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  June
        30, 2007
  or
 
 o
              **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:  0-11676
 
 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  o No
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer or a non-accelerated filer. See definition of "accelerated
        filer and large accelerated filer" in Rule 12b-12 of the Exchange
        Act.
  o
                    Large
                    accelerated filer
                x
                    Accelerated filer
                oNon-accelerated filer
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
  o
          Yes  x No
 At
        August
        1, 2007, there were 2,626,949 shares of Class A Common Stock, $0.10 par
        value, outstanding and 9,273,827 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 June 30, 2007(unaudited)
                    and December 31, 2006
                
                2-3Condensed
                    Consolidated Statements of Operations for the Three andSix
                    Months Ended June 30, 2007 and 2006 (unaudited)
                
                4Condensed
                    Consolidated Statements of Stockholders' Equity forthe
                    Year Ended December 31, 2006 andthe
                    Six Months Ended June 30, 2007 (unaudited)
                
                5-6Condensed Consolidated Statements
                    of Cash Flows for the SixMonths
                    Ended June 30, 2007 and 2006 (unaudited)
                
                7-9Notes
                    to Condensed Consolidated Financial Statements
                    (unaudited)
                
                10-29Item
                    2.
                
                Management's
                    Discussion and Analysis ofFinancial
                    Condition and Results of Operations
                
                30-49Item
                    3.
                
                Quantitative
                    and Qualitative Disclosures AboutMarket
                    Risk
                
                50Item
                    4.
                
                Controls
                    and Procedures
                
                51Part
                  II
                
                
                
                Other
                  InformationItem
                    1.
                
                Legal
                    Proceedings
                
                52-53Item
                    4.
                
                Submission
                    of Matters to a Vote of Security Holders
                
                53Item
                    6.
                
                Exhibits
                
                54Signatures
                
                
                
                55
 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. It
        is
        suggested that the following condensed consolidated financial statements
        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, 2006.
 
 The
        results of operations for the six and three months ended June 30, 2007 and
        2006
        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**
  June
                    30,
                
                December
                    31,2007
                
                2006(Unaudited)**ASSETS**Current
                    Assets:Cash
                    and cash equivalents
                
                $
                99,604,067
                
                $
                76,760,543Marketable
                    securities
                
                
                4,592,921
                
                
                15,576,212Accounts
                    receivable - less allowance for doubtfulaccounts
                    of $912,000 and $1,087,006 atJune
                    30, 2007 and December 31, 2006, respectively
                
                
                42,724,499
                
                
                43,765,750Inventories
                
                
                43,995,494
                
                
                46,297,208Prepaid
                    expenses and other currentassets
                
                
                1,509,979
                
                
                1,382,807Deferred
                    income taxes
                
                
                1,463,429
                
                
                1,665,857Assets
                    held for sale
                
                
                4,193,720
                
                
                848,049Total
                    Current Assets
                
                
                198,084,109
                
                
                186,296,426Property,
                    plant and equipment - net
                
                
                40,523,316
                
                
                44,289,159Restricted
                    cash
                
                
                4,500,000
                
                
                -Deferred
                    income taxes
                
                
                5,380,280
                
                
                3,425,375Intangible
                    assets - net
                
                
                1,474,684
                
                
                1,892,417Goodwill
                
                
                28,117,143
                
                
                28,117,143Other
                    assets
                
                
                4,346,216
                
                
                4,476,990TOTAL
                    ASSETS
                
                $
                282,425,748
                
                $
                268,497,510
  See
          notes
          to condensed consolidated financial statements.
  -2-
 **BEL
                      FUSE INC. AND SUBSIDIARIES****CONDENSED
                      CONSOLIDATED BALANCE
                      SHEETS**
  June
                      30,
                  
                  December
                      31,2007
                  
                  2006(Unaudited)**LIABILITIES
                      AND STOCKHOLDERS' EQUITY**Current
                      Liabilities:Accounts
                      payable
                  
                  $
                  15,490,801
                  
                  $
                  17,244,937Accrued
                      expenses
                  
                  
                  12,892,813
                  
                  
                  12,713,417Income
                      taxes payable
                  
                  
                  6,352,909
                  
                  
                  11,094,107Dividends
                      payable
                  
                  
                  559,800
                  
                  
                  566,583Total
                      Current Liabilities
                  
                  
                  35,296,323
                  
                  
                  41,619,044Long-term
                      Liabilities:Deferred
                      gain on sale of property
                  
                  
                  4,665,015Liability
                      for uncertain tax positions
                  
                  
                  5,420,000
                  
                  
                  -Minimum
                      pension obligation andunfunded
                      pension liability
                  
                  
                  5,206,639
                  
                  
                  4,728,286Total
                      Long-term Liabilities
                  
                  
                  15,291,654
                  
                  
                  4,728,286Total
                      Liabilities
                  
                  
                  50,587,977
                  
                  
                  46,347,330Commitments
                      and ContingenciesStockholders'
                      Equity:Preferred
                      stock, no par value,authorized
                      1,000,000 shares;none
                      issued
                  
                  
                  -
                  
                  
                  -Class
                      A common stock, par value$.10
                      per share - authorized10,000,000
                      shares; outstanding2,635,651
                      and 2,702,677 shares, respectively(net
                      of 1,072,770 treasury shares)
                  
                  
                  263,565
                  
                  
                  270,268Class
                      B common stock, par value$.10
                      per share - authorized30,000,000
                      shares; outstanding 9,271,827and
                      9,167,665 shares, respectively(net
                      of 3,218,310 treasury shares)
                  
                  
                  927,183
                  
                  
                  916,767Additional
                      paid-in capital
                  
                  
                  31,174,153
                  
                  
                  31,826,046Retained
                      earnings
                  
                  
                  200,001,875
                  
                  
                  190,952,754Accumulated
                      other comprehensive(loss)
                  
                  
                  (529,005
                  )
                  
                  (1,815,655
                  )Total
                      Stockholders' Equity
                  
                  
                  231,837,771
                  
                  
                  222,150,180TOTAL
                      LIABILITIES ANDSTOCKHOLDERS'
                      EQUITY
                  
                  $
                  282,425,748
                  
                  $
                  268,497,510
  See
          notes
          to condensed consolidated financial statements.
  -3-
 **BEL
                      FUSE INC. AND SUBSIDIARIES****CONDENSED
                      CONSOLIDATED STATEMENTS OF OPERATIONS**(Unaudited)
  Six
                      Months Ended
                  
                  Three
                      Months EndedJune
                      30,
                  
                  June
                      30,2007
                  
                  2006
                  
                  2007
                  
                  2006Net
                      Sales
                  
                  $
                  123,418,921
                  
                  $
                  121,100,346
                  
                  $
                  61,612,245
                  
                  $
                  66,474,098Costs
                      and expenses:Cost
                      of sales
                  
                  
                  96,489,901
                  
                  
                  90,248,564
                  
                  
                  48,598,575
                  
                  
                  50,261,675Selling,
                      general and administrative
                  
                  
                  18,661,047
                  
                  
                  19,610,167
                  
                  
                  9,178,527
                  
                  
                  10,232,982Gain
                      on sale of property, plant and equipment
                  
                  
                  (879,804
                  )
                  
                  -
                  
                  
                  (879,804
                  )
                  
                  -Casualty
                      loss
                  
                  
                  -
                  
                  
                  1,097,271
                  
                  
                  -
                  
                  
                  133,480114,271,144
                  
                  
                  110,956,002
                  
                  
                  56,897,298
                  
                  
                  60,628,137Income
                      from operations
                  
                  
                  9,147,777
                  
                  
                  10,144,344
                  
                  
                  4,714,947
                  
                  
                  5,845,961Interest
                      expense and other costs
                  
                  
                  (123,463
                  )
                  
                  (44,386
                  )
                  
                  (1,526
                  )
                  
                  (17,186
                  )Gain
                      on sale of marketable securities - net
                  
                  
                  2,507,868
                  
                  
                  5,151,039
                  
                  
                  2,507,868
                  
                  
                  5,239,519Interest
                      income
                  
                  
                  1,835,939
                  
                  
                  1,173,758
                  
                  
                  1,002,696
                  
                  
                  661,162Earnings
                      before provision for income taxes
                  
                  
                  13,368,121
                  
                  
                  16,424,755
                  
                  
                  8,223,985
                  
                  
                  11,729,456Income
                      tax provision
                  
                  
                  3,201,000
                  
                  
                  3,664,000
                  
                  
                  2,066,000
                  
                  
                  2,966,000Net
                      earnings
                  
                  $
                  10,167,121
                  
                  $
                  12,760,755
                  
                  $
                  6,157,985
                  
                  $
                  8,763,456Earnings
                      per share (2006, as restated, see Note 1)Earnings
                      per Class A common shareBasic
                  
                  $
                  0.81
                  
                  $
                  1.03
                  
                  $
                  0.49
                  
                  $
                  0.71Diluted
                  
                  $
                  0.81
                  
                  $
                  1.03
                  
                  $
                  0.49
                  
                  $
                  0.71Weighted
                      average Class A common sharesoutstanding
                      - basic
                  
                  
                  2,682,400
                  
                  
                  2,702,677
                  
                  
                  2,661,589
                  
                  
                  2,702,677Weighted
                      average Class A common sharesoutstanding
                      - diluted
                  
                  
                  2,682,400
                  
                  
                  2,702,677
                  
                  
                  2,661,589
                  
                  
                  2,702,677Earnings
                      per Class B common shareBasic
                  
                  $
                  0.87
                  
                  $
                  1.10
                  
                  $
                  0.52
                  
                  $
                  0.75Diluted
                  
                  $
                  0.86
                  
                  $
                  1.09
                  
                  $
                  0.52
                  
                  $
                  0.75Weighted
                      average Class B common sharesoutstanding
                      - basic
                  
                  
                  9,203,547
                  
                  
                  9,065,990
                  
                  
                  9,233,397
                  
                  
                  9,093,807Weighted
                      average Class B common sharesoutstanding
                      - diluted
                  
                  
                  9,234,319
                  
                  
                  9,127,208
                  
                  
                  9,261,587
                  
                  
                  9,142,582
  See
            notes
            to condensed consolidated financial statements.
  -4-
 **BEL
                        FUSE INC. AND SUBSIDIARIES****CONDENSED
                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
                        EQUITY**(Unaudited)
 Total
                        
                        Compre-
                          hensive
                          Income
                        
                        Retained
                            Earnings
                        
                        Accumulated
                          Other
                          Compre-
                          hensive
                          Income
                            (loss)
                        
                        Class
                            A
                          Common
                          Stock
                        
                        Class
                            B
                          Common
                          Stock
                        
                        Additional
                          Paid-In
                          Capital
                        
                        Deferred
                          Stock- Based
                          CompensationBalance,
                            January 1, 2006
                        
                        $
                        201,576,549
                        
                        
                        
                        
                        $
                        167,991,188
                        
                        $
                        4,262,867
                        
                        $
                        270,268
                        
                        $
                        901,327
                        
                        $
                        31,713,608
                        
                        $
                        (3,562,709
                        )Exercise
                            of stock options
                        
                        
                        3,186,587
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        13,280
                        
                        
                        3,173,307Tax
                            benefits arising from the disposition
                            of non-qualified incentive stock options
                        
                        
                        336,456
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        336,456
                        
                        
                        -Cash
                            dividends declared on Class A common stock
                        
                        
                        (430,940
                        )
                        
                        
                        
                        
                        (430,940
                        )Cash
                            dividends declared on Class B common stock
                        
                        
                        (1,810,847
                        )
                        
                        
                        
                        
                        (1,810,847
                        )Issuance
                            of restricted common stock
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        2,160
                        
                        
                        (2,160
                        )Deferred
                            stock-based compensation
                        
                        
                        (1,403,157
                        )
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (1,403,157
                        )
                        
                        -Currency
                            translation adjustment
                        
                        
                        387,822
                        
                        $
                        387,822
                        
                        
                        
                        
                        
                        387,822Change
                            in unrealized gain or loss on marketable securities -net of
                            taxes
                        
                        
                        (4,819,632
                        )
                        
                        (4,819,632
                        )
                        
                        
                        
                        
                        (4,819,632
                        )Stock-based
                            compensation expense
                        
                        
                        1,570,701
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1,570,701
                        
                        
                        -Adoption
                            of SFAS No. 123 (R)
                        
                        
                        -
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (3,562,709
                        )
                        
                        3,562,709Unfunded
                            SERP liability-net of taxes upon adoption of SFAS No.
                            158
                        
                        
                        (1,646,712
                        )
                        
                        
                        
                        
                        
                        
                        
                        (1,646,712
                        )Net
                            earnings
                        
                        
                        25,203,353
                        
                        
                        25,203,353
                        
                        
                        25,203,353Comprehensive
                            income
                        
                        
                        
                        
                        $
                        20,771,543Balance,
                            December 31, 2006
                        
                        
                        222,150,180
                        
                        
                        
                        
                        
                        190,952,754
                        
                        
                        (1,815,655
                        )
                        
                        270,268
                        
                        
                        916,767
                        
                        
                        31,826,046
                        
                        
                        -
  See
                notes
                to condensed consolidated financial statements.
 -5-
 **BEL
                        FUSE INC. AND SUBSIDIARIES****CONDENSED
                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (Continued)****(Unaudited)**
 Total
                      
                      Compre-hensiveIncome
                      
                      Retained
                          Earnings
                      
                      AccumulatedOtherCompre-hensiveIncome
                          (loss)
                      
                      Class
                          ACommonStock
                      
                      Class
                          BCommonStock
                      
                      AdditionalPaid-InCapitalExercise
                          of stockoptions
                      
                      
                      1,034,251
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      4,456
                      
                      
                      1,029,795Tax
                          benefits arisingfrom
                          the disposition ofnon-qualifiedincentive
                          stock options
                      
                      
                      124,039
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      124,039Cash
                          dividends declared on Class Acommon
                          stock
                      
                      
                      (215,470
                      )
                      
                      
                      
                      
                      (215,470
                      )Cash
                          dividends declared on Class Bcommon
                          stock
                      
                      
                      (902,530
                      )
                      
                      
                      
                      
                      (902,530
                      )Currency
                          translationadjustment
                      
                      
                      333,820
                      
                      $
                      333,820
                      
                      
                      
                      
                      
                      333,820Change
                          in unrealized gain orloss
                          on marketable securities-net
                          of taxes
                      
                      
                      952,830
                      
                      
                      952,830
                      
                      
                      
                      
                      
                      952,830Issuance
                          of restricted common stock
                      
                      
                      -
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      7,420
                      
                      
                      (7,420
                      )Termination
                          of restricted common stock
                      
                      
                      -
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (1,460
                      )
                      
                      1,460Repurchase/retirement
                          of Class Acommon
                          stock
                      
                      
                      (2,477,454
                      )
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      (6,703
                      )
                      
                      
                      
                      
                      (2,470,751
                      )Stock-based
                          compensation expense
                      
                      
                      670,984
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      670,984Net
                          earnings
                      
                      
                      10,167,121
                      
                      
                      10,167,121
                      
                      
                      10,167,121Comprehensive
                          income
                      
                      
                      
                      
                      $
                      11,453,771Balance,
                          June 30, 2007
                      
                      $
                      231,837,771
                      
                      
                      
                      
                      $
                      200,001,875
                      
                      $
                      (529,005
                      )
                      $
                      263,565
                      
                      $
                      927,183
                      
                      $
                      31,174,153
 See
            notes
            to condensed consolidated financial statements.
 -6-
 **BEL
                            FUSE INC. AND SUBSIDIARIES****CONDENSED
                            CONSOLIDATED STATEMENTS OF CASH FLOWS****(Unaudited)**
  Six
                            Months EndedJune
                            30,2007
                        
                        2006Cash
                            flows from operatingactivities:Net
                            earnings
                        
                        $
                        10,167,121
                        
                        $
                        12,760,755Adjustments
                            to reconcile netincome
                            to net cash providedby
                            operating activities:Depreciation
                            and amortization
                        
                        
                        3,850,398
                        
                        
                        4,775,968Casualty
                            loss
                        
                        
                        -
                        
                        
                        1,097,271Stock-based
                            compensation
                        
                        
                        682,710
                        
                        
                        790,960Excess
                            tax benefits from share-basedpayment
                            arrangements
                        
                        
                        (124,039
                        )
                        
                        (112,345
                        )Gain
                            on sale of marketable securities
                        
                        
                        (2,507,868
                        )
                        
                        (5,151,039
                        )Gain
                            on sale of property, plantand
                            equipment
                        
                        
                        (879,804
                        )
                        
                        -Other
                        
                        
                        478,353
                        
                        
                        441,869Deferred
                            income taxes
                        
                        
                        (2,426,000
                        )
                        
                        (548,000
                        )Changes
                            in operating assetsand
                            liabilities
                        
                        
                        2,557,408
                        
                        
                        (5,367,143
                        )Net
                            Cash Provided byOperating
                            Activities
                        
                        
                        11,798,279
                        
                        
                        8,688,296Cash
                            flows from investing activities:Purchase
                            of property, plantand
                            equipment
                        
                        
                        (4,483,357
                        )
                        
                        (4,333,017
                        )Purchase
                            of marketablesecurities
                        
                        
                        (11,801,386
                        )
                        
                        (729,088
                        )Payment
                            for acquisitions - net ofcash
                            acquired
                        
                        
                        -
                        
                        
                        (2,692,974
                        )Proceeds
                            from sale ofmarketable
                            securities
                        
                        
                        27,498,919
                        
                        
                        24,489,966Proceeds
                            from sale of property, plantand
                            equipment
                        
                        
                        2,192,103
                        
                        
                        -Net
                            Cash Provided byInvesting
                            Activities
                        
                        
                        13,406,279
                        
                        
                        16,734,887
 See
                  notes
                  to condensed consolidated consolidated financial statements.
  -7-
  **BEL
                              FUSE INC. AND SUBSIDIARIES****CONDENSED
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Continued)****(Unaudited)**
  Six
                              Months EndedJune
                              30,2007
                          
                          2006Cash
                              flows from financingactivities:Proceeds
                              from exercise ofstock
                              options
                          
                          
                          1,034,251
                          
                          
                          1,887,037Dividends
                              paid to commonshareholders
                          
                          
                          (1,124,789
                          )
                          
                          (1,104,078
                          )Purchase
                              and retire of Class A common stock
                          
                          
                          (2,477,454
                          )
                          
                          -Excess
                              tax benefits from share-basedpayment
                              arrangements
                          
                          
                          124,039
                          
                          
                          112,345Net
                              Cash (Used In) Provided ByFinancing
                              Activities
                          
                          
                          (2,443,953
                          )
                          
                          895,304Effect
                              of exchange rate changes on cash
                          
                          
                          82,919
                          
                          
                          130,150Net
                              Increase inCash
                              and Cash Equivalents
                          
                          
                          22,843,524
                          
                          
                          26,448,637Cash
                              and Cash Equivalents-
                              beginning of period
                          
                          
                          76,760,543
                          
                          
                          51,997,634Cash
                              and Cash Equivalents-
                              end of period
                          
                          $
                          99,604,067
                          
                          $
                          78,446,271Changes
                              in operating assetsand
                              liabilities consist of:Decrease
                              (increase) in accountsreceivable
                          
                          $
                          1,157,723
                          
                          $
                          (7,931,062
                          )Decrease
                              (increase) in inventories
                          
                          
                          2,336,755
                          
                          
                          (5,853,897
                          )Increase
                              in prepaid expenses and othercurrent
                              assets
                          
                          
                          (127,172
                          )
                          
                          (1,213,199
                          )(Increase)
                              decrease in other assets
                          
                          
                          (680,743
                          )
                          
                          (359,959
                          )(Decrease)
                              increase in accounts payable
                          
                          
                          (1,759,018
                          )
                          
                          5,193,397Increase
                              in income taxes payable
                          
                          
                          802,841
                          
                          
                          2,573,495Increase
                              in accrued expenses
                          
                          
                          827,022
                          
                          
                          2,224,082$
                          2,557,408
                          
                          $
                          (5,367,143
                          )
  See
                    notes
                    to condensed consolidated financial statements.
  -8-
 **BEL
                                  FUSE INC. AND SUBSIDIARIES****CONDENSED
                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Concluded)****(Unaudited)**
  Six
                                  Months EndedJune
                                  30,2007
                              
                              2006Supplementary
                                  information:Cash
                                  paid during the quarter for:Income
                                  taxes
                              
                              $
                              4,757,000
                              
                              $
                              1,240,000Interest
                              
                              $
                              -
                              
                              $
                              44,000Details
                                  of acquisitions:Intangibles
                              
                              $
                              -
                              
                              $
                              446,571Goodwill
                              
                              
                              -
                              
                              
                              2,000,000Acquisition
                                  costs
                              
                              
                              -
                              
                              
                              2,446,571Less:
                                  Amounts paid on acquisition payment
                              
                              
                              -
                              
                              
                              514,403Amounts
                                  accrued
                              
                              
                              -
                              
                              
                              (268,000
                              )Cash
                                  paid for acquisitions
                              
                              $
                              -
                              
                              $
                              2,692,974
  See
                      notes
                      to condensed consolidated financial statements.
  -9-
 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 June 30, 2007, 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 six months ended June 30, 2007 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,
        2006
        was derived from audited financial statements.
 
 Accounting
        Policies
  DESCRIPTION
        OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Bel Fuse
        Inc. and subsidiaries operate in one industry with three geographic reporting
        segments and are engaged in the design, manufacture and sale of products
        used in
        local area networking, telecommunication, business equipment and consumer
        electronic applications. The Company manages its operations geographically
        through its three reporting units: North America, Asia and Europe. Sales
        are
        predominantly in North America, Europe and Asia.
  
 PRINCIPLES
        OF CONSOLIDATION - The
        condensed consolidated financial statements include the accounts of the Company
        and its wholly owned subsidiaries, including businesses acquired since their
        respective dates of acquisition. All intercompany transactions and balances
        have
        been eliminated.
 
 USE
        OF
        ESTIMATES - The
        preparation of the condensed consolidated financial statements in conformity
        with accounting principles generally accepted in the United States of America
        requires management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities and disclosure of contingent assets and
        liabilities at the date of the financial statements and the reported amounts
        of
        revenues and expenses during the reporting period. Actual results could differ
        from those estimates.
 
 CASH
        EQUIVALENTS - Cash
        equivalents include short-term investments in U.S. treasury bills and commercial
        paper with an original maturity of three months or less when purchased. At
        June
        30, 2007 and December 31, 2006, cash equivalents approximated $50,055,000
        and
        $35,843,000, respectively.
 
 MARKETABLE
        SECURITIES - The
        Company classifies its equity securities as "available for sale", and
        accordingly, reflects unrealized gains and losses, net of deferred income
        taxes,
        as a component of accumulated other comprehensive income.
 
 The
        fair
        values of marketable securities are based on quoted market prices. Realized
        gains or losses from the sale of marketable securities are based on the specific
        identification method.
  -10-
 
 ACQUISITION
        EXPENSES - The
        Company capitalizes all direct costs associated with proposed acquisitions.
        If
        the proposed acquisition is consummated, such costs will be included as a
        component of the overall cost of the acquisition. Such costs are expensed
        at
        such time as the Company deems the consummation of a proposed acquisition
        to be
        unsuccessful.
 
 FOREIGN
        CURRENCY TRANSLATION - The
        functional currency for some foreign operations is the local currency. Assets
        and liabilities of foreign operations are translated at exchange rates as
        of the
        balance sheet date, and income, expense and cash flow items are translated
        at
        the average exchange rate for the applicable period. Translation adjustments
        are
        recorded in Other Comprehensive Income. The U.S. Dollar is used as the
        functional currency for certain foreign operations that conduct their business
        in U.S. Dollars. Realized foreign currency losses were $28,000 and $203,000
        for
        the six months ended June 30, 2007 and 2006, and $7,000 and $245,000 for
        the
        three months ended June 30, 2007 and 2006, respectively, and have been included
        in the condensed consolidated statements of operations.
 
 CONCENTRATION
        OF CREDIT RISK - Financial
        instruments which potentially subject the Company to concentrations of credit
        risk consist principally of accounts receivable and temporary cash investments.
        The Company grants credit to customers that are primarily original equipment
        manufacturers and to subcontractors of original equipment manufacturers based
        on
        an evaluation of the customer's financial condition, without requiring
        collateral. Exposure to losses on receivables is principally dependent on
        each
        customer's financial condition. The Company controls its exposure to credit
        risk
        through credit approvals, credit limits and monitoring procedures and
        establishes allowances for anticipated losses.
 
 The
        Company places its temporary cash investments with quality financial
        institutions and commercial issuers of short-term paper and, by policy, limits
        the amount of credit exposure in any one financial instrument.
 
 INVENTORIES
        - Inventories
        are stated at the lower of weighted average cost or market.
 
 REVENUE
        RECOGNITION - The
        Company recognizes revenue in accordance with the guidance contained in SEC
        Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial
        Statements". Revenue is recognized when the product has been delivered and
        title
        and risk of loss has passed to the customer, collection of the resulting
        receivable is deemed reasonably assured by management, persuasive evidence
        of an
        arrangement exists and the sales price is fixed and determinable. Substantially
        all of the Company's shipments are FCA (free carrier) which provides for
        title
        to pass upon delivery to the customer's freight carrier. Some product is
        shipped
        DDP/DDU with title passing when the product arrives at the customer's
        dock.
  -11-
  For
        certain customers, the Company provides consigned inventory, either at the
        customer’s facility or at a third party warehouse. Sales of consigned inventory
        are recorded when the customer withdraws inventory from consignment **.** During
        all periods in 2007 and 2006, inventory on consignment was
        immaterial.
 
 The
        Company typically has a twelve-month warranty policy for workmanship defects.
        During the three months ended June 30, 2007, the Company established a warranty
        accrual related to certain defective parts sold to a customer primarily within
        the same quarter, which the Company is replacing, in the amount of approximately
        $1.2 million, which includes a $.4 million inventory write off of inventory
        on
        hand. Such accrual has been classified within cost of sales. As the Company
        has
        not historically had significant warranty claims, no general reserves for
        warranties have been established.
 
 The
        Company is not contractually obligated to accept returns except for defective
        product or in instances where the product does not meet the customer's quality
        specifications. However, the Company may permit its customers to return product
        for other reasons. In these instances, the Company would generally require
        a
        significant cancellation penalty payment by the customer. The Company estimates
        such returns, where applicable, based upon management's evaluation of historical
        experience, market acceptance of products produced and known negotiations
        with
        customers. Such estimates are deducted from gross sales and provided for
        at the
        time revenue is recognized.
 
 GOODWILL
        - The
        Company tests goodwill for impairment annually (in the fourth quarter), using
        a
        fair value approach at the reporting unit level. A reporting unit is an
        operating segment or one level below an operating segment for which discrete
        financial information is available and reviewed regularly by management.
        Assets
        and liabilities of the Company have been assigned to the reporting units
        to the
        extent that they are employed in or are considered a liability related to
        the
        operations of the reporting unit and were considered in determining the fair
        value of the reporting unit.
 
 DEPRECIATION
        - Property,
        plant and equipment are stated at cost less accumulated depreciation and
        amortization. Depreciation and amortization are calculated primarily using
        the
        declining-balance method for machinery and equipment and the straight-line
        method for buildings and improvements over their estimated useful lives.
 
 INCOME
        TAXES - The
        Company accounts for income taxes using an asset and liability approach under
        which deferred income taxes are recognized by applying enacted tax rates
        applicable to future years to the differences between the financial statement
        carrying amounts and the tax bases of reported assets and
        liabilities.
 
 For
        that
        portion of foreign earnings that have not been repatriated, an income tax
        provision has not been recorded for U.S. federal income taxes on the
        undistributed earnings of foreign subsidiaries as such earnings are intended
        to
        be permanently reinvested in those operations. Such earnings would become
        taxable upon the sale or liquidation of these foreign subsidiaries or upon
        the
        repatriation of earnings.
 
 -12-
  The
        principal items giving rise to deferred taxes are unrealized gains/losses
        on
        unrealized property sales and marketable securities available for sale, foreign
        tax credits, the use of accelerated depreciation methods for machinery and
        equipment, timing differences between book and tax amortization of intangible
        assets and goodwill and certain expenses including the SERP which have been
        deducted for financial reporting purposes which are not currently deductible
        for
        income tax purposes.
 
 Effective
        January 1, 2007, uncertain tax positions are accounted for in accordance
        with
        FASB Interpretation No. 48 “Accounting for Uncertainty in Income Taxes.” See
        Note 7 for further discussion.
 
 STOCK-BASED
        COMPENSATION - The
        Company has one stock-based compensation plan under which both incentive
        stock-options and restricted stock awards are granted to employees and
        directors. Effective January 1, 2006, the Company accounts for stock-based
        compensation under Statement of Financial Accounting Standards ("SFAS") No.
        123
        (R), "Share-Based Payment". The Company adopted SFAS 123(R) using the modified
        prospective method. Under modified prospective application, this SFAS applies
        to
        new awards and to awards modified, repurchased, or cancelled after the required
        effective date. Additionally, compensation costs for the portion of the awards
        for which the requisite service has not been rendered that are outstanding
        as of
        the required effective date are being recognized as the requisite service
        is
        rendered after the required effective date. The compensation cost for the portion
        of awards is based on the grant-date fair value of those awards as calculated
        for either recognition or pro forma disclosures under SFAS 123. Changes to
        the
        grant-date fair value of equity awards granted before the required effective
        date of this Statement are precluded. The compensation cost for those earlier
        awards is attributed to periods beginning on or after the required effective
        date of this SFAS using the attribution method that was used under SFAS 123,
        except that the method of recognizing forfeitures only as they occur was
        not
        continued.
  During
        the six months ended June 30, 2007 and 2006, the Company issued 74,200 and
        152,400 class B common shares, respectively, under a restricted stock plan
        to
        various employees and directors. For additional information regarding the
        accounting treatment and effect on the Condensed Consolidated Financial
        Statements see Note 10 of Notes to the Condensed
        Consolidated Financial Statements.
 
 RESEARCH
        AND DEVELOPMENT - Research
        and development costs are expensed as incurred, and are included in cost
        of
        sales. Generally all research and development is performed internally for
        the
        benefit of the Company. The Company does not perform such activities for
        others.
        Research and development costs include salaries, building maintenance and
        utilities, rents, materials, administration costs and miscellaneous other
        items.
        Research and development expenses for the six months ended June 30, 2007
        and
        2006 amounted to $3.1 million and $3.5 million, respectively, and for the
        three
        months ended June 30, 2007 and 2006 amounted to $1.6 million and $1.6 million,
        respectively.
 
 -13-
 
 EVALUATION
        OF LONG-LIVED ASSETS - The
        Company reviews property and equipment and finite-lived intangible assets
        for
        impairment whenever events or changes in circumstances indicate the carrying
        value may not be recoverable in accordance with guidance in SFAS No. 144,
        “Accounting for the Impairment or Disposal of Long-Lived Assets.” If the
        carrying value of the long-lived asset exceeds the present value of the related
        estimated future cash flows, the asset would be adjusted to its fair value
        and
        an impairment loss would be charged to operations in the period
        identified.
 
 CASUALTY
        LOSS - During
        February 2006, the Company incurred a $1.1 million pre-tax casualty loss
        primarily for raw materials destroyed by a fire at the Company's leased
        manufacturing facility in the Dominican Republic.
 
 EARNINGS
        PER SHARE (RESTATED) - Subsequent to the issuance of its Condensed Consolidated Financial
        Statements for the quarter ended September 30, 2006, the Company determined
        that
        the method it uses to report earnings per share should utilize the two-class
        method, displaying earnings per share separately for both Class A and Class
        B
        common stock, rather than only one class as previously reported. 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 actual dividends declared to Class A and Class B based
        on
        amounts actually declared. In computing earnings per share, 5% more of the
        undistributed earnings have been allocated to Class B shares than to the
        Class A
        shares on a per share basis. Previously, all shareholders were assumed to
        share
        in the earnings equally. As a result, the earnings per share disclosures
        in the
        accompanying Condensed Consolidated Financial Statements for the three
        months and six months ended June 30, 2006, have been restated to reflect
        the two-class method of computing earnings per share. 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 stock options for Class A and B common shares which,
        if
        exercised, would have a dilutive effect on earnings per share.
 
 -14-
 Restatement
                    of Earnings Per ShareAs
                    PreviouslySix
                      Months EndedJune
                      30, 2006
                
                Reported
                
                As
                    RestatedBasic
                
                $
                1.08Diluted
                
                $
                1.08Class
                    A - Basic
                
                
                
                
                $
                1.03Class
                    B- Basic
                
                
                
                
                $
                1.10Class
                    A- Diluted
                
                
                
                
                $
                1.03Class
                    B - Diluted
                
                
                
                
                $
                1.09
 
 Three
                    Months EndedJune 30, 2006
                
                Reported
                
                As
                    RestatedBasic
                
                $
                0.74Diluted
                
                $
                0.74Class
                    A - Basic
                
                
                
                
                $
                0.71Class
                    B- Basic
                
                
                
                
                $
                0.75Class
                    A- Diluted
                
                
                
                
                $
                0.71Class
                    B - Diluted
                
                
                
                
                $
                0.75
 The
        previously reported weighted average shares outstanding for the six and three
        months ended June 30, 2006 were as follows:
 Six
                    Months Ended
                
                Three
                    Months EndedJune
                    30,
                
                June
                    30,2006
                
                2006Basic
                
                
                11,768,667
                
                
                11,796,484Diluted
                
                
                11,829,885
                
                
                11,845,259
 
 The
        following table includes a reconciliation of shares used in the calculation
        of
        basic and diluted earnings per share for Class A and Class B common shares
        for
        the six and three months ended June 30, 2007 and 2006.
  Six
                    Months Ended
                
                Three
                    Months EndedJune
                    30,
                
                June
                    30,2007
                
                2006
                
                2007
                
                2006(As
                    restated)
                
                
                
                (As
                    restated)Class
                    A Common SharesWeighted
                    average shares outstanding - basic
                
                
                2,682,400
                
                
                2,702,677
                
                
                2,661,589
                
                
                2,702,677Dilutive
                    impact of stock options andunvested
                    restricted stock awards
                
                
                -
                
                
                -
                
                
                -
                
                
                -Weighted
                    average shares oustanding - diluted
                
                
                2,682,400
                
                
                2,702,677
                
                
                2,661,589
                
                
                2,702,677Class
                    B Common SharesWeighted
                    average shares outstanding - basic
                
                
                9,203,547
                
                
                9,065,990
                
                
                9,233,397
                
                
                9,093,807Dilutive
                    impact of stock options andunvested
                    restricted stock awards
                
                
                30,772
                
                
                61,218
                
                
                28,190
                
                
                48,775Weighted
                    average shares oustanding - diluted
                
                
                9,234,319
                
                
                9,127,208
                
                
                9,261,587
                
                
                9,142,582
  -15-
  During
        the quarter ended June 30, 2007 and 2006, 14,000 outstanding options were
        not included in the foregoing computations for Class B common shares because
        they were antidilutive.
 
 FAIR
        VALUE OF FINANCIAL INSTRUMENTS - For
        financial instruments, including cash and cash equivalents, marketable
        securities, accounts receivable, accounts payable and accrued expenses, the
        carrying amount approximates fair value because of the short maturities of
        such
        instruments.
 
 2.
              GOODWILL
                  AND OTHER INTANGIBLES
 
 Goodwill
        represents the excess of the purchase price and related acquisition costs
        over
        the value assigned to the net tangible and other intangible assets with finite
        lives acquired in a business acquisition.
 
 Other
        intangibles include patents, product information, covenants not-to-compete
        and
        supply agreements. Amounts assigned to these intangibles have been determined
        by
        management. Management considered a number of factors in determining the
        allocations, including valuations and independent appraisals. Other intangibles
        are being amortized over 1 to 10 years. Amortization expense was $418,000
        and
        $1,299,000 for the six months ended June 30, 2007 and 2006, respectively,
        and
        $194,000 and $504,000 for the three months ended June 30, 2007 and 2006,
        respectively.
 
 Under
        the
        terms of the E-Power LTD (“E-Power”) and Current Concepts, Inc. (“Current
        Concepts”) acquisition agreements of May 11, 2001, the Company was required to
        make contingent purchase price payments up to an aggregate of $7.6 million
        should the acquired companies attain specified related sales levels. E-Power was
        to be paid
        $2.0 million in contingent purchase price payments if sales reached $15.0
        million and an additional $4.0 million if sales reached $25.0
        million on a cumulative basis through May 2007. During January 2006, the
        $2.0
        million of contingent purchase price consideration was earned by
        E-Power  and
        during February
        2006, E-Power was paid $2.0 million in contingent purchase price
        payments **.** During
        September 2006, an additional $4.0 million was earned when
        sales reached $25.0 million on a cumulative basis and,
        as a
        result, $4.0 million was paid in November 2006, and accounted for as additional
        purchase price and as an increase to goodwill. No additional payments will
        be
        made under the E-Power agreement. Current Concepts was
        to be paid
        16% of the first $10.0 million in sales through May 2007. This $10.0 million
        benchmark was reached during the second quarter of 2006 and therefore, no
        additional payments will be made. During
        the six and three months ended June 30, 2006, the Company paid or accrued
        approximately $447,000 and $268,000, respectively, in contingent purchase
        price
        payments to Current Concepts. The contingent purchase price payments for
        Current
        Concepts are accounted for as additional purchase price and as an increase
        to
        covenants not to compete within intangible assets when such payment obligations
        are incurred.
 
 -16-
 
 3.  MARKETABLE
        SECURITIES
 
 The
        Company currently owns a total of 1,840,919 shares, or approximately
        1.9% of the
        outstanding shares ,
        of the
        common stock of Toko, Inc. (“Toko”) at a total cost of $5.6 million. Toko had a
        market capitalization of approximately $240 million as of June 30, 2007.
        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”. Thus, as of June 30, 2007, the Company has recorded
        an unrealized loss, net of income tax benefit, of approximately $.7 million
        which is included in accumulated other comprehensive income (loss) in
        stockholders’ equity. During April 2007, the Company sold 4,034,000 shares of
        common stock of Toko on the open market which resulted in a gain of
        approximately $2.5 million, net of investment banker fees and other expenses
        in
        the amount of $.8 million. The Company accrued bonuses of $500,000 in connection
        with this gain which will be paid by December 31, 2007. For financial statement
        purposes approximately $360,000 and $140,000 has been classified within cost
        of
        sales and selling, general and administrative expenses, respectively.
 
 The
        Company acquired a total of 2,037,500 shares of the common stock of Artesyn
        Technologies, Inc. (“Artesyn”) at a total purchase price of $16,331,469. On
        April 28, 2006, Artesyn was acquired by Emerson Network Power for $11.00
        per
        share in cash. During the second quarter of 2006, in connection with the
        Company's sale of its Artesyn common stock, the Company recognized a gain
        of
        approximately $5.2 million, net of investment banker advisory fees of $850,000.
        The Company accrued bonuses of $1.0 million in connection with the gain.
        For
        financial statement purposes approximately $300,000 and $700,000 has been
        classified within cost of sales and selling, general and administrative
        expenses, respectively, and was paid to key employees by December 31, 2006.
 
 At
        June
        30, 2007 and December 31, 2006, respectively, marketable securities have
        a cost
        of approximately $5,658,000 and $18,031,000, an estimated fair value of
        approximately $4,593,000 and $15,576,000 and gross unrealized losses of
        approximately $(1,065,000) and $(2,455,000). Such unrealized losses are
        included, net of tax, in accumulated other comprehensive income. The Company
        had
        no realized losses for the six months ended June 30, 2007 and $88,000 of
        realized losses for the six months ended June 30, 2006. Included in other
        assets
        at June 30, 2007 and December 31, 2006 are marketable securities designated
        for
        utilization in accordance with the Company’s SERP plan with a cost of
        approximately $3,420,000 and an estimated fair value of approximately $3,907,000
        at June 30, 2007 and $3,766,000 at December 31, 2006. Such unrealized net
        gains
        are included, net of tax, in other comprehensive income (loss).
 
 -17-
  4.  INVENTORIES
 
 The
        components of inventories are as follows:
 June
                    30,
                
                December
                    31,2007
                
                2006Raw
                    materials
                
                $
                23,195,804
                
                $
                24,374,438Work
                    in progress
                
                
                3,586,486
                
                
                3,531,148Finished
                    goods
                
                
                17,213,204
                
                
                18,391,622$
                43,995,494
                
                $
                46,297,208
  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:
 Six
                    Months Ended
                
                Three
                    Months EndedJune
                    30,
                
                June
                    30,2007
                
                2006
                
                2007
                
                2006Total
                    segment revenuesNorth
                    America
                
                $
                39,167,795
                
                $
                39,531,004
                
                $
                20,737,267
                
                $
                21,036,118Asia
                
                
                88,264,093
                
                
                88,243,885
                
                
                42,227,628
                
                
                49,338,286Europe
                
                
                17,901,465
                
                
                13,355,532
                
                
                8,767,312
                
                
                7,670,699Total
                    segment revenues
                
                
                145,333,353
                
                
                141,130,421
                
                
                71,732,207
                
                
                78,045,103Reconciling
                    items:Intersegment
                    revenues
                
                
                (21,914,432
                )
                
                (20,030,075
                )
                
                (10,119,962
                )
                
                (11,571,005
                )Net
                    sales
                
                $
                123,418,921
                
                $
                121,100,346
                
                $
                61,612,245
                
                $
                66,474,098Income
                    (loss) from Operations:North
                    America
                
                $
                2,110,649
                
                $
                (19,078
                )
                $
                1,008,638
                
                $
                874,823Asia
                
                
                6,387,378
                
                
                9,705,590
                
                
                3,230,627
                
                
                4,865,271Europe
                
                
                649,750
                
                
                457,832
                
                
                475,682
                
                
                105,867$
                9,147,777
                
                $
                10,144,344
                
                $
                4,714,947
                
                $
                5,845,961
 6.
              DEBT
 
 Short-term
        debt
 
 During
        the first quarter of 2007, the Company entered into a new unsecured credit
        agreement in the amount of $20 million, which expires on July 21, 2008. There
        was no balance outstanding as of June 30, 2007. 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 June 30, 2007. The line of credit expired
        July
        31, 2007. 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. The Company is currently negotiating an extension to this line
        of
        credit.
  -18-
  Included
        in interest expense for the six months ended June 30, 2007 is the write-off
        of
        approximately $122,000 of previously unamortized deferred financing charges
        in
        connection with a credit facility that has been superseded.
 
 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 amount of the Company’s liabilities
        for uncertain tax positions, approximately $5.4 million of the Company’s
        liability for uncertain tax positions was reclassified to non-current
        liabilities.
 
 The
        Company has approximately $11.6 million of liabilities for uncertain tax
        positions all of which, 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
        2003 and for state examinations before 2003. Regarding foreign subsidiaries,
        the
        Company is no longer subject to examination by tax authorities for years
        before
        2000. 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. During April 2007, the IRS wrote a preliminary letter
        to
        the Company accepting the tax return as originally filed for 2004.
 
 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 year 2000
        and issued a notice of additional assessment during the first quarter of
        2007
        and demand for tax in the amount of $1.4 million. This was paid during May
        2007.
        There is no interest or penalties in connection with this assessment. The
        IRD
        has proposed certain adjustments to the Company’s offshore income tax claim
        position and is proposing tax adjustments for the years 2001 through 2005
        in the
        net amount of $2.8 million. Management has evaluated these adjustments and
        agrees with the IRD. The Company’s estimate of the tax has been accrued as a
        component of the Company’s liability for uncertain tax positions.
 
 Based
        on
        possible outcomes of the examinations mentioned above, or as a result of
        the
        expiration of the statue 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 June 30, 2007. Based on the number of tax
        years currently under audit by the relevant tax authorities, the Company
        anticipates that several of these audits may be finalized in the next twelve
        months. It is not possible to estimate the effect of changes, if any, that
        will
        occur to previously recorded uncertain tax positions over the next
        year.
 
 -19-
  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
        six and three months ended June 30, 2007, the Company recognized approximately
        $237,000 and $145,000 in interest and penalties in the Condensed
        Consolidated Statement of Operations. The Company has approximately $1.7
        million accrued for the payment of interest and penalties at June 30, 2007,
        which is included in both income taxes payable and liability for uncertain
        tax
        positions in the condensed consolidated balance sheet.
 
 8.  ACCRUED
        EXPENSES
 
 Accrued
        expenses consist of the following:
 June
                    30,
                
                December
                    31,2007
                
                2006Sales
                    commissions
                
                $
                1,556,896
                
                $
                1,715,816Subcontracting
                    labor
                
                
                1,797,414
                
                
                2,032,763Deposits
                    on future sale of properties
                
                
                1,751,113Salaries,
                    bonuses andrelated
                    benefits
                
                
                3,168,000
                
                
                4,147,135Other
                
                
                4,619,390
                
                
                4,817,703$
                12,892,813
                
                $
                12,713,417
  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 plan provides for participants to voluntarily contribute
        a
        portion of their compensation, subject to certain legal maximums. The Company
        will match, based on a sliding scale, up to $350 for the first $600 contributed
        by each participant. Matching contributions plus additional discretionary
        contributions are made with Company stock purchased in the open market. The
        expense for the six months ended June 30, 2007 and 2006 amounted to
        approximately, $289,000 and $280,000, respectively. The expense for the three
        months ended June 30, 2007 and 2006 amounted to approximately $119,000 and
        $144,000, respectively. As of June 30, 2007, the plans owned 17,200 and 143,695
        shares of Bel Fuse Inc. Class A and Class B common stock,
        respectively.
 
 The
        Company's Far East subsidiaries have a retirement fund covering substantially
        all of their Hong Kong based full-time employees. Eligible employees contribute
        up to 5% of salary to the fund. In addition, the Company may contribute an
        amount up to 7% of eligible salary, as determined by Hong Kong government
        regulations, in cash or Company stock. The expense for the six months ended
        June
        30, 2007 and 2006 amounted to approximately $202,000 and $351,000, respectively.
        The expense for the three months ended June 30, 2007 and 2006 amounted to
        approximately $95,000 and $169,000, respectively. As of June 30, 2007, 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 (“SERP”) is designed to provide a limited
        group of key management and highly compensated employees of the Company with
        supplemental retirement and death benefits. Participants in the SERP are
        selected by the Compensation Committee of the Board of Directors. The SERP
        initially became effective in 2002 and was amended
        and restated in April 2007 to conform with applicable requirements of Section
        409A of the Internal Revenue Code and to modify the provisions regarding
        benefits payable in connection with a change in control of the Company. Benefits
        under the SERP are payable from the general assets of the Company, but the
        Company has certain life insurance policies in effect on participants to
        partially cover the Company’s obligations under the Plan. The Plan also allows
        the Company to establish a grantor trust to provide for the payment of Plan
        benefits.
 
 -20-
 The
        components of SERP expense are as follows:
 Six
                    Months Ended
                
                Three
                    Months EndedJune
                    30,
                
                June
                    30,2007
                
                2006
                
                2007
                
                2006Service
                    cost
                
                $
                287,000
                
                $
                486,000
                
                $
                147,000
                
                $
                173,000Interest
                    cost
                
                
                54,000
                
                
                96,000
                
                
                27,000
                
                
                35,000Amortization
                    of adjustments
                
                
                42,000
                
                
                58,000
                
                
                24,000
                
                
                18,000Total
                    SERP expense
                
                $
                383,000
                
                $
                640,000
                
                $
                198,000
                
                $
                226,000
  June
                    30,
                
                December
                    31,2007
                
                2006Balance
                    sheet amounts:Minimum
                    pension obligationand
                    unfunded liability
                
                $
                5,206,639
                
                $
                4,728,286Accumulated
                    other comprehensiveincome
                    (loss)
                
                
                1,646,712
                
                
                1,646,712
 
 10.
        SHARE-BASED COMPENSATION
 
 On
        January 1, 2006, the Company adopted SFAS No. 123 (R) "Share-Based Payment"
        requiring the recognition of compensation expense in the Condensed
        Consolidated Statements of Operations related to the fair value of its
        employee share-based options and awards. SFAS No. 123 (R) revises SFAS No.
        123
        "Accounting for Stock-Based Compensation" and supersedes APB Opinion No.
        25
        "Accounting for Stock Issued to Employees." SFAS No. 123(R) is supplemented
        by
        SEC Staff Accounting Bulletin ("SAB") No. 107 "Share-Based Payment." SAB
        No. 107
        expresses the SEC staff's views regarding the interaction between SFAS No.
        123(R) and certain SEC rules and regulations including the valuation of
        share-based payment arrangements.
 
 The
        aggregate pretax compensation cost recognized in net earnings for stock based
        compensation (including incentive stock options, restricted stock and dividends
        on restricted stock, as further discussed below) amounted to approximately
        $683,000 and $790,000 for the six months ended June 30, 2007 and 2006,
        respectively. For the three months ended June 30, 2007 and 2006 the aggregate
        compensation cost recognized in net earnings amounted to $279,000 and $409,000.
        The Company did not use any cash to settle any equity instruments granted
        under
        share based arrangements during the six months ended June 30, 2007 and 2006.
 
 Under
        the
        provisions of SFAS 123 (R), the recognition of deferred compensation,
        representing the amount of unrecognized restricted stock expense that is
        reduced
        as expense is recognized,
        at the date restricted stock is granted, is no longer required. Therefore,
        in
        the first quarter of 2006, the amount that had been in "Deferred compensation"
        in the Condensed Consolidated Balance Sheet was reversed to
        zero.
 
 -21-
  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 . The
        Company believes that such awards better align the interest of its employees
        with those of its shareholders. The Plan provides for the issuance of 2,400,000
        common shares. Unless
        otherwise provided at the date of grant or unless subsequently accelerated,
        options granted under the Program  become
        exercisable twenty-five percent (25%)  one
        year
        from the date of
 grant
        and
        twenty-five percent (25%) for each year of the three years thereafter. Upon
        exercise the Company will issue new shares. The exercise price of  incentive
        stock options
        granted pursuant to the Plan is not to be less than 100 percent of the fair
        market value of the shares on the date of grant. In general,
        no option will be exercisable after ten years
        from the date granted.
 A
        summary
        of option activity under the plan as of June 30, 2007 and January 1, 2007
        and
        changes during the six months ended June 30, 2007 is presented
        below:
 WeightedAverageWeighted
                
                Remaining
                
                AggregateAverage
                
                Contractual
                
                IntrinsicOptions
                
                Shares
                
                Exercise
                    Price
                
                Term
                
                ValueOutstanding
                    at January 1, 2007
                
                
                137,813
                
                $
                25.59Granted
                
                
                -Exercised
                
                
                (44,563
                )
                
                23.21
                
                
                
                
                $
                665,826Forfeited
                    or expired
                
                
                (1,500
                )
                
                18.89Outstanding
                    at June 30, 2007
                
                
                91,750
                
                $
                26.86
                
                
                2.0
                
                $
                699,685Exercisable
                    at June 30, 2007
                
                
                54,750
                
                $
                24.11
                
                
                1.6
                
                $
                563,785
 During
        the six months ended June 30, 2007 and 2006, the Company received $1,034,251
        and
        $1,887,037 from the exercise of stock options and realized tax benefits of
        approximately $124,000 and $112,000, respectively. The total intrinsic value
        of
        options exercised during the six months ended June 30, 2007 and 2006 was
        $665,826 and $696,879, respectively. Stock compensation expense applicable
        to
        stock options for the six months and three months ended June 30, 2007 and
        2006
        was approximately $123,000 and $226,000 for the three months and six months
        ended June 30, 2007 and $33,000 and $113,000 for the three months and six
        months
        ended June 30, 2006, respectively.
 
 -22-
 
 A
        summary
        of the status of the Company's nonvested shares as of December 31, 2006 and
        changes during the six months ended June 30, 2007 is presented
        below:
 Weighted-AverageGrant-DateNonvested
                    Shares
                
                Shares
                
                Fair
                    ValueNonvested
                    at December 31, 2006
                
                
                91,000
                
                $
                25.53Granted
                
                
                -
                
                
                -Vested
                
                
                (52,500
                )
                
                21.92Forfeited
                
                
                (1,500
                )
                
                18.89Nonvested
                    at June 30, 2007
                
                
                37,000
                
                $
                30.92
  At
        June
        30, 2007, there was $32,000 of total unrecognized cost related to nonvested
        stock-based compensation arrangements under the  Program .
        The
        cost is expected to be recognized over a weighted average period of 1 year.
        Currently, the Company believes that substantially all options will vest.
 
 Restricted
        Stock Awards
 
 The
        Company provides common stock awards to certain officers and key employees.
        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 are earned 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 2007 and 2006, the Company issued 74,200 and 152,400 class
        B
        common shares, respectively, under a restricted stock plan to various employees
        and directors. The shares vest 25% after two years of employment with an
        additional 25% vesting in each of years three through five. Deferred
        stock-based compensation expense of $6.4 million associated with unearned
        shares
        under this plan as of June 30, 2007, is reported within Stockholders' equity
        on
        the Company's condensed consolidated balance sheet. Pretax compensation expense
        was $560,000 and $564,000 for the six months ended June 30, 2007 and 2006,
        respectively and $270,000 and $303,000 for the three months ended June 30,
        2007
        and 2006, respectively.
 
 -23-
 
 A
        summary
        of the activity regarding restricted stock awards under the Program as of
        January 1, 2007 and for the six months ended June 30, 2007 is presented
        below:
 WeightedWeighted
                
                AverageAverage
                
                RemainingRestricted
                    Stock
                
                
                
                Award
                
                ContractualAwards
                
                Shares
                
                Price
                
                TermOutstanding
                    at January 1, 2007
                
                
                167,000
                
                $
                34.93
                
                
                3.85
                    yearsGranted
                
                
                74,200
                
                
                36.40Awarded
                
                
                -
                
                
                -Forfeited
                
                
                (8,800
                )
                
                36.97Outstanding
                    at June 30, 2007
                
                
                232,400
                
                
                35.35
                
                
                3.81
                    yearsExercisable
                    at June 30, 2007
                
                
                -
                
                
                
                
                
                -
 The
        Company's policy is to issue new shares to satisfy Restricted Stock Awards
        and
        incentive stock option exercises.
 
 Currently
        the Company believes that substantially all Restricted Stock Awards will
        vest.
  -24-
  11.
        COMMON STOCK
 
 During
        2000, the Board of Directors of the Company authorized the purchase of up
        to ten
        percent (10%) of the Company’s outstanding common shares. As of June 30, 2007,
        the Company had purchased and retired 23,600 Class B common shares at a cost
        of
        approximately $808,000 which reduced the number of Class B common shares
        outstanding. No shares of Class B common stock were repurchased during the
        six
        and three months ended June 30, 2007.
 
 As
        of
        June 30, 2007, the Company had purchased and retired 67,026 Class A common
        shares at a cost of approximately $2.5 million, which reduced the number
        of
        Class A common shares outstanding. All such shares were purchased during
        the
        quarter ended June 30, 2007. During July and August 2007, the Company purchased
        8,702 additional Class A common shares at a cost of $290,659 which will reduce
        the number of Class A common shares outstanding.
 
 During
        July 2007, the Board of Directors of the Company authorized to increase the
        dividends $.02 per share per quarter for both Class A and B common shares
        effective with the November 2007 dividend payment.
 
 -25-
 
 12.
        COMPREHENSIVE INCOME
  Comprehensive
        income for the six and three months ended June 30, 2007 and 2006 consists
        of:
 Six
                    Months Ended
                
                Three
                    Months EndedJune
                    30,
                
                June
                    30,2007
                
                2006
                
                2007
                
                2006Net
                    earnings
                
                $
                10,167,121
                
                $
                12,760,755
                
                $
                6,157,985
                
                $
                8,763,456Currency
                    translation adjustment
                
                
                333,820
                
                
                204,968
                
                
                (24,204
                )
                
                113,089Increase
                    (decrease) in unrealizedgain
                    on marketable securities-
                    net of taxes
                
                
                952,830
                
                
                (3,024,527
                )
                
                (3,343,361
                )
                
                (5,532,198
                )Comprehensive
                    income
                
                $
                11,453,771
                
                $
                9,941,196
                
                $
                2,790,420
                
                $
                3,344,347
  13.
        ASSETS SOLD AND HELD FOR SALE
 
 During
        May 2007, the Company sold a parcel of land located in Jersey City, New Jersey
        for $6,000,000. The Company estimates that approximately $760,000 of the
        proceeds will be payable to the State of New Jersey as a portion of the property
        is subject to tideland claims. Of the $6.0 million sales price, the Company
        received cash of $1.5 million before closing costs, and $4.5 million is being
        held in escrow pending final resolution of the State of New Jersey tideland
        claim and certain environmental costs the Company is liable for in the maximum
        amount of $390,000. The Company has agreed to indemnify the title insurance
        company for the entire $6.0 million selling price of the property for any
        possible title claim by the State of New Jersey. The Company has deferred
        the
        estimated gain on the sale of the land before deduction of the estimated
        tideland claim payment of $760,000, in the amount of $4.7 million, due to
        the
        uncertainty of the final resolution of the State of New Jersey tideland Claim.
        The escrow of $4.5 million has been classified in restricted cash and the
        deferred gain of $4.7 million has been classified in deferred gain on the
        sale
        of property in the Condensed Consolidated Balance Sheet as of June 30,
        2007. Addtionally, the Company realized a $.9 million gain from the sale
        of
        property in Hong Kong during the six months ended June 30, 2007.
 
 During
        the quarter ended June 30, 2007, two of the Company’s Far East subsidiaries
        entered into contracts to sell four real estate properties, one in Hong Kong
        and
        three in Macau with a gross selling price of $9.2 million. The Company has
        classified these assets as held for sale with a net book value of approximately
        $4.2 million on the Company’s condensed consolidated balance sheet at June 30,
        2007 and expects to sell the properties by the fourth quarter of
        2007.
 
 -26-
 
 14.  NEW
        FINANCIAL ACCOUNTING STANDARDS
 
 
 In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
        enhances existing guidance for measuring assets and liabilities using fair
        value. This Standard provides a single definition of fair value, together
        with a
        framework for measuring it, and requires additional disclosure about the
        use of
        fair value to measure assets and liabilities. SFAS No. 157 is effective for
        financial statements issued for fiscal years beginning after November 15,
        2007,
        and interim periods within those fiscal years. The Company does not believe
        that
        SFAS No. 157 will have a material impact on its financial
        statements.
  In
        February 2007, the FASB issued SFAS No. 159 (“SFAS 159”) “The Fair Value Option
        for Financial Assets and Financial Liabilities”, providing companies with an
        option to report selected financial assets and liabilities at fair value.
        The
        Standard’s objective is to reduce both complexity in accounting for financial
        instruments and the volatility in earnings caused by measuring related assets
        and liabilities differently. It also requires entities to display the fair
        value
        of those assets and liabilities for which the Company has chosen to use fair
        value on the face of the balance sheet. SFAS 159 is effective for fiscal
        years
        beginning after November 15, 2007. The Company is currently evaluating the
        impact of the adoption of this Statement on its financial statements.
 
 -27-
  15.  LEGAL
        PROCEEDINGS
 
 The
        Company is a defendant in a lawsuit captioned Halo Electronics, Inc. (“Halo”) v.
        Bel Fuse Inc., Pulse Engineering, Inc. and Technitrol, Inc. brought in Nevada
        Federal District Court. Plaintiff claims that the Company has infringed its
        patents covering certain surface mount discrete magnetic products made by
        the
        Company. Halo is seeking unspecified damages, which it claims should be trebled.
 
 The
        Company is a plaintiff in a lawsuit captioned Bel Fuse Inc., a New Jersey
        Corporation v. Halo Electronics, Inc. brought in the United States District
        Court of New Jersey during May 2007. The Company claims that Halo has infringed
        a patent covering certain surface mount discrete magnetic products made by
        Halo.
        The Company is seeking unspecified damages plus interest, costs and attorney
        fees.
  The
        Company and two of its officers are defendants in a wrongful termination
        lawsuit
        brought in the District Court of Frankfurt am Main, Germany by a former employee
        at a foreign subsidiary of the Company. During July 2007, this lawsuit was
        settled for approximately $466,000. The Company had provided for this liability
        in its financial statements prior to the settlement.
 
 The
        Company is a plaintiff in a lawsuit captioned Bel Fuse Inc., a New Jersey
        corporation, and Bel Power, Inc., a Massachusetts corporation, v. Andrew
        Ferencz, Gregory Zovonar, Bernhard Schroter, EE2GO, Inc., a Massachusetts
        corporation, 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.
 
 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. The Company
        believes it has adequate defenses regarding this lawsuit and accordingly
        has not
        accrued any liability in connection with such lawsuit.
 
 The
        Company is a defendant in a lawsuit captioned Murata Manufacturing Company,
        Ltd.
        v. Bel Fuse Inc. et al, brought in Illinois Federal District Court. Plaintiff
        claims that its patent covers all of the Company's modular jack products.
        That
        party had previously advised the Company that it was willing to grant a
        non-exclusive license to the Company under the patent for a 3% royalty on
        all
        future gross sales of ICM products; payment of a lump sum of 3% of past sales
        including sales of applicable Insilco products; an annual minimum royalty
        of
        $500,000; payment of all attorney fees; and marking of all licensed ICM's
        with
        the third party's patent
        number. The Company was also a defendant in a lawsuit, captioned Regal
        Electronics, Inc. v. Bel Fuse Inc., brought in California Federal District
        Court. Plaintiff claims that its patent covers certain of the Company's modular
        jack products. That party had previously advised the Company that it was
        willing
        to grant a non-transferable license to the Company for an up front fee of
        $500,000 plus a 6% royalty on future sales. The District Court has granted
        summary judgment
        in the Company's favor dismissing Regal Electronics' infringement claims,
        while
        at the
        same
        time the Court dismissed the Company's invalidity counterclaim against Regal
        Electronics. Regal
        has
        appealed the Court's rejection of its infringement claims to the U.S. Court
        of
        Appeals. The case was heard on February 6, 2007 and the U.S.
        Court of Appeals upheld the District Court’s ruling in favor of the
        Company.
  -28-
 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 condensed consolidated financial condition
        or
        results of operations. As of June 30, 2007, no amounts have been accrued
        in
        connection with these lawsuits, except for the Germany lawsuit, as described
        above, as the amounts are not determinable.
 
 The
        Company is not a party to any other legal proceeding, the adverse outcome
        of
        which is likely to
        have a
        material adverse effect on the Company's condensed consolidated financial
        condition or results of operations.
 
 16.  ACCUMULATED
        OTHER COMPREHENSIVE INCOME (LOSS)
 
 The
        components of accumulated other comprehensive income (loss) as of June 30,
        2007
        and December 31, 2006 are summarized below:
 June
                    30,
                
                December
                    31,2007
                
                2006Foreign
                    currency translationadjustment
                
                $
                1,474,704
                
                $
                1,140,884Unrealized
                    holding (loss)on
                    available-for-sale securitiesunder
                    SFAS No. 115, net oftaxes
                    of $(219,657) and $(802,797)as
                    of June 30, 2007 and December 31, 2006
                
                
                (356,997
                )
                
                (1,309,827
                )Unfunded
                    SERP liability net of taxesof
                    $(686,000) as of June 30, 2007and
                    December 31, 2006
                
                
                (1,646,712
                )
                
                (1,646,712
                )Accumulated
                    other comprehensive loss
                
                $
                (529,005
                )
                $
                (1,815,655
                )
  -29-
  Item
        2.
        Management’s Discussion and Analysis of Financial Condition and Results of
        Operations
  The
        Company’s quarterly and annual operating results are affected by a wide variety
        of factors that could materially and adversely affect revenues and
        profitability, including the risk factors described in the Company's Annual
        Report on Form 10-K for the year ended December 31, 2006. 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, 2006, 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, 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.
 
 We
        design
        our products to enhance the systems in which they operate. As our products
        typically become components in other third-party’s systems, our revenues are
        largely driven by the extent to which our customers can design and develop
        new
        applications and the extent to which those customers have needs for the types
        of
        components that we can provide. We are problem-solvers; we design most of
        our
        products to combine various discrete components in a manner that will allow
        the
        systems designer to save space and to offer a more efficient
        product.
 
 Our
        expenses are driven principally by the cost of the materials that we use
        and the
        cost of labor where our factories are located. In recent years, the increasing
        cost of copper, steel and petroleum-based products and an increased wage structure in the Far East have contributed to increases in
        manufacturing costs .
        Effective September 1, 2006, local People's Republic of China ("PRC")
        authorities implemented a new revised standard work week, and new minimum
        wages
        and overtime rates, for areas where our factories are located .
 
 The
        Company’s sales increased by $2.3 million or 1.9% for the six months ended June
        30, 2007 as compared to the six months ended June 30, 2006. The Company’s sales decreased
        by $4.9 million or 7.3% for the three months ended June 30, 2007 as compared
        to
        the three months ended June 30, 2006. The decline reflected revenue decreases
        in
        sales of magnetics and interconnect products, as the Company exited from
        certain
        low margin business.
 
 -30-


Gross
      profit margins were lower during the six months ended June 30, 2007 compared
      to
      the six months ended June 30, 2006, principally due to increased costs for
      raw
      material such as mosfets, steel, integrated circuits, PBC and petroleum-based
      products, increased transportation costs and a warranty reserve and related
      inventory write-off in the amount of $1.2 million during the quarter ended
      June
      30, 2007. Sales of the Company’s DC-DC power products have increased. While
      these products are strategic to Bel’s growth and important to total earnings,
      they return lower gross profit percentage margins as a larger percentage of
      their bills of material are purchased components. As these sales continue to
      increase, the Company’s average gross profit percentage will likely decrease
      unless offset by increased sales of higher margin products. Gross
      profit margins are also adversely affected to the extent that the Company
      manufactures lead-free products, as the Company has additional labor and
      manufacturing costs associated
      with operating duplicate production lines  but
      cannot attain premium pricing for such products.





On
      January 1, 2007, the Company implemented FASB Interpretation No. 48 “Accounting
      for Uncertainty in Income Taxes”, (“FIN 48”) which resulted in no adjustment in
      the liability for uncertain tax positions.





During
      the six months ended June 30, 2007, the Company incurred severance and related
      expenses of approximately $269,000; wrote off approximately $122,000 in deferred
      financing fees related to a credit facility no longer available because of
      a
      change in the Company’s banking relationship; incurred stock based compensation
      expense of $683,000, accrued $237,000 of interest and penalties in connection
      with uncertain tax positions; and incurred $881,000 less amortization of
      intangibles compared to the six months ended June 30, 2006 due to certain
      intangibles becoming fully amortized. Additionally, the Company realized a
      pretax gain from the sale of real estate in the amount of $.9 million and a
      pretax gain from the sale of Toko common shares in the amount of $2.5
      million.




-31-




Critical
      Accounting Policies





The
      Company’s discussion and analysis of its financial condition and results of
      operations are 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.





The
      Company believes the following critical accounting policies affect its more
      significant judgments and estimates used in the preparation of its condensed
      consolidated financial statements.





Allowance
      for Doubtful Accounts





The
      Company maintains allowances for doubtful accounts for estimated losses from
      the
      inability of its customers to make required payments. The Company determines
      its
      reserves by both specific identification of customer accounts where appropriate
      and the application of historical loss experience to non-specific accounts.
      If
      the financial condition of the Company's customers were to deteriorate,
      resulting in an impairment of their ability to make payments, additional
      allowances may be required.





Inventory





The
      Company makes purchasing decisions principally based upon firm sales orders
      from
      customers, the availability and pricing of raw materials and projected customer
      requirements. Future events that could adversely affect these decisions and
      result in significant charges to the Company’s operations include miscalculating
      customer requirements, technology changes which render certain raw materials
      and
      finished goods obsolete, loss of customers and/or cancellation of sales orders,
      stock rotation with distributors and termination of distribution agreements.
      The
      Company writes down its inventory for estimated obsolescence or unmarketable
      inventory equal to the difference between the cost of inventory and the
      estimated market value based upon the aforementioned assumptions. If actual
      market conditions are less favorable than those projected by management,
      additional inventory write-downs may be required.




-32-




When
      inventory is written-off, it is never written back up; the cost remains at
      zero
      or the level to which it has been written-down. When inventory that has been
      written-off is subsequently used in the manufacturing process, the lower
      adjusted cost of the material is charged to cost of sales. Should any of this
      inventory be used in the manufacturing process for customer orders, the improved
      gross profit will be recognized at the time the completed product is shipped
      and
      the sale is recorded.





Goodwill
      and Intangible Assets





The
      assets and liabilities of acquired businesses are recorded under the purchase
      method of accounting at their estimated fair values at the dates of acquisition.
      Goodwill represents costs in excess of fair values assigned to the underlying
      net assets of acquired businesses.





Goodwill
      and intangible assets deemed to have indefinite lives are not amortized, but
      are
      subject to annual impairment testing. The identification and measurement of
      goodwill impairment involves the estimation of the fair value of geographic
      reporting units. The estimates of fair value of geographic reporting units
      are
      based on the best information available as of the date of the assessment, which
      primarily incorporate management assumptions about expected future cash flows
      and contemplate other valuation techniques. Future cash flows can be affected
      by
      changes in industry or market conditions or the rate and extent to which
      anticipated synergies or cost savings are realized with newly acquired entities.
      There can be no assurances that goodwill impairments will not occur in the
      future. See Note 2 to the Condensed Consolidated Financial Statements for
      further discussion.





Income
      Taxes





Income
      taxes are accounted for under Statement of Financial Accounting Standards
      (“SFAS”) No. 109, “Accounting for Income Taxes.” In accordance with SFAS No.
      109, deferred tax assets and liabilities are recognized for the future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective tax
      bases, as measured by enacted tax rates that are expected to be in effect in
      the
      periods when the deferred tax assets and liabilities are expected to be settled
      or realized. Significant judgment is required in determining the worldwide
      provisions for income taxes. In the ordinary course of a global business, the
      ultimate tax outcome is uncertain for many transactions. It is the Company’s
      policy to establish provisions for taxes that may become payable in future
      years
      as a result of an examination by tax authorities. The Company establishes the
      provisions based upon management’s assessment of exposure associated with
      permanent tax differences and tax credits applied to temporary difference
      adjustments. The tax provisions are analyzed periodically (at least quarterly)
      and adjustments are made as events occur that warrant adjustments to those
      provisions.





Our
      accounting policy for income taxes was recently modified due to the adoption
      of
      FIN 48. FIN 48 requires significant judgment in determining what constitutes
      an
      individual tax position as well as assessing the outcome of each tax position.
      Changes in judgment as to recognition or measurement of tax positions can
      materially affect the estimate of the effective tax rate and consequently,
      affect our operating results.




-33-




Revenue
      Recognition





The
      Company recognizes revenue in accordance with the guidance contained in SEC
      Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial
      Statements”. Revenue is recognized when the product has been delivered and title
      and risk of loss have passed to the customer, collection of the resulting
      receivable is deemed reasonably assured by management, persuasive evidence
      of an
      arrangement exists and the sale price is fixed and determinable.





Historically
      the Company has been successful in mitigating the risks associated with its
      revenue. Some issues relate to product warranty, credit worthiness of its
      customers and concentration of sales among a few major customers.





The
      Company is not contractually obligated to accept returns from non-distributor
      customers except for defective product or in instances where the product does
      not meet the Company’s quality specifications. If these conditions existed, the
      Company would be obligated to repair or replace the defective product or make
      a
      cash settlement with the customer. Distributors generally have the right to
      return up to 5% of their purchases over the previous three to six months and
      are
      obligated to purchase an amount at least equal to the return. If the Company
      terminates a distributor, the Company is obligated to accept as a return all
      of
      the distributor’s inventory from the Company. The Company accrues an estimate
      for anticipated returns based on historical experience at the time revenue
      is
      recognized and adjusts such estimate as specific anticipated returns are
      identified. If a distributor terminates its relationship with the Company,
      the
      Company is not obligated to accept any inventory returns. The Company has a
      significant amount of sales with several customers. However, no one customer
      represented 10% or more of sales during the six months ended June 30, 2007.
      The
      loss of any substantial customer could have a material adverse effect on the
      Company’s consolidated results of operations, financial position and cash
      flows.




-34-




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 SalesSix
                  Months Ended
              
              Three
                  Months EndedJune
                  30,
              
              June
                  30,2007
              
              2006
              
              2007
              
              2006Net
                  sales
              
              
              100.0%
              
              
              100.0%
              
              
              100.0%
              
              
              100.0%Cost
                  of sales
              
              
              78.2
              
              
              74.5
              
              
              78.9
              
              
              75.6Selling,
                  general andadministrative
                  expenses
              
              
              15.1
              
              
              16.2
              
              
              14.9
              
              
              15.4Gain
                  on sale of property, plant andequipment
              
              
              0.7
              
              
              -
              
              
              1.4
              
              
              -Casualty
                  loss
              
              
              -
              
              
              0.9
              
              
              -
              
              
              0.2Interest
                  income and interestand
                  financing expense
              
              
              1.4
              
              
              0.9
              
              
              1.6
              
              
              1.0Gain
                  on sale of property andmarketable
                  securities
              
              
              2.0
              
              
              4.3
              
              
              4.1
              
              
              7.9Earnings
                  before provisionfor
                  income taxes
              
              
              10.8
              
              
              13.6
              
              
              13.3
              
              
              17.6Income
                  tax provision
              
              
              2.6
              
              
              3.0
              
              
              3.4
              
              
              4.5Net
                  earnings
              
              
              8.2
              
              
              10.5
              
              
              10.0
              
              
              13.2





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) fromPrior
                  Period
              
              (Decrease)
                  fromPrior
                  PeriodSix
                  Months EndedJune
                  30, 2007compared
                  with SixMonths
                  Ended June30,
                  2006
              
              Three
                  Months EndedJune
                  30, 2007compared
                  with ThreeMonths
                  Ended June30,
                  2006Net
                  sales
              
              
              1.9%
              
              
              (7.3)%Cost
                  of sales
              
              
              6.9
              
              
              (3.3)Selling,
                  general andadministrative
                  expenses
              
              
              (4.8)
              
              
              (10.3)Net
                  earnings
              
              
              (20.3)
              
              
              (29.7)
  -35-


**SIX
      MONTHS ENDED JUNE 30, 2007 VERSUS** **SIX
      MONTHS ENDED JUNE 30, 2006**





Sales




Net
      sales
      increased 1.9% from $121.1 million during the six months ended June 30, 2006
      to
      $123.4 million during the six months ended June 30, 2007. The Company attributes
      the increase to increased module sales of $11.2 million, offset by a decrease
      in
      magnetic sales of $7.5 million, a decrease in interconnect sales of $1.3 million
      and a decrease in circuit protection sales of $.1 million. The decreases reflect
      determinations by the Company to exit lower margin business.





The
      significant components of the Company's revenues for the six months ended June
      30, 2007 were magnetic products of $61.3 million (as compared with $68.8 million
      during the six months ended June 30, 2006), interconnect products of $22.1
      million (as compared with $23.4 million during the six months ended June 30,
      2006), module products of $30.6 million (as compared with $19.4 million during
      the six months ended June 30, 2006), and circuit protection products of $9.4
      million (as compared with $9.5 million during the six months ended June 30,
      2006.)





Based
      in
      part on conflicting opinions the Company received from customers and competitors
      in the electronics industry pertaining to revenue growth during 2006, the
      Company cannot predict with any degree of certainty sales revenue for 2007.
      Although the Company's backlog has been stable, the Company feels that such
      backlog is not a good indicator of revenues. The Company continues to have
      limited visibility as to future customer requirements.





The
      Company cannot quantify the extent of sales growth arising from unit sales
      mix
      and/or price changes. Given the change in the nature of the products purchased
      by customers from period to period, the Company believes that neither unit
      changes nor price changes are meaningful. Over the past year, newer and more
      sophisticated products with higher unit selling prices have been introduced.
      Through the Company's engineering and research effort, the Company has been
      successful in adding additional value to existing product lines, which tends
      to
      increase sales prices initially until that generation of products becomes mature
      and sales prices experience price degradation. In general, as products become
      mature, average selling prices decrease.




-36-





Cost
      of Sales





Bel
      generally enters into processing arrangements with five independent third party
      contractors in the Far East. Costs are recorded as incurred for all products
      manufactured either at third party facilities or at the Company's own
      manufacturing facilities. Such amounts are determined based upon the estimated
      stage of production and include labor cost and fringes and related allocations
      of factory overhead. The Company manufactures finished goods at its own
      manufacturing facilities in Glen Rock, Pennsylvania, Inwood, New York, the
      Dominican Republic and Mexico.





Cost
      of
      sales as a percentage of net sales increased from 74.5% during the six months
      ended June 30, 2006 to 78.2% during the six months ended June 30, 2007. The
      increase in the cost of sales percentage is primarily attributable to the
      following:





·
            The
                Company established a $1.2 million warranty accrual for a defective
                part,
                including a $.4 million inventory write-off of materials on hand
                related
                to this matter which are deemed to be
                unusable.





·
            The
                Company incurred a 3.3% increase in material costs as a percentage
                of net
                sales. The increase in raw material costs is principally related
                to
                increased manufacturing of value-added products, which have a higher
                raw
                material content than the Company’s other products, increased costs for
                raw materials such as copper, steel and petroleum-based products
                and
                increased transportation costs. Since the majority of the manufacturing
                is
                conducted in the Far East the increased material costs negatively
                impact
                the operating profits in the Far
                East.





·
            The
                Company is currently paying higher wage rates and benefits to its
                production workers in China. These higher rates and benefits are
                reflected
                in the Company’s cost of sales.





·
            Sales
                of the Company’s DC-DC power products have increased. While these products
                are strategic to Bel’s growth and important to total earnings, they return
                lower gross profit percentage margins as a larger percentage of their
                bills of materials are purchased components. As these sales continue
                to
                increase, the Company’s average gross profit percentage will likely
                decrease.




Included
      in cost of sales are research and development expenses of $3.1 million and
      $3.5
      million for the six months ended June 30, 2007 and 2006, respectively.




-37-




Selling,
      General and Administrative Expenses





The
      percentage relationship of selling, general and administrative expenses to
      net
      sales decreased from 16.2% during the six months ended June 30, 2006 to 15.1%
      during the six months ended June 30, 2007. The Company attributes the percentage
      decrease to increased sales and a decrease in selling, general and
      administrative expense. The decrease in selling, general and administrative
      expense for the six months ended June 30, 2007 compared to the six months ended
      June 30, 2006 was approximately $.9 million. The decrease is principally
      attributed to a decrease of bonus accruals of $.7 million and amortization
      of
      intangibles of $.8 million partially offset by increased professional fees
      of
      $.4 million. The decrease in amortization is principally attributable to lower
      amortization of intangibles due to certain intangibles becoming fully amortized.
      The increase in professional fees is principally attributable to increased
      legal
      fees in connection with various lawsuits in which the Company is
      involved.




-38-





Interest
      Income





Interest
      income earned on cash and cash equivalents increased by approximately $.7
      million during the six months ended June 30, 2007, as compared to the comparable
      period in 2006. The increase is due primarily to increased balances of cash
      and
      cash equivalent balances and marketable securities and increased yields on
      such
      balances.





Interest
      Expense and Other Costs





Interest
      expense and other costs amounted to $123,000 during the six months ended June
      30, 2007, related primarily to the write off of financing expenses incurred
      in
      connection with the Company’s credit facility. During the six months ended June
      30, 2006, interest and other expenses included $44,000 of amortization of
      financing expenses related to the Company's credit facility in the United
      States.





Sale
      of Marketable Securities and Property





During
      the six months ended June 30, 2007, the Company realized gains from the sale
      of
      Toko common stock in the amount of $2.5 million and the sale of real estate
      in
      Hong Kong in the amount of $.9 million. During the six months ended June 30,
      2006, the Company realized a gain principally from the sale of Artesyn common
      stock in the amount of $5.2 million.




Casualty
      Loss





During
      2006, the Company
      incurred a $1.1 million pre-tax casualty loss as a result of a fire at its
      leased manufacturing facility in the Dominican Republic .
      The
      loss was for raw
      materials and equipment in excess of estimated insurance proceeds. The
      production at this facility was substantially restored during July 2006.





Provision
      for Income Taxes





The
      provision for income taxes for the six months ended June 30, 2007 was $3.2
      million compared to a $3.7 million provision for the six months ended June
      30,
      2006. The Company's earnings before income taxes for the six months ended June
      30, 2007 are approximately $3.1 million lower than in 2006. The Company’s
      effective tax rate, the income tax provision as of percent of earnings before
      provision for income taxes, was 23.9% and 22.3% for the six months ended June
      30, 2007 and June 30, 2006, respectively. The increase is principally attributed
      to higher U.S. taxable income as a percentage of condensed consolidated taxable
      income and lower Far East taxable income for the six months ended June 30,
      2007
      compared to June 30, 2006. During the first quarter of 2006, the Company
      incurred a $1.1 million casualty loss in the U.S. which reduced U.S. income
      tax
      expense.




-39-




The
      Company conducts manufacturing activities in the Far East. More specifically,
      the Company has the majority of its products manufactured on the mainland of
      the
      People’s Republic of China (“PRC”), Hong Kong and Macao and has not been subject
      to corporate income tax in the PRC. The Company's activities in Hong Kong have
      generally consisted of administration, quality control and accounting, as well
      as some limited manufacturing activities. Hong Kong imposes corporate income
      tax
      at a rate of 17.5 percent solely on income sourced to Hong Kong. That is, its
      tax system is a territorial one which only seeks to tax activities conducted
      in
      Hong Kong.




Macao
      currently has a statutory corporate income tax rate of 12 percent. Since most
      of
      the Company's operations are conducted in the Far East, the majority of its
      profits are sourced in these three Far East jurisdictions. Accordingly, the
      profits earned in the U.S. are comparatively small in relation to its profits
      earned in the Far East. Therefore, there is generally a significant difference
      between the statutory U.S. tax rate and the Company's effective tax rate.




During
      2005, the Company was granted an offshore operating license from the government
      of Macao to set up an MCO named Bel Fuse (Macao Commercial Offshore) Limited
      with the intent to handle all of the Company’s sales to third party customers in
      Asia. Sales to third party customers commenced during the first quarter of
      2006.
      Sales consist of products manufactured in the PRC. The MCO is not subject to
      Macao corporate income taxes.





The
      Company has historically followed a practice of reinvesting a portion of the
      earnings of foreign subsidiaries in the expansion of its foreign operations.
      If
      the unrepatriated earnings were distributed to the parent corporation rather
      than reinvested in the Far East, such funds would be subject to United States
      Federal income taxes.





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
      six months ended June 30, 2007, the Company recognized approximately $237,000
      in
      interest and penalties in the condensed Consolidated Statement of Operations.
      The Company has approximately $1.7 million accrued for the payment of interest
      and penalties at June 30, 2007, which is included in both income taxes payable
      and liability for uncertain tax positions in the condensed consolidated balance
      sheet.




-40-


**THREE
      MONTHS ENDED JUNE 30, 2007 VERSUS** **THREE
      MONTHS ENDED JUNE 30, 2006**





Sales





Net
      sales
      decreased 7.3% from $66.5 million during the three months ended June 30, 2006
      to
      $61.6 million during the three months ended June 30, 2007. The Company
      attributes the decrease to decreased magnetic sales of $7.1 million, decreased
      interconnect sales of $1.3 million and decreased circuit protection sales of
      $.3
      million offset in part by an increase in module sales of $3.8 million. The
      decreases reflect determinations by the Company to exit lower margin business.





The
      significant components of the Company's revenues for the three months ended
      June
      30, 2007 were magnetic products of $29.8 million (as compared with $36.9 million
      during the three months ended June 30, 2006), interconnect products of $11.0
      million (as compared with $12.3 million during the three months ended June
      30,
      2006), module products of $15.8 million (as compared with $12.0 million during
      the three months ended June 30, 2006), and circuit protection products of $5.0
      million (as compared with $5.3 million during the three months ended June 30,
      2006.)





Cost
      of Sales





Cost
      of
      sales as a percentage of net sales increased from 75.6% during the three months
      ended June 30, 2006 to 78.9% during the three months ended June 30, 2007. The
      increase in the cost of sales percentage is primarily attributable to the
      following:




-41-


·
            The
                Company established a $1.2 million warranty accrual for a defective
                part,
                including a $.4 million inventory write-off of materials on hand
                related
                to this matter which are deemed to be
                unusable.





·
            The
                Company’s material costs as a percentage of net sales remained constant
                during the quarter ended June 30, 2007 versus June 30, 2006.





·
            The
                Company is currently paying higher wage rates and benefits to its
                production workers in China. These higher rates and benefits are
                reflected
                in the Company’s cost of sales.





·
            Sales
                of the Company’s DC-DC power products have increased. While these products
                are strategic to Bel’s growth and important to total earnings, they return
                lower gross profit percentage margins as a larger percentage of their
                bills of materials are purchased components. As these sales continue
                to
                increase, the Company’s average gross profit percentage will likely
                decrease.




Included
      in cost of sales are research and development expenses of $1.6 million and
      $1.6
      million for the three months ended June 30, 2007 and 2006, respectively.




Selling,
      General and Administrative Expenses





The
      percentage relationship of selling, general and administrative expenses to
      net
      sales decreased from 15.4 % during the three months ended June 30, 2006 to
      14.9%
      during the three months ended June 30, 2007. The decrease in selling, general
      and administrative expense for the three months ended June 30, 2007 compared
      to
      the three months ended June 30, 2006 was approximately $1.1 million. The
      decreases are principally related to the same reasons as outlined in the six
      month analysis.





Interest
      Income





Interest
      income earned on cash and cash equivalents increased by approximately $.3
      million during the three months ended June 30, 2007, as compared to the
      comparable period in 2006. The increase is due primarily to increased balances
      of cash and cash equivalent balances and marketable securities and increased
      yields on such balances.




-42-


Sale
      of Marketable Securities and Property





During
      the three months ended June 30, 2007, the Company realized gains from the sale
      of Toko common stock in the amount of $2.5 million and the sale of real property
      in Hong Kong in the amount of $.9 million. During the three months ended June
      30, 2006, the Company realized a gain principally from the sale of Artesyn
      common stock in the amount of $5.2 million.





Provision
      for Income Taxes





The
      provision for income taxes for the three months ended June 30, 2007 was $2.1
      million compared to a $3.0 million provision for the three months ended June
      30,
      2006. The Company's earnings before income taxes for the three months ended
      June
      30, 2007 are approximately $3.5 million lower than the same period in 2006.
      The
      lower provision in 2007 is the result of lower taxable income in the U.S.
      principally due to lower capital gains from the sale of marketable securities
      of
      $2.7 million during the three months ended June 30, 2007 compared to the three
      months ended June 30, 2006 and lower income from operations offset in part
      by a
      tax free sale of real property in Hong Kong during the three months ended June
      30, 2007.




-43-




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
      three months ended June 30, 2007, the Company recognized approximately $145,000
      in interest and penalties in the Condensed Consolidated Statement of Operations.





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, the Macao Pataca or the Chinese
      Renminbi. The Chinese Renminbi has appreciated in value during 2007 and 2006.
      Further appreciation of the Renminbi would result in the Company’s incurring
      higher costs for all expenses incurred in China. Commencing with the acquisition
      of the Passive Components Group, the Company's European entity has sales
      transactions which are denominated principally in Euros and British
      Pounds. Conversion of these transactions into U.S. dollars has resulted in realized
      currency exchange losses of $28,000 and $203,000 for the six months ended June
      30, 2007 and 2006, respectively, which were charged to expense, and
      approximately $334,000 and $205,000 for the six months ended June 30, 2007
      and
      2006, respectively, in unrealized exchange gains relating to the translation
      of
      foreign subsidiary financial statements which are included in accumulated other
      comprehensive income. Any change in linkage of the U.S. Dollar and the Hong
      Kong
      Dollar or the Macao Pataca could have a material effect on the Company's
      condensed 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 the near term.
      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 .




-44-





During
      the quarter ended March 31, 2007, the Company entered into a new unsecured
      credit agreement in the amount of $20 million, which expires on June 30, 2008.
      There was no balance outstanding as of June 30, 2007. 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 June 30, 2007. The line of credit expired during
      July 2007. 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. The Company is currently negotiating an extension of
      this
      line of credit.





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 2006 Annual Report on Form 10-K.





The
      Company completed construction of a 117,000 square foot manufacturing facility,
      during November 2006, in Zhongshan City, PRC for approximately $1.3 million.




-45-





During
      May 2007, the Company sold a parcel of land located in Jersey City, New Jersey
      for $6,000,000. The Company estimates that approximately $760,000 of the
      proceeds will be payable to the State of New Jersey as a portion of the property
      is subject to tideland claims. Of the $6.0 million sales price, the Company
      received cash of $1.5 million before closing costs, and $4.5 million is being
      held in escrow pending final resolution of the State of New Jersey tideland
      claim and certain environmental costs the Company is liable for in the maximum
      amount of $390,000. The Company has agreed to indemnify the title insurance
      company for the entire $6.0 million selling price of the property for any
      possible title claim by the State of New Jersey. The Company has deferred the
      estimated gain on the sale of the land before deduction of the estimated
      tideland claim payment of $760,000, in the amount of $4.7 million, due to the
      uncertainty of the final resolution of the State of New Jersey tideland Claim.
      The escrow of $4.5 million has been classified in restricted cash and the
      deferred gain of $4.7 million has been classified in deferred gain on the sale
      of property in the Condensed Consolidated Balance Sheet as of June 30, 2007.
      Additionally, the Company realized a $.9 million gain from the sale of real
      property in Hong Kong during the six months ended June 30, 2007.





During
      the quarter ended June 30, 2007, two of the Company’s Far East subsidiaries
      entered into contracts to sell four real estate properties, one in Hong Kong
      and
      three in Macau with a gross selling price of $9.2 million. The Company has
      classified these assets as held for sale with a net book value of approximately
      $4.2 million on the Company’s condensed consolidated balance sheet at June 30,
      2007 and expects to sell the properties by the fourth quarter of
      2007.





The
      Company currently owns a total of 1,840,919 shares, or approximately
      1.9% of the
      outstanding shares ,
      of the
      common stock of Toko, Inc. (“Toko”) at a total purchase price of $5.6 million.
      Toko had a market capitalization of approximately $240 million as of June 30,
      2007. These shares are reflected on the Company’s condensed consolidated balance
      sheet 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”. Thus, as of June 30, 2007, the Company has recorded
      an unrealized loss, net of income tax benefit of approximately $.7 million
      which
      is included in accumulated other comprehensive income in stockholders’ equity.
      During the three months ended June 30, 2007, the Company sold 4,034,000 shares
      of common stock of Toko on the open market which resulted in a pre-tax gain,
      net
      of investment banker fees and other expenses of approximately $2.5 million.





The
      Company acquired a total of 2,037,500 shares of the common stock of Artesyn
      Technologies, Inc. (“Artesyn”) at a total purchase price of $16,331,469. On
      April 28, 2006, Artesyn was acquired by Emerson Network Power for $11.00 per
      share in cash. During the second quarter of 2006, in connection with the
      Company's sale of its Artesyn common stock, the Company recognized a gain of
      approximately $5.2 million, net of investment banker advisory fees of $850,000.
      The Company accrued bonuses of $1.0 million in connection with the gain. For
      financial statement presentation purposes, the $1.0 million bonus was classified
      within selling, general and administrative expenses and was paid to key
      employees by December 31, 2006.




-46-





Under
      the
      terms of the E-Power LTD (“E-Power”) and Current Concepts, Inc. (“Current
      Concepts”) acquisition agreements of May 11, 2001, the Company was required to
      make contingent purchase price payments up to an aggregate of $7.6 million
      should the acquired companies attain specified related sales levels. E-Power was
      to be paid
      $2.0 million in contingent purchase price payments if sales reached $15.0
      million and an additional $4.0 million if sales reached $25.0
      million on a cumulative basis through May 2007. During January 2006, the $2.0
      million of contingent purchase price consideration was earned by
      E-Power  and
      during February
      2006, E-Power was paid $2.0 million in contingent purchase price
      payments **.** During
      September 2006, an additional $4.0 million was earned when
      sales reached $25.0 million on a cumulative basis and,
      as a
      result, $4.0 million was paid in November 2006, and accounted for as additional
      purchase price and as an increase to goodwill. No additional payments will
      be
      made under the E-Power agreement. Current Concepts is
      to be paid
      16% of the first $10.0 million in sales through May 2007. This $10.0 million
      benchmark was reached during the second quarter of 2006 and therefore, no
      additional payments will be made. During
      the six and three months ended June 30, 2006, the Company paid or accrued
      approximately $447,000 and $268,000, respectively, in contingent purchase price
      payments to Current Concepts. The contingent purchase price payments for Current
      Concepts are accounted for as additional purchase price and as an increase
      to
      covenants not to compete within intangible assets when such payment obligations
      are incurred.





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 June 30, 2007, the
      Company had purchased and retired 23,600 Class B common shares at a cost of
      approximately $808,000 which reduced the number of Class B common shares
      outstanding and had purchased and retired 67,026 Class A common shares at a
      cost
      of approximately $2.5 million which reduced the number of Class A common shares
      outstanding. During July and August 2007, the Company purchased 8,702 additional
      Class A common shares at a cost of $290,659 which will reduce the number of
      Class A common shares outstanding. No shares of Class B common stock were
      repurchased during the six months ended June 30, 2007 and 67,026 Class A shares
      were repurchased during the six months ended June 30, 2007.





During
      July 2007, the Board of Directors of the Company approved an increase in the
      dividends by $.02 per share per quarter for both Class A and B common shares
      effective with the November 2007 dividend payment. Such amounts are subject
      to
      change, and will be recorded when declared by the Board of
      Directors.





During
      the six months ended June 30, 2007, the Company's cash and cash equivalents
      increased by $22.8 million, reflecting approximately $11.8 million provided
      by
      operating activities (principally as a result of net income of $10.2 million
      and
      depreciation and amortization expense of $3.9 million), $27.5 million from
      the
      sale of marketable securities, $2.2 million from the sale of property, plant
      and
      equipment, proceeds of $1.0 million from the exercise of stock options and
      $4.7
      million from the deferred gain on the sale of property offset, in part, by
      $11.8
      million used principally for purchases of marketable securities, $4.5 million
      for the purchase of property, plant and equipment, $4.5 million of restricted
      cash (escrow) from the deferred gain on the sale of property, $2.5 million
      for
      the repurchase of the Company’s common stock and $1.1 million for payments of
      dividends.




-47-





Cash,
      marketable securities and cash equivalents and accounts receivable comprised
      approximately 52.0% and 50.7% of the
      Company's total assets at June 30, 2007 and December 31, 2006, respectively.
      The
      Company's current ratio (i.e., the ratio of current assets to current
      liabilities) was 5.6 to 1 and 4.5 to 1 at June 30, 2007 and December 31, 2006,
      respectively.





The
      following table sets forth at June 30, 2007 the amounts of payments due under
      specific types of contractual obligations, aggregated by category of contractual
      obligation, for the time periods described below. This table excludes
      liabilities recorded relative to uncertain income tax positions under FIN 48,
      amounting to $6.2 million included in income taxes payable and $5.4 million
      included in liability for uncertain tax positions, as of June 30, 2007 due
      to
      the uncertain timing of the resolution of such matters.




Payments
                  due by periodContractual
                  Obligations
              
              Total
              
              Less
                  than 1 year
              
              1-3
                years
              
              3-5
                years
              
              More
                  than
                5
                  yearsCapital
                  expenditure obligations
              
              $
              2,842,993
              
              $
              2,842,993
              
              $
              -
              
              $
              -
              
              $
              -Operating
                  leases
              
              
              5,171,302
              
              
              1,756,697
              
              
              2,200,285
              
              
              1,214,320
              
              
              -Raw
                  material purchase obligations
              
              
              14,107,797
              
              
              14,107,797
              
              
              -
              
              
              -
              
              
              -Total
              
              $
              22,122,092
              
              $
              18,707,487
              
              $
              2,200,285
              
              $
              1,214,320
              
              $
              -





The
      Company is required to pay SERP
      obligations at the occurrence of certain events. As of June 30, 2007, the SERP
      had an unfunded benefit obligation of approximately $1.6 million, net of
      deferred income tax benefit. The gross minimum pension obligation and unfunded
      benefit obligation in the amount of $5.2 million is included in long-term
      liabilities as an unfunded pension obligation on the Company’s condensed
      consolidated balance sheet. Included in other assets at June 30, 2007 are
      marketable securities with an estimated value of $3.9 million, which have been
      designated by the Company to be utilized to fund the Company’s SERP
      obligations.




-48-





New
      Financial Accounting Standards




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
      enhances existing guidance for measuring assets and liabilities using fair
      value. This Standard provides a single definition of fair value, together with
      a
      framework for measuring it, and requires additional disclosure about the use
      of
      fair value to measure assets and liabilities. SFAS No. 157 is effective for
      financial statements issued for fiscal years beginning after November 15, 2007,
      and interim periods within those fiscal years. The Company does not believe
      that
      SFAS No. 157 will have a material impact on its financial
      statements.





In
      February 2007, the FASB issued SFAS No. 159 (“SFAS 159”) “The Fair Value Option
      for Financial Assets and Financial Liabilities”, providing companies with an
      option to report selected financial assets and liabilities at fair value. The
      Standard’s objective is to reduce both complexity in accounting for financial
      instruments and the volatility in earnings caused by measuring related assets
      and liabilities differently. It also requires entities to display the fair
      value
      of those assets and liabilities for which the Company has chosen to use fair
      value on the face of the balance sheet. SFAS 159 is effective for fiscal years
      beginning after November 15, 2007. The Company is currently evaluating the
      impact of the adoption of this Statement on its financial statements.




-49-




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.





The
      Company enters into transactions denominated in U.S. Dollars, Hong Kong Dollars,
      the Macao Pataca, the Chinese Renminbi, Euros and British Pounds. 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.





-50-




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.




-51-


PART
      II.
      Other Information





Item
      1.  Legal
      Proceedings





The
      Company is a defendant in a lawsuit captioned Halo Electronics, Inc. (“Halo”) v.
      Bel Fuse Inc., Pulse Engineering, Inc. and Technitrol, Inc. brought in Nevada
      Federal District Court. Plaintiff claims that the Company has infringed its
      patents covering certain surface mount discrete magnetic products made by the
      Company. Halo is seeking unspecified damages, which it claims should be trebled.





The
      Company is a plaintiff in a lawsuit captioned Bel Fuse Inc., a New Jersey
      Corporation v. Halo Electronics, Inc. brought in the United States District
      Court of New Jersey during May 2007. The Company claims that Halo has infringed
      a patent covering certain surface mount discrete magnetic products made by
      Halo.
      The Company is seeking unspecified damages plus interest, costs and attorney
      fees.





The
      Company and two of its officers are defendants in a wrongful termination lawsuit
      brought in the District Court of Frankfurt am Main, Germany by a former employee
      at a foreign subsidiary of the Company. During July 2007, this lawsuit was
      settled for approximately $466,000. The Company had provided for this liability
      in its financial statements prior to the settlement.





The
      Company is a plaintiff in a lawsuit captioned Bel Fuse Inc., a New Jersey
      corporation, and Bel Power, Inc., a Massachusetts corporation, v. Andrew
      Ferencz, Gregory Zovonar, Bernhard Schroter, EE2GO, Inc., a Massachusetts
      corporation, 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.





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. The Company
      believes it has adequate defenses regarding this lawsuit and accordingly has
      not
      accrued any liability in connection with such lawsuit.




-52-





The
      Company is a defendant in a lawsuit captioned Murata Manufacturing Company,
      Ltd.
      v. Bel Fuse Inc. et al, brought in Illinois Federal District Court. Plaintiff
      claims that its patent covers all of the Company's modular jack products. That
      party had previously advised the Company that it was willing to grant a
      non-exclusive license to the Company under the patent for a 3% royalty on all
      future gross sales of ICM products; payment of a lump sum of 3% of past sales
      including sales of applicable Insilco products; an annual minimum royalty of
      $500,000; payment of all attorney fees; and marking of all licensed ICM's with
      the third party's patent number. The Company was also a defendant in a lawsuit,
      captioned Regal Electronics, Inc. v. Bel Fuse Inc., brought in California
      Federal District Court. Plaintiff claims that its patent covers certain of
      the
      Company's modular jack products. That party had previously advised the Company
      that it was willing to grant a non-transferable license to the Company for
      an up
      front fee of $500,000 plus a 6% royalty on future sales. The District Court
      has
      granted summary judgment in the Company's favor dismissing Regal Electronics'
      infringement claims, while at the same time the Court dismissed the Company's
      invalidity counterclaim against Regal Electronics. Regal has appealed the
      Court's rejection of its infringement claims to the U.S. Court of Appeals.
      The
      case was heard on February 6, 2007 and the U.S. Court of Appeals upheld the
      District Court’s ruling in favor of the Company.





The
      Company cannot predict the outcome of these 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 at June 30, 2007, no amounts have been accrued in connection
      with
      these lawsuits, except for the Germany lawsuit, as described above, as the
      amounts are not determinable.




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




Item
      4. Submission
      of Matters to a Vote of Security Holders





The
      Company’s annual meeting of security holders was held on May 11, 2007. At the
      meeting the Board’s nominees were elected to the Board of Directors for terms of
      three years. The votes were cast as follows:




For
            
            WithheldDaniel
                Bernstein
            
            
            1,598,270
            
            
            394,919Peter
                Gilbert
            
            
            1,836,669
            
            
            156,520John
                Johnson
            
            
            1,836,669
            
            
            156,520




-53-




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.




-54-


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 and
                  Chief
                    Executive Officer


By:
            /s/
              Colin DunnColin
                Dunn, Vice President of Finance




Dated:
      August 9, 2007





-55-