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What changed in BEL FUSE INC /NJ's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of BEL FUSE INC /NJ's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+371 added−271 removedSource: 10-K (2025-02-28) vs 10-K (2024-03-11)

Top changes in BEL FUSE INC /NJ's 2024 10-K

371 paragraphs added · 271 removed · 202 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

54 edited+16 added−16 removed41 unchanged
Biggest changeThe Company was incorporated in 1949 and is organized under New Jersey law. Bel's principal executive offices are located at 300 Executive Drive, Suite 300, West Orange, New Jersey 07052, and Bel's telephone number is (201) 432-0463. The Company operates facilities in North America, Europe and Asia and trades on the NASDAQ Global Select Market (ticker symbols BELFA and BELFB).
Biggest changeBel has proven itself a valuable supplier to world-class companies by developing new products with cost effective solutions. The Company was incorporated in 1949 and is organized under New Jersey law. Bel's principal executive offices are located at 300 Executive Drive, Suite 300, West Orange, New Jersey 07052, and Bel's telephone number is (201) 432-0463.
See "Cautionary Notice Regarding Forward-Looking Information." Available Information We maintain a website at www.belfuse.com where we make available free of charge the proxy statements, press releases, registration statements and reports on Forms 3, 4, 8-K, 10-K and 10-Q, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act that we (and in the case of Section 16 reports, our insiders) file with the SEC.
See "Cautionary Notice Regarding Forward-Looking Information." Available Information We maintain a website at www.belfuse.com where we make available free of charge the proxy statements, press releases, registration statements and reports on Forms 3, 4, 5, 8-K, 10-K and 10-Q, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act that we (and in the case of Section 16 reports, our insiders) file with the SEC.
Military/aerospace, test and measurement, IoT, 5G high-frequency and wireless communications. Johnson, Trompeter, Midwest Microwave TM , Semflex ® Ethernet, I/O, Industrial and Power Connectivity RJ45, RJ11, M12, IP67 and USB connectivity for data/voice/video transmission. Applications including routers, hubs, switches, peripheral device connectivity and patch panels; and emerging internet-of-things (IoT) applications. Stewart Connector Magnetic Solutions Bel's Magnetics offers industry-leading products.
Military/aerospace, space, test and measurement, internet-of-things (IoT), 5G high-frequency and wireless communications. Johnson, Trompeter, Midwest Microwave TM , Semflex ® Ethernet, I/O, Industrial and Power Connectivity RJ45, RJ11, M12, IP67 and USB connectivity for data/voice/video transmission. Applications including routers, hubs, switches, peripheral device connectivity and patch panels; and emerging IoT applications. Stewart Connector Magnetic Solutions Bel's Magnetics offers industry-leading products.
We create a positive work environment where associates can make a difference. As a company that has been in business for 75 years, Bel understands the importance of trust, integrity and accountability of all levels of the organization. Our policies, practices and priorities are continually reviewed to align with the best interests of our associates, shareholders and other stakeholders.
We create a positive work environment where associates can make a difference. As a company that has been in business for over 75 years, Bel understands the importance of trust, integrity and accountability of all levels of the organization. Our policies, practices and priorities are continually reviewed to align with the best interests of our associates, shareholders and other stakeholders.
In the event that the current economic conditions have a negative impact on the financial condition of our suppliers, this may impact the availability and cost of our raw materials. Intellectual Property We have acquired or been granted a number of patents in the U.S., Europe and Asia and have additional patent applications pending relating to our products.
In the event that economic conditions have a negative impact on the financial condition of our suppliers, this may impact the availability and cost of our raw materials. Intellectual Property We have acquired or been granted a number of patents in the U.S., Europe and Asia and have additional patent applications pending relating to our products.
Environmental, Social and Governance (“ESG”) Bel is committed to creating a better tomorrow by understanding how our actions impact the world around us. We aim to accomplish this by making tangible steps, big and small, to invest in our communities, to seek to minimize environmental impact and to promote alignment of interest among stakeholders.
Environmental, Social and Governance (“ESG”) Matters Bel is committed to creating a better tomorrow by understanding how our actions impact the world around us. We aim to accomplish this by making tangible steps, big and small, to invest in our communities, to seek to minimize environmental impact and to promote alignment of interest among stakeholders.
Product Line Function Applications Brands Sold Under Connectivity Solutions Expanded Beam Fiber Optic Connectors, Cable Assemblies and Active Optical Devices (transceivers and media converters) Harsh-environment, high-reliability, flight-grade optical connectivity for high-speed communications. Military/aerospace, oil and gas well monitoring and exploration, broadcast, communications, RADAR.
Product Line Function Applications Brands Sold Under Connectivity Solutions Expanded Beam Fiber Optic Connectors, Cable Assemblies and Active Optical Devices (transceivers and media converters) Harsh-environment, high-reliability, flight-grade optical connectivity for high-speed communications. Military/aerospace, space, oil and gas well monitoring and exploration, broadcast, communications, RADAR.
Our website also includes investor presentations and corporate governance materials. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. 10 Table of Contents
Our website also includes investor presentations and corporate governance materials. The information contained on our website is not incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC. 6 Table of Contents
Item 1. Business Bel Fuse Inc. designs, manufactures and markets a broad array of products that power, protect and connect electronic circuits. These products are primarily used in the networking, telecommunications, computing, general industrial, high-speed data transmission, military, commercial aerospace, transportation and eMobility industries. Bel's portfolio of products also finds application in the automotive, medical, broadcasting and consumer electronics markets.
Item 1. Business Bel Fuse Inc. designs, manufactures and markets a broad array of products that power, protect and connect electronic circuits. These products are primarily used in the defense, commercial aerospace, networking, telecommunications, computing, general industrial, high-speed data transmission, transportation and eMobility industries. Bel's portfolio of products also finds application in the automotive, medical, broadcasting and consumer electronics markets.
Bel Power Solutions & Protection 3 Table of Contents Connectivity Solutions Bel offers a comprehensive line of high speed and harsh environment copper and optical fiber connectors and integrated assemblies, which provide connectivity for a wide range of applications across multiple industries including commercial aerospace, military communications, defense, network infrastructure, structured building cabling and several industrial applications.
Bel Power Solutions & Protection 2 Table of Contents Connectivity Solutions Bel offers a comprehensive line of high speed and harsh environment copper and optical fiber connectors and integrated assemblies, which provide connectivity for a wide range of applications across multiple industries including commercial aerospace, military communications, defense, network infrastructure, structured building cabling and several industrial applications.
From coaching their local sports team to raising funds for local charities of choice, Bel supports and encourages our associates’ participation in these types of activities. 2023 Charitable Contribution Program: In 2022, Bel launched a Company-wide Charitable Contribution Program to ensure consistency and drive our corporate values across the organization.
From coaching their local sports team to raising funds for local charities of choice, Bel supports and encourages our associates’ participation in these types of activities. 2024 Charitable Contribution Program: In 2022, Bel launched a Company-wide Charitable Contribution Program to ensure consistency and drive our corporate values across the organization.
The global capabilities and collaborative approach allows Bel to develop leading edge technological products that support highly complex and evolving markets such as eMobility, cloud computing, military, aerospace, and others. On occasion, we execute non-disclosure agreements with customers to help develop proprietary, next generation products intended for rapid deployment.
The global capabilities and collaborative approach allows Bel to develop leading edge technological products that support highly complex and evolving markets such as defense, commercial aerospace, eMobility, cloud computing, and others. On occasion, we execute non-disclosure agreements with customers to help develop proprietary, next generation products intended for rapid deployment.
Bel’s internal ESG Committee provides updates to either the Nominating and ESG Committee or to the full Board on a quarterly basis. 9 Table of Contents Environmental At Bel, we understand the impact of climate change upon so many aspects of our lives and our future, and we are committed to reducing environmental impact for a more sustainable tomorrow.
Bel’s internal ESG Committee provides updates to either the Nominating and ESG Committee or to the full Board on a quarterly basis. Environmental At Bel, we understand the impact of climate change upon so many aspects of our lives and our future, and we are committed to reducing environmental impact for a more sustainable tomorrow.
This passive investment creates a strategic alliance that is focused on Electric Vehicles (“EV”) on-board power electronics, and in particular next generation fast-charging technology. With no product overlap, this relationship expands the Bel eMobility Power portfolio, further enhancing Bel's competitive position in this emerging field. The innolectric investment is p art of Bel's Power Solutions and Protection group.
This passive investment creates a strategic alliance that is focused on Electric Vehicles (“EV”) on-board power electronics, and in particular next generation fast-charging technology. With no product overlap, this relationship expanded the Bel eMobility Power portfolio, and further enhanced Bel's competitive position in this emerging field. The innolectric investment is p art of Bel's Power Solutions and Protection group.
Government Regulations The Company is subject to various government regulations in the United States as well as various jurisdictions where it operates. These regulations cover several diverse areas including trade compliance, anti-bribery, anti-corruption, money laundering, and data and privacy protection.
Government Regulations The Company is subject to various government regulations in the United State s as well as various jurisdictions where it operates. These regulations cover several diverse areas including trade compliance, anti-bribery, anti-corruption, money laundering, and data and privacy protection.
Bel has started the process of measuring the impact of its operations on the environment and intends to utilize these measurements to establish reduction goals and related initiatives throughout the global organization. Today we have 19 manufacturing facilities of various sizes and five of them are ISO 14001 certified and represent 73% of our manufacturing footprint.
Bel has started the process of measuring the impact of its operations on the environment and intends to utilize these measurements to establish reduction goals and related initiatives throughout the global organization. Today we have 22 manufacturing facilities of various sizes and five of them are ISO 14001 certified and represent 63% of our manufacturing footprint.
The trademarks survive as long as they are in use and the registrations of these trademarks are renewed. Government Contracts We must comply with and are affected by laws and regulations relating to the award, administration, and performance of U.S. Government contracts.
The trademarks survive as long as they are in use and the registrations of these trademarks are renewed. 4 Table of Contents Government Contracts We must comply with and are affected by laws and regulations relating to the award, administration, and performance of U.S. Government contracts.
See "Cautionary Notice Regarding Forward-Looking Information." 5 Table of Contents Research and Development ("R&D") Our 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.
See "Cautionary Notice Regarding Forward-Looking Information." Research and Development ("R&D") Our 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.
Bel Power Solutions & Protection, Melcher TM , CUI, EOS External Power Products Standard and customizable desktop and wall plug adapters that convert AC main input voltages to a variety of DC output voltages. Consumer and industrial devices and equipment. CUI, EOS Circuit Protection Protects devices by preventing current in an electrical circuit from exceeding acceptable levels.
Enercon, MilPower External Power Products Standard and customizable desktop and wall plug adapters that convert AC main input voltages to a variety of DC output voltages. Consumer and industrial devices and equipment. CUI, EOS Circuit Protection Protects devices by preventing current in an electrical circuit from exceeding acceptable levels.
Bel Power Solutions & Protection Board-Mount Power Products These are designed to be mounted on a circuit board. These converters take input voltage and provide localized on-board power to low-voltage electronics. Telecommunication, networking and a broad range of industrial applications.
Servers, telecommunication, network and data storage equipment. Bel Power Solutions & Protection Board-Mount Power Products These are designed to be mounted on a circuit board. These converters take input voltage and provide localized on-board power to low-voltage electronics. Telecommunication, networking and a broad range of industrial applications.
The failure to comply with the terms of our government contracts could harm our business reputation. It could also result in our progress payments being withheld. 6 Table of Contents In some instances, these laws and regulations impose terms or rights that are more favorable to the government than those typically available to commercial parties in negotiated transactions.
The failure to comply with the terms of our government contracts could harm our business reputation. It could also result in our progress payments being withheld. In some instances, these laws and regulations impose terms or rights that are more favorable to the government than those typically available to commercial parties in negotiated transactions. For example, the U.S.
For example, the U.S. Government may terminate any of our government contracts and, in general, subcontracts, at its convenience as well as for default based on performance.
Government may terminate any of our government contracts and, in general, subcontracts, at its convenience as well as for default based on performance.
While there are key customers and end markets within each of the three product groups, there were no direct customers who accounted for more than 10% of our consolidated net sales in 2023. Our diverse product mix and customer base minimizes our dependence on any one customer or end market.
While there are key customers and end markets within each of the three product grou ps, there were no direct customers who accounted for more than 10% of our consolidated net sales in 2024. Our dive rse product mix and customer base minimizes our dependence on any one customer or end market.
The purpose of the ESG Committee is to support the Company’s ongoing commitment to ESG matters including environmental stewardship, health and safety, corporate social responsibility, corporate governance, sustainability, and other related issues of significance to the Company.
Bel also has an internal ESG Committee whose purpose is to support the Company’s ongoing commitment to ESG matters including environmental stewardship, health and safety, corporate social responsibility, corporate governance, sustainability, and other related issues of significance to the Company.
Bookings for our Magnetic Solutions products decreased by 58% from 2022 to $52.7 million in 202 3, largely due to reduced demand from our networking customers. Backlog of Orders We typically manufacture products against firm orders and projected usage by customers. Cancellation and return arrangements are either negotiated by us on a transactional basis or contractually determined.
Bookings for our Magnetic Solutions products decreased by 24% from 2023 to $65.0 million in 202 4, largely due to reduced demand from our networking customers. Backlog of Orders We typically manufacture products against firm orders and projected usage by customers. Cancellation and return arrangements are either negotiated by us on a transactional basis or contractually determined.
The social program is also in alignment with our Core Value of Community Engagement and directly reflects the ambitions of our ESG initiative to support the global communities within which we operate. In 2023, the program resulted in contributions to 52 local charities across 14 countries.
The social program is also in alignment with our Core Value of Community Engagement and directly reflects the ambitions of our ESG initiative to support the global communities within which we operate. In 2024, the program resulted in contributions of $168,975 to 48 local charities across 13 countries.
For information regarding Bel's operating segments, see Note 14, "Segments" , of the notes to our consolidated financial statements. Hereinafter, all references to "Note" will refer to the notes to our consolidated financial statements included in Part II, Item 8. "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Hereinafter, all references to "Note" will refer to the notes to our consolidated financial statements included in Part II, Item 8. "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
In addition, there was a matching program for the organizations selected and associates who donated. Governance As a company that has been in business for 75 years, Bel understands the importance of trust, integrity and accountability at all levels of the organization. Recent additions to our Board and executive management team have brought greater diversity and new perspectives to Bel.
Governance As a company that has been in business for more than 75 years, Bel understands the importance of trust, integrity and accountability at all levels of the organization. Recent additions to our Board and executive management team have brought greater diversity and new perspectives to Bel.
Orders received for our C onnectivity Solutions products were $210.9 million in 2023, 5% lower than in 2022, as a result of decreased demand from our distribution partners largely offset by a rebound in demand from our direct and aftermarket commercial aerospace and military customers.
Orders received for our Connectivity Solutions products were $212.1 million in 2024, 1% lower than in 2023, as a result of decreased demand from our distribution partners largely offset by a rebound in demand from our direct and aftermarket commercial aerospace and military customers.
EOS enhances Bel's position related to certain industrial and medical markets historically served by EOS, with a strong line of high-power density and low-profile products with high convection ratings. In addition to new products and customers acquired, this acquisition diversified Bel's manufacturing footprint in Asia. The EOS business is part of Bel's Power Solutions and Protection group.
EOS, located in Mumbai, India, enhanced Bel's position related to certain industrial and medical markets historically served by EOS, with a strong line of high-power density and low-profile products with high convection ratings. In addition to new products and customers acquired, this acquisition diversified Bel's manufacturing footprint in Asia.
Switchmode power supplies, DC/DC converters, LED lighting, automotive and consumer electronics. Signal Discrete Components-Ethernet Condition, filter, and isolate the electronic signals to ensure high speed Ethernet data transmission. Network switches, routers, hubs, and PCs used in multi-speed Gigabit Ethernet and Power over Ethernet (PoE).
Switchmode power supplies, DC/DC converters, LED lighting, automotive and consumer electronics. Signal Discrete Components-Ethernet Condition, filter, and isolate the electronic signals to ensure high speed Ethernet data transmission. Network switches, routers, hubs, and PCs used in multi-speed Gigabit Ethernet and Power over Ethernet (PoE). Bel Sales and Marketing We sell our products to customers throughout North America, Europe and Asia.
The Company may, from time to time, purchase equity positions in companies that are potential merger candidates. On February 1, 2023, Bel closed on an €8.0 million (a pproximately $8.8 million as of the February 2023 closing) no ncontrolling (one-third) investment in innolectric AG ("innolectric"), a Germany-based business in the field of on-board charging for eMobility applications.
On February 1, 2023, Bel closed on an €8.0 million (a pproximately $8.8 million as of the February 2023 closing) no ncontrolling (one-third) investment in innolectric AG ("innolectric"), a Germany-based business in the field of on-board charging for eMobility applications.
These guidelines, which are designed to enhance the Company’s corporate governance, will serve as a framework within which the Board will conduct its business, subject to applicable laws, regulations, listing requirements, and the Company’s organizational documents and Board committee charters. Bel is committed to a better tomorrow.
These guidelines, which are designed to enhance the Company’s corporate governance, serve as a framework within which the Board will conduct its business, subject to applicable laws, regulations, listing requirements, and the Company’s organizational documents and Board committee charters. The foregoing discussion of ESG matters contains Forward-Looking Statements.
On December 31, 2023, Bel employed approximatel y 5,260 associates, almost all of which are full-time, across 6 countries, with 33.0% located within North America. Outside of the United States, our largest employee populations were located within the PRC, Mexico, Slovakia, the Dominican Republic, India and the United Kingdom.
On December 31, 2024, Bel employed approximatel y 5,370 associat es, almost all of which are full-time, acros s 15 co untries, with 31.0% located within North America. Outside of the United States, our largest employee populations were located within the PRC, Mexico, Slovakia, the Dominican Republic, Israel, India and the United Kingdom.
Bel offers a broad array of product offerings, which are grouped as follows: Power Solutions & Protection (49% o f net sales in 2023), Connectivity Solutions (33% of net sales in 2023) and Magnetic Solutions (18% of net sales in 2023).
Bel offers a broad array of product offerings, which are grouped as follows: Power Solutions & Protection (46% of net sales in 2024), Connectivity Solutions (41% of net sales in 2024) and Magnetic Solutions (13% of net sales in 2024).
Product Line Function Applications Brands Sold Under Power Solutions and Protection Front-End Power Supplies Provides the primary point of isolation between AC main line (input) and the low-voltage DC output that is used to power all electronics downstream. Servers, telecommunication, network and data storage equipment.
The Power and Protection products are primarily used in Aerospace, Defense, Servers, Storage, Networking, Transportation, Harsh Environment, Consumer, Medical and Industrial markets. Product Line Function Applications Brands Sold Under Power Solutions and Protection Front-End Power Supplies Provides the primary point of isolation between AC main line (input) and the low-voltage DC output that is used to power all electronics downstream.
With 75 years in operation, Bel has reliably demonstrated the ability to participate in a variety of product areas across a global platform. The Company has a strong track record of technical innovation working with the engineering teams of market leaders. Bel has proven itself a valuable supplier to world-class companies by developing new products with cost effective solutions.
With more than 75 years in operation, Bel has reliably demonstrated the ability to participate in a variety of product areas across a global platform. The Company has a strong track record of technical innovation working with the engineering teams of market leaders.
We strive to create a workplace where associates feel that their contributions are welcomed and valued, allowing them to fully utilize their talents while achieving personal satisfaction in their respective roles within Bel.
Great Associates Bel is committed to fostering an inclusive environment that respects and encourages individual differences, diversity of thought, and talent. We strive to create a workplace where associates feel that their contributions are welcomed and valued, allowing them to fully utilize their talents while achieving personal satisfaction in their respective roles within Bel.
As a global leader in delivering reliable solutions, Bel has signed a Statement of Support Program declaration to show support for National Guard and Reserve member associates coordinated by the Department of Defense's Employer Support of the Guard and Reserve (ESGR) program.
We support this commitment by participating in networking and community events and actively recruiting a broad group of qualified candidates. 5 Table of Contents As a global leader in delivering reliable solutions, Bel has signed a Statement of Support Program declaration to show support for National Guard and Reserve member associates coordinated by the Department of Defense's Employer Support of the Guard and Reserve (ESGR) program.
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, 2023, we had a sales and support staff o f approximately 200 people t hat supported a network of sales representative organizations and non-exclusive distributors.
Independent sales representatives and authorized distributors are overseen by the Company's sales management personnel located throughout the world. As of December 31, 2024, we had a sales and support staff o f approximately 240 people that supported a network of sales representative organizations and non-exclusive distributors.
This supplemental level of service, in addition to first-line sales support, enables us to be more responsive to customers' needs on a global level. Our marketing capabilities include product management which drives new product development, application engineering for technical support and marketing communications. Market Factors Competition We operate in a variety of markets, all of which are highly competitive.
Our marketing capabilities include product management which drives new product development, application engineering for technical support and marketing communications. 3 Table of Contents Market Factors Competition We operate in a variety of markets, all of which are highly competitive.
On March 31, 2021, the Company completed the acquisition of EOS Power ("EOS") through a stock purchase agreement for $7.8 million, net of cash acquired, including a working capital adjustment. EOS, located in Mumbai, India, had sales of $15.4 million and $17.6 million (pro forma) for the years ended December 31, 2023 and 2022 , respectively.
On March 31, 2021, the Company completed the acquisition of EOS Power ("EOS") through a stock purchase agreement for $7.8 million, net of cash acquired, including a working capital adjustment.
Bel 4 Table of Contents Sales and Marketing We sell our products to customers throughout North America, Europe and Asia. Sales are made through one of three channels: strategic account managers or in some cases, regional sales managers, working directly with our customers; regional sales managers working with independent sales representative organizations; or authorized distributors.
Sales are made through one of three channels: strategic account managers or in some cases, regional sales managers, working directly with our customers; 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.
We intend that our policies, practices and priorities will be periodically and continually reviewed as appropriate to better align with the best interests of our shareholders, associates and other stakeholders.
We intend that our policies, practices an d priorities will be periodically and continually reviewed as appropriate to better align with the best interests of our shareholders, associates and other stakeholders. In addition to the Board-level ESG oversight, the Company adheres to Bel’s Corporate Governance Guidelines which are available at https://ir.belfuse.com/corporate-governance.
See "Cautionary Notice Regarding Forward-Looking Information." Trends in Market Demand Product orders, or bookings, received during 2023 amounted to $447.6 million, a 41% decrease from 2022. By product group, orders received for our Power Solutions and Protection products amounted to $184.0 million in 2023, a 55% decrease from 2022.
See "Cautionary Notice Regarding Forward-Looking Information." Trends in Market Demand Product orders, or bookings, received during 2024 amounted to $416.8 million, a 7% decrease from 2023.
Originally based in Coon Rapids, Minnesota, the rms Connectors business was relocated into Bel's existing facilities during the second quarter of 2021, and is part of Bel's Connectivity Solutions group. On December 3, 2019, we completed the acquisition of the majority of the power supply products business of CUI Inc.
Originally based in Coon Rapids, Minnesota, the rms Connectors business was relocated into Bel's existing facilities during 2021 and is part of Bel's Connectivity Solutions group. 1 Table of Contents Products The Company primarily generates revenue through the sale of its products.
We regularly monitor various key performance indicators around the key human capital priorities of attracting, retaining, and engaging our global talent.
We regularly monitor various key performance indicators around the key human capital priorities of attracting, retaining, and engaging our global talent. In addition, we enable the execution of our strategic priorities by providing all associates with access to training and development opportunities to improve critical skill sets.
The current level of backlog is still viewed by management as being elevated compared to historical levels (i.e. pre-COVID, the Company's backlog level was $160 million as of December 31, 2019). 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.
Ma nagement estimates that approximately 80%-85% of the Company's backlog a s of January 31, 2025 will be shipped by December 31, 2025. 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.
On January 8, 2021, the Company acquired rms Connectors, Inc.
The EOS business is part of Bel's Power Solutions and Protection group. On January 8, 2021, the Company acquired rms Connectors, Inc.
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 our products. In the past, we have experienced shortages in certain raw materials, such as capacitors, ferrites and integrated circuits ("IC's"), when these materials were in great demand.
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 our products. Sharp increases in metal commodity prices, particularly Copper (Cu) and Gold (Au) over the past few years continue to impact cost structures and supplier pricing.
Culture In an increasingly competitive global marketplace, Bel succeeds when we attract and retain the best talent that is reflective of the diversity of the communities in which we work and live.
Culture In an increasingly competitive global marketplace, Bel succeeds when we attract and retain the best talent in the communities in which we operate, without regard to race, sex, religion, national origin, disability status, veteran status, or any other protected category.
Power Solutions and Protection Bel's power conversion products include internal and external AC/DC power supplies, DC/DC converters and DC/AC inverters. These products provide power conversion solutions for a number of industrial, networking and consumer applications.
Power Solutions and Protection Bel's power conversion products include internal and external AC/DC power supplies, DC/DC converters and DC/AC inverters. Bel circuit protection products include a board offering of surface mount and through-hole level fuses as well as Polymeric PTC (Positive Temperature Coefficient) devices.
As an organization that thrives on learning and continuous improvement, Bel welcomes and embraces change. The below sections outline some recent developments at Bel as we work to drive continuous improvements in these areas. 8 Table of Contents Global Director of ESG In November 2022 Bel appointed a Global Director of ESG.
As an organization that thrives on learning and continuous improvement, Bel welcomes and embraces change. Over the last few years, we have worked to drive continuous improvements in these areas. Oversight of Bel’s compliance with government-mandated ESG disclosures and reporting requirements and other internal initiatives starts at the Board level, through its Nominating and ESG Committee.
We estimate the value of the backlog of orders as of February 29, 2024 to be approximately $362.5 million as compared with a backlog of $526.9 million as of February 28, 2023. Management estimates that approximately 80%-85% of the Company's backlog as of February 29, 2024 will be shipped by December 31, 2024.
We estimate the value of the backlog of orders as of January 31, 2025 to be approximately $388.1 million as compared with a backlo g of $358.3 million as of January 31, 2024. The backlog of orders at January 31, 2025 includes $132.5 million from Enercon (acquired in November 2024).
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(the "CUI power business") through an asset purchase agreement with CUI Global Inc. for $29.2 million (after a working capital adjustment), plus the assumption of certain liabilities. The CUI power business designs and markets a broad portfolio of AC/DC and DC/DC power supplies and board level components.
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The Company operates facilities in North America, Europe and the Middle East (referred to as the "EMEA" region throughout), and Asia and trades on the NASDAQ Global Select Market (ticker symbols BELFA and BELFB). For information regarding Bel's operating segments, s ee Note 14, "Segments" , of the notes to our consolidated financial statements.
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The CUI power business is headquartered in Tualatin, Oregon and contributed sales of $50.8 million for 2023, $64.5 million for 2022, $55.8 million for 2021 and $43.1 million for 2020. The acquisition of the CUI power business enhanced Bel's existing offering of power products, allowing us to better address more of our customers' power needs.
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On February 3, 2025, the Company announced that Bel's current President and Chief Executive Officer, Daniel Bernstein, would be stepping down from his executive officer positions effective immediately following the Company's 2025 Annual Meeting of Shareholders, currently scheduled to be held on May 27, 2025 (the "2025 Annual Meeting"). Subject to Mr.
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It also introduced an alternative business model to Bel's, one which carries a higher gross margin profile and lower manufacturing risk. CUI is part of Bel's Power Solutions and Protection group. 2 Table of Contents Products The Company primarily generates revenue through the sale of its products.
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Bernstein's reelection at the 2025 Annual Meeting, Bel's Board of Directors (the "Board") has approved Mr. Bernstein's appointment as Non-Executive Chairman of the Board, effective on the date of the 2025 Annual Meeting.
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Bel circuit protection products include board level fuses (miniature, micro and surface mount), and Polymeric PTC (Positive Temperature Coefficient) devices, designed for the global electronic and telecommunication markets.
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Also on February 3, 2025, the Board appointed Farouq Tuweiq as the successor President and Chief Executive Officer of the Company, effective immediately following the 2025 Annual Meeting. The Board additionally approved the expansion of the Board to ten directors and the appointment of Mr.
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This decrease w as partially due to a $17.7 million reduction in orders related to expedite fees.
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Tuweiq as a director on the Board, effective as of the date of the 2025 Annual Meeting. Mr. Tuweiq is expected to be nominated by the Board for election as a director for a full three-year term at the 2025 Annual Meeting.
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In addition, we enable the execution of our strategic priorities by providing all associates with access to training and development opportunities to improve critical skill sets. 7 Table of Contents Great Associates Bel is committed to fostering an inclusive environment that respects and encourages individual differences, diversity of thought, and talent.
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On November 14, 2024, the Company closed on the acquisition of its majority 80% stake in Enercon Technologies, Ltd.
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In 2023, we maintained our focus on the safety and well-being of our associates around the world in light of COVID and the variants of COVID that have followed. Our management team closely monitors the situation at each of our facilities; protective measures, where possible and as applicable under governing regulations, remain in place throughout our facilities.
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(“Enercon”) pursuant to the terms of the Share Purchase Agreement, dated as of September 19, 2024 (the “Purchase Agreement”), by and among the Company, Enercon, and FF3 Holdings, L.P., for itself and as Sellers’ Representative (“FF3”), and each of the other seller parties signatory thereto (collectively with FF3, the “Sellers”).
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See "Overview - Key Factors Affecting our Business - Potential Future Impacts of COVID" in Item 7 of this Annual Report on Form 10-K for a discussion of current and potential future impacts of COVID upon our business.
Added
Enercon is a leading supplier of highly customized power conversion and networking solutions to aerospace and defense markets globally, providing robust and reliable solutions across air, land and sea applications. Enercon is based in Netanya, Israel with additional facilities in New Hampshire, U.S. and Haryana, India. The Enercon business is part of Bel’s Power Solutions and Protection group.
Removed
We are committed to increasing the diversity of our workforce by participating in networking and community events and actively recruiting and hiring veterans, women, minorities, and individuals with disabilities.
Added
At the closing, Bel paid an aggregate of approximately $325.6 million in cash in respect of the cash purchase price (after giving effect to estimated adjustments taken at closing including for Enercon’s cash, indebtedness, net working capital and unpaid transaction costs, and subject to further adjustment post-closing).
Removed
This new dedicated role has allowed the Company to embark on a series of initiatives aimed at improving Bel’s commitment to its ESG program. ESG Committee The first internal (operations-level) ESG Committee was formed in early December of 2022.
Added
Bel funded the closing of the transaction through cash on hand of approximately $85.6 million and with approximately $240 million provided through incremental borrowings under the Company’s revolving credit facility.
Removed
The ESG Committee aims to: ● Define ESG priorities, objectives and strategy with the goal of further integrating sustainability into the Company’s strategy and operations, subject to the oversight and overall direction of the Nominating and ESG Committee of our Board of Directors (as described below); ● Oversee and coordinate the implementation of the Company’s ESG initiatives at the operational level; ● Assist the Nominating and ESG Committee of our Board of Directors in fulfilling its oversight responsibilities with respect to the Company’s ESG efforts; and ● Monitor and assess developments relating to and improving the Company’s understanding of ESG matters.
Added
Pursuant to the transaction documents, Bel may acquire the remaining 20% stake in Enercon and has the current intention to so purchase such remaining interest by early 2027 in accordance with the terms and subject to the conditions of a shareholders’ agreement, which was also entered into on November 14, 2024.
Removed
The members of the ESG Committee include senior executives and associates from various regions and business segments while taking into account each person’s expertise in relevant disciplines, such as environmental, health and safety, operations, marketing, legal, investor relations, corporate governance, finance, and human resources.
Added
The preceding statement regarding Bel’s intention to purchase the remaining interest in Enercon represents a Forward-Looking Statement. See "Cautionary Notice Regarding Forward-Looking Information." See Note 3, “ Acquisition and Divestiture ” for further details about the Enercon acquisition.
Removed
Board-Level Oversight of ESG Matters In October 2022, Bel’s Board of Directors approved an expanded role for its Nominating Committee, broadening the purposes and functions of such committee to include oversight and monitoring of ESG matters, and re-designating the committee as the “Nominating and ESG Committee” in recognition of these new responsibilities.
Added
Bel Power Solutions & Protection, Melcher TM , CUI, EOS Military, Aerospace and Defense Products Customized Power and Networking solutions designed to meet harsh environment standards. Military, Aerospace and Defense applications including air, ground, sea, space and soldier.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

39 edited+76 added−26 removed59 unchanged
Biggest changeLEGAL, TAX AND REGULATORY RISKS 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.
Biggest changeAny equity financing that could be arranged may dilute existing shareholders and any debt financing that could be arranged may result in the imposition of more stringent financial and operating covenants. 12 Table of Contents LEGAL, TAX AND REGULATORY RISKS 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.
Fluctuations in these prices and other commodity prices associated with Bel's raw materials will have a corresponding impact on our profit margins. ● Increases in Labor Costs : Wage rates, particularly in the PRC, Mexico and Slovakia w here the majority of our manufacturing associates are located, have been gradually increasing in recent years as government-mandated increases in the minimum wage rate in these jurisdictions cause an increase in our overall pay scale.
Fluctuations in these prices and other commodity prices associated with Bel's raw materials will have a corresponding impact on our profit margins. ● Increases in Labor Costs : Wage rates, particularly in the PRC, Mexico, India and Slovakia w here the majority of our manufacturing associates are located, have been gradually increasing in recent years as government-mandated increases in the minimum wage rate in these jurisdictions cause an increase in our overall pay scale.
Any inability to adequately address privacy concerns, even if unfounded, or to comply with the more complex privacy or data protection laws, regulations and privacy standards, could lead to significant financial penalties, which may result in a material and adverse effect on our consolidated results of operations. 17 Table of Contents RISKS RELATED TO OUR COMMON STOCK As a result of protective provisions in the Company's Restated Certificate of Incorporation, as amended, the voting power of holders of Class A common shares whose voting rights are not suspended (including officers, directors and principal shareholders) may be increased at future meetings of the Company's shareholders.
Any inability to adequately address privacy concerns, even if unfounded, or to comply with the more complex privacy or data protection laws, regulations and privacy standards, could lead to significant financial penalties, which may result in a material and adverse effect on our consolidated results of operations. 14 Table of Contents RISKS RELATED TO OUR COMMON STOCK As a result of protective provisions in the Company's Restated Certificate of Incorporation, as amended, the voting power of holders of Class A common shares whose voting rights are not suspended (including officers, directors and principal shareholders) may be increased at future meetings of the Company's shareholders.
These price and volume fluctuations often have been unrelated to the operating performance of the affected companies. 18 Table of Contents GENERAL RISKS The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and consolidated results of operations .
These price and volume fluctuations often have been unrelated to the operating performance of the affected companies. 15 Table of Contents GENERAL RISKS The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and consolidated results of operations .
To the extent that the voting rights of particular holders of Class A common stock are suspended as of times when the Company's shareholders vote due to the above-mentioned provisions, such suspension will have the effect of increasing the voting power of those holders of Class A common shares whose voting rights are not suspended.
To the extent that the voting rights of particular holders of Class A common stock are suspended as of times when the Company's shareholders vote due to the above-mentioned provisions, such suspension would have the effect of increasing the voting power of those holders of Class A common shares whose voting rights are not suspended.
Our Company has seen an increased volume of cybersecurity threats and ransomware attempts in 2023 and expects to continue to experience cybersecurity threats from time to time, which pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data.
Our Company has seen an increased volume of cybersecurity threats and ransomware attempts in 2024 and expects to continue to experience cybersecurity threats from time to time, which pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data.
Risks inherent in our PRC operations include the following: ● changes in import, export, transportation regulations and tariffs, and risks associated with boycotts and embargoes; ● changes in, or impositions of, legislative or regulatory requirements or restrictions, including tax and trade laws in the U.S. and in the PRC, and government action to restrict our ability to sell to customers where sales of products may require export licenses; ● transportation delays and other supply chain issues; ● changes in tax regulations in the U.S. and/or the PRC, including restrictions and/or taxes applicable to the transfer or repatriation of funds; ● international political relationships, including the relationship between the U.S. and the PRC; ● epidemics and illnesses (including COVID, any new variants that may emerge, and any future health crises) within the PRC that affect the areas in which we operate and manufacture our products; ● economic, social and political instability; ● longer accounts receivable collection cycles and difficulties in collecting accounts receivable; ● less effective protection of intellectual property and contractual arrangements, and risks associated with enforcing contracts and legal rights and remedies generally; ● uncertainties associated with the PRC legal system, which is based on civil law, can involve protected proceedings involving substantial judicial discretion, and is based in part on PRC government policies and internal rules, some of which are not published on a timely basis, or at all, and may have retroactive effect; ● risks arising out of any changes in governmental and economic policy and the potential for adverse developments arising out of any political or economic instability related to Hong Kong or Taiwan; ● the potential for political unrest, expropriation, nationalization, revolution, war or acts of terrorism; and ● risks associated with the concentration of a substantial portion of our manufacturing capacity and supplier base in the PRC.
Risks inherent in our PRC operations include the following: ● changes in import, export, transportation regulations and tariffs, and risks associated with boycotts and embargoes; ● changes in, or impositions of, legislative or regulatory requirements or restrictions, including tax and trade laws in the U.S. and in the PRC, and government action to restrict our ability to sell to customers where sales of products may require export licenses; ● transportation delays and other supply chain issues; ● changes in tax regulations in the U.S. and/or the PRC, including restrictions and/or taxes applicable to the transfer or repatriation of funds; ● international political relationships, including the relationship between the U.S. and the PRC; ● epidemics and illnesses within the PRC that affect the areas in which we operate and manufacture our products; ● economic, social and political instability; ● longer accounts receivable collection cycles and difficulties in collecting accounts receivable; ● less effective protection of intellectual property and contractual arrangements, and risks associated with enforcing contracts and legal rights and remedies generally; ● uncertainties associated with the PRC legal system, which is based on civil law, can involve protected proceedings involving substantial judicial discretion, and is based in part on PRC government policies and internal rules, some of which are not published on a timely basis, or at all, and may have retroactive effect; ● risks arising out of any changes in governmental and economic policy and the potential for adverse developments arising out of any political or economic instability related to Hong Kong or Taiwan; ● the potential for political unrest, expropriation, nationalization, revolution, war or acts of terrorism; and ● risks associated with the concentration of a substantial portion of our manufacturing capacity and supplier base in the PRC, including potential trade restrictions placed on PRC suppliers by the U.S. government.
We manufacture in 7 countries, and our products are distributed in those countries as well as in other parts of the world. A large portion of our manufacturing operations are located outside of the United States and a large portion of our sales are generated outside of the United States.
We manufacture in 8 countries, and our products are distributed in those countries as well as in other parts of the world. A large portion of our manufacturing operations are located outside of the United States and a large portion of our sales are generated outside of the United States.
Further, commodity prices, especially those pertaining to gold, copper and silver, can be volatile.
Further, commodity prices, especially those pertaining to gold and copper, can be volatile.
We made certain assumptions in estimating the anticipated savings we expect to achieve related to these initiatives, which include the estimated savings from the elimination of certain headcount and the consolidation of facilities. These assumptions may turn out to be incorrect due to a variety of factors.
W e make certain assumptions in estimating the anticipated savings we expect to achieve related to these initiatives, which include the estimated savings from the elimination of certain headcount and the consolidation of facilities. These assumptions may turn out to be incorrect due to a variety of factors.
For additional information regarding risks associated with our operations in the PRC, see the discussion set forth above under the caption, "We have substantial manufacturing operations located in the PRC, which exposes us to significant risks that could materially and adversely affect our business, operations, consolidated financial condition and consolidated results of operations." 19 Table of Contents Cybersecurity risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties with which we do business, could have a material adverse effect on our business, consolidated financial condition and consolidated results of operations.
For additional information regarding risks associated with our operations in the PRC, see the discussion set forth above under the caption, "We have substantial manufacturing operations located in the PRC, which exposes us to significant risks that could materially and adversely affect our business, operations, consolidated financial condition and consolidated results of operations." For additional information regarding risks associated with our operations in Israel, see the discussion set forth above under the caption, "We may face risks related to conducting business in Israel." Cybersecurity risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties with which we do business, could have a material adverse effect on our business, consolidated financial condition and consolidated results of operations.
The market price of our common stock may rise and fall in response to a variety of other factors, including: • announcements of technological or competitive developments; • general market or economic conditions; • the continuing and uncertain future impact of the COVID pandemic on our operations and supply chain; • market or economic conditions specific to particular geographical areas in which we operate; • acquisitions or strategic alliances by us or our competitors; • our ability to achieve our anticipated cost savings from announced restructuring programs; • the gain or loss of a significant customer or order; • changes in the amount or frequency of our payments of dividends or repurchases of our common stock; or • changes in estimates of our financial performance or changes in recommendations by securities analysts regarding us or our industry.
The market price of our common stock may rise and fall in response to a variety of other factors, including: ● announcements of technological or competitive developments; ● general market or economic conditions; ● market or economic conditions specific to particular geographical areas in which we operate; ● acquisitions or strategic alliances by us or our competitors; ● our ability to achieve our anticipated cost savings from announced restructuring programs; ● the gain or loss of a significant customer or order; ● changes in the amount or frequency of our payments of dividends or repurchases of our common stock; or ● changes in estimates of our financial performance or changes in recommendations by securities analysts regarding us or our industry.
In addition, other events, such as the ongoing discussion and negotiations concerning varying levels of tariffs on product imported from the PRC, also create a level of uncertainty.
In addition, other events, such as the ongoing discussion and negotiations concerning varying levels of tariffs on product imported from the PRC, Mexico, India and throughout Europe also create a level of uncertainty.
To the extent our suppliers in the PRC are negatively impacted by new or amended regulations, any such negative implications could adversely impact our supply chain, including in the form of increased costs, disruptions, shortages or unavailability of product or component parts, and/or other deleterious consequences, which could materially adversely affect our business and operating results. 13 Table of Contents Our significant manufacturing operations in the PRC may expose us to other risks.
To the extent our suppliers in the PRC are negatively impacted by new or amended regulations, any such negative implications could adversely impact our supply chain, including in the form of increased costs, disruptions, shortages or unavailability of product or component parts, and/or other deleterious consequences, which could materially adversely affect our business and operating results.
Furthermore, factors that negatively impact the businesses of our major customers could materially and adversely affect us even if the customer represents less th an 10% of our 2023 consolidated net sales. 14 Table of Contents We may not achieve all of the expected benefits from our restructuring programs.
Furthermore, factors that negatively impact the businesses of our major customers could materially and adversely affect us even if the customer represents less than 10% of our 2024 consolidated net sales. We may not achieve all of the expected benefits from our restructuring programs.
Risks inherent in our international operations include: ● COVID-related closures and other pandemic-related uncertainties in the countries in which we operate; ● Import and export regulations that could erode profit margins or restrict exports; ● Foreign exchange controls and tax rates; ● Foreign currency exchange rate fluctuations, including devaluations; ● Changes in regional and local economic conditions, including local inflationary pressures; ● Difficulty of enforcing agreements and collecting receivables through certain foreign legal systems; ● Variations in protection of intellectual property and other legal rights; ● More expansive legal rights of foreign unions or works councils; ● Changes in labor conditions and difficulties in staffing and managing international operations; ● Inability or regulatory limitations on our ability to move goods across borders; ● Changes in laws and regulations, including the laws and policies of the United States affecting trade, tariffs and foreign investment; ● Restrictive governmental actions such as those on transfer or repatriation of funds and trade protection matters, including antidumping duties, tariffs, trade wars, embargoes and prohibitions or restrictions on acquisitions or joint ventures; ● Social plans that prohibit or increase the cost of certain restructuring actions; ● The potential for nationalization of enterprises or facilities; and ● Unsettled political conditions and possible terrorist attacks against U.S. or other interests.
Risks inherent in our international operations include: ● Import and export regulations that could erode profit margins or restrict exports; ● Foreign exchange controls and tax rates; ● Foreign currency exchange rate fluctuations, including devaluations; ● Changes in regional and local economic conditions, including local inflationary pressures; ● Difficulty of enforcing agreements and collecting receivables through certain foreign legal systems; ● Variations in protection of intellectual property and other legal rights; ● More expansive legal rights of foreign unions or works councils; ● Changes in labor conditions and difficulties in staffing and managing international operations; ● Inability or regulatory limitations on our ability to move goods across borders; ● Changes in laws and regulations, including the laws and policies of the United States affecting trade, tariffs and foreign investment; ● Restrictive governmental actions such as those on transfer or repatriation of funds and trade protection matters, including antidumping duties, tariffs, trade wars, embargoes and prohibitions or restrictions on acquisitions or joint ventures; ● Social plans that prohibit or increase the cost of certain restructuring actions; ● The potential for nationalization of enterprises or facilities; ● Unsettled political conditions and possible terrorist attacks against U.S. or other interests; and ● Intergovernmental and other conflicts or actions, including, but not limited to, armed conflict, such as the ongoing military conflicts between Ukraine and Russia, as well as between Israel and its adversaries in the Middle East.
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. 11 Table of Contents OPERATIONAL RISKS Our global operations and demand for our products face risks related to health epidemics such as the coronavirus.
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. 7 Table of Contents OPERATIONAL RISKS Our global operations and demand for our products face risks related to public health crises, including potential future outbreaks, epidemics or pandemics.
The majority of Bel's Magnetic Solutions manufacturing capacity and supplier base is located in the PRC, as is a portion of Bel's Power Solutions and Protection group. As of December 31, 2023, 50% of our associates, 74% of our owned or leased manufacturing facilities (by square footage) and 24% of our Company’s tangible assets were all located in the PRC.
The majority of Bel's Magnetic Solutions manufacturing capacity and supplier base is located in the PRC, as is a portion of Bel's Power Solutions and Protection group. As of December 31, 2024, 41% of our associates, 62% of our owned or leased manufacturing facilities (by square footage) and 7.3% of our Company’s tangible assets were all located in the PRC.
Over the past three years, our business was impacted by temporary facility closures, shelter-in-place orders and challenges related to travel restrictions imposed by the local governmental authorities as a result of COVID. Our suppliers, customers and our customers’ contract manufacturers have experienced similar challenges from time to time throughout the pandemic.
In the past, our business was impacted by temporary facility closures, shelter-in-place orders and challenges related to travel restrictions imposed by the local governmental authorities as a result of a health epidemic, including precautionary measures during the coronavirus pandemic. Our suppliers, customers and our customers’ contract manufacturers have experienced similar challenges from time to time.
If the acquisitions fail to perform up to our expectations, or if there is a weakening of economic conditions, we could be required to record impairment charges on the goodwill associated with our acquisitions. We are dependent on our ability to develop new products.
If the acquisitions fail to perform up to our expectations, or if there is a weakening of economic conditions, we could be required to record impairment charges on the goodwill and/or other assets associated with our acquisitions.
A shortage of availability or an increase in the cost of raw materials, components and other resources may adversely impact our ability to procure these items at cost effective prices and thus may negatively impact profit margins. Additionally, inflationary pressures could result in higher input costs and materially adversely affect our financial results.
A shortage of availability or an increase in the cost of raw materials, components and other resources may adversely impact our ability to procure these items at cost effective prices and thus may negatively impact profit margins.
Our margins could be substantially impacted by the following factors. ● Declines in Selling Prices : The average selling prices for our products tend to decrease over their life cycles, and customers put pressure on suppliers to lower prices even when production costs are increasing. Further, increased competition from low-cost suppliers around the world has put additional pressures on pricing.
Our margins could be substantially impacted by the following factors: ● Declines in Selling Prices : The average selling prices for certain of our products tend to decrease over their life cycles, and customers put pressure on suppliers to lower prices even when production costs are increasing.
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.
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.
If we are unsuccessful in implementing these programs or if we do not achieve our expected results, our results of operations and cash flows could be adversely affected or our business operations could be disrupted.
If we are unsuccessful in implementing these programs or if we do not achieve our expected results, our results of operations and cash flows could be adversely affected or our business operations could be disrupted. 10 Table of Contents FINANCIAL RISKS There are several factors which can cause our margins to suffer.
We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. 15 Table of Contents If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay acquisitions, investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay acquisitions, investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance our indebtedness.
As we periodically 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.
Any future outbreaks, health epidemics or pandemics could result in similar measures, which may materially adversely affect our financial results. We may experience labor unrest. As we periodically 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.
Many of these materials and components are produced by a limited number of suppliers and their availability to us may be constrained by supplier capacity. Any material disruption could materially adversely affect our financial results. In addition, inflationary pressures could result in higher input costs, including those related to our raw materials, labor, freight, utilities, healthcare and other expenses.
Many of these materials and components are produced by a limited number of suppliers and their availability to us may be constrained by supplier capacity. Any material disruption could materially adversely affect our financial results.
If we do not continue to satisfy these required ratios or receive waivers from our lenders, we will be in default under the credit agreement, which could result in an accelerated maturity of our debt obligations. We cannot assure investors that we will be able to access private or public debt or equity on satisfactory terms, or at all.
If we do not continue to satisfy the required ratios including the Leverage Ratio or receive waivers from our lenders, we will be in default under the credit agreement, which could result in an accelerated maturity of our debt obligations.
If we are unable to anticipate and effectively manage these and other risks, it could have a material and adverse effect on our business, our consolidated results of operations and consolidated financial condition. The recent political tensions and armed confli ct involving Russia and Ukraine continues to evolve and we are closely monitoring this dynamic situation.
If we are unable to anticipate and effectively manage these and other risks, it could have a material and adverse effect on our business, our consolidated results of operations and consolidated financial condition.
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.
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.
Please see the Risk Factor appearing below under the caption, "The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and consolidated results of operations.” The loss of certain substantial customers could materially and adversely affect us.
Please see the Risk Factors appearing below under the captions, "We may face risks related to conducting business in Israel" and "The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and consolidated results of operations.” 9 Table of Contents We may face risks related to conducting business in Israel.
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. 16 Table of Contents ESG issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and could damage our reputation.
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.
In addition to the risks associated with our PRC operations described above, the global nature of our operations generally subjects us to additional risks. We conduct operations in 14 countries, and outside of the United States (and the PRC), our largest manufacturing operations and associate populations are located within Mexico, Slovakia, the Dominican Republic, India and the United Kingdom.
We con duct operations i n 15 countries, and outside of the United States (and the PRC), our largest manufacturing operations and associate populations are located within Mexico, Slovakia, the Dominican Republic, Israel, India and the United Kingdom.
See “Overview - Key Factors Affecting our Business" in Item 7 of this Annual Report on Form 10-K for a discussion of how pricing and availability of materials is currently impacting our business. 12 Table of Contents We have sub stantial manufacturing operations located in the PRC , which exposes us to significant risks that could materially and adversely affect our business, operations, consolidated financial condition and consolidated results of operations.
See “Overview - Key Factors Affecting our Business" in Item 7 of this Annual Report on Form 10-K for a discussion of how pricing and availability of materials is currently impacting our business.
In 2022, we announced restructuring plans related to four facility consolidations as further described in "Overview - Key Factors Affecting our Business - Restructuring" in Item 7 of this Annual Report.
Over the past three years, the Company has undertaken a series of facility consolidations around the world, as further described in "Overview - Key Factors Affecting our Business - Restructuring" in Item 7 of this Annual Report.
Labor costs can also be impacted by fluctuations in the exchange rates in which local wages are paid as compared to the U.S. dollar. Profit margins will be materially and adversely impacted if we are not able to reduce our costs of production, introduce technological innovations as sales prices decline, or pass through cost increases to customers.
The imposition of new or increased tariffs and trade restrictions, particularly with respect to the PRC and Mexico, may materially adversely affect our business, financial condition, and results of operations." Profit margins will be materially and adversely impacted if we are not able to reduce our costs of production, introduce technological innovations as sales prices decline, or pass through cost increases to customers.
Our backlog figures may not be reliable indicators. Many of the orders that comprise our backlog may be delayed, accelerated or canceled by customers without penalty. Customers may on occasion double order from multiple sources to ensure timely delivery when lead times are particularly long. Customers often cancel orders when business is weak and inventories are excessive.
Customers may on occasion double order from multiple sources to ensure timely delivery when lead times are particularly long. Customers often cancel orders when business is weak and inventories are excessive. Additional factors that could cause the Company to fail to ship orders comprising our backlog include unanticipated supply difficulties, changes in customer demand and new customer designs.
Our level of indebtedness could negatively impact our access to the capital markets and our ability to satisfy financial covenants under our existing credit agreement. Our U.S. debt service requirements are significant in relation to our U.S. revenue and cash flow.
Our level of indebtedness could negatively impact our access to the capital markets and our ability to satisfy financial covenants under our existing credit agreement. We have incurred substantial amounts of indebtedness to fund the acquisition of Enercon in 2024, and we may need to incur additional indebtedness to finance operations or for other general corporate purposes.
During the year ended December 31, 2023, while there were no direct customers whose sales exceed ed 10% o f our 2023 consolidated net sales, approximately 11.6% of the Company's total net sales were sold to one ultimate end-user through various intermediary contract manufacturers.
During the year ended December 31, 2024, there were no direct customers or ultimate end customers whose sales exceeded 10% of our 2024 consolidated net sales. While there were no customers who exceeded 10% of our net sales in 2024, w e have experienced significant concentrations of customers in prior years (see Note 14, "Segments" ) .
Removed
As the status of the COVID pandemic and its effects continue to evolve, additional Bel facilities could become negatively impacted. COVID remains a potential supply continuity risk due to the unknown nature of future outbreaks including as a result of the emergence of further COVID virus variants.
Added
We may encounter unanticipated difficulties following our November 2024 acquisition of our 80%-owned Enercon subsidiary, including if we are unable to integrate the Enercon business successfully, or if we fail to realize the expected benefits and synergies of the acquisition within the expected time period (if at all).
Removed
The extent to which COVID will impact our business and our consolidated financial results will depend on future developments which are highly uncertain and cannot be predicted at the time of the filing of this Annual Report on Form 10-K.
Added
In addition, our business may be disrupted if our intended acquisition of the remaining 20% stake in Enercon is not completed for any reason. In November 2024, we completed our acquisition of our 80% interest in Enercon.
Removed
See "Overview - Key Factors Affecting our Business - Potential Future Impacts of COVID" in Item 7 of this Annual Report on Form 10-K for a discussion of current and potential future impacts of COVID upon our business. We may experience labor unrest.
Added
The success of our recently-closed Enercon acquisition will depend, in significant part, on our ability to successfully integrate the acquired business, establish and maintain good relationships with new and existing customers, suppliers, and other business partners, grow the revenue of the consolidated company and realize the anticipated strategic benefits and synergies.
Removed
While Bel sells a diversified portfolio of products to this ultimate end-user, we believe that the loss of this end user could have a material adverse effect on our consolidated financial position and consolidated results of operations. We have experienced significant concentrations of customers in prior years. See Note 14, "Segments" f or additional disclosures related to our significant customers.
Added
The combination of businesses is a complex, costly and time-consuming process. As a result, while we have devoted significant management attention and resources prior to closing in preparation for integration, we expect to continue to devote significant management attention and resources now that the acquisition has closed in order to complete the integration of business practices and operations.
Removed
Management has estimated that these initiatives will result in restructuring costs of approximately $13.4 million ($6.3 mill ion of which was incurred through December 31, 2023 ), incremental capital expenditures of approximately $5 million and once complete, annualized cost savings of approximately $6.9 m illion.
Added
We may encounter unanticipated difficulties or delays with the integration process, or may incur unexpected or higher than expected expenditures associated with the integration process and matters related to the acquisition. The integration process may disrupt Bel's legacy and acquired businesses and, if implemented ineffectively, would impair the realization of the full expected benefits.
Removed
Additionally, in connection with a new restructuring initiative implemented in the fourth quarter of 2023 involving the transition of certain manufacturing from our Glen Rock, Pennsylvania facility to other existing Bel sites as further described in "Overview – Key Factors Affecting our Business – Restructuring" in Item 7 of this Annual Report, management estimated that the initiative will result in restructuring costs of approximately $0.5 million ($0.4 million of which was incurred through December 31, 2023) and once complete, annualized cost savings of approximately $1.0 million.
Added
The anticipated opportunities in terms of potential growth and expansion offered by, and the anticipated benefits of, the Enercon acquisition may not be realized fully or at all, or may take longer to realize than we expect.
Removed
As mentioned above, the amounts set forth in the foregoing including anticipated restructuring costs, incremental capital expenditure spend and annualized cost savings are the Company’s current estimates based on information presently available to the Company, assumptions and circumstances as they exist in each case at the time of filing of this Annual Report on Form 10-K, and are subject to change.
Added
Actual operating, strategic and revenue opportunities, if achieved at all, may be less significant than we expect or may take longer to achieve than anticipated.
Removed
See "Cautionary Notice Regarding Forward-Looking Information." FINANCIAL RISKS There are several factors which can cause our margins to suffer.
Added
If we are not able to achieve these objectives and realize the anticipated benefits and synergies expected from the Enercon acquisition within a reasonable time, our business, financial condition and operating results may be materially adversely affected.
Removed
Additional factors that could cause the Company to fail to ship orders comprising our backlog include unanticipated supply difficulties, changes in customer demand and new customer designs. Throughout 2023, Bel has faced macroeconomic and excessive levels of inventory within the supply channel and these conditions expected to continue through at least the first half of 2024.
Added
Pursuant to the transaction documents governing the Enercon acquisition, Bel may acquire the remaining 20% stake in Enercon and has the current intention to so purchase such remaining interest by early 2027 in accordance with the terms and subject to the conditions of the shareholders’ agreement, which was entered into at the November 14, 2024 closing on the initial 80% interest.
Removed
Any equity financing that could be arranged may dilute existing shareholders and any debt financing that could be arranged may result in the imposition of more stringent financial and operating covenants.
Added
The purchase of the remaining 20% interest in Enercon is subject to the put-call mechanism set forth in the shareholders’ agreement and the other terms and conditions thereof. There can be no assurances that we will complete the acquisition of the remaining 20% interest in Enercon by early 2027 as intended, or at all.
Removed
Companies across all industries are facing increasing scrutiny relating to their ESG policies. Increased focus and activism related to ESG may hinder our access to capital, as investors may reconsider their capital investment as a result of their assessment of our ESG practices.
Added
Any failure to complete our intended acquisition of the remaining 20% interest may disrupt our plans, operations, and relationships with customers, suppliers, distributors, business partners and regulators, can cause potential difficulties in employee retention, and can have a material adverse effect on our business and results of operations. We are dependent on our ability to develop new products.
Removed
In particular, investors, customers and other stakeholders are increasingly focusing on environmental issues, including climate change, water use, waste and other sustainability concerns. Changing customer or consumer preferences may also result in increased demands regarding components and materials including packaging materials, including with respect to their environmental impact on sustainability.
Added
Our access to parts or materials, and our ability to contract with suppliers, may be limited or prohibited from time to time by trade restrictions or other legal or regulatory enactments. Additionally, inflationary pressures could result in higher input costs and materially adversely affect our financial results.
Removed
These demands could impact the profitability products, cause us to incur additional costs, to make changes to our operations, or to make additional commitments, set targets or establish additional goals and take actions to meet them, which could expose us to market, operational and execution costs or risks.
Added
Additionally, our access to parts or materials, and our ability to contract with suppliers utilized previously, may be limited or prohibited from time to time by trade restrictions or other legal or regulatory enactments.
Removed
In addition, governmental and non-governmental organizations, investors, customers, consumers, our employees and other stakeholders have placed increasing importance on ESG matters, and depending on their assessment of our ESG practices, certain investors may reconsider their investment in the Company.
Added
We anticipate continued downward pressure on our Power sales given trade restrictions on one of our former suppliers previously utilized for this segment, which had historically supported approximately $3 to $4 million per quarter of our sales into the consumer end market. We are currently evaluating alternative manufacturing options for the components previously supplied by this manufacturer.
Removed
Concern over climate change, waste, consumption or use of materials including packaging materials, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment.
Added
In addition, inflationary pressures could result in higher input costs, including those related to our raw materials, labor, freight, utilities, healthcare and other expenses.
Removed
Increased regulatory requirements, including in relation to various aspects of ESG including the SEC’s recent disclosure proposal on climate change, or environmental causes may result in increased compliance or input costs of energy, raw materials or compliance with emissions standards, which may cause disruptions in the manufacture of our products or an increase in operating costs.
Added
Demand in Enercon ’ s end markets can be cyclical, impacting the demand for its products, and Enercon ’ s business could be materially adversely affected by reductions in defense spending. Our majority 80%-owned subsidiary Enercon is a leading supplier of highly customized power conversion and networking solutions to aerospace and defense markets globally.
Removed
We may undertake additional costs to control, assess and report on ESG metrics as the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand. Our ability to achieve any stated goal, target, or objective is subject to numerous factors and conditions, many of which are outside of our control.
Added
For full fiscal year 2024, approximately 93% and 7% of Enercon’s revenue was attributable to the defense and aerospace end markets, respectively. Demand in Enercon’s end-use markets can be sensitive to general economic conditions, competitive influences, and fluctuations in inventory levels throughout the supply chain.
Removed
Any failure to achieve our ESG goals or ambitions or a perception (whether or not valid) of our failure to act responsibly with respect to the environment or to effectively respond to new, or changes in, legal or regulatory requirements concerning environmental or other ESG matters, or increased operating or manufacturing costs due to increased regulation or environmental causes could adversely affect our business and reputation.
Added
Enercon’s sales are sensitive to the market conditions present in the industries in which the ultimate consumers of its products operate, which in some cases have been highly cyclical and subject to substantial downturns.
Removed
If we do not adapt to or comply with new regulations, or fail to meet ESG goals or ambitions or evolving investor, industry or stakeholder expectations and standards, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, customers may choose to stop purchasing our products or purchase products from another company or a competitor, and our reputation, business or financial condition may be adversely affected.
Added
As a result of the high correlation to government spending on defense and budgeting, Enercon has experienced, and in the future, it may experience, significant fluctuations in sales and results of operations with respect to a substantial portion of our total product offering, and such fluctuations could be material and adverse to our overall financial condition, results of operations and liquidity.
Removed
As of February 29, 2024, to the Company's knowledge, there was one shareholder of the Company's common stock with ownership in excess of 10% of Class A outstanding shares with no ownership of the Company's Class B common stock and with no basis for exception from the operation of the above-mentioned provisions.
Added
Because certain of Enercon’s products are used in a variety of land, air and sea defense applications, Enercon derives a substantial portion of its revenue from the defense industry. For full fiscal year 2024, approximately 93% of Enercon’s revenue was derived from customers in the defense industry.
Removed
In order to vote its shares at Bel's next shareholders' meeting, this shareholder must either purchase the required number of Class B common shares or sell or otherwise transfer Class A common shares until its Class A holdings are under 10%.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following is a list of the locations of the Company's principal manufacturing facilities at December 31, 2023: Location Approximate Square Feet Product Group Produced at Facility Owned/ Leased Percentage Used for Manufacturing Dongguan, People's Republic of China 661,000 Magnetic Solutions Leased 36 % Pingguo, People's Republic of China 180,000 Magnetic Solutions Leased 39 % Shenzhen, People's Republic of China 227,000 Power Solutions & Protection Leased 100 % Zhongshan, People's Republic of China 77,000 All three product groups Leased 100 % Zhongshan, People's Republic of China 118,000 All three product groups Owned 100 % Zhongshan, People's Republic of China 78,000 All three product groups Owned 100 % Guangxi, People's Republic of China 243,000 Magnetic Solutions Leased 54 % Mumbai, India 56,000 Power Solutions & Protection Leased 46 % Dubnica nad Vahom, Slovakia 35,000 Power Solutions & Protection Owned 50 % Dubnica nad Vahom, Slovakia 70,000 Power Solutions & Protection Leased 100 % Worksop, United Kingdom 51,000 Connectivity Solutions Leased 28 % Chelmsford, United Kingdom 17,000 Connectivity Solutions Leased 80 % Dominican Republic 33,000 Magnetic Solutions Leased 85 % Cananea, Mexico 30,000 Connectivity Solutions Leased 60 % Reynosa, Mexico 80,000 Connectivity Solutions Leased 56 % Glen Rock, Pennsylvania 74,000 Connectivity Solutions Owned 60 % Waseca, Minnesota 127,000 Connectivity Solutions Leased 83 % McAllen, Texas 40,000 Connectivity Solutions Leased 56 % Melbourne, Florida 13,000 Connectivity Solutions Leased 64 % 2,210,000 Of the space described above, 420,000 square feet is used for engineering, warehousing, sales and administrative support functions at various locations and 419,000 square feet is designated for dormitories, canteen and other employee related facilities in the PRC.
Biggest changeThe following is a list of the locations of the Company's principal manufacturing facilities at December 31, 2024: Location Approximate Square Feet Product Group Produced at Facility Owned/ Leased Percentage Used for Manufacturing Dongguan, PRC 661,000 Magnetic Solutions Leased 36 % Pingguo, PRC 27,000 Magnetic Solutions Leased 39 % Shenzhen, PRC 227,000 Power Solutions & Protection Leased 100 % Zhongshan, PRC 153,000 All three product groups Leased 39 % Zhongshan, PRC 118,000 All three product groups Owned 100 % Zhongshan, PRC 78,000 All three product groups Owned 100 % Guangxi, PRC 243,000 Magnetic Solutions Leased 54 % Mumbai, India 53,000 Power Solutions & Protection Leased 66 % Dubnica nad Vahom, Slovakia 35,000 Power Solutions & Protection Owned 100 % Dubnica nad Vahom, Slovakia 70,000 Power Solutions & Protection Leased 100 % Worksop, United Kingdom 51,000 Connectivity Solutions Leased 83 % Chelmsford, United Kingdom 17,000 Connectivity Solutions Leased 80 % Dominican Republic 33,000 Magnetic Solutions Leased 85 % Cananea, Mexico 30,000 Connectivity Solutions Leased 60 % Reynosa, Mexico 88,000 Connectivity Solutions Leased 56 % Glen Rock, Pennsylvania 74,000 Connectivity Solutions Owned 60 % Waseca, Minnesota 128,000 Connectivity Solutions Leased 83 % McAllen, Texas 40,000 Connectivity Solutions Leased 56 % Melbourne, Florida 13,000 Connectivity Solutions Leased 64 % Belmont, New Hampshire 16,000 Power Solutions & Protection Leased 90 % Haryana, India 36,000 Power Solutions & Protection Leased 90 % Netanya, Israel 60,000 Power Solutions & Protection Leased 70 % 2,251,000 Of the space described above, 428,000 square feet is used for engineering, warehousing, sales and administrative support functions at various locations and 406,000 square feet is designated for dormitories, canteen and other employee related facilities in the PRC.
Item 2. Properties The Company is headquartered in West Orange, New Jersey. The Compan y occupies 294,000 square feet at 18 non-manufacturing facilities , which are used primarily for management, financial accounting, engineering, sales and administrative support. Of this space, the Company leases 187,000 square feet in 13 facilities and owns properties of 107,000 square feet.
Item 2. Properties The Company is headquartered in West Orange, New Jersey. The Company occupies 304,000 square feet of non-manufacturing space, which is used primarily for management, financial accounting, engineering, sales and administrative support. Of this space, the Company leases 197,000 square feet and owns properties of 107,000 square feet.
The Company also operate d 19 manufacturing facilities in 7 c oun tries as of December 31, 2023. Approximately 13% of the 2.4 million square feet the Co mpany occupies is owned while the remainder is leased. See Note 19, "Commitments and Contingencies" , for additional information pertaining to leases.
The Company also operate d manufacturing facilities in 8 coun tries as of December 31, 2024, as detailed below. Approximately 14% of the 2.3 million square feet the Company occupies is owned while the remainder is leased. See Note 19, "Commitments and Contingencies" , for additional information pertaining to leases.
Management cannot presently predict what future impact, if any, this will have on the Company or how the political climate in the PRC will affect its contractual arrangements in the PRC. A significant portion of the Company's manufacturing operations and approximately 21.6% of its id entifiable assets are located in Asia.
A significant portion of the Company's manufacturing operations and approximately 30.8% of its identifiable assets are located in Asia.
Added
Management cannot presently predict what future impact the current status of these territories, along with evolving political landscape in the region, will have on the Company, if any, or how the political climate in the PRC will affect the Company's contractual arrangements in the PRC (including risks arising out of any changes in governmental and economic policy, such as increased or new tariffs, and current or additional trade restrictions, and the potential for adverse developments arising out of any political or economic instability related to Hong Kong or Taiwan).

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings The information called for by this Item is incorporated herein by reference to the caption "Legal Proceedings" in Note 19, "Co mmitments and Contingencies." Item 4. Mine Safety Disclosures Not applicable. 21 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings The information called for by this Item is incorporated herein by reference to the caption "Legal Proceedings" in Note 19, "Co mmitments and Contingencies." Item 4. Mine Safety Disclosures Not applicable. 18 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeNevertheless, as in the past, the respective amounts of future dividends, if any, to be declared on each class of Common Stock depends on circumstances existing at the time, including the Company's financial condition, capital requirements, earnings, legally available funds for the payment of dividends and other relevant factors and are declared at the discretion of the Company’s Board of Directors.
Biggest changeNevertheless, as in the past, the respective amounts of future dividends, if any, to be declared on each class of Common Stock depends on circumstances existing at the time, including the Company's financial condition, capital requirements, earnings, legally available funds for the payment of dividends and other relevant factors and are declared at the discretion of the Company’s Board of Directors. 19 Table of Contents Stock Performance Graph The following shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any of our other filings under the Securities Exchange Act of 1934, as amended, or the Securities Act.
The aggregate $25.0 million available for repurchases under the Repurchase Program has been suballocated for purchases of Class A shares and Class B shares in portions of $4.0 million and $21.0 million, respectively, prorated to take into account the number of outstanding shares of each respective class.
The aggregate $25.0 million available for repurchases under the Repurchase Program has been sub-allocated for purchases of Class A shares and Class B shares in portions of $4.0 million and $21.0 million, respectively, prorated to take into account the number of outstanding shares of each respective class.
Dividends During the years ended December 31, 2023 and 2022, the Company declared dividends on a quarterly basis at a rate of $0.06 per Class A share of common stock and $0.07 per Class B share of common stock totaling $3.5 mi llion in 2023 and $3.4 million in 2022.
Dividends During the years ended December 31, 2024, 2023 and 2022, the Company declared dividends on a quarterly basis at a rate of $0.06 per Class A share of common stock and $0.07 per Class B share of common stock totaling $3.5 m i llion in 2024, $3.5 million in 2023 and $3.4 million in 2022.
On February 21, 2024, Bel's Board of Directors declared a dividend in the amount of $0.06 per Class A common share and $0.07 per Class B common share which is scheduled to be paid on May 1, 2024 to all shareholders of record at April 15, 2024.
On February 12, 2025, Bel's Board of Directors declared a dividend in the amount of $0.06 per Class A common share and $0.07 per Class B common share which is scheduled to be paid on May 1, 2025 to all shareholders of record at April 15, 2025.
On February 1, 2024, the Company paid a dividend to all shareholders of record at January 15, 2024 of Class A and Class B Common Stock in the total amount of $0.1 million ($0.06 per share) and $0.7 million ($0.07 p er share), respectively.
On February 1, 2025, the Company paid a dividend to all shareholders of record at January 15, 2025 of Class A and Class B Common Stock in the total amount of $0.1 million ($0.06 per share) and $0.7 million ($0.07 per share), respectively.
The Repurchase Program does not obligate the Company to repurchase any dollar amount or number of shares, and the Repurchase Program may be suspended or terminated at any time. 22 Table of Contents Item 6. [Reserved]
The Repurchase Program does not obligate the Company to repurchase any dollar amount or number of shares, and the Repurchase Program may be suspended or terminated at any time.
Holders As of February 29, 2024, there w e re 34 registered shareholders of the Company's Class A Common Stock and 317 registered shareholders of the Company's Class B Common Stock.
Holders As of January 31, 2025, there w e re 29 registered shareholders of the Company's Class A Common Stock and 217 registered shareholders of the Company's Class B Common Stock.
Removed
At February 29, 2024, to the Company's knowledge, there was one shareholder of the Company's Class A common stock whose voting rights were suspended. This shareholder owned 16.7% of the Company's outstanding shares of Class A common stock.
Added
The following graph shows, for the five years ended December 31, 2024, the cumulative total return on an investment of $100 assumed to have been made on December 31, 2019 in Bel Fuse Inc. Class B common stock.
Removed
For additional discussion, see Item 1A – "Risk Factors – As a result of protective provisions in the Company's restated certificate of incorporation, as amended, the voting power of holders of Class A common shares whose voting rights are not suspended (including officers, directors and principal shareholders) may be increased at future meetings of the Company's shareholders" .
Added
The graph compares this return ("Bel") with that of comparable investments assumed to have been made on the same date in: (a) Russell 2000 Index and (b) a group of companies in our industry, consisting of Nasdaq listed stocks (U.S. and foreign) with SIC codes 3670-3679, Electronic Components & Accessories.
Removed
Issuer Purchases of Equity Securities The following table summarizes the activity related to repurchases of our equity securities during the fourth quarter ended December 31, 2023: Total Number of Shares Purchased (1) Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 1, 2023 – October 31, 2023 - $ - - (2) November 1, 2023 – November 30, 2023 - - - (2) December 1, 2023 – December 31, 2023 2,000 (Class B) (1) 52.60 (1) - (2) Total 2,000 (Class B) (1) $ 52.60 (1) - (2) (1) Represents 2,000 shares of Class B Common Stock that were repurchased by the Company from a former employee in connection with the sale of its Czech Republic subsidiary Bel Steward s.r.o.
Added
Total return for each assumed investment assumes the reinvestment of all dividends on December 31 of the year in which the dividends were paid.
Removed
The repurchase was executed in December 2023 in a privately negotiated transaction at the market price of the Class B Common Stock on the date the parties reached agreement with respect to the terms of the transaction.
Added
Comparison of 5 Year Cumulative Total Return Assumes Initial Investment of $100 December 2024 2019 2020 2021 2022 2023 2024 Bel Fuse Inc. $ 100.00 $ 75.20 $ 65.93 $ 170.57 $ 348.28 $ 431.96 Russell 2000 Index 100.00 118.36 134.57 105.56 121.49 133.67 Nasdaq Stocks (SIC 3670-3679 US + Foreign) Electronic Components & Accessories 100.00 45.14 39.83 19.50 34.70 58.16 Issuer Purchases of Equity Securities On February 21, 2024, the Company’s Board of Directors authorized and the Company publicly announced a $25.0 million share repurchase program (the “Repurchase Program”).
Removed
(2) As the relevant authorization and initiation of the Company’s new Repurchase Program (as defined below) are events subsequent to the Q4-2023 reporting period, the table above reporting repurchase data for the fourth quarter ended December 31, 2023 does not reflect any data or transactions relevant to the Company’s $25.0 million share repurchase program (the “Repurchase Program”) as authorized by the Company’s Board of Directors and publicly announced on February 21, 2024.
Added
As of December 31, 2024, the program-to-date repurchases amounted to 26,326 Class A shares at an aggregate purchase price of $1.9 million and 235,821 Class B shares at an aggregate purchase price of $14.1 million. There were no repurchases of our equity securities during the three months ended December 31, 2024.
Added
Approximately $2.1 million of Class A shares and $6.9 million of Class B shares are yet to be purchased under this plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDollar, and the restructuring and efficiency programs implemented throughout 2023 in our Connectivity Solutions segment. The reduction in labor costs were partially offset by the unfavorable fluctuation of the Mexican Peso exchange rate versus the U.S. Dollar in the 2023 versus the 2022.
Biggest changeBy segment, our Magnetic Solutions segment is most impacted by fluctuations in the exchange rates of the Chinese renminbi versus the U.S. dollar; our Connectivity Solutions segment is most impacted by fluctuations in the exchange rate of the Mexican peso versus the U.S. dollar; and our Power Solutions and Protection segment is most impacted by fluctuations in the exchange rates of the Chinese renminbi and the Israeli shekel versus the U.S. dollar.
Our products are manufactured at various facilities in the U.S., Mexico, India, the Dominican Republic, the United Kingdom, Slovakia and the PRC. We have little visibility into the ordering habits of our customers and we can be subjected to large and unpredictable variations in demand for our products.
Our products are manufactured at various facilities in the U.S., Mexico, Israel, India, the Dominican Republic, the United Kingdom, Slovakia and the PRC. We have little visibility into the ordering habits of our customers and we can be subjected to large and unpredictable variations in demand for our products.
Further, if we are unable to achieve the projected revenue growth rates or margins assumed in our projections, this would also impact the fair value of our reporting units. Effective with the October 1, 2023 testing date, we changed our reporting unit structure to align with how management is currently reviewing and managing the business.
Further, if we are unable to achieve the projected revenue growth rates or margins assumed in our projections, this would also impact the fair value of our reporting units. Effective with the October 1, 2024 testing date, we changed our reporting unit structure to align with how management is currently reviewing and managing the business.
Magnetic Solutions: Sales of our Magnetic Soluti ons products declined by $63.6 million during 2023 as compared to 2022. Reduced demand for our Magnetic Solutions products from our networking customers and through our distribution channels has been the primary driver as we believe these customers continue to work through inventory on hand.
Magnetic Solutions: Sales of our Magnetic Solutions products declined by $63.6 million during 2023 as compared to 2022. Reduced demand for our Magnetic Solutions products from our networking customers and through our distribution channels has been the primary driver as we believe these customers continue to work through inventory on hand.
In total, these other expenses were largely the same in 2023 as compared to 2022 as the benefits realized on cost savings initiatives were offset by higher costs from the redundant operations in China that were in place while our facility consolidation project was underway for much of 2023.
In total, these other expenses were largely the same in 2023 as compared to 2022 as the benefits realized on cost savings initiatives were offset by higher costs from the redundant operations in the PRC that were in place while our facility consolidation project was underway for much of 2023.
The net expense in 2023 was comprised of a foreign exchange loss of $1.4 million, the loss on liquidation of a foreign subsidiary of $2.7 million, $0.8 million of losses associated with Bel's investment in innolectric and $0.8 million of other expense; partially offset by $1.7 million of interest income and a gain of $1.2 million related to the Company's SERP investments.
The net expense in 2023 was comprised of a foreign exchange loss of $1.4 million, the loss on liquidation of a foreign subsidiary of $2.7 million, $0.8 million of losses associated with Bel's investment in innolectric and $0.8 million of other expense; partially offset by a gain of $1.2 million related to the Company's SERP investments.
We applied a combined weighting of 75% to the income approach when determining the fair value of our reporting units. 31 Table of Contents Market Approach Used to Determine Fair Values The market approach estimates the fair value of the reporting unit by applying multiples of operating performance measures to the reporting unit's operating performance (the "Guideline Publicly Traded Company Method").
We applied a combined weighting of 75% to the income approach when determining the fair value of our reporting units. 29 Table of Contents Market Approach Used to Determine Fair Values The market approach estimates the fair value of the reporting unit by applying multiples of operating performance measures to the reporting unit's operating performance (the "Guideline Publicly Traded Company Method").
Any impairment charges that we may take in the future could be material to our consolidated results of operations and consolidated financial condition. The Company conducted its annual goodwill impairment test as of October 1, 2023, and no impairment was identified at that time.
Any impairment charges that we may take in the future could be material to our consolidated results of operations and consolidated financial condition. The Company conducted its annual goodwill impairment test as of October 1, 2024, and no impairment was identified at that time.
Management has also concluded that the fair value of its goodwill exceeded the associated carrying value at December 31, 2023 and that no impairment exists as of that date. See Note 5, "Goodwill and Other Intangible Assets," for details of our goodwill balance and the goodwill review performed in 2023 .
Management has also concluded that the fair value of its goodwill exceeded the associated carrying value at December 31, 2024 and that no impairment exists as of that date. See Note 5, "Goodwill and Other Intangible Assets," for details of our goodwill balance and the goodwill review performed in 2024 .
Most significant expenses, including raw materials, labor and manufacturing expenses, are incurred primarily in U.S. dollars, Mexican pesos, or the Chinese renminbi, and to a lesser extent in British pounds, or I ndian ru pees.
Most significant expenses, including raw materials, labor and manufacturing expenses, are incurred primarily in U.S. dollars, Mexican pesos, the Chinese renminbi or the Israeli shekel, and to a lesser extent in British pounds, or I ndian ru pees.
Sales into our military end market also grew by $8.8 million (24%) in 2023 as compared to 2022. We also experienced an increased volume of Connectivity Solutions products sold through our distribution channels in 2023 compared to last year.
Sales into our military end market also grew by $8.8 million (24%) in 2023 as compared to 2022. We also experienced an increased volume of Connectivity Solutions products sold through our distribution channels in 2023 compared to 2022.
Hong Kong has a territorial tax system which imposes corporate income tax at a rate of 16.5% on income from activities solely conducted in Hong Kong. The Company holds an offshore business license from the government of Macao.
Hong Kong has a territorial tax system which imposes corporate income tax at a rate of 16.5% on inco me from activities solely conducted in Hong Kong. The Company holds an offshore business license from the government of Macao.
This increase was primarily due to the following: • net cash provided by operating activities of $108.3 million; • proceeds from the sale of property, plant and equipment of $6.0 million; • proceeds from held to maturity securities of $19.9 million; and • proceeds from the sale of our business in the Czech Republic of $5.1 million; partially offset by • purchases of held to maturity and marketable securities of $60.0 million; • payments for our equity method investment in innolectric of $10.3 million; • purchases of property, plant and equipment of $12.1 million; • dividend payments of $ 3.5 million; and • net repayments under our revolving credit line of $35.0 million.
This increas e was primarily due to cash provided by operating activities of $108.3 million, proceeds from the sale of property, plant and equipment of $6.0 million, proceeds from held to maturity securities of $19.9 million, and proceeds from the sale of our business in the Czech Republic of $5.1 million; partially offset by the purchases of held to maturity and marketable securities of $60.0 million, payments for our equity method investment in innolectric of $10.3 million, purchases of property, plant and equipment of $12.1 million, dividend payments of $3.5 million, and net repayments under our revolving credit line of $35.0 million.
In the event of a sudden decrease in demand for our products, or a higher incidence of inventory obsolescence, the Company could be required to increase its inventory reserve, which would have an unfavorable impact on our gross margin. 30 Table of Contents Goodwill We use a fair value approach to test goodwill for impairment.
In the event of a sudden decrease in demand for our products, or a higher incidence of inventory obsolescence, the Company could be required to increase its inventory reserve, which would have an unfavorable impact on our gross margin. Goodwill We use a fair value approach to test goodwill for impairment.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The information in this MD&A should be read in conjunction with the Company's consolidated financial statements and the notes related thereto.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The information in this Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A") should be read in conjunction with the Company's consolidated financial statements and the notes related thereto.
The Company’s earnings before income taxes for the year ended December 31, 2023 were approximately $24.2 m illion higher as compared with the year ended December 31, 2022, primarily attributable to an increase in income in the Asia and North America regions.
The Company’s earnings before income taxes for the year ended December 31, 2023, were approximately $24.2 million higher as compared with the year ended December 31, 2022, primarily attributable to an increase in income in the Asia and North America regions.
Consistent with the dividend rates declared in prior years, Bel's Board of Directors declared dividends on November 1, 2023 and again on February 21, 2024 on each of our two classes of common stock. These two quarterly payments will be made in the first half of 2024 in the total anticipated amount of $1.7 million.
Consistent with the dividend rates declared in prior years, Bel's Board of Directors declared dividends on November 1, 2024 and again on February 12, 2025 on each of our two classes of common stock. These two quarterly payments will be made in the first half of 2025 in the total anticipated amount of $1.7 million.
The changes in net periodic benefit cost year-over-year are attributable to demographic changes within the plan, as well as any changes to the discount rate or the assumption around the future annual increases in compensation. The discount rate utilized for the net periodic benefit cost was 5.0% at December 31, 2023 and 2.75% at December 31, 2022.
The changes in net periodic benefit cost year-over-year are attributable to demographic changes within the plan, as well as any changes to the discount rate or the assumption around the future annual increases in compensation. The discount rate utilized for the net periodic benefit cost was 4.75% at December 31, 2024 and 5.0% at December 31, 2023.
If an event of default occurs, the lenders under the credit agreement would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor. At December 31, 2023, the Company had $60 million outstanding under its credit agreement.
If an event of default occurs, the lenders under the credit agreement would be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a secured creditor. At December 31, 2024, the Company had $287.5 million outstanding under its credit agreement.
New Financial Accounting Standards The discussion of new financial accounting standards applicable to the Company is incorporated herein by reference to Note 1, "Description of Business and Summary of Significant Accounting Policies."
New Financial Accounting Standards The discussion of new financial accounting standards applicable to the Company is incorporated herein by reference to Note 1, "Description of Business and Summary of Significant Accounting Policies." 30 Table of Contents
An increase in the discount rate assumption of 50 basis points would have impacted the fair values of our reporting units, and would have reduced the excess of fair value over carrying value to a revised range of 69% to 163%.
An increase in the discount rate assumption of 50 basis points would have impacted the fair values of our reporting units, and would have reduced the excess of fair value over carrying value to a revised range of 38% to 478%.
We were favorably impacted by transactional foreign exchange gains in 2023 due to the depreciation of the Chinese Renminbi against the U.S. dollar, which was largely offset by an appreciation of the Mexican Peso against the U.S. dollar, as compared to exchange rates in effect during 2022.
We were favorably impacted by transactional foreign exchange gains in 2024 due to the depreciation of the Chinese renminbi and Mexican peso against the U.S. dollar, which was largely offset by an appreciation of the Israeli shekel against the U.S. dollar, as compared to exchange rates in effect during 2023.
Such transactions, as well as those related to our multi-currency intercompany payable and receivable transactions, resulted in a net realized and unrealized currency exchange loss of $1.4 million in 2023 and a gain of $0.3 million in 2022 which were included in other expense, net on the consolidated statements of operations.
Such transactions, as well as those related to our multi-currency intercompany payable and receivable transactions, resulted in a net realized and unrealized currency exchangeloss of $1.9 million in 2024, a loss of $1.4 million i n 2023 and a gain of $0.3 million in 2022 which were included in other expense, net on the consolidated statements of operations.
Tax Payments - At December 31, 2023, we had liabilities for unrecognized tax benefits and related interest and penalties of $19.8 million, all of which is included in other liabilities on our consolidated balance sheet. At December 31, 2023, we cannot reasonably estimate the future period or periods of cash settlement of these liabilities.
Tax Payments - At December 31, 2024, we had liabilities for unrecognized tax benefits and related interest and penalties of $18.1 million, all of which is included in other liabilities on our consolidated balance sheet. At December 31, 2024, we cannot reasonably estimate the future period or periods of cash settlement of these liabilities.
These sales increases were offset in part by a decline in sales of passive connector and cabling products used in the industrial premise wiring and 5G/IOT markets of $11.0 million (29.0%) as compared to the prior year.
These sales increases were offset in part by a decline in sales of passive connector and cabling products used in the industrial premise wiring and 5G/IoT markets of $11.0 million (29.0%) for 2023 as compared to 2022.
Our reserve calculations are based on historical experience related to slow-moving inventory in addition to specific known concerns in the case of products going end-of-life or customer cancellations. As of December 31, 2023 and 2022, the Company had reserves for excess or obsolete inventory o f $13.7 million and $1 4.5 million, respectively.
Our reserve calculations are based on historical experience related to slow-moving inventory in addition to specific known concerns in the case of products going end-of-life or customer cancellations. As of December 31, 2024 and 2023, the Company had reserves for excess or obsolete inventory o f $14.5 m illion and $1 3.7 million, respectively.
Also as described below in the discussion captioned "Inflation and Foreign Currency Exchange" , the Company realized foreign exchange transactional losses of $ 1.4 mi llion during 2023, due to the fluctuation of the spot rates of certain currencies in effect when translating our balance sheet accounts at December 31, 2023 versus those in effect at December 31, 2022.
Also as described below in the discussion captioned "Inflation and Foreign Currency Exchange" , the Company realized foreign exchange transactional losses of $1.9 million during 2024, due to the fluctuation of the spot rates of certain currencies in effect when translating our balance sheet accounts at December 31, 2024 versus those in effect at December 31, 2023.
In 2022, a gain of $1.6 million was recorded in connection with the sale of a separate property in Jersey City. Interest Expense The Company incurred interest expense of $2.9 million in 2023 and $3.4 million in 2022 primarily due to its outstanding borrowings under the Company's credit agreement.
In 2022, a gain of $1.6 million was recorded in connection with the sale of a separate property in Jersey City. 24 Table of Contents Interest Expense 2024 as Compared to 2023 The Company incurred interest expense of $4.1 million in 2024 and $2.9 million in 2023 primarily due to its outstanding borrowings under the Company's credit agreement.
We believe that our current liquidity position and future cash flows from operations will enable us to fund our operations, both in the next twelve months and in the longer term. 28 Table of Contents Cash Flow Summary During the year ended December 31, 2023, the Company's cash and cash equivalents increased by $19.1 million.
We believe that our current liquidity position and future cash flows from operations will enable us to fund our operations, both in the next twelve months and in the longer term. 26 Table of Contents Cash Flow Summary During the year ended December 31, 2024, the Company's cash and cash equivalents decreased by $21.1 million.
The Company also had outstanding purchase orders related to capital expenditures which totaled $5.8 m illion at December 31, 2023, all of which is expected to be paid in 2024. Pension Benefit Obligations - As further described in Note 15, "Re tirement Fund and Profit Sharing Plan" , the Company maintains a Supplemental Executive Retirement Plan ("SERP").
The Company also had outstanding purchase orders related to capital expenditures which totaled $4.7 million at December 31, 2024, all of which is expected to be paid in 2025. Pension Benefit Obligations - As further described in Note 15, "Re tirement Fund and Profit Sharing Plan" , the Company maintains a Supplemental Executive Retirement Plan ("SERP").
If m arket factors change and the discount rate utilized in the fair value calculation changes, it would result in a higher or lower fair value of our reporting units. The discount rates utilized in our October 1, 2023 impairment test ranged from 14.0% to 18 .5%.
If market factors change and the discount rate utilized in the fair value calculation changes, it would result in a higher or lower fair value of our reporting units. The discount rates utilized in our October 1, 2024 impairment test ranged from 10.0% to 14.5%.
To the extent the renminbi or peso appreciate in futu re periods, it could result in the Company's incurring higher costs for most expenses incurred in the PRC and Mexico.
To the extent the renminbi, peso or shekel appreciate in future periods, it could result in the Company's incurring higher costs for most expenses incurred in the PRC, Mexico and Israel.
We applied a combined weighting of 25% to the market approach when determining the fair value of these reporting units. As indicated i n Note 5, "Goodwill and Other Intangible Assets" , the fair value of each of our four reporting units exceeded their respective carrying values by a large margin (ranging from 71% to 169%).
We applied a combined weighting of 25% to the market approach when determining the fair value of our reporting units. As indicated in Note 5, "Goodwill and Other Intangible Assets" , the fair value of each of our four reporting units exceeded their respective carrying values by a very large margin (ranging from 44% to 500%) .
At December 31, 2023, estimated future obligations under the plan amounted to $19.5 million. It is expected that the Company will pay $0.8 million in benefit payments in connection with the SERP during 2024.
At December 31, 2024, estimated future obligations under the plan amounted to $18 million. It is expected that the Company will pay $0.9 million in benefit payments in connection with the SERP during 2025.
Different assumptions and judgments could change the estimates used in the preparation of the consolidated financial statements, which, in turn, could change the results from those reported. Management evaluates its estimates, assumptions and judgments on an ongoing basis.
Actual results may differ from these estimates under different assumptions or conditions. Different assumptions and judgments could change the estimates used in the preparation of the consolidated financial statements, which, in turn, could change the results from those reported. Management evaluates its estimates, assumptions and judgments on an ongoing basis.
S ee Note 10, "Income Taxes", for furthe r discussion. Also included on our consolidated balance sheet at December 31, 2023 is $2.7 million of liabilities for transition tax associated with the 2017 U.S. tax reform, of which $2.7 million is expected to be paid in 2024.
See Note 10, "Income Taxes", for further discussion. Also included on our consolidated balance sheet at December 31, 2024 is $2.0 million of liabilities for transition tax associated with the 2017 U.S. tax reform, all of which is expected to be paid in 2025.
D uring the year ended December 31, 2023 , accounts receivable decreased $22.5 million primarily due to the lower sales volume in the second half of 2023 as compared to the same period of 2022. Days sales outstanding (DSO) decreased to 55 days at December 31, 2023 from 58 days at December 31, 2022 .
During the year ended December 31, 2023, accounts receivable decreased $22.5 million primarily due to the lower sales volume in the second half of 2023 as compared to the same period of 2022. DSO decreased to 55 days at December 31, 2023 from 58 days at December 31, 2022. Inventories decreased by $33.6 million from the December 31, 2022 level.
Liquidity and Capital Resources Our principal sources of liquidity include $ 89.4 million of cash and cash equivalents at December 31, 2023, $37.5 million of held to maturity investments in U.S. Treasury securities, cash provided by operating activities and borrowings available under our credit facility.
Liquidity and Capital Resources Our principal sources of liquidity include $68.3 million of cash and cash equivalents at December 31, 2024, $1.0 million of held to maturity investments in U.S. Treasury securities, cash provided by operating activities and borrowings available under our credit facility.
Translation of subsidiaries' foreign currency financial statements into U.S. dollars resulted in translation adjustments, net of taxes, o f $6.7 mi llion and ($8.2) million for the years ended December 31, 2023 and 2022, respectively, which are included in accumulated other comprehensive loss on the consolidated balance sheets.
Translation of subsidiaries' foreign currency financial statements into U.S. dollars resulted in translation adjustments, net of taxes, of ($5.5) million and $6.7 million for the years ended December 3 1, 2024 and 2023, respectively, which are included in accumulated other comprehensive loss on the consolidated balance sheets.
In 2022, the Company recorded $7.3 million of restructuring charges related to these same initiatives. Gain on Sale of Properties During 2023, the Company recorded a gain of $3.8 million related to the sale of one of its properties in Jersey City, New Jersey.
Gain on Sale of Properties During 2023, the Company recorded a gain of $3.8 million related to the sale of one of its properties in Jersey City, New Jersey.
Labor costs in 2023 as a percentage of sales have decreased significantly from the 2022 periods presented due to a variety of factors, including the shift in product mix resulting in a lower consolidated percentage of sales from of our labor-intensive Magnetic products, lower labor costs in the PRC due to the favorable fluctuation in the Chinese Renminbi exchange rate versus the U.S.
Labor costs in 2023 as a percentage of sales decreased significantly from 2022 due to a variety of factors, including the shift in product mix resulting in a lower consolidated percentage of sales from of our labor-intensive Magnetic products, lower labor costs in the PRC due to the favorable fluctuation in the Chinese renminbi exchange rate versus the U.S. dollar, and the restructuring and efficiency programs implemented throughout 2023 in our Connectivity Solutions segment.
See "Cautionary Notice Regarding Forward-Looking Information." 24 Table of Contents • Impact of Foreign Currency – As further described below in this "Impact of Foreign Currency" discussion, during 2023, labor and overhead costs were less than $0.1 million higher than in 2022 due to an unfavorable foreign exchange environment involving the Mexican peso, and Euro partially offset by favorable foreign exchange fluctuation due to Chinese renminbi as compared to the prior year period.
See "Cautionary Notice Regarding Forward-Looking Information." ● Impact of Foreign Currency – As further described below in this "Impact of Foreign Currency" discussion, during 2024, labor and overhead costs were $0.4 million lower than in 2023 due to favorable foreign exchange environment involving the Chinese renminbi and the Mexican peso, partially offset by unfavorable foreign exchange fluctuations due to the Israeli shekel as compared to the prior year period.
Fluctuations of the U.S. dollar against other major currencies have not significantly affected our foreign operations as most sales continue to be denominated in U.S. dollars or currencies directly or indirectly linked to the U.S. dollar.
We are ex posed to market risk from changes in foreign currency exchange rates. Fluctuations of the U.S. dollar against other major currencies have not significantly affected our foreign operations as most sales continue to be denominated in U.S. dollars or currencies directly or indirectly linked to the U.S. dollar.
At December 31, 2023, the Company's indefinite-lived intangible assets related solely to trademarks. Pension Benefit Obligations Net periodic benefit cost for the Company's SERP totaled $1.3 million in 2 023 and $1.5 million in 2022. Benefit plan information for financial reporting purposes is calculated using actuarial assumptions including a discount rate for plan benefit obligations.
Pension Benefit Obligations Net periodic benefit cost for the Company's SERP totaled $1.4 million in 2 024, $1.3 million in 2023, and $1.5 million in 2022. Benefit plan information for financial reporting purposes is calculated using actuarial assumptions including a discount rate for plan benefit obligations.
T he discount rate utilized for the pension benefit obligation was 4.75% at December 31, 2023 and 5.00% at December 31, 2022. An increase in this 2023 discount rate assumption of 25 basis points would have reduced the pension benefit obligation by $0.5 million at December 31, 2023.
An increase or decrease in this 2024 discount rate assumption of 25 basis points would have increased/decreased the 2024 periodic benefit cost by less t han $0.1 million. T he discount rate utilized for the pension benefit obligation was 5.50% at December 31, 2024 and 4.75% at December 31, 2023.
With this license, a Macao offshore company named Bel Fuse (Macao Commercial Offshore) Limited has been established to handle the Company’s sales to third-party customers in Asia. Sales by this company primarily consist of products manufactured in the PRC. The Macao corporate profit taxes imposes a tax rate of 12% on income from activitie s solely conducted in Macao.
With this license, a Macao offshore company named Bel Fuse (Macao Commercial Offshore) Limited ("Bel Fuse Macao") has been established to handle the Company’s sales to third-party customers in Asia. Sales by this company primarily consist of products manufactured in the PRC.
As of December 31, 2023, the Company was contractually obligated to pay future operating lease payments of $22.6 m illion, of which $ 6.7 million is expected to be paid in 2024, and future financing lease obligations o f $2.1 million, of which $0.7 millio n is expected to be paid in 2024. See Note 18, "Leases," for further information.
As of December 31, 2024, the Company was contractually obligated to pay future operating lease payments of $29.0 million, of which $9.1 million is expected to be paid in 2025, and future financing lease obligations of $3.0 million, of which $0.8 million is expected to be paid in 2025. See Note 18, "Leases," for further information.
The unused credit available under the credit facility at December 31, 2023 was $115 million, of which we had the ability to borrow the full amount without violating our Leverage Ratio covenant based on the Company's existing consolidated EBITDA.
The unused credit available under the credit facility at December 31, 2024 was $37.5 million, of which we had the ability to borrow the full amount without violating our Leverage Ratio covenant based on the Company's existing consolidated EBITDA. At December 31, 2024, the Company was in compliance with its debt covenants, including its most restrictive covenant, the Leverage Ratio.
See "Cautionary Notice Regarding Forward-Looking Information." Results of Operations - Summary by Operating Segment Net Sales and Gross Margin The Company's net sales and gross margin by major product line for the years ended December 31, 2023 and 2022 were as follows (dollars in thousands): Years Ended December 31, Net Sales Gross Margin 2023 2022 2023 2022 Power Solutions and Protection $ 314,105 $ 288,366 38.1 % 30.5 % Connectivity Solutions 210,572 187,085 34.2 % 25.9 % Magnetic Solutions 115,136 178,782 22.0 % 27.6 % $ 639,813 $ 654,233 33.7 % 28.0 % Power Solutions and Protection: Sales of our Power Solutions and Protection products were higher by $25.7 mil lion in 2023 as compared to 2022.
See Note 10 to the Company's Consolidated Financial Statements - "Income Taxes" . 22 Table of Contents Results of Operations - Summary by Operating Segment Net Sales and Gross Margin The Company's net sales and gross margin by major product line for the years ended December 31, 2024, 2023 and 2022 were as follows (dollars in thousands): Years Ended December 31, Net Sales Gross Margin 2024 2023 2022 2024 2023 2022 Power solutions and protection $ 245,551 $ 314,105 $ 288,366 42.4 % 38.1 % 30.5 % Connectivity solutions 220,370 210,572 187,085 37.1 % 34.2 % 25.9 % Magnetic solutions 68,871 115,136 178,782 25.3 % 22.0 % 27.6 % $ 534,792 $ 639,813 $ 654,233 37.8 % 33.7 % 28.0 % 2024 as Compared to 2023 Power Solutions and Protection: Sales of our Power Solutions and Protection products were lower by $68.6 million in 2024 as compared to 2023.
At December 31, 2023, the Company was in compliance with its debt covenants, including its most restrictive covenant, the Fixed Charge Coverage Ratio. At December 31, 2023, the Company was also a party to two pay-fixed, receive-variable interest rate swap agreements covering the full amount of its then variable interest exposure through August 2026.
At December 31, 2024, the Company was also a party to two pay-fixed, receive-variable interest rate swap agreements covering the full amount of its then variable interest exposure through August 2026.
Overview Our Company We design, manufacture and market a broad array of products that power, protect and connect electronic circuits. These products are primarily used in the networking, telecommunications, computing, general industrial, high-speed data transmission, military, commercial aerospace, transportation and eMobility industries. Bel's portfolio of products also finds application in the automotive, medical, broadcasting and consumer electronics markets.
All amounts and percentages are approximate due to rounding. Overview Our Company We design, manufacture and market a broad array of products that power, protect and connect electronic circuits. These products are primarily used in the defense, commercial aerospace, networking, telecommunications, computing, general industrial, high-speed data transmission, transportation and eMobility industries.
The lower sales volume and favorable exchange rates with the Chinese Renminbi versus the U.S. dollar, was the primary driver of gross margin reduction for this product group compared with 2022. 25 Table of Contents Cost of Sales Cost of sales as a percentage of net sales for the years ended December 31, 2023 and 2022 consisted of the following: Years Ended December 31, 2023 2022 Material costs 40.8 % 45.4 % Labor costs 6.6 % 8.3 % Other expenses 18.9 % 18.3 % Total cost of sales 66.3 % 72.0 % Material costs as a percentage of sales during 2023 came down compared to 2022, as pricing actions helped to offset the continued heightened cost of certain raw materials.
The lower sales volume and favorable exchange rates with the Chinese renminbi versus the U.S. dollar, were the primary drivers of gross margin reduction for this product group in 2023 compared with 2022. 23 Table of Contents Cost of Sales Cost of sales as a percentage of net sales for the years ended December 31, 2024, 2023 and 2022 consisted of the following: Years Ended December 31, 2024 2023 2022 Material costs 29.7 % 40.8 % 45.4 % Labor costs 7.8 % 6.6 % 8.3 % Other expenses 24.7 % 18.9 % 18.3 % Total cost of sales 62.2 % 66.3 % 72.0 % 2024 as Compared to 2023 Material costs as a percentage of sales during 2024 were lower compared to 2023, due to a shift in product mix, the stabilization of raw material pricing, shorter lead times, and better procurement efforts.
The net expense in 2022 was comprised of a loss of $2.2 million in 2022 related to the Company's SERP investments and $1.0 million of other expense; partially offset by foreign exchange gains of $0.3 million and $0.2 million of interest income.
The net expense in 2022 was comprised of a foreign exchange loss of $2.2 million in 2022 related to the Company's SERP investments and $1.0 million of other expense; partially offset by foreign exchange gains of $0.3 million. Income Taxes The Company’s effective tax rate will fluctuate based on the geographic regions in which the pretax profits are earned.
The change in the effective tax rate during the year ended December 31, 2023 as compared to fiscal year 2022 is primarily attributable to a n increase in U.S. tax expense resulting from higher U.S. income, which was offset by a benefit resulting from the impact of permanent differences on U.S. activities, was well as an increase in the tax benefit relating to the reversal of uncertain tax positions resulting from the expiration of certain statute of limitations. 27 Table of Contents Other Tax Matters The Company has a portion of its products manufactured on the mainland of the PRC where Bel is not subject to corporate income tax on manufacturing services provided by third parties.
The change in the effective tax rate during the year ended December 31, 2023, as compared to 2022 is primarily attributable to an increase in tax expense resulting from higher U.S. income, which was offset by a benefit resulting from the impact of permanent differences on U.S. activities, as well as an increase in the tax benefit relating to the reversal of uncertain tax positions resulting from the expiration of certain statutes of limitations.
Income Taxes The Company’s effective tax rate will fluctuate based on the geographic regions in which the pretax profits are earned. Of the jurisdictions in which the Company operates, the U.S. and Europe’s tax rates are generally equivalent; and Asia has the lowest tax rates of the Company’s three geographic regions.
Of the jurisdictions in which the Company operates, t he U.S. and Europe's tax rates are generally equivalent; and Asia has the lowest tax rates of the Company's three geographic regions.
The Mexican pesos appreciated by 12%, Euro appreciated by 3%, British pound ap preciated by 1 %, the Indian rupee and the Chines e renminbi each depreciated by 5% versus the U.S. dollar in 2023 compared to 2022.
The Mexican pesos depreciated by 3%, the Euro was flat, the British pound appreciated by 2%, and the Indian rupee and the Chinese renminbi each depreciated by 2% versus the U.S. dollar in 2024 compared to 2023.
The backlog for our Connectivity Solutions products was the same as the year-end 2022 level, as restored demand from our direct and after-market commercial aerospace customers was fully offset by reduced demand from customers in the networking and industrial end markets. • Product Mix – Material and labor costs vary by product line and any significant shift in product mix between higher- and lower-margin product lines will have a corresponding impact on the Company’s gross margin percentage.
The backlog for our Connectivity Solutions products decreased by $8.2 million (7%) in 2024 from the 2023 level, due to reduced demand from customers in the networking and industrial end markets partially offset by an increase in demand from our military customers. ● Product Mix – Material and labor costs vary by product line and any significant shift in product mix between higher- and lower-margin product lines will have a corresponding impact on the Company’s gross margin percentage.
The Company's material cash requirements arising in the normal course of business primarily include: Debt Obligations and Interest Payments - The Company had $60 m illion outstanding under its revolving credit facility at December 31, 2023, as further described below and in Note 11, "De bt" .
The Company's material cash requirements arising in the normal course of business primarily include: Debt Obligations and Interest Payments - The Company had $287.5 million outstanding under its revolving credit facility at December 31, 2024, as further described below and in Note 11, "Debt" . There are no mandatory principal payments due on the credit facility borrowings during 2025.
Included in other assets at December 31, 2023 is the cash surrender value of company-owned life insurance and marketable securities held in a rabbi trust with an aggregate value of $15.4 million, which has been designated by the Company to be utilized to fund the Company's SERP obligations.
Included in other assets at December 31, 2024 is the cash surrender value of company-owned life insurance and marketable securities held in a rabbi trust with an aggregate value of $17.0 million, which has been designated by the Company to be utilized to fund the Company's SERP obligations. 27 Table of Contents Dividends - The Company has historically paid quarterly dividends on its two classes of common stock, which am ounted to $3.5 million in 2024 as compared to $3.5 million in 2023.
By product segment, Power Solutions and Protection sales increased by 8.9% , Connectivity Solutions sales increased by 12.6% and Magnetic Solutions sales decreased by 35.6% . • Backlog – Our backlog of orders totaled $373.1 million at December 31, 2023, representing a decrease of $192.3 million, or 34%, from December 31, 2022.
By product segment, Power Solutions and Protection sales decreased by 21.8%, Connectivity Solutions sales increased by 4.7% and Magnetic Solutions sales decreased by 40.2%. ● Backlog – Our backlog of orders totaled $381.6 million at December 31, 2024, representing a decrease of $8.5 million, or 2%, from December 31, 2023.
During the year ended December 31, 2022, the Company's cash and cash equivalents increased by $8.5 million.
Inventory turns were 3.1 times for the year ended December 31, 2023 and 2.7 times for the year ended December 31, 2022. During the year ended December 31, 2022, the Company's cash and cash equivalents increased by $8.5 million.
We will continue to monitor goodwill on an annual basis and whenever events or changes in circumstances, such as significant adverse changes in business climate or operating results, changes in management's business strategy or significant declines in our stock price, indicate that there may be a potential indicator of impairment. 32 Table of Contents Indefinite-Lived Intangible Assets The Company tests indefinite-lived intangible assets for impairment annually on October 1, or upon a triggering event, using a fair value approach, the relief-from-royalty method (a form of the income approach).
We will continue to monitor goodwill on an annual basis and whenever events or changes in circumstances, such as significant adverse changes in business climate or operating results, changes in management's business strategy or significant declines in our stock price, indicate that there may be a potential indicator of impairment.
The Company had outstanding purchase orders related to raw materials in the amount of $57.7 million at December 31, 2023 , of which $50.6 million is expected t o be paid in 2024.
The Company had outstanding purchase orders related to raw materials in the am ount of $82.2 million at December 31, 2024, of which $75.1 million is expected to be paid in 2025.
The other expenses noted in the table above include fixed cost items such as support labor and fringe, depreciation and amortization, and facility costs (i.e. rent, utilities, insurance).
The reduction in labor costs were partially offset by the unfavorable fluctuation of the Mexican Peso exchange rate versus the U.S. dollar in 2023 versus 2022. The other expenses noted in the table above include fixed cost items such as support labor and fringe, depreciation and amortization, and facility costs (i.e. rent, utilities, insurance).
An increase in this 2023 discount rate assumption of 25 basis points would have decreased the 2023 periodic benefit cost by $0.1 million. A decrease in this 2023 discount rate assumption of 25 basis points would have increased the 2023 periodic benefit cost by $0.2 million.
An increase in this 2024 discount rate assumption of 25 basis points would have reduced the pension benefit obligation by $0.4 million at December 31, 2024. A decrease in this 2024 discount rate assumption of 25 basis points would have increased the pension benefit obligation by $0.5 million at December 31, 2024.
Due to the practicality of determining the deferred taxes on outside basis differences in our investments in our foreign subsidiaries, management has not provided for deferred taxes on outside basis differences at December 31, 2023 and deemed that these basis differences will be indefinitely reinvested.
Due to the practicality of determining the deferred taxes on outside basis differences in our investments in our foreign subsidiaries, management has not provided for deferred taxes on outside basis differences at December 31, 2024 and deemed that these basis differences will be indefinitely reinvested. 25 Table of Contents Inflation and Foreign Currency Exchange During the past two years, we do not believe the effect of inflation was material to our consolidated financial position or our consolidated results of operations.
In the event these funds were needed for Bel's U.S. operations, the Company would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds. 29 Table of Contents Future Cash Requirements The Company expects foreseeable liquidity and capital resource requirements to be met through its existing cash and cash equivalents, held to maturity investments in U.S.
In the event these funds were needed for Bel's U.S. operations, the Company would be required to accrue and pay U.S. state taxes and any applicable foreign withholding taxes to repatriate these funds.
Other Income/Expense, Net Other income/expense, net was a net expense of $2.8 million in 2023 compared to a net expense of $2.7 million in 2022.
Other Expense, Net 2024 as Compared to 2023 Other expense, net was a net expense of $3.2 million in 2024 compared to a net expense of $4.5 million in 2023.
Research and Development ("R&D") R&D expenses were $ 22.5 million and $20.2 million for the years ended December 31, 2023 and 2022, respectively. The increase noted in R&D expenses during 2023 is largely due to higher salaries, benefits and product development costs.
Research and Development ("R&D") R&D expenses were $23.6 million, $22.5 million and $20.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.
From 2022 to the 2023 year-end, the backlog for our Power Solutions and Protection products decreased by 37%, due to a reduction in demand within the networking end market and in the distribution channel. Our Magnetic Solutions backlog decreased by 69%, primarily due to reduced order volume from a large networking customer.
From 2023 to the 2024 year-end, the backlog for our Power Solutions and Protection (excluding Enercon) products decreased by 44%, due to a reduction in demand within the networking end market and in the distribution channel. Enercon backlog at December 31, 2024 was $119 million.
We have significant manufacturing operations located in in the PRC and Mexico where labor and overhead costs are paid in local currency. As a result, the U.S. Dollar equivalent costs of these operations were approximately $2.6 million lower in the PRC, largely offset by higher costs in Mexico of approximately $2.3 million, in 2023 as compared to 2022.
As a result, the U.S. dollar equivalent costs of these operations were approximately $0.7 million lower in the PRC, and $0.5 million lower in Mexico, largely offset by higher costs in Israel of approximately $0.8 million, in 2024 as compared to 2023.
See “Cautionary Notice Regarding Forward-Looking Information.” • Effective Tax Rate – The Company's effective tax rate will fluctuate based on the geographic region in which the pretax profits are earned. Of the jurisdictions in which the Company operates, the U.S. and Europe's tax rates are generally equivalent; and Asia has the lowest tax rates of the Company's three geographic regions.
See "Cautionary Notice Regarding Forward-Looking Information." ● Effective Tax Rate – The Company's effective tax rate will fluctuate based on the geographic region in which the pretax profits are earned.
See Note 14, "Segments" for profit margin information by product group. • P ricing and Availability of Materials – Dur ing 2023, while there has been some stabilization of raw materials pricing, overall our cost of materials remain elevated. Supply constraints have eased related to components that constitute raw materials in our manufacturing processes, particularly with capacitors, resistors and copper.
See Note 14, "Segments" for profit margin information by product group. ● P ricing and Availability of Materials – There has been some stabilization of raw materials pricing in 2024; however overall, our cost of materials remains elevated.
See Note 13, "Derivative Instruments and Hedging Activities" for further details. Critical Accounting Estimates The Company's consolidated financial statements include certain amounts that are based on management's best estimates and judgments. The Company bases its estimates on historical experience and on various other assumptions, including in some cases future projections, that are believed to be reasonable under the circumstances.
See Note 13, "Derivative Instruments and Hedging Activities" for further details. 28 Table of Contents Critical Accounting Estimates The Company's consolidated financial statements include certain amounts that are based on management's best estimates and judgments.
Accordingly, we must continually recruit and train new workers to replace those lost to attrition and be able to address peaks in demand that may occur from time to time.
Accordingly, we must continually recruit and train new workers to replace those lost to attrition and be able 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 any increase in demand, can add volatility to the labor costs incurred by us.
Within SG&A, increases in salaries and fringe benefits of $6.1 m illion, legal and professional fees of $2.4 million, and travel of $1.0 million were partially offset by a $1.3 million reduction in commissions to outside sales representatives, and a $1.2 million reduction in depreciation and amortization as compared to 2022. 26 Table of Contents Restructuring Charges The Company recorded $10.1 million of restructuring charges in 2023 largel y in connection with the four facility consolidation projects in the U.S., UK and PRC, as further described in "Overview - Key Factors Affecting our Business - Restructuring" above.
Within SG&A, increases in salaries and fringe benefits of $6.1 million, legal and professional fees of $2.4 million, and travel of $1.0 million were partially offset by a $1.3 million reduction in commissions to outside sales representatives, and a $1.2 million reduction in depreciation and amortization as compared to 2022.
The results of these estimates 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 bases its estimates on historical experience and on various other assumptions, including in some cases future projections, that are believed to be reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
It may, however, seek to expand such resources through bank borrowings, at favorable lending rates, from time to time.
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.
With the recent decrease in demand for ou r products, our value of inventory on hand has decreased by $35.9 mi llion from December 31, 2022 to December 31, 2023.
With the recent acquisition of Enercon our value of inventory on hand has increased by $24.8 mi llion from December 31, 2023 to December 31, 2024.
Any significant fluctuations in the exchange rates of the Chinese Renminbi versus the U.S. dollar will have an impact on labor costs within our Magnetic Solutions and Power Solutions and Protection segments.
Further, our labor costs in the PRC, Mexico and Israel are largely paid in local currencies and any significant fluctuations in these exchange rates versus the U.S. dollar will have an impact on our labor costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company is not required to provide the information called for by this Item as it is a "smaller reporting company," as defined in Rule 12b-2 of the Exchange Act, for purposes of this Annual Report on Form 10-K.
Added
Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to various risks in its business activities, including market risks related to interest rates, foreign currency exchange rates, and fluctuations in commodity prices. Interest Rate Risk On November 14, 2024, Bel entered into a Third Amendment Agreement (the "Third Amendment") to the Credit and Security Agreement (CSA).
Added
This amendment includes certain modifications, such as (i) increasing the maximum revolving credit amount from $175 million to $325 million to finance the Enercon acquisition and (ii) making loans under the new revolving credit facility with an aggregate principal amount of $240 million.
Added
As of December 31, 2024, outstanding borrowings under the revolving credit facility amounted to $287.5 million, with unused credit available of $37.5 million. The Company incurred $4.1 million in interest expense during the year ended December 31, 2024, related to interest due on its outstanding borrowings under the CSA.
Added
An interest rate swap with a notional value of $60 million was designated as a cash flow hedge to mitigate the variability of cash flows associated with the Company's SOFR-based loans scheduled to mature on September 1, 2026. This cash flow hedge partially reduces the Company's exposure to future interest rate fluctuations.
Added
After accounting for the aforementioned hedge, the remaining borrowings of $227.5 million, which represent approximately 79% of the Company's total debt, are still subject to future interest rate changes that could adversely affect the Company's cash flows.
Added
A prospective increase of 100 basis points in the interest rate applicable to the Company's outstanding borrowings under its credit facility would lead to an estimated increase of $2.3 million in annual interest expense. Foreign Exchange Rate Risk The Company operates globally, exposing it to foreign exchange risks stemming from currency fluctuations that can impact sales, margins, and equity.
Added
To manage this risk, the Company strategically locates factories near sales regions, utilizes hedging contracts, and carefully manages costs and working capital. However, these strategies may not completely shield the Company from sudden declines in foreign currencies. Key currencies involved include the euro and British pound, Chinese renminbi, Mexican pesos and Israeli Shekel.
Added
As of December 31, 2024, the Company faced significant exposure to foreign currencies, particularly the euro, Chinese renminbi, Mexican peso, and Indian rupee. The carrying value of intercompany loans at risk was approximately $152 million, with potential losses of $15.2 million projected from a hypothetical 10% decline in currency rates. Some exposures may offset others, reducing the overall risk.
Added
In the PRC, Mexico and Israel, the Company's labor costs are incurred in the respective local currency. Any fluctuations in related exchange rates could result in the Company incurring higher expenses in those countries. The Company employs foreign exchange forward contracts for hedging, which, as of December 31, 2024, had a fair value that was not material.
Added
A 10% change in exchange rates would not significantly impact this value. The Company does not engage in speculative trading and maintains strong relationships with financial institutions to minimize exposure risks. See the "Inflation and Foreign Currency Exchange" section above for additional information related to the Company's foreign exchange rate risk.
Added
Commodity Price Risk The Company utilizes various metals in the production of its products, including copper, zinc, tin, gold, and silver. Fluctuations in the prices of these and other commodities can lead to significantly higher production costs. The Company believes it has adequate primary and secondary sources for each of its key materials.
Added
While facing potential volatility in metal prices and anticipating increased material costs, the Company actively monitors these risks. To mitigate any possible negative impacts from these changes, it has implemented and may continue to implement various strategies, including price adjustments and productivity improvements. 31 Table of Contents

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