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[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Fiscal Year Ended December 31, 2010
or
[    ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ___________ to ____________

NEW JERSEY		22-1463699
(State of  incorporation)		(I.R.S. Employer Identification No.)

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.	Yes [   ]	No [X]
Indicate by checkmark if the registrant is not required to file reports to Section 13 or 15(d) of the Act.	Yes [   ]	No [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	Yes [X]	No [   ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Requirement not applicable to registrant prior to June 30, 2011	Yes [   ]	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.	[   ]

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

Large accelerated filer  [    ]	Accelerated filer [X]	Non-accelerated filer [    ] (Do not check if a smaller reporting company)	Smaller reporting company [    ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).				Yes [   ]	No [X]

Title of Each Class		Number of Shares of Common Stock Outstanding as of March 1, 2011
Class A Common Stock		2,174,912
Class B Common Stock		9,527,343

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BEL FUSE INC.
INDEX
			Page
Forward Looking Information			1
Part I
	Item 1.	Business	1
	Item 1A.	Risk Factors	6
	Item 1B.	Unresolved Staff Comments	10
	Item 2.	Properties	11
	Item 3.	Legal Proceedings	12
	Item 4.	Reserved	12
Part II
	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
		Purchases of Equity Securities	13
	Item 6.	Selected Financial Data	14
	Item 7.	Management's Discussion and Analysis of Financial Condition and Results
		of Operations	16
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	29
	Item 8.	Financial Statements and Supplementary Data*	29
	Item 9.	Changes in and Disagreements with Accountants on Accounting and
		Financial Disclosure	31
	Item 9A.	Controls and Procedures	31
	Item 9B.	Other Information	31
Part III
	Item 10.	Directors, Executive Officers and Corporate Governance	32
	Item 11.	Executive Compensation	32
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related
		Stockholder Matters	32
	Item 13.	Certain Relationships and Related Transactions, and Director Independence	32
	Item 14.	Principal Accountant Fees and Services	32
Part IV
	Item 15.	Exhibits, Financial Statement Schedule	33
Signatures			35
* Page F-1 follows page 30

 

The Company has set forth below a description of its product groups as of December 31, 2010.

·	MagJack® integrated connector modules

·	Diplexer and triplexer filters

·	Power transformers

·	Discrete components

·	Power conversion modules

·	Integrated modules

·	Miniature fuses

·	Surface mount PTC devices and fuses

·	Radial PTC devices and micro fuses

 

·	I/O Interconnect – Circular Connectors, Micro D Connectors

·	Compression Board to Board, Device to Board Interconnect

·	High speed cables

·	Enclosures

·	Custom cable assemblies

 

 

 

 

Product Group		Function	Applications
Magnetics
	MagJack® Integrated Connectors	Condition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission and provide RJ45 and USB connectivity.	Network switches, routers, hubs, and PCs used in 10/100/1000 Gigabit Ethernet, Power over Ethernet (PoE), PoE Plus, home networking, and cable modem applications.
	Diplexer and Triplexer Filters	Condition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission with maximum throughput.	Home networking, set top box, and cable modem applications including high bandwidth video transmission and triple play applications.
	Power Transformers	Safety isolation and distribution.	Power supplies, alarm, fire detection, and security systems, HVAC, lighting and medical equipment. Class 2, three phase, chassis mount, and PC mount designs available.
	Discrete Components	Condition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission.	Network switches, routers, hubs, and PCs used in 10/100/1000 Gigabit Ethernet and Power over Ethernet (PoE).

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 Modules	Condition, filter, and isolate the electronic signal to ensure accurate data/voice/video transmission within a highly integrated, reduced footprint.	Broadband, home networking, set top boxes, HDTV, and telecom equipment supporting ISDN, T1/E1 and DSL technologies. Also integrated in smart meters and appliances in support of developing Smart Grid technology.
Circuit Protection
	Miniature Fuses	Protects devices by preventing current in an electrical circuit from exceeding acceptable levels.	Power supplies, electronic ballasts, and consumer electronics.
	Surface mount PTC devices and fuses	Protects devices by preventing current in an electrical circuit from exceeding acceptable levels. PTC devices can be reset to resume functionality.	Cell phone chargers, consumer electronics, power supplies, and set top boxes.
	Radial PTC devices and micro fuses	Protects devices by preventing current in an electrical circuit from exceeding acceptable levels. PTC devices can be reset to resume functionality.	Cell phones, mobile computers, IC and battery protection, power supplies, and telecom line cards.

Product Group		Function	Applications
Interconnect
	Passive Jacks	RJ45 and RJ11 connectivity for data/voice/video transmission.	Network routers, hubs, switches, and patch panels deployed in Category 5e, 6, 6a, and 7a cable systems.
	Plugs	RJ45 and RJ11 connectivity for data/voice/video transmission.	Network routers, hubs, switches, and patch panels deployed in Category 5e, 6, 6a, and 7a cable systems.
	Cable Assemblies	RJ45 and RJ11 connectivity for data/voice/video transmission.	Structured Category 5e, 6, 6a, and 7a cable systems (premise wiring).
	Compression Interface	CIN::APSE , iQ and AMC Connectors	High density parallel interfacing.  Supporting Board-to-Board, Device-to-Board and Flex-To-Board applications – in ATE and high speed computer applications
	High Speed Cables	QSFP, QSFP+ , CX4 and 12X	High speed data rate transfers – supported by industry standards like Infiniband – targeting networking applications
	Connectors	Omega series, circular connectors, Dura-Con MIL-DTL-83513, Barrier Blocks, Harness Connectors	MIL/Aero applications, Specifically FQIS – Fuel quantity indicator system applications. Highest reliability interconnect applications
	Enclosures and Harnesses	ModICE™ and SHS Headers/Connectors	Engine control units, transportation applications

 

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 estimated value of the backlog of orders as of February 28, 2011 was approximately $100.4 million as compared with a backlog of $125.6 million as of February 28, 2010.  Management expects that all of the Company's backlog as of February 28, 2011 will be shipped by December 31, 2011. 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.  Due to these factors, 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."

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 when sales prices decline.

 

In the PRC, the availability of labor is cyclical and is significantly affected by the migration of workers in relation to the annual Lunar New Year holiday as well as economic conditions in the PRC.  In addition, we have little visibility into the ordering habits of our customers and can be subjected to large and unpredictable variations in demand for our products.  Accordingly, we must continually recruit and train new workers to replace those lost to attrition each year and to address peaks in demand that may occur from time to time.  These recruiting and training efforts and related inefficiencies, and overtime required in order to meet demand can add volatility to the costs incurred by the Company for labor in the PRC.

During the year ended December 31, 2010, we had two customers with sales in excess of 10% of our consolidated revenue. One such customer represented 13.6% of our revenue and the other represented 11.1% of our revenue. We believe that the loss of either of these customers would have a material adverse effect on the Company’s results of operations, financial position and cash flows.  We have experienced significant concentrations in prior years. See Note 11 of the notes to the Company’s consolidated financial statements.

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 and all factory workers in the PRC are represented by government-sponsored unions.  In addition, in connection with the Cinch acquisition we acquired manufacturing facilities located in the United Kingdom and Mexico whose factory workers are represented by labor unions.

Greenhouse gas (“GHG”) emissions have increasingly become the subject of substantial international, national, regional, state and local attention.  GHG emission regulations have been promulgated in certain of the jurisdictions in which we operate, and additional GHG requirements are in various stages of development.  Such measures could require us to modify existing or obtain new permits, implement additional pollution control technology, curtail operations or increase our operating costs.  Any additional regulation of GHG emissions, including a cap-and-trade system, technology mandate, emissions tax, reporting requirement or other program, could adversely affect our business.

Our results of operations may be adversely impacted by difficulties in obtaining raw materials, supplies, power, labor, 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 of 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.

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.

·	announcements of technological or competitive developments;

·	general market or economic conditions;

·	acquisitions or strategic alliances by us or our competitors;

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

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

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.

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.   In connection with a patent infringement lawsuit discussed in Item 3. Legal Proceedings, the Company incurred an expense of $8.1 million related to the SynQor lawsuit settlement in December 2010.  In addition,  the Company paid a lump sum licensing fee of $2.1 million during 2009 in exchange for a licensing agreement covering past and future sales of the Company’s MagJack® integrated connector modules (ICMs).

The Company's certificate of incorporation provides that if a shareholder, other than shareholders subject to specific exceptions, acquires (after the date of the Company’s 1998 recapitalization) 10% or more of the outstanding Class A common stock and does not own an equal or greater percentage of all then outstanding shares of both Class A and Class B common stock (all of which common stock must have been acquired after the date of the 1998 recapitalization), such shareholder must, within 90 days of the trigger date, purchase Class B common shares, in an amount and at a price determined in accordance with a formula described in the Company's certificate of incorporation, or forfeit its right to vote its Class A common shares. As of February 28, 2011, to the Company’s knowledge, there were two shareholders of the Company's common stock with ownership in excess of 10% of Class A outstanding shares with no ownership of the Company's Class B common stock and with no basis for exception from the operation of the above-mentioned provisions. In order to vote their respective shares at Bel's next shareholders' meeting, these shareholders must either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until their Class A holdings are under 10%. As of February 28, 2011, to the Company's knowledge, these shareholders owned 28.5% and 15.9%, respectively, of the Company's Class A common stock and had not taken steps to either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until their Class A holdings fall below 10%.  Unless and until this situation is satisfied in a manner permitted by the Company’s Restated Certificate of Incorporation, the subject shareholders will not be permitted to vote their shares of Common Stock.

The Company is headquartered in Jersey City, New Jersey, where it currently owns 19,000 square feet of office and warehouse space. In addition to its facilities in Jersey City, New Jersey, the Company leases 112,000 square feet in 13 facilities and owns properties of 45,000 square feet which are used primarily for management, financial accounting, engineering, sales and administrative support.  The Company also operated 12 manufacturing facilities in 6 countries as of December 31, 2010.  Approximately 36% of the 1.3 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.

Location		Approximate Square Feet		Owned/ Leased		Percentage Used for Manufacturing
Zhongshan, People's Republic of China		385,000		Leased		68%
Zhongshan, People's Republic of China		118,000		Owned		100%
Zhongshan, People's Republic of China		78,000		Owned		100%
Pingguo, People's Republic of China		136,000		Leased		75%
Louny, Czech Republic		11,000		Owned		75%
Dominican Republic		41,000		Leased		85%
Cananea, Mexico		39,000		Leased		60%
Reynosa, Mexico		77,000		Leased		56%
Worksop, England (a)		52,000		Leased		28%
Inwood, New York		39,000		Owned		40%
Glen Rock, Pennsylvania		74,000		Owned		60%
Vinita, Oklahoma		87,000		Owned		53%
		1,137,000
(a) Approximately 58% of the Worksop facility is designated for manufacturing use, but 30% is currently idle

The Company is a defendant in a lawsuit captioned SynQor, Inc. v. Artesyn Technologies, Inc., et al. brought in the United States District Court, Eastern District of Texas in November 2007.  The plaintiff alleged that eleven defendants, including Bel, infringed its patents covering certain power products. With respect to the Company, the plaintiff claimed that the Company infringed its patents related to unregulated bus converters and/or point-of-load (POL) converters used in intermediate bus architecture power supply systems. The case went to trial in December 2010 and a judgment was entered on December 29, 2010.  The jury found that certain products of the defendants directly and/or indirectly infringe the SynQor patents.  The jury awarded damages of $8.1 million against the Company.  The Company intends to appeal the verdict and judgment.  The Company recorded an $8.1 million litigation charge during the year ended December 31, 2010 related to this case.

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.

(a)	Market Information

		Class A				Class A				Class B				Class B
		High				Low				High				Low
Year Ended December 31, 2010
First Quarter		$	21.80			$	14.64			$	24.04			$	17.37
Second Quarter			22.25				15.50				25.15				16.35
Third Quarter			23.36				16.45				24.03				16.27
Fourth Quarter			27.88				20.46				25.52				20.11
Year Ended December 31, 2009
First Quarter		$	18.19			$	7.00			$	21.94			$	8.79
Second Quarter			15.33				10.80				17.75				12.44
Third Quarter			19.30				12.85				20.65				14.78
Fourth Quarter			20.70				16.80				22.11				17.23

 

From 2000 through December 31, 2010, the Company has purchased and retired 527,817 Class A common shares at a cost of approximately $16.8 million and has purchased and retired 23,600 Class B common shares at a cost of approximately $0.8 million.  No shares of Class A or Class B common stock were repurchased during the year ended December 31, 2010.

Item 6. Selected Financial Data

 

The following tables set forth selected consolidated financial data as of the dates and for the periods presented.  The selected consolidated balance sheet data as of December 31, 2010 and 2009 and the selected consolidated statement of operations data for the years ended December 31, 2010, 2009 and 2008 have been derived from our audited consolidated financial statements and related notes that we have included elsewhere in this Annual Report. The selected consolidated balance sheet data as of December 31, 2008, 2007 and 2006 and the selected consolidated statement of operations data for the years ended December 31, 2007 and 2006 have been derived from audited consolidated financial statements that are not presented in this Annual Report.

 

The selected historical consolidated financial data as of any date and for any period are not necessarily indicative of the results that may be achieved as of any future date or for any future period. You should read the following selected historical consolidated financial data in conjunction with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes that we have presented elsewhere in this Annual Report.

For information regarding the Company’s acquisitions of Cinch in 2010 and Bel Pingguo in 2009, see “Business – Acquisitions.”

		Years Ended December 31,
		2010				2009				2008				2007				2006
		(In thousands of dollars, except per share data)
Selected Statements of Operations Data:
Net sales		$	302,539			$	182,753			$	258,350			$	259,137			$	254,933
Cost of sales (f)			239,185				161,454				217,079				203,007				192,985
Selling, general and administrative expenses (g)			40,443				30,055				36,093				36,117				37,800
Impairment of assets (b) (d)			-				12,875				14,805				-				-
Litigation charge (h)			8,103				-				-				-				-
Restructuring charges (c)			-				413				1,122				-				-
Gain on sale of property, plant and equipment			(352	)			(4,693	)			-				(5,499	)			-
Casualty loss (a)			-				-				-				-				1,030
Gain (loss/impairment charge) on investments (e)			-				7,129				(10,358	)			2,146				5,150
Interest income and other, net			420				527				2,454				4,046				2,780
Earnings (loss) before provision (benefit)
for income taxes			15,580				(9,695	)			(18,653	)			31,704				31,048
Income tax provision (benefit)			1,931				(1,385	)			(3,724	)			5,368				5,845
Net earnings (loss)			13,649				(8,310	)			(14,929	)			26,336				25,203
Earnings (loss) per share:
Class A common share - basic and diluted			1.10				(0.71	)			(1.25	)			2.11				2.03
Class B common share - basic			1.18				(0.72	)			(1.28	)			2.25				2.16
Class B common share - diluted			1.18				(0.72	)			(1.28	)			2.24				2.15
Cash dividends declared per share:
Class A common share			0.24				0.24				0.24				0.20				0.16
Class B common share			0.28				0.28				0.28				0.24				0.20
		As of December 31,
			2010				2009				2008				2007				2006
		(In thousands of dollars, except percentages)
Selected Balance Sheet Data and Ratios:
Working capital		$	157,296			$	167,833			$	163,985			$	173,171			$	144,677
Total assets			277,172				245,946				261,784				293,860				268,497
Stockholders' equity			220,333				208,932				217,773				244,527				222,150
Return on average total assets (i)			5.22	%			-3.32	%			-5.17	%			9.34	%			9.65	%
Return on average stockholders' equity (i)			6.37	%			-3.88	%			-6.23	%			11.30	%			11.81	%

(a)

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 2006.

(b)

During the third quarter of 2009, the Company conducted an interim valuation test related to the Company’s goodwill by operating segment.  As a result of the reduction in fair value of the Asia operating segment, the Company recorded charges of $12.9 million related to the impairment of goodwill of its Asia operating segment during 2009.  During the fourth quarter of 2008, the Company conducted its annual valuation test related to the Company's goodwill by operating segment.  As a result of the reduction in the fair value of the North America operating segment, the Company recorded charges of $14.1 million related to the impairment of goodwill of its North America operating segment during 2008.

(c)

During 2008, the Company ceased its manufacturing operations in its Westborough, Massachusetts facility.  In connection with this closure, the Company incurred severance costs during 2008 of $0.6 million and lease termination costs of $0.5 million.  The Company incurred an additional $0.4 million of restructuring costs in 2009 related primarily to the facility lease obligation.

(d)

During 2008, the Company incurred fixed asset impairments of $0.7 million related to assets located at the Westborough, Massachusetts facility which ceased operations as of December 31, 2008.  This charge is included in Impairment of Assets in the Company’s consolidated statement of operations for the year ended December 31, 2008.

(e)

During 2009, the Company realized a net gain for financial reporting purposes of $7.1 million related to the sale of its investments in Toko, Inc. and Power-One, Inc and the final redemptions of its investment in the Columbia Strategic Cash Portfolio.  During 2008, the Company recorded other-than-temporary impairment charges and realized losses of $10.4 million related to its investments in Toko, Inc., Power-One, Inc. and the Columbia Strategic Cash Portfolio.  During 2007, the Company realized a gain from the sale of Toko, Inc. common stock in the amount of $2.5 million, offset by an other-than-temporary impairment charge of $0.3 million related to its investment in the Columbia Strategic Cash Portfolio.  During 2006, the Company realized a gain principally from the sale of Artesyn common stock in the amount of $5.2 million.

(f)	During 2009, the Company incurred a $2.0 million licensing fee in connection with the settlement of the Murata lawsuit.

(g)	During 2009, the Company incurred $0.6 million in acquisition costs related to the acquisitions of Bel Pingguo and Cinch Connectors.  During 2010, the Company incurred an additional $0.3 million of acquisition costs related to Cinch.

(h)	During 2010, the Company recorded a litigation charge in the amount of $8.1 million in connection with the SynQor lawsuit, as further described in Item 3.

(i)

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

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.

The Company continues to monitor proposed legislation affecting the taxation of transfers of U.S. intangible property and other potential tax law changes.

·

Cinch Acquisition – The acquisition of Cinch in January 2010 has allowed the Company to broaden its customer base into the military, aerospace and transportation industries.  The Cinch products are among the Company’s interconnect product group which generally use lower-cost materials and generate higher profit margins than Bel’s other product groups.  The Company believes the integration of the Cinch products has had, and will continue to have, a favorable impact on Bel’s overall profit margin.

·

Reduced Backlog - Bel’s backlog of orders was $109 million at December 31, 2010, reflecting an 18% decrease from June 30, 2010.  This decrease was primarily due to the Company’s ability to manufacture and deliver our products with shorter lead times, while a smaller portion of the reduction was due to the cancellation of orders by customers, primarily during the third quarter.  Bel’s backlog of orders at February 28, 2011 was $100 million, a decrease of 8% from December 31, 2010, primarily due to some easing in the availability of components, which has improved our ability to ship modules products.

·

Pricing and Availability of Materials – While the Company has seen component pricing and availability stabilize in the latter half of 2010 for most of Bel’s product lines, the Company continues to experience some component shortages in it modules product line which limits Bel’s ability to deliver its DC-DC products.  In addition, the costs of certain commodities associated with our raw materials, such as gold and copper, have increased.  Fluctuations in these prices and other commodity prices associated with Bel’s raw materials will have a corresponding impact on Bel’s profit margins.

·

Workforce Volatility – Bel increased its workforce by over 4,000 workers during late 2009 and into 2010 to accommodate the substantial increase in demand for Bel’s products.  The Company experienced higher labor costs through the first half of 2010 due to training costs, overtime and production inefficiencies associated with hiring these new workers.  These increased labor costs stabilized during the third quarter, as the training periods generally ended and production efficiencies were restored.

·

Labor Costs – In addition to increases in labor costs due to the mostly new workforce, the costs of labor, particularly in the PRC where several of Bel’s factories are located, have been higher in recent years as a result of government mandates for new higher minimum wage and overtime requirements.  The PRC government increased minimum wage levels by 21% in the areas where Bel’s factories are located effective May 1, 2010.  While Bel has implemented price increases to its customers during 2010 to partially offset the existing increases in labor and material costs, there is an additional government mandate effective March 2011 which will increase the minimum wage level by 18% at certain of Bel’s facilities in the PRC. The Company anticipates that this increase and any additional increases to the minimum wage levels will have a negative impact on Bel’s profit margins in future quarters.

·

Impact of Lunar New Year – As described above, the Company has limited visibility as to the percentage of experienced workers who will return after the Lunar New Year holiday, which occurred in early February 2011.  The current lead time for Bel products is averaging 8-12 weeks.  If a large percentage of workers do not return, this will stretch out lead times for our products and will drive up labor costs as the Company will incur additional recruiting and training expenses, as well as overtime to meet demand.

·

Product Mix – The Company is beginning to see a shift in product mix, with the largest growth during 2011 expected in the modules product line.  The products in this line have a higher material content, which results in lower profit margins than the Company’s other product lines.  A large increase in this product line coupled with flat to minimal growth in other product lines would result in a lower overall profit margin percentage in 2011.

·

Acquisition-Related Costs – In connection with the acquisition of Cinch in January 2010, the Company incurred $0.3 million in acquisition-related costs and $0.8 million in inventory-related purchase accounting adjustments during 2010.  Bel continues to look for potential acquisition opportunities.  Any future acquisitions, including the proposed acquisition of Pulse Electronics as further described in the Liquidity and Capital Resources section, would give rise to additional legal and professional fees and could result in various purchase accounting adjustments.

		2010								2009								2008
North America		$	111,888				37	%		$	41,898				23	%		$	67,380				26	%
Asia			156,635				52	%			123,764				68	%			165,164				64	%
Europe			34,016				11	%			17,091				9	%			25,806				10	%
		$	302,539				100	%		$	182,753				100	%		$	258,350				100	%

		2010				2009				2008
Income (Loss) from Operations:
North America		$	4,181			$	(205	)		$	(12,646	)
Asia			9,357				(16,462	)			1,202
Europe			1,622				(684	)			695
		$	15,160			$	(17,351	)		$	(10,749	)

		Year Ended
		December 31,
		2010								2009								2008
Magnetics		$	127,664				43	%		$	86,326				47	%		$	118,552				46	%
Interconnect			101,059				33	%			32,447				18	%			47,407				18	%
Modules			61,092				20	%			54,323				30	%			77,285				30	%
Circuit protection			12,724				4	%			9,657				5	%			15,106				6	%
		$	302,539				100	%		$	182,753				100	%		$	258,350				100	%

		(Favorable) Unfavorable Variances in SG&A
		Year Ended												Year Ended
		December 31, 2010 vs. 2009												December 31, 2009 vs. 2008
		Consolidated				Legacy-Bel Only				Cinch				Legacy-Bel Only (pre-Cinch)
Sales commissions		$	1,892			$	1,060			$	832			$	(1,952	)
Salaries and fringes			2,755				(809	)			3,564				(1,447	)
Incentive compensation			2,528				2,263				265				(215	)
Fraud-related costs			(594	)			(594	)			-				472
Acquisition-related costs			(205	)			(260	)			55				605
Travel expenses			873				539				334				(975	)
Office expenses			1,642				100				1,542				(1,086	)
Other legal and professional fees			716				475				241				(236	)
Severance charges			(191	)			(372	)			181				389
Fair value of COLI investments
(SG&A portion only)			160				160				-				(545	)
Foreign exchange			58				(76	)			134				(522	)
Other			754				(244	)			998				(526	)
		$	10,388			$	2,242			$	8,146			$	(6,038	)

 

 

 

 

 

		Payments due by period
Contractual Obligations		Total				Less than 1 year				1-3 years				3-5 years				More than 5 years
Capital expenditure obligations		$	1,658			$	1,658			$	-			$	-			$	-
Operating leases			8,714				2,956				3,880				1,878				-
Raw material purchase obligations			30,154				30,153				1				-				-
Total		$	40,526			$	34,767			$	3,881			$	1,878			$	-