UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





FORM
      10-K


(Mark
      One)





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





For
      the
      fiscal year ended  December
      31,
      2006________________________________________________________


or





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





For
      the
      transition period from _______________________________ to__________________________________





Commission
      File Number:  0-11676________________________________________________________________




BEL
      FUSE
      INC.









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








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


None





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


Class
      A
      Common Stock, $0.10 par value; Class B Common Stock, $0.10 par
      value





Indicate
      by checkmark if the registrant is a well-known issuer, as defined in Rule 405
      of
      the


Securities
      Act. o Yes x
      No





Indicate
      by checkmark if the registrant is not required to file reports to Section 13
      or
      15(d)


of the Act.
o Yes x
      No








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




Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
      be contained, to the best of registrant's knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form 10-K
      or any amendment to this Form 10-K.  x





Indicate
      by checkmark whether the registrant is a large accelerated filer, an accelerated
      filer, or a non-accelerated filer. See definition of “accelerated filer” and
“large accelerated filer” in Rule 12b-2 of the Securities Exchange Act of
      1934.


Large
      accelerated filer o
      Accelerated filer x
      Non-accelerated filer o







Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). o
      Yes  x
      No





The
      aggregate market value of the voting and non-voting common equity of the
      registrant held by non-affiliates (for this purpose, persons and entities other
      than executive officers, directors, and 5% or more shareholders) of the
      registrant, as of the last business day of the registrant's most recently
      completed second fiscal quarter (June 30, 2006), was $312,206,369.





Number
      of
      shares of Common Stock outstanding as of March 1, 2007: 2,702,677 Class A Common
      Stock; 9,171,665- Class B Common Stock





Documents
      incorporated by reference:





Bel
      Fuse
      Inc.'s Definitive Proxy Statement for the 2007 Annual Meeting of Stockholders
      is
      incorporated by reference into Part III.





BEL
                  FUSE INC.INDEXForward
                  Looking Information
              PagePart
                  IItem
                  1.
              Business
              1Item
                  1A.
              Risk
                  Factors
              11Item
                  1B.
              Unresolved
                  Staff Comments
              17Item
                  2.
              Properties
              17Item
                  3.
              Legal
                  Proceedings
              19Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              20Part
                  IIItem
                  5.
              Market
                  for Registrant's Common Equity,Related
                  Stockholder Matters and IssuerPurchases
                  of Equity Securities
              21Item
                  6.
              Selected
                  Financial Data
              23Item
                  7.
              Management's
                  Discussion and Analysis of FinancialCondition
                  and Results of Operations
              25Item
                  7A.
              Quantitative
                  and Qualitative Disclosures AboutMarket
                  Risk
              45Item
                  8.
              Financial
                  Statements and Supplementary Data
              45Item
                  9.
              Changes
                  in and Disagreements With Accountantson
                  Accounting and Financial Disclosure
              47Item
                  9A.
              Controls
                  and Procedures
              47Item
                  9B.
              Other
                  Information
              49Part
                  IIIItem
                  10.
              Directors,
                  Executive Officers and CorporateGovernance
              49Item
                  11.
              Executive
                  Compensation
              49Item
                  12.
              Security
                  Ownership of Certain Beneficial Ownersand
                  Management and Related StockholderMatters
              49







BEL
                FUSE INC.INDEX
                (Con't)Forward
                Looking Information
            PagePart
                  III (Con't)


Item
                  13.
            Certain
                  Relationships and Related Transactions,and
                Director Independence
            49Item
                  14.
            Principal
                Accountant Fees and Services
            49Part
                  IVItem
                  15.
            Exhibits
                and Financial Statement Schedules
            50Signatures
            
            
            53*Page
                F-1 follows page 46





FORWARD
      LOOKING INFORMATION





The
      Company’s quarterly and annual operating results are affected by a wide variety
      of factors that could materially and adversely affect revenues and
      profitability, including the risk factors described in Item 1A of the Company's
      Annual Report on Form 10-K. 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
      mentioned above, and those detailed in Item 1A of this Annual Report on Form
      10-K, 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 hereof or
      to
      reflect the occurrence of unanticipated events. An investment in the Company
      involves various risks, including those mentioned above and those which are
      detailed from time to time in the Company’s SEC filings.







PART
      I


Item
      1. Business





General





Bel
      Fuse
      Inc. ("Bel" or the "Company") 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 portfolio of
      products also finds application in the automotive, medical and consumer
      electronics markets. These products are designed to protect, regulate, connect,
      isolate or manage a variety of electronic circuits.





With
      over
      55 years in the electronics industry, Bel has reliably demonstrated the ability
      to succeed in a variety of product areas across multiple industries. Founded
      in
      1949, the Company has a strong track record of technical innovation working
      with
      the engineering communities of market leaders. Bel has consistently proven
      itself a valuable supplier to the foremost companies in its chosen industries
      by
      developing cost-effective solutions for the challenges of new product
      development. By combining our strength in product design with our own
      specially-designed manufacturing facilities, Bel has established itself as
      a
      formidable competitor on a global basis.








1


The
      Company, which is organized under New Jersey law, operates in one industry
      with
      three geographic reporting segments as defined in Statement of Financial
      Accounting Standards No. 131, "Disclosures about Segments of an Enterprise
      and
      Related Information". Bel’s principal executive offices are located at 206 Van
      Vorst Street, Jersey City, New Jersey 07302; (201) 432-0463. The Company
      operates other facilities in North America, Europe and the Far East and trades
      on the NASDAQ (BELFA and BELFB). For information regarding Bel's three
      geographic reporting units, see Note 11 of the Notes to Consolidated Financial
      Statements.





The
      terms
“Company” and “Bel” as used in this Annual Report on Form 10-K refers to Bel
      Fuse Inc. and its consolidated subsidiaries unless otherwise
      specified.




Product
      Groups





Magnetics


§
            Discrete
                components


§
            Power
                transformers


§
            MagJack®integrated connector modules





The
      Company, a leading producer of discrete magnetics, markets an extensive line
      of
      products (transformers, diplex filters, common mode chokes and delay lines)
      used
      in networking, telecommunications and broadband applications. These magnetic
      devices condition, filter and isolate the signal as it travels through network
      equipment helping to ensure accurate data and/or voice transmission. Bel’s
      magnetic components are also used in the automotive and consumer products
      markets.





Power
      transformer products include standard and custom designs that have been added
      to
      the Company’s product mix as a result of the Company's Signal Transformer
      acquisition in 2003. Manufactured for use in alarm, security and medical
      products, these devices are designed to comply with international safety
      standards governing transformers, including UL, CSA, IEC, TUV and VDE.





Marketed
      under the brand MagJack®, Bel's connectors with integrated magnetics provide the
      signal conditioning, electromagnetic interference suppression and signal
      isolation previously performed by multiple, discrete magnetics.





Modules


§
            Power
                conversion modules


§
            Integrated
                analog front end modules


§
            Custom
                modules





Bel’s
      Power conversion products include standard and custom non-isolated DC-DC
      converters designed specifically to power low voltage silicon devices. The
      need
      for converting one DC voltage to another voltage is growing rapidly as the
      developers of integrated circuits commonly adjust the supply voltage as a means
      of optimizing device performance. These DC-DC converters are used in data
      networking equipment, distributed power architecture, and telecommunication
      devices, as well as computers and peripherals.


2





The
      Company develops IC-compatible, integrated front end modules for
      broadband and telecommunication applications. These modules can
      eliminate the need for several discrete components by providing the same
      functionality in a single, compact device.





The
      Company continues to pursue market opportunities, where it can supply customized
      value-added modules to customers requiring integrated products that combine
      one
      or more of the Company's capabilities in surface mount assembly, automatic
      winding, hybrid fabrication and component encapsulation.





Circuit
      Protection


§
            Miniature
                fuses


§
            Micro
                fuses


§
            Surface
                mount fuses and PTC devices


§
            Radial
                PTC





The
      Company’s circuit protection products include board level fuse and PTC devices
      (miniature, micro and surface mount fuses) designed for the global electronic
      and telecommunication markets. Fuses and PTC devices prevent currents in an
      electrical circuit from exceeding certain predetermined levels, acting as a
      safety valve to protect expensive components from damage by cutting off high
      currents before they can generate enough heat to cause smoke or fire.
      Additionally, PTC devices are resettable and do not have to be replaced before
      normal operation of the end product can resume.





While
      the
      Company continues to manufacture traditional fuse types, its surface mount
      chip
      fuses are used in space-critical applications such as mobile phones and
      computers. Like the majority of Bel’s fuse products, the chip fuses comply with
      RoHS standards for the elimination of lead and other hazardous materials.





The
      Company’s circuit protection devices are used extensively in products such as
      televisions, consumer electronics, power supplies, computers, telephones and
      networking equipment.





Interconnect


§
            Passive
                jacks


§
            Plugs


§
            Cable
                assemblies





The Company
      has  a
      comprehensive line of modular connectors, including RJ45 and RJ11 passive jacks,
      plugs and cable assemblies. Passive jacks serve primarily as the connectivity
      device in networking equipment such as routers, hubs, switches and patch panels.
      Modular plugs and cable assemblies are utilized within the structured cabling
      system, often referred to as premise wiring. The Company’s connector products
      are designed to meet all major performance standards including Category 6
      compliant products targeted to next generation network standards for Gigabit
      Ethernet and 10Gigabit Ethernet.


3


The
      following table describes, for each of Bel's product groups, the principal
      functions and applications associated with such product groups.





**Product
                Group**
            **Function**
            **Application****Magnetics**Discrete
                Components
            Condition,
                filter and isolate the electronic signal to ensure accurate data
                and/or
                voice transmission.
            Network
                switches, routers, hubs and PCs used in 10/100Base-TX, Gigabit, Voice
                over
                the Internet Protocol (”VoIP"), home networking and cable modem
                applications.Power
                Transformers
            Safety
                isolation and distribution.
            Power
                supplies, alarm, fire detection and security systems, HVAC, lighting
                and
                medical equipment.MagJack®Integrated Connector Modules
            Condition,
                filter and isolate an electronic signal to ensure accurate data and/or
                voice transmission and to provide RJ45 and USB
                connectivity
            Network
                switches, routers, hubs and PCs used in 10/100Base-TX, Gigabit, and
                VoIP.**Modules**Power
                Conversion Modules
              (DC-DC
                Converters)
            Convert
                DC voltage level to other DC level as required to meet the power
                needs of
                low voltage silicon devices
            Networking
                equipment, distributed power architecture, telecom devices, computers
                and
                peripherals.Integrated
                Analog Front End Modules
            Condition,
                filter and isolate the electronic signal to ensure accurate data
                and/or
                voice transmission.
            Broadband
                and telecom equipment supporting ISDN, T1/E1, xDSL technologies.Custom
                Modules
            Integrate
                several discrete devices to provide customized, space-saving
                solution.
            Networking
                products.**Circuit
                Protection**Miniature
                Fuses
            Protects
                devices by preventing current in an electrical circuit from exceeding
                acceptable levels.
            Power
                supplies, electronic ballasts and consumer electronics.Micro
                Fuses and Radial PTC
            Protects
                devices by preventing current in an electrical circuit from exceeding
                acceptable levels.
            Cellular
                phone chargers, consumer electronics, power supplies and set top
                boxes.Surface
                Mount Fuses and PTC
            Protects
                devices by preventing current in an electrical circuit from exceeding
                acceptable levels.
            Cellular
                phones, mobile computers, IC and battery protection, power supplies
                and
                telecom line cards.**Interconnect**Passive
                Jacks
            RJ45
                and RJ11 connectivity for
              data
                and/or voice transmission.
            Network
                routers, hubs, switches and patch panels deployed in Category 5,
                5e and 6
                cable systems.Plugs
            RJ45
                and RJ11 connectivity for
              data
                and/or voice transmission.
            Network
                routers, hubs, switches and patch panels deployed in Category 5,
                5e and 6
                cable systems.Cable
                Assemblies
            RJ45
                and RJ11 connectivity for
              data
                and voice transmission.
            Structured
                Category 5, 5e and 6 cabling systems (premise
                wiring).


4


Acquisitions





Acquisitions
      have played a critical role in the growth of Bel and the expansion of both
      its
      product portfolio and its customer base. Furthermore, acquisitions continue
      to
      be a key element in the Company’s growth strategy. As part of the Company’s
      acquisition strategy, it may **,** from
      time to time, purchase equity positions in companies that are potential merger
      candidates. The Company frequently evaluates possible merger candidates that
      would provide an expanded product and technology base that will allow the
      Company to further penetrate its strategic customers and/or an opportunity
      to
      reduce overall operating expense as a percentage of revenue. Bel also looks
      at
      whether the merger candidates are positioned to take advantage of the Company's
      low cost manufacturing facilities; and whether a cultural fit will allow the
      acquired company to be integrated smoothly and efficiently.





On
      June
      30, 2005, the Company acquired the common stock of Netwatch s.r.o., located
      in
      Prague, The Czech Republic, for approximately $1.9 million of which $0.5 million
      was due to the sellers and was paid by the Company during June 2006. Netwatch
      s.r.o. is a designer and manufacturer of high-performance fiber optic and copper
      cable assemblies for data and telecommunication applications. Approximately
      $1.0
      million of goodwill arose from the transaction which is included in the
      Company’s European reporting unit.





The
      Company believes that the strategic value of the Netwatch s.r.o. acquisition
      was
      the establishment of a European manufacturing presence for the Company and
      the
      addition of fiber optic capability to the Bel Stewart Connector Group to
      complement the Company’s existing copper-based product portfolio. The Company
      believes that this acquisition enabled Bel Stewart to support the Company's
      customer base, including the world's largest structured cabling providers,
      with
      a broad range of both copper and fiber based components and
      assemblies.





This
      acquisition was accounted for using the purchase method of accounting and
      accordingly, the results of operations of Netwatch s.r.o. have been included
      in
      the Company’s financial statements from June 30, 2005.





There
      was
      no in process research and development acquired as part of this
      acquisition.





On
      March
      22, 2005, the Company acquired the common stock of Galaxy Power Inc. (“Galaxy”)
      for approximately $19.0 million in cash including transaction costs of
      approximately $0.4 million. The purchase price has been allocated to both
      tangible and intangible assets and liabilities based on estimated fair values
      after considering an independent formal appraisal. Approximately $11.5 million
      of goodwill and $2.6 million of identifiable intangible assets arose from the
      transaction and are included in the Company’s North American reporting unit. The
      identifiable intangible assets are being amortized on a straight-line basis
      over
      their estimated useful lives.








5





The
      Company believes that the purchase of Galaxy’s Power Group was a logical
      strategic fit with Bel’s Power Products group. The Company believes that the
      products are highly complementary with minimal overlap. The customer base is
      similar but still affords ample opportunity for cross selling. While Bel offers
      Galaxy a much-needed cost competitive manufacturing base in China, Galaxy brings
      a portfolio of products and technologies aimed at higher end markets. In
      addition to these strategic synergies, there is significant opportunity for
      expense reduction and the elimination of redundancies.





This
      acquisition was accounted for using the purchase method of accounting and
      accordingly, the results of operations of Galaxy have been included in the
      Company’s financial statements from March 22, 2005.





There
      was
      no in process research and development acquired as part of this
      acquisition.





The
      following unaudited pro forma summary results of operations assume that Galaxy
      and Netwatch s.r.o. had been acquired as of January 1, 2004 (in thousands,
      except per share data):





Year
                  EndedDecember
                  31,2005
              
              2004Net
                  sales
              
              $
              221,227
              
              $
              212,331Net
                  earnings
              
              
              20,026
              
              
              25,419Earnings
                  per share - dilutedClass
                  A
              
              
              1.65
              
              
              2.14Class
                  B
              
              
              1.75
              
              
              2.23





The
      information above is not necessarily indicative of the results of operations
      that would have occurred if the acquisitions had been consummated as of January
      1, 2004 **.** Such
      information should not be construed as a representation of the future results
      of
      operations of the Company.












6




A
      condensed balance sheet of the major assets and liabilities of Galaxy and
      Netwatch s.r.o. at the acquisition dates is as follows:




Cash
              
              $
                  311,856Accounts
                  receivable
              
              3,687,331Inventories
              
              2,862,571Prepaid
                  expenses
              
              96,120Income
                  taxes receivable
              
              
              5,488Property,
                  plant andequipment
              
              
              1,545,526Other
                  assets
              
              
              32,083Deferred
                  tax asset
              
              
              1,392,850Goodwill
              
              
              11,786,080Intangible
                  assets
              
              
              2,630,000Notes
                  payable
              
              
              (860,694
              )Accounts
                  payable
              
              
              (2,129,165
              )Accrued
                  expenses
              
              
              (465,002
              )Net
                  assets acquired
              
              $
              20,895,044


The
      Company has cumulatively acquired a total of 5,874,919 shares, or approximately
      6% of the
      outstanding shares ,
      of the
      common stock of Toko, Inc. (“Toko”) at a total purchase price of $18.0 million.
      Toko had a market capitalization of approximately $255 million as of December
      31, 2006. These shares are reflected on the Company’s consolidated balance sheet
      as marketable securities. These marketable securities are considered to be
      available for sale under SFAS No. 115, “Accounting for Certain Investments in
      Debt and Equity Securities”. Thus, as of December 31, 2006, the Company has
      recorded an unrealized loss, net of income tax benefit, of approximately $1.5
      million which is included in accumulated other comprehensive income as stated
      in
      the consolidated statement of stockholders’ equity. The Company’s investment in
      Toko has been in an unrealized loss position for less than twelve months. As
      a
      result of the volatility of the Toko share price over the last year, management
      believes that the investment in Toko is not other-than-temporarily impaired.
      Furthermore, at March 14, 2007 the unrealized loss, net of income tax benefit,
      was approximately $.6 million. In connection with this transaction, the Company
      is obligated to pay an investment banker’s advisory fee to a third party of 20%
      of the appreciation in the stock of Toko, or $1 million, whichever is lower.
      During 2006 $300,000 was prepaid against this obligation. As of December 31,
      2006, the Company has not accrued any additional fees to the investment banker
      as the Toko stock is at an unrealized loss position.





The
      Company acquired a total of 2,037,500 shares of the common stock of Artesyn
      Technologies, Inc. (“Artesyn”) at a total purchase price of $16,331,469. On
      April 28, 2006, Artesyn was acquired by Emerson Network Power for $11.00 per
      share in cash. During the second quarter of 2006, in connection with the
      Company's sale of its Artesyn common stock, the Company recognized a gain of
      approximately $5.2 million, net of investment banker’s advisory fees of
      $850,000. The Company accrued bonuses of $1.0 million in connection with the
      gain. For financial statement presentation purposes, the $1.0 million bonus
      was
      classified within selling, general and administrative expenses ($723,000) and
      cost of sales ($277,000) and was paid to key employees during January 2007.


7








Sales
      and
      Marketing





The
      Company sells its products to customers throughout North America, Western Europe
      and the Far East. Sales are made through one of three channels: direct strategic
      account managers, regional sales managers working with independent sales
      representative organizations or authorized distributors. Bel's strategic account
      managers are assigned to handle major accounts requiring global coordination.





Independent
      sales representatives and authorized distributors are overseen by the Company's
      sales management personnel located throughout the world. As of December 31,
      2006, the Company had a sales and support staff of 50 persons that supported
      a
      network of 82 sales representative organizations and non-exclusive distributors.
      The Company has written agreements with all of its sales representative organizations and
      major distributors. These written agreements, terminable on short notice by
      either party, are standard in the industry.





Sales
      support functions have also been established and located in Bel international
      facilities to provide timely, efficient support for customers. This supplemental
      level of service, in addition to first-line sales support, enables the Company
      to be more responsive to customers ’ needs on
      a global level. The Company’s marketing capabilities include product management
      which drives new product development, application engineering for technical
      support and marketing communications. Product marketing managers facilitate
      technical partnerships for engineering development of IC-compatible components
      and modules.





8





Research
      and Development





The
      Company’s engineering groups are strategically located around the world to
      facilitate communication with and access to customers’ engineering personnel.
      This collaborative approach enables partnerships with customers for technical
      development efforts. On occasion, Bel executes non-disclosure agreements with
      customers to help develop proprietary, next generation products destined for
      rapid deployment.





The
      Company also sponsors membership in technical organizations that allow Bel’s
      engineers to participate in developing standards for emerging technologies.
      It
      is management’s opinion that this participation is critical in establishing
      credibility and a reputable level of expertise in the marketplace, as well
      as
      positioning the Company as an industry leader in new product
      development.





Research
      and development costs are expensed as incurred, and are included in cost of
      sales. Generally, research and development is performed internally for the
      benefit of the Company. Research and development costs include salaries,
      building maintenance and utilities, rents, materials, administration costs
      and
      miscellaneous other items. Research and development expenses for the years
      ended
      December 31, 2006, 2005 and 2004 amounted to $6.6 million, $7.3 million and
      $7.3
      million, respectively. The decrease from 2005 to 2006 is principally attributed
      to less research and development costs in the United States due to the
      consolidation of the Bel Power and Galaxy facilities in Massachusetts. This
      was
      offset in part by increased expenses at the Company’s China research and
      development facility which has a lower cost structure.





Competition





The
      Company operates in a variety of markets all of which are highly competitive.
      There are numerous independent companies and divisions of major companies that
      manufacture products that are competitive with one or more of Bel’s products. It
      is management’s opinion that Bel’s expanded product portfolio helps to
      differentiate the Company in these markets and, as a result, reduces the
      possibility of any single direct competitor operating across all product groups.





The
      Company's ability to compete is dependent upon several factors including product
      performance, quality, reliability, depth of product line, customer service,
      technological innovation, design, delivery time and price. Overall financial
      stability and global presence also play a significant role and give Bel a
      favorable position in relation to many of its competitors. Management intends
      to
      maintain a strong competitive posture in the Company's markets by continued
      expansion of the Company’s product lines and ongoing investment in research,
      development and manufacturing resources.














9





Associates





As
      of
      December 31, 2006, the Company had 1,956 full-time associates. The Company
      employed 616 people at its North American facilities, 1,270 people at its Asian
      facilities and 70 people at its European facilities, excluding workers supplied
      by independent contractors. The Company's manufacturing facility in New York
      is
      represented by a labor union. The Company believes that its relations with
      its
      associates are satisfactory.





Suppliers





The
      Company has multiple suppliers for most of the raw materials that it purchases.
      Where possible, the Company has contractual agreements with suppliers to assure
      a continuing supply of critical components.





With
      respect to those items which are purchased from single sources, the Company
      believes that comparable items would be available in the event that there was
      a
      termination of the Company's existing business relationships with any such
      supplier. While such a termination could produce a disruption in production,
      the
      Company believes that the termination of business with any one of its suppliers
      would not have a material adverse effect on its long-term operations. Actual
      experience could differ materially from this belief as a result of a number
      of
      factors, including the time required to locate an alternative supplier, and
      the
      nature of the demand for the Company’s products. In the past, the Company has
      experienced shortages in certain raw materials, such as capacitors, ferrites
      and
      integrated circuits (“IC’s”), when these materials were in great demand. Even
      though the Company may have more than one supplier for certain materials, it
      is
      possible that these materials may not be available to the Company in sufficient
      quantities or at the times desired by the Company.





Backlog





The
      Company typically manufactures products against firm orders and projected usage
      by customers. Cancellation and return arrangements are either negotiated by
      the
      Company on a transactional basis or contractually determined. The Company's
      backlog of orders as of February 28, 2007 was approximately $47.1 million,
      as
      compared with a backlog of $50.1 million as of February 28, 2006. Management
      expects that all of the Company's backlog as of February 28, 2007 will be
      shipped by December 31, 2007. Such expectation constitutes a Forward-Looking
      Statement. Factors that could cause the Company to fail to ship all such orders
      by year-end include unanticipated supply difficulties, changes in customer
      demand and new customer designs. The Company's major customers have negotiated
      reduced lead times on purchase orders with the goal of reducing their
      inventories. Accordingly, backlog may not be a
      reliable indicator of the timing of future sales. See Item 1A of this Annual
      Report- "Risk Factors - Our backlog figures may not be reliable indicators."











10





Intellectual
      Property





The
      Company has been granted a number of U.S. patents and has additional U.S. patent
      applications pending relating to its products. While the Company believes that
      the issued patents are defendable and that the pending patent applications
      relate to patentable inventions, there can be no assurance that a patent will
      be
      obtained from the applications or that its existing patents can be successfully
      defended. It is management's opinion that the successful continuation and
      operation of the Company's business does not depend upon the ownership of
      patents or the granting of pending patent applications, but upon the innovative
      skills, technical competence and marketing and managerial abilities of its
      personnel. The patents have a life of seventeen years from the date of issue
      or
      twenty years from filing of patent applications. The Company's existing patents
      expire on various dates from August 25, 2009 to February 15, 2021.





The
      Company utilizes U.S. registered trademarks to identify various products that
      it
      manufactures. The trademarks survive as long as they are in use and the
      registrations of these trademarks are renewed.





Available
      Information





The
      Company maintains a website at www.belfuse.com where it
      makes available the proxy statements, press releases and reports on Form 4,
      8-K,
      10-K and 10-Q that it and its insiders file with the SEC. These forms are made
      available as soon as reasonably practicable after such material is
      electronically filed with or furnished to the SEC. Press releases are also
      issued via electronic transmission to provide access to the Company’s financial
      and product news. In addition, the Company provides notification of and access
      to voice and Internet broadcasts of its quarterly and annual results.





Item
      1A. Risk Factors





An
      investment in our common stock involves a high degree of risk. Investors should
      carefully consider the risks described below, together with all other
      information contained in this Annual Report before making investment decisions
      with respect to our common stock.





***We
      do business in a highly competitive industry***





Our
      business is highly competitive worldwide, with relatively low barriers to
      competitive entry. We compete principally on the basis of product performance,
      quality, reliability, depth of product line, customer service, technological
      innovation, design, delivery time and price. The electronic components industry
      has become increasingly concentrated and globalized in recent years and our
      major competitors, some of which are larger than us, have significant financial
      resources and technological capabilities.










11


***Our
      backlog figures may not be reliable indicators.***


Many
      of
      the orders that comprise our backlog may be canceled by customers without
      penalty. Customers may on occasion double and triple order components from
      multiple sources to ensure timely delivery when backlog is particularly long.
      Customers often cancel orders when business is weak and inventories are
      excessive. Therefore, we cannot be certain that the amount of our backlog equals
      or exceeds the level of orders that will ultimately be delivered. Our results
      of
      operations could be adversely impacted if customers cancel a material portion
      of
      orders in our backlog.





***There
      are several factors which can cause us to lower our
      prices.***





a)  The
      average selling prices for our products tend to decrease rapidly over their
      life
      cycle, and customers are increasing pressure on suppliers to lower prices.
      Our
      profits will suffer if we are not able to reduce our costs of production or
      induce technological innovations as sales prices decline.





b)  Any
      drop
      in demand or increase in supply of our products due to the overcapacity of
      our
      competitors could cause a dramatic drop in our average sales prices causing
      a
      decrease in our gross margins.





c) Increased competition from low cost suppliers around the world has put further pressures
      on pricing. We continually strive to lower our costs,
      negotiate better pricing for components and raw materials and improve our
      operating efficiencies. Profit margins will be materially and adversely impacted
      if we are not able to reduce our costs of production or introduce technological
      innovations as sales prices decline.








***We
      are dependent on our ability to develop new products*** *.*





Our
      future operating results are dependent, in part, on our ability to develop,
      produce and market new and more technologically advanced products. There are
      numerous risks inherent in this process, including the risks that we will be
      unable to anticipate the direction of technological change or that we will
      be
      unable to timely develop and bring to market new products and applications
      to
      meet customers’ changing needs.





***Our
      acquisitions may not produce the anticipated results.***





A
      significant portion of our recent growth is from acquisitions. We cannot assure
      you that we will identify or successfully complete transactions with suitable
      acquisition candidates in the future. We also cannot assure you that
      acquisitions we complete will be successful. If an acquired business fails
      to
      operate as anticipated or cannot be successfully integrated with our other
      businesses, our results of operations, enterprise value, market value and
      prospects could all be materially and adversely affected.





12


If
      our
      acquisitions fail to perform up to our expectations, or as the value of goodwill
      decreases, we could be required to record a loss from the impairment of assets.
      Integration of new acquisitions into our consolidated operations may result
      in
      lower average operating results for the group as a whole.





Our
      strategy also focuses on the reduction of selling, general and administrative
      expenses through the integration or elimination of redundant sales offices
      and
      administrative functions at acquired companies. Our inability to achieve these
      goals could have a material and adverse effect on our results of
      operations.





We
      intend
      to continue to seek additional acquisition candidates, although we cannot
      predict when or if we will make any additional acquisitions, and what the impact
      of any such acquisitions may have on our financial performance. If we were
      to
      undertake a substantial acquisition for cash, the acquisition would likely
      need
      to be financed in part through bank borrowings or the issuance of public or
      private debt or equity. If we borrow money to finance acquisitions, this would
      likely decrease our ratio of earnings to fixed charges and adversely affect
      other leverage criteria and could result in the imposition of material
      restrictive covenants. Under our existing credit facility, we are required
      to
      obtain our lenders’ consent for certain additional debt financing, to comply
      with other covenants including the application of specific financial ratios,
      and
      may be restricted from paying cash dividends on our capital stock. We cannot
      assure you that the necessary acquisition financing would be available to us
      on
      acceptable terms, or at all, when required. If we issue a substantial amount
      of
      stock either as consideration in an acquisition or to finance an acquisition,
      such issuance may dilute existing stockholders and may take the form of capital
      stock having preferences over our existing common stock.








***We
      are exposed to weaknesses in international markets and other risks inherent
      in
      foreign trade.***





We
      have
      operations in eight countries around the world outside the United States, and
      approximately 73 % of our revenues during 2006 were derived from sales to
      customers outside the United States. Some of the countries in which we operate
      have in the past experienced and may continue to experience political, economic,
      medical epidemic and military instability or unrest. These conditions could
      have
      a material and adverse impact on our ability to operate in these regions and,
      depending on the extent and severity of these conditions, could materially
      and
      adversely affect our overall financial condition and operating results.





Although
      our operations have traditionally been largely transacted in U.S. dollars or
      U.S. dollar linked currencies, recent world financial instability may cause
      additional foreign currency risks in the countries we operate in.





Other
      risks inherent in doing trade internationally include: expropriation and
      nationalization, trade restrictions, transportation delays, and changes in
      United States laws that may inhibit or restrict our ability to manufacture
      in or
      sell to any particular country. For information regarding risks associated
      with
      our presence in Hong Kong and Macao, see "Item 2 - Properties" of this Annual
      Report on Form 10-K.








13


While
      we
      have benefited from favorable tax treatment in many of the countries where
      we
      operate, the benefits we currently enjoy could change if laws or rules in the
      United States or those foreign jurisdictions change, incentives are changed
      or
      revoked, or we are unable to renew current incentives.





***We
      may experience labor unrest*** *.*





As
      we
      implement transfers of certain of our operations, we may experience strikes
      or
      other types of labor unrest as a result of lay-offs or termination of employees
      in higher labor cost countries .
      Our
      manufacturing facility in New York is represented by a labor union .





***Our
      results of operations may be materially and adversely impacted by environmental
      and other regulations*** *.*





Our
      manufacturing operations, products and/or product packaging are subject to
      environmental laws and regulations governing air emissions, wastewater
      discharges, the handling, disposal and remediation of hazardous substances,
      wastes and certain chemicals used or generated in our manufacturing processes,
      employee health and safety labeling or other notifications with respect to
      the
      content or other aspects of our processes, products or packaging, restrictions
      on the use of certain materials in or on design aspects of our products or
      product packaging and responsibility for disposal of products or product
      packaging. More stringent environmental regulations may be enacted in the
      future, and we cannot presently determine the modifications, if any, in our
      operations that any such future regulations might require, or the cost of
      compliance with these regulations.





***Our
      results may vary substantially from period to period*** *.*





Our
      revenues and expenses may vary significantly from one accounting period to
      another accounting period due to a variety of factors, including customers'
      buying decisions, our product mix and general market and economic conditions.
      Such variations could significantly impact our stock price.














14





***A
      shortage of availability or an increase in the cost of raw materials and
      components and our ability to procure high quality raw materials at cost
      effective prices may negatively impact profit
      margins.***





Our
      results of operations may be adversely impacted by difficulties in obtaining
      raw
      materials, supplies, power, natural resources and any other items needed for
      the
      production of our products, as well as by the effects of quality deviations
      in
      raw materials and the effects of significant fluctuations in the prices on existing
      inventories and purchase commitments for these materials. Many of these materials and components are produced by a limited
      number of suppliers and may be constrained by supplier capacity.





As
      product life cycles shorten and during periods of market slowdowns, the risk
      of materials **** obsolescence
      increases and this may **** materially
      and adversely impact our financial results.





***Rapid
      shifts in demand for various products may cause some of our inventory of raw
      materials, components or finished goods to become obsolete.***





The
      life
      cycles and demand for our products are directly linked to the life cycles and
      demand for the end products into which they are designed. Rapid shifts in the
      life cycles or demand for these end products due to technological shifts,
      economic conditions or other market trends may result in material amounts of
      inventory of either raw materials or finished goods becoming obsolete. While
      the
      Company works diligently to manage inventory levels, rapid shifts in demand
      may
      result in obsolete or excess inventory and **** materially impact
      financial results.














15





***A
      loss of the services of the Company’s executive officers or other skilled
      associates could negatively impact our operations and
      results.***





The
      success of the Company’s operations is largely dependent upon the performance of
      its executive officers, managers, engineers and sales people. Many of these
      individuals have a significant number of years of experience within the Company
      and/or the industry in which we compete and would be extremely difficult to
      replace. The loss of the services of any of these associates may materially
      and
      adversely impact our results of operations if we are unable to replace them
      in a
      timely manner.





***Our
      stock price, like that of many technology companies, has been and may continue
      to be volatile.***





The
      market price of our common stock may fluctuate as a result of variations in
      our
      quarterly operating results and other factors beyond our control. These
      fluctuations may be exaggerated if the trading volume of our common stock is
      low. In addition, the market price of our common stock may rise and fall in
      response to a variety of factors, including:





·
            announcements
                of technological or competitive
                developments;


·
            acquisitions
                or strategic alliances by us or our
                competitors;


·
            the
                gain or loss of a significant customer or
                order;


·
            changes
                in estimates of our financial performance or changes in recommendations
                by
                securities analysts regarding us or our industry;
                or


·
            general
                market or economic conditions.





In
      addition, equity securities of many technology companies have experienced
      significant price and volume fluctuations. These price and volume fluctuations
      often have been unrelated to the operating performance of the affected
      companies.





***Our
      intellectual property rights may not be adequately protected under the current
      state of the law.***





We
      cannot
      assure you we will be successful in protecting our intellectual property through
      patent or other laws. As a result, other companies may be able to develop and
      market similar products which could materially **** and **** adversely
      affect our business.





We
      may be
      sued by third parties for alleged infringement of their proprietary rights
      and
      we may incur defense costs and possibly royalty obligations or lose the right
      to
      use technology important to our business.





From
      time
      to time, we receive claims by third parties asserting that our products violate
      their intellectual property rights. Any intellectual property claims, with
      or
      without merit, could be time consuming and expensive to litigate or settle
      and
      could divert management attention from administering our business. A third
      party
      asserting infringement claims against us or our customers with respect to our
      current or future products may materially **** and adversely affect us by, for example, causing us to enter into costly royalty
      arrangements or forcing us to incur settlement or litigation
      costs.


16





Item
      1B.
      Unresolved Staff Comments





Not
      applicable.





Item
      2.   Properties





The
      Company is headquartered in Jersey City, New Jersey where it currently owns
      53,000 square feet of office and warehouse space. On July 15, 2004 the Company
      entered into an agreement for the sale of land and building of approximately
      40,000 square feet located in Jersey City, New Jersey. The sales agreement
      expired during January 2006.  The
      buyer
      and seller are continuing to negotiate about certain environmental matters
      among
      themselves and with the State of New Jersey. **** See
      Item
      7 of this Annual Report on Form 10-K for additional information regarding this
      agreement.





The
      Company operated 13 manufacturing facilities in 7 countries as of December
      31,
      2006. An additional 117,000 square foot manufacturing facility has been
      constructed in the PRC to meet customer demand. This manufacturing facility
      was
      completed during November 2006 and was operational by December 31, 2006.





The
      following is a list of the locations of the Company's principal manufacturing
      facilities at December 31, 2006.




Location
              
              Approximate
                Square
                  Feet
              
              Owned/
                Leased
              
              Percentage
                Used
                  for
                ManufacturingDonnguan,
                  People'sRepublic
                  of China
              
              
              346,000
              
              
              Leased
              
              
              61
              %Zhongshan,
                  People'sRepublic
                  of China
              
              
              416,000
              
              
              Leased
              
              
              81
              %Zhongshan,
                  People'sRepublic
                  of China
              
              
              128,000
              
              
              Leased
              
              
              74
              %Zhongshan,
                  People'sRepublic
                  of China
              
              
              117,000
              
              
              Owned
              
              
              83
              %Zhongshan,
                  People'sRepublic
                  of China
              
              
              77,000
              
              
              Owned
              
              
              81
              %Hong
                  Kong
              
              
              66,000
              
              
              Owned
              
              
              29
              %Macao
              
              
              71,000
              
              
              Owned
              
              
              28
              %Louny,
                  Czech Republic
              
              
              15,000
              
              
              Leased
              
              
              76
              %Dominican
                  Republic
              
              
              41,000
              
              
              Leased
              
              
              85
              %Cananea,
                  Mexico
              
              
              28,000
              
              
              Leased
              
              
              65
              %Inwood,
                  New York
              
              
              35,000
              
              
              Owned
              
              
              60
              %Glen
                  Rock, Pennsylvania
              
              
              74,000
              
              
              Owned
              
              
              60
              %Westboro,
                  MA
              
              
              22,000
              
              
              Leased
              
              
              85
              %1,436,000








17





Of
      this
      manufacturing space, 95,000 square feet of space is used for engineering,
      warehousing, sales and administrative support functions at various locations
      and
      265,000 square feet of space is used for dormitories, canteen and other employee
      related facilities in the PRC and the Special Administrative Regions of Hong
      Kong and Macao in Asia.





The
      Territory of Hong Kong became a Special Administrative Region (“SAR”) of The
      People's Republic of China during 1997. The territory of Macao became a SAR
      of
      The People's Republic of China at the end of 1999. Management cannot presently
      predict what future impact, if any, this will have on the Company or how the
      political climate in China and the Dominican Republic will affect its
      contractual arrangements in China or labor relationships in the Dominican
      Republic. A significant portion of the Company's manufacturing operations and
      approximately 45% of its identifiable assets are located in Hong Kong, Macao,
      and The People's Republic of China. Accordingly, events resulting from any
      change in the "Most Favored Nation" status granted to China by the U.S. could
      have a material and adverse
      effect on the Company.





Approximately
      33% of the 1.5 million square feet the Company occupies is owned while the
      remainder is leased. See Note 15 of the Notes to Consolidated Financial
      Statements for additional information pertaining to leases.










18





Item
      3.  Legal
      Proceedings





The
      Company and two of its officers are defendants in a wrongful termination lawsuit
      brought in the District Court of Frankfurt am Main, Germany by a former employee
      at a foreign subsidiary of the Company. The Company believes it has adequately
      accrued sufficient amounts for this liability in accordance with the terms
      of
      the ex-employee's employment agreement.





The
      Company is a plaintiff in a lawsuit captioned Bel Fuse Inc., a New Jersey
      corporation, and Bel Power, Inc., a Massachusetts corporation, v. Andrew
      Ferencz, Gregory Zovonar, Bernhard Schroter, EE2GO, Inc., a Massachusetts
      corporation, Howard E. Kaepplein and William Ng, brought in the Superior Court
      of the Commonwealth of Massachusetts. The Company was granted injunctive relief
      and is seeking damages against the former stockholders of Galaxy Power, Inc.,
      key employees of Galaxy and a corporation formed by some or all of the
      individual defendants. The Company has alleged that the defendants violated
      their written non-competition, non-disclosure and non-solicitation agreements,
      diverted business and usurped substantial business opportunities with key
      customers, misappropriated confidential information and trade secrets, and
      harmed the Company’s business.





In
      a
      related matter, the Company is a defendant in a lawsuit captioned Robert
      Chimielnski, P.C. on behalf of the stockholder representatives and the former
      stockholders of Galaxy Power, Inc. v. Bel Fuse Inc. et al. brought in the
      Superior Court of the Commonwealth of Massachusetts. This complaint for damages
      and injunctive relief is based on an alleged breach of contract and other
      allegedly illegal acts in a corporate context arising out of the Company’s
      objection to the release of nearly $2.0 million held in escrow under the terms
      of the stock purchase agreement between Galaxy and the Company. The Company
      believes it has adequate defenses regarding this lawsuit and accordingly has
      not
      accrued any liability in connection with such lawsuit.





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




19





The
      Company cannot predict the outcome of these matters; however, management
      believes that the ultimate resolution of these matters will not have a material
      impact on the Company's consolidated financial condition or results of
      operations.





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








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





No
      matters were submitted to a vote of the Company's shareholders during the fourth
      quarter of 2006.







20





PART
      II





Item
      5.
      Market for Registrant's Common Equity and Related


Stockholder
      Matters and Issuer Purchases of Equity Securities





(a) Market
      Information





The
      Company’s voting Class A Common Stock, par value $0.10 per share, and non-voting
      Class B Common Stock, par value $0.10 per share ("Class A" and "Class B,"
      respectively), are traded on the NASDAQ National Market. The following table
      sets forth the high and low closing sales price range (as reported by The Nasdaq
      Stock Market Inc.) for the Common Stock on NASDAQ for each quarter during the
      past two years.





Class
                A
            
            Class
                A
            
            Class
                B
            
            Class
                BHigh
            
            Low
            
            High
            
            LowYear
                Ended December 31, 2005First
                Quarter
            
            $
            29.79
            
            $
            24.10
            
            $
            34.92
            
            $
            28.42Second
                Quarter
            
            
            26.74
            
            
            21.50
            
            
            31.72
            
            
            25.54Third
                Quarter
            
            
            29.50
            
            
            24.50
            
            
            36.48
            
            
            29.72Fourth
                Quarter
            
            
            30.10
            
            
            22.39
            
            
            37.00
            
            
            28.88Year
                Ended December 31, 2006First
                Quarter
            
            
            34.50
            
            
            24.59
            
            
            40.16
            
            
            31.83Second
                Quarter
            
            
            29.00
            
            
            25.75
            
            
            34.85
            
            
            29.24Third
                Quarter
            
            
            31.25
            
            
            24.95
            
            
            37.61
            
            
            29.49Fourth
                Quarter
            
            
            32.95
            
            
            25.99
            
            
            37.92
            
            
            30.90





The
      Common Stock is reported under the symbols BELFA and BELFB in the NASDAQ
      National Market.










21




(b) Holders


As
      of
      February 28, 2007 there were 86 registered shareholders of the Company's Class
      A
      Common Stock and 108 registered shareholders of the Company’s Class B Common
      Stock. The Company estimates that there were 1,203 beneficial shareholders
      of
      Class A Common Stock and 3,258 beneficial shareholders of the Company’s Class B
      Common Stock as of February 28, 2007.





(c) Dividends





There
      are
      no contractual restrictions on the Company's ability to pay dividends provided
      the Company continues to comply with the financial tests in its credit
      agreement. On February 1, 2006, May 1, 2006, August 1, 2006 and November 1,
      2006
      the Company paid a $0.05 per share dividend to all shareholders of record of
      Class B Common Stock in the total amount of $443,589, $443,320, $447,410 and $458,205 ,
      respectively. On February 1, 2006, May 1, 2006, August 1, 2006 and November
      1,
      2006 the Company paid a $0.04 per share dividend to all shareholders of record
      of Class A Common Stock in the total amount of $107,735, $107,735, $107,735
      and
      $107,735, respectively. On February 2, 2005, May 2, 2005, August 1, 2005, and
      November 1, 2005 the Company paid a $0.05 per share dividend to all shareholders
      of record of Class B Common Stock in the total amount of $433,450, $437,175,
      $439,450, and $442,356, respectively. On February 2, 2005, May 2, 2005, August
      1, 2005 and November 1, 2005 the Company paid a $0.04 per share dividend to
      all
      shareholders of record of Class A Common Stock in the total amount of $107,735,
      $107,735, $107,735 and $107,735, respectively.





On
      February 1, 2007 the Company paid a $0.04 and $0.05 per share dividend to all
      shareholders of record at January 15, 2007 of Class A and Class B Common
      Stock , **** respectively, in
      the total amount
      of $107,735 and $450,404, respectively. The Company currently anticipates paying
      these dividends in the future.





(d) Securities
          authorized for issuance under the Equity Compensation
          Plans





Equity
      Compensation Plan Information




Plan
                  Category
              
              Number
                  of Securities to be
                Issued
                  Upon Exercise of
                Outstanding
                  Options,
                Warrants
                  and Rights
                (a)
              
              Weighted
                  Average Exercise
                Price
                  of Outstanding Options,
                Warrants
                  and Rights
                (b)
              
              Number
                  of Securities Remaining
                Available
                  for Future Issuance
                Under
                  Equity Compensation
                Plans
                  (Excluding Securities
                Reflected
                  in Column (a)
                (c)Equity
                  compensation plans approved
                by
                  security holders
              
              
              137,813
              
              $
              25.59
              
              
              811,785Equity
                  compensation plans not
                approved
                  by security holders
              
              
              -
              
              
              -
              
              
              -Totals
              
              
              137,813
              
              $
              25.59
              
              
              811,785






22




Item
                    6. Selected Financial DataYears
                    Ended December 31,2006
                
                2005
                    (c)
                
                2004
                
                2003
                    (c)
                
                2002(In
                    thousands of dollars, except per share data)Selected
                    Statements of Operations Data: (c) (d)Net
                    sales
                
                $
                254,933
                
                $
                215,916
                
                $
                190,022
                
                $
                158,498
                
                $
                95,528Cost
                    of sales
                
                
                192,985
                
                
                156,147
                
                
                132,776
                
                
                113,813
                
                
                72,420Selling,
                    general andadministrative
                    expenses
                
                
                37,800
                
                
                33,152
                
                
                31,302
                
                
                26,757
                
                
                22,270Fixed
                    asset impairment/casualty loss (e) (f)
                
                
                1,030
                
                
                -
                
                
                1,033
                
                
                -
                
                
                -Interest
                    income - net
                
                
                2,781
                
                
                1,098
                
                
                525
                
                
                249
                
                
                940Gain
                    on sale of marketable securities
                
                
                5,150
                
                
                -
                
                
                -
                
                
                -
                
                
                -Lawsuit
                    proceeds (d)
                
                
                -
                
                
                -
                
                
                2,935
                
                
                -
                
                
                -Earnings
                    before provisionfor
                    income taxes
                
                
                31,048
                
                
                27,715
                
                
                28,371
                
                
                18,177
                
                
                1,778Income
                    tax provision
                
                
                5,845
                
                
                7,482
                
                
                3,649
                
                
                4,413
                
                
                1,199Net
                    earnings
                
                
                25,203
                
                
                20,233
                
                
                24,722
                
                
                13,764
                
                
                579Earnings
                    (loss) per Class A commonshare
                    - basic (a)
                
                
                2.03
                
                
                1.67
                
                
                2.10
                
                
                1.15
                
                
                -Earnings
                    (loss) per Class A commonshare
                    - diluted (a)
                
                
                2.03
                
                
                1.67
                
                
                2.10
                
                
                1.15
                
                
                -Earnings
                    per Class B commonshare
                    - basic (a)
                
                
                2.16
                
                
                1.79
                
                
                2.22
                
                
                1.28
                
                
                0.07Earnings
                    per Class B commonshare
                    - diluted (a)
                
                
                2.15
                
                
                1.77
                
                
                2.16
                
                
                1.27
                
                
                0.07Cash
                    dividends declared perClass
                    A common share
                
                
                0.16
                
                
                0.16
                
                
                0.16
                
                
                0.08
                
                
                -Cash
                    dividends declared perClass
                    B common share
                
                
                0.20
                
                
                0.20
                
                
                0.20
                
                
                0.20
                
                
                0.20As
                    of December 31,2006
                
                
                2005
                
                
                2004
                
                
                2003
                
                
                2002(In
                    thousands of dollars, except per share data and
                    percentages)Selected
                    Balance Sheet Data and Ratios:Working
                    capital
                
                $
                144,677
                
                $
                128,203
                
                $
                127,624
                
                $
                102,370
                
                $
                82,986Total
                    assets
                
                
                268,498
                
                
                242,056
                
                
                217,777
                
                
                181,817
                
                
                147,840Long
                    term debt
                
                
                -
                
                
                -
                
                
                6,500
                
                
                8,500
                
                
                -Stockholders'
                    equity
                
                
                222,150
                
                
                201,577
                
                
                178,461
                
                
                146,855
                
                
                130,659Return
                    on averagetotal
                    assets, % (b)
                
                
                9.65
                
                
                8.83
                
                
                12.37
                
                
                7.95
                
                
                0.40Return
                    on averageStockholders'equity,
                    % (b)
                
                
                11.81
                
                
                10.75
                
                
                15.20
                
                
                9.93
                
                
                0.44


(a)
      Previously reported earnings per share has been restated to present our earnings
      using the two-class method. See Note 1 of Notes to Consolidated Financial
      Statements.




(b)
      Returns on average total assets and stockholders’ equity are computed for any
      year by dividing net income for such year by the average balances of total
      assets or stockholders’ equity on the last day of each quarter during such year
      and on the last day of the immediately preceding year.





23


(c) See
      Item
      1 for information regarding the acquisitions during 2005 of Galaxy and
      Netwatch.
      Further,during
      2003,the
      Company acquiredAdvanced
      Power Components plc (“APC”)****and
      the
      Passive Components Group of InsilcoTechnologies, Inc.
      These
      transactions were accounted for using the purchase method of accounting and,
      accordingly, the results of operations of Galaxy, Netwatch, the Passive
      Components Group of Insilco and APC have been included in the Company's
      financial statements since their respective dates of
      acquisition.




(d)  The
      Company was a party to an arbitration proceeding related to the acquisition
      of
      its Telecom Components business in 1998. The Company asserted that the seller
      breached the terms of a related Global Procurement Agreement dated October
      2,
      1998 and sought damages related thereto. During December 2004, the Company
      and
      the seller settled this matter. The settlement resulted in a payment to the
      Company and an unconditional release by the seller of all counterclaims against
      the Company. The net gain of $2,935,000 from the settlement is included in
      the
      Company’s consolidated statement of operations for the year ended December 31,
      2004.








(e)  During
      2006, the Company
      incurred a loss of $1.0 million as a result of a fire at its leased
      manufacturing facility in the Dominican Republic .
      The
      loss was for raw
      materials and equipment in excess of estimated insurance proceeds. The
      production at this facility was substantially restored during July 2006.








(f) During
          the year ended December 31, 2004 the Company wrote down fixed assets,
          principally machinery and equipment, with a net book value of $ 1,033,000 , at its
          Far East manufacturing facilities. The Company considered these fixed assets
          to
          be surplus equipment which was replaced by equipment with more advanced
          technology.










24


Item
              7.
            Management’s
                Discussion and Analysis of Financial Condition and
              Results
                of Operations




The
      following discussion and analysis should be read in conjunction with the
      Company’s consolidated financial statements and the notes related thereto. The
      discussion of results, causes and trends should not be construed to  imply any
      conclusion that such results, causes or trends will necessarily continue in
      the
      future.





Critical
      Accounting Policies





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





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





Allowance
      for Doubtful Accounts





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





Inventory





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


25








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





Goodwill
      and Intangible Assets





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





Goodwill
      and intangible assets deemed to have indefinite lives are not amortized, but
      are
      subject to annual impairment testing. The identification and measurement of
      goodwill impairment involves the estimation of the fair value of geographic
      reporting units. The estimates of fair value of geographic reporting units
      are
      based on the best information available as of the date of the assessment, which
      primarily incorporate management assumptions about expected future cash flows
      and contemplate other valuation techniques. Future cash flows can be affected
      by
      changes in industry or market conditions or the rate and extent to which
      anticipated synergies or cost savings are realized with newly acquired entities.
      There can be no assurances that goodwill impairments will not occur in the
      future. See Note 3 to the Consolidated Financial Statements for further
      discussion.





Income
      Taxes





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





26





Revenue
      Recognition





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





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





The
      Company is not contractually obligated to accept returns from non-distributor
      customers except for defective product or in instances where the product does
      not meet the Company’s quality specifications. If these conditions existed, the
      Company would be obligated to repair or replace the defective product or make
      a
      cash settlement with the customer. Distributors generally have the right to
      return up to 5% of their purchases over the previous three to six months and
      are
      obligated to purchase an amount at least equal to the return. If the Company
      terminates a distributor, the Company is obligated to accept as a return all
      of
      the distributor’s inventory from the Company. The Company accrues an estimate
      for anticipated returns based on historical experience at the time revenue
      is
      recognized and adjusts such estimate as specific anticipated returns are
      identified. If a distributor terminates its relationship with the Company,
      the
      Company is not obligated to accept any inventory returns. The Company has a
      significant amount of sales with several customers, including one major customer
      with sales of $42,167,000 (16.5%) in 2006. The loss of any one of these
      customers could have a material adverse effect on the Company’s consolidated
      results of operations and financial position.











27


Overview





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





We
      design
      our products to enhance the systems in which they operate. As our products
      typically become components in other third-party’s systems, our revenues are
      largely driven by the extent to which our customers can design and develop
      new
      applications and the extent to which those customers have needs for the types
      of
      components that we can provide. We are problem-solvers; we design most of our
      products to combine various discrete components in a manner that will allow
      the
      systems designer to save space and to offer a more efficient
      product.





Our
      expenses are driven principally by the cost of the materials that we use and
      the
      cost of labor where our factories are located. In recent years, the increasing
      cost of copper, steel and petroleum-based products and an increased wage structure in the Far East have contributed to increases in
      manufacturing costs .
      Effective September 1, 2006, local PRC authorities implemented a new revised
      standard work week, and new minimum wages and overtime rates, for areas where
      our factories are located .





During
      2006, approximately $4.6 million of the Company’s sales increase was
      attributable to the acquisition by the Company of Galaxy Power, Inc. (“Galaxy”)
      which occurred on March 22, 2005 and Netwatch s.r.o. (now named Bel Stewart
      Net
      s.r.o.) which occurred on June 30, 2005. The $4.6 million of sales increase
      attributable to Galaxy and Netwatch for the periods January 1, 2006 to March
      22,
      2006 and January 1, 2006 to June 30, 2006, respectively represents sales during
      these periods of 2006. There were no sales during these same periods in 2005
      because it was prior to the acquisition of these entities. The Company had
      an
      organic sales increase of $34.5
      million or 16.0%
      during 2006. The organic sales increase is measured by the difference between
      net sales for 2006, less net sales for 2005, less the $4.6 million sales
      increase attributed to Galaxy and Netwatch for the periods discussed above.
      The
      2005 acquisitions resulted in additional Cost of Sales and Selling, General
      and
      Administrative expenses of $12.7 million and $3.3 million, respectively, during
      2006.





Gross
      profit margins were lower during 2006 compared to 2005, principally due to
      increased raw material costs resulting from higher commodity prices for copper,
      steel, and petroleum-based products and changes in the Company’s product mix.
      Sales of the Company’s DC-DC power products have increased. While these products
      are strategic to Bel’s growth and important to total earnings, they return lower
      gross profit percentage margins **,** as a
      larger percentage of their bills of material are purchased components. As these
      sales continue to increase, the Company’s average gross profit percentage will
      likely decrease unless offset by increased sales of higher margin products.
      The
      increasing sales of the Company's DC-DC power products also have an impact
      on
      the accelerated write off of intangible assets related to the acquisition of
      Current Concepts, Inc. (“Current Concepts”). The contingent purchase price
      payments are accounted for as additional purchase price and as an increase
      to
      covenants not to compete within intangible assets when such payment obligations
      are incurred. Due to the shorter remaining lives of the covenants not to
      compete, any additional contingent purchase price payments that are allocated
      to
      covenants not to compete are amortized over a shorter remaining life. During
      2006,
      Current Concepts reached its benchmark sales target and no additional contingent
      purchase price payments will be made. Gross profit margins are also adversely
      affected to the extent that the Company manufactures lead-free products, as
      the
      Company has additional labor and manufacturing costsassociated
      with operating duplicate production linesbut
      cannot attain premium pricing for such products.




28




The
      Company also incurred $1.6 million in pre-tax stock-based compensation expense
      during the year ended December 31, 2006 in connection with its stock
      incentive plans .
      This
      expense is reflected both in the Company’s cost of sales and selling, general
      and administrative expenses, consistent with the classification of employee
      compensation expense.





During
      the year ended December 31, 2006 the Company incurred a $1.0 million pre-tax
      casualty loss primarily for raw materials destroyed by a fire at a Company
      leased manufacturing facility in the Dominican Republic in excess of insured
      amounts.





During
      the year ended December 31, 2006, the Company realized a gain on marketable
      securities of $5.2 million from the sale of Artesyn common stock, net of
      investment banking fees, offset by a $1.0 million accrual (classified within
      selling, general and administrative expense for accounting purposes) for
      performance bonuses awarded by the Board of Directors in connection with the
      gain and was paid to key employees during January 2007. In
      connection with the decline in fair value of the Company’s investment in the
      common stock of Toko, Inc., the Company has recorded (as of December 31, 2006)
      an unrealized loss, net of income tax benefit, of approximately $1.5 million
      which is included in accumulated other comprehensive income as stated in the
      Company’s consolidated statements of stockholders’ equity.








29





Results
      of Operations





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






Percentage
                  of Net SalesYears
                  Ended December 31,2006
              
              2005
              
              2004Net
                  sales
              
              
              100.0
              %
              
              100.0
              %
              
              100.0
              %Cost
                  of sales
              
              
              75.7
              
              
              72.3
              
              
              69.9Selling,
                  general andadministrative
                  expenses
              
              
              14.8
              
              
              15.4
              
              
              16.5Casualty
                  loss
              
              
              0.4
              
              
              -
              
              
              -Fixed
                  asset impairment
              
              
              -
              
              
              -
              
              
              0.5Interest
                  income - net
              
              
              (1.1
              )
              
              (0.5
              )
              
              (0.3
              )Gain
                  on sale of marketablesecurities
              
              
              (2.0
              )
              
              -
              
              
              -Lawsuit
                  proceeds
              
              
              -
              
              
              -
              
              
              (1.5
              )Earnings
                  before provision forincome
                  taxes
              
              
              12.2
              
              
              12.8
              
              
              14.9Income
                  tax provision
              
              
              2.3
              
              
              3.5
              
              
              1.9Net
                  earnings
              
              
              9.9
              
              
              9.4
              
              
              13.0


30





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





Increase
                    (Decrease) from Prior
                  Period2006
                    comparedwith 2005
              
              
              2005
                    comparedwith 2004Net
                  sales
              
              
              18.1
              %
              
              13.6
              %Cost
                  of sales
              
              
              23.6
              
              
              17.6Selling,
                  general andadministrative
                  expenses
              
              
              14.0
              
              
              5.9Net
                  earnings
              
              
              24.6
              
              
              (18.2
              )





Sales





Net
      sales
      increased 18.1% from $215.9 million during the year ended December 31, 2005
      to
      $254.9 million during the year ended December 31, 2006. The Company attributes
      the increase to increased module sales of $21.3 million of which $3.4 million
      is
      attributable to the acquisition of Galaxy, which was included in our sales
      for a
      full year in 2006 and 9 months in 2005, strong demand for interconnect products
      resulting in an increase of $3.8 million in such sales, of which $1.2 million
      is
      attributable to the acquisition of Netwatch **,** and
      strong demand for magnetic sales resulting in an increase of $14.3 million
      in
      such sales, while circuit protection sales decreased by $0.4 million. Bel had
      an
      organic sales increase of 16.0% for the year.





The
      significant components of the Company's revenues for the year ended December
      31,
      2006 were magnetic products of $141.5 million (as compared with $127.2 million
      during the year ended December 31, 2005), interconnect products of $44.5 million
      (as compared with $40.7 million during the year ended December 31, 2005), module
      products of $49.5 million (as compared with $28.2 million during the year ended
      December 31, 2005) and circuit protection products of $19.4 million(as compared
      with $19.8 million during the year ended December 31, 2005).





During
      the fourth quarter of 2006, the Company experienced a decrease in sales compared
      to the third quarter of 2006 of approximately $12.7 million across almost all
      product lines. The Company attributes the decrease in sales to increased
      customer inventories and uncertainty by customers relating to inventory
      management practices related to the annual first quarter of 2007 Lunar New
      Year
      factory closedowns.

















31





Based
      in
      part on conflicting opinions the Company received from customers and competitors
      in the electronics industry pertaining to revenue growth during 2006, the
      Company cannot predict with any degree of certainty its sales
      revenue for 2007. Although the Company's backlog has been stable, the Company believes that
      this is not a good indicator of future revenues. The Company continues to have
      limited visibility as to future customer requirements. The Company had one
      customer with sales in excess of 10% (16.5%) of total sales during the year
      ended December 31, 2006. The loss of this customer could have a material adverse
      effect on the Company's results of operations, financial position and cash
      flows.





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





Net
      sales
      increased 13.6% from $190.0 million during the year ended December 31, 2004
      to
      $215.9 million during the year ended December 31, 2005. The Company attributes
      the increase to increased module sales of $14.4 million , of which
      $10.6 million is attributable to the acquisition of Galaxy, strong demand for
      interconnect products resulting in an increase of $6.6 million in such sales,
      of
      which $1.4 million is attributable to the acquisition of Netwatch **,** and
      strong demand for magnetic sales resulting in an increase of $4.9 million in
      such sales, while circuit protection sales remained substantially unchanged.
      Excluding 2005 acquisitions, Bel had an organic sales increase of 7.3% for
      the
      year.





The
      significant components of the Company's revenues for the year ended December
      31,
      2005 were magnetic products of $127.2 million (as compared with $122.4 million
      during the year ended December 31, 2004), interconnect products of $40.7 million
      (as compared with $34.0 million during the year ended December 31, 2004), module
      products of $28.2 million (as compared with $13.8 million during the year ended
      December 31, 2004 and circuit protection products of $19.8 million (as compared
      with $19.8 million during the year ended December 31, 2004).








32


Cost
      of Sales





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





Cost
      of
      sales as a percentage of net sales increased from 72.3% during the year ended
      December 31, 2005 to 75.7% during the year ended December 31, 2006. The increase
      in the cost of sales percentage is primarily attributable to the
      following:





 ̈
            The
                Company incurred a 4.6% increase in material costs as a percentage
                of net
                sales. The increase in raw material costs is principally related
                to
                increased manufacturing of modules (including new Power productscommencingin
                the second half of 2005), which have a higherraw
                material content than the Company’s other products,increased
                costs for raw materials such as mosfets, steel, integrated circuits,
                PCB’s
                and petroleum-based products and increased transportation
                costs.





 ̈
            The
                Company’s subcontracting processors have also started to pay higher wage
                rates and benefits to its production workers in China,
                resulting from a new revised standard work week, new minimum wages
                and new
                overtime rates.
                These higher rates and benefits are reflected in the Company’s cost of
                sales.





 ̈
            Sales
                of the Company’s DC-DC power products have increased. While these products
                are strategic to Bel’s growth and important to total earnings, they return
                lower gross profit percentage margins as a larger percentage of their
                bills of materials are purchased components. As these sales continue
                to
                increase, the Company’s average gross profit percentage will likely
                decrease. The increasing sales also have an impact on the accelerated
                write-off of intangibles related to contingent purchase price payments
                arising from the acquisition of Current Concepts as the amortization
                life
                of the identifiable intangibles have expired and all payments are
                expensed
                in the period they were paid.





Included
      in cost of sales are research and development expenses of $6.6 million and
      $7.3
      million for the years ended December 31, 2006 and 2005, respectively. The
      principal reason for the decrease is less research and development in the United
      States due to the consolidation of the Bel Power and the Galaxy facilities
      in
      Massachusetts.  This
      was
      offset in part by increased expenses at the Company’s China research and
      development facility which has a lower cost structure.




Cost
      of
      sales as a percentage of net sales increased from 69.9% during the year ended
      December 31, 2004 to 72.3%
      during the year ended December 31, 2005. The
      increase in the cost of sales percentage is primarily attributable to the same
      factors that led to the increase in the cost of sales as a percentage of net
      sales from 2005 to 2006. From 2004 to 2005, the Company
      incurred a 2.1% increase in material costs as a percentage of net
      sales.





Included
      in cost of sales are research and development expenses of $7.3
      million for both
      2004 and 2005.




33




Selling,
      General and Administrative Expenses





The
      percentage relationship of selling, general and administrative expenses to
      net
      sales decreased from 15.4% during the year ended December 31, 2005 to 14.8%
      during the year ended December 31, 2006, in part as a result of the Company's
      ability to leverage general and administrative expenses over a larger revenue
      base. The $4.6
      million increase in the dollar amount of such expenses included increased selling expenses of approximately $1.4 million, including $.2 million
      in Bel Power related expenses. The $3.2
      million increase in general and administrative expenses included  $1.0
      million related to Bel Power, additional salaries, wages and bonuses of $2.3
      million ,
      principally attributable to the $1.0 million bonus approved by the Board of
      Directors in connection with the gain from the sale of Artesyn stock, additional
      stock compensation expense of $.8 million, partially arising from the Company’s
      implementation of Statement of Financial Accounting Standards (“SFAS”) No. 123 ( R )
      during
      2006 (See below and Notes 1 and 10 of the Notes to the Company’s Consolidated
      Financial Statements), and additional professional fees of $1.0 million
      principally related to Sarbanes - Oxley
      compliance and legal expenses in connection with various lawsuits in
      which the
      Company is involved .
      These
      increases were offset in part by other net decreases in several expense accounts
      totaling $1.9 million.





The
      percentage relationship of selling, general and administrative expenses to
      net
      sales decreased from 16.5% during the year ended December 31, 2004 to 15.4%
      during the year ended December 31, 2005, in part as a result of the Company's
      ability to leverage general and administrative expenses over a larger revenue
      base. The Company attributes the $1.8 million increase in the dollar amount
      of
      such expenses primarily to increased selling expenses of approximately $1.1
      million, including $0.6 million in Galaxy related expenses. In addition, the
      Company incurred a $.7 million increase in general and administrative expenses.
      This increase includes $1.8 million related to Galaxy, additional bad debt
      expense of approximately $0.3 million , additional stock compensation expense of $0.2 million , arising
      from the grant
      of  restricted
      stock ,
      and
      additional amortization of identifiable intangibles in the amount of $.8 million
      principally arising from the acquisition of Galaxy. Of the $.8 million increase
      in amortization of intangibles **,** $.7
      million is included in the $1.8 million increase in general and administrative
      expenses related to Galaxy. The Company incurred increased Supplemental
      Executive Retirement Plan (“SERP”) costs of approximately $0.2 million as
      additional employees were added to the plan. This was offset in part by lower
      employment costs of $0.6 million due to reduced bonuses and lower professional
      fees of $1.2 million due to lower Sarbanes-Oxley compliance costs.








34


Casualty
      Loss





During
      2006, the Company
      incurred a $1.0 million pre-tax casualty loss as a result of a fire at its
      leased manufacturing facility in the Dominican Republic .
      The
      loss was for raw
      materials and equipment in excess of estimated insurance proceeds. The
      production at this facility was substantially restored during July 2006.








Fixed
      Asset Impairment





During
      the year ended December 31, 2004, the Company wrote down fixed assets,
      principally machinery and equipment, with a net book value of $ 1,033,000, at its
      Far East manufacturing facilities. The Company considered these fixed assets
      to
      be surplus equipment which was replaced by equipment with more advanced
      technology.










Interest
      Income





Interest
      income earned on cash and cash equivalents increased by approximately $1.4
      million during the year ended December 31, 2006 as compared to the year ended
      December 31, 2005. The increase is due primarily to increased balances of cash
      and cash equivalent balances and higher yields on such balances.





Interest
      income earned on cash and cash equivalents increased by approximately $660,000
      during the year ended December 31, 2005 as compared to the comparable period
      in
      2004. The increase is due primarily to increased earnings on cash and cash
      equivalent balances and marketable securities.








Interest
      Expense





A
      $10
      million term loan was entered into on March 21, 2003, representing
      borrowings  for
      the
      acquisition of Insilco's Passive Components Group. The loan bore interest at
      LIBOR plus 1.50% **,** payable
      quarterly **,** and was
      completely paid off by June 30, 2005. Interest expense related to these
      borrowings amounted to $325,000 during the year ended December 31, 2005. During
      the year ended December 31, 2006, interest expense amounted to $71,000,
      representing financing expenses related to the Company's credit facility in
      the
      United States.





35


Interest
      expense increased by approximately $90,000 during the year ended December 31,
      2005 compared with 2004. The increase is attributable in part to higher interest
      rates charged on the above-mentioned
      term **** loan
      during 2005 compared to 2004 and in part to the fact that during March 2005
      the
      Company borrowed $8.0 million against its domestic line of credit to partially
      finance the acquisition of Galaxy. During October and November of 2005 the
      Company borrowed $4.0 million against its line of credit. The loan was repaid
      during December 2005. The loan bore interest at LIBOR plus .75% to 1.25%
      annually , based on
      certain financial statement ratios maintained by the Company.





Lawsuit
      Proceeds





During
      the year ended December 31, 2004, the Company settled an arbitration proceeding
      related to a 1998 acquisition. The Company received $2,935,000 (net of $65,000
      of related legal expenses incurred during the period) pursuant to that
      settlement.





Provision
      for Income Taxes





The
      provision for income taxes for the year ended December 31, 2006 was $5.8 million
      compared to $7.5 million during the year ended December 31, 2005. The Company's
      earnings before income taxes for the year ended December 31, 2006 were approximately $3.3 million higher than in 2005. During the year ended December
      31, 2006, the Company incurred lower taxes of approximately $1.7 million
      principally as a result of lower foreign taxes in the Far East due to the
      implementation by the Company of its Macao Commercial Offshore Company (“MCO”),
      which is not subject to Macao corporate income taxes. This was offset in part
      by
      higher United States taxes resulting principally from the gain from the sale
      of
      marketable securities (Artesyn). This had an impact of reducing the effective
      tax rate from 27.0% for the year ended December 31, 2005 to 18.8% for the year
      ended December 31, 2006 (measured by reflecting the tax provision as a
      percentage of earnings before provision for income taxes). Additionally, during
      the year ended December 31, 2005, the Company repatriated $70.6 million of
      foreign earnings which resulted in higher taxes of $3.1 million during the
      year
      ended December 31, 2005.





The
      provision for income taxes for the year ended December 31, 2005 was $7.5 million
      compared to $3.6 million during the year ended December 31, 2004. The Company's
      earnings before income taxes for the year ended December 31, 2005 were approximately $0.6 million less than in 2004. The Company incurred higher taxes
      of approximately $3.1 million
      as a result of repatriating $70.6 million of foreign earnings during 2005.
      Additionally, the income tax effective rate was higher in
      2005 than in
      2004 primarily due to higher foreign taxes associated with the treatment by Hong
      Kong  authorities of
      offshore income. This was offset in part by the utilization of approximately
      $0.6 million in research and development tax credits and the utilization of
      a
      $0.1 million net operating loss carryforward tax benefit related to a foreign
      subsidiary. In addition, during the year ended December 31, 2004, the Company
      reversed tax accruals no longer required in the amount of approximately $0.4
      million, utilized certain tax credits amounting to $0.8 million and utilized
      net
      operating loss carry forwards with a tax effect of approximately $0.1
      million.











36


The
      Company is currently being audited by the United States Internal Revenue Service
      (“IRS”) for the year ended December 31, 2004. As part of this audit the IRS is
      also reviewing the
      years
      ended December 31, 2003 and 2005. This examination is in its early stages and
      to
      date no adjustments have been proposed by the IRS.





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





Macao
      currently has a statutory corporate income tax rate of 12 percent. However,
      the
      Company, in previous years, as a result of investing in a certain location
      in
      Macao, was able to obtain a 10-year tax holiday in Macao, thereby reducing
      its
      effective Macao income tax rate from 16 percent to 8 percent. The tax holiday
      in
      Macao expired in April 2004. Since most of the Company's operations are
      conducted in the Far East, the majority of its profits are sourced in these
      three Far East jurisdictions. Accordingly, the profits earned in the U.S. are
      comparatively small in relation to its profits earned in the Far East.
      Therefore, there is generally a significant difference between the statutory
      U.S. tax rate and the Company's effective tax rate.




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





The
      Company has historically followed a practice of reinvesting a portion of the
      earnings of foreign subsidiaries in the expansion of its foreign operations.
      If
      the unrepatriated earnings were distributed to the parent corporation rather
      than reinvested in the Far East, such funds would be subject to United States
      Federal income taxes. During the year ended December 31, 2005, management repatriated
      foreign earnings of approximately $70.6 million which were eligible
      for the reduced tax rate of 5.25% under the American Jobs Creations Act of
      2004.
      See Note 8 of Notes to Consolidated Financial Statements. As a result of the
      favorable tax treatment afforded the repatriation of controlled foreign
      corporation (“CFC”) earnings and management’s decision to repatriate such funds
      in 2005, the Company recorded a $6,326,000 tax benefit in 2004 which resulted from the
      difference in tax rates between the Act and the tax rates previously provided
      on
      the portion of CFC earnings which were expected to be repatriated, leaving
      deferred income taxes in the amount of approximately $1,342,000 recorded in
      such
      earnings to be repatriated.




37





Inflation
      and Foreign Currency Exchange





During
      the past two years, the effect of inflation on the Company's profitability
      was
      not material. Historically, fluctuations of the U.S. Dollar against other major
      currencies have not significantly affected the Company's foreign operations
      as
      most sales have been denominated in U.S. Dollars or currencies directly or
      indirectly linked to the U.S. Dollar. Most significant expenses, including
      raw
      materials, labor and manufacturing expenses, are either incurred in U.S. Dollars
      or the currencies of the Hong Kong Dollar, the Macao Pataca or the Chinese
      Renminbi. The Chinese Renminbi has appreciated in value during 2006. Further
      appreciation of the Renminbi would result in the Company incurring higher costs
      for all expenses incurred in China. Commencing with the acquisition of the
      Passive Components Group, the Company's European entity has sales transactions
      which are denominated principally in Euros and British Pounds. Conversion of
      these transactions into U.S. dollars has resulted in currency exchange (losses)
      gains of ($201,000), $27,000 and $54,000 for the years ended December 31, 2006,
      2005 and 2004, respectively, which were
      charged to expense, and approximately $388,000, ($669,000) and $386,000 for
      the
      years ended December 31, 2006, 2005 and 2004, respectively, in net unrealized
      exchange gains (losses) relating to the translation of foreign subsidiary
      financial statements which are included in other comprehensive income. Any
      change in linkage of the U.S. Dollar and the Hong Kong Dollar, the Chinese
      Renminbi or the Macao Pataca could have a material effect on the Company's
      consolidated financial position or results of operations.














38


Liquidity
      and Capital Resources





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





During
      March 2005, the Company borrowed $8 million against a
      $10
      million line of
      credit to partially finance the acquisition of Galaxy. The outstanding balance
      was paid off in its entirety on June 30, 2005. During July 2005, the Company
      amended its credit agreement to increase the line of credit to $20
      million .  During
      October and November of 2005, the Company borrowed $4.0 million against the
      line
      of credit which was paid off during December 2005. As
      of
      December 31, 2006, the entire $20 million line of credit was available to the
      Company to borrow. The loan was
      initially collateralized with a first priority security interest in and lien on 100%
      of
      the issued and outstanding shares of the capital stock of the Company's material
      domestic subsidiaries and 65%
      of
      all the issued and outstanding shares of the capital stock of certain of the
      foreign subsidiaries of the Company and all other personal property of
      the
      Company. In July, 2005, the lender terminated it's security interest in assets
      of the Company other than the lender’s first priority security interest in 100%
      of the issued and outstanding shares of the capital stock of the Company's
      material domestic subsidiaries and 65% of all the issued and outstanding shares
      of the capital stock of certain of the foreign subsidiaries of the Company.
      During February, 2007, the Company replaced the $20 million line of credit
      with
      a $20 million line of credit from a different lender, on substantially the
      same
      terms and conditions as previously existed, except that the new lender did
      not
      receive a security interest in any assets of the Company.





For
      the
      years ended December 31, 2006, 2005 and 2004,  the
      Company recorded interest expense of approximately $71,000, $325,000 and
      $239,000, respectively.





The
      Company's Hong Kong subsidiary has an unsecured line of credit of approximately
      $2 million, which was unused at December 31, 2006. This line of credit expires
      during July 2007. Borrowing on this line of credit is 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 the Notes to the Company's
      Consolidated Financial Statements .





For
      information regarding the Company's 2005 acquisitions of Galaxy Power Inc.
      and
      Netwatch s.r.o. ,
      see
      Item 1 of this Annual Report on Form 10-K.





39


For
      information regarding the Company’s acquisition
      of shares
      of
      the common stock of Toko , Inc. ,
      see
      Item 1 of this Annual Report on Form 10-K.





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





During
      2004, the Company completed construction of a 64,000 square foot manufacturing
      facility in Zhongshan City, PRC for approximately $1.0 million.





On
      July
      15, 2004, the Company entered into an agreement for the sale of a certain parcel
      of land located in Jersey City, New Jersey. The sales agreement is subject
      to a
      due diligence period by the buyer. The sales agreement expired during January
      2006. The buyer and seller are continuing to negotiate about certain
      environmental matters among themselves and with the State of New Jersey. The
      seller and buyer are aware that a portion of the property may be subject to
      tidelands claims by the State of New Jersey. Additionally, the Company is
      obligated for environmental remediation costs of up to $350,000. As of December
      31, 2006, the Company had also paid $247,000 of legal, site testing and State
      of
      New Jersey Environmental Protection Agency Fees. As these costs are incurred,
      the Company has
      capitalized them on
      the Company's consolidated balance sheet as assets held for sale. The Company
      has classified the asset as held for sale with a net book value of approximately
      $848,000 on the Company's consolidated balance sheet at December 31, 2006 and
      expects to sell the property during the first half of 2007.





Under
      the
      terms of the E-Power LTD (“E-Power”) and Current Concepts, Inc. (“Current
      Concepts”) acquisition agreements of May 11, 2001, the Company was required to
      make contingent purchase price payments up to an aggregate of $7.6 million
      should the acquired companies attain specified related sales levels. E-Power was
      to be paid
      $2.0 million in contingent purchase price payments if sales reach $15.0 million
      and an additional $4.0 million if sales reach $25.0 million on a cumulative
      basis through May 2007.  During
      February 2006, E-Power was paid $2.0 million in contingent purchase price
      payments as E-Power's sales, as defined, reached $15.0 million. The
      $25.0
      million benchmark was reached during September 2006. As a result, $4.0 million
      was paid in November 2006, and accounted for as additional purchase price and
      as
      an increase to goodwill. No additional payments will be made under the E-Power
      agreement. Current Concepts is
      to be paid
      16% of related sales on the first $10.0 million in sales through May 2007.
      This
      $10 million benchmark was reached during the second quarter of 2006 and
      therefore no additional payments will be made. During the years ended December
      31, 2006, 2005 and 2004, the Company paid approximately $447,000, $529,000 and
      $354,000, respectively, in contingent purchase price payments to Current
      Concepts. The contingent purchase price payments to Current Concepts have been
      accounted for as additional purchase price and as an increase to covenants
      not to compete within intangible assets.




40





On
      May 9,
      2000, the Board of Directors authorized the repurchase of up to 10% of the
      Company’s outstanding common shares from time to time in market or privately
      negotiated transactions. As of December 31, 2006, the Company had purchased
      and
      retired 23,600 Class B shares at a cost of approximately $808,000, which reduced
      the number of Class B common shares outstanding. No shares were repurchased
      during the year ended December 31, 2006.





During
      the year ended December 31, 2006, the Company's cash and cash equivalents
      increased by approximately $24.8 million, reflecting approximately $19.0
      million provided by operating activities (principally as a result of net income
      of $25.2 million and depreciation and amortization expense of $9.0 million
      offset in part by a gain on the sale of marketable securities of $5.1 million),
      proceeds of $ 24.5
      million from the
      sale of marketable securities and
      proceeds of $3.2 million from the exercise of stock options ,
      offset
      in part by  expenditures
      of  $9.4
      million for the purchase of property, plant and equipment, $ 7.0
      million used principally for acquisitions, $ 3.6
      million for the purchase of marketable securities and $2.2
      million for payments of dividends.





During
      the year ended December 31, 2005, the Company's cash and cash equivalents
      decreased by approximately $19.2 million, reflecting approximately $20.8 million
      used principally for acquisitions, $19.4 million for loan repayments,
      $ 18.0
      million for the purchase of marketable securities, $7.7 million
      for the purchase of property, plant and equipment, and $2.2 million for payments
      of dividends , offset,
      in part, by $31.3 million provided by operating activities (principally as
      a
      result of net income of $20.2 million and depreciation and amortization expense
      of $10.1 million), borrowings of $12.0 million, proceeds of $4.1 million from
      the exercise of stock options and $1.6 million in proceeds from the sale of
      marketable securities.





During
      the year ended December 31, 2004, the Company’s cash and cash equivalents
      increased by approximately $13.7 million, reflecting approximately $32.1 million
      provided by operating activities (principally as a result of net income of
      $24.7
      million and depreciation expense of $9.0 million), $6.3 million provided from
      the sale of marketable securities and $3.9 million from proceeds from the
      exercise of stock options offset, in part, by $17.7 million for the purchase
      of
      marketable securities, $6.6 million for the purchase of property, plant and
      equipment, $2.0 million for loan repayments, $2.2 million for payment of
      dividends and $.4 million for contingent acquisition payments.





Cash,
      marketable securities and cash equivalents and accounts receivable comprised
      approximately 50.7% and 53.6% of the Company's total assets at December 31,
      2006
      and December 31, 2005, respectively. The Company's current ratio (i.e., the
      ratio of current assets to current liabilities) was 4.5 to 1 and 4.5 to 1 at
      December 31, 2006 and December 31, 2005, respectively.







41


Accounts
      receivable, net of allowances, were $43.8 million at December 31, 2006, as
      compared with $39.3 million at December 31, 2005, reflecting, among other
      things, pressures from certain customers to increase their credit terms.
      Inventories were $46.3 million at December 31, 2006, as compared with $32.9
      million at December 31, 2005. The increase in inventories reflected increased
      sales during 2006, increased raw materials prices and an effort by the Company
      to build slighter higher inventory levels to assure that the Company is able
      to
      satisfy customer demand during the Lunar New Year holidays in
      China.





The
      following table sets forth at December 31, 2006 the amounts of payments due
      under specific types of contractual obligations, aggregated by category of
      contractual obligation, for the time periods described below.





Payments
                  due by periodContractual
                  Obligations
              
              Total
              
              Less
                  than
                1
                  year
              
              1-3
                years
              
              3-5
                years
              
              More
                  than
                5
                  yearsCapital
                  expenditure obligations
              
              $
              1,491,613
              
              $
              1,491,613
              
              $
              -
              
              $
              -
              
              $
              -Operating
                  leases
              
              
              4,734,766
              
              
              1,658,502
              
              
              1,932,688
              
              
              1,143,576Raw
                  material purchase obligations
              
              
              14,641,552
              
              
              14,641,552
              
              
              -
              
              
              -
              
              
              -Total
              
              $
              20,867,931
              
              $
              17,791,667
              
              $
              1,932,688
              
              $
              1,143,576
              
              $
              -




The
      Company is required to pay SERP
      obligations at the occurrence of certain events. As of December 31, 2006, the
      SERP had an unfunded benefit obligation of approximately $1.6 million, net
      of
      deferred income tax benefit. The gross unfunded benefit obligation in the amount
      of $4.7 million is included in long-term liabilities as an unfunded pension
      obligation on the Company’s consolidated balance sheet. The unfunded benefit
      obligation, net of deferred income tax benefits, is included in the accompanying
      consolidated balance sheet as a component of “Other Comprehensive Income.”





Other
      Matters





The
      Company believes that it has sufficient cash reserves to fund its foreseeable
      working capital needs. It may, however, seek to expand such resources through
      bank borrowings, at favorable lending rates, from time to time. If the Company
      were to undertake a substantial acquisition for cash, the acquisition would
      likely need to be financed in part through bank borrowings or the issuance
      of
      public or private debt or equity. If the Company borrows money to finance
      acquisitions, this would likely decrease the Company’s ratio of earnings to
      fixed charges and adversely affect other leverage criteria and could result
      in
      the imposition of material restrictive covenants. Under its existing credit
      facility, the Company is required to obtain its lender’s consent for certain
      additional debt financing, to comply with other covenants including the
      application of specific financial ratios, and may be restricted from paying
      cash
      dividends on its common stock. The Company cannot assure that the necessary
      acquisition financing would be available to it on acceptable terms, or at all,
      when required. If the Company issues a substantial amount of stock either as
      consideration in an acquisition or to finance an acquisition, such issuance
      may
      dilute existing stockholders and may take the form of capital stock having
      preferences over its existing common stock.




42


New
      Financial Accounting Standards





In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Post Retirement Plans”, an
      amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS 158 requires
      employers to recognize their defined benefit plans’ overfunded or underfunded
      status in their balance sheets, requires employers to measure plan assets and
      plan obligations as of the balance sheet date, immediately recognize any
      remaining transition obligation currently being deferred, and recognize
      actuarial gains and losses through other comprehensive income. The statement
      is
      effective for fiscal years ending after December 15, 2006. For additional
      information regarding the accounting treatment and effect on the Consolidated
      Balance Sheet of SFAS No. 158, see Note
      12 of Notes to the Consolidated Financial Statements.





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





In
      September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
      Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year
      Misstatements when Quantifying Misstatements in Current Year Financial
      Statements” (“SAB No. 108”). SAB No. 108 provides guidance on the consideration
      of effects of the prior year misstatements in quantifying current year
      misstatements for the purpose of a materiality assessment. We adopted SAB No.
      108 in the fourth quarter of 2006 and adoption of SAB No. 108 did not impact
      our
      consolidated financial results.





In
      July
      2006, FASB issued Interpretation No. 48 “Accounting for Uncertainty in Income
      Taxes” ("FIN 48"). The interpretation requires a two step approach for
      recognizing and measuring tax benefits based on a recognition threshold of
“more
      likely than not”. The FASB also requires explicit disclosures about
      uncertainties in tax positions including a detailed rollforward of tax benefits
      that do not qualify for financial statement recognition. The adoption of FIN
      48
      is effective for fiscal years beginning after December 15, 2006. While the
      Company’s analysis of the impact of this Interpretation is not yet complete, we
      do not anticipate it will have a material impact on the Consolidated Financial
      Statements or with any of the Company’s debt covenants.








43




In
      February 2007, the FASB issued SFAS No. 159 (“SFAS 159”) “The Fair Value Option
      for Financial Assets and Financial Liabilities”, providing companies with an
      option to report selected financial assets and liabilities at fair value. The
      Standard’s objective is to reduce both complexity in accounting for financial
      instruments and the volatility in earnings caused by measuring related assets
      and liabilities differently. It also requires entities to display the fair
      value
      of those assets and liabilities for which the Company has chosen to use fair
      value on the face of the balance sheet. SFAS 159 is effective for fiscal years
      beginning after November 15, 2007. The Company is currently evaluating the
      impact of the adoption of this Statement on its financial statements. SFAS
      159
      also establishes presentation and disclosure requirements designed to facilitate
      comparisons between companies that choose different measurement attributes
      for
      similar types of assets and liabilities. The Standard requires companies to
      provide additional information that will help investors and other users of
      financial statements to more easily understand the effect of a company’s choice
      to use fair value on its earnings. SFAS 159 is effective for fiscal years
      beginning after November 15, 2007. The Company is currently evaluating the
      impact of the adoption of this Statement on its financial
      statements.

















44


Item
      7A. Quantitative
      and Qualitative Disclosures About Market Risk





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




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





The
      Company's carrying values of cash, marketable securities, accounts receivable,
      accounts payable and accrued expenses are a reasonable approximation of their
      fair value.





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





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





Item
      8. Financial
      Statements and Supplementary Data





See
      the
      consolidated financial statements listed in the accompanying Index to
      Consolidated Financial Statements for the information required by this
      item.














45




BEL
                  FUSE INC.INDEXFinancial
                  Statements
              PageReport
                  of Independent RegisteredPublic
                  Accounting Firm
              F-1Consolidated
                  Balance Sheets as ofDecember
                  31, 2006 and 2005
              F-2
                  - F-3Consolidated
                  Statements of Operations for Eachof
                  the Three Years in the Period EndedDecember
                  31, 2006
              F-4Consolidated
                  Statements of Stockholders' Equityfor
                  Each of the Three Years in the Period EndedDecember
                  31, 2006
              F-5
                  - F-6Consolidated
                  Statements of Cash Flows forEach
                  of the Three Years in the Period EndedDecember
                  31, 2006
              F-7
                  - F-9Notes
                  to Consolidated Financial Statements
              F-10
                  - F-43Selected
                  Quarterly Financial Data - Years EndedDecember
                  31, 2006 and 2005 (Unaudited)
              F-44














46




REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To
      the
      Board of Directors and Stockholders of Bel Fuse Inc.


Jersey
      City, New Jersey




We
      have
      audited the accompanying consolidated balance sheets of Bel Fuse Inc. and
      subsidiaries (the “Company”) as of December 31, 2006 and 2005, and the related
      consolidated statements of operations, stockholders' equity and cash flows
      for
      each of the three years in the period ended December 31, 2006. Our audits also
      included the financial statement schedule listed in the Index at Item 15. We
      also have audited management's assessment, included in the accompanying
      Management’s Report on Internal Control Over Financial Reporting, **** that
      the
      Company maintained effective internal control over financial reporting as of
      December 31, 2006, based on criteria established in *Internal
      Control—Integrated Framework* issued
      by
      the Committee of Sponsoring Organizations of the Treadway
      Commission. **** The
      Company's management is responsible for these financial statements and financial
      statement schedule, for maintaining effective internal control over financial
      reporting, and for its assessment of the effectiveness of internal control
      over
      financial reporting.  Our responsibility is to express an opinion on these
      financial statements and financial statement schedule, an opinion on
      management's assessment, and an opinion on the effectiveness of the Company's
      internal control over financial reporting based on our audits.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States).  Those standards require that
      we plan and perform the audit to obtain reasonable assurance about whether
      the
      financial statements are free of material misstatement and whether effective
      internal control over financial reporting was maintained in all material
      respects.  Our audit of financial statements included examining, on a test
      basis, evidence supporting the amounts and disclosures in the financial
      statements, assessing the accounting principles used and significant estimates
      made by management, and evaluating the overall financial statement
      presentation. **** Our
      audit
      of internal control over financial reporting included obtaining an understanding
      of internal control over financial reporting, evaluating management's
      assessment, testing and evaluating the design and operating effectiveness of
      internal control, and performing such other procedures as we considered
      necessary in the circumstances.  We believe that our audits provide a
      reasonable basis for our opinions.




A
      company's internal control over financial reporting is a process designed by,
      or
      under the supervision of, the company's principal executive and principal
      financial officers, or persons performing similar functions, and effected by
      the
      company's board of directors, management, and other personnel to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      generally accepted accounting principles.  A company's internal control
      over financial reporting includes those policies and procedures that (1) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company; (2)
      provide reasonable assurance that transactions are recorded as necessary to
      permit preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the company are
      being made only in accordance **** with
      authorizations of management and directors of the company; and (3) provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use, or disposition of the company's assets that could have a
      material effect on the financial statements.




Because
      of the inherent limitations of internal control over financial reporting,
      including the possibility of collusion or improper management override of
      controls, material misstatements due to error or fraud may not be prevented
      or
      detected on a timely basis.  Also, projections of any evaluation of the
      effectiveness of the internal control over financial reporting to future periods
      are subject to the risk that the controls may become inadequate because of
      changes in conditions, or that the degree of compliance with the policies or
      procedures may deteriorate.




In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of Bel Fuse Inc. and
      subsidiaries as of December 31, 2006 and 2005, and the results of their
      operations and their cash flows for each of the three years in the period ended
      December 31, 2006, in conformity with accounting principles generally accepted
      in the United States of America.  Also, in our opinion, such financial
      statement schedule, when considered in relation to the basic consolidated
      financial statements taken as a whole, presents fairly, in all material
      respects, the information set forth therein. Also in our opinion, management's
      assessment that the Company maintained effective internal control over financial
      reporting as of December 31, 2006, is fairly stated, in all material respects,
      based on the criteria established in *Internal
      Control—Integrated Framework*issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission. 
Furthermore, in our opinion, the Company maintained, in all material respects,
      effective internal control over financial reporting as of December 31, 2006,
      based on the criteria established in*Internal
      Control—Integrated Framework*issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission*.*




As
      discussed in Note 1 to the consolidated financial statements, the Company
      adopted Statement of Financial Accounting Standards (“SFAS”) No. 158,
“Employers’ Accounting for Defined Benefit Pension and Other Postretirement
      Plans - an amendment of FASB Statements No. 87, 88, 106 and 132(R),” effective
      December 31, 2006 and SFAS No. 123(R), “Share-Based Payment,” effective January
      1, 2006.




As
      discussed in Note 1 to the consolidated financial statements, the Company has
      restated its 2005 and 2004 earnings per share disclosures to present earning
      per
      share using the two-class method.






*DELOITTE
      & TOUCHE LLP*




New
      York,
      New York


March
      13,
      2007










F-1




**BEL
                  FUSE INC. AND SUBSIDIARIES****CONSOLIDATED
                  BALANCE SHEETS**December
                  31,2006
              
              2005**ASSETS**Current
                  Assets:Cash
                  and cash equivalents
              
              $
              76,760,543
              
              $
              51,997,634Marketable
                  securities
              
              
              15,576,212
              
              
              38,463,108Accounts
                  receivable - less allowance for doubtfulaccounts
                  of $1,087,000 and $1,107,000 atDecember
                  31, 2006 and 2005, respectively
              
              
              43,765,750
              
              
              39,304,984Inventories
              
              
              46,297,208
              
              
              32,947,103Prepaid
                  expenses and other currentassets
              
              
              1,382,807
              
              
              1,691,017Deferred
                  income taxes
              
              
              1,665,857
              
              
              -Assets
                  held for sale
              
              
              848,049
              
              
              828,131Total
                  Current Assets
              
              
              186,296,426
              
              
              165,231,977Property,
                  plant and equipment - net
              
              
              44,289,159
              
              
              42,379,356Deferred
                  income taxes
              
              
              3,425,375
              
              
              3,901,000Intangible
                  assets - net
              
              
              1,892,417
              
              
              2,782,188Goodwill
              
              
              28,117,143
              
              
              22,427,934Prepaid
                  pension costs
              
              
              -
              
              
              1,655,362Other
                  assets
              
              
              4,476,990
              
              
              3,678,100TOTAL
                  ASSETS
              
              $
              268,497,510
              
              $
              242,055,917






F-2






**BEL
                FUSE INC. AND SUBSIDIARIES****CONSOLIDATED
                BALANCE SHEETS**December
                31,2006
            
            2005**LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                Liabilities:Accounts
                payable
            
            $
            17,244,937
            
            $
            14,560,827Accrued
                expenses
            
            
            12,713,417
            
            
            10,667,558Deferred
                income taxes
            
            
            -
            
            
            1,412,000Income
                taxes payable
            
            
            11,094,107
            
            
            9,840,295Dividends
                payable
            
            
            566,583
            
            
            548,000Total
                Current Liabilities
            
            
            41,619,044
            
            
            37,028,680Long-term
                Liabilities:Minimum
                pension obligation andunfunded
                pension liability
            
            
            4,728,286
            
            
            3,450,688Total
                Long-term Liabilities
            
            
            4,728,286
            
            
            3,450,688Total
                Liabilities
            
            
            46,347,330
            
            
            40,479,368Commitments
                and ContingenciesStockholders'
                Equity:Preferred
                stock, no par value,authorized
                1,000,000 shares;none
                issued
            
            
            -
            
            
            -Class
                A common stock, par value$.10
                per share - authorized10,000,000
                shares; outstanding2,702,677
                and 2,702,677 shares, respectively(net
                of 1,072,770 treasury shares)
            
            
            270,268
            
            
            270,268Class
                B common stock, par value$.10
                per share - authorized30,000,000
                shares; outstanding 9,167,665and
                9,013,264 shares, respectively(net
                of 3,218,310 treasury shares)
            
            
            916,767
            
            
            901,327Additional
                paid-in capital
            
            
            31,826,046
            
            
            31,713,608Retained
                earnings
            
            
            190,952,754
            
            
            167,991,188Deferred
                stock-based compensation
            
            
            -
            
            
            (3,562,709
            )Cumulative
                other comprehensiveincome
                (loss)
            
            
            (1,815,655
            )
            
            4,262,867Total
                Stockholders' Equity
            
            
            222,150,180
            
            
            201,576,549TOTAL
                LIABILITIES ANDSTOCKHOLDERS'
                EQUITY
            
            $
            268,497,510
            
            $
            242,055,917





F-3





**BEL
                  FUSE INC. AND SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF OPERATIONS**Years
                  Ended December 31,2006
              
              2005
              
              2004Net
                  Sales
              
              $
              254,932,986
              
              $
              215,915,756
              
              $
              190,021,953Costs
                  and expenses:Cost
                  of sales
              
              
              192,985,004
              
              
              156,146,724
              
              
              132,776,304Selling,
                  general and administrative
              
              
              37,800,403
              
              
              33,151,672
              
              
              31,301,722Casualty
                  loss
              
              
              1,029,853
              
              
              -
              
              
              -Fixed
                  asset impairment
              
              
              -
              
              
              -
              
              
              1,032,786231,815,260
              
              
              189,298,396
              
              
              165,110,812Income
                  from operations
              
              
              23,117,726
              
              
              26,617,360
              
              
              24,911,141Interest
                  expense
              
              
              (70,703
              )
              
              (324,802
              )
              
              (238,552
              )Gain
                  on sale of marketable securities
              
              
              5,149,794
              
              
              -
              
              
              -Interest
                  income
              
              
              2,851,536
              
              
              1,422,719
              
              
              763,000Lawsuit
                  proceeds
              
              
              -
              
              
              -
              
              
              2,935,000Earnings
                  before provision for income taxes
              
              
              31,048,353
              
              
              27,715,277
              
              
              28,370,589Income
                  tax provision
              
              
              5,845,000
              
              
              7,482,000
              
              
              3,649,000Net
                  earnings
              
              $
              25,203,353
              
              $
              20,233,277
              
              $
              24,721,589Earnings
                  per share (2005 and 2004, asrestated
                  - see Note 1)Earnings
                  per Class A common shareBasic
              
              $
              2.03
              
              $
              1.67
              
              $
              2.10Diluted
              
              $
              2.03
              
              $
              1.67
              
              $
              2.10Weighted
                  average Class A common sharesoutstanding
                  - basic
              
              
              2,702,677
              
              
              2,702,677
              
              
              2,702,677Weighted
                  average Class A common sharesoutstanding
                  - diluted
              
              
              2,702,677
              
              
              2,702,677
              
              
              2,702,677Earnings
                  per Class B common shareBasic
              
              $
              2.16
              
              $
              1.79
              
              $
              2.22Diluted
              
              $
              2.15
              
              $
              1.77
              
              $
              2.16Weighted
                  average Class B common sharesoutstanding
                  - basic
              
              
              9,104,897
              
              
              8,807,498
              
              
              8,581,073Weighted
                  average Class B common sharesoutstanding
                  - diluted
              
              
              9,149,445
              
              
              8,890,581
              
              
              8,808,418




F-4




**BEL
                  FUSE INC. AND SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF STOCKHOLDERS' EQUITY**CumulativeOther
              
              
              
              
              
              
              
              DeferredCompre-
              
              
              
              Compre-
              
              Class
                  A
              
              Class
                  B
              
              Additional
              
              Stock-hensive
              
              Retained
              
              hensive
              
              Common
              
              Common
              
              Paid-In
              
              BasedTotal
              
              Income
              
              Earnings
              
              Income
                  (loss)
              
              Stock
              
              Stock
              
              Capital
              
              CompensationBalance,
                  January 1, 2004
              
              $
              146,854,953
              
              
              
              
              $
              127,406,693
              
              $
              979,576
              
              $
              270,167
              
              $
              846,069
              
              $
              17,352,448
              
              $
              -Exercise
                  of stockoptions
              
              
              3,891,266
              
              
              
              
              
              
              
              
              
              
              
              101
              
              
              19,990
              
              
              3,871,175Tax
                  benefits arisingfrom
                  the disposition ofnon-qualifiedincentive
                  stock options
              
              
              765,551
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              765,551Cash
                  dividends declared on Class Acommon
                  stock
              
              
              (430,707
              )
              
              
              
              
              (430,707
              )Cash
                  dividends declared on Class Bcommon
                  stock
              
              
              (1,748,292
              )
              
              
              
              
              (1,748,292
              )Currency
                  translationadjustment
              
              
              386,257
              
              $
              386,257
              
              
              
              
              
              386,257Change
                  in unrealized gain orloss
                  on marketable securities-net
                  of taxes
              
              
              4,020,679
              
              
              4,020,679
              
              
              
              
              
              4,020,679Net
                  earnings
              
              
              24,721,589
              
              
              24,721,589
              
              
              24,721,589Comprehensive
                  income
              
              
              
              
              $
              29,128,525Balance,
                  December 31, 2004
              
              
              178,461,296
              
              
              
              
              
              149,949,283
              
              
              5,386,512
              
              
              270,268
              
              
              866,059
              
              
              21,989,174
              
              
              -Exercise
                  of stockoptions
              
              
              4,115,508
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              20,028
              
              
              4,095,480Tax
                  benefits arisingfrom
                  the disposition ofnon-qualifiedincentive
                  stock options
              
              
              429,802
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              429,802
              
              
              -Cash
                  dividends declared on Class Acommon
                  stock
              
              
              (430,940
              )
              
              
              
              
              (430,940
              )Cash
                  dividends declared on Class Bcommon
                  stock
              
              
              (1,760,432
              )
              
              
              
              
              (1,760,432
              )Issuance
                  of restrictedcommon
                  stock
              
              
              5,214,392
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              15,240
              
              
              5,199,152Deferred
                  stock-basedcompensation
              
              
              (3,742,004
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (3,742,004
              )Currency
                  translationadjustment
              
              
              (669,153
              )
              $
              (669,153
              )
              
              
              
              
              (669,153
              )Change
                  in unrealized gain orloss
                  on marketable securities-net
                  of taxes
              
              
              (454,492
              )
              
              (454,492
              )
              
              
              
              
              (454,492
              )Stock-based
                  compensationexpense
              
              
              179,295
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              179,295Net
                  earnings
              
              
              20,233,277
              
              
              20,233,277
              
              
              20,233,277Comprehensive
                  income
              
              
              
              
              $
              19,109,632Balance,
                  December 31, 2005
              
              
              201,576,549
              
              
              
              
              
              167,991,188
              
              
              4,262,867
              
              
              270,268
              
              
              901,327
              
              
              31,713,608
              
              
              (3,562,709
              )
   F-5




**BEL
                  FUSE INC. AND SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF STOCKHOLDERS'
                  EQUITY**
  CumulativeOtherCompre-
              
              
              
              Compre-
              
              Class
                  A
              
              Class
                  B
              
              Additional
              
              Stock-hensive
              
              Retained
              
              hensive
              
              Common
              
              Common
              
              Paid-In
              
              BasedTotal
              
              Income
              
              Earnings
              
              Income
                  (loss)
              
              Stock
              
              Stock
              
              Capital
              
              CompensationExercise
                  of stockoptions
              
              
              3,186,587
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              13,280
              
              
              3,173,307Tax
                  benefits arisingfrom
                  the disposition ofnon-qualifiedincentive
                  stock options
              
              
              336,456
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              336,456
              
              
              -Cash
                  dividends declared on Class Acommon
                  stock
              
              
              (430,940
              )
              
              
              
              
              (430,940
              )Cash
                  dividends declared on Class Bcommon
                  stock
              
              
              (1,810,847
              )
              
              
              
              
              (1,810,847
              )Issuance
                  of restrictedcommon
                  stock
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2,160
              
              
              (2,160
              )Deferred
                  stock-basedcompensation
              
              
              (1,403,157
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,403,157
              )
              
              -Currency
                  translationadjustment
              
              
              387,822
              
              $
              387,822
              
              
              
              
              
              387,822Change
                  in unrealized gain orloss
                  on marketable securities-net
                  of taxes
              
              
              (4,819,632
              )
              
              (4,819,632
              )
              
              
              
              
              (4,819,632
              )Stock-based
                  compensationexpense
              
              
              1,570,701
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,570,701
              
              
              -Adoption
                  of SFAS No. 123 (R)
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (3,562,709
              )
              
              3,562,709Unfunded
                  SERP liability-netof
                  taxes upon adoption of SFAS No. 158
              
              
              (1,646,712
              )
              
              
              
              
              
              
              
              (1,646,712
              )Net
                  earnings
              
              
              25,203,353
              
              
              25,203,353
              
              
              25,203,353Comprehensive
                  income
              
              
              
              
              $
              20,771,543Balance,
                  December 31, 2006
              
              $
              222,150,180
              
              
              
              
              $
              190,952,754
              
              $
              (1,815,655
              )
              $
              270,268
              
              $
              916,767
              
              $
              31,826,046
              
              $
              -






F-6




**BEL
                  FUSE INC. AND SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**
  Years
                  Ended December 31,2006
              
              2005
              
              2004Cash
                  flows from operatingactivities:Net
                  income
              
              $
              25,203,353
              
              $
              20,233,277
              
              $
              24,721,589Adjustments
                  to reconcile netincome
                  to net cash providedby
                  operating activities:Depreciation
                  and amortization
              
              
              9,027,659
              
              
              10,104,373
              
              
              9,025,364Fixed
                  asset impairment
              
              
              -
              
              
              -
              
              
              1,032,786Casualty
                  loss
              
              
              1,029,853
              
              
              -
              
              
              -Stock-based
                  compensation
              
              
              1,570,701
              
              
              248,000
              
              
              -Excess
                  tax benefits from share-basedpayment
                  arrangements
              
              
              (336,456
              )Gain
                  on sale of marketable securities
              
              
              (5,149,794
              )Other
              
              
              678,664
              
              
              1,464,000
              
              
              1,238,000Deferred
                  income taxes
              
              
              (988,237
              )
              
              (3,602,000
              )
              
              (4,986,000
              )Changes
                  in operating assetsand
                  liabilities (net of acquisitions)
              
              
              (12,003,251
              )
              
              2,825,445
              
              
              1,077,010Net
                  Cash Provided byOperating
                  Activities
              
              
              19,032,492
              
              
              31,273,095
              
              
              32,108,749Cash
                  flows from investing activities:Purchase
                  of property, plantand
                  equipment - net of accruals
              
              
              (9,364,444
              )
              
              (7,745,817
              )
              
              (6,578,658
              )Purchase
                  of marketablesecurities
              
              
              (3,633,890
              )
              
              (17,998,601
              )
              
              (17,723,615
              )Payment
                  of investment bankingadvisory
                  fee
              
              
              (300,000
              )
              
              -
              
              
              -Payment
                  for acquisitions - net ofcash
                  acquired
              
              
              (6,960,974
              )
              
              (20,807,083
              )
              
              (353,464
              )Proceeds
                  from repaymentby
                  contractors
              
              
              -
              
              
              -
              
              
              29,000Proceeds
                  from sale ofmarketable
                  securities
              
              
              24,489,966
              
              
              1,621,603
              
              
              6,345,595Proceeds
                  from sale ofbuilding
              
              
              -
              
              
              252,587
              
              
              -Net
                  Cash Provided by (Used in)Investing
                  Activities
              
              
              4,230,658
              
              
              (44,677,311
              )
              
              (18,281,142
              )


F-7




**BEL
                  FUSE INC. AND SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS (Continued)**Years
                  Ended December 31,2006
              
              2005
              
              2004Cash
                  flows from financingactivities:Proceeds
                  from borrowings
              
              
              -
              
              
              12,000,000
              
              
              -Loan
                  repayments
              
              
              -
              
              
              (19,360,694
              )
              
              (2,000,000
              )Proceeds
                  from exercise ofstock
                  options
              
              
              3,186,587
              
              
              4,115,508
              
              
              3,891,266Dividends
                  paid to commonshareholders
              
              
              (2,223,204
              )
              
              (2,183,371
              )
              
              (2,168,258
              )Excess
                  tax benefits from share-basedpayment
                  arrangements
              
              
              336,456
              
              
              -
              
              
              -Net
                  Cash Provided by (Used In)Financing
                  Activities
              
              
              1,299,839
              
              
              (5,428,557
              )
              
              (276,992
              )Effect
                  of exchange rate changes on cash
              
              
              199,920
              
              
              (367,484
              )
              
              186,124Net
                  Increase (decrease) inCash
                  and Cash Equivalents
              
              
              24,762,909
              
              
              (19,200,257
              )
              
              13,736,739Cash
                  and Cash Equivalents-
                  beginning of year
              
              
              51,997,634
              
              
              71,197,891
              
              
              57,461,152Cash
                  and Cash Equivalents-
                  end of year
              
              $
              76,760,543
              
              $
              51,997,634
              
              $
              71,197,891Changes
                  in operating assetsand
                  liabilities (net of acquisitions) consist of:Increase
                  in accountsreceivable
              
              $
              (4,280,411
              )
              $
              (2,638,200
              )
              $
              (2,671,513
              )Increase
                  in inventories
              
              
              (13,500,956
              )
              
              (1,145,242
              )
              
              (2,774,275
              )Decrease
                  (increase) in prepaidexpenses
                  and othercurrent
                  assets
              
              
              288,292
              
              
              809,821
              
              
              (700,243
              )Increase
                  in other assets
              
              
              (498,892
              )
              
              (383,980
              )
              
              (738,878
              )Increase
                  in accounts payable
              
              
              2,657,504
              
              
              3,629,923
              
              
              1,299,301Increase
                  in income taxes payable
              
              
              1,590,268
              
              
              3,071,828
              
              
              6,946,523Increase
                  (decrease) inaccrued
                  expenses
              
              
              1,740,944
              
              
              (518,705
              )
              
              (283,905
              )$
              (12,003,251
              )
              $
              2,825,445
              
              $
              1,077,010






F-8




**BEL
                      FUSE INC. AND SUBSIDIARIES****CONSOLIDATED
                      STATEMENTS OF CASH FLOWS
                      (Concluded)**
  Year
                      Ended December 31,2006
                  
                  2005
                  
                  2004Supplementary
                      information:Cash
                      paid during the year for:Income
                      taxes
                  
                  $
                  4,451,000
                  
                  $
                  6,578,000
                  
                  $
                  2,128,000Interest
                  
                  $
                  71,000
                  
                  $
                  325,000
                  
                  $
                  239,000Details
                      of acquisitions:Fair
                      value of assets acquired (excludingcash
                      acquired of $311,856 in 2005)
                  
                  $
                  -
                  
                  $
                  6,077,138
                  
                  $
                  -Intangibles
                  
                  
                  446,571
                  
                  
                  2,657,518
                  
                  
                  353,464Goodwill
                  
                  
                  6,000,000
                  
                  
                  12,546,080
                  
                  
                  -6,446,571
                  
                  
                  21,280,736
                  
                  
                  353,464Amounts
                      paid (held back) onacquisition
                      payment
                  
                  
                  514,403
                  
                  
                  (473,653
                  )
                  
                  -Cash
                      paid for acquisitions
                  
                  $
                  6,960,974
                  
                  $
                  20,807,083
                  
                  $
                  353,464




F-9








BEL
      FUSE
      INC. AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS




FOR
      THE
      YEARS ENDED DECEMBER 31, 2006, 2005 and 2004






1.  DESCRIPTION
      OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES







Bel
      Fuse
      Inc. and subsidiaries operate in one industry with three geographic reporting
      segments and are engaged in the design, manufacture and sale of products used
      in
      local area networking, telecommunication, business equipment and consumer
      electronic applications. The Company manages its operations geographically
      through its three reporting units: North America, Asia and Europe. Sales are
      predominantly in North America, Europe and Asia.





PRINCIPLES
      OF CONSOLIDATION - The
      consolidated financial statements include the accounts of the Company and its
      wholly owned subsidiaries including the businesses acquired since their
      respective dates of acquisition. All intercompany transactions and balances
      have
      been eliminated.





USE
      OF
      ESTIMATES - The
      preparation of the consolidated financial statements in conformity with
      accounting principles generally accepted in the United States of America
      requires management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statements and the reported amounts
      of
      revenues and expenses during the reporting period. Actual results could differ
      from those estimates.





CASH
      EQUIVALENTS - Cash
      equivalents include short-term investments in U.S. treasury bills and commercial
      paper with an original maturity of three months or less when purchased. At
      December 31, 2006 and December 31, 2005, cash equivalents approximated
      $35,843,000 and $13,444,000, respectively.





MARKETABLE
      SECURITIES - The
      Company classifies its marketable equity securities as "available for sale",
      and
      accordingly, reflects unrealized gains and losses, net of deferred income taxes,
      as a component of accumulated other comprehensive income.





The
      fair
      values of marketable securities are based on quoted market prices. Realized
      gains or losses from the sale of marketable securities are based on the specific
      identification method.








F-10





ACQUISITION
      EXPENSES - The
      Company capitalizes all direct costs associated with proposed acquisitions.
      If
      the proposed acquisitions are consummated, such costs will be included as a
      component of the overall cost of the acquisition. Such costs are expensed at
      such time as the Company deems the consummation of a proposed acquisition to
      be
      unsuccessful.





FOREIGN
      CURRENCY TRANSLATION - The
      functional currency for some foreign operations is the local currency. Assets
      and liabilities of foreign operations are translated at balance sheet date
      rates
      of exchange and income, expense and cash flow items are translated at the
      average exchange rate for the period. Translation adjustments are recorded
      in
      Other Comprehensive Income. The U.S. Dollar is used as the functional currency
      for certain foreign operations that conduct their business in U.S. Dollars.
      Realized foreign currency (losses) gains were ($201,000), $27,000 and $54,000
      for the years ended December 31, 2006, 2005 and 2004, respectively, and have
      been expensed as a component of selling, general and administrative expense
      in
      the consolidated statements of operations.





CONCENTRATION
      OF CREDIT RISK - Financial
      instruments which potentially subject the Company to concentrations of credit
      risk consist principally of accounts receivable and temporary cash investments.
      The Company grants credit to customers that are primarily original equipment
      manufacturers and to subcontractors of original equipment manufacturers based
      on
      an evaluation of the customer's financial condition, without requiring
      collateral. Exposure to losses on receivables is principally dependent on each
      customer's financial condition. The Company controls its exposure to credit
      risk
      through credit approvals, credit limits and monitoring procedures and
      establishes allowances for anticipated losses.





The
      Company places its temporary cash investments with quality financial
      institutions and commercial issuers of short-term paper and, by policy, limits
      the amount of credit exposure in any one financial instrument.





INVENTORIES
      - Inventories
      are stated at the lower of weighted average cost or market.





REVENUE
      RECOGNITION - The
      Company recognizes revenue in accordance with the guidance contained in SEC
      Staff Accounting Bulletin No. 104, "Revenue Recognition in Financial
      Statements " .  Revenue
      is recognized when the product has been delivered and title and risk of loss have passed
      to the customer, collection of the resulting receivable is deemed reasonably
      assured by management, persuasive evidence of an arrangement exists and the
      sales price is fixed and determinable. Substantially all of the Company's
      shipments are FCA (free carrier) which provides for title to pass upon delivery
      to the customer's freight carrier. Some product is shipped DDP/DDU with title
      passing when the product arrives at the customer's dock.








F-11





For
      certain customers, the Company provides consigned inventory, either at the
      customer’s facility or at a third party warehouse. Sales of consigned inventory
      are recorded when the customer withdraws inventory from consignment **.** During
      all periods in 2006, 2005 and 2004, inventory on consignment was
      immaterial.





The
      Company typically has a twelve-month warranty policy for workmanship defects.
      Warranty returns have historically averaged at or below 1% of annual net sales.
      The Company establishes warranty reserves when a warranty issue becomes
      known , as
      warranty claims have historically been immaterial. No general reserves for
      warranties have been established.





The
      Company is not contractually obligated to accept returns except for defective
      product or in instances where the product does not meet the customer's quality
      specifications. However, the Company may permit its customers to return product
      for other reasons. In these instances, the Company would generally require
      a
      significant cancellation penalty payment by the customer. The Company estimates
      such returns, where applicable, based upon management's evaluation of historical
      experience, market acceptance of products produced and known negotiations with
      customers. Such estimates are deducted from gross sales and provided for at
      the
      time revenue is recognized.





GOODWILL
      - The
      Company tests goodwill for impairment annually during the fourth quarter, using
      a fair value approach at the reporting unit level. A reporting unit is an
      operating segment or one level below an operating segment for which discrete
      financial information is available and reviewed regularly by management. Assets
      and liabilities of the Company have been assigned to the reporting units to
      the
      extent that they are employed in or are considered a liability related to the
      operations of the reporting unit and were considered in determining the fair
      value of the reporting unit.





DEPRECIATION
      - Property,
      plant and equipment are stated at cost less accumulated depreciation and
      amortization. Depreciation and amortization are calculated primarily using
      the
      declining-balance method for machinery and equipment and the straight-line
      method for buildings and improvements over their estimated useful lives.







F-12


INCOME
      TAXES - The
      Company accounts for income taxes using an asset and liability approach under
      which deferred income taxes are recognized by applying enacted tax rates
      applicable to future years to the differences between the financial statement
      carrying amounts and the tax bases of reported assets and
      liabilities.





For
      that
      portion of foreign earnings that have not been repatriated, an income tax
      provision has not been recorded for U.S. federal income taxes on the
      undistributed earnings of foreign subsidiaries as such earnings are intended
      to
      be permanently reinvested in those operations. Such earnings would become
      taxable in the United States upon the sale or liquidation of these foreign
      subsidiaries or upon the repatriation of earnings. See Note 8 of Notes to
      Consolidated Financial Statements.





The
      principal items giving rise to deferred taxes are unrealized gains on marketable
      securities available for sale, the use of accelerated depreciation methods
      for
      machinery and equipment, timing differences between book and tax amortization
      of
      intangible assets and goodwill and certain expenses including the SERP which
      have been deducted for financial reporting purposes which are not currently
      deductible for income tax purposes.





EARNINGS
      PER SHARE (RESTATED) - Subsequent to the issuance of its Consolidated Financial Statements for the
      year
      ended December 31, 2005, the Company determined that the method it uses to
      report earnings per share should utilize the two-class method, displaying
      earnings per share separately for both Class A and Class B common stock, rather
      than only one class as previously reported. The two-class method is an earnings
      allocation formula that determines earnings per share for each class of common
      stock according to dividends declared and participation rights in undistributed
      earnings. The Company’s Certificate of Incorporation, as amended, states that
      Class B common shares are entitled to dividends at least 5% greater than
      dividends paid to Class A common shares **,** resulting in the two-class method of computing earnings per share. In computing
      earnings per share, the Company has allocated actual dividends declared to
      Class
      A and Class B based on amounts actually declared. In computing earnings per
      share, 5% more of the undistributed earnings have been allocated to Class B
      shares than to the Class A shares on a per share basis. Previously, all
      shareholders were assumed to share in the earnings equally. As a result, the
      earnings per share disclosures in the accompanying Consolidated Financial
      Statements for the years ended December 31, 2005 and December 31, 2004, as
      well as for interim periods within 2006 and 2005 (see Unaudited
      Condensed Quarterly Financial Data), have been restated to reflect the two-class
      method of computing earnings per share. Basic earnings per common share are
      computed by dividing net earnings by the weighted average number of common
      shares outstanding during the period. Diluted earnings per common share, for
      each class of common stock, are computed by dividing net earnings by the
      weighted average number of common shares and potential common shares outstanding
      during the period. Potential common shares used in computing diluted earnings
      per share relate to stock options for Class A and B common shares which, if
      exercised, would have a dilutive effect on earnings per share.





F-13




Restatement
                    of Earnings Per ShareAs
                    PreviouslyYear
                    Ended
                
                Reported
                
                As
                    RestatedDecember
                    31, 2005Basic
                
                $
                1.76Diluted
                
                $
                1.75Class
                    A - Basic
                
                
                
                
                $
                1.67Class
                    B- Basic
                
                
                
                
                $
                1.79Class
                    A- Diluted
                
                
                
                
                $
                1.67Class
                    B - Diluted
                
                
                
                
                $
                1.77Year
                    EndedDecember
                    31, 2004Basic
                
                $
                2.19Diluted
                
                $
                2.15Class
                    A - Basic
                
                
                
                
                $
                2.10Class
                    B- Basic
                
                
                
                
                $
                2.22Class
                    A- Diluted
                
                
                
                
                $
                2.10Class
                    B - Diluted
                
                
                
                
                $
                2.16


The
      previously reported weighted average shares outstanding for the years ended
      December 31, 2005 and 2004 were as follows:




2005
              
              2004Basic
              
              
              11,510,175
              
              
              11,283,750Diluted
              
              
              11,593,258
              
              
              11,551,095


The
      following table includes a reconciliation of shares used in the calculation
      of
      basic and diluted earnings per share for Class A and Class B common
      shares:




2006
              
              2005
              
              2004Class
                  A Common SharesWeighted
                  average shares outstanding - basic (as restated)
              
              
              2,702,677
              
              
              2,702,677
              
              
              2,702,677Dilutive
                  impact of stock options andunvested
                  restricted stock awards
              
              
              -
              
              
              -
              
              
              -Weighted
                  average shares oustanding - diluted (as restated)
              
              
              2,702,677
              
              
              2,702,677
              
              
              2,702,677Class
                  B Common SharesWeighted
                  average shares outstanding - basic (as restated)
              
              
              9,104,897
              
              
              8,807,498
              
              
              8,581,073Dilutive
                  impact of stock options andunvested
                  restricted stock awards
              
              
              44,548
              
              
              83,083
              
              
              227,345Weighted
                  average shares oustanding - diluted (as restated)
              
              
              9,149,445
              
              
              8,890,581
              
              
              8,808,418





During
      the years ended December 31, 2006, 2005 and 2004, respectively, 14,000, 20,000
      and 24,000 outstanding options were not included in the foregoing computations
      for Class B common shares because they were antidilutive.











F-14


STOCK-BASED
      COMPENSATION - The
      Company has one stock-based compensation plan under which both incentive
      stock-options and restricted stock awards are granted to employees and
      directors. Effective January 1, 2006, the Company accounts for stock-based
      compensation under Statement of Financial Accounting Standards ("SFAS") No.
      123
      (R), "Share-Based Payment". The Company adopted SFAS 123(R) using the modified
      prospective method. Under modified prospective application, this SFAS applies
      to
      new awards and to awards modified, repurchased, or cancelled after the required
      effective date. Additionally, compensation costs for the portion of the awards
      for which the requisite service has not been rendered that are outstanding
      as of
      the required effective date are being recognized as the requisite service is
      rendered after the required effective date. The compensation cost for the portion
      of awards is based on the grant-date fair value of those awards as calculated
      for either recognition or pro forma disclosures under SFAS 123. Changes to
      the
      grant-date fair value of equity awards granted before the required effective
      date of this Statement are precluded. The compensation cost for those earlier
      awards is attributed to periods beginning on or after the required effective
      date of this SFAS using the attribution method that was used under SFAS 123,
      except that the method of recognizing forfeitures only as they occur was not
      continued. Prior to January 1, 2006, the Company accounted for stock option
      grants issued to employees in accordance with Accounting Principles Board
      Opinion No. 25 "Accounting for Stock Issued to Employees", and had adopted
      the
      disclosure only requirements of SFAS No. 123, "Accounting for Stock-Based
      Compensation", as amended by SFAS No. 148, “Accounting for Stock-Based
      Compensation-Transition and Disclosure, an amendment of FASB Statement No.
      123”.
      As such, for periods prior to January 1, 2006, the Company presents pro forma
      net earnings and earnings per share as if the fair-value-based method of
      accounting had been applied under SFAS No. 123.




In
      December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based
      Compensation-Transition and Disclosure, an amendment of FASB Statement No.
      123”.
      SFAS No. 148 provides alternative methods of transition for a voluntary change
      to the fair value based method of accounting for stock-based employee
      compensation. It also requires disclosure in both annual and interim financial
      statements about the method of accounting for stock-based employee compensation
      and the effect of the method used on reported results. The Company adopted the
      disclosure provisions of SFAS No. 148 beginning with the year ended December
      31,
      2002. The Company grants stock options with exercise prices at fair market
      value
      at the date of the grant. The Company has accounted for stock-based employee
      compensation under the recognition and measurement principle of APB Opinion
      No.
      25 and related interpretations through December 31, 2005.





Prior
      to
      January 1, 2006, the Company adopted the disclosure-only provisions of SFAS
      No.
      123. Had compensation cost for the Company's stock option plan been determined
      based on the fair value at the grant date for awards in 2005 and 2004 consistent
      with the provisions of SFAS No. 123, the Company's net earnings and earnings
      per
      share would have been reduced to the pro forma amounts indicated below.







F-15


Years
                  Ended December 31,2005
              
              2004Net
                  earnings - as reported
              
              $
              20,233,277
              
              $
              24,721,589Add:
                  Stock-based compensationexpense
                  included in net income,net
                  of taxes, as reported
              
              
              179,295
              
              
              -Deduct:
                  Total stock-basedemployee
                  compensation expensedetermined
                  under fair value basedmethod
                  for all awards,net
                  of taxes
              
              
              (643,472
              )
              
              (1,125,427
              )Net
                  earnings- pro forma
              
              $
              19,769,100
              
              $
              23,596,162Earnings
                  per Class A common share -basic-as
                  reported
              
              $
              1.67
              
              $
              2.10Earnings
                  per Class A common share -basic-pro
                  forma
              
              $
              1.63
              
              $
              2.00Earnings
                  per Class A common share -diluted-as
                  reported
              
              $
              1.67
              
              $
              2.10Earnings
                  per Class A common share -diluted-pro
                  forma
              
              $
              1.63
              
              $
              2.00Earnings
                  per Class B common share -basic-as
                  reported
              
              $
              1.79
              
              $
              2.22Earnings
                  per Class B common share -basic-pro
                  forma
              
              $
              1.74
              
              $
              2.12Earnings
                  per Class B common share -diluted-as
                  reported
              
              $
              1.77
              
              $
              2.16Earnings
                  per Class B common share -diluted-pro
                  forma
              
              $
              1.73
              
              $
              2.07




The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted-average
      assumptions used for grants in 2004: dividends yield of 0.9%, expected
      volatility of 35% for Class B; risk-free interest rate of 5% and expected lives
      of 5 years. No options were granted during the years ended December 31, 2006
      and
      2005.





RESEARCH
      AND DEVELOPMENT - Research
      and development costs are expensed as incurred, and are included in cost of
      sales. Generally all research and development is performed internally for the
      benefit of the Company. The Company does not perform such activities for others.
      Research and development costs include salaries, building maintenance and
      utilities, rents, materials, administration costs and miscellaneous other items.
      Research and development expenses for the years ended December 31, 2006, 2005
      and 2004 amounted to $6.6 million, $7.3 million and $7.3 million,
      respectively.





EVALUATION
      OF LONG-LIVED ASSETS - The
      Company reviews property and equipment for impairment whenever events or changes
      in circumstances indicate the carrying value may not be recoverable in
      accordance with guidance in SFAS No. 144, “Accounting for the Impairment or
      Disposal of Long-Lived Assets.” If the carrying value of the long-lived asset
      exceeds the present value of the related estimated future cash flows, the asset
      would be adjusted to its fair value and an impairment loss would be charged
      to
      operations in the period identified.










F-16


FAIR
      VALUE OF FINANCIAL INSTRUMENTS - For
      financial instruments, including cash and cash equivalents, marketable
      securities, accounts receivable, accounts payable and accrued expenses, the
      carrying amount approximates fair value because of the short maturities of
      such
      instruments.








RECLASSIFICATIONS -
      Certain reclassifications have been made to prior period amounts to conform
      to
      the current year presentation, principally within cash flows from operating
      activities in the 2005 and 2004 Consolidated Statements of Cash Flows and in
      the
      detailed disclosures within the footnotes pertaining to Property, Plant and
      Equipment and Income Taxes.





F-17


NEW
      FINANCIAL ACCOUNTING STANDARDS





In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 158, “Employers’
Accounting for Defined Benefit Pension and Other Post Retirement Plans”, an
      amendment of FASB Statements No. 87, 88, 106 and 132(R). SFAS 158 requires
      employers to recognize their defined benefit plans’ overfunded or underfunded
      status in their balance sheets, requires employers to measure plan assets and
      plan obligations as of the balance sheet date, immediately recognize any
      remaining transition obligation currently being deferred, and recognize
      actuarial gains and losses through other comprehensive income. The statement
      is
      effective for fiscal years ending after December 15, 2006. For additional
      information regarding the accounting treatment and effect on the Consolidated
      Balance Sheet of SFAS No. 158, see Note
      12 of Notes to the Consolidated Financial Statements.





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





In
      September 2006, the Securities and Exchange Commission (“SEC”) issued Staff
      Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year
      Misstatements when Quantifying Misstatements in Current Year Financial
      Statements” (“SAB No. 108”). SAB No. 108 provides guidance on the consideration
      of effects of the prior year misstatements in quantifying current year
      misstatements for the purpose of a materiality assessment. We adopted SAB No.
      108 in the fourth quarter of 2006 and adoption of SAB No. 108 did not impact
      our
      consolidated financial results.








In
      July
      2006, FASB issued Interpretation No. 48 “Accounting for Uncertainty in Income
      Taxes” ("FIN 48"). The interpretation requires a two step approach for
      recognizing and measuring tax benefits based on a recognition threshold of
“more
      likely than not”. The FASB also requires explicit disclosures about
      uncertainties in tax positions including a detailed rollforward of tax benefits
      that do not qualify for financial statement recognition. The adoption of FIN
      48
      is effective for fiscal years beginning after December 15, 2006. While the
      Company’s analysis of the impact of this Interpretation is not yet complete, we
      do not anticipate it will have a material impact on the Consolidated Financial
      Statements or with any of the Company’s debt covenants.











F-18





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













F-19








2.
            ACQUISITIONS





On
      June
      30, 2005, the Company acquired the common stock of Netwatch s.r.o., located
      in
      Prague, the Czech Republic, for approximately $1.9 million in cash **,** of which
      $0.5 million was due to the sellers and was paid by the Company during June
      2006. Netwatch s.r.o. is a designer and manufacturer of high-performance fiber
      optic and copper cable assemblies for data and telecommunication applications.
      Approximately $1.0 million of goodwill arose from the transaction which goodwill is
      included in the Company’s European reporting unit.





The
      acquisition has been accounted for using the purchase method of accounting
      and,
      accordingly, the results of operation of Netwatch s.r.o. have been included
      in
      the Company’s consolidated financial statements from June 30, 2005.





There
      was
      no in process research and development acquired as part of this
      acquisition.





On
      March
      22, 2005, the Company acquired the common stock of Galaxy Power Inc. ("Galaxy"),
      located in Westborough, Massachusetts, for approximately $19.0 million in cash
      including transaction costs of approximately $0.4 million. Galaxy is a designer
      and manufacturer of high-density DC-DC converters for distributed power and
      telecommunication applications. The purchase price has been allocated to both
      tangible and intangible assets and liabilities based on estimated fair values
      after considering an independent formal appraisal. Approximately $11.5 million
      of goodwill and $2.6 million of identifiable intangible assets arose from the
      transaction and are included in the Company’s North American reporting unit. The
      identifiable intangible assets and related deferred tax liabilities are being
      amortized on a straight-line basis over their estimated useful lives.





The
      acquisition has been accounted for using the purchase method of accounting
      and,
      accordingly, the results of operations of Galaxy have been included in the
      Company's consolidated financial statements from March 22, 2005.





There
      was
      no in process research and development acquired as part of this
      acquisition.





See
      Note
      3 of Notes to Consolidated Financial Statements for a discussion of E-Power
      and
      Current Concepts earn out payments in 2006.











F-20





The
      following unaudited pro forma summary results of operations assume that Galaxy
      and Netwatch s.r.o. had been acquired as of January 1, 2004 (in thousands,
      except per share data):





Years
                  EndedDecember
                  31,2005
              
              2004Net
                  sales
              
              $
              221,227
              
              $
              212,331Net
                  earnings
              
              
              20,026
              
              
              25,419Earnings
                  per share - dilutedClass
                  A
              
              
              1.65
              
              
              2.14Class
                  B
              
              
              1.75
              
              
              2.23





The
      information above is not necessarily indicative of the results of operations
      that would have occurred if the acquisitions had been consummated as of January
      1, 2004.  Such
      information should not be construed as a representation of the future results
      of
      operations of the Company.








A
      condensed combined balance sheet of the assets and liabilities of Galaxy and
      Netwatch s.r.o., as of their acquisition dates is as follows:





Cash
              
              $
              311,856Accounts
                  receivable
              
              
              3,687,331Inventories
              
              
              2,862,571Prepaid
                  expenses
              
              
              96,120Income
                  taxes receivable
              
              
              5,488Property,
                  plant andequipment
              
              
              1,545,526Other
                  assets
              
              
              32,083Deferred
                  tax asset
              
              
              1,392,850Goodwill
              
              
              11,876,080Intangible
                  assets
              
              
              2,630,000Notes
                  payable
              
              
              (860,694
              )Accounts
                  payable
              
              
              (2,129,165
              )Accrued
                  expenses
              
              
              (386,961
              )Net
                  assets acquired
              
              $
              21,063,085





F-21




3.
            GOODWILL
                AND OTHER INTANGIBLES





Goodwill
      represents the excess of the purchase price and related acquisition costs over
      the value assigned to the net tangible and other intangible assets with finite
      lives acquired in a business acquisition.





Effective
      January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other
      Intangible Assets". Under SFAS No. 142, goodwill and intangible assets deemed
      to
      have indefinite lives are no longer amortized, but are subject to, at a minimum,
      an annual impairment test. If the carrying value of goodwill or intangible
      assets exceeds its fair market value, an impairment loss would be recorded.





Other
      intangibles include patents, product information, covenants not-to-compete
      and
      supply agreements. Amounts assigned to these intangibles have been determined
      by
      management. Management considered a number of factors in determining the
      allocations, including valuations and independent appraisals. Other intangibles
      are being amortized over 1 to 10 years. Amortization expense was $1,840,000,
      $2,567,000 and $1,299,000 for the years ended December 31, 2006, 2005 and 2004,
      respectively.





Under
      the
      terms of the E-Power LTD (“E-Power”) and Current Concepts, Inc. (“Current
      Concepts”) acquisition agreements of May 11, 2001, the Company was required to
      make contingent purchase price payments up to an aggregate of $7.6 million
      should the acquired companies attain specified related sales levels. E-Power was
      to be paid
      $2.0 million in contingent purchase price payments if sales reached $15.0
      million and an additional $4.0 million if sales reached $25.0
      million on a cumulative basis through May 2007. During January 2006, the $2.0
      million of contingent purchase price consideration was earned by
      E-Power  and
      during February
      2006, E-Power was paid $2.0 million in contingent purchase price
      payments **.** During
      September 2006, an additional $4.0 million was earned when
      sales reached $25.0 million on a cumulative basis and,
      as a
      result, $4.0 million was paid in November 2006, and accounted for as additional
      purchase price and as an increase to goodwill. No additional payments will
      be
      made under the E-Power agreement. Current Concepts is
      to be paid
      16% of the first $10.0 million in sales through May 2007. This $10 million
      benchmark was reached during the second quarter of 2006 and therefore no
      additional payments will be made. During the years ended December 31, 2006,
      2005
      and 2004, the Company paid approximately $447,000, $529,000 and $354,000,
      respectively, in contingent purchase price payments to Current Concepts. The
      contingent purchase price payments to Current Concepts have been accounted
      for
      as additional purchase price and as an increase to covenants
      not to compete within intangible assets.


F-22





The
      changes in the carrying value of goodwill classified by geographic reporting
      units, net of accumulated depreciation, for the years ended December 31, 2006
      and 2005 are as follows:





Total
              
              Asia
              
              North
                  America
              
              EuropeBalance,
                  January 1, 2005
              
              $
              9,881,854
              
              $
              6,407,435
              
              $
              2,869,092
              
              $
              605,327Goodwill
                  allocationrelated
                  to acquisitions
              
              
              12,546,080
              
              
              -
              
              
              11,543,846
              
              
              1,002,234Balance,
                  December 31, 2005
              
              
              22,427,934
              
              
              6,407,435
              
              
              14,412,938
              
              
              1,607,561Goodwill
                  allocationrelated
                  to acquisitions
              
              
              6,000,000
              
              
              6,000,000
              
              
              -
              
              
              -Purchase
                price
                adjustment - reclassification to intangibleassets
              
              
              (670,000
              )
              
              -
              
              
              (670,000
              )
              
              -Other
                  purchase price and foreignexchange
                  adjustments
              
              
              359,209
              
              
              -
              
              
              323,529
              
              
              35,680Balance,
                  December 31, 2006
              
              $
              28,117,143
              
              $
              12,407,435
              
              $
              14,066,467
              
              $
              1,643,241


The
      components of intangible assets other than goodwill by geographic reporting
      unit
      are as follows:







December
                31, 2006Total
            
            Asia
            
            North
                AmericaGross
                Carrying
            
            Accumulated
            
            Gross
                Carrying
            
            Accumulated
            
            Gross
                Carrying
            
            AccumulatedAmount
            
            Amortization
            
            Amount
            
            Amortization
            
            Amount
            
            AmortizationPatents
                and ProductInformation
            
            $
            2,935,000
            
            $
            2,250,648
            
            $
            2,653,000
            
            $
            2,044,186
            
            $
            282,000
            
            $
            206,462Customer
                relationships
            
            
            1,830,000
            
            
            648,125
            
            
            -
            
            
            -
            
            
            1,830,000
            
            
            648,125Covenants
                not-to-compete
            
            
            5,299,998
            
            
            5,273,808
            
            
            4,499,998
            
            
            4,499,998
            
            
            800,000
            
            
            773,810$
            10,064,998
            
            $
            8,172,581
            
            $
            7,152,998
            
            $
            6,544,184
            
            $
            2,912,000
            
            $
            1,628,397




December
                31, 2005Total
            
            Asia
            
            North
                AmericaGross
                Carrying
            
            
            Accumulated
            
            
            Gross
                Carrying
            
            
            Accumulated
            
            
            Gross
                Carrying
            
            
            AccumulatedAmount
            
            
            Amortization
            
            
            Amount
            
            
            Amortization
            
            
            Amount
            
            
            AmortizationPatents
                and ProductInformation
            
            $
            2,935,000
            
            $
            1,812,853
            
            $
            2,653,000
            
            $
            1,634,566
            
            $
            282,000
            
            $
            178,287Customer
                relationships
            
            
            1,160,000
            
            
            178,833
            
            
            -
            
            
            -
            
            
            1,160,000
            
            
            178,833Covenants
                not-to-compete
            
            
            5,021,034
            
            
            4,342,160
            
            
            4,221,034
            
            
            3,813,589
            
            
            800,000
            
            
            528,571$
            9,116,034
            
            $
            6,333,846
            
            $
            6,874,034
            
            $
            5,448,155
            
            $
            2,242,000
            
            $
            885,691






F-23




Estimated
      amortization expense for intangible assets for the next five years is as
      follows:




EstimatedYear
                  Ending
              
              AmortizationDecember
                  31,
              
              Expense2007
              
              $
              809,2772008
              
              
              525,9392009
              
              
              422,2962010
              
              
              120,9862011
              
              
              13,919
  Amortization
                    Period - 2006Weighted
                    AverageIntangible
                    Asset
                
                Estimated
                    LifePatents
                    and Product Information
                
                2.14
                    yearsCustomer
                    Relationships
                
                2.2
                    yearsCovenants
                    Not-to-Compete
                
                .2
                    years




The
      weighted average amortization period of the Company’s intangible assets at
      December 31, 2006 is 2.1 years.





4.  MARKETABLE
      SECURITIES





The
      Company has cumulatively acquired a total of 5,874,919 shares, or approximately
      6% of the
      outstanding shares ,
      of the
      common stock of Toko, Inc. (“Toko”) at a total purchase price of $18.0 million.
      Toko had a market capitalization of approximately $255 million as of December
      31, 2006. These shares are reflected on the Company’s consolidated balance sheet
      as marketable securities. These marketable securities are considered to be
      available for sale under SFAS No. 115, “Accounting for Certain Investments in
      Debt and Equity Securities”. Thus, as of December 31, 2006, the Company has
      recorded an unrealized loss, net of income tax benefit, of approximately $1.5
      million which is included in accumulated other comprehensive income in
      stockholders’ equity. The Company’s investment in Toko has been in an unrealized
      loss position for less than twelve months. As a result of the volatility of
      the
      Toko share price over the last year, management believes that the investment
      in
      Toko is not other-than-temporarily impaired. In connection with this
      transaction, the Company is obligated to pay an investment banker’s advisory fee
      to a third party of 20% of the appreciation in the stock of Toko, or $1 million,
      whichever is lower. During 2006, $300,000 was prepaid against this obligation.
      As of December 31, 2006, the Company has not accrued any additional fees to
      the
      investment banker as the Toko stock is at an unrealized loss position.





The
      Company acquired a total of 2,037,500 shares of the common stock of Artesyn
      Technologies, Inc. (“Artesyn”) at a total purchase price of $16,331,469. On
      April 28, 2006, Artesyn was acquired by Emerson Network Power for $11.00 per
      share in cash. During the second quarter of 2006, in connection with the
      Company's sale of its Artesyn common stock, the Company recognized a gain of
      approximately $5.2 million, net of investment banker’s advisory fees of
      $850,000. The Company accrued bonuses of $1.0 million in connection with the
      gain. For financial statement presentation purposes, the $1.0 million bonus
      was
      classified within selling, general and administrative expenses ($723,000) and
      cost of sales ($277,000) and was paid to key employees during January 2007.






F-24


At
      December 31, 2006 and 2005, respectively, marketable securities have a cost
      of
      approximately $18,031,000 and $32,893,000, an estimated fair value of
      approximately $15,576,000 and $38,463,000 and gross unrealized (losses) gains
      of
      approximately $(2,455,000) and $5,570,000. Included in other assets at December
      31, 2006 and December 31, 2005 are marketable securities designated for
      utilization in accordance with the Company’s SERP plan with a cost of
      approximately $3,765,000 and $2,353,000, respectively and an estimated fair
      value of approximately $4,117,000 and $2,537,000, respectively. Such unrealized
      net (losses) gains are included, net of tax (benefit) expense, in other
      comprehensive income.





5.
            INVENTORIES





The
      components of inventories are as follows:


December
                  31,2006
              
              2005Raw
                  materials
              
              $
              24,374,438
              
              $
              19,342,703Work
                  in progress
              
              
              3,531,148
              
              
              2,515,174Finished
                  goods
              
              
              18,391,622
              
              
              11,089,226$
              46,297,208
              
              $
              32,947,103





6.
            IMPAIRMENT,
                CASUALTY LOSSES AND LAWSUIT
                PROCEEDS





Impairment
      Loss





During
      the year ended December 31, 2004, the Company wrote down fixed assets,
      principally machinery and equipment, with a net book value of $1,033,000 at
      its
      Far East manufacturing facilities. The Company considered these fixed assets
      to
      be surplus equipment which was replaced by equipment with more advanced
      technology.





Casualty
      Loss





The
      Company incurred a $1.0 million pre-tax casualty loss as a result of a fire
      at
      its leased manufacturing facility in the Dominican Republic for raw materials
      and equipment in excess of estimated insurance proceeds. The production at
      this
      facility was substantially restored during July 2006.





Lawsuit
      Proceeds





During
      the year ended December 31, 2004, the Company settled an arbitration proceeding
      related to a 1998 acquisition. The Company received $2,935,000 (net of $65,000
      of related legal expenses incurred during the period) pursuant to that
      settlement.





F-25


7.  PROPERTY,
      PLANT AND EQUIPMENT





Property,
      plant and equipment consist of the following:





December
                  31,2006
              
              2005Land
              
              $
              3,584,522
              
              $
              3,570,380Buildings
                  and improvements
              
              
              25,385,367
              
              
              24,509,146Machinery
                  and equipment
              
              
              60,745,740
              
              
              73,855,61389,715,629
              
              
              101,935,139Less
                  accumulated depreciation
              
              
              45,426,471
              
              
              59,555,783$
              44,289,159
              
              $
              42,379,356




Depreciation
      expense for the years ended December 31, 2006, 2005 and 2004 was $7,188,000,
      $7,537,000 and $7,726,000, respectively.





On
      July
      15, 2004, the Company entered into an agreement for the sale of a certain parcel
      of land located in Jersey City, New Jersey. The sales agreement is subject
      to a
      due diligence period by the buyer. The sales agreement expired during January
      2006. The buyer and seller are continuing to negotiate about certain
      environmental matters among themselves and with the State of New Jersey. The
      seller and buyer are aware that a portion of the property may be subject to
      tidelands claims by the State of New Jersey. Additionally, the Company is
      obligated for environmental remediation costs of up to $350,000. As of December
      31, 2006, the Company had also paid $247,000 of legal, site testing and State
      of
      New Jersey Environmental Protection Agency Fees. As these costs are incurred,
      the Company has
      capitalized them on
      the Company's consolidated balance sheet as assets held for sale. The Company
      has classified the asset as held for sale with a net book value of approximately
      $848,000 on the Company's consolidated balance sheet at December 31, 2006 and
      expects to sell the property during the first half of 2007.





8.  INCOME
      TAXES





The
      provision for income taxes consists of the following. All amounts are in
      thousands of dollars.




Years
                  Ended December 31,2006
              
              2005
              
              2004Current:Federal
              
              $
              4,784
              
              $
              4,590
              
              $
              3,524Foreign
              
              
              1,619
              
              
              6,250
              
              
              5,234State
              
              
              430
              
              
              244
              
              
              (123
              )6,833
              
              
              11,084
              
              
              8,635Deferred:Federal
                  and state
              
              
              (928
              )
              
              (1,420
              )
              
              (1,586
              )Foreign
              
              
              (60
              )
              
              (2,182
              )
              
              (3,400
              )(988
              )
              
              (3,602
              )
              
              (4,986
              )$
              5,845
              
              $
              7,482
              
              $
              3,649






F-26





A
      reconciliation of taxes on income computed at the federal statutory rate to
      amounts provided is as follows. All amounts are in thousands of
      dollars.







Years
                  Ended December 31,2006
              
              2005
              
              2004Tax
                  provisioncomputed
                  at the Federalstatutory
                  rate of 34%
              
              $
              10,556
              
              $
              9,423
              
              $
              9,646Increase
                  (decrease) intaxes
                  resulting from:Benefit
                  relating to tax rate differential on foreignearnings
                  to be repatriated in 2005-net
              
              
              -
              
              
              -
              
              
              (1,017
              )Repatriation
                  of foreign earningsnet
                  of foreign tax credit of $255 and $529
              
              
              -
              
              
              3,100
              
              
              -Different
                  tax rates and permanentdifferences
                  applicable toforeign
                  operations
              
              
              (4,816
              )
              
              (5,128
              )
              
              (3,380
              )Utilization
                  of net operating losscarryforward
              
              
              (66
              )
              
              (122
              )
              
              (165
              )Principally
                  the utilization of research anddevelopment
                  tax credits
              
              
              (409
              )
              
              (630
              )
              
              (1,413
              )State
                  (benefit) taxes, net of federal benefit
              
              
              279
              
              
              161
              
              
              (81
              )Other,
                  net
              
              
              301
              
              
              678
              
              
              59$
              5,845
              
              $
              7,482
              
              $
              3,649








F-27





(1)Under
      the American Jobs Creation Act of 2004 (the "Act"), the Company has repatriated
      earnings from controlled foreign corporations ("CFC's") in the amount of
      $70,560,000 in order to take advantage of the temporary 85 percent dividends
      received deduction for cash dividends in excess of the historical "base-period"
      average. This results in an effective federal tax rate of approximately 5.0%.
      The election to repatriate these CFC earnings expired on December 31, 2005
      and
      the dividend proceeds must meet a number of criteria as outlined in the Act
      to
      be eligible for the favorable tax rate. In prior years, the Company provided
      deferred taxes of approximately $7,668,000 on a portion of its CFC earnings
      which management concluded would likely be repatriated. As a result of the
      favorable tax treatment afforded the repatriation of CFC earnings and
      management’s decision to repatriate such funds in 2005, the Company recorded a
      $6,326,000 tax benefit in 2004 which results from the difference in tax rates
      between the Act and the tax rates previously provided on the portion of CFC
      earnings which were expected to be repatriated **,** leaving
      deferred income taxes in the amount of approximately $1,342,000 recorded
      pertaining to such earnings to be repatriated. In light of the planned
      repatriation during 2004 of CFC earnings in 2005, Management had identified
      certain domestic and foreign tax exposures relating to such operations. Such
      amount has been included in Income Taxes Payable in the accompanying
      consolidated balance sheet. Prior to the enactment of the Act, it was
      management’s intention to permanently reinvest the majority of the earnings of
      foreign subsidiaries in the expansion of its foreign operations. No earnings
      were repatriated during 2004 and 2003. Unrepatriated earnings, upon which U.S.
      income taxes have not been accrued, are approximately $85.4 million at December
      31, 2006. Such
      unrepatriated earnings are deemed by management to be permanently
      reinvested. Estimated income taxes related to unrepatriated foreign earnings are $26.0
      million under the current tax law as the Act has expired.





The
      Company files income tax returns in all jurisdictions in which it has reason
      to
      believe it is subject to tax. Historically, the Company has been subject to
      examination by various taxing jurisdictions. To date, none of these examinations
      has resulted in any material additional tax. Nonetheless, any tax jurisdiction
      may contend that a filing position claimed by the Company regarding one or
      more
      of its transactions is contrary to that jurisdiction's laws or regulations.
      Significant judgment is required in determining the worldwide provisions for
      income taxes. In the ordinary course of a global business, the ultimate tax
      outcome is uncertain for many transactions. It is our policy to establish
      provisions for taxes that may become payable in future years as a result of
      an
      examination by tax authorities. We establish the provisions based upon
      management’s assessment of exposure associated with permanent tax differences
      and tax credits applied to temporary difference adjustments. The tax provisions
      are analyzed periodically (at least quarterly) and adjustments are made as
      events occur that warrant adjustments to those provisions.








The
      Company is currently being audited by the United States Internal Revenue Service
      (“IRS”) for the year ended December 31, 2004. As part of this audit the IRS is
      also reviewing  the
      years
      ended December 31, 2003 and 2005. This examination is in its early stages and
      to
      date no adjustments have been proposed by the IRS.










F-28





The
      types
      of temporary differences between the tax basis of assets and liabilities and
      their financial reporting amounts that give rise to deferred
      tax liabilities and
      deferred tax assets and
      their approximate tax effects are as follows. All amounts are in thousands
      of
      dollars.







December
                31,2006
            
            2005Temporary
            
            
            
            TemporaryDifference
            
            Tax
                Effect
            
            Difference
            
            Tax
                EffectDeferred
                Tax Assets -currentUnrealizedappreciation/
                depreciationin
                marketable securities
            
            $
            2,107
            
            $
            801
            
            $
            -
            
            $
            -Reserves
                and accruals
            
            
            3,586
            
            
            865
            
            
            -
            
            
            -$
            5,693
            
            $
            1,666
            
            $
            -
            
            $
            -Deferred
                Tax Assets -non-current:United
                States net operating losscarryforward
            
            $
            2,335
            
            $
            887
            
            $
            4,316
            
            $
            1,640Unfunded
                pension liability
            
            
            2,332
            
            
            686
            
            
            -
            
            
            -Depreciation
            
            
            677
            
            
            188
            
            
            (2,474
            )
            
            (134
            )Amortization
            
            
            1,654
            
            
            519
            
            
            972
            
            
            373State
                net operating loss andcredits
                carryforward
            
            
            1,821
            
            
            338
            
            
            1,887
            
            
            345Other
                accruals
            
            
            3,378
            
            
            1,145
            
            
            6,660
            
            
            2,022Valuation
                allowances
            
            
            (1,821
            )
            
            (338
            )
            
            (1,887
            )
            
            (345
            )$
            10,376
            
            $
            3,425
            
            $
            9,474
            
            $
            3,901Deferred
                Tax Liability -current:Unrealizedappreciation/
                depreciationin
                marketable securities
            
            $
            -
            
            $
            -
            
            $
            5,661
            
            $
            2,151Reserves
                and accruals
            
            
            -
            
            
            -
            
            
            (2,352
            )
            
            (739
            )$
            -
            
            $
            -
            
            $
            3,309
            
            $
            1,412







The
      Company was granted a ten year tax holiday in Macao which resulted in an
      effective tax rate of 8%, which was 50% of the normal tax rate. Such holiday
      expired during 2004. The rate for the year ended December 31, 2006 is 12%.
      During the year ended December 31, 2005, the Company used a $764,000 net
      operating loss which resulted in a tax savings of approximately $122,000. During
      the year ended December 31, 2004, the Company used $1.1 million of net operating
      loss carry-forwards, which resulted in a tax savings of approximately $165,000.








F-29





Galaxy,
      at the time of the acquisition, had a net operating loss carry forward of
      approximately $5.4 million. The remaining net operating loss carry forward
      of
      approximately $2.3 million at December 31, 2006, arose principally from the
      non-qualified dispositions of stock options and warrants and expires during
      2024. The use of the operating loss is limited, due to the change of ownership,
      but the Company expects to use the $2.3 million over the next two
      years.





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





9.  DEBT





a.  Short-term
      debt





Previously
      the Company had available one domestic line of credit of $10 million. During
      March 2005, the Company borrowed $8 million against the line of credit to
      partially finance the acquisition of Galaxy. The outstanding balance was paid
      off in its entirety on June 30, 2005. During July 2005, the Company amended
      its
      credit agreement to increase the line of credit to $20 million, which expires
      on
      July 21, 2008. During October and November of 2005, the Company borrowed $4
      million against the line of credit. The outstanding balance was paid off in
      its
      entirety during December 2005. There was no balance outstanding as of December
      31, 2006. At that date, the entire $20 million line of credit was available
      to
      the Company to borrow. The line was
      initially collateralized with a first priority security interest in and lien on 100%
      of
      the issued and outstanding shares of the capital stock of the Company's material
      domestic subsidiaries and 65%
      of
      all the issued and outstanding shares of the capital stock of certain of the
      foreign subsidiaries of the Company and all other personal property of
      the
      Company. In July 2005, the lender terminated it's security interest in assets of
      the Company other than the lender’s first priority security interest in 100% of
      the issued and outstanding shares of the capital stock of the Company's material
      domestic subsidiaries and 65% of all the issued and outstanding shares of the
      capital stock of certain of the foreign subsidiaries of the
      Company. The line bore interest at LIBOR plus 0.75% to 1.25% based on certain
      financial statement ratios maintained by the Company. As of December 31, 2006,
      the Company was in compliance with its debt covenants. During
      February 2007, the Company replaced the $20 million line of credit with a $20
      million line of credit from a different lender, on substantially the same terms
      and conditions as previously existed, except that the new lender did not receive
      a security interest in any assets of the Company.





The
      Company’s Hong Kong subsidiary has an unsecured line of credit of approximately
      $2 million which was unused as of December 31, 2006. The line of credit expires
      during July 2007. Borrowing on the line of credit is guaranteed by the U.S.
      parent. The line of credit bears interest at a rate determined by the bank
      as
      the financing is extended.














F-30


b.  Long-term
      debt





On
      March
      21, 2003, the Company entered into a $10 million secured term loan, which was
      paid off in June 2005. The loan was used to partially finance the Company's
      acquisition of Insilco's Passive Components Group. This term loan facility
      is no
      longer available to the Company.





For
      the
      years ended December 31, 2006, 2005 and 2004, the Company recorded interest
      expense of $71,000, $325,000 and $239,000, respectively.








10  ACCRUED
      EXPENSES





Accrued
      expenses consist of the following:


Year
                  Ended December 31,2006
              
              2005Sales
                  commissions
              
              $
              1,715,816
              
              $
              1,812,135Investment
                  banking commissions
              
              
              -
              
              
              1,105,510Subcontracting
                  labor
              
              
              2,032,763
              
              
              1,597,279Salaries,
                  bonuses andrelated
                  benefits
              
              
              4,147,135
              
              
              2,642,729Other
              
              
              4,817,703
              
              
              3,509,905$
              12,713,417
              
              $
              10,667,558


11.  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.
      All amounts are in thousands of dollars.







F-31








2006
              
              2005
              
              2004Net
                  sales from unrelatedentities
                  and countryof
                Company's domicile:North
                  America
              
              $
              73,241
              
              $
              69,089
              
              $
              67,177Asia
              
              
              153,037
              
              
              131,104
              
              
              109,011Europe
              
              
              28,655
              
              
              15,723
              
              
              13,834$
              254,933
              
              $
              215,916
              
              $
              190,022Net
                  sales:North
                  America
              
              $
              80,860
              
              $
              80,836
              
              $
              76,979Asia
              
              
              200,773
              
              
              151,992
              
              
              132,224Europe
              
              
              30,105
              
              
              16,967
              
              
              15,194Less
                  intergeographicrevenues
              
              
              (56,805
              )
              
              (33,879
              )
              
              (34,375
              )$
              254,933
              
              $
              215,916
              
              $
              190,022Income
                  from Operations:North
                  America
              
              $
              2,658
              
              $
              4,020
              
              $
              8,475Asia
              
              
              19,622
              
              
              22,391
              
              
              15,805Europe
              
              
              838
              
              
              206
              
              
              631$
              23,118
              
              $
              26,617
              
              $
              24,911Long
                  Lived Assets:North
                  America
              
              $
              18,026
              
              $
              17,419Asia
              
              
              30,050
              
              
              27,944Europe
              
              
              690
              
              
              694$
              48,766
              
              $
              46,057Capital
                  Expenditures:North
                  America
              
              $
              2,823
              
              $
              1,328
              
              $
              736Asia
              
              
              6,783
              
              
              6,322
              
              
              5,557Europe
              
              
              227
              
              
              96
              
              
              286$
              9,833
              
              $
              7,746
              
              $
              6,579Depreciation
                  and Amortizationexpense:North
                  America
              
              $
              2,314
              
              $
              2,526
              
              $
              1,928Asia
              
              
              6,477
              
              
              7,364
              
              
              6,966Europe
              
              
              237
              
              
              214
              
              
              131$
              9,028
              
              $
              10,104
              
              $
              9,025






F-32





Transfers
      between geographic areas include finished products manufactured in foreign
      countries which are then transferred to the United States and Europe for sale;
      finished goods manufactured in the United States which are transferred to Europe
      and Asia for sale; and semi-finished components manufactured in the United
      States which are
      sold
      to Asia for further processing. Income from operations represents gross profit
      less operating expenses.





Identifiable
      assets are those assets of the Company that are identified with the operations
      of each geographic area.





The
      territory of Hong Kong became a Special Administrative Region (“SAR”) of the
      People's Republic of China in the middle of 1997. The territory of Macao became
      a SAR of the People’s Republic of China at the end of 1999. Management cannot
      presently predict what future impact this will have on the Company, if any,
      or
      how the political climate in China will affect the Company's contractual
      arrangements in China. Substantially all of the Company's manufacturing
      operations and approximately 38% of its identifiable assets are located in
      The
      People's Republic of China and its SARs of Hong Kong and Macao. Accordingly,
      events which may result from the expiration of such leases ,
      as well
      as any change in the "Most Favored Nation" status granted to China by the U.S.,
      could have a material adverse effect on the Company.





The
      Company had sales to one customer in excess of ten percent of consolidated
      net
      sales as follows in 2006, 2005 and 2004: The amount and percentages of the
      Company's sales to this customer in each
      year
      was $42,167,000 (16.5%) in 2006, $32,844,000 (15.2%) in 2005 and $22,062,000
      (11.6%) in 2004. Management believes that the loss of such customer could **** have
      a
      material adverse effect on the Company's consolidated results of operations,
      financial position and cash flows.














F-33


12.  RETIREMENT
      FUND AND PROFIT SHARING PLAN





The
      Company maintains a domestic profit sharing plan and a contributory stock
      ownership and savings 401(K) plan, which combines stock ownership and individual
      voluntary savings provisions to provide retirement benefits for plan
      participants. The plan provides for participants to voluntarily contribute
      a
      portion of their compensation, subject to certain legal maximums. The Company
      will match, based on a sliding scale, up to $350 for the first $600 contributed
      by each participant. Matching contributions plus additional discretionary
      contributions are made with Company stock purchased in the open market. The
      expense for the years ended December 31, 2006, 2005 and 2004 amounted to
      approximately $471,000, $437,000 and $404,000, respectively. As of December
      31,
      2006, the plans owned 18,374 and 144,423 shares of Bel Fuse Inc. Class A and
      Class B common stock, respectively.





The
      Company's Far East subsidiaries have a retirement fund covering substantially
      all of their Hong Kong based full-time employees. Eligible employees contribute
      up to 5% of their salary to the fund. In addition, the Company may contribute
      an
      amount up to 7% of eligible salary, as determined by Hong Kong government
      regulations, in cash or Company stock. The expense for the years ended December
      31, 2006, 2005 and 2004 amounted to approximately $408,000, $482,000 and
      $447,000, respectively. As of December 31, 2006, 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 Plan was established by the Company in 2002.
      Employees are selected at the sole discretion of the Board of Directors of
      the
      Company to participate in the Plan. The Plan is unfunded. The Company utilizes
      life insurance to partially cover its obligations under the Plan. The benefits
      available under the Plan vary according to when and how the participant
      terminates employment with the Company. If a participant retires (with the
      prior
      written consent of the Company) on his normal retirement date (65 years old,
      20
      years of service, and 5 years of Plan participation), his normal retirement
      benefit under the Plan would be annual payments equal to 40% of his average
      base
      compensation (calculated using compensation from the highest 5 consecutive
      calendar years of Plan participation), payable in monthly installments for
      the
      remainder of his life. If a participant retires early from the Company (55
      years
      old, 20 years of service, and 5 years of Plan participation), his early
      retirement benefit under the Plan would be an amount (i) calculated as if his
      early retirement date were in fact his normal retirement date, (ii) multiplied
      by a fraction, with the numerator being the actual years of service the
      participant has with the Company and the denominator being the years of service
      the participant would have had if he had retired at age 65, and (iii)
      actuarially reduced to reflect the early retirement date. If a participant
      dies
      prior to receiving 120 monthly payments under the Plan, his beneficiary would
      be
      entitled to continue receiving benefits for the shorter of (i) the time
      necessary to complete 120 monthly payments or (ii) 60 months. If a participant
      dies while employed by the Company, his beneficiary would receive, as a survivor
      benefit, an annual amount equal to (i) 100% of the participant’s annual base
      salary at date of death for one year, and (ii) 50% of the participant’s annual
      base salary at date of death for each of the following 4 years, each payable
      in
      monthly installments. The Plan also provides for disability benefits, and a
      forfeiture of
      benefits if a participant terminates employment for reasons other than those
      contemplated under the Plan. The expense for the years ended December 31, 2006,
      2005 and 2004 amounted to approximately $729,000, $699,000 and $509,000,
      respectively.




F-34


The
      following provides a reconciliation of benefit obligations, the funded status
      of
      the SERP and a summary of significant assumptions:





December
                  31,
              
              2006
              
              2005
              
              2004Change
                  in benefit obligation:Projected
                  benefit obligation at beginning of year
              
              $
              4,476,296
              
              $
              2,890,113
              
              $
              2,637,902Service
                  cost
              
              
              325,415
              
              
              331,942
              
              
              221,981Interest
                  cost
              
              
              242,587
              
              
              211,920
              
              
              145,085Plan
                  amendments
              
              
              -
              
              
              444,684
              
              
              -Benefits
                  paid
              
              
              (131,250
              )
              
              (37,500
              )
              
              -Actuarial
                  (gains) losses
              
              
              (184,762
              )
              
              635,137
              
              
              (114,855
              )Minimum
                  pension obligation andunfunded
                  pension liability
              
              $
              4,728,286
              
              $
              4,476,296
              
              $
              2,890,113Funded
                  status of plan:Under
                  funded status
              
              $
              (4,728,286
              )
              $
              (4,476,296
              )
              $
              (2,890,113
              )Unrecognized
                  net loss
              
              
              -
              
              
              869,673
              
              
              259,218Unrecognized
                  prior service costs
              
              
              -
              
              
              1,811,297
              
              
              1,497,253Accrued
                  pension cost
              
              $
              (4,728,286
              )
              $
              (1,795,326
              )
              $
              (1,133,642
              )Change
                  in plan assets:Fair
                  value of plan assets, beginning of year
              
              $
              -
              
              $
              -
              
              $
              -Company
                  contributions
              
              
              131,250
              
              
              37,500
              
              
              -Benefit
                  paid
              
              
              (131,250
              )
              
              (37,500
              )
              
              -Fair
                  value of plan assets, end of year
              
              $
              -
              
              $
              -
              
              $
              -Balance
                  sheet amounts:Minimum
                  pension obligation andunfunded
                  pension liability
              
              $
              4,728,286
              
              $
              3,450,688
              
              $
              2,261,583Intangible
                  asset
              
              
              -
              
              
              1,655,362
              
              
              1,127,941The
                  components of SERP expense are as follows:December
                  31,
              
              
              2006
              
              
              2005
              
              
              2004Service
                  cost
              
              $
              325,415
              
              $
              331,942
              
              $
              221,981Interest
                  cost
              
              
              242,587
              
              
              211,920
              
              
              145,085Net
                  amortization and deferral
              
              
              161,142
              
              
              155,322
              
              
              142,363Total
                  SERP expense
              
              $
              729,144
              
              $
              699,184
              
              $
              509,429Assumption
                  percentages:Discount
                  rate
              
              
              6.00
              %
              
              5.50
              %
              
              5.50
              %Rate
                  of compensation increase
              
              
              3.00
              %
              
              3.00
              %
              
              3.00
              %




The
      accumulated benefit obligation for the SERP was $3,503,524 and $3,450,688 as
      of
      December 31, 2006 and 2005.




F-35


In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Post
      Retirement Plans”, (“SFAS No. 158”). This statement is effective for fiscal
      years ending after December 15, 2006 and is applicable for the Company’s SERP
      Plan.





The
      amount of net gain and prior service cost on a pretax basis included in Other
      Comprehensive Income is $656,963 and $1,675,749, respectively, which arose
      during the year **** ended
      December 31, 2006 .
      The
      estimated portion of net periodic gain and prior service cost that will be
      recognized as a component of net periodic benefit cost over the next fiscal
      year
      is $12,965 and $133,094, respectively.





The
      Company had no net transition assets or obligations recognized as an adjustment
      to Other Comprehensive Income and does not anticipate any plan assets being
      returned to the Company during 2007, as the plan has no assets.





The
      following balance sheet accounts were incrementally adjusted due to the
      effect of applying SFAS No. 158 at December 31, 2006:





Deferred tax asset - long term
            
            $
            686,000Other Comprehensive Loss - net of income
              tax
              benefit
            
            
            1,646,712Unfunded pension liability - long
              term
            
            
            2,332,712Intangible assets
            
            
            (1,107,000
            )








13.
      STOCK-BASED COMPENSATION





On
      January 1, 2006, the Company adopted SFAS No. 123 (R)
      "Share-Based Payment" requiring the recognition of compensation expense in
      the
      Consolidated Statements of Operations related to the fair value of its employee
      stock-based options and awards. SFAS No. 123 (R)
      revises SFAS No. 123 "Accounting for Stock-Based Compensation" and supercedes
      APB Opinion No. 25 "Accounting for Stock Issued to Employees." SFAS No. 123(R)
      is supplemented by SEC Staff Accounting Bulletin ("SAB") No. 107 "Share-Based
      Payment." SAB No. 107 expresses the SEC staff's views regarding the interaction
      between SFAS No. 123(R) and certain SEC rules and regulations including the
      valuation of stock-based payment arrangements.





The
      Company recognizes the cost of all employee stock options on a straight-line
      attribution basis over their respective vesting periods, net of estimated
      forfeitures. The Company has selected the modified prospective method of
      transition; accordingly, prior periods have not been restated. Prior to adopting
      SFAS No. 123(R), the Company applied APB Opinion No. 25 and
      related interpretations in accounting for its stock-based compensation plans.
      All employee stock options were granted at or above the grant date market price.
      Accordingly, prior to 2006 no compensation cost was recognized for fixed stock
      option grants.


F-36


On
      December 31, 2006, the Company has one stock-based compensation plan, which
      is
      described below. During the year ended December 31, 2006, the adoption of SFAS
      No. 123(R) resulted in incremental stock-based compensation expense of
      approximately $453,433. The incremental stock-based compensation expense caused
      both the basic and diluted earnings per common share to each decrease
      by $.04 and $.04 per share for Class A common stock and $.03 and $.03 per share
      for Class B common stock, respectively, for the year
      ended December 31, 2006. In
      addition, in connection with the adoption of SFAS No. 123 (R),
      net
      cash provided by operating activities decreased and net cash provided by
      financing activities increased during the year ended December 31, 2006 by
      $336,456 related to excess tax benefits from stock-based payment
      arrangements.





The
      aggregate pretax compensation cost recognized in net earnings for stock-based
      compensation (including incentive stock options, restricted stock and dividends
      on restricted stock, as further discussed below) amounted to approximately
      $1,571,000 and $248,000 for the years ended December 31, 2006 and 2005,
      respectively. The Company did not use any cash to settle any equity instruments
      granted under share based arrangements during the years ended December 31,
      2006
      and 2005.





Under
      the
      provisions of SFAS 123(R), the recognition of deferred compensation as a
      separate component of equity representing the amount of unrecognized restricted
      stock expense that is reduced as expense is recognized at the date restricted
      stock is granted, is no longer required. Therefore, at January 1, 2006, the
      amount that had been in "Deferred compensation" in the Consolidated Balance
      Sheet was reversed to zero and is currently included in additional paid-in
      capital.





Stock
      Options





The
      Company has an
      equity
      compensation program (the
      " Program ")
      which
      provides for the granting of "Incentive Stock Options" within
      the meaning of Section 422 of the Internal Revenue Code of 1986, as
      amended ,
      non-qualified stock options and restricted stock awards . The
      Company believes that such awards better align the interest of its employees
      with those of its shareholders. The Plan provides for the issuance of 2,400,000
      common shares. Unless
      otherwise provided at the date of grant or unless subsequently accelerated,
      options granted under the Program  become
      exercisable twenty-five percent (25%)  one
      year
      from the date of grant and twenty-five percent (25%) for each year of the three
      years thereafter. Upon exercise the Company will issue new shares. The exercise
      price of  incentive
      stock options
      granted pursuant to the Plan is not to be less than 100 percent of the fair
      market value of the shares on the date of grant. In general,
      no option will be exercisable after ten years
      from the date granted.





The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted-average
      assumptions used for grants in 2004, which was the last year options were
      granted; dividends yield of 0.9%, expected volatility of 35% for Class B;
      risk-free interest rate of 5% and expected lives of 5 years. Expected
      lives of options previously granted were estimated using the historical exercise
      behavior of employees. Expected volatilities are based on implied volatilities
      from historical volatility of the Company's stock. The Company uses historical
      data to estimate employee forfeitures. The risk free rate is based on the U.S.
      Treasury yield curve in effect at the time of the grant.








F-37


Information
      regarding the Company’s stock
      options for
      2006, 2005, and 2004 is as follows:




2006
              
              2005
              
              2004Weighted-
              
              
              
              Weighted-
              
              
              
              Weighted-Average
              
              
              
              Average
              
              
              
              AverageExercise
              
              
              
              Exercise
              
              
              
              ExerciseShares
              
              Price
              
              Shares
              
              Price
              
              Shares
              
              PriceOptions
                  out-standing,
                  begin-ning
                  of year
              
              
              286,013
              
              $
              24.96
              
              
              495,289
              
              $
              23.17
              
              
              712,600
              
              $
              21.61Options
                  exercised
              
              
              (132,800
              )
              $
              24.00
              
              
              (200,276
              )
              $
              20.50
              
              
              (200,911
              )
              $
              19.37Options
                  granted
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -
              
              
              24,000
              
              $
              37.00Options
                  cancelled
              
              
              (15,400
              )
              $
              27.60
              
              
              (9,000
              )
              $
              27.29
              
              
              (40,400
              )
              $
              22.71Options
                  out-standing,
                  endof
                  year
              
              
              137,813
              
              $
              25.59
              
              
              286,013
              
              $
              24.96
              
              
              495,289
              
              $
              23.17Options
                  pricerange
                  at endof
                  year
              
              $
              18.89
                  to $37.00
              
              
              
              
              $
              18.89
                  to $37.00
              
              
              
              
              $
              17.00
                  to $37.00Options
                  pricerange
                  forexercisedshares
              
              $
              18.89
                  to $29.50
              
              
              
              
              $
              17.00
                  to $29.50
              
              
              
              
              $
              15.38
                  to $29.50Options
                  availablefor
                  grant at endof
                  year
              
              
              811,785
              
              
              
              
              
              810,985
              
              
              
              
              
              954,385Weighted-average
                  fairvalue
                  of optionsgranted
                  duringthe
                  year
              
              $
              -
              
              
              
              
              $
              -
              
              
              
              
              $
              8.66




During
      the years ended December 31, 2006 and 2005 the Company received $3,186,587
      and
      $4,115,508 from the exercise of stock options and realized tax benefits of
      approximately $336,000 and $430,000, respectively. The total intrinsic value
      of
      options exercised during the years ended December 31, 2006, 2005 and 2004 was
      $1,498,043, $2,853,734 and $3,453,948, respectively. Stock compensation expense
      applicable to stock options for the years ended December 31, 2006, 2005 and
      2004
      was approximately $453,433, $-0- and $-0-, respectively. The aggregated
      intrinsic value of options outstanding as of December 31, 2006 was
      $1,269,158.














F-38


The
      following table summarizes information about fixed-price stock options
      outstanding at December 31, 2006:





Weighted-Number
                  Out-
              
              Average
              
              Weighted-
              
              Number
              
              Weighted-Range
                  of
              
              standing
                  at
              
              Remaining
              
              Average
              
              Exercisable
                  at
              
              AverageExercise
              
              December
                  31,
              
              Contractual
              
              Exercise
              
              December
                  31,
              
              ExercisePrices
              
              2006
              
              Life
              
              Price
              
              2006
              
              Price$29.50
              
              
              61,813
              
              
              3
                  years
              
              $
              29.50
              
              
              16,813
              
              $
              29.50$19.52
                  - $22.25
              
              
              5,000
              
              
              1
                  year
              
              $
              21.70
              
              
              5,000
              
              $
              21.70$18.89
              
              
              57,000
              
              
              1
                  year
              
              $
              18.89
              
              
              18,000
              
              $
              18.89$37.00
              
              
              14,000
              
              
              3
                  years
              
              $
              37.00
              
              
              7,000
              
              $
              37.00137,813
              
              
              2.5
                  years
              
              $
              25.59
              
              
              46,813
              
              $
              25.21

















A
      summary
      of the status of the Company’s non-vested options as of December 31, 2006 and
      2005 and changes during the year ended December 31, 2006 is presented
      below:





Weighted-AverageGrant-DateNonvested
                  options
              
              Options
              
              Fair
                  ValueNonvested
                  at December 31, 2005
              
              
              177,500
              
              $
              24.28Granted
              
              
              -
              
              
              -Vested
              
              
              (71,100
              )
              
              21.52Forfeited
              
              
              (15,400
              )
              
              27.60Nonvested
                  at December 31, 2006
              
              
              91,000
              
              $
              25.78





At
      December 31, 2006 there was $51,950 of total unrecognized cost related to
      nonvested stock-based compensation arrangements under the  Program .
      The
      cost is expected to be recognized over a weighted average period of 1.6 years.
      The fair value of the 71,100 vested shares is $1,487,000 for the year ended
      December 31, 2006. The aggregate intrinsic value of options vested during 2006
      was $944,208. Currently, the Company believes that substantially all options
      will vest.





























F-39








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 2005 and 2006, the Company issued 152,400 and 21,600 class B
      common shares, respectively, under a restricted stock plan to various officers
      and employees. The shares vest 25% after two years of employment with an
      additional 25% vesting in each of years three through five. This resulted in
      pre-tax compensation expense of $1,117,268 and $248,131 ($804,826 and $179,295,
      after tax benefit) for the years ended December 31, 2006 and 2005, respectively.
      The balance of $4,444,114 of deferred stock-based compensation is included
      within paid-in-capital on the Company’s consolidated balance sheet.





A
      summary
      of the activity under the Restricted Stock Awards Plan as of December 31, 2006
      is presented below:





WeightedWeighted
              
              AverageAverage
              
              Remaining
              
              AggregateRestricted
                  Stock
              
              
              
              Award
              
              Contractual
              
              IntrinsicAwards
              
              Shares
              
              Price
              
              Term
              
              ValueOutstanding
                  at January 1, 2006
              
              
              152,400
              
              $
              35.64Granted
              
              
              -
              
              
              -Awarded
              
              
              21,600
              
              
              30.67Forfeited
              
              
              (7,000
              )
              
              36.09Outstanding
                  at December 31, 2006
              
              
              167,000
              
              
              34.93
              
              
              3.85
              
              $
              -Vestedat
                  December 31, 2006
              
              
              -
              
              
              
              
              
              -
              
              $
              -


As
      of
      December 31, 2006, there was $4.4 million of total pre-tax unrecognized
      compensation cost 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 4.5 years.





The
      Company's policy is to issue new shares to satisfy Restricted Stock Awards
      and  stock
      option exercises.





Currently
      the Company believes that substantially all restricted stock awards will
      vest.
















F-40





14.
      COMMON STOCK





During
      2000, the Board of Directors of the Company authorized the repurchase of up
      to
      ten percent (10%) of the Company’s outstanding common shares from time to time
      in market or privately negotiated transactions. As of December 31, 2006, the
      Company had purchased and retired 23,600 Class B common shares at a cost of
      approximately $808,000 which reduced the number of Class B common shares
      outstanding. No shares were repurchased during the years ended December 31,
      2006
      or 2005.





There
      are
      no contractual restrictions on the Company's ability to pay dividends provided
      the Company continues to comply with the financial tests in its credit
      agreement. On February 1, 2006, May 1, 2006, August 1, 2006 and November 1,
      2006
      the Company paid a $0.05 per share dividend to all shareholders of record of
      Class B Common Stock in the total amount of $443,589, $443,320, $447,410 and $457,945 ,
      respectively. On February 1, 2006, May 1, 2006, August 1, 2006 and November
      1,
      2006 the Company paid a $0.04 per share dividend to all shareholders of record
      of Class A Common Stock in the total amount of $107,735, $107,735, $107,735
      and
      $107,735, respectively. On February 2, 2005, May 2, 2005, August 1, 2005, and
      November 1, 2005 the Company paid a $0.05 per share dividend to all shareholders
      of record of Class B Common Stock in the total amount of $433,450, $437,175,
      $439,450, and $442,356, respectively. On February 2, 2005, May 2, 2005, August
      1, 2005 and November 1, 2005 the Company paid a $0.04 per share dividend to
      all
      shareholders of record of Class A Common Stock in the total amount of $107,735,
      $107,735, $107,735 and $107,735, respectively.





15.  COMMITMENTS
      AND CONTINGENCIES





Leases





The
      Company leases various facilities. Some of these leases require the Company
      to
      pay certain executory costs (such as insurance and maintenance).





Future
      minimum lease payments for operating leases are approximately as
      follows:





Years
                EndingDecember
                31,2007
              
              $
              1,659,0002008
              
              
              1,099,0002009
              
              
              833,0002010
              
              
              572,0002011
              
              
              572,000$
              4,735,000




Rental
      expense was approximately $1,733,000, $1,624,000 and $1,433,000 for the years
      ended December 31, 2006, 2005, and 2004, respectively.








F-41





Legal
      Proceedings





The
      Company and two of its officers are defendants in a wrongful termination lawsuit
      brought in the District Court of Frankfurt am Main, Germany by a former employee
      at a foreign subsidiary of the Company. The Company believes it has adequately
      accrued sufficient amounts for this liability in accordance with the terms
      of
      the ex-employee's employment agreement.





The
      Company is a plaintiff in a lawsuit captioned Bel Fuse Inc., a New Jersey
      corporation, and Bel Power, Inc., a Massachusetts corporation, v. Andrew
      Ferencz, Gregory Zovonar, Bernhard Schroter, EE2GO, Inc., a Massachusetts
      corporation, Howard E. Kaepplein and William Ng, brought in the Superior Court
      of the Commonwealth of Massachusetts. The Company was granted injunctive relief
      and is seeking damages against the former stockholders of Galaxy Power, Inc.,
      key employees of Galaxy and a corporation formed by some or all of the
      individual defendants. The Company has alleged that the defendants violated
      their written non-competition, non-disclosure and non-solicitation agreements,
      diverted business and usurped substantial business opportunities with key
      customers, misappropriated confidential information and trade secrets, and
      harmed the Company’s business.





In
      a
      related matter, the Company is a defendant in a lawsuit captioned Robert
      Chimielnski, P.C. on behalf of the stockholder representatives and the former
      stockholders of Galaxy Power, Inc. v. Bel Fuse Inc. et al. brought in the
      Superior Court of the Commonwealth of Massachusetts. This complaint for damages
      and injunctive relief is based on an alleged breach of contract and other
      allegedly illegal acts in a corporate context arising out of the defendants'
      objection to the release of nearly $2.0 million held in escrow under the terms
      of the stock purchase agreement between Galaxy and the Company. The Company
      believes it has adequate defenses regarding this lawsuit and accordingly has
      not
      accrued any liability in connection with such lawsuit.





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








F-42


The
      Company cannot predict the outcome of these matters or the impact on the
      Company's consolidated financial condition or results of
      operations.





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





16.  ACCUMULATED
      OTHER COMPREHENSIVE INCOME (LOSS)





The
      components of accumulated other comprehensive income (loss) as of December
      31,
      2006 and 2005 are summarized below:





2006
              
              2005Foreign
                  currency translationadjustment
              
              $
              1,140,884
              
              $
              753,062Unrealized
                  holding gain (loss)on
                  available-for-sale securitiesunder
                  SFAS No. 115, net oftaxes
                  of $(802,797) and $2,244,207as
                  of December 31, 2006 and 2005
              
              
              (1,309,827
              )
              
              3,509,805Unfunded
                  SERP liability uponadoption
                  of SFAS No. 158, netof
                  taxes of $(686,000) as ofDecember
                  31, 2006
              
              
              (1,646,712
              )
              
              -Accumulated
                  other comprehensiveincome
                  (loss)
              
              $
              (1,815,655
              )
              $
              4,262,867








F-43





**CONDENSED
                  SELECTED QUARTERLY FINANCIAL DATA****(Unaudited)**
  Total
                  YearQuarter
                  Ended
              
              EndedMarch
                  31,
              
              June
                  30,
              
              September
                  30,
              
              December
                  31,
              
              December
                  31,2006
              
              2006
              
              2006
              
              2006
              
              2006Net
                  sales
              
              $
              54,626,248
              
              $
              66,474,098
              
              $
              73,259,757
              
              $
              60,572,883
              
              $
              254,932,986Gross
                  profit
              
              
              14,639,359
              
              
              16,212,423
              
              
              17,449,799
              
              
              13,646,401
              
              
              61,947,982Net
                  earnings
              
              
              3,997,299
              
              
              8,763,456
              
              
              7,745,485
              
              
              4,697,113
              
              
              25,203,353Earningsper
                  Class A
                  common share-
                  basic
                  (2)
              
              $
              0.32
              
              $
              0.71
              
              $
              0.62
              
              $
              0.38
              
              $
              2.03Earningsper
                  Class A
                  common sharediluted
                  (2)
              
              $
              0.32
              
              $
              0.71
              
              $
              0.62
              
              $
              0.38
              
              $
              2.03Earningsper
                  Class B
                  common share-
                  basic
                  (2)
              
              $
              0.35
              
              $
              0.75
              
              $
              0.66
              
              $
              0.40
              
              $
              2.16Earningsper
                  Class B
                  common sharediluted
                  (2)
              
              $
              0.34
              
              $
              0.75
              
              $
              0.66
              
              $
              0.40
              
              $
              2.15As
                  previously
                  reported (2)Earnings
                  per
                  share - basic
              
              $
              0.34
              
              $
              0.74
              
              $
              0.65
              
              
              N/A
              
              
              N/AEarnings
                  per
                  share - diluted
              
              $
              0.34
              
              $
              0.74
              
              $
              0.65
              
              
              N/A
              
              
              N/A
  Total
                  YearQuarter
                    Ended
              
              
              EndedMarch
                      31,
              
              
              June
                  30,
              
              
              September
                  30,
              
              
              December
                  31,
              
              
              December
                  31,2005
              
              
              2005
              
              
              2005
              
              
              2005
              
              
              2005Net
                  sales
              
              $
              45,438,285
              
              $
              57,545,421
              
              $
              56,247,745
              
              $
              56,684,305
              
              $
              215,915,756Gross
                  profit
              
              
              12,749,474
              
              
              16,853,324
              
              
              15,827,945
              
              
              14,338,289
              
              
              59,769,032Net
                  earnings
              
              
              4,313,365
              
              
              6,668,675
              
              
              5,986,397
              
              
              3,264,840
              
              
              20,233,277Earningsper
                  Class A
                  common share-
                  basic
                  (2)
              
              $
              0.36
              
              $
              0.55
              
              $
              0.50
              
              $
              0.26
              
              $
              1.67Earningsper
                  Class A
                  common sharediluted
                  (2)
              
              $
              0.36
              
              $
              0.55
              
              $
              0.50
              
              $
              0.26
              
              $
              1.67Earningsper
                  Class B
                  common share-
                  basic
                  (2)
              
              $
              0.39
              
              $
              0.59
              
              $
              0.53
              
              $
              0.28
              
              $
              1.79Earningsper
                  Class B
                  common sharediluted
                  (2)
              
              $
              0.38
              
              $
              0.59
              
              $
              0.52
              
              $
              0.28
              
              $
              1.77As
                  previously
                  reported (2)Earnings
                  per
                  share - basic
              
              $
              0.38
              
              $
              0.58
              
              $
              0.52
              
              $
              0.28
              
              $
              1.76Earnings
                  per
                  share - diluted
              
              $
              0.38
              
              $
              0.58
              
              $
              0.52
              
              $
              0.28
              
              $
              1.75


(1)
      Quarterly amounts of earnings per share may not agree to the total for the
      year
      due to rounding.


(2)
      Previously reported earnings per share have been restated to present earnings
      per share using the two-class method. See Note 1 of Notes to Consolidated
      Financial Statements for further discussion.


F-44


BEL
                  FUSE INC. AND SUBSIDIARIESSCHEDULE
                  II - VALUATION AND QUALIFYING
                  ACCOUNTS
  Column
                  A
              
              Column
                  B
              
              Column
                  C
              
              Column
                  D
              
              
              
              Column
                  E
              
              Column
                  FCharged
              
              AdditionsBalance
                  at
              
              to
                  profit
              
              Charged
              
              
              
              
              
              Balancebeginning
              
              and
                  loss
              
              to
                  other
              
              
              
              Deductions
              
              at
                  closeDescription
              
              of
                  period
              
              or
                  income
              
              accounts
              
              
              
              (describe)(a)
              
              of
                  periodYear
                  ended
                  December 31, 2006Allowance
                  for
                  doubtfulaccounts
              
              $
              1,107,000
              
              $
              707,000
              
              $
              109,000
              
              (a
              )
              $
              836,000
              
              $
              1,087,000Allowance
                  for
                  excess andobsolete
                  inventory
              
              $
              5,017,000
              
              $
              1,470,000
              
              $
              (6,000
              )
              
              
              $
              1,418,000
              
              $
              5,063,000Year
                  ended
                  December 31, 2005Allowance
                  for
                  doubtfulaccounts
              
              $
              1,610,000
              
              $
              275,000
              
              $
              25,000
              
              (a
              )
              $
              803,000
              
              $
              1,107,000Allowance
                  for
                  excess andobsolete
                  inventory
              
              $
              5,471,000
              
              $
              867,000
              
              $
              475,000
              
              
              
              $
              1,796,000
              
              $
              5,017,000Year
                  ended
                  December 31, 2004Allowance
                  for
                  doubtfulaccounts
              
              $
              1,976,000
              
              $
              233,000
              
              $
              65,000
              
              (a
              )
              $
              664,000
              
              $
              1,610,000Allowance
                  for
                  excess andobsolete
                  inventory
              
              $
              5,679,000
              
              $
              1,250,000
              
              $
              43,000
              
              
              
              $
              1,501,000
              
              $
              5,471,000
  (a)
                  Write
                  offs.











S-1


Item
      9.
      Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosures.





Not
      applicable





Item
      9A  Controls
      and Procedures





Evaluation
      of Disclosure Controls and Procedures





During
      the fourth quarter of 2006, the Company’s management, including the principal
      executive officer and principal financial officer, evaluated the Company’s
      disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
      under the Securities Exchange Act of 1934) related to the recording, processing,
      summarization, and reporting of information in the Company’s periodic reports
      that the Company files with the SEC. These disclosure controls and procedures
      have been designed to ensure that material information relating to the Company,
      including its subsidiaries, is made known to the Company’s management, including
      these officers, by other of the Company’s employees, and that this information
      is recorded, processed, summarized, evaluated, and reported, as applicable,
      within the time periods specified in the SEC’s rules and forms. The Company’s
      controls and procedures can only provide reasonable, not absolute, assurance
      that the above objectives have been met. Notwithstanding these limitations,
      the
      Company believes that its disclosure controls and procedures are designed to
      provide reasonable assurances of achieving their objectives.






Based
      on
      their evaluation as of December 31, 2006, the Company’s principal executive
      officer and principal financial officer have concluded that the Company’s
      disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
      under the Securities Exchange Act of 1934) are effective to ensure that the
      information required to be disclosed by the Company in the reports that the
      Company files or submits under the Securities Exchange Act of 1934 is recorded,
      processed, summarized and reported within the time periods specified in SEC
      rules and forms.





















47







Management’s
      Report on Internal Control Over Financial Reporting






The
      Company’s management is responsible for establishing and maintaining adequate
      internal control over financial reporting, as such term is defined in Exchange
      Act Rules 13a-15(f). Under the supervision and with the participation of the
      Company’s management, including the Company’s principal executive officer and
      principal financial officer, the Company conducted an evaluation of the
      effectiveness of the Company’s internal control over financial reporting based
      on the framework in *Internal
      Control - Integrated Framework* issued
      by the Committee of Sponsoring Organizations of the Treadway Commission. Based
      on the Company’s evaluation under the framework in *Internal
      Control* - *Integrated
      Framework* ,
      the
      Company’s management concluded that the Company’s internal control over
      financial reporting was effective as of December 31, 2006.






Our
      management’s assessment of the effectiveness of our internal control over
      financial reporting as of December 31, 2006 has been audited by Deloitte &
Touche LLP, an independent registered public accounting firm, as stated in
      their
      report which is included herein.






























48







Changes
      in Internal Controls Over Financial Reporting




There
      have been no changes in the Company’s internal control over financial reporting
      that occurred during the last fiscal quarter to which this Annual Report on
      Form
      10-K relates that have materially affected, or are reasonably likely to
      materially affect, the Company’s internal control over financial
      reporting.





Item
      9b. Other
      Information





Not
      applicable.








Item
      10. Directors , Executive Officers and
      Corporate Governance





The
      Registrant incorporates by reference herein information to be set forth in
      its
      definitive proxy statement for its 2007 annual meeting of shareholders that
      is
      responsive to the information required with respect to this item.





The
      registrant has adopted a code of ethics for its directors, executive officers
      and all other senior financial personnel. The Registrant will make copies of
      its
      code of ethics available to investors upon request. Any such request should
      be
      sent by mail to Bel Fuse Inc., 206 Van Vorst Street, Jersey City, NJ 07302
      Attn:
      Colin Dunn or should be made by telephone by calling Colin Dunn at 201-432-0463.





Item
      11. Executive
      Compensation





The
      Registrant incorporates by reference herein information to be set forth in
      its
      definitive proxy statement for its 2007 annual meeting of shareholders that
      is
      responsive to the information required with respect to this Item.





Item
      12. Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters





The
      Registrant incorporates by reference herein information to be set forth in
      its
      definitive proxy statement for its 2007 annual meeting of shareholders that
      is
      responsive to the information required with respect to this Item.





Item
      13. Certain
      Relationships and Related Transactions ,
      and
      Director Independence





The
      Registrant incorporates by reference herein information to be set forth in
      its
      definitive proxy statement for its 2007 annual meeting of shareholders that
      is
      responsive to the information required with respect to this Item.





Item
      14. Principal
      Accountant Fees and Services





The
      Registrant incorporates by reference herein information to be set forth in
      its
      definitive proxy statement for its 2007 annual meeting of shareholders that
      is
      responsive to the information required with respect to this Item.





49





PART
      IV





Item
      15.  Exhibits,
      Financial Statement Schedules





Page(a)
              
              Financial
                  Statements1.
              Financial
                  statements filed as a part of thisAnnual
                  Report on Form 10-K:Report
                  of Independent RegisteredPublic
                  Accounting Firm
              
              F-1Consolidated
                  Balance Sheets as of December 31,2006
                  and 2005
              
              F-2
                  - F-3Consolidated
                  Statements of Operations for Eachof
                  the Three Years in the Period EndedDecember
                  31, 2006
              
              F-4Consolidated
                  Statements of Stockholders' Equityfor
                  Each of the Three Years in the PeriodEnded
                    December 31, 2006
              
              F-5
                  - F-6Consolidated
                  Statements of Cash Flows for Eachof
                  the Three Years in the Period EndedDecember
                    31, 2006
              
              F-7
                  - F-9Notes
                    to Consolidated Financial Statements
              
              F-
                  10 - F-43Selected
                  Quarterly Financial Data - Years EndedDecember
                  31, 2006 and 2005 (Unaudited)
              
              F-442.
              Financial
                  statement schedules filed as part ofthis
                  report:Schedule
                  II: Valuation and Qualifying Accounts
              
              S-1All
                  other schedules are omitted because they areinapplicable,
                  not required or the information isincluded
                  in the consolidated financial statements or notesthereto.






50







(c)   Exhibits





3.1
            Certificate
                of Incorporation, as amended, is incorporated by reference to Exhibit
                3.1
                of the Company’s Annual Report on Form 10-K for the year ended December
                31, 1999.





3.2
            By-laws,
                as amended, are incorporated by reference to Exhibit 4.2 of the Company's
                Registration Statement on Form S-2 (Registration No. 33-16703) filed
                with
                the Securities and Exchange Commission on August 25,
                1987.





10.1
            Agency
                agreement dated October 1, 1988 between Bel Fuse Ltd. and Rush Profit
                Ltd.
                Incorporated by reference to Exhibit 10.1 of the Company's annual
                report
                on Form 10-K for the year ended December 31,
                1994.





10.2
            Contract
                dated March 16, 1990 between Accessorios Electronicos (Bel Fuse Macau
                Ltd.) and the Government of Macao. Incorporated by reference to Exhibit
                10.2 of the Company's annual report on Form 10-K for the year ended
                December 31, 1994.





10.3
            Loan
                agreement dated February 14, 1990 between Bel Fuse, Ltd. (as lender)
                and
                Luen Fat Lee Electronic Factory (as borrower). Incorporated by reference
                to Exhibit 10.3 of the Company's Annual Report on Form 10-K for the
                year
                ended December 31, 1995.





10.4
            2002
                Equity Compensation Program.
                Incorporated by reference tothe
                Registrant’s proxy statement for its 2002 annual meeting of
                shareholders.





10.5
            Amended
                and Restated Credit and Guarantee Agreement, dated as of March 21,
                2003,
                by and among Bel Fuse Inc., as Borrower, the Subsidiary Guarantors
                party
                thereto and The Bank of New York, as Lender. Incorporated by reference
                to
                Exhibit 10.7 of the Company’s Form 10-K for the year ended December 31,
                2002.




10.6  Amendment
      No. 1 dated as of July 26, 2005, to the Registrant's Amended and Restated Credit
      and Guarantee Agreement dated as of March 21, 2003. Incorporated by Reference
      to
      Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 1,
      2005.







51


Item
      15.  Exhibits,
      Financial Statement Schedules and Reports on


Form
      8-K (continued)





Exhibit
      No.:





10.7
            Agreement
                and Plan of Merger dated as of March 4, 2005 by and among Bel Fuse,
                Inc.,
                Bel Westboro, Inc. and Galaxy Power, Inc. Incorporated by reference
                to
                exhibit 2.1 of the Company's Form 8-K dated March 7,
                2005.





10.8
            Contract
                for Purchase and Sale of Real Estate dated July 15, 2004 between
                Bel Fuse
                Inc. and Fields Development Group Co .Incorporated by reference to
                Exhibit
                10.9 of the Company’s Form 10-K for the year ended December 31,
                2004.





11.1
            A
                statement regarding the computation of earnings per share is omitted
                because such computation can be clearly determined from the material
                contained in this Annual Report on Form
                10-K.





22.1
            Subsidiaries
                of the Registrant.





23.1
            Consent
                of Independent Registered Public Accounting
                Firm.





24.1  Power
      of
      attorney (included on the signature page)





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





31.2
            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.































52





SIGNATURES





Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, this report has been signed below by the following persons on behalf
      of
      the registrant and in the capacities and on the dates indicated.




BEL
              FUSE
              INC.Date: March
              16, 2007
            By:
            /s/ Daniel
              BernsteinDaniel Bernstein, President, Chief
                Executive
              Officer and
                Director




KNOW
      ALL
      MEN BY THESE PRESENTS, that each person whose signature appears below
      constitutes and appoints Daniel Bernstein and Colin Dunn as his/her
      attorney-in-fact and agent, with full power of substitution and resubstitution,
      for him/her and in his/her name, place, and stead, in any and all capacities,
      to
      sign and file any and all amendments to this Annual Report on Form 10-K, with
      all exhibits thereto and hereto, and other documents with the Securities and
      Exchange Commission, granting unto said attorney-in-fact and agent, and each
      of
      them, full power and authority to do and perform each and every act and thing
      requisite or necessary to be done in and about the premises, as fully to all
      intents and purposes as he/she might or could do in person, hereby ratifying
      and
      confirming all that said attorneys-in-fact and agents, or any of them, or their
      or his substitutes, may lawfully do or cause to be done by virtue
      hereof.





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.







Signature
              
              Title
              
              Date/S/
                  Daniel Bernstein
              
              President,
                  Chief
              
              March
                  16, 2007Daniel
                  Bernstein
              
              Executive
                  Officer and Director/s/
                  Howard Bernstein
              
              Director
              
              March
                  16, 2007Howard
                  B. Bernstein/s/
                  Robert H. Simandl
              
              Director
              
              March
                  16, 2007Robert
                  H. Simandl/s/
                  Peter Gilbert
              
              Director
              
              March
                  16, 2007Peter
                  Gilbert/s/
                  John Tweedy
              
              Director
              
              March
                  16, 2007John
                  Tweedy/s/
                  John Johnson
              
              Director
              
              March
                  16, 2007John
                  Johnson/s/
                  Avi Eden
              
              Director
              
              March
                  16, 2007Avi
                  Eden/s/
                  Colin Dunn
              
              Vice-PresidentColin
                  Dunn
              
              Finance
                  and Secretary
              
              March
                  16, 2007





53