1.	BASIS OF PRESENTATION AND ACCOUNTING POLICIES

The condensed consolidated balance sheets and statements of operations, comprehensive (loss) income, stockholders’ equity and cash flows for the periods presented herein have been prepared by the Company and are unaudited. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly the consolidated financial position, results of operations and cash flows for all periods presented have been made. The results for the

three

months ended

March 31, 2020

are

not

necessarily indicative of the results to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Bel Fuse Annual Report on Form

-K for the year ended

December 31, 2019

Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted from these condensed consolidated financial statements pursuant to the rules and regulations, including the interim reporting requirements, of the U.S. Securities and Exchange Commission (“SEC”). The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our condensed consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

The Company’s significant accounting policies are summarized in Note

of the Company’s Annual Report on Form

-K for the year ended

December 31, 2019

. There were

significant changes to these accounting policies during the

three

months ended

March 31, 2020

, except as discussed in “Recently Adopted Accounting Standards” below.

Reclassifications

- During the

fourth

quarter of

2019,

the Company changed its financial statement presentation of research and development costs. These costs were previously included within cost of sales and were a factor in arriving at gross profit. Research and development costs in the amount of

7.2

million have been reclassified from cost of sales to a separate line item below gross profit in the accompanying condensed consolidated statement of operations for the

three

months ended

March 31, 2019.

Also during the

fourth

quarter of

2019,

the Company changed its financial statement presentation related to gain/loss on foreign currency exchange. These gains/losses were previously included within selling, general and administrative expense. Losses on foreign currency exchange in the amount of

0.6

million have been reclassified from selling, general and administrative expense and are now included within other income/expense, net on the accompanying condensed consolidated statement of operations for the

three

months ended

March 31, 2019.

These changes in presentation are consistent with that of our peers. The Company also implemented a change to its reportable segments during the

fourth

quarter of

2019.

In the past, its reportable operating segments were geographic in nature: North America, Europe and Asia. In connection with the Company's migration to its new ERP system and with the acquisition of CUI, management is now assessing the business on a product group basis, and making decisions based on the profitability of

three

product segments, Cinch Connectivity Solutions, Power Solutions and Protection and Magnetic Solutions, in addition to a Corporate segment. The segment disclosures in Note

for the

three

months ended

March 31, 2019

have been recast to reflect the new reportable operating segments.

All amounts included in the tables to these notes to condensed consolidated financial statements, except per share amounts, are in thousands.

Recently Adopted Accounting Standards

August 2018,

the FASB issued ASU

2018

13,

Fair Value Measurement (Topic

820

): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement

. The updated guidance improves the disclosure requirements on fair value measurements. The updated guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2019.

The Company adopted the updated provisions effective

January 1, 2020.

The adoption did

not

have a material impact on the Company's consolidated financial position or consolidated results of operations.

August 2018,

the FASB issued ASU

2018

15,

Intangibles – Goodwill and Other-Internal-Use Software (Subtopic

350

): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Cost

. This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective for interim and annual reporting periods beginning after

December 15, 2019.

The Company adopted this guidance effective

January 1, 2020

and it did

not

have a material impact on its consolidated financial position or consolidated results of operations.

Accounting Standards Issued But

Not

Yet Adopted

June 2016,

the FASB issued ASU

No.

2016

13,

Financial Instruments – Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments (“ASU

2016

13”

)

, as amended. The new guidance will broaden the information that an entity must consider in developing its expected credit loss estimates related to its financial instruments and adds to U.S. GAAP an impairment model that is based on expected losses rather than incurred losses. The amendment is effective for the Company for annual reporting periods beginning after

December 15, 2022,

with early adoption permitted. Management is currently assessing the impact of ASU

2016

13,

but it is

not

expected to have a material impact on the Company’s consolidated financial statements.

August 2018,

the FASB issued ASU

2018

14,

Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic

715

): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans ("ASU

2018

14"

)

. This guidance removes certain disclosures that are

not

considered cost beneficial, clarifies certain required disclosures and adds additional disclosures. The standard is effective for fiscal years ending after

December 15, 2020.

The amendments in ASU

2018

would need to be applied on a retrospective basis. The Company is currently assessing the impact the new guidance will have on our disclosures.

December 2019,

the FASB issued ASU

2019

12,

Simplifying the Accounting for Income Taxes ("ASU

2019

12"

)

, which modifies ASC

740

to reduce complexity while maintaining or improving the usefulness of the information provided to users of financial statements. ASU

2019

is effective for the Company for interim and annual reporting periods beginning after

December 15, 2020.

The Company is currently assessing the impact of ASU

2019

12,

but it is

not

expected to have a material impact on the Company’s consolidated financial statements.