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,
      2008


or





** ̈** **** **TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934**





For
      the
      transition period from  ** to  **





Commission
      File Number:  0-F11676





BEL
      FUSE
      INC.


(Exact
      name of registrant as specified in its charter)




NEW
                  JERSEY
              
              22-1463699(State
                  of other jurisdiction of incorporation or organization)
              
              (I.R.S.
                  Employer Identification No.)
 
 206
                  Van Vorst Street
              Jersey
                  City, New Jersey
              07302(Address
                  of principal executive offices)
              
              (Zip
                  Code)




(201)
        432-0463
 
 (Registrant's
        telephone number, including area code)









(Former
      name, former address and former fiscal year, if changed since last
      report)





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





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





Large
                accelerated filer ̈
            Accelerated
                filerx
            Non-accelerated
                filer ̈
            Smaller
                reporting company ̈


(Do not
      check if a smaller reporting
      company)





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


 ̈  Yes  x  No





At
      August
      6, 2008, there were 2,511,380 shares of Class A Common Stock, $0.10 par value,
      outstanding and 9,374,593 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, 2008 and December 31,
                2007
            2-3Condensed
                Consolidated Statements of Operations for the Three and Six Months
                Ended
                June 30, 2008 and 2007
            4Condensed
                Consolidated Statements of Stockholders' Equity for the Year Ended
                December 31, 2007 and the Six Months Ended June 30, 2008
            5Condensed
                Consolidated Statements of Cash Flows for the Six Months Ended June
                30,
                2008 and 2007
            6-7Notes
                to Condensed Consolidated Financial Statements
            8-22Item
                1A.
            Risk
                Factors
            23Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            24-36Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            37-38Item
                4.
            Controls
                and Procedures
            39Part
                II
            
            Other
                InformationItem
                1.
            Legal
                Proceedings
            39Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            40Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            40Item
                6.
            Exhibits
            41Signatures
            42







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, 2007.





The
      results of operations for the three and six months ended June 30, 2008 and
      2007
      are not necessarily indicative of the results for the entire fiscal year or
      for
      any other period.


-
          1 -





**BEL
      FUSE INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(dollars
      in thousands)**





June 30,
            
            December 31,2008
            
            2007**ASSETS**Current
                Assets:Cash
                and cash equivalents
            
            $
            88,126
            
            $
            83,875Marketable
                securities
            
            
            13,963
            
            
            3,273Short-term
                investments
            
            
            9,360
            
            
            20,542Accounts
                receivable - less allowance for doubtful accounts of $1,045 and $977
                at
                June 30, 2008 and December 31, 2007, respectively
            
            
            51,716
            
            
            52,217Inventories
            
            
            46,295
            
            
            39,049Prepaid
                expenses and other current assets
            
            
            1,833
            
            
            1,446Refundable
                income taxes
            
            
            2,452
            
            
            3,168Deferred
                income taxes
            
            
            1,655
            
            
            2,661Total
                Current Assets
            
            
            215,400
            
            
            206,231Property,
                plant and equipment - net
            
            
            41,030
            
            
            41,113Restricted
                cash
            
            
            2,304
            
            
            4,553Long-term
                investments
            
            
            2,492
            
            
            2,536Deferred
                income taxes
            
            
            6,234
            
            
            4,364Intangible
                assets - net
            
            
            1,170
            
            
            1,181Goodwill
            
            
            28,686
            
            
            28,447Other
                assets
            
            
            5,206
            
            
            5,435TOTAL
                ASSETS
            
            $
            302,522
            
            $
            293,860





See
      notes
      to condensed consolidated financial statements.


-
          2 -


**BEL
      FUSE INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**


**(dollars
      in thousands, except per share data)**




June 30,
            
            December 31,2008
            
            2007**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                Liabilities:Accounts
                payable
            
            $
            20,847
            
            $
            16,145Accrued
                expenses
            
            
            11,846
            
            
            12,113Income
                taxes payable
            
            
            3,881
            
            
            4,007Dividends
                payable
            
            
            834
            
            
            795Total
                Current Liabilities
            
            
            37,408
            
            
            33,060Long-term
                Liabilities:Deferred
                gain on sale of property
            
            
            4,633
            
            
            4,645Liability
                for uncertain tax positions
            
            
            7,387
            
            
            6,930Minimum
                pension obligation and unfunded pension liability
            
            
            5,019
            
            
            4,698Total
                Long-term Liabilities
            
            
            17,039
            
            
            16,273Total
                Liabilities
            
            
            54,447
            
            
            49,333Commitments
                and ContingenciesStockholders'
                Equity:Preferred
                stock, no par value, authorized 1,000,000 shares; none
                issued
            
            
            -
            
            
            -Class
                A common stock, par value $.10 per share - authorized 10,000,000
                shares;
                outstanding 2,517,200 and 2,545,644 shares, respectively (net of
                1,072,770
                treasury shares)
            
            
            252
            
            
            255Class
                B common stock, par value $.10 per share - authorized 30,000,000
                shares;
                outstanding 9,374,593 and 9,286,627 shares, respectively (net of
                3,218,310
                treasury shares)
            
            
            938
            
            
            929Additional
                paid-in capital
            
            
            29,355
            
            
            29,107Retained
                earnings
            
            
            216,947
            
            
            214,580Accumulated
                other comprehensive income (loss)
            
            
            583
            
            
            (344
            )Total
                Stockholders' Equity
            
            
            248,075
            
            
            244,527TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            302,522
            
            $
            293,860





See
      notes
      to condensed consolidated financial statements.


-
          3 -





**BEL
      FUSE INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(dollars
      in thousands, except per share data)**





Three
                Months Ended
            
            Six
                Months EndedJune
                30,
            
            June
                30,2008
            
            2007
            
            2008
            
            2007Net
                Sales
            
            $
            72,454
            
            $
            61,612
            
            $
            133,323
            
            $
            123,419Costs
                and expenses:Cost
                of sales
            
            
            59,317
            
            
            48,599
            
            
            108,955
            
            
            96,490Selling,
                general and administrative
            
            
            9,284
            
            
            9,178
            
            
            18,217
            
            
            18,661Gain
                on sale of property, plant and equipment
            
            
            -
            
            
            (880
            )
            
            -
            
            
            (880
            )68,601
            
            
            56,897
            
            
            127,172
            
            
            114,271Income
                from operations
            
            
            3,853
            
            
            4,715
            
            
            6,151
            
            
            9,148Interest
                expense and other costs
            
            
            (2
            )
            
            (2
            )
            
            (1
            )
            
            (124
            )(Impairment
                charge) gain on sale of investment
            
            
            (2,352
            )
            
            2,508
            
            
            (2,633
            )
            
            2,508Interest
                income
            
            
            605
            
            
            1,003
            
            
            1,518
            
            
            1,836Earnings
                before provision for income taxes
            
            
            2,104
            
            
            8,224
            
            
            5,035
            
            
            13,368Income
                tax provision
            
            
            293
            
            
            2,066
            
            
            1,057
            
            
            3,201Net
                earnings
            
            $
            1,811
            
            $
            6,158
            
            $
            3,978
            
            $
            10,167Earnings
                per Class A common shareBasic
            
            $
            0.14
            
            $
            0.49
            
            $
            0.31
            
            $
            0.81Diluted
            
            $
            0.14
            
            $
            0.49
            
            $
            0.31
            
            $
            0.81Weighted
                average Class A common shares outstandingBasic
            
            
            2,524,978
            
            
            2,661,589
            
            
            2,528,693
            
            
            2,682,400Diluted
            
            
            2,524,978
            
            
            2,661,589
            
            
            2,528,693
            
            
            2,682,400Earnings
                per Class B common shareBasic
            
            $
            0.16
            
            $
            0.52
            
            $
            0.34
            
            $
            0.87Diluted
            
            $
            0.16
            
            $
            0.52
            
            $
            0.34
            
            $
            0.86Weighted
                average Class B common shares outstandingBasic
            
            
            9,352,092
            
            
            9,233,397
            
            
            9,329,516
            
            
            9,203,547Diluted
            
            
            9,352,609
            
            
            9,261,587
            
            
            9,333,082
            
            
            9,234,319




See
      notes
      to condensed consolidated financial statements.


-
          4 -





**BEL
      FUSE INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY**


**(dollars
      in thousands)**





AccumulatedCompre-
            
            
            
            Other
            
            Class
                A
            
            Class
                B
            
            Additionalhensive
            
            Retained
            
            Comprehensive
            
            Common
            
            Common
            
            Paid-InTotal
            
            Income
            
            Earnings
            
            Income
                (loss)
            
            Stock
            
            Stock
            
            CapitalBalance,
                January 1, 2007
            
            $
            222,150
            
            
            
            
            $
            190,953
            
            $
            (1,816
            )
            $
            270
            
            $
            917
            
            $
            31,826Exercise
                of stock options
            
            
            1,452
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            6
            
            
            1,446Tax
                benefits arising from the disposition of non-qualified incentive
                stock
                options
            
            
            149
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            149Cash
                dividends declared on Class A common stock
            
            
            (534
            )
            
            
            
            
            (534
            )Cash
                dividends declared on Class B common stock
            
            
            (2,175
            )
            
            
            
            
            (2,175
            )Issuance
                of restricted common stock
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            7
            
            
            (7
            )Termination
                of restricted common stock
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1
            )
            
            1Repurchase/retirement
                of Class A common stock
            
            
            (5,733
            )
            
            
            
            
            
            
            
            
            
            
            (15
            )
            
            
            
            
            (5,718
            )Currency
                translation adjustment
            
            
            960
            
            
            960
            
            
            
            
            
            960Unrealized
                holding gains on marketable securities arising during the year, net
                of
                taxes
            
            
            2,077
            
            
            2,077
            
            
            
            
            
            2,077Reclassification
                adjustment for gains included in net earnings, net of
                taxes
            
            
            (2,058
            )
            
            (2,058
            )
            
            
            
            
            (2,058
            )Stock-based
                compensation expense
            
            
            1,410
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1,410Change
                in unfunded SERP liability, net of taxes
            
            
            493
            
            
            493
            
            
            
            
            
            493Net
                earnings
            
            
            26,336
            
            
            26,336
            
            
            26,336Comprehensive
                income
            
            
            
            
            $
            27,808Balance,
                December 31, 2007
            
            $
            244,527
            
            
            
            
            $
            214,580
            
            $
            (344
            )
            $
            255
            
            $
            929
            
            $
            29,107Exercise
                of stock options
            
            
            312
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3
            
            
            309Tax
                benefits arising from the disposition of non-qualified incentive
                stock
                options
            
            
            40
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            40Cash
                dividends declared on Class A common stock
            
            
            (306
            )
            
            
            
            
            (306
            )Cash
                dividends declared on Class B common stock
            
            
            (1,305
            )
            
            
            
            
            (1,305
            )Issuance
                of restricted common stock
            
            
            -
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            6
            
            
            (6
            )Repurchase/retirement
                of Class A common stock
            
            
            (766
            )
            
            
            
            
            
            
            
            
            
            
            (3
            )
            
            
            
            
            (763
            )Currency
                translation adjustment
            
            
            804
            
            
            804
            
            
            
            
            
            804Unrealized
                holding losses on marketable securities arising during the year,
                net of
                taxes
            
            
            (1,336
            )
            
            (1,336
            )
            
            
            
            
            (1,336
            )Reclassification
                adjustment for impairment charge included in net earnings, net of
                taxes
            
            
            1,459
            
            
            1,459
            
            
            
            
            
            1,459Stock-based
                compensation expense
            
            
            668
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            668Net
                earnings
            
            
            3,978
            
            
            3,978
            
            
            3,978Comprehensive
                income
            
            
            
            
            $
            4,905Balance,
                June 30, 2008
            
            $
            248,075
            
            
            
            
            $
            216,947
            
            $
            583
            
            $
            252
            
            $
            938
            
            $
            29,355





See
      notes
      to condensed consolidated financial statements.


-
          5 -


**BEL
      FUSE INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(dollars
      in thousands)**





Six
                Months EndedJune
                30,2008
            
            2007Cash
                flows from operating activities:Net
                earnings
            
            $
            3,978
            
            $
            10,167Adjustments
                to reconcile net earnings to net cash provided by operating
                activities:Depreciation
                and amortization
            
            
            3,601
            
            
            3,850Stock-based
                compensation
            
            
            668
            
            
            683Excess
                tax benefits from share-basedpayment
                arrangements
            
            
            (40
            )
            
            (124
            )Loss
                (gain) on sale of property, plant and equipment
            
            
            2
            
            
            (880
            )Impairment
                charge (gain on sale) on investment
            
            
            2,633
            
            
            (2,508
            )Unrealized
                foreign exchange transaction gains
            
            
            (123
            )
            
            -Other,
                net
            
            
            289
            
            
            478Deferred
                income taxes
            
            
            (1,059
            )
            
            (2,426
            )Changes
                in operating assets and liabilities (see below)
            
            
            (1,245
            )
            
            2,558Net
                Cash Provided by Operating Activities
            
            
            8,704
            
            
            11,798Cash
                flows from investing activities:Purchase
                of property, plant and equipment
            
            
            (3,144
            )
            
            (4,484
            )Purchase
                of intangible asset
            
            
            (300
            )
            
            -Purchase
                of marketable securities
            
            
            (12,524
            )
            
            (11,801
            )Proceeds
                from sale of marketable securities
            
            
            -
            
            
            27,499Proceeds
                from sale of property, plant and equipment
            
            
            2,290
            
            
            2,192Redemption
                of investment
            
            
            10,949
            
            
            -Net
                Cash (Used In) Provided by Investing Activities
            
            
            (2,729
            )
            
            13,406





See
      notes
      to condensed consolidated financial statements.


-
          6 -


**BEL
      FUSE INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)**


**(dollars
      in thousands)**





Six
                Months EndedJune
                30,2008
            
            2007Cash
                flows from financing activities:Proceeds
                from exercise of stock options
            
            
            312
            
            
            1,034Dividends
                paid to common shareholders
            
            
            (1,572
            )
            
            (1,125
            )Purchase
                and retirement of Class A common stock
            
            
            (766
            )
            
            (2,477
            )Excess
                tax benefits from share-basedpayment
                arrangements
            
            
            40
            
            
            124Net
                Cash Used In Financing Activities
            
            
            (1,986
            )
            
            (2,444
            )Effect
                of exchange rate changes on cash
            
            
            262
            
            
            83Net
                Increase in Cash and Cash Equivalents
            
            
            4,251
            
            
            22,843Cash
                and Cash Equivalents-
                beginning of period
            
            
            83,875
            
            
            76,761Cash
                and Cash Equivalents-
                end of period
            
            $
            88,126
            
            $
            99,604Changes
                in operating assets and liabilities consist of:Decrease
                in accounts receivable
            
            $
            907
            
            $
            1,158(Increase)
                decrease in inventories
            
            
            (6,990
            )
            
            2,337Increase
                in prepaid expenses and other current assets
            
            
            (360
            )
            
            (127
            )Increase
                in other assets
            
            
            (75
            )
            
            (681
            )Increase
                (decrease) in accounts payable
            
            
            4,604
            
            
            (1,759
            )Increase
                in income taxes
            
            
            982
            
            
            803(Decrease)
                increase in accrued expenses
            
            
            (313
            )
            
            827$
            (1,245
            )
            $
            2,558Supplementary
                information:Cash
                paid during the period for income taxes
            
            $
            854
            
            $
            4,757





See
      notes
      to condensed consolidated financial statements.


-
          7 -


BEL
      FUSE
      INC. AND SUBSIDIARIES


NOTES
      TO
      UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS




1. BASIS
          OF
          PRESENTATION AND ACCOUNTING POLICIES




The
      condensed consolidated balance sheet as of June 30, 2008, and the condensed
      consolidated statements of operations, stockholders' equity and cash flows
      for
      the periods presented herein have been prepared by Bel Fuse Inc. (the "Company"
      or "Bel") and are unaudited. In the opinion of management, all adjustments
      (consisting solely of normal recurring adjustments) necessary to present fairly
      the financial position, results of operations, changes in stockholders' equity
      and cash flows for all periods presented have been made. The results for the
      three and six months ended June 30, 2008 should not be viewed as indicative
      of
      the Company’s annual results or the Company’s results for any other period. The
      information for the condensed consolidated balance sheet as of December 31,
      2007
      was derived from audited financial statements. These financial statements should
      be read in conjunction with the consolidated financial statements and footnotes
      thereto included in the Bel Form 10-K for the year ended December 31,
      2007.





Certain
      reclassifications have been made to prior period amounts to conform to the
      current year presentation, principally in the detailed disclosures within the
      footnotes pertaining to the business segment information and accrued
      expenses.




2. EARNINGS
          PER SHARE





The
      Company utilizes the two-class method to report its earnings per share. The
      two-class method is an earnings allocation formula that determines earnings
      per
      share for each class of common stock according to dividends declared and
      participation rights in undistributed earnings. The Company’s Certificate of
      Incorporation, as amended, states that Class B common shares are entitled to
      dividends at least 5% greater than dividends paid to Class A common shares,
      resulting in the two-class method of computing earnings per share. In computing
      earnings per share, the Company has allocated dividends declared to Class A
      and
      Class B based on amounts actually declared for each class of stock and 5% more
      of the undistributed earnings have been allocated to Class B shares than to
      the
      Class A shares on a per share basis. Basic earnings per common share are
      computed by dividing net earnings by the weighted average number of common
      shares outstanding during the period. Diluted earnings per common share, for
      each class of common stock, are computed by dividing net earnings by the
      weighted average number of common shares and potential common shares outstanding
      during the period. Potential common shares used in computing diluted earnings
      per share relate to stock options for Class B common shares which, if exercised,
      would have a dilutive effect on earnings per share.


-
          8 -


The
      earnings and weighted average shares outstanding used in the computation of
      basic and diluted earnings per share are as follows (dollars in thousands,
      except share and per share data):





Three
                Months Ended
            
            Six
                Months EndedJune
                30, 2008
            
            June
                30, 20082008
            
            2007
            
            2008
            
            2007Numerator:Net
                earnings
            
            $
            1,811
            
            $
            6,158
            
            $
            3,978
            
            $
            10,167Less
                Dividends declared:Class
                A
            
            
            152
            
            
            108
            
            
            306
            
            
            215Class
                B
            
            
            655
            
            
            452
            
            
            1,305
            
            
            903Undistributed
                earnings
            
            $
            1,004
            
            $
            5,598
            
            $
            2,367
            
            $
            9,049Undistributed
                earnings allocation - basic:Class
                A undistributed earnings
            
            $
            205
            
            $
            1,206
            
            $
            486
            
            $
            1,966Class
                B undistributed earnings
            
            
            799
            
            
            4,392
            
            
            1,881
            
            
            7,083Total
                undistributed earnings
            
            $
            1,004
            
            $
            5,598
            
            $
            2,367
            
            $
            9,049Undistributed
                earnings allocation - diluted:Class
                A undistributed earnings
            
            $
            205
            
            $
            1,203
            
            $
            486
            
            $
            1,961Class
                B undistributed earnings
            
            
            799
            
            
            4,395
            
            
            1,881
            
            
            7,088Total
                undistributed earnings
            
            $
            1,004
            
            $
            5,598
            
            $
            2,367
            
            $
            9,049Net
                earnings allocation - basic:Class
                A allocated earnings
            
            $
            357
            
            $
            1,314
            
            $
            792
            
            $
            2,181Class
                B allocated earnings
            
            
            1,454
            
            
            4,844
            
            
            3,186
            
            
            7,986Net
                earnings
            
            $
            1,811
            
            $
            6,158
            
            $
            3,978
            
            $
            10,167Net
                earnings allocation - diluted:Class
                A allocated earnings
            
            $
            357
            
            $
            1,311
            
            $
            792
            
            $
            2,176Class
                B allocated earnings
            
            
            1,454
            
            
            4,847
            
            
            3,186
            
            
            7,991Net
                earnings
            
            $
            1,811
            
            $
            6,158
            
            $
            3,978
            
            $
            10,167Denominator:Weighted
                average shares outstanding:Class
                A - basic and diluted
            
            
            2,524,978
            
            
            2,661,589
            
            
            2,528,693
            
            
            2,682,400Class
                B - basic
            
            
            9,352,092
            
            
            9,233,397
            
            
            9,329,516
            
            
            9,203,547Dilutive
                impact of stock options and unvested restricted stock
                awards
            
            
            517
            
            
            28,190
            
            
            3,566
            
            
            30,772Class
                B - diluted
            
            
            9,352,609
            
            
            9,261,587
            
            
            9,333,082
            
            
            9,234,319Earnings
                per share:Class
                A - basic
            
            $
            0.14
            
            $
            0.49
            
            $
            0.31
            
            $
            0.81Class
                A - diluted
            
            $
            0.14
            
            $
            0.49
            
            $
            0.31
            
            $
            0.81Class
                B - basic
            
            $
            0.16
            
            $
            0.52
            
            $
            0.34
            
            $
            0.87Class
                B - diluted
            
            $
            0.16
            
            $
            0.52
            
            $
            0.34
            
            $
            0.86





During
      the three and six months ended June 30, 2008 and during the three and six months
      ended June 30, 2007, 53,000 and 14,000 outstanding options, respectively, were
      not included in the foregoing computations for Class B common shares because
      their effect would be antidilutive.





-
          9 -




3.  MARKETABLE
      SECURITIES





At
      June
      30, 2008, the Company’s investment securities included privately placed units of
      beneficial interests in the Columbia Strategic Cash Portfolio (the “Columbia
      Portfolio”), which is an enhanced cash fund sold as an alternative to
      money-market funds. During the latter half of 2007, the Company invested a
      portion of its cash balances on hand in this fund. In December 2007, due to
      adverse market conditions, the fund was overwhelmed with withdrawal requests
      from investors and it was closed with a restriction placed upon the cash
      redemption ability of its holders. As a result, the Company redesignated the
      Columbia Portfolio units from cash equivalents (as previously classified during
      the second and third quarters of 2007) to short-term investments or long-term
      investments based upon the liquidation schedule provided by the fund. In
      addition, the Company has recorded total impairment charges of $0.7 million
      due
      to the declining net asset value (NAV), $0.3 million of which was recorded
      in
      the first quarter of 2008. As the NAV of the Columbia Portfolio has remained
      relatively constant during the second quarter of 2008, the Company has not
      recorded any additional impairment charge during the three months ended June
      30,
      2008.





As
      of
      June 30, 2008, the Company has received total cash redemptions to date of $13.2
      million (including $10.9 million in the six months ended June 30, 2008) at
      a
      weighted-average net asset value of $.9826 per unit. The additional realized
      gains and losses associated with these redemptions were minimal. Information
      and
      the markets relating to these investments remain dynamic, and there may be
      further declines in the value of these investments, the value of the collateral
      held by these entities, and the liquidity of the Company’s investments. To the
      extent that the Company determines that there is a further decline in fair
      value, the Company may recognize additional impairment charges in future periods
      up to the aggregate amount of these investments.





As
      of
      June 30, 2008, the Company owned a total of 1,840,919 shares, or approximately
      1.9%, of the
      outstanding shares ,
      of the
      common stock of Toko, Inc. (“Toko”) at a total cost of $5.6 million ($3.07 per
      share). Toko had a market capitalization of approximately $174.5 million as
      of
      June 30, 2008. These shares are reflected on the Company’s condensed
      consolidated balance sheets as marketable securities. These marketable
      securities are considered to be available for sale under SFAS No. 115,
“Accounting for Certain Investments in Debt and Equity Securities”. In
      accordance with FASB Staff Position (“FSP”) 115-1, the Company periodically
      reviews its marketable securities and determines whether the investments are
      other-than-temporarily impaired. The Company reviewed various factors in making
      its determination, including volatility of the Toko share price over the last
      year, Toko’s recent financial results and the Company’s intention and ability to
      hold the investment. The Toko share price has been extremely volatile over
      the
      last year, ranging from $1.22 - $2.79. While this stock is highly volatile,
      the
      Company’s cost basis in its remaining shares of Toko stock is $3.07 per share,
      which is above the 52-week high of $2.79. While the Company has the intent
      and
      ability to hold this investment until it is in a gain position, there is no
      indication that the Toko stock price will rise above the Company’s cost basis
      within the foreseeable future. As a result, the Company has deemed this
      investment to be other-than-temporarily impaired as of June 30, 2008 and has
      recorded a pre-tax impairment charge of $2.4 million during the second quarter
      of 2008 to write this investment to its fair value at June 30,
      2008.


-
          10 -


On
      February 25, 2008, the Company announced that it had acquired 4,370,052 shares
      of Power-One, Inc. (“Power-One”) common stock representing, to the Company’s
      knowledge, 5% of Power-One’s outstanding common stock, at a total purchase price
      of $10.1 million. Power-One’s common stock is quoted on the NASDAQ Global
      Market. Power-One is a designer and manufacturer of power conversion and power
      management products. As of June 30, 2008, the Company has recorded an unrealized
      loss, net of income tax, of approximately $1.2 million which is included in
      accumulated other comprehensive income in stockholders’ equity. As this stock
      has been highly volatile during the short timeframe that the Company has held
      this investment and, as management has the ability and intention to hold this
      investment until the market improves, the Company does not believe that the
      investment in Power-One is other-than-temporarily impaired as of June 30,
      2008.





During
      June 2008, the Company invested $2.4 million in certificates of deposit (CDs)
      with Stephens, Inc., with whom the Company has an investment banking
      relationship. This investment is part of the Certificate of Deposit Account
      Registry Service (CDARS) program whereby the funds are allocated to various
      banks in order to achieve FDIC insurance on the full invested amount. The CDs
      have a 26-week maturity and an early redemption feature with a 30-day interest
      penalty.





At
      June
      30, 2008 and December 31, 2007, respectively, marketable securities had a cost
      of approximately $18.2 million and $5.6 million, an estimated fair value of
      approximately $14.0 million and $3.3 million and gross unrealized losses of
      approximately $1.8 million and $2.3 million. Such unrealized losses are
      included, net of tax, in accumulated other comprehensive income (loss). During
      the six months ended June 30, 2008, the Company recorded a pre-tax
      other-than-temporary impairment charge of $2.4 million related to its investment
      in Toko discussed above. The Company has realized losses of $0.2 million during
      the six months ended June 30, 2008 related to the partial redemption of its
      investment in the Columbia Portfolio. During the six 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 realized gain of $2.5 million. Included in other assets
      at
      June 30, 2008 and December 31, 2007 are marketable securities designated for
      utilization in accordance with the Company’s SERP plan with a cost of
      approximately $4.6 million and $4.6 million, respectively, and an estimated
      fair
      value of approximately $4.6 million and $4.9 million, respectively. Such
      unrealized net gains (losses) are included, net of tax, in accumulated other
      comprehensive loss.





Effective
      January 1, 2008, the Company has adopted the provisions of SFAS 157 for its
      financial assets and liabilities. Although this partial adoption of SFAS 157
      had
      no material impact on its financial condition, results of operations or cash
      flows, the Company is now required to provide additional disclosures as part
      of
      its financial statements. SFAS 157 clarifies that fair value is an exit price,
      representing the price that would be received to sell an asset or paid to
      transfer a liability in an orderly transaction between market participants
      at
      the measurement date. The Company utilizes market data or assumptions that
      market participants would use in pricing the asset or liability. SFAS 157
      establishes a three-tier fair value hierarchy, which prioritizes the inputs
      used
      in measuring fair value. These tiers include: Level 1, defined as observable
      inputs such as quoted market prices in active markets; Level 2, defined as
      inputs other than quoted prices in active markets that are either directly
      or
      indirectly observable; and Level 3, defined as unobservable inputs about which
      little or no market data exists, therefore requiring an entity to develop its
      own assumptions.


-
          11 -


As
      of
      June 30, 2008, the Company held certain financial assets that are measured
      at
      fair value on a recurring basis. These consisted of the Company’s investments in
      Toko and Power-One stock (categorized as available-for-sale securities) and
      the
      marketable securities designated for utilization in accordance with the
      Company’s SERP plan (categorized as an other long-term investment). The fair
      value of these investments is determined based on quoted market prices in public
      market and are categorized as Level 1. The Company does not have any financial
      assets measured at fair value on a recurring basis categorized as Level 2 or
      Level 3, and there were no transfers in or out of Level 2 or Level 3 during
      the
      six months ended June 30, 2008.





The
      following table sets forth by level within SFAS 157’s fair value hierarchy of
      the Company’s financial assets accounted for at fair value on a recurring basis
      as of June 30, 2008 (dollars in thousands).




Assets at Fair Value as of June 30, 2008Total
            
            Quoted Prices
              in Active
              Markets for
              Identical
              Assets
              (Level 1)
            
            Significant
              Other
              Observable
              Inputs
              (Level 2)
            
            Significant
              Unobservable
              Inputs
              (Level 3)Available-for-sale
                securities
            
            $
            13,957
            
            $
            13,957
            
            
            -
            
            
            -Other
                long-term investments
            
            
            4,625
            
            
            4,625
            
            
            -
            
            
            -Total
            
            $
            18,582
            
            $
            18,582
            
            
            -
            
            
            -





The
      following table sets forth by level within SFAS 157’s fair value hierarchy of
      the Company’s financial assets accounted for at fair value on a nonrecurring
      basis as of June 30, 2008 (dollars in thousands). These consisted of the
      Company’s investment in the Columbia Portfolio (categorized as an other
      investment in the table below). The fair value of these investments is
      determined based on significant other observable inputs and are categorized
      as
      Level 2 (dollars in thousands).




Assets at Fair Value as of June 30, 2008
            
            Total Gains (Losses)Total
            
            Quoted Prices
              in Active
              Markets for
              Identical
              Assets
              (Level 1)
            
            Significant
              Other
              Observable
              Inputs
              (Level 2)
            
            Significant
              Unobservable
              Inputs
              (Level 3)
            
            Three Months
              Ended
              June 30, 2008
            
            Six Months
              Ended
              June 30, 2008Other
                investments
            
            $
            11,852
            
            
            -
            
            $
            11,852
            
            
            -
            
            $
            3
            
            
            ($278
            )Total
            
            $
            11,852
            
            
            -
            
            $
            11,852
            
            
            -
            
            $
            3
            
            
            ($278
            )


-
          12 -


There
      were no changes to the Company’s valuation techniques used to measure asset fair
      values on a recurring or nonrecurring basis during the six months ended June
      30,
      2008 and the Company did not have any financial liabilities as of June 30,
      2008.





4.  INVENTORIES





The
      components of inventories are as follows (dollars in thousands):





June 30,
            
            December 31,2008
            
            2007Raw materials
            
            $
            28,698
            
            $
            24,089Work
                in progress
            
            
            2,545
            
            
            2,434Finished
                goods
            
            
            15,052
            
            
            12,526$
            46,295
            
            $
            39,049





5.  BUSINESS
      SEGMENT INFORMATION





The
      Company operates in one industry with three reportable segments. The segments
      are geographic and include North America, Asia and Europe. The primary criteria
      by which financial performance is evaluated and resources are allocated are
      revenues and operating income. The following is a summary of key financial
      data
      (dollars in thousands):





Three Months Ended
            
            Six Months EndedJune 30,
            
            June 30,2008
            
            2007
            
            2008
            
            2007Total
                segment revenuesNorth
                America
            
            $
            24,022
            
            $
            20,737
            
            $
            47,014
            
            $
            39,168Asia
            
            
            53,234
            
            
            41,731
            
            
            95,374
            
            
            86,103Europe
            
            
            7,624
            
            
            8,767
            
            
            14,410
            
            
            17,901Total
                segment revenues
            
            
            84,880
            
            
            71,235
            
            
            156,798
            
            
            143,172Reconciling
                items:Intersegment
                revenues
            
            
            (12,426
            )
            
            (9,623
            )
            
            (23,475
            )
            
            (19,753
            )Net
                sales
            
            $
            72,454
            
            $
            61,612
            
            $
            133,323
            
            $
            123,419Income
                from Operations:North
                America
            
            $
            1,647
            
            $
            1,009
            
            $
            2,745
            
            $
            2,111Asia
            
            
            1,464
            
            
            3,231
            
            
            2,304
            
            
            6,387Europe
            
            
            742
            
            
            475
            
            
            1,102
            
            
            650$
            3,853
            
            $
            4,715
            
            $
            6,151
            
            $
            9,148





6.  DEBT





Short-term
      debt





On
      April
      30, 2008, the Company renewed its unsecured credit agreement in the amount
      of
      $20 million, which expires on June 10, 2011. There have not been any borrowings
      under the credit agreement and as such, there was no balance outstanding as
      of
      June 30, 2008. At that date, the entire $20 million line of credit was available
      to the Company to borrow. The credit agreement bears interest at LIBOR plus
      0.75% to 1.25% based on certain financial statement ratios maintained by the
      Company.


-
          13 -


The
      Company’s Hong Kong subsidiary had an unsecured line of credit of approximately
      $2 million which was unused as of June 30, 2008. The line of credit expires
      on
      January 31, 2009. Any borrowing on the line of credit will be guaranteed by
      the
      U.S. parent. The line of credit bears interest at a rate determined by the
      bank
      as the financing is extended.





Included
      in interest expense for the six months ended June 30, 2007 is the write-off
      of
      approximately $0.1 million of previously unamortized deferred financing charges
      in connection with the Company’s prior credit facility.





7.  INCOME
      TAXES





The
      Company adopted the provisions of FASB Interpretation No. 48, Accounting for
      Uncertainties in Income Taxes (“FIN 48”), on January 1, 2007. Although the
      implementation of FIN 48 did not impact the total amount of the Company’s
      liabilities for uncertain tax positions, which amounted to $12.4 million at
      January 1, 2007, the Company separately recognizes the liability for uncertain
      tax positions on its balance sheet. Included in the liabilities for uncertain
      tax positions at the date of adoption is $1.4 million for interest and
      penalties.





At
      June
      30, 2008 and December 31, 2007, the Company has approximately $9.7 million
      and
      $9.2 million, respectively, of liabilities for uncertain tax positions
      (including interest and penalties). Of these amounts, the current portions
      of
      $2.3 million and $2.3 million are included in income tax payable and the
      noncurrent portions of $7.4 million and $6.9 million are included in liability
      for uncertain tax positions. These liabilities for uncertain tax positions,
      if
      recognized, would reduce the Company’s effective tax rate.





The
      Company and its subsidiaries file income tax returns in the U.S. federal
      jurisdiction and various states and foreign jurisdictions. The Company is no
      longer subject to U.S. federal examinations by tax authorities for years before
      2004 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
      Company is currently being audited by the State of New Jersey, Department of
      the
      Treasury, Division of Taxation (“New Jersey”) for the years ended December 31,
      2003 through 2006. The State of New Jersey is proposing a tax adjustment for
      the
      years 2003 through 2006 in the amount of $0.2 million. The assessment arises
      from the method the Company utilized to account for home office charges from
      the
      parent company to its related entities. The Company intends to challenge the
      state’s position on this matter. During the six months ended June 30, 2008, the
      Company accrued the $0.2 million tax assessment.





During
      February 2008, the Company received correspondence from the State of California
      Franchise Tax Board. They requested copies of U.S. federal income tax returns
      for the years 2005 and 2006 for further analysis to determine if the tax returns
      will be selected for audit. On July 3, 2008 the Company received correspondence
      from the State of California that the tax returns for the years 2005 and 2006
      will not be audited at this time.


-
          14 -


The
      Inland Revenue Department (“IRD”) of Hong Kong commenced an examination of one
      of the Company’s Hong Kong subsidiaries’ income tax returns for the years 2000
      through 2005 and issued a notice of additional assessment during 2007 and demand
      for tax in the amount of $3.8 million. This was paid in May and August 2007.
      There is no interest or penalties in connection with this assessment. The IRD
      proposed certain adjustments to the Company’s offshore income tax claim
      position, with which Company management agreed.





Based
      on
      possible outcomes of the examinations mentioned above, or as a result of the
      expiration of the statute of limitations for specific jurisdictions, it is
      reasonably possible that the related unrecognized benefits for tax positions
      taken regarding previously filed tax returns may change materially from those
      recorded as liabilities for uncertain tax positions in the Company’s condensed
      consolidated financial statements at June 30, 2008. 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
      be made to previously recorded uncertain tax positions over the next
      year.





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, 2008 and 2007, the Company recognized approximately
      $0.2 million and $0.2 million, respectively in interest and penalties in the
      Condensed Consolidated Statements of Operations. The Company has approximately
      $2.0 million and $1.8 million accrued for the payment of interest and penalties
      at June 30, 2008 and December 31, 2007, respectively, which is included in
      both
      income taxes payable and liability for uncertain tax positions in the Condensed
      Consolidated Balance Sheets.





8.  ACCRUED
      EXPENSES





Accrued
      expenses consist of the following (dollars in thousands):





June 30,
            
            December 31,2008
            
            2007Sales
                commissions
            
            $
            1,730
            
            $
            1,903Contract
                labor
            
            
            3,139
            
            
            1,723Salaries,
                bonuses andrelated
                benefits
            
            
            4,205
            
            
            4,082Other
            
            
            2,772
            
            
            4,405$
            11,846
            
            $
            12,113





9.  RETIREMENT
      FUND AND PROFIT SHARING PLAN





The
      Company maintains a domestic profit sharing plan and a contributory stock
      ownership and savings 401(K) plan, which combines stock ownership and individual
      voluntary savings provisions to provide retirement benefits for plan
      participants. The
      expense for the six months ended June 30, 2008 and 2007 amounted to
      approximately $0.2 million and $0.3 million, respectively. The expense for
      the
      three months ended June 30, 2008 and 2007 amounted to approximately $0.1 million
      and $0.1 million, respectively. As of June 30, 2008, the plans owned 17,116
      and
      154,250 shares of Bel Fuse Inc. Class A and Class B common stock,
      respectively.


-
          15 -


The
      Company's subsidiaries in Asia have a retirement fund covering substantially
      all
      of their Hong Kong based full-time employees. The
      expense for the six months ended June 30, 2008 and 2007 amounted to
      approximately $0.2 million and $0.2 million, respectively. The expense for
      the
      three months ended June 30, 2008 and 2007 amounted to approximately $0.1 million
      and $0.1 million, respectively. As of June 30, 2008, the plan owned 3,323 and
      17,756 shares of Bel Fuse Inc. Class A and Class B common stock,
      respectively.





The
      Supplemental Executive Retirement Plan (the "SERP" or the “Plan”) is designed to
      provide a limited group of key management and highly compensated employees
      of
      the Company with supplemental
      retirement and death benefits.





The
      components of SERP expense are as follows (dollars in thousands):




Three Months Ended
            
            Six Months EndedJune 30,
            
            June 30,2008
            
            2007
            
            2008
            
            2007Service cost
            
            $
            73
            
            $
            147
            
            $
            146
            
            $
            287Interest
                cost
            
            
            76
            
            
            27
            
            
            152
            
            
            54Amortization
                of adjustments
            
            
            33
            
            
            24
            
            
            66
            
            
            42Total
                SERP expense
            
            $
            182
            
            $
            198
            
            $
            364
            
            $
            383




June 30,
            
            December 31,2008
            
            2007Balance sheet amounts:Minimum
                pension obligationand
                unfunded pension liability
            
            $
            5,019
            
            $
            4,698Accumulated
                other comprehensive income (loss)
            
            
            (1,154
            )
            
            (1,154
            )





Included
      in other assets at June 30, 2008 and December 31, 2007 are marketable securities
      designated for utilization in accordance with the Company’s SERP plan with a
      cost of approximately $4.6 million and $4.6 million, respectively, and an
      estimated fair value of approximately $4.6 million and $4.9 million,
      respectively. Such unrealized net gains (losses) are included, net of tax,
      in
      accumulated other comprehensive income (loss). The
      Company contributed $0.1 million to this investment during the six months ended
      June 30, 2008.




10.
      SHARE-BASED COMPENSATION





The
      Company records compensation expense in its Condensed Consoldiated Statements
      of
      Operations related to employee stock-based options and awards in accordance
      with
      SFAS No. 123(R) “Share-Based Payment”. The aggregate pretax compensation cost
      recognized in net earnings for stock-based compensation (including incentive
      stock options and restricted stock, as further discussed below) amounted to
      approximately $0.7 million and $0.7 million for the six months ended June 30,
      2008 and 2007, respectively. For the three months ended June 30, 2008 and 2007
      the aggregate compensation cost recognized in net earnings amounted to $0.4
      million and $0.3 million, respectively. The Company did not use any cash to
      settle any equity instruments granted under share-based arrangements during
      the
      six months ended June 30, 2008 and 2007.


-
          16 -


Stock
      Options





The
      Company has an
      equity
      compensation program (the
      " Program ")
      which
      provides for the granting of "Incentive Stock Options" within
      the meaning of Section 422 of the Internal Revenue Code of 1986, as
      amended ,
      non-qualified stock options and restricted stock awards .  No
      stock
      options were granted during the six months ended June 30, 2008 or
      2007.




Information
      regarding the Company’s stock
      options for the
      six months ended June 30, 2008 is as follows. All of the stock options noted
      below relate to options to purchase shares of the Company’s Class B common
      stock.





Average
            
            Contractual
            
            IntrinsicOptions
            
            Shares
            
            Exercise Price
            
            Term
            
            Value (000's)Outstanding
                at January 1, 2008
            
            
            70,000
            
            $
            28.42Granted
            
            
            -Exercised
            
            
            (16,500
            )
            
            18.89Forfeited
                or expired
            
            
            (500
            )
            
            18.89Outstanding
                at June 30, 2008
            
            
            53,000
            
            $
            31.48
            
            
            1.7
                years
            
            $
            -Exercisable
                at June 30, 2008
            
            
            34,500
            
            $
            31.78
            
            
            1.7
                years
            
            $
            -




During
      the six months ended June 30, 2008 and 2007 the Company received $0.3 million
      and $1.0 million, respectively, from the exercise of stock options and realized
      minimal tax benefits during the six months ended June 30, 2008 and $0.1 million
      in tax benefits during the six months ended June 30, 2007. The total intrinsic
      value of options exercised during the six months ended June 30, 2008 and 2007
      was $0.2 million and $0.7 million, respectively. Stock compensation expense
      applicable to stock options was minimal for the six months ended June 30, 2008
      and was approximately $0.2 million for the six months ended June 30, 2007.


-
          17 -





A
      summary
      of the status of the Company's nonvested stock options as of December 31, 2007
      and changes during the six months ended June 30, 2008 is presented
      below:





Weighted-AverageGrant-DateNonvested Stock Options
            
            Shares
            
            Fair ValueNonvested
                at December 31, 2007
            
            
            33,500
            
            $
            30.28Granted
            
            
            -Vested
            
            
            (15,000
            )
            
            29.50Forfeited
            
            
            -Nonvested
                at June 30, 2008
            
            
            18,500
            
            $
            30.92





At
      June
      30, 2008, there was less than $0.1 million of total unrecognized cost related
      to
      nonvested stock options arrangements under the  Program .
      The
      cost is expected to be recognized over a weighted average period of 0.75 months.
      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 the six months ended June 30, 2008 and 2007, the Company issued
      56,300 and 74,200 Class B common shares, respectively, under a restricted stock
      plan to various employees. Pre-tax compensation expense was $0.7 million and
      $0.6 million for the six months ended June 30, 2008 and 2007, respectively
      and
      $0.4 million and $0.3 million for the three months ended June 30, 2008 and
      2007,
      respectively.


-
          18 -





A
      summary
      of the activity under the Restricted Stock Awards Plan as of January 1, 2008
      and
      for the six months ended June 30, 2008 is presented below:





WeightedWeighted
            
            AverageAverage
            
            RemainingRestricted Stock
            
            
            
            Award
            
            ContractualAwards
            
            Shares
            
            Price
            
            TermOutstanding
                at January 1, 2008
            
            
            195,400
            
            $
            35.31
            
            
            3.43
                yearsGranted
            
            
            56,300
            
            
            24.47Vested
            
            
            (4,500
            )
            
            30.67Forfeited
            
            
            (7,250
            )
            
            33.74Outstanding
                at June 30, 2008
            
            
            239,950
            
            $
            32.90
            
            
            3.39
                years





As
      of
      June 30, 2008, there was $5.3 million of total pre-tax unrecognized compensation
      cost included within additional paid-in-capital related to non-vested stock
      based compensation arrangements granted under the restricted stock award plan;
      that cost is expected to be recognized over a period of 4.9 years. The
      Company's policy is to issue new shares to satisfy Restricted Stock Awards
      and
      incentive stock option exercises. In calculating the stock-based compensation
      expense related to stock awards, the Company has estimated that 5% of the
      outstanding unvested stock awards will forfeit each year related to employee
      attrition.





11.
      COMMON STOCK





During
      2000, the Board of Directors of the Company authorized the purchase of up to
      ten
      percent of the Company’s outstanding common shares. As of June 30, 2008, the
      Company had purchased and retired 23,600 Class B common shares at a cost of
      approximately $0.8 million and had purchased and retired 185,529 Class A common
      shares at a cost of approximately $6.5 million. No shares of Class B common
      stock were repurchased during the six months ended June 30, 2008 and 25,496
      shares of Class A common stock were repurchased during the six months ended
      June
      30, 2008 at a cost of $0.8 million.





As
      of
      June 30, 2008, there were two shareholders of the Company’s common stock with
      ownership in excess of 10% of Class A outstanding shares with no ownership
      of
      the Company’s Class B common stock. In accordance with the Company’s certificate
      of incorporation, the Class B Protection clause is triggered if a shareholder
      owns 10% or more of the outstanding Class A common stock and does not own an
      equal or greater percentage of all then outstanding shares (both Class A and
      Class B common stock). If this clause is triggered, the shareholder must within
      90 days of the trigger date, purchase Class B common shares, in an amount and
      at
      a price determined in accordance with a formula described in the Company’s
      certificate of incorporation or forfeit its right to vote its Class A common
      shares. As of June 30, 2008, to the Company's knowledge, these two such
      shareholders had not purchased any Class B shares to comply with these
      requirements. In order to vote their shares at Bel’s next shareholders’ meeting,
      these shareholders must either purchase the required number of Class B common
      shares or sell or otherwise transfer Class A common shares until their Class
      A
      holdings are under 10%. As of June 30, 2008, to the Company’s knowledge, these
      shareholders owned 34.2% of the Company’s Class A common stock in the aggregate
      and had not taken steps to either purchase the required number of Class B common
      shares or sell or otherwise transfer Class A common shares until their Class
      A
      holdings fall below 10%.




-
          19 -




There
      are
      no contractual restrictions on the Company's ability to pay dividends provided
      the Company is not in default immediately before such payment and after giving
      effect to such payment. On May 1, 2008, the Company paid a $0.07 per share
      dividend to all shareholders of record of Class B Common Stock in the total
      amount of $0.6 million and a $0.06 per share dividend to all shareholders of
      record of Class A Common Stock in the total amount of $0.2 million.





12.
      COMPREHENSIVE INCOME




Comprehensive
      (loss) income for the three and six months ended June 30, 2008 and 2007 consists
      of the following (dollars in thousands):




Three Months Ended
            
            Six Months EndedJune 30,
            
            June 30,2008
            
            2007
            
            2008
            
            2007Net
                earnings
            
            $
            1,811
            
            $
            6,158
            
            $
            3,978
            
            $
            10,167Currency
                translation adjustment
            
            
            85
            
            
            (24
            )
            
            804
            
            
            334(Decrease)
                increase in unrealizedgain
                on marketable securities-
                net of taxes
            
            
            (4,229
            )
            
            (3,344
            )
            
            (1,336
            )
            
            953Reclassification
                adjustment forimpairment
                charge included innet
                earnings, net of tax
            
            
            1,459
            
            
            -
            
            
            1,459
            
            
            -Comprehensive
                (loss) income
            
            $
            (874
            )
            $
            2,790
            
            $
            4,905
            
            $
            11,454




13.
      SALE
      OF PROPERTY





During
      May 2007, the Company sold a parcel of land located in Jersey City, New Jersey
      for $6.0 million. The Company had previously estimated that approximately $0.8
      million of the proceeds would be payable to the State of New Jersey, as a
      portion of the property is subject to tideland claims. In December 2007, the
      Tidelands Resource Council voted to approve the Bureau of Tideland’s
      Management’s recommendation for a Statement of No Interest. On March 14, 2008,
      the Commissioner of the Department of Environmental Protection signed a letter
      to approve the Statement of No Interest. As final approval of the Statement
      of
      No Interest is still pending, the Company has continued to defer the estimated
      gain on sale of the land, in the amount of $4.6 million. Of the $6.0 million
      sales price, the Company received cash of $1.5 million before closing costs,
      and
      $4.6 million (including interest) was being held in escrow pending final
      resolution of the State of New Jersey tideland claim and certain environmental
      costs. During 2007, the Company paid $0.4 million related to environmental
      costs, which approximated the maximum amount for which the Company is liable.
      During May 2008, the title company released $2.3 million of the escrow and
      as
      such, $2.3 million still remains in escrow and has been classified as restricted
      cash as of June 30, 2008. The Company anticipates resolution of this sale,
      release of the remaining escrow and corresponding guarantees and recognition
      of
      the gain by the end of fiscal 2008. As the timing of the release of the
      remaining escrow of $2.3 million is not under the Company’s control, it has been
      classified in non-current assets as restricted cash and the deferred gain of
      $4.6 million has been classified in deferred gain on the sale of property in
      the
      Condensed Consolidated Balance Sheet as of June 30, 2008 and December 31, 2007.


-
          20 -





14.  NEW
      FINANCIAL ACCOUNTING STANDARDS





In
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of
      accounting principles and the framework for selecting the principles to be
      used
      in the preparation of financial statements of nongovernmental entities that
      are
      presented in conformity with generally accepted accounting principles (GAAP)
      in
      the United States. This Statement is effective sixty days following the SEC’s
      approval of the Public Company Accounting Oversight Board amendments to AU
      Section 411, “The Meaning of Present Fairly in Conformity With Generally
      Accepted Accounting Principles.” The Company is currently evaluating the
      potential impact, if any, of the adoption of SFAS No. 162 on its financial
      statements.





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities”, an amendment of FASB Statement No. 133 (“SFAS No.
      161”). The new standard is intended to improve financial reporting about
      derivative instruments and hedging activities by requiring enhanced disclosures
      to enable investors to better understand their effects on an entity’s financial
      position, financial performance and cash flows. It is effective for financial
      statements issued for fiscal years and interim periods beginning after November
      15, 2008. The Company does not believe that SFAS No. 161 will have a material
      impact on its financial statements.




15.  LEGAL
      PROCEEDINGS





The
      Company is, from time to time, a party to litigation arising in the normal
      course of its business, including various claims of patent infringement. See
      the
      Company’s Annual Report on Form 10-K for the details of pending lawsuits. The
      Company cannot predict the outcome of the unresolved matters; however,
      management believes that the ultimate resolution of these matters will not
      have
      a material impact on the Company's consolidated financial condition or results
      of operations. As of June 30, 2008, no amounts have been accrued in connection
      with these lawsuits, as the amounts are not determinable.


-
          21 -





16.  ACCUMULATED
      OTHER COMPREHENSIVE INCOME (LOSS)





The
      components of accumulated other comprehensive income (loss) as of June 30,
      2008
      and December 31, 2007 are summarized below (dollars in thousands):





June 30,
            
            December 31,2008
            
            2007Foreign
                currency translation adjustment
            
            $
            2,905
            
            $
            2,101Unrealized
                holding loss on available-for-sale securities under SFAS No. 115,
                net of
                taxes of $(712) and $(789) as of June 30, 2008 and December 31,
                2007
            
            
            (1,168
            )
            
            (1,291
            )Unfunded
                SERP liability, net of taxes of ($483) as of June 30, 2008 and December
                31, 2007
            
            
            (1,154
            )
            
            (1,154
            )Accumulated
                other comprehensive income (loss)
            
            $
            583
            
            $
            (344
            )





17.  RELATED
      PARTY TRANSACTIONS





In
      June
      2008, the Company invested $2.0 million in a money market fund with GAMCO
      Investors, Inc. (“GAMCO”). GAMCO is a current shareholder of the Company, with
      holdings of its Class A stock in excess of 10%.





18.
      SUBSEQUENT EVENT





On
      July
      31, 2008, the Company announced that it will cease manufacturing operations
      at
      its Bel Power Inc. facility in Westborough, Massachusetts by January 2009.
      The
      Company expects to incur severance and other costs related to the layoff of
      approximately 50 associates over the next few months. The Company is currently
      evaluating the accounting implications of the closure of this facility, which
      will be recorded in the third quarter of 2008.


-
          22 -





Item
      1A.
      Risk Factors





***As
      a result of protective provisions in the Company’s certificate of incorporation,
      the voting power of certain officers, directors and principal shareholders
      may
      be increased at future meetings of the Company’s
      shareholders.***





An
      investment in our common stock involves a high degree of risk. Investors should
      carefully consider the risk described below, together with all other risk
      factors contained in the Company’s Annual Report on Form 10-K for the year ended
      December 31, 2007.





The
      Company's certificate of incorporation provides that if a shareholder, other
      than shareholders subject to specific exceptions, owns 10% or more of the
      outstanding Class A common stock and does not own an equal or greater percentage
      of all then outstanding shares (both Class A and Class B common stock),such
      shareholder must within 90 days of the trigger date, purchase Class B common
      shares, in an amount and at a price determined in accordance with a formula
      described in the Company's certificate of incorporation, or forfeit its right
      to
      vote its Class A common shares. As of June 30, 2008, to the Company's knowledge,
      there were two shareholders of the Company's common stock with ownership in
      excess of 10% of Class A outstanding shares with no ownership of the Company's
      Class B common stock and with no basis for exception from the operation of
      the
      above-mentioned provisions. In order to vote their shares at Bel's next
      shareholders' meeting, these shareholders must either purchase the required
      number of Class B common shares or sell or otherwise transfer Class A common
      shares until their Class A holdings are under 10%. As of June 30, 2008, to
      the
      Company's knowledge, these shareholders owned 34.2% of the Company's Class
      A
      common stock in the aggregate and had not taken steps to either purchase the
      required number of Class B common shares or sell or otherwise transfer Class
      A
      common shares until their Class A holdings fall below 10%.





To
      the
      extent that the voting rights of particular holders of Class A common stock
      are
      suspended as of times when the Company's shareholders vote due to non-compliance
      with the above-mentioned provisions, such suspension will have the effect of
      increasing the voting power of those holders of Class A common shares whose
      voting rights are not suspended.  As of June 30, 2008, Daniel Bernstein,
      the Company's chief executive officer, beneficially owned 93,555 Class A common
      shares (or 5.6%) of the Class A common shares whose voting rights were not
      suspended, the Estate of Elliot Bernstein beneficially owned 251,132 Class
      A
      common shares (or 15.2%) of the Class A common shares whose voting rights were
      not suspended and all directors and executive officers as a group (including
      Daniel Bernstein) beneficially owned 243,484 Class A common shares (or 14.6%)
      of
      the Class A common shares whose voting rights were not
      suspended.


-
          23 -


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




The
      Company’s quarterly and annual operating results are impacted by a wide variety
      of factors that could materially and adversely affect revenues and
      profitability, including the risk factors described in the Company's Annual
      Report on Form 10-K for the year ended December 31, 2007. As a result of these
      and other factors, the Company may experience material fluctuations in future
      operating results on a quarterly or annual basis, which could materially and
      adversely affect its business, financial condition, operating results, and
      stock
      prices. Furthermore, this document and other documents filed by the Company
      with
      the Securities and Exchange Commission (the “SEC”) contain certain
      forward-looking statements under the Private Securities Litigation Reform Act
      of
      1995 (“Forward-Looking Statements”) with respect to the business of the Company.
      These Forward-Looking Statements are subject to certain risks and uncertainties,
      including those detailed in Item 1A of the Company’s Annual Report on Form 10-K
      for the year ended December 31, 2007, which could cause actual results to differ
      materially from these Forward-Looking Statements. The Company undertakes no
      obligation to publicly release the results of any revisions to these
      Forward-Looking Statements which may be necessary to reflect events or
      circumstances after the date such statements are made or to reflect the
      occurrence of unanticipated events. An investment in the Company involves
      various risks, including those which are detailed from time to time in the
      Company’s SEC filings.




Overview





Bel
      is a
      leading producer of electronic products that help make global connectivity
      a
      reality. The Company designs, manufactures and markets a broad array of
      magnetics, modules, circuit protection devices and interconnect products. While
      these products are deployed primarily in the computer, networking and
      telecommunication industries, Bel’s expanding portfolio of products also finds
      application in the automotive, medical and consumer electronics markets. Bel's
      products are designed to protect, regulate, connect, isolate or manage a variety
      of electronic circuits.





The
      Company’s revenues are primarily driven by the designs of its products for
      customer applications and by working closely with its customers’ engineering
      staffs and aligning them with industry standards committees and various
      integrated circuit (IC) manufacturers.





The
      Company’s expenses are driven principally by the cost of labor where Bel’s
      factories are located and the cost of the materials that it uses. The
      Company has experienced a high turnover rate among workers in the People’s
      Republic of China (“PRC”). Since
      the
      conclusion of the Lunar New Year holiday in early February, net new hires of
      approximately 5,300 employees in Bel’s PRC facilities were required to meet a
      40% increase in its Magnetics product backlog. The addition of new workers,
      particularly surrounding the Lunar New Year, increased Bel’s training costs and
      curtailed Bel’s output, as the new employees had lower productivity levels until
      they became familiar with the Company’s methods of production. In addition, PRC
      officials implemented an increase in wage rates effective April 1, 2008 in
      the
      areas where our products are manufactured, including double-time rates for
      Saturdays and Sundays. During the second quarter of 2008, Bel’s employees worked
      longer hours at those premium overtime rates. Furthermore, the U.S. dollar
      continued to fall in value against the PRC yuan, the currency in which all
      of
      Bel’s PRC factory workers are paid. The combination of low efficiency of new
      workers, higher wage rates, increased overtime hours worked and unfavorable
      currency effects resulted in higher total labor costs. As of June 30, 2008,
      although the backlog is still above prior year levels, the turnover level of
      workers has returned to more normal levels and productivity levels are back
      up
      to 90% (as compared to productivity levels of 40-50% experienced during the
      heavy transition period after the Lunar New Year). With
      regard to material costs, the increasing cost of gold, copper and solder wire
      have had a significant impact on the Company’s overall cost of sales .


-
          24 -


The
      Company’s sales increased by $10.8 million or 17.6% during the three months
      ended June 30, 2008 as compared to the same period in 2007. The Company’s sales
      increased by $9.9 million or 8.0% during the six months ended June 30, 2008
      as
      compared to the same period in 2007. The increase in sales is primarily due
      to
      an increase in module sales (including power products) of $6.2 million for
      the
      three months ended June 30, 2008 and $11.3 million for the six months ended
      June
      30, 2008, as compared to the comparable periods of 2007. Certain of the power
      products went into production at the end of the first quarter of 2007, as
      compared to a full six months of revenue stream associated with these new
      products in 2008. In addition, the Company’s interconnect sales increased by
      $3.2 million for the three months ended June 30, 2008 and $4.1 million for
      the
      six months ended June 30, 2008, as compared to the comparable periods of 2007.
      The increase in sales for the six months ended June 30, 2008 were partially
      offset by a decrease in the Company’s ICM sales of $3.4 million from the same
      period of 2007 as a result of the production inefficiencies in the PRC referred
      to above, which inhibited the Company’s ability to increase product shipments,
      and together with increased orders resulted in an increase in backlog.





While
      the
      Company’s sales increased from 2007, gross profit margins decreased from 21.1%
      for the three months ended June 30, 2007 to 18.1% for the three months ended
      June 30, 2008. Gross profit margins for the six months ended June 30, 2008
      were
      18.3% as compared to 21.8% for the six months ended June 30, 2007. Direct labor
      costs as a percent of sales increased by 3.7% during the three months ended
      June
      30, 2008 and by 2.3% for the six months ended June 30, 2008 as compared to
      the
      comparable periods of 2007. The rising labor costs resulted from increased
      wage
      rates, higher overtime rates and overtime hours worked and the productivity
      issues experienced after the Lunar New Year, as discussed above. The remaining
      reduction in margin resulted primarily from the increased cost of materials
      such
      as gold, copper and solder wire.





Net
      earnings for this year's second quarter of $1,811,000 include a pre-tax charge
      of $2,353,000 for the other-than-temporary impairment of Bel's holdings in
      Toko
      Inc. (TSE: 6801). See “Liquidity and Capital Resources” for further information
      regarding this impairment charge.





Critical
      Accounting Policies





The
      Company’s discussion and analysis of its financial condition and results of
      operations is based upon the Company’s condensed consolidated financial
      statements, which have been prepared in accordance with accounting principles
      generally accepted in the United States of America. The preparation of these
      financial statements requires the Company to make estimates and judgments that
      affect the reported amounts of assets, liabilities, revenues and expenses,
      and
      related disclosure of contingent assets and liabilities. On an on-going basis,
      the Company evaluates its estimates, including those related to product returns,
      bad debts, inventories, intangible assets, investments, SERP expense, income
      taxes and contingencies and litigation. The Company bases its estimates on
      historical experience and on various other assumptions that are believed to
      be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions. For a discussion of the
      Company’s critical accounting policies, see the Company’s Annual Report on Form
      10-K for 2007.


-
          25 -


Results
      of Operations





The
      following table sets forth, for the periods presented, the percentage
      relationship to net sales of certain items included in the Company’s condensed
      consolidated statements of operations.





Percentage
                of Net Sales
            
            Percentage
                of Net SalesThree
                Months Ended
            
            Six
                Months EndedJune
                30,
            
            June
                30,2008
            
            2007
            
            2008
            
            2007Net
                sales
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Cost
                of sales
            
            
            81.9
            
            
            78.9
            
            
            81.7
            
            
            78.2Selling,
                general and administrative expenses
            
            
            12.8
            
            
            14.9
            
            
            13.7
            
            
            15.1Gain
                on sale of property, plant and equipment
            
            
            -
            
            
            (1.4
            )
            
            -
            
            
            (0.7
            )(Impairment
                charge) gain on sale of investment
            
            
            (3.2
            )
            
            4.1
            
            
            (2.0
            )
            
            2.0Interest
                income, net of interestand
                financing expense
            
            
            0.8
            
            
            1.6
            
            
            1.1
            
            
            1.4Earnings
                before provisionfor
                income taxes
            
            
            2.9
            
            
            13.3
            
            
            3.8
            
            
            10.8Income
                tax provision
            
            
            0.4
            
            
            3.4
            
            
            0.8
            
            
            2.6Net
                earnings
            
            
            2.5
            
            
            10.0
            
            
            3.0
            
            
            8.2




-
          26 -





The
      following table sets forth the year over year percentage increase or decrease
      of
      certain items included in the Company's condensed consolidated statements of
      operations.





Increase (decrease) from
            
            Increase (decrease) fromPrior Period
            
            Prior PeriodThree Months Ended
            
            Six Months EndedJune 30, 2008
            
            June 30, 2008Compared with
            
            Compared withThree Months Ended
            
            Six Months EndedJune 30, 2007
            
            June 30, 2007Net
                sales
            
            
            17.6
            %
            
            8.0
            %Cost
                of sales
            
            
            22.1
            
            
            12.9Selling,
                general and administrative expenses
            
            
            1.2
            
            
            (2.4
            )Net
                earnings
            
            
            (70.6
            )
            
            (60.9
            )





**THREE
      MONTHS ENDED JUNE 30, 2008 VERSUS THREE MONTHS ENDED JUNE 30,
      2007**





Sales





Net
      sales
      increased 17.6% from $61.6 million during the three months ended June 30, 2007
      to $72.5 million during the three months ended June 30, 2008. The Company
      attributes the increase to an increase in module sales of $6.2 million, an
      increase in interconnect sales of $3.2 million and an increase in magnetic
      sales
      of $2.0 million, offset in part by a decrease in circuit protection sales of
      $0.5 million. The main factor driving this net sales increase during the second
      quarter related to a higher volume of products sold. While the Company has
      announced recent price increases to its customers, these new rates will not
      take
      effect until the third quarter of 2008.





The
      significant components of the Company's revenues for the three months ended
      June
      30, 2008 were magnetic products of $31.8 million (as compared with $29.8 million
      during the three months ended June 30, 2007), interconnect products of $14.2
      million (as compared with $11.0 million during the three months ended June
      30,
      2007), module products of $22.0 million (as compared with $15.8 million during
      the three months ended June 30, 2007), and circuit protection products of $4.5
      million (as compared with $5.0 million during the three months ended June 30,
      2007).





Cost
      of Sales





Cost
      of
      sales as a percentage of net sales increased from 78.9% during the three months
      ended June 30, 2007 to 81.9% during the three months ended June 30, 2008. During
      the three months ended June 30, 2007, the Company established a $1.2 million
      warranty accrual for a defective part, including a $0.4 million inventory
      write-off of materials on hand related to this matter which were deemed to
      be
      unusable. Excluding this anomaly, cost of sales as a percentage of net sales
      increased 4.9% during the second quarter of 2008 as compared to the same quarter
      of 2007. The increase in the cost of sales percentage is primarily attributable
      to the following:


-
          27 -


 ̈
            The
                Company experienced a significant increase in labor costs during
                the three
                months ended June 30, 2008 (16.1% of sales as compared to 12.4% of
                sales
                for the three months ended June 30, 2007). This increase was due
                to a
                variety of factors, including increased training costs and production
                inefficiencies resulting from the hiring of 5,300 net new hires since
                Lunar New Year, higher wage rates effective April 1, 2008 as mandated
                by
                PRC officials and an increase in overtime hours worked to reduce
                our
                backlog, with many of these hours being worked on Saturdays and Sundays
                at
                the new double-time rates. A significant number of new hires were
                brought
                on during the first quarter 2008 and the training period typically
                takes
                three months to become familiar with our production methods and achieve
                an
                acceptable level of productivity. As a result, the Company was still
                experiencing production inefficiencies at the beginning of the second
                quarter. In addition, the PRC yuan, in which all PRC workers are
                paid, has
                appreciated on average by 10.4% during the three months ended June
                30,
                2008 from the comparable period of 2007.





 ̈
            The
                Company incurred a 1.4% increase in material costs as a percentage
                of net
                sales. The increase in raw material costs is principally related
                to
                increased costs for raw materials such as gold, copper and solder
                wire. In
                addition, the shift in product mix has lead to increased manufacturing
                of
                value-added products, which have a higher raw material content than
                the
                Company’s other products. Increased transportation costs have also
                contributed to the rising cost of materials. Since the majority of
                the
                manufacturing is conducted in Asia, the increased material costs
                negatively impact the Company’s operating profits in
                Asia.





 ̈
            Sales
                of the Company’s module 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 $2.0 million and
      $1.6
      million for the three months ended June 30, 2008 and 2007, respectively.





Selling,
      General and Administrative Expenses





The
      percentage relationship of selling, general and administrative expenses to
      net
      sales decreased from 14.9% during the three months ended June 30, 2007 to 12.8%
      during the three months ended June 30, 2008. The decrease in the dollar amount
      of selling, general and administrative expense for the three months ended June
      30, 2008 compared to the three months ended June 30, 2007 was approximately
      $0.1
      million. The dollar decrease is principally attributed a $0.4 million decrease
      in legal fees from the second quarter of 2007, primarily due to reduced legal
      activity in the second quarter of 2008 and a $0.1 million reduction in external
      accounting fees due to the implementation of an internal audit function. This
      was largely offset by an increase in sales and marketing expenses of $0.4
      million as compared to the second quarter of 2007 due to increased commissions
      on the higher sales volume.


-
          28 -


Gain
      on Sale of Property, Plant and Equipment





During
      the three months ended June 30, 2007, the Company realized gains from the sale
      of real property in Hong Kong in the amount of $0.9 million.





(Impairment
      Charge) Gain on Sale of Investment





During
      the three months ended June 30, 2008, the Company recorded a pre-tax
      other-than-temporary impairment charge of $2.4 million associated with its
      investment in Toko, Inc. See “Liquidity and Capital Resources” for further
      information. 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.





Interest
      Income





Interest
      income earned on cash and cash equivalents decreased by approximately $0.4
      million during the three months ended June 30, 2008, as compared to the
      comparable period in 2007. The decrease is due primarily to significantly lower
      interest rates on invested balances during the three months ended June 30,
      2008
      as compared to 2007.





Provision
      for Income Taxes





The
      provision for income taxes for the three months ended June 30, 2008 was $0.3
      million compared to a $2.1 million provision for the three months ended June
      30,
      2007. The Company's earnings before income taxes for the three months ended
      June
      30, 2008 are approximately $6.1 million lower than the same period in 2007.
      The
      Company’s effective tax rate, the income tax provision as a percentage of
      earnings before provision for income taxes, was 13.9% and 25.1% for the three
      months ended June 30, 2008 and June 30, 2007, respectively. The Company’s
      effective tax rate will fluctuate based on the geographic segment the pretax
      profits are earned in. Of the geographic segments in which the Company operates,
      the U.S. has the highest tax rates; Europe’s tax rates are generally lower than
      U.S. tax rates; and the Far East has the lowest tax rates. The decrease is
      principally related to the tax benefit in the U.S. of $0.9 million associated
      with the other than temporary impairment loss taken for financial statement
      purposes, in connection with the Company’s investment in Toko during the second
      quarter of 2008. During the three months ended June 30, 2007 there was a gain
      in
      the U.S. from the sale of TOKO stock in the amount of $2.5 million which
      increased the effective tax rate. This was offset in part by higher U.S. and
      European taxable income from operations to total pretax income during the three
      months ended June 30, 2008 compared with June 30, 2007.


-
          29 -


**SIX
      MONTHS ENDED JUNE 30, 2008 VERSUS SIX MONTHS ENDED JUNE 30,
      2007**





Sales





Net
      sales
      increased 8.0% from $123.4 million during the six months ended June 30, 2007
      to
      $133.3 million during the six months ended June 30, 2008. The Company attributes
      the increase to an increase in module sales of $11.3 million and an increase
      in
      interconnect sales of $4.1 million, offset in part by a decrease in magnetic
      sales of $4.6 million and a decrease in circuit protection sales of $0.9
      million. The increase in module sales includes $6.2 million of additional power
      products revenue during the six months ended June 30, 2008 as compared with
      the
      same period in 2007. Certain of the power products went into production at
      the
      end of the first quarter of 2007, as compared to a full six months of revenue
      stream associated with these new products in 2008. The increase in module sales
      was constrained by production inefficiencies associated with increased demand.
      The partially offsetting decrease in magnetic sales is primarily due to a
      decrease in the Company’s ICM sales of $3.4 million during the six months ended
      June 30, 2008 as compared to the comparable period of 2007 as a result of
      production inefficiencies in the PRC referred to above.





The
      significant components of the Company's revenues for the six months ended June
      30, 2008 were magnetic products of $56.7 million (as compared with $61.3 million
      during the six months ended June 30, 2007), interconnect products of $26.2
      million (as compared with $22.1 million during the six months ended June 30,
      2007), module products of $41.9 million (as compared with $30.6 million during
      the six months ended June 30, 2007), and circuit protection products of $8.5
      million (as compared with $9.4 million during the six months ended June 30,
      2007).





Cost
      of Sales





Cost
      of
      sales as a percentage of net sales increased from 78.2% during the six months
      ended June 30, 2007 to 81.7% during the six months ended June 30, 2008. During
      the six months ended June 30, 2007, the Company established a $1.2 million
      warranty accrual for a defective part, including a $0.4 million inventory
      write-off of materials on hand related to this matter which were deemed to
      be
      unusable. Excluding this anomaly, cost of sales as a percentage of net sales
      increased 4.5% during the six months ended June 30, 2008 as compared to the
      same
      period of 2007. The increase in the cost of sales percentage is primarily
      attributable to the following:





 ̈
            The
                Company experienced a significant increase in labor costs during
                the six
                months ended June 30, 2008 (13.8% of sales as compared to 11.5% of
                sales
                for the six months ended June 30, 2007). This increase was due to
                a
                variety of factors, including increased training costs and production
                inefficiencies resulting from the hiring of 5,300 net new hires since
                Lunar New Year, higher wage rates effective April 1, 2008 as mandated
                by
                PRC officials and an increase in overtime hours worked to reduce
                our
                backlog, with many of these hours being worked on Saturdays and Sundays
                at
                the new double-time rates. In addition, the PRC yuan, in which all
                PRC
                workers are paid, has appreciated on average by 9.4% during the six
                months
                ended June 30, 2008 from the comparable period of 2007.


-
          30 -


 ̈
            The
                Company incurred a 2.0% increase in material costs as a percentage
                of net
                sales. The increase in raw material costs is principally related
                to
                increased costs for raw materials such as gold, copper and solder
                wire. In
                addition, the shift in product mix has lead to increased manufacturing
                of
                value-added products, which have a higher raw material content than
                the
                Company’s other products. Increased transportation costs have also
                contributed to the rising cost of materials. Since the majority of
                the
                manufacturing is conducted in Asia, the increased material costs
                negatively impact the Company’s operating profits in
                Asia.





 ̈
            Sales
                of the Company’s module 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 $3.9 million and
      $3.1
      million for the six months ended June 30, 2008 and 2007, respectively.





Selling,
      General and Administrative Expenses





The
      percentage relationship of selling, general and administrative expenses to
      net
      sales decreased from 15.1% during the six months ended June 30, 2007 to 13.7%
      during the six months ended June 30, 2008. The decrease in the dollar amount
      of
      selling, general and administrative expense for the six months ended June 30,
      2008 compared to the six months ended June 30, 2007 was approximately $0.4
      million. The dollar decrease is principally attributed to the
      following:





 ̈
            Legal
                and professional fees decreased by $0.9 million from the first six
                months
                of 2007 principally due to the implementation of an internal audit
                and SOX
                function which reduced audit and external consultant fees by approximately
                $0.5 million and reduced legal activity during the second quarter
                of 2008,
                resulting in a decrease in legal fees of $0.4
                million.





 ̈
            Other
                general and administrative costs decreased by $0.3 million during
                the six
                months ended June 30, 2008 as compared to the same period of 2007.
                The
                Company has reduced its discretionary bonus expense during the six
                months
                ended June 30, 2008 as a result of lower profitability in 2008. In
                addition, the Company recorded a $0.1 million reduction of stock-based
                compensation expense related to forfeitures of the restricted stock
                awards. There were additional reductions in other general and
                administrative costs that were not individually
                significant.





Offsetting
      these factors in part, sales and marketing expenses increased by $0.5 million
      as
      compared to the six months ended June 30, 2007 due to increased commissions
      on
      the higher sales volume. In addition, bad debt expense increased by $0.2 million
      during the six months ended June 30, 2008 as compared to the same period of
      2007. This increase resulted from a specific reserve on a large account in
      Germany that was recorded during the first quarter of 2008.


-
          31 -


Gain
      on Sale of Property, Plant and Equipment





During
      the six months ended June 30, 2007, the Company realized gains from the sale
      of
      real property in Hong Kong in the amount of $0.9 million.





(Impairment
      Charge) Gain on Sale of Investment





During
      the six months ended June 30, 2008, the Company recorded a pre-tax
      other-than-temporary impairment charge of $2.4 million associated with its
      investment in Toko, Inc. The Company also recorded an other-than-temporary
      impairment charge of $0.3 million related to its investment in the Columbia
      Strategic Cash Portfolio during the six months ended June 30, 2008. See
“Liquidity and Capital Resources” for further information on these impairment
      charges. 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.





Interest
      Income





Interest
      income earned on cash and cash equivalents decreased by approximately $0.3
      million during the six months ended June 30, 2008, as compared to the comparable
      period in 2007. The decrease is due primarily to significantly lower interest
      rates on invested balances during the six months ended June 30, 2008 as compared
      to 2007.





Provision
      for Income Taxes





The
      provision for income taxes for the six months ended June 30, 2008 was $1.1
      million compared to a $3.2 million provision for the six months ended June
      30,
      2007. The Company's earnings before income taxes for the six months ended June
      30, 2008 are approximately $8.3 million lower than the same period in 2007.
      The
      Company’s effective tax rate, the income tax provision as a percentage of
      earnings before provision for income taxes, was 21.0% and 23.9% for the six
      months ended June 30, 2008 and June 30, 2007, respectively. The Company’s
      effective tax rate will fluctuate based on the geographic segment the pretax
      profits are earned in. Of the geographic segments in which the Company operates,
      the U.S. has the highest tax rates; Europe’s tax rates are generally lower than
      U.S. tax rates; and the Far East has the lowest tax rates. The decrease is
      principally related to the tax benefit of $0.9 million in the U.S. associated
      with the other than temporary impairment loss taken for financial statement
      purposes, in connection with the Company’s investment in Toko during the second
      quarter of 2008. During the six months ended June 30, 2007 there was a gain
      in
      the U.S. from the sale of TOKO stock in the amount of $2.5 million which
      increased the effective tax rate. This was offset in part by an increase in
      the
      provision related to the State of New Jersey tax assessment in the amount of
      $0.2 million during the six months ended June 30, 2008 and higher U.S. and
      European taxable income from operations to total pretax income during the six
      months ended June 30, 2008 compared with June 30, 2007.


-
          32 -


Inflation
      and Foreign Currency Exchange





During
      the past two years, the effect of inflation on the Company's profitability
      was
      not material. Historically, fluctuations of the U.S. Dollar against other major
      currencies have not significantly affected the Company's foreign operations
      as
      most sales have been denominated in U.S. Dollars or currencies directly or
      indirectly linked to the U.S. Dollar. Most significant expenses, including
      raw
      materials, labor and manufacturing expenses, are either incurred in U.S. Dollars
      or the currencies of the Hong Kong Dollar or the Chinese Renminbi. However,
      the
      Chinese Renminbi has appreciated in value significantly (approximately 9.4%)
      during the six months ended June 30, 2008 as compared to the same period of
      2007. Further appreciation of the Renminbi would result in the Company’s
      incurring higher costs for all expenses incurred in the PRC. Commencing with
      the
      Company’s acquisition of its Passive Components Group in 2005, 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 unrealized
      exchange gains of $0.8 million and $0.3 million for the six months ended June
      30, 2008 and June 30, 2007, respectively, relating
      to the translation of foreign subsidiary financial statements which are included
      in accumulated other comprehensive income. Realized currency gains (losses)
      during the six months ended June 30, 2008 and June 30, 2007 were not material.
      Any change in the linkage of the U.S. Dollar and the Hong Kong Dollar could
      have
      a material effect on the Company's consolidated financial position or results
      of
      operations.




Liquidity
      and Capital Resources





Historically,
      the Company has financed its capital expenditures primarily through cash flows
      from operating activities and has
      financed acquisitions both through cash flows from operating activities and
      borrowings . Management believes that the cash flow from operations after payments of
      dividends combined with its existing capital base and the Company's available
      lines of credit, will be sufficient to fund its operations for at least the
      next
      twelve months. Such statement constitutes a Forward Looking Statement. Factors
      which could cause the Company to require additional capital include, among
      other
      things, a softening in the demand for the Company’s existing products, an
      inability to respond to customer demand for new products, potential acquisitions
      requiring substantial capital, future expansion of the Company's operations
      and
      net losses that would result in net cash being used in operating, investing
      and/or financing activities which result in net decreases in cash and cash
      equivalents. Net losses may result in the loss of domestic and foreign credit
      facilities and preclude the Company from raising debt or equity financing in
      the
      capital markets on
      affordable terms or otherwise .





On
      April
      30, 2008, the Company renewed its unsecured credit agreement in the amount
      of
      $20 million, which expires on June 10, 2011. There was no balance outstanding
      as
      of June 30, 2008. At that date, the entire $20 million line of credit was
      available to the Company to borrow. The loan bears interest at LIBOR plus 0.75%
      to 1.25% based on certain financial statement ratios maintained by the Company.





The
      Company's Hong Kong subsidiary had an unsecured line of credit of approximately
      $2 million, which was unused at June 30, 2008. The line of credit expires on
      January 31, 2009. Borrowing on the line of credit was guaranteed by the U.S.
      parent. The line of credit bears interest at a rate determined by the bank
      as
      the financing is extended.





For
      information regarding further commitments under the Company's operating leases,
      see Note 15 of Notes to the Company's Consolidated Financial Statements in
      the
      Company's 2007 Annual Report on Form 10-K.


-
          33 -


During
      May 2007, the Company sold a parcel of land located in Jersey City, New Jersey
      for $6.0 million. The Company had previously estimated that approximately $0.8
      million of the proceeds would be payable to the State of New Jersey as a portion
      of the property is subject to tideland claims. In December 2007, the Tidelands
      Resource Council voted to approve the Bureau of Tideland’s Management’s
      recommendation for a Statement of No Interest. On March 14, 2008, the
      Commissioner of the Department of Environmental Protection signed a letter
      to
      approve the Statement of No Interest. As final approval of the Statement of
      No
      Interest is still pending, the Company has continued to defer the estimated
      gain
      on sale of the land, in the amount of $4.6 million. Of the $6.0 million sales
      price, the Company received cash of $1.5 million before closing costs, and
      $4.6
      million (including interest) was being held in escrow pending final resolution
      of the State of New Jersey tideland claim and certain environmental costs.
      During 2007, the Company paid $0.4 million related to environmental costs,
      which
      approximated the maximum amount for which the Company is liable. During May
      2008, the title company released $2.3 million of the escrow and as such, $2.3
      remains in escrow and has been classified as restricted cash as of June 30,
      2008. The Company anticipates resolution of this sale, release of the remaining
      escrow and corresponding guarantees and recognition of the gain by the end
      of
      fiscal 2008. As the timing of the release of the remaining escrow of $2.3
      million is not under the Company’s control, it has been classified in
      non-current assets as restricted cash and the deferred gain of $4.6 million
      has
      been classified in deferred gain on the sale of property in the Condensed
      Consolidated Balance Sheet as of June 30, 2008.




At
      June
      30, 2008, the Company’s investment securities included privately placed units of
      beneficial interests in the Columbia Strategic Cash Portfolio (the “Columbia
      Portfolio”), which is an enhanced cash fund sold as an alternative to
      money-market funds. During the latter half of 2007, the Company invested a
      portion of its cash balances on hand in this fund. In December 2007, due to
      adverse market conditions, the fund was overwhelmed with withdrawal requests
      from investors and it was closed with a restriction placed upon the cash
      redemption ability of its holders. As a result, the Company redesignated the
      Columbia Portfolio units from cash equivalents (as previously classified during
      the second and third quarters of 2007) to short-term investments or long-term
      investments based upon the liquidation schedule provided by the fund. In
      addition, the Company has recorded total impairment charges of $0.7 million
      due
      to the declining net asset value (NAV), $0.3 million of which was recorded
      in
      the first quarter of 2008. As the NAV of the Columbia Portfolio has remained
      relatively constant during the second quarter of 2008, the Company has not
      recorded any additional impairment charge during the three months ended June
      30,
      2008.





As
      of
      June 30, 2008, the Company has received total cash redemptions to date of $13.2
      million (including $10.9 million in the six months ended June 30, 2008) at
      a
      weighted-average net asset value of $.9826 per unit. The additional realized
      gains and losses associated with these redemptions were minimal. Information
      and
      the markets relating to these investments remain dynamic, and there may be
      further declines in the value of these investments, the value of the collateral
      held by these entities, and the liquidity of the Company’s investments. To the
      extent that the Company determines that there is a further decline in fair
      value, the Company may recognize additional impairment charges in future periods
      up to the aggregate amount of these investments.


-
          34 -


As
      of
      June 30, 2008, the Company owned a total of 1,840,919 shares, or approximately
      1.9%, of the
      outstanding shares ,
      of the
      common stock of Toko, Inc. (“Toko”) at a total cost of $5.6 million ($3.07 per
      share). Toko had a market capitalization of approximately $174.5 million as
      of
      June 30, 2008. These shares are reflected on the Company’s condensed
      consolidated balance sheets as marketable securities. These marketable
      securities are considered to be available for sale under SFAS No. 115,
“Accounting for Certain Investments in Debt and Equity Securities”. In
      accordance with FSP 115-1, the Company periodically reviews its marketable
      securities and determines whether the investments are other-than-temporarily
      impaired. The Company reviewed various factors in making its determination,
      including volatility of the Toko share price over the last year, Toko’s recent
      financial results and the Company’s intention and ability to hold the
      investment. The Toko share price has been extremely volatile over the last
      year,
      ranging from $1.22 - $2.79. While this stock is highly volatile, the Company’s
      cost basis in its remaining shares of Toko stock is $3.07 per share, which
      is
      above the 52-week high of $2.79. While the Company has the intent and ability
      to
      hold this investment until it is in a gain position, there is no indication
      that
      the Toko stock price will rise above the Company’s cost basis within the
      foreseeable future. As a result, the Company has deemed this investment
      other-than-temporarily impaired as of June 30, 2008 and has recorded a pre-tax
      impairment charge of $2.4 million during the second quarter of 2008 to write
      this investment to its fair value at June 30, 2008.





On
      February 25, 2008, the Company announced that it had acquired 4,370,052 shares
      of Power-One, Inc. (“Power-One”) common stock representing, to the Company’s
      knowledge, 5% of Power-One’s outstanding common stock, at a total purchase price
      of $10.1 million. Power-One’s common stock is quoted on the NASDAQ Global
      Market. Power-One is a designer and manufacturer of power conversion and power
      management products. As of June 30, 2008, the Company has recorded an unrealized
      loss, net of income tax, of approximately $1.2 million which is included in
      accumulated other comprehensive income in stockholders’ equity. As this stock
      has been highly volatile during the short timeframe that the Company has held
      this investment and as management has the ability and intention to hold this
      investment until the market improves, the Company does not believe that their
      investment in Power-One is other-than-temporarily impaired as of June 30,
      2008.





During
      June 2008, the Company invested $2.4 million in certificates of deposit (CDs)
      with Stephens, Inc., with whom the Company has an investment banking
      relationship. This investment is part of the Certificate of Deposit Account
      Registry Service (CDARS) program whereby the funds are allocated to various
      banks in order to achieve FDIC insurance on the full invested amount. The CDs
      have a 26-week maturity and an early redemption feature with a 30-day interest
      penalty.





During
      2000, the Board of Directors of the Company authorized the purchase of up to
      ten
      percent of the Company’s outstanding common shares. As of June 30, 2008, the
      Company had purchased and retired 23,600 Class B common shares at a cost of
      approximately $0.8 million and had purchased and retired 185,529 Class A common
      shares at a cost of approximately $6.5 million. No shares of Class B common
      stock were repurchased during the six months ended June 30, 2008 and 25,496
      shares of Class A common stock were repurchased during the six months ended
      June
      30, 2008 at a cost of $0.8 million.





During
      the six months ended June 30, 2008, the Company's cash and cash equivalents
      increased by $4.3 million, reflecting approximately $8.7 million provided by
      operating activities (principally as a result of net income of $4.0 million,
      depreciation and amortization expense of $3.6 million, stock-based compensation
      expense of $0.7 million and impairment charges, net of deferred tax provision,
      of $1.6 million, offset in part by a $1.2 million decrease in operating assets
      and liabilities), $10.9 million from the partial redemption of the Columbia
      Portfolio and $2.3 million from the partial release of escrow related to the
      sale of the Jersey City property, offset, in part, by $12.5 million used for
      purchases of marketable securities, $3.1 million for the purchase of property,
      plant and equipment, $0.8 million for the repurchase of the Company’s common
      stock and $1.6 million for payments of dividends.


-
          35 -


Cash
      and
      cash equivalents, marketable securities, short-term investments and accounts
      receivable comprised approximately 53.9% and 54.4% of the
      Company's total assets at June 30, 2008 and December 31, 2007, respectively.
      The
      Company's current ratio (i.e., the ratio of current assets to current
      liabilities) was 5.8 to 1 and 6.2 to 1 at June 30, 2008 and December 31, 2007,
      respectively.


On
        July
        31, 2008, the Company announced that it will cease manufacturing operations
        at
        its Bel Power, Inc. facility in Westborough, Massachusetts by January 2009.
        The
        Company expects to incur severance and other costs related to the layoff
        of
        approximately 50 associates over the next few months. The Company is currently
        evaluating the accounting implications of the closure of this facility, which
        will be recorded in the third quarter of 2008.


New
      Financial Accounting Standards





In
      May
      2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of
      accounting principles and the framework for selecting the principles to be
      used
      in the preparation of financial statements of nongovernmental entities that
      are
      presented in conformity with generally accepted accounting principles (GAAP)
      in
      the United States. This Statement is effective sixty days following the SEC’s
      approval of the Public Company Accounting Oversight Board amendments to AU
      Section 411, “The Meaning of Present Fairly in Conformity With Generally
      Accepted Accounting Principles.” The Company is currently evaluating the
      potential impact, if any, of the adoption of SFAS No. 162 on its financial
      statements.





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities”, an amendment of FASB Statement No. 133 (“SFAS No.
      161”). The new standard is intended to improve financial reporting about
      derivative instruments and hedging activities by requiring enhanced disclosures
      to enable investors to better understand their effects on an entity’s financial
      position, financial performance and cash flows. It is effective for financial
      statements issued for fiscal years and interim periods beginning after November
      15, 2008. The Company does not believe that SFAS No. 161 will have a material
      impact on its financial statements.


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          36 -




Item
      3. Quantitative
      and Qualitative Disclosures About Market Risk





Fair
      Value of Financial Instruments — The estimated fair values of financial
      instruments have been determined by the Company using available market
      information and appropriate valuation methodologies.




The
      Company has not entered into, and does not expect to enter into, financial
      instruments for trading or hedging purposes. The Company does not currently
      anticipate entering into interest rate swaps and/or similar
      instruments.





The
      Company's carrying values of cash, marketable securities, accounts receivable,
      accounts payable and accrued expenses are a reasonable approximation of their
      fair value. At
      June
      30, 2008, two of the Company’s investments - the Company’s investment in Toko
      stock and the Company’s investment in the Columbia Strategic Cash Portfolio (the
“Columbia Portfolio”) - have been subject to recent market declines, triggering
      impairment charges recorded during the six months ended June 30, 2008.





The
      per
      share fair market value of the remaining 1.8 million shares of Toko stock has
      decreased by 22.5% since March 31, 2008 (a decline of $0.52 per share). This
      investment has been in a loss position since April 2007. While the Company
      has
      the intent and ability to hold this investment until it is in a gain position,
      there is no indication that the Toko stock price will rise above the Company’s
      cost basis within the foreseeable future. As a result, the Company has deemed
      this investment other-than-temporarily impaired as of June 30, 2008 and has
      recorded an impairment charge of $2.4 million during the second quarter of
      2008.
      If Toko experiences further declines in their stock price, this could cause
      the
      Company to take additional impairment charges on this investment in the future.





The
      Company’s investment in the Columbia Portfolio has also been sensitive to the
      recent market decline. In December 2007, the Company was notified that its
      $25.7
      million investment in the Columbia Portfolio was being liquidated and that
      the
      fund was converting from a fixed net asset value (“NAV”) to a floating NAV,
      which resulted in the Company’s recording a $0.3 million impairment charge
      during the year ended December 31, 2007 and an additional impairment charge
      of
      $0.3 million was recorded in the three months ended March 31, 2008. See Note
      3
      of the Notes to the Company’s Condensed Consolidated Financial Statements. As of
      June 30, 2008, the Company has a total of $11.9 million invested in the Columbia
      Portfolio. While the NAV remained steady during the second quarter of 2008,
      if
      the NAV were to decline by $0.10 per unit (10% of the NAV of $0.9705 at June
      30,
      2008), the net impact to the Company’s results of operations and cash flows
      would be a decrease of income before provision for income taxes and cash flows
      from operating activities of approximately $1.2 million.





In
      addition to the two investments discussed above, the Company’s investment in
      Power-One, Inc. has also been subject to recent market declines. As of June
      30,
      2008, the pre-tax unrealized loss associated with this investment is $1.8
      million. If the per share fair market value of the Power-One stock were to
      decrease by $0.18 per share (10% of the June 30, 2008 Power-One stock price),
      this would result in an additional unrealized loss of $0.8 million. The
      Company’s cost in this investment was $2.32 per share and from the time of
      purchase in late February 2008 through the end of the second quarter, the
      closing stock price ranged from $1.81 - $3.70 per share, with the average
      closing stock price for the period at $2.79 per share. The Company has the
      intent and ability to hold this stock for the period of time it takes for the
      market to recover. As a result of these factors, management believes that the
      investment in Power-One is not other-than-temporarily impaired as of June 30,
      2008.


-
          37 -


The
      Company enters into transactions denominated in U.S. Dollars, Hong Kong Dollars,
      the Chinese Renminbi, Euros, British Pounds and the Czech Koruna. Fluctuations
      in the U.S. dollar exchange rate against these currencies could significantly
      impact the Company's consolidated results of operations.





The
      Company believes that a change in interest rates of 1% or 2% would not have
      a
      material effect on the Company's condensed consolidated statement of operations
      or balance sheet.


-
          38 -





Item
      4. Controls
      and Procedures





a)
            Disclosure
                controls and procedures.
                As of the end of the Company’s most recently completed fiscal quarter
                covered by this report, the Company carried out an evaluation, with
                the
                participation of the Company’s management, including the Company’s chief
                executive officer and vice president of finance, of the effectiveness
                of
                the Company’s disclosure controls and procedures pursuant to Securities
                Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s chief
                executive officer and vice president of finance concluded that the
                Company’s disclosure controls and procedures are effective in ensuring
                that information required to be disclosed by the Company in the reports
                that it files or submits under the Securities Exchange Act is recorded,
                processed, summarized and reported, within the time periods specified
                in
                the SEC’s rules and forms.





b.)
            Changes
                in internal controls over financial reporting:
                There have been no changes in the Company's internal controls over
                financial reporting that occurred during the Company's last fiscal
                quarter
                to which this report relates that have materially affected, or are
                reasonable likely to materially affect, the Company’s internal control
                over financial reporting.





PART
      II.
      Other Information





Item
      1.  Legal
      Proceedings





The
      Company is, from time to time, a party to litigation arising in the normal
      course of its business, including various claims of patent infringement. See
      the
      Company’s Annual Report on Form 10-K for the details of pending lawsuits. The
      Company cannot predict the outcome of the unresolved matters; however,
      management believes that the ultimate resolution of these matters will not
      have
      a material impact on the Company's consolidated financial condition or results
      of operations. As of June 30, 2008, no amounts have been accrued in connection
      with these lawsuits, as the amounts are not determinable.


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          39 -





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





The
      following table sets forth certain information regarding the Company's purchase
      of shares of its Class A Common Stock during each calendar month in the quarter
      ended June 30, 2008:





Period
            
            Total Number
              of Shares
              Purchased
            
            Average
              Price Paid
              per Share
            
            Total Number of
              Shares Purchased as
              Part of Publicly
              Announced Plans or
              Programs
            
            Maximum Number
              of Shares that May
              Yet Be Purchased
              Under the PlanApril
                1 - April 30, 2008
            
            
            -
            
            $
            -
            
            
            -
            
            
            80,809May
                1 - May 31, 2008
            
            
            9,610
            
            
            27.98
            
            
            9,610
            
            
            70,238June
                1 - June 30, 2008
            
            
            3,679
            
            
            28.57
            
            
            3,679
            
            
            66,191Total
            
            
            13,289
            
            $
            28.14
            
            
            13,289
            
            
            66,191





As
      of
      June 30, 2008, the Company had cumulatively purchased and retired 23,600 shares
      of the Company’s Class B Common Stock. No shares of Class B common stock were
      repurchased during the six months ended June 30, 2008. The maximum number of
      shares of Class B common stock that may yet be purchased under the plan as
      of
      April 30, 2008, May 31, 2008 and June 30, 2008 were 908,569, 914,099 and
      913,859, respectively.





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





The
      Company’s annual meeting of security holders was held on May 9, 2008. 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
            
            WithheldAvi
                Eden
            
            
            2,326,776
            
            
            92,680Robert
                H. Simandl
            
            
            2,120,159
            
            
            299,297








With
      respect to the ratification of the designation of Deloitte & Touche LLP to
      audit the Company’s books and accounts for 2008, the votes were cast as
      follows:





For
            
            Against
            
            Abstain2,381,417
            
            
            12,765
            
            
            25,274


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          40 -





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.


-
          41 -


SIGNATURES





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





BEL
                FUSE INC.By:
            /s/Daniel
                BernsteinDaniel
                Bernstein, President andChief
                Executive OfficerBy:
            /s/
                Colin DunnColin
                Dunn, Vice President of Finance




Dated:
      August 8, 2008


-
          42 -





EXHIBIT
      INDEX





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





Exhibit
      31.2 - Certification of the Vice President of Finance pursuant to Section 302
      of
      the Sarbanes-Oxley Act of 2002.





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





Exhibit
      32.2 - Certification of the Vice President of Finance pursuant to Section 906
      of
      the Sarbanes-Oxley Act of 2002.


-
          43 -