent from other sources. Actual results may differ from
          these
          estimates under different assumptions or conditions. For a discussion of
          the
          Company’s critical accounting policies, see the Company’s Annual Report on Form
          10-K for 2007.
 
 Results
          of Operations
 
 The
          following table sets forth, for the periods presented, the percentage
          relationship to net sales of certain items included in the Company’s condensed
          consolidated statements of operations.
 
 Percentage of Net Sales
                
                Percentage of Net SalesThree Months Ended
                
                Nine Months EndedSeptember 30,
                
                September 30,2008
                
                2007
                
                2008
                
                2007Net
                    sales
                
                
                100.0
                %
                
                100.0
                %
                
                100.0
                %
                
                100.0
                %Cost
                    of sales
                
                
                84.1
                
                
                78.8
                
                
                82.5
                
                
                78.4Selling,
                    general andadministrative
                    expenses
                
                
                13.3
                
                
                13.1
                
                
                13.6
                
                
                14.4Restructuring
                    charge
                
                
                0.5
                
                
                -
                
                
                0.2
                
                
                -Gain
                    on sale of property, plantand
                    equipment
                
                
                -
                
                
                0.5
                
                
                -
                
                
                0.6(Impairment
                    charge) gain on sale ofinvestment
                
                
                (2.1
                )
                
                -
                
                
                (2.0
                )
                
                1.3Interest
                    income, net of interestand
                    financing expense
                
                
                0.8
                
                
                1.7
                
                
                1.0
                
                
                1.5Earnings
                    before provisionfor
                    income taxes
                
                
                0.7
                
                
                10.3
                
                
                2.8
                
                
                10.7Income
                    tax (benefit) provision
                
                
                (2.2
                )
                
                1.4
                
                
                (0.2
                )
                
                2.2Net
                    earnings
                
                
                2.9
                
                
                8.9
                
                
                3.0
                
                
                8.5
  -
              31 -
 
 The
          following table sets forth the year over year percentage increase or decrease
          of
          certain items included in the Company's condensed consolidated statements
          of
          operations.
 
 Increase (decrease) from
                
                Increase (decrease) fromPrior Period
                
                Prior PeriodThree Months Ended
                
                Nine Months EndedSeptember 30, 2008
                
                September 30, 2008Compared with
                
                Compared withThree Months Ended
                
                Nine Months EndedSeptember 30, 2007
                
                September 30, 2007Net
                    sales
                
                
                0.9
                %
                
                5.5
                %Cost
                    of sales
                
                
                7.7
                
                
                11.1Selling,
                    general andadministrative
                    expenses
                
                
                3.0
                
                
                (0.7
                )Net
                    earnings
                
                
                (67.1
                )
                
                (63.2
                )
 
 **THREE
          MONTHS ENDED SEPTEMBER 30, 2008 VERSUS** **THREE
          MONTHS ENDED SEPTEMBER 30, 2007**
 
 Sales
 
 Net
          sales
          increased 0.9% from $66.4 million during the three months ended September
          30,
          2007 to $67.0 million during the three months ended September 30, 2008.
          The
          Company attributes the increase to an increase in module sales of $0.4
          million,
          an increase in interconnect sales of $0.9 million and an increase in magnetic
          sales of $0.5 million, offset in part by a decrease in circuit protection
          sales
          of $1.2 million. The main factor driving this net sales increase during
          the
          third quarter related to a higher volume of products sold. The Company
          implemented price increases late in the third quarter; these increases
          had a
          negligible impact on third quarter sales.
 
 The
          significant components of the Company's revenues for the three months ended
          September 30, 2008 were magnetic products of $33.9 million (as compared
          with
          $33.3 million during the three months ended September 30, 2007), interconnect
          products of $12.2 million (as compared with $11.4 million during the three
          months ended September 30, 2007), module products of $17.0 million (as
          compared
          with $16.6 million during the three months ended September 30, 2007), and
          circuit protection products of $3.9 million (as compared with $5.1 million
          during the three months ended September 30, 2007).
 
 Cost
          of Sales
 
 Cost
          of
          sales as a percentage of net sales increased from 78.8% during the three
          months
          ended September 30, 2007 to 84.1% during the three months ended September
          30,
          2008. The increase in the cost of sales percentage is primarily attributable
          to
          the following:
  -
              32 -
   ̈
                The
                    Company experienced a significant increase in labor costs during
                    the three
                    months ended September 30, 2008 (18.0% of sales as compared to
                    9.9% of
                    sales for the three months ended September 30, 2007). This increase
                    was
                    due to a variety of factors, including higher wage rates effective
                    April
                    1, 2008 as mandated by PRC officials and an increase in overtime
                    hours
                    worked to reduce our backlog, with many of these hours being
                    worked on
                    Saturdays and Sundays at the new double-time rates. In addition,
                    the PRC
                    yuan, in which all PRC workers and subcontractors are paid, has
                    appreciated on average by 10.5% against the U.S. dollar during
                    the three
                    months ended September 30, 2008 from the comparable period of
                    2007.
 
  ̈
                The
                    Company’s costs related to support labor and fringe benefits increased
                    by
                    1.1% of net sales during the three months ended September 30,
                    2008 as
                    compared to the same period of 2007. The Company increased its
                    support
                    staff in its Wing Ming facility during the third quarter of 2008
                    which,
                    coupled with the appreciation of the PRC yuan, resulted in higher
                    support
                    staff costs in Asia during the three months ended September 30,
                    2008 as
                    compared to the same period of 2007.
 
  ̈
                As
                    an offsetting factor, the Company experienced a 2.6% decrease
                    in material
                    costs as a percentage of net sales in comparison with the third
                    quarter of
                    2007. This reduction in material costs was primarily due to the
                    shift in
                    product mix to a lower sales volume of certain of the Company’s power
                    products during the third quarter 2008. As these were value-added
                    products
                    with a higher raw material content than the Company’s other products, the
                    decrease in sales volume triggered a related reduction in material
                    costs
                    as a percent of sales. Bel’s suppliers have continued to pass on price
                    increases related to raw materials such as gold, copper and plastics.
  Included
          in cost of sales are research and development expenses of $1.9 million
          and $1.8
          million for the three months ended September 30, 2008 and 2007, respectively.
 
 Selling,
          General and Administrative Expenses
 
 The
          percentage relationship of selling, general and administrative expenses
          to net
          sales increased from 13.1% during the three months ended September 30,
          2007 to
          13.3% during the three months ended September 30, 2008. The increase in
          the
          dollar amount of selling, general and administrative expense for the three
          months ended September 30, 2008 compared to the three months ended September
          30,
          2007 was approximately $0.3 million and was the result of the following
          factors:
 
  ̈
                The
                    Company’s legal and professional fees increased by $0.4 million from
                    the
                    third quarter of 2007, primarily due to increased legal activity
                    associated with the closure of Bel’s Westborough, MA facility and the
                    related lawsuit against former stockholders and key employees
                    of Galaxy,
                    and higher audit fees.
 
  ̈
                Primarily
                    as a result of the strengthening of the U.S. dollar versus certain
                    European currencies during the three months ended September 30,
                    2008, the
                    Company’s currency exchange losses increased by $0.2 million. Payables
                    related to certain of the Company’s European purchases are denominated in
                    U.S. dollars, and receivables related to certain of the Company’s sales
                    are denominated in European currencies.
  -
              33 -
   ̈
                The
                    above factors were partially offset by a $0.3 million decrease
                    in bad debt
                    expense during the three months ended September 30, 2008 as compared
                    to
                    the same period of 2007. Certain of the Company’s receivable accounts with
                    open balances were resolved during the third quarter of 2008
                    and as a
                    result, the bad debt reserve was reduced
                    accordingly.
 
 Restructuring
          Charge
 
 The
          Company incurred $0.3 million of termination benefit charges during the
          three
          months ended September 30, 2008 related to the anticipated closure of its
          Westborough, MA facility. See “Liquidity and Capital Resources” for further
          information on the restructuring charges.
 
 Sale
          of Property, Plant and Equipment
 
 During
          the three months ended September 30, 2007, the Company realized gains from
          the
          sale of property, plant and equipment in Hong Kong and Macao in the amount
          of
          $0.3 million.
 
 (Impairment
          Charge) Gain on Sale of Investment
 
 During
          the three months ended September 30, 2008, the Company recorded additional
          pre-tax other-than-temporary impairment charges of $1.3 million associated
          with
          its investment in Toko, Inc. and $0.1 million related to its investment
          in the
          Columbia Portfolio. See “Liquidity and Capital Resources” for further
          information.
 
 Interest
          Income
 
 Interest
          income earned on cash and cash equivalents decreased by approximately $0.6
          million during the three months ended September 30, 2008, as compared to
          the
          comparable period in 2007. The decrease is due primarily to significantly
          lower
          interest rates on invested balances during the three months ended September
          30,
          2008 as compared to 2007.
 
 (Benefit)
          Provision for Income Taxes
 
 The
          benefit for income taxes for the three months ended September 30, 2008
          was $1.5
          million compared to a $1.0 million provision for the three months ended
          September 30, 2007. The Company's earnings before income taxes for the
          three
          months ended September 30, 2008 are approximately $6.4 million lower than
          the
          same period in 2007. The Company’s effective tax rate, the income tax (benefit)
          provision as a percentage of earnings before (benefit) provision for income
          taxes, was (293.1)% and 13.9% for the three months ended September 30,
          2008 and
          September 30, 2007, respectively. The Company’s effective tax rate will
          fluctuate based on the geographic segment the pretax profits are earned
          in. Of
          the geographic segments in which the Company operates, the U.S. has the
          highest
          tax rates; Europe’s tax rates are generally lower than U.S. tax rates; and the
          Far East has the lowest tax rates. The decrease is principally related
          to the
          tax benefits in the U.S. of $2.3 million resulting from the reversal of
          an
          accrual for uncertain tax positions resulting from the expiration of certain
          statute of limitations and the finalization of a tax audit. This was offset
          in
          part by higher U.S. and European taxable income from operations as a proportion
          of total pretax income during the three months ended September 30, 2008
          compared
          with September 30, 2007. Additionally, there were certain changes in estimates
          for prior year taxes, upon finalization of 2007 tax returns.
  -
              34 -
  **NINE
          MONTHS ENDED SEPTEMBER 30, 2008 VERSUS** **NINE
          MONTHS ENDED SEPTEMBER 30, 2007**
 
 Sales
 
 Net
          sales
          increased 5.5% from $189.8 million during the nine months ended September
          30,
          2007 to $200.3 million during the nine months ended September 30, 2008.
          The
          Company attributes the increase to an increase in module sales of $11.7
          million
          and an increase in interconnect sales of $5.1 million, offset in part by
          a
          decrease in magnetic sales of $4.2 million and a decrease in circuit protection
          sales of $2.1 million. The increase in module sales includes $4.2 million
          of
          additional power products revenue during the nine months ended September
          30,
          2008 as compared with the same period in 2007. Certain of the power products
          went into production at the end of the first quarter of 2007, as compared
          to a
          full nine months of revenue stream associated with these new products in
          2008.
          The increase in module sales was constrained by production inefficiencies
          associated with increased demand. The partially offsetting decrease in
          magnetic
          sales is primarily due to a decrease in the Company’s ICM sales of $2.8 million
          during the nine months ended September 30, 2008 as compared to the comparable
          period of 2007 as a result of production inefficiencies in the PRC referred
          to
          above.
 
 The
          significant components of the Company's revenues for the nine months ended
          September 30, 2008 were magnetic products of $90.5 million (as compared
          with
          $94.7 million during the nine months ended September 30, 2007), interconnect
          products of $38.5 million (as compared with $33.4 million during the nine
          months
          ended September 30, 2007), module products of $58.9 million (as compared
          with
          $47.2 million during the nine months ended September 30, 2007), and circuit
          protection products of $12.4 million (as compared with $14.5 million during
          the
          nine months ended September 30, 2007).
 
 Cost
          of Sales
 
 Cost
          of
          sales as a percentage of net sales increased from 78.4% during the nine
          months
          ended September 30, 2007 to 82.5% during the nine months ended September
          30,
          2008. During the nine months ended September 30, 2007, the Company established
          a
          $1.2 million warranty accrual for a defective part, including a $0.4 million
          inventory write-off of materials on hand related to this matter which were
          deemed to be unusable. Excluding this anomaly, cost of sales as a percentage
          of
          net sales increased 4.7% during the nine months ended September 30, 2008
          as
          compared to the same period of 2007. The increase in the cost of sales
          percentage is primarily attributable to the following:
  -
              35 -
   ̈
                The
                    Company experienced a significant increase in labor costs during
                    the nine
                    months ended September 30, 2008 (14.8% of sales as compared to
                    10.2% of
                    sales for the nine months ended September 30, 2007). This increase
                    was due
                    to a variety of factors, including increased training costs and
                    production
                    inefficiencies resulting from the hiring of 5,300 net new hires
                    since
                    Lunar New Year, higher wage rates effective April 1, 2008 as
                    mandated by
                    PRC officials and an increase in overtime hours worked to reduce
                    our
                    backlog, with many of these hours being worked on Saturdays and
                    Sundays at
                    the new double-time rates. In addition, the PRC yuan, in which
                    all PRC
                    workers are paid, has appreciated on average by 9.7% during the
                    nine
                    months ended September 30, 2008 from the comparable period of
                    2007.
 
  ̈
                As
                    an offsetting factor, the Company experienced a 0.6% decrease
                    in material
                    costs as a percentage of net sales as compared to the prior year.
                    This
                    reduction in material costs was primarily due to the shift in
                    product mix
                    to a lower sales volume of certain of the Company’s power products during
                    the third quarter 2008. As these were value-added products with
                    a higher
                    raw material content than the Company’s other products, the decrease in
                    sales volume triggered a related reduction in material costs
                    as a percent
                    of sales. While the Company experienced an overall decrease in
                    material
                    costs, Bel’s suppliers continued to pass on price increases related to raw
                    materials such as gold, copper and plastics throughout the nine
                    months
                    ended September 30, 2008.
 
 Included
          in cost of sales are research and development expenses of $5.6 million
          and $4.9
          million for the nine months ended September 30, 2008 and 2007, respectively.
          The
          increase in research and development expenses during 2008 was primarily
          related
          to Bel’s power products and new integrated connector modules.
 
 Selling,
          General and Administrative Expenses
 
 The
          percentage relationship of selling, general and administrative expenses
          to net
          sales decreased from 14.4% during the nine months ended September 30, 2007
          to
          13.6% during the nine months ended September 30, 2008. The decrease in
          the
          dollar amount of selling, general and administrative expense for the nine
          months
          ended September 30, 2008 compared to the nine months ended September 30,
          2007
          was approximately $0.2 million. The dollar decrease is principally attributed
          to
          the following:
 
  ̈
                Legal
                    and professional fees decreased by $0.5 million from nine months
                    ended
                    September 30, 2007 principally due to the high level of patent
                    infringement activity during 2007 which did not recur in 2008.
                    This was
                    partially offset by increased activity related to the Galaxy
                    lawsuit
                    during the nine months ended September 30,
                    2008.
 
  ̈
                Other
                    general and administrative costs decreased by $0.6 million during
                    the nine
                    months ended September 30, 2008 as compared to the same period
                    of 2007.
                    The Company has reduced its discretionary bonus expense during
                    the nine
                    months ended September 30, 2008 as a result of lower profitability
                    in
                    2008. In addition, the Company recorded a $0.1 million reduction
                    of
                    stock-based compensation expense related to forfeitures of restricted
                    stock awards. There were additional reductions in other general
                    and
                    administrative costs that were not individually significant.
                    Offsetting
                    these factors in part, sales and marketing expenses increased
                    by $0.7
                    million as compared to the nine months ended September 30, 2007
                    primarily
                    due to increased commissions on the higher sales volume.
  -
              36 -
   ̈
                Primarily
                    as a result of the strengthening of the U.S. dollar versus certain
                    European currencies during the third quarter of 2008, the Company’s
                    currency exchange losses increased by $0.2 million. Payables
                    related to
                    certain of the Company’s European purchases are denominated in U.S.
                    dollars, and receivables related to certain of the Company’s sales are
                    denominated in European currencies.
 
 Restructuring
          Charge
 
 The
          Company incurred $0.3 million of termination benefit charges during the
          nine
          months ended September 30, 2008 related to the anticipated closure of its
          Westborough, MA facility. See “Liquidity and Capital Resources” for further
          information on the restructuring charges.
 
 Gain
          on Sale of Property, Plant and Equipment
 
 During
          the nine months ended September 30, 2007, the Company realized gains from
          the
          sale of property, plant and equipment in Hong Kong and Macao in the amount
          of
          $1.2 million.
 
 (Impairment
          Charge) Gain on Sale of Investment
 
 During
          the nine months ended September 30, 2008, the Company recorded a pre-tax
          other-than-temporary impairment charge of $3.6 million associated with
          its
          investment in Toko, Inc. The Company also recorded an other-than-temporary
          impairment charge of $0.4 million related to its investment in the Columbia
          Strategic Cash Portfolio during the nine months ended September 30, 2008.
          See
“Liquidity and Capital Resources” for further information on these impairment
          charges. During the nine months ended September 30, 2007, the Company realized
          gains from the sale of Toko common stock in the amount of $2.5 million.
 
 Interest
          Income
 
 Interest
          income earned on cash and cash equivalents decreased by approximately $0.9
          million during the nine months ended September 30, 2008, as compared to
          the
          comparable period in 2007. The decrease is due primarily to significantly
          lower
          interest rates on invested balances during the nine months ended September
          30,
          2008 as compared to 2007.
 
 (Benefit)
          Provision for Income Taxes
 
 The
          benefit for income taxes for the nine months ended September 30, 2008 was
          $0.4
          million compared to a $4.2 million provision for the nine months ended
          September
          30, 2007. The Company's earnings before income taxes for the nine months
          ended
          September 30, 2008 are approximately $14.7 million lower than the same
          period in
          2007. The Company’s effective tax rate, the income tax (benefit) provision as a
          percentage of earnings before (benefit) provision for income taxes, was
          (7.1)%
          and 20.5% for the nine months ended September 30, 2008 and September 30,
          2007,
          respectively. The Company’s effective tax rate will fluctuate based on the
          geographic segment the pretax profits are earned in. Of the geographic
          segments
          in which the Company operates, the U.S. has the highest tax rates; Europe’s tax
          rates are generally lower than U.S. tax rates; and the Far East has the
          lowest
          tax rates. The decrease is principally related to the tax benefits in the
          U.S.
          of $2.3 million resulting from the reversal of an accrual for uncertain
          tax
          positions resulting from the expiration of certain statutes of limitations
          and
          the finalization of a tax audit. This was offset in part by higher U.S.
          and
          European taxable income from operations as a proportion of total pretax
          income
          during the nine months ended September 30, 2008 compared with September
          30,
          2007. Additionally, there were certain changes in estimates for prior year
          taxes, upon finalization of 2007 tax returns. During the nine months ended
          September 30, 2007, there was a gain in the U.S. from the sale of Toko
          stock in
          the amount of $2.5 million which increased the tax rate.
 
 -
              37 -
 
 Inflation
          and Foreign Currency Exchange
 
 During
          the past two years, the effect of inflation on the Company's profitability
          was
          not material. Historically, fluctuations of the U.S. Dollar against other
          major
          currencies have not significantly affected the Company's foreign operations
          as
          most sales have been denominated in U.S. Dollars or currencies directly
          or
          indirectly linked to the U.S. Dollar. Most significant expenses, including
          raw
          materials, labor and manufacturing expenses, are either incurred in U.S.
          Dollars
          or the currencies of the Hong Kong Dollar or the Chinese Renminbi. However,
          the
          Chinese Renminbi has appreciated in value significantly (approximately
          9.7%)
          during the nine months ended September 30, 2008 as compared to the same
          period
          of 2007. Further appreciation of the Renminbi would result in the Company’s
          incurring higher costs for all expenses incurred in the PRC. The Company's
          European entities have sales transactions which are denominated principally
          in
          Euros and British Pounds.  Conversion of these transactions into U.S. dollars has resulted in immaterial
          unrealized translation losses for the nine months ended September 30, 2008
          and
          unrealized translation gains of $0.5 million for the nine months ended
          September
          30, 2007, relating
          to the translation of foreign subsidiary financial statements, which are
          included in accumulated other comprehensive income. Realized and unrealized
          net
          currency transaction losses were $0.3 million during the nine months ended
          September 30, 2008 and were not material for the nine months ended September
          30,
          2007. Any change in the linkage of the U.S. Dollar and the Hong Kong Dollar
          could have a material effect on the Company's consolidated financial position
          or
          results of operations.
  Liquidity
          and Capital Resources
 
 Historically,
          the Company has financed its capital expenditures primarily through cash
          flows
          from operating activities and has
          financed acquisitions both through cash flows from operating activities
          and
          borrowings . Management believes that the cash flow from operations after payments of
          dividends combined with its existing capital base and the Company's available
          lines of credit, will be sufficient to fund its operations for at least
          the next
          twelve months. Such statement constitutes a Forward Looking Statement.
          Factors
          which could cause the Company to require additional capital include, among
          other
          things, a softening in the demand for the Company’s existing products, an
          inability to respond to customer demand for new products, potential acquisitions
          requiring substantial capital, future expansion of the Company's operations
          and
          net losses that would result in net cash being used in operating, investing
          and/or financing activities which result in net decreases in cash and cash
          equivalents. Net losses may result in the loss of domestic and foreign
          credit
          facilities and preclude the Company from raising debt or equity financing
          in the
          capital markets on
          affordable terms or otherwise .
  -
              38 -
  On
          April
          30, 2008, the Company renewed its unsecured credit agreement in the amount
          of
          $20 million, which expires on September 10, 2011. There was no balance
          outstanding as of September 30, 2008. At that date, the entire $20 million
          line
          of credit was available to the Company to borrow. The loan bears interest
          at
          LIBOR plus 0.75% to 1.25% based on certain financial statement ratios maintained
          by the Company.
 
 The
          Company's Hong Kong subsidiary had an unsecured line of credit of approximately
          $2 million, which was unused at September 30, 2008. The line of credit
          expires
          on January 31, 2009. Borrowing on the line of credit was guaranteed by
          the U.S.
          parent. The line of credit bears interest at a rate determined by the bank
          as
          the financing is extended.
 
 For
          information regarding further commitments under the Company's operating
          leases,
          see Note 15 of Notes to the Company's Consolidated Financial Statements
          in the
          Company's 2007 Annual Report on Form 10-K.
 
 During
          May 2007, the Company sold a parcel of land located in Jersey City, New
          Jersey
          for $6.0 million. The Company had previously estimated that approximately
          $0.8
          million of the proceeds would be payable to the State of New Jersey as
          a portion
          of the property is subject to tideland claims. In December 2007, the Tidelands
          Resource Council voted to approve the Bureau of Tideland’s Management’s
          recommendation for a Statement of No Interest. On March 14, 2008, the
          Commissioner of the Department of Environmental Protection signed a letter
          to
          approve the Statement of No Interest. As final approval of the Statement
          of No
          Interest is still pending, the Company has continued to defer the estimated
          gain
          on sale of the land, in the amount of $4.6 million. Of the $6.0 million
          sales
          price, the Company received cash of $1.5 million before closing costs,
          and $4.6
          million (including interest) was being held in escrow pending final resolution
          of the State of New Jersey tideland claim and certain environmental costs.
          During 2007, the Company paid $0.4 million related to environmental costs,
          which
          approximated the maximum amount for which the Company is liable. During
          May
          2008, the title company released $2.3 million of the escrow and as such,
          $2.3
          remains in escrow and has been classified as restricted cash as of September
          30,
          2008. The Company anticipates resolution of this sale, release of the remaining
          escrow and corresponding guarantees and recognition of the gain by the
          end of
          fiscal 2008. As the timing of the release of the remaining escrow of $2.3
          million is not under the Company’s control, it has been classified in
          non-current assets as restricted cash and the deferred gain of $4.6 million
          has
          been classified in deferred gain on the sale of property in the Condensed
          Consolidated Balance Sheet as of September 30, 2008.
  At
          September 30, 2008, the Company’s investment securities included privately
          placed units of beneficial interests in the Columbia Portfolio, which is
          an
          enhanced cash fund sold as an alternative to money-market funds. During
          the
          latter half of 2007, the Company invested a portion of its cash balances
          on hand
          in this fund. In December 2007, due to adverse market conditions, the fund
          was
          overwhelmed with withdrawal requests from investors and it was closed with
          a
          restriction placed upon the cash redemption ability of its holders. As
          a result,
          the Company redesignated the Columbia Portfolio units from cash equivalents
          (as
          previously classified during the second and third quarters of 2007) to
          short-term investments or long-term investments based upon the liquidation
          schedule provided by the fund. At the time the liquidation was announced,
          the
          Company held 25.7 million units of the Columbia Portfolio at a book value
          of
          $25.7 million.
  -
              39 -
  As
          of
          September 30, 2008, the Company has received total cash redemptions to
          date of
          $16.7 million (including $14.4 million in the nine months ended September
          30,
          2008) at a weighted-average net asset value of $.9785 per unit. As the
          net asset
          value continues to decline, the Company has been recording impairment charges
          on
          this investment. During the three and nine months ended September 30, 2008,
          the
          Company recorded $0.1 million and $0.4 million in impairment charges,
          respectively. As such, the additional realized gains and losses recorded
          at the
          time of the redemptions were minimal. As of September 30, 2008, the Company
          holds 8.6 million units at a book value of $8.2 million. Subsequent to
          September
          30, 2008, the net asset value associated with the Columbia Portfolio continued
          to decline and as of October 31, 2008, the Company recorded additional
          unrealized losses of $0.3 million related to this investment. Information
          and
          the markets relating to these investments remain dynamic, and there may
          be
          further declines in the value of these investments, the value of the collateral
          held by these entities, and the liquidity of the Company’s investments. To the
          extent that the Company determines that there is a further decline in fair
          value, the Company may recognize additional impairment charges in future
          periods
          up to the aggregate amount of these investments.
 
 As
          of
          September 30, 2008, the Company owned a total of 1,840,919 shares, or
          approximately 1.9%, of the
          outstanding shares ,
          of the
          common stock of Toko. The Company’s original cost of these shares was $5.6
          million ($3.07 per share). Toko develops, manufactures and sells power
          supply
          related components and radio frequency related components primarily in
          Japan.
          Toko had a market capitalization of approximately $107.3 million as of
          September
          30, 2008. These shares are reflected on the Company’s condensed consolidated
          balance sheets as marketable securities. These marketable securities are
          considered to be available for sale under SFAS No. 115, “Accounting for Certain
          Investments in Debt and Equity Securities”. In accordance with FASB Staff
          Position (“FSP”) 115-1, the Company periodically reviews its marketable
          securities and determines whether the investments are other-than-temporarily
          impaired. During the second quarter of 2008, the Company deemed this investment
          to be other-than-temporarily impaired and recorded a pre-tax impairment
          charge
          of $2.4 million to write this investment to its fair value at June 30,
          2008
          ($1.79 per share). The Company deemed this investment to be
          other-than-temporarily impaired as of September 30, 2008 and has recorded
          a
          pre-tax impairment charge of $1.3 million during the third quarter of 2008
          to
          write down this investment to its fair value at September 30, 2008 ($1.10
          per
          share). The Company reviewed various factors in making its determination,
          including volatility of the Toko share price since June 30, 2008, Toko’s recent
          financial results and the Company’s intention and ability to hold the
          investment. The Toko share price has declined from $1.79 per share at June
          30,
          2008 to $1.10 per share at September 30, 2008. While the Company has the
          intent
          and ability to hold this investment until it is in a gain position, there
          is no
          indication that the Toko stock price will rise above the Company’s adjusted cost
          basis within the foreseeable future.
  -
              40 -
  On
          February 25, 2008, the Company announced that it had acquired 4,370,052
          shares
          of Power-One, Inc. (“Power-One”) common stock representing, to the Company’s
          knowledge, 5% of Power-One’s outstanding common stock, at a total purchase price
          of $10.1 million ($2.32 per share). Power-One’s common stock is quoted on the
          NASDAQ Global Market. Power-One is a designer and manufacturer of power
          conversion and power management products. As of September 30, 2008, the
          Company
          has recorded an unrealized loss, net of income tax, of approximately $2.4
          million which is included in accumulated other comprehensive loss in
          stockholders’ equity. The Company reviewed various factors in determining
          whether an other-than-temporary impairment exists on its investment in
          Power-One
          at September 30, 2008. These factors included volatility of the Power-One
          share
          price, Power-One’s recent financial results and recent changes made to its
          executive management, as well as the Company’s intention and ability to hold the
          investment. The Power-One share price has been extremely volatile since
          the
          Company’s purchase of this stock, ranging from $1.23 - $3.70, with an average
          closing price of $2.46 during the ownership period. The Company has the
          ability
          and intent to hold this investment until the market improves. In addition,
          during early October, the Company purchased an additional 2,968,946 shares
          of
          Power-One stock representing, to the Company’s knowledge, an additional 3.4% of
          Power-One’s outstanding common stock, at a total purchase price of $14.1
          million. Based on all factors reviewed, the Company does not believe that
          the
          investment in Power-One is other-than-temporarily impaired as of September
          30,
          2008.
  During
          June 2008, the Company invested $2.4 million in certificates of deposit
          (CDs)
          with Stephens, Inc., with whom the Company has an investment banking
          relationship. During October 2008, the Company invested an additional $2.5
          million in CDs with Stephens, Inc. These investments are part of the Certificate
          of Deposit Account Registry Service (CDARS) program whereby the funds are
          allocated to various banks in order to achieve FDIC insurance on the full
          invested amount. The CDs have an initial maturity of 26-weeks and an early
          redemption feature with a 30-day interest penalty.
 
 During
          2000, the Board of Directors of the Company authorized the purchase of
          up to ten
          percent of the Company’s outstanding common shares. As of September 30, 2008,
          the Company had purchased and retired 23,600 Class B common shares at a
          cost of
          approximately $0.8 million and had purchased and retired 510,925 Class
          A common
          shares at a cost of approximately $16.5 million. No shares of Class B common
          stock were repurchased during the nine months ended September 30, 2008
          and
          350,892 shares of Class A common stock were repurchased during the nine
          months
          ended September 30, 2008 at a cost of $10.8 million. Of such shares, 325,396
          shares were repurchased during the three months ended September 30,
          2008.
 
 During
          the nine months ended September 30, 2008, the Company's cash and cash
          equivalents decreased by $1.1 million, reflecting approximately $13.1 million
          provided by operating activities (principally as a result of net income
          of $5.9
          million, depreciation and amortization expense of $5.4 million, stock-based
          compensation expense of $1.1 million and impairment charges of $4.0 million,
          offset in part by a $3.0 million decrease in operating assets and liabilities),
          $14.4 million from the partial redemption of the Columbia Portfolio and
          $2.3
          million from the partial release of escrow related to the sale of the Jersey
          City property, offset, in part, by $12.5 million used for purchases of
          marketable securities, $5.3 million for the purchase of property, plant
          and
          equipment, $10.8 million for the repurchase of the Company’s common stock and
          $2.4 million for payments of dividends.
 
 Cash
          and
          cash equivalents, marketable securities, short-term investments and accounts
          receivable comprised approximately 50.8% and 54.4% of the
          Company's total assets at September 30, 2008 and December 31, 2007,
          respectively. The Company's current ratio (i.e., the ratio of current assets
          to
          current liabilities) was 5.3 to 1 and 6.2 to 1 at September 30, 2008 and
          December 31, 2007, respectively.
  -
              41 -
  During
          the current worldwide financial downturn, the Company believes that several
          of
          its vendors, particularly those located in Asia, are seeking to shorten
          established credit terms or eliminate credit entirely.
 
 As
          part
          of the Company’s planning of various strategic initiatives targeted principally
          at reducing costs, enhancing organizational efficiency and consolidating
          and
          rationalizing existing processes and facilities, the Company announced
          on July
          31, 2008 that it will cease manufacturing operations at its Bel Power Inc.
          facility in Westborough, Massachusetts by January 2009. The costs associated
          with this closure are being accounted for under SFAS No. 146 “Accounting for
          Costs Associated with Exit or Disposal Activities”. While the Company has
          decided to discontinue the manufacturing of its power products at the
          Westborough facility, the Company will continue its power product business
          with
          products manufactured primarily in Asia, and sold in all of the Company’s
          regions.
  The
          Company expects to incur severance charges and other costs related to the
          layoff
          of approximately 50 associates aggregating up to $0.7 million of termination
          benefit charges, $0.3 million of which was recorded during the three months
          ended September 30, 2008. The Westborough facility will continue to accept
          new
          orders and manufacture product through December 31, 2008. The cash flows
          expected to be generated from the manufacturing operations in the Westborough
          facility are expected to exceed the current carrying value of the fixed
          assets
          at such facility. However, as the Company finalizes its plans for the transfer
          of inventory and fixed assets to its other existing facilities in Asia,
          it is
          possible that certain of these items will not ultimately be transferred
          and will
          be sold locally. In the event these assets will be sold, the Company will
          reevaluate those inventory items for possible impairment and will revise
          the
          depreciable lives on the related fixed assets accordingly. The current
          carrying
          amount of inventories and fixed assets at the Westborough facility at September
          30, 2008 amount to $1.5 million and $1.3 million, respectively.
  The
          Company is still exploring various options related to its facility lease
          obligation in Westborough, including sublessee opportunities as well as
          the
          consideration of continuing use of the office and lab space within this
          facility
          going forward. At September 30, 2008, the Company is obligated under its
          current
          lease for rent amounting to approximately $1.4 million through February
          28,
          2014.
 
 A
          substantial amount of the remaining costs associated with this activity
          will be
          recorded upon the closure of the facility which is anticipated to occur
          by the
          first quarter of 2009. The current period costs associated with this
          restructuring activity have been included in Restructuring Charges in the
          Condensed Consolidated Statements of Operations for the three and nine
          months
          ended September 30, 2008 and impact the operating profits in the Company’s North
          America reporting segment.
 
 New
          Financial Accounting Standards
 
 In
          May
          2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
          Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of
          accounting principles and the framework for selecting the principles to
          be used
          in the preparation of financial statements of nongovernmental entities
          that are
          presented in conformity with generally accepted accounting principles (GAAP)
          in
          the United States. This Statement is effective sixty days following the
          SEC’s
          approval of the Public Company Accounting Oversight Board amendments to
          AU
          Section 411, “The Meaning of Present Fairly in Conformity With Generally
          Accepted Accounting Principles.” The Company is currently evaluating the
          potential impact, if any, of the adoption of SFAS No. 162 on its financial
          statements.
  -
              42 -
  In
          March
          2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
          and Hedging Activities”, an amendment of FASB Statement No. 133 (“SFAS No.
          161”). The new standard is intended to improve financial reporting about
          derivative instruments and hedging activities by requiring enhanced disclosures
          to enable investors to better understand their effects on an entity’s financial
          position, financial performance and cash flows. It is effective for financial
          statements issued for fiscal years and interim periods beginning after
          November
          15, 2008. The Company does not believe that SFAS No. 161 will have a material
          impact on its financial statements.
 
 In
          February 2008, the FASB issued FASB Staff Position SFAS 157-1, “Application
          of SFAS No. 157 to SFAS No. 13 and Its Related Interpretative Accounting
          Pronouncements that Address Leasing Transactions” (“FSP SFAS 157-1”) and FASB
          Staff Position SFAS 157-2, “Effective Date of SFAS No. 157” (“FSP SFAS
          157-2”). FSP SFAS 157-1 excludes SFAS No. 13 and its related interpretive
          accounting pronouncements that address leasing transactions from the
          requirements of SFAS No. 157, with the exception of fair value measurements
          of
          assets and liabilities recorded as a result of a lease transaction but
          measured
          pursuant to other pronouncements within the scope of SFAS No. 157. FSP SFAS
          157-2 delays the effective date of SFAS No. 157 for all nonfinancial assets
          and
          nonfinancial liabilities, except those that are recognized or disclosed
          at fair
          value in the financial statements on a recurring basis (at least annually).
          FSP
          SFAS 157-1 and FSP SFAS 157-2 became effective for the Company upon adoption
          of
          SFAS No. 157 on January 1, 2008. The Company will provide the additional
          disclosures required relating to the fair value measurement of nonfinancial
          assets and nonfinancial liabilities when it fully implements SFAS No. 157
          on
          January 1, 2009, as required, and does not believe they will have a significant
          impact on its financial statements.
  -
              43 -
  Item
          3. Quantitative
          and Qualitative Disclosures About Market Risk
 
 Fair
          Value of Financial Instruments — The estimated fair values of financial
          instruments have been determined by the Company using available market
          information and appropriate valuation methodologies.
  The
          Company has not entered into, and does not expect to enter into, financial
          instruments for trading or hedging purposes. The Company does not currently
          anticipate entering into interest rate swaps and/or similar
          instruments.
 
 The
          Company's carrying values of cash, marketable securities, accounts receivable,
          accounts payable and accrued expenses are a reasonable approximation of
          their
          fair value. At
          September 30, 2008, two of the Company’s investments – the Company’s investment
          in Toko stock and the Company’s investment in the Columbia Strategic Cash
          Portfolio (the “Columbia Portfolio”) - have been subject to recent market
          declines, triggering impairment charges recorded during the nine months
          ended
          September 30, 2008.
 
 The
          per
          share fair market value of the remaining 1.8 million shares of Toko stock
          has
          decreased by 38.5% since June 30, 2008 to $1.10 at September 30, 2008 (a
          decline
          of $0.69 per share). This investment has been in a loss position since
          April
          2007. The Company deemed this investment other-than-temporarily impaired
          as of
          June 30, 2008 and recorded an impairment charge of $2.4 million during
          the
          second quarter of 2008. This adjusted the Company’s cost basis in its investment
          in Toko down to its then current fair value of $1.79 per share. While the
          Company has the intent and ability to hold this investment until it is
          in a gain
          position, there is no indication that the Toko stock price will rise above
          the
          Company’s adjusted basis within the foreseeable future. As a result, the Company
          has deemed this investment to be further impaired as of September 30, 2008
          and
          has recorded an additional impairment charge of $1.3 million during the
          third
          quarter of 2008. If Toko experiences further declines in its stock price,
          this
          could cause the Company to take additional impairment charges on this investment
          in the future.
 
 The
          Company’s investment in the Columbia Portfolio has also been sensitive to the
          recent market decline. In December 2007, the Company was notified that
          its $25.7
          million investment in the Columbia Portfolio was being liquidated and that
          the
          fund was converting from a fixed net asset value (“NAV”) to a floating NAV,
          which resulted in the Company’s recording a $0.3 million impairment charge
          during the year ended December 31, 2007 and additional impairment charges
          of
          $0.4 million were recorded in the nine months ended September 30, 2008.
          See Note
          3 of the Notes to the Company’s Condensed Consolidated Financial Statements. As
          of September 30, 2008, the Company has a total of $8.2 million invested
          in the
          Columbia Portfolio. If the NAV were to decline by $0.10 per unit (10% of
          the NAV
          of $0.9572 at September 30, 2008), the net impact to the Company’s results of
          operations and cash flows would be a decrease of income before provision
          for
          income taxes and cash flows from operating activities of approximately
          $0.8
          million.
  -
              44 -
  In
          addition to the two investments discussed above, the Company’s investment in
          Power-One, Inc. has also been subject to recent market declines. As of
          September
          30, 2008, the pre-tax unrealized loss associated with this investment is
          $3.8
          million. If the per share fair market value of the Power-One stock were
          to
          decrease by $0.15 per share (10% of the September 30, 2008 Power-One stock
          price), this would result in an additional unrealized loss of $0.6 million.
          The
          Company’s cost in this investment was $2.32 per share and from the time of
          purchase in late February 2008 through the end of the third quarter, the
          closing
          stock price ranged from $1.23 - $3.70 per share, with the average closing
          stock
          price for the period at $2.79 per share. The Company has the intent and
          ability
          to hold this stock for the period of time it takes for the market to recover.
          As
          a result of these factors, management believes that the investment in Power-One
          is not other-than-temporarily impaired as of September 30, 2008.
 
 The
          Company enters into transactions denominated in U.S. Dollars, Hong Kong
          Dollars,
          the Chinese Renminbi, Euros, British Pounds and the Czech Koruna. Fluctuations
          in the U.S. dollar exchange rate against these currencies could significantly
          impact the Company's consolidated results of operations.
 
 The
          Company believes that a change in interest rates of 1% or 2% would not
          have a
          material effect on the Company's condensed consolidated statement of operations
          or balance sheet.
  -
              45 -
  Item
          4. Controls
          and Procedures
 
 a)
                Disclosure
                    controls and procedures.
                    As of the end of the Company’s most recently completed fiscal quarter
                    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 vice president of finance, of the effectiveness
                    of
                    the Company’s disclosure controls and procedures pursuant to Securities
                    Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s chief
                    executive officer and vice president of finance concluded that
                    the
                    Company’s disclosure controls and procedures are effective in ensuring
                    that information required to be disclosed by the Company in the
                    reports
                    that it files or submits under the Securities Exchange Act is
                    recorded,
                    processed, summarized and reported, within the time periods specified
                    in
                    the SEC’s rules and forms.
 
 b.)
                Changes
                    in internal controls over financial reporting:
                    There have been no changes in the Company's internal controls
                    over
                    financial reporting that occurred during the Company's last fiscal
                    quarter
                    to which this report relates that have materially affected, or
                    are
                    reasonable likely to materially affect, the Company’s internal control
                    over financial reporting.
 
 PART
          II.
          Other Information
 
 Item
          1.  Legal
          Proceedings
 
 The
          Company is, from time to time, a party to litigation arising in the normal
          course of its business, including various claims of patent infringement.
          See the
          Company’s Annual Report on Form 10-K for the details of all of Bel’s pending
          lawsuits. Updates to pending lawsuits since the Company’s Form 10-K filing are
          described below.
  The
          Company is a plaintiff in a lawsuit captioned Bel Fuse Inc. and Bel Power,
          Inc.
          v. Andrew Ferencz, Gregory Zvonar, Bernhard Schroter, EE2GO, Inc., Howard
          E.
          Kaepplein and William Ng, brought in the Superior Court of the Commonwealth
          of
          Massachusetts.  The Company was granted injunctive relief and is seeking
          damages against the former stockholders of Galaxy Power, Inc., key employees
          of
          Galaxy and a corporation formed by some or all of the individual defendants.
          The
          Company has alleged that the defendants violated their written non-competition,
          non-disclosure and non-solicitation agreements, diverted business and usurped
          substantial business opportunities with key customers, misappropriated
          confidential information and trade secrets, and harmed the Company's
          business.   On October 21, 2008, the court issued an order denying
          Bel's motion for partial summary judgment against the defendants.
  In
          a
          related matter, the Company is a defendant in a lawsuit captioned Robert
          Chimielnski, P.C. on behalf of the stockholder representatives and the
          former
          stockholders of Galaxy Power, Inc. v. Bel Fuse Inc. et al. brought in the
          Superior Court of the Commonwealth of Massachusetts.  This complaint for
          damages and injunctive relief is based on an alleged breach of contract
          and
          other allegedly illegal acts in a corporate context arising out of the
          Company's
          objection to the release of nearly $2.0 million held in escrow under the
          terms
          of the stock purchase agreement between Galaxy and the Company.  On October
          21, 2008, the court issued an order allowing the stockholder's motion for
          summary judgment.  A separate and final judgment will be entered so that
          the escrow deposit can be released to the stockholders. The court also
          ruled
          that Bel will be liable for payment of the plaintiff’s attorney fees related to
          this lawsuit. The amount of these fees has not yet been determined.
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              46 -
  The
          Company cannot predict the outcome of the unresolved matters; however,
          management believes that the ultimate resolution of these matters will
          not have
          a material impact on the Company's consolidated financial condition or
          results
          of operations. As of September 30, 2008, no amounts have been accrued in
          connection with these lawsuits, as the amounts are not determinable.
 
 Item
          2.
          Unregistered Sales of Equity Securities and Use of Proceeds
 
 The
          following table sets forth certain information regarding the Company's
          purchase
          of shares of its Class A Common Stock during each calendar month in the
          quarter
          ended September 30, 2008:
  Period
                
                Total Number
                  of Shares
                  Purchased
                
                Average
                  Price Paid
                  per Share
                
                Total Number of
                  Shares Purchased as
                  Part of Publicly
                  Announced Plans or
                  Programs
                
                Maximum Number
                  of Shares that May
                  Yet Be Purchased
                  Under the PlanJuly
                    1 - July 31, 2008
                
                
                5,820
                
                $
                26.99
                
                
                5,820
                
                
                973,648August
                    1 - August 31, 2008
                
                
                318,618
                
                
                30.88
                
                
                318,618
                
                
                622,974September
                    1 - September 30, 2008
                
                
                958
                
                
                25.96
                
                
                958
                
                
                621,720Total
                
                
                325,396
                
                $
                30.79
                
                
                325,396
                
                
                621,720
 
 As
          of
          September 30, 2008, the Company had cumulatively purchased and retired
          23,600
          shares of the Company’s Class B Common Stock. No shares of Class B common stock
          were repurchased during the nine months ended September 30, 2008.
  -
              47 -
 
 Item
          6. Exhibits
 (a)
          Exhibits:
 
 31.1
                
                Certification
                    of the Chief Executive Officer pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 200231.2
                
                Certification
                    of the Vice President of Finance pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 2002.32.1
                
                Certification
                    of the Chief Executive Officer pursuant to Section 906 of the
                    Sarbanes -
                    Oxley Act of 2002.32.2
                
                Certification
                    of the Vice-President of Finance pursuant to Section 906 of the
                    Sarbanes-Oxley Act of 2002.
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              48 -
  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.By:
                /s/Daniel
                    BernsteinDaniel
                  Bernstein, President andChief
                  Executive OfficerBy:
                /s/
                    Colin DunnColin
                  Dunn, Vice President of Finance
 
 Dated:
          November 7, 2008
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              49 -
 
 EXHIBIT
          INDEX
 
 Exhibit
          31.1 - Certification of the Chief Executive Officer pursuant to Section
          302 of
          the Sarbanes-Oxley Act of 2002.
 
 Exhibit
          31.2 - Certification of the Vice President of Finance pursuant to Section
          302 of
          the Sarbanes-Oxley Act of 2002.
 
 Exhibit
          32.1 - Certification of the Chief Executive Officer pursuant to Section
          906 of
          the Sarbanes-Oxley Act of 2002.
 
 Exhibit
          32.2 - Certification of the Vice President of Finance pursuant to Section
          906 of
          the Sarbanes-Oxley Act of 2002.
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              50 -