UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                       ----------------------------------


                                    FORM 8-K
                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 21, 2003

                                  BEL FUSE INC.
--------------------------------------------------------------------------------
               (Exact name of registrant as specified in charter)

  New Jersey                     0-11676                      22-1463699
---------------                -----------                ------------------
(State or other                (Commission                  (IRS Employer
jurisdiction of                File Number)                 Identification
incorporation)                                              Number)

206 Van Vorst Street, Jersey City, New Jersey                    07302
---------------------------------------------                 ----------
(Address of principal executive offices)                      (Zip Code)

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

--------------------------------------------------------------------------------
                (Former name or former address, if changed since
                                  last report)



<page>


         Item 2.  Acquisition or Disposition of Assets.
                  -------------------------------------

         On March 21, 2003, Bel Fuse Inc., a New Jersey corporation (the
"Registrant"), completed its acquisition of the Passive Components Group of
Insilco Technologies, Inc. ("Insilco"). Pursuant to a stock and asset purchase
agreement, dated as of December 15, 2002, as amended by Amendment No. 1 to such
stock and asset purchase agreement, dated as of March 21, 2003 (as so amended,
the "Purchase Agreement"), among the Registrant, certain subsidiaries of the
Registrant, Insilco and certain of Insilco's subsidiaries, the Registrant and
Registrant's subsidiaries acquired substantially all of the assets, subject to
certain of the liabilities, of Stewart Connector Systems, Inc., InNet
Technologies, Inc. and Signal Transformer Co., Inc., as well as the stock of
several of Insilco's foreign subsidiaries. The net purchase price paid by the
Registrant amounted to $35 million in cash plus the assumption of certain
liabilities. The Registrant funded approximately $10 million of the purchase
price by means of a loan made in the ordinary course of business by a banking
institution, whose name has been omitted from this Report but furnished by
separate correspondence to the SEC, and the remainder of the purchase price from
internally generated funds.

         The transactions contemplated by the Purchase Agreement were approved
by the United States Bankruptcy Court for the District of Delaware on March 10,
2003 as part of Chapter XI bankruptcy proceedings commenced voluntarily by
Insilco and several of its affiliated companies.

         The Registrant intends to continue the use of the assets acquired in
the passive components business.


                                      - 2 -


<page>


Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits
         ------------------------------------------------------------------

         a.  With respect to the acquisition of the Passive Components Group of
             Insilco Technologies, Inc. by Bel Fuse Inc. and subsidiaries of
             Bel Fuse Inc., the following financial statements are included
             herein:

             Passive Components Group Financial Statements:

             (1)  Report of Independent Accountants

             (2)  Combined Balance Sheets at November 1, 2002 and December 31,
                  2001 and 2000

             (3)  Combined Statements of Operations for the ten months ended
                  November 1, 2002 and for the years ended December 31, 2001
                  and 2000

             (4)  Combined Statements of Equity and Comprehensive Income (Loss)
                  for the ten months ended November 1, 2002 and for the years
                  ended December 31, 2001 and 2000

             (5)  Combined Statements of Cash Flows for the ten months ended
                  November 1, 2002 and for the years ended December 31, 2001
                  and 2000

             (6)  Notes to Combined Financial Statements, November 1, 2002 and
                  December 31, 2001 and 2000

         b.  The following unaudited financial statements of the Passive
             Components Group are included herein:

             (1)  Combined Balanced Sheet at December 31, 2002

             (2)  Combined Statement of Operations for the year ended December
                  31, 2002

             (3)  Combined Statement of Cash Flows for the year ended December
                  31, 2002

             (4)  Notes to Combined Financial Statements, December 31, 2002


                                      - 3 -

<page>



         c.  The following unaudited pro forma financial statements are
             included herein:

             (1)  Introduction to Unaudited Pro Forma Condensed Combining
                  Financial Statements of Registrant and the Passive Component
                  Group of Insilco Technologies, Inc. as of December 31, 2002
                  and for the year then ended

             (2)  Unaudited Pro Forma Condensed Combined Balance Sheet as of
                  December 31, 2002

             (3)  Unaudited Pro Forma Condensed Combined Statement of Operations
                  for the year ended December 31, 2002

             (4)  Notes to the Unaudited Pro Forma Condensed Combining Financial
                  Statements as of and for the year ended December 31, 2002

         d.  Exhibits:

             2.1  Stock and Asset Purchase Agreement, among Bel Fuse Ltd., Bel
                  Fuse Macau, L.D.A., Bel Connector Inc. and Bel Transformer,
                  Inc. and Insilco Technologies, Inc. and Certain of its
                  Subsidiaries, dated as of December 15, 2002, as amended by
                  Amendment No. 1 to Stock and Asset Purchase Agreement, dated
                  as of March 21, 2003, among Bel Fuse Inc., Bel Fuse Ltd., Bel
                  Fuse Macau, L.D.A., Bel Connector Inc. and Bel Transformer,
                  Inc. and Insilco Technologies, Inc. and Certain of its
                  Subsidiaries are incorporated by reference to Exhibit 10.6 of
                  the Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 2002.

             23.1 Consent of Pricewaterhouse Coopers LLP

             99.1 Certification of the Chief Executive Officer pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002

             99.2 Certification of the Vice President of Finance pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002


                                      - 4 -

<page>





PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)
COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000




                                      - 5 -

<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholder of Insilco Technologies, Inc.


In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, of equity and comprehensive income (loss) and
of cash flows present fairly, in all material respects, the combined financial
position of the Passive Components Group (the Companies), wholly owned
subsidiaries of Insilco Technologies, Inc. (Insilco), at November 1, 2002 and
December 31, 2001 and 2000, and the results of their combined operations and
their combined cash flows for the ten months ended November 1, 2002 and for the
years ended December 31, 2001 and 2000 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of Insilco's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

As explained in Note 1, the combined financial statements include certain costs
allocated by Insilco that are not necessarily indicative of the amounts that
would have been recorded by the Companies on a stand-alone basis.

As explained in Note 12, there is substantial doubt about Insilco's and the
Companies' ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.



January 14, 2003


                                     - 6 -

<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED BALANCE SHEETS
AT NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                    DECEMBER 31,
                                                 NOVEMBER 1,   -------------------
                                                    2002        2001        2000
                                                 -----------   -------     -------
<S>                                                <C>         <C>         <C>
ASSETS
  Cash and cash equivalents                        $10,545     $ 6,445     $ 2,772
  Trade receivables, net                            14,140      14,074      17,738
  Other receivables                                  1,171         398         577
  Inventories, net                                  13,177      14,796      19,061
  Prepaid expenses and other current assets            896         734         872
                                                   -------     -------     -------
    Total current assets                            39,929      36,447      41,020
                                                   -------     -------     -------
Property, plant and equipment, net                  11,992      14,231      16,634
Other assets and deferred charges                    1,400       1,620         913
                                                   -------     -------     -------
      Total assets                                 $53,321     $52,298     $58,567
                                                   =======     =======     =======
LIABILITIES AND EQUITY
Current liabilities
  Current portion of long-term debt                $24,713     $24,780     $    15
  Accounts payable                                   4,352       5,133      10,701
  Accrued expenses and other current liabilities     4,902       3,493       3,917
  Income taxes payable                                 730         333       1,127
                                                   -------     -------     -------
    Total current liabilities                       34,697      33,739      15,760
                                                   -------     -------     -------
Long-term debt, excluding current portion              138         160         169
Other long-term liabilities                             60         805       1,629
                                                   -------     -------     -------
    Total liabilities                               34,895      34,704      17,558
                                                   -------     -------     -------
Commitments and contingencies
Equity
  Insilco Technologies, Inc.
    Net investment and advances                     15,718      13,932      40,545
  Accumulated other comprehensive income             2,708       3,662         464
                                                   -------     -------     -------
    Total equity                                    18,426      17,594      41,009
                                                   -------     -------     -------
      Total liabilities and equity                 $53,321     $52,298     $58,567
                                                   =======     =======     =======
</TABLE>


                  The accompanying notes are an integral part
                    of these combined financial statements.

                                     - 7 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED STATEMENTS OF OPERATIONS
FOR THE TEN MONTHS ENDED NOVEMBER 1, 2002 AND FOR THE
YEARS ENDED DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                DECEMBER 31,
                                                          NOVEMBER 1,     ------------------------
                                                             2002            2001           2000
                                                          -----------     ---------      ---------
<S>                                                        <C>            <C>            <C>
Net sales                                                  $  60,541      $  78,781      $ 105,113
                                                           ---------      ---------      ---------
Cost of products sold                                         46,708         63,373         71,558
Depreciation and amortization                                  3,635          8,429          4,564
Selling, general and administrative expenses                  13,809         16,924         17,163
Goodwill impairment charge                                        --         35,105             --
Restructuring charge                                           1,744            181             --
Allocated corporate costs, Insilco Technologies, Inc.          1,160          1,980          1,248
                                                           ---------      ---------      ---------
    Operating (loss) income                                   (6,515)       (47,211)        10,580
                                                           ---------      ---------      ---------
Other (expense) income:
Interest expense                                              (1,267)        (1,624)            (8)
Allocated interest expense, Insilco Technologies, Inc.        (2,773)        (7,120)        (4,213)
Interest income                                                  178             45              2
Other income (expense), net                                    1,389         (1,075)        (1,130)
                                                           ---------      ---------      ---------
    Total other (expense) income                              (2,473)        (9,774)        (5,349)
                                                           ---------      ---------      ---------
(Loss) Income from operations before
  income taxes                                                (8,988)       (56,985)         5,231

Income tax expense                                               730             30          2,796
                                                           ---------      ---------      ---------
Net (loss) income                                          $  (9,718)     $ (57,015)     $   2,435
                                                           =========      =========      =========

</TABLE>
                  The accompanying notes are an integral part
                    of these combined financial statements.

                                     - 8 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)
FOR THE TEN MONTHS ENDED NOVEMBER 1, 2002 AND FOR THE
YEARS ENDED DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               INSILCO
                                                           TECHNOLOGIES INC.
                                                                 NET            ACCUMULATED
                                                              INVESTMENT           OTHER
                                                                 AND            COMPREHENSIVE           TOTAL
                                                               ADVANCES         INCOME (LOSS)           EQUITY
                                                           -----------------    -------------          --------
<S>                                                            <C>                 <C>                 <C>
Balances at December 31, 1999                                  $ 40,256            $    584            $ 40,840

  Net income                                                      2,435                  --               2,435
  Foreign currency translation                                       --                (120)               (120)
                                                                                                       --------
  Total comprehensive income                                                                              2,315
  Changes in Insilco Technologies, Inc. net investment
    and advances                                                 (2,146)                 --              (2,146)
                                                               --------            --------            --------
Balances at December 31, 2000                                    40,545                 464              41,009

  Net loss                                                      (57,015)                 --             (57,015)
  Foreign currency translation                                       --               3,198               3,198
                                                                                                       --------
  Total comprehensive loss                                                                              (53,817)
  Changes in Insilco Technologies, Inc. net investment
    and advances                                                 30,402                  --              30,402
                                                               --------            --------            --------
Balances at December 31, 2001                                    13,932               3,662              17,594

  Net loss                                                       (9,718)                 --              (9,718)
  Foreign currency translation                                       --                (954)               (954)
                                                                                                       --------
  Total comprehensive loss                                                                              (10,672)
  Changes in Insilco Technologies, Inc. net investment
    and advances                                                 11,504                  --              11,504
                                                               --------            --------            --------
Balances at November 1, 2002                                   $ 15,718            $  2,708            $ 18,426
                                                               ========            ========            ========

</TABLE>

                  The accompanying notes are an integral part
                    of these combined financial statements.

                                     - 9 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED STATEMENTS OF CASH FLOWS
FOR THE TEN MONTHS ENDED NOVEMBER 1, 2002 AND FOR THE
YEARS ENDED DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                      DECEMBER 31,
                                                                NOVEMBER 1,     ------------------------
                                                                  2002            2001            2000
                                                               -----------      --------        --------
<S>                                                             <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net (loss) income                                             $ (9,718)       $(57,015)       $  2,435
  Adjustments to reconcile net (loss) income to net cash
    (used in) provided by operating activities:
    Depreciation and amortization                                  3,635           8,429           4,564
    Deferred tax benefit (provision)                                  --            (806)           (255)
    Write-down of fixed assets                                        --           1,138              --
    Goodwill impairment charge                                        --          35,105              --
    Changes in operating assets and liabilities:
      Trade and other receivables                                   (186)          8,713          (2,641)
      Inventories                                                  1,846           8,836          (5,100)
      Prepaid expenses and other current assets                     (178)            214             180
      Accounts payable                                              (799)         (8,738)          4,837
      Other current liabilities and other                         (1,000)           (151)          3,543
                                                                --------        --------        --------
  Net cash (used in) provided by operating activities             (6,400)         (4,275)          7,563
                                                                --------        --------        --------
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisitions, net of cash acquired                                  --         (44,174)             --
  Capital expenditures and other investing activities             (1,594)         (1,913)         (2,885)
                                                                --------        --------        --------
    Net cash used in investing activities                         (1,594)        (46,087)         (2,885)
                                                                --------        --------        --------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of long-term debt                            --          25,000              --
  Payments on long-term debt                                         (89)           (454)            (14)
  Debt issuance and tender costs                                     (59)           (808)           (794)
  Net change in Insilco Technologies, Inc. net investment
    and advances                                                  11,504          30,402          (2,146)
                                                                --------        --------        --------
    Net cash provided by (used in) financing activities           11,356          54,140          (2,954)
                                                                --------        --------        --------
  Effect of exchange rate changes on cash                            738            (105)            (50)
                                                                --------        --------        --------
  Net increase in cash and cash equivalents                        4,100           3,673           1,674

  Cash and cash equivalents at beginning of period                 6,445           2,772           1,098
                                                                --------        --------        --------
  Cash and cash equivalents at end of period                    $ 10,545        $  6,445        $  2,772
                                                                ========        ========        ========
</TABLE>


                  The accompanying notes are an integral part
                    of these combined financial statements.

                                     - 10 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

1.   BASIS OF PRESENTATION

     The combined financial statements reflect the financial position, results
     of operations and cash flows of the Passive Components Group for the ten
     months ended November 1, 2002 and the years ended December 31, 2001 and
     2000. The Passive Components Group consists of three business units and
     their subsidiaries (all of which are wholly owned subsidiaries of Insilco
     Technologies, Inc.) (Insilco or the Parent): Signal Transformer Co., Inc.
     (Signal); InNet Technologies, Inc. (InNet), which was purchased on January
     10, 2001; and Stewart Connector Systems, Inc. (SCS), herein referred to as
     Passive Components or the Companies. The Companies' operations consist of
     the manufacturing and sale of telecommunications and electrical component
     products. Passive Components is not a separate legal entity and since no
     direct ownership in the Companies as a combined group exists, Insilco's net
     investment and advances in the Companies is shown in lieu of stockholder's
     equity in the combined financial statements and includes the accumulation
     of transactions between the Companies and Insilco described below. All
     intercompany accounts and transactions amongst the Passive Components Group
     have been eliminated. Sales to other subsidiaries of Insilco were
     approximately $45,000 for the ten months ended November 1, 2002 and $20,000
     and $41,000 for the years ended December 31, 2001 and 2000, respectively.

     Management believes the assumptions underlying the combined financial
     statements are reasonable. However, the combined financial position,
     results of operations and cash flows presented herein may not be the same
     as would have occurred had the Companies operated as stand-alone entities
     during the periods presented and may not be indicative of future financial
     results.

     INTERCOMPANY RELATIONSHIP WITH THE PARENT
     The combined financial statements include allocations of Insilco's
     corporate overhead, executive management and administrative expenses
     amounting to $1.2 million for the ten months ended November 1, 2002 and
     $2.0 million and $1.2 million for the years ended December 31, 2001 and
     2000, respectively, which are included in the Allocated corporate costs
     line in the statement of operations. These allocations include the general
     administrative expenses of Insilco's corporate office, such as accounting,
     information technology, human resources, legal, environmental, treasury,
     and tax. As specific identification of these expenses was not practical,
     allocations were charged based on a formula factoring in the ratio of the
     Companies' forecasted annual sales, forecasted assets, and actual number of
     employees in proportion to Insilco's consolidated numbers for these
     categories. The resulting ratio was applied to Insilco's forecasted
     corporate expenses and allocated to the Companies rateably over each year.

     Insilco's management believes that this allocation method is reasonable,
     however, the allocations do not necessarily represent what the Companies
     would have incurred on a stand-alone basis. As the Companies were operated
     in a decentralized manner with their own administrative infrastructure, and
     the Companies would likely make different decisions regarding
     administrative initiatives, their overhead expenses as a separate company
     would be different than that reflected in the combined financial
     statements.


                                     - 11 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     The Companies' combined financial statements also include allocations of
     Insilco's interest expense totalling $2.8 million for the ten months ended
     November 1, 2002 and $7.1 million and $4.2 million for the years ended
     December 31, 2001 and 2000, respectively, which are included in the
     Allocated interest expense line in the statement of operations. Interest
     expense has been allocated generally based on the Companies' net assets in
     proportion to Insilco's consolidated net assets. The interest rate applied
     was 10.0% in 2002, 2001 and 2000, which represents an estimated weighted
     average cost of capital.

     The amounts used to calculate interest expense do not necessarily reflect
     the level of indebtedness the Companies would incur as a separate entity.
     Insilco's management believes these are reasonable estimates of the cost of
     financing the Companies' assets and operations in the past. However, the
     Companies may not be able to obtain financing at interest rates similar to
     those used for the interest expense calculation. Accordingly, the
     Companies' interest expense and financing costs as a separate entity may be
     different than that reflected in the combined financial statements.

     Insilco uses a centralized approach to cash management and the financing of
     its operations. The Companies' cash accounts are swept on a daily basis and
     are netted against the net investment and advances account. As a result,
     none of Insilco's cash, cash equivalents or debt at the corporate level has
     been allocated to the Companies in the combined financial statements, other
     than the $25 million portion of the credit facility drawn specifically to
     fund the acquisition of InNet in 2001. Cash in the combined financial
     statements primarily represents amounts held locally by the Companies'
     operations in their various geographic areas.

     ACQUISITION
     On January 10, 2001, Insilco acquired the outstanding equity interests in
     InNet, excluding approximately 16% of the outstanding equity interests that
     Insilco already owned. InNet, now a wholly owned subsidiary of Insilco, is
     a California-based designer, developer and marketer of a broad range of
     magnetic interface products for networking, computer and telecommunications
     original equipment manufacturers. The gross purchase price paid for the
     remaining equity interests was $44.9 million and was financed with cash and
     additional borrowings of $25.0 million under the Parent's credit facility.
     The purchase method of accounting has been used to account for the
     purchase; accordingly, the results of operations of InNet have been
     included in the Companies' combined financial statements from January 10,
     2001. The purchase price, net of cash acquired and including costs incurred
     directly related to the transaction, was $44.2 million. The excess of the
     purchase price over identifiable assets acquired was $37.9 million, which
     was being amortized on a straight-line basis over 20 years. InNet
     subsequently evaluated the recoverability of the goodwill and recorded a
     pretax impairment charge of $35.1 million in 2001. For further discussion,
     see Note 11, Impairment of Goodwill.


                                     - 12 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CASH EQUIVALENTS
     Cash equivalents include time deposits and highly liquid investments with
     original maturities of three months or less.

     TRADE RECEIVABLES
     Trade receivables are presented net of allowances for doubtful accounts and
     sales returns of $1.8 million, $1.5 million and $1.2 million at November 1,
     2002, December 31, 2001 and 2000, respectively.

     INVENTORIES
     Inventories are valued at the lower of cost or net realizable value. Cost
     is generally determined using the first-in, first-out cost method.

     PROPERTY, PLANT AND EQUIPMENT
     Property, plant and equipment are stated at cost. Depreciation of plant and
     equipment is calculated on the straight-line method over the assets'
     estimated useful lives, which is 25 years for new buildings and ranges from
     3 to 9 years for machinery and equipment. The cost of assets sold or
     retired and the related accumulated depreciation are removed from the
     accounts, with any resulting gain or loss included in net income.
     Maintenance and repairs are charged to expense as incurred. Major renewals
     and betterments that extend service lives are capitalized.

     Long-lived assets are reviewed for impairment whenever events or changes in
     circumstances indicate that full recoverability is questionable. Factors
     used in the valuation include, but are not limited to, management's plans
     for future operations, recent operating results and projected cash flows.

     DEFERRED FINANCING COSTS
     Deferred financing costs are being amortized using the effective interest
     method over the life of the related debt. Deferred financing costs were
     $1,134,000, $1,313,000 and $749,000, net of accumulated amortization of
     approximately $528,000, $289,000 and $45,000 at November 1, 2002 and
     December 31, 2001 and 2000, respectively. Amortization expense was
     approximately $239,000 for the period ended November 1, 2002, $244,000 in
     2001 and $45,000 in 2000.

     REVENUE RECOGNITION
     Revenue from product sales is recognized upon shipment to customers.
     Provisions for returns and other adjustments are provided for in the same
     period the related sales are recorded.

     FOREIGN CURRENCY TRANSLATION
     Assets and liabilities of the Companies' foreign subsidiaries are
     translated at the balance sheet date exchange rates and statement of
     operations accounts are translated at the average rates prevailing during
     the period. Adjustments resulting from the translation are recorded as a
     separate component of equity.



                                     - 13 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     ENVIRONMENTAL REMEDIATION AND COMPLIANCE
     Environmental remediation and compliance expenditures are expensed or
     capitalized in accordance with accounting principles generally accepted in
     the United States of America. Liabilities are recorded when it is probable
     the obligations have been incurred and the amounts can be reasonably
     estimated.

     FAIR VALUE OF FINANCIAL INSTRUMENTS
     Fair value of cash, accounts receivable, accounts payable and accrued
     liabilities approximate book value at November 1, 2002, December 31, 2001
     and 2000. Due to the situation described in Notes 12 and 13, management is
     not able to make a fair determination of the fair value of the debt.

     CONCENTRATIONS OF CREDIT RISK
     The Companies are subject to concentration of credit risk relating to cash
     and equivalents. The Companies maintain cash and cash equivalents with
     various financial institutions. The Companies monitor the relative credit
     standing of these financial institutions and other entities and limit the
     amounts of credit exposure with any one entity. The Companies also monitor
     the creditworthiness of the entities to which they grant credit terms in
     the normal course of business.

     The Companies are exposed to market risk for changes in interest rates.

     No customer accounted for more than 10% of the Companies' combined revenues
     in 2002, 2001 or 2000.

     INCOME TAXES
     Passive Components is not a separate tax paying entity. Passive Components
     is included in Insilco's combined federal and certain state income tax
     groups for income tax reporting purposes and is responsible for its
     proportionate share of income taxes calculated upon its federal taxable
     income at a current estimate of the annual effective tax rate.

     Income taxes are accounted for under the asset and liability method.
     Deferred tax assets and liabilities are determined based upon differences
     between the financial reporting and tax basis of assets and liabilities and
     are measured by applying enacted tax rates and laws to taxable years in
     which such differences are expected to reverse. Determination of the amount
     of valuation allowance recognized is based upon an assessment of whether it
     is more likely than not that all or some portion of the deferred tax assets
     will not be realized.

     COMPREHENSIVE INCOME (LOSS)
     Comprehensive income (loss) consists of net income (loss) and foreign
     currency translation adjustments and is presented in the combined
     statements of equity and comprehensive income (loss).



                                     - 14 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     ESTIMATES
     In conformity with accounting principles generally accepted in the United
     States of America, the preparation of financial statements requires
     management to make estimates and assumptions that affect the amounts
     reported in the financial statements and, therefore, actual results may
     ultimately differ from those estimates.

     IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
     In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
     with Exit or Disposal Activities. Statement No. 146 requires that a
     liability for a cost associated with an exit or disposal activity be
     recognized when the liability is incurred. Statement No. 146 eliminates the
     definition and requirement for recognition of exit costs in Emerging Issues
     Task Force (EITF) Issue No. 94-3 where a liability for an exit cost was
     recognized at the date of an entity's commitment to an exit plan. This
     statement is effective for exit or disposal activities initiated after
     December 31, 2002. The Companies believe that the adoption of this
     statement will not have a significant impact on the results of operations
     or financial position.

     In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
     Guarantor's Accounting and Disclosure Requirements for Guarantees,
     Including Indirect Guarantees of Indebtedness of Others, an interpretation
     of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation
     No. 34. FIN 45 clarifies the requirements of FASB Statement No. 5,
     Accounting for Contingencies, relating to the guarantor's accounting for,
     and disclosure of, the issuance of certain types of guarantees. This
     interpretation clarifies that a guarantor is required to recognize, at the
     inception of certain types of guarantees, a liability for the fair value of
     the obligation undertaken in issuing the guarantee. The initial recognition
     and measurement provisions of this Interpretation are applicable on a
     prospective basis to guarantees issued or modified after December 31, 2002,
     irrespective of the guarantor's fiscal year-end. The disclosure
     requirements in this interpretation are effective for financial statements
     of annual periods ending after December 15, 2002. The Companies are
     assessing the impact the adoption of this interpretation will have on the
     results of operations or financial position.



                                     - 15 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------
3.   INVENTORIES

     A summary of inventories at November 1, 2002 and December 31, 2001 and 2000
     follows (in thousands):

                                                          DECEMBER 31,
                                      NOVEMBER 1,    ---------------------
                                         2002          2001          2000
                                      -----------    -------       -------
      Raw materials and supplies       $ 5,139       $ 5,528       $ 6,221
      Work in process                    2,880         3,317         6,225
      Finished goods                     5,158         5,951         6,615
                                       -------       -------       -------
          Total inventories            $13,177       $14,796       $19,061
                                       =======       =======       =======

4.   PROPERTY, PLANT AND EQUIPMENT

     A summary of property, plant and equipment at November 1, 2002 and December
     31, 2001 and 2000 follows (in thousands):

                                                          DECEMBER 31,
                                      NOVEMBER 1,    ---------------------
                                         2002          2001          2000
                                      -----------    -------       -------
      Land                             $    623      $    623      $    623
      Buildings                           4,313         4,067         4,100
      Machinery and equipment            39,088        40,095        37,257
                                       --------      --------      --------
                                         44,024        44,785        41,980
      Less accumulated depreciation     (32,032)      (30,554)      (25,346)
                                       --------      --------      --------
                                       $ 11,992      $ 14,231      $ 16,634
                                       ========      ========      ========


                                     - 16 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

5.   ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     A summary of accrued expenses and other current liabilities at November 1,
     2002 and December 31, 2001 and 2000 follows (in thousands):

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                              NOVEMBER 1,    -------------------
                                                 2002         2001         2000
                                              -----------    ------       ------
               <S>                              <C>          <C>          <C>
               Salaries and wages payable       $1,230       $  970       $1,901
               Pension                             413          213           87
               Insurance                           487          542          504
               Commissions                         431          468          526
               Miscellaneous taxes                  99          188          699
               Restructuring                     1,728           --           --
               Other accrued expenses              514        1,112          200
                                                ------       ------       ------
                                                $4,902       $3,493       $3,917
                                                ======       ======       ======
</TABLE>

6.   LONG-TERM DEBT

     On January 10, 2001, Insilco increased its credit facility by $25.0 million
     to fund the acquisition of InNet. This debt is reflected in the combined
     balance sheets of the Companies at December 31, 2001 and November 1, 2002.
     The related interest expense, deferred financing costs, amortization
     expense and accumulated amortization have also been reflected on the
     combined balance sheets and combined statements of operations of the
     Companies.

     The outstanding balance under the credit facility is subject to
     twenty-three mandatory quarterly payments of $62,500 and two payments of
     $11,781,250 in each of year six and seven. Interest accrues under the
     credit facility at floating rates calculated with respect to either the
     London Interbank Offered Rate (LIBOR) or Bank One's Base Rate, plus an
     applicable margin. The margin, in turn, fluctuates based on Insilco's debt
     covenant ratios. LIBOR at November 1, 2002 was 1.66%. At November 1, 2002,
     the applicable margin for the credit facility was LIBOR plus 4.5%.

     The credit facilities of the Parent are guaranteed by all of Insilco's
     subsidiaries, including the Companies. In addition, the obligations
     thereunder are collateralized by substantially all assets of the Companies.

     The credit facility contains certain financial covenants including, but not
     limited to, covenants related to minimum EBITDA, maximum debt and a limit
     on annual capital expenditures. The credit facility also contains certain
     negative covenants typical of credit agreements of this type including, but
     not limited to, a prohibition on the ability of Insilco and its domestic
     subsidiaries to incur additional indebtedness in excess of certain agreed
     upon amounts, and to make investments other than permitted investments, and
     also restricts Insilco and its subsidiaries from paying any


                                     - 17 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     dividends, redeeming, repurchasing or acquiring any Insilco or Insilco
     Holding Co. shares or paying any principal, premium or interest (in excess
     of certain agreed upon amounts) on any subordinated obligations.

     As a result of the situation described in Notes 12 and 13, the outstanding
     debt obligation under the credit facility has been classified as current.

7.   BENEFIT PLANS

     Certain Signal and SCS employees participate in Insilco's defined benefit
     pension plans. The benefits under these plans are based primarily on
     employees' years of service and compensation near retirement. The
     Companies' funding policy is consistent with the funding requirements of
     federal laws and regulations. The net periodic pension cost allocated to
     the Companies associated with Insilco's defined benefit pension plans was
     $164,000 during the ten months ended November 1, 2002, $127,000 during 2001
     and $(71,000) during 2000.

     Signal also contributes to a multi-employer plan sponsored by a bargaining
     unit for its union employees. Signal recognized expenses of $201,000 during
     the ten months ended November 1, 2002, $295,000 in 2001, and $313,000 in
     2000 related to contributions to this multi-employer plan.

     In addition to the defined benefit plans described above, Signal and SCS
     employees may participate in a qualified defined contribution 401(k) plan
     sponsored by Insilco, which covers substantially all nonunion employees of
     the Companies and their subsidiaries, and which covers union employees at
     one of the Companies' subsidiaries. The Companies match 50% of
     participants' voluntary contributions up to a maximum of 3% of each
     participant's eligible compensation, subject to limitations required by
     government laws or regulations. The Companies' expense related to this plan
     was approximately $76,000 during the ten months ended November 1, 2002, and
     $119,000 and $174,000 for the years ended December 31, 2001 and 2000,
     respectively.

     InNet sponsors a SIMPLE IRA plan for its employees. InNet's contributions
     to this plan on behalf of its employees were $36,000 during the ten months
     ended November 1, 2002 and $37,000 for the year ended December 31, 2001.



                                     - 18 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

8.   INCOME TAXES

     The Passive Components combined financial statements reflect a charge
     (benefit) for federal, state and foreign income taxes as if Passive
     Components had been subject to tax on a separate company basis during the
     periods presented.

     The components of total income tax expense follow (in thousands):

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                              NOVEMBER 1,      ----------------------
                                                 2002           2001           2000
                                              -----------      -------        -------
               <S>                              <C>            <C>            <C>
               Current
                 Federal                        $    --        $    --        $ 1,247
                 State                                3              3             43
                 Foreign                            727            833          1,761
                                                -------        -------        -------
                                                    730            836          3,051
                                                -------        -------        -------
               Deferred
                 Federal                             --           (739)          (322)
                 State                               --            (67)            67
                 Foreign                             --             --             --
                                                -------        -------        -------
                                                     --           (806)          (255)
                                                -------        -------        -------
               Total income tax provision       $   730        $    30        $ 2,796
                                                =======        =======        =======
</TABLE>

     Domestic current income tax obligations (benefits) are treated as having
     been settled through the intercompany account as if Passive Components were
     filing its income tax returns on a separate company basis. Such amounts
     were insignificant for the ten months ended November 1, 2002 and the year
     ended December 31, 2001 and approximately $1,006,000 for the year ended
     December 31, 2000. Foreign income tax obligations have been paid directly
     by the foreign subsidiaries.



                                     - 19 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     The significant components of deferred income tax expense (benefit) follow
     (in thousands):


<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                     NOVEMBER 1,   ---------------------
                                                        2002         2001         2000
                                                     -----------   --------     --------
<S>                                                   <C>          <C>          <C>
               Deferred tax expense (benefit)
                 exclusive of the effects
                 of the following component           $(1,528)     $(8,348)     $  (255)

               Changes in the valuation allowance
                 for deferred tax assets
                 allocated to income tax expense        1,528        7,542           --
                                                      -------      -------      -------
                                                      $    --      $  (806)     $  (255)
                                                      =======      =======      =======
</TABLE>

     Pretax income (loss) by domestic and foreign sources follows (in
     thousands):

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                     NOVEMBER 1,   ---------------------
                                                        2002         2001         2000
                                                     -----------   --------     --------
<S>                                                   <C>          <C>          <C>

               Domestic                               $(13,609)    $(60,108)    $  1,913
               Foreign                                   4,621        3,123        3,318
                                                      --------     --------     --------
                                                      $ (8,988)    $(56,985)    $  5,231
                                                      ========     ========     ========
</TABLE>


     Income tax expense differs from the amount computed by applying the Federal
     statutory rate to pretax income due to the following (in thousands):

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                     NOVEMBER 1,   ---------------------
                                                        2002         2001         2000
                                                     -----------   --------     --------
<S>                                                   <C>          <C>          <C>

               Computed statutory expense             $ (3,146)    $(19,945)    $  1,831
               Goodwill book write off/amortization         --       13,368           --
               State and local taxes                      (332)        (691)          94
               Foreign tax rate differential              (890)        (260)         600
               U.S. possession income                       --           --          265
               Subpart foreign income deemed
                 taxable in the U.S.                     3,545           --           --
               Other                                        25           16            6
               Valuation allowance                       1,528        7,542           --
                                                      --------     --------     --------
                   Income tax expense                 $    730     $     30     $  2,796
                                                      ========     ========     ========
</TABLE>




                                     - 20 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     The tax effects of temporary differences that give rise to significant
     portions of the deferred tax assets and deferred tax liabilities follows
     (in thousands):
<TABLE>
<CAPTION>

                                                                       DECEMBER 31,
                                                     NOVEMBER 1,   --------------------
                                                        2002        2001         2000
                                                     -----------   -------      -------
               <S>                                    <C>          <C>          <C>
               Deferred tax assets
                 Net operating loss carryforwards     $ 8,293      $ 7,437      $   104
                 Accrued liabilities-receivables          329          308          205
                 Accrued liabilities-inventory            350          442          351
                 Accrued liabilities-other                898          828          496
                                                      -------      -------      -------
                   Total gross deferred tax asset       9,870        9,015        1,156
                   Less: valuation allowance           (9,093)      (7,565)         (23)
                                                      -------      -------      -------
                   Total gross deferred tax asset
                    after valuation allowance             777        1,450        1,133
               Deferred tax liabilities
                 Plant and equipment                     (777)      (1,450)      (1,894)
                                                      -------      -------      -------
               Net deferred tax (liability)           $    --      $    --      $  (761)
                                                      =======      =======      =======

</TABLE>


     Deferred taxes were not provided on cumulative unremitted earnings of
     $8,961,000 and $9,238,000 at December 31, 2001 and 2000, respectively, for
     certain subsidiaries outside the United States because it was expected that
     the earnings would be permanently reinvested and determination was not
     practical. In 2002, current taxes were provided on the earnings of those
     foreign subsidiaries because it is expected that the earnings will not be
     permanently reinvested due to financial obligations of Insilco.

     At November 1, 2002, the Companies had net operating loss carryforwards for
     Federal tax purposes of $20.9 million, which will begin to expire in 2022.

     Insilco and its domestic subsidiaries file a consolidated U.S. federal
     income tax return.

9.   RESTRUCTURING AND PLANT CLOSING COSTS

     During the ten months ended November 1, 2002 and the year ended December
     31, 2001, the Companies recorded $1,744,000 and $181,000, respectively, of
     restructuring and plant closing costs relating to the closure of facilities
     in New York and the Dominican Republic and a sales office located in Japan.
     These closings were under taken to reduce operating costs. During 2001, the
     Companies paid approximately $181,000 related to these restructuring
     charges. There were no charges during 2000.



                                     - 21 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     All of these costs have been reflected in the Restructuring charge line
     item on the combined statements of operations.

     As of November 1, 2002, the Companies had an accrual of $1,728,000 relating
     to these restructuring charges, which is included in accrued expenses on
     the balance sheet. A summary of this accrual is as follows (in thousands):
<TABLE>
<CAPTION>

                                                        AS OF                                         AS OF
                                                     DECEMBER 31,    RESTRUCTURING       CASH      NOVEMBER 1,
                                                         2001            CHARGE         OUTLAYS       2002
                                                     ------------    -------------      -------    -----------
               <S>                                      <C>             <C>             <C>         <C>
               Restructuring charges:
                 Employee separations                   $   --          $1,037          $   --        $1,037
                 Other exit costs                           --              16             (16)           --
                 Remaining noncancelable
                   lease costs                              --             691              --           691
                                                        ------          ------          -------       ------
                   Total restructuring charge           $   --          $1,744          $  (16)       $1,728
                                                        ======          ======          ======        ======
               </TABLE>



     The headcount reduction from these activities was approximately 73
     employees.

10.  COMMITMENTS AND CONTINGENCIES

     Rental expense for operating leases totaled $1.2 million, $2.0 million, and
     $824,000 for the ten months ended November 1, 2002 and the years ended
     December 31, 2001 and 2000, respectively. These leases primarily relate to
     production facilities.

     Future minimum lease payments under contractually noncancelable operating
     leases (with initial lease terms in excess of one year) for years
     subsequent to November 1, 2002 are as follows (in thousands):
<TABLE>
<CAPTION>
                <S>                             <C>
                2003                            $ 1,050
                2004                                504
                2005                                258
                2006                                207
                2007                                 30
                Thereafter                            -
</TABLE>

     The Companies are subject to various claims and legal actions arising in
     the ordinary course of business. The Companies accrue for amounts related
     to legal matters if it is probable that a liability has been incurred and
     an amount is reasonably estimable. No amounts were accrued related to legal
     matters at November 1, 2002, December 31, 2001 or 2000.

     The Companies' operations are subject to extensive federal, state and local
     laws and regulations relating to the generation, storage, handling,
     emission, transportation and discharge of materials


                                     - 22 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     into the environment. The Companies have a program for monitoring its
     compliance with applicable environmental regulations, the interpretation of
     which often is subjective. The Companies have taken significant measures to
     (1) address emissions, discharges and waste generation and disposal, (2)
     improve management practices and operations in response to legal
     requirements, and (3) internally review compliance with applicable
     environmental regulations and approved practices. In order to achieve these
     goals, the Companies have instituted several programs including (1) raw
     material and process substitution, recycling and material management, (2)
     periodic review of hazardous waste storage and disposal practices, and (3)
     review of compliance and financial status and management practices of our
     offsite third-party waste management firms.

     In the opinion of management, the ultimate disposition of the matters
     discussed above will not have a material adverse effect on the Companies'
     combined financial position, results of operations or liquidity.

11.  IMPAIRMENT OF GOODWILL

     During the first half of 2001, the Companies experienced a significant
     decrease in the rate of growth due to a dramatic decline in capital
     spending in the telecommunications industry. During the second quarter of
     2001, major customers further reduced their order forecasts and canceled
     orders already placed. Management believed that the growth prospects for
     these business segments were significantly less than previously expected
     and those of historical periods.

     The Companies review the value of their long-lived assets when events or
     changes in circumstances occur that indicate the carrying value of the
     asset may be impaired. As a result of the business conditions noted above,
     Insilco concluded such a review was required for its recent acquisition of
     InNet, acquired in January 2001, and the related goodwill. The review was
     completed in a series of tests. The first test included the following
     steps: (1) management estimated the undiscounted future cash flows of the
     asset based on estimated growth levels; (2) management estimated the
     terminal value of the asset based on an appropriate multiple of EBITDA; and
     (3) management compared the sum of the future cash flows and terminal value
     to the carrying value of long lived assets to determine if an impairment
     has occurred. If an impairment had occurred, management performed a second
     test as follows: (1) management discounted the future cash flows and
     terminal value, using EBITDA as a proxy for cash flow, to a present value
     using an appropriate discount rate; and (2) management compared the
     discounted net present value to the carrying value of long lived assets to
     determine the amount of the impairment.

     As a result of this review, management determined that the goodwill related
     to the acquisition of InNet was impaired and, in accordance with Insilco's
     policy it was necessary to write down the goodwill. Thus in 2001, InNet
     recorded a pretax impairment charge of $35.1 million.



                                     - 23 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

12.  GOING CONCERN MATTERS

     On February 15, 2002, the Parent failed to make a required interest payment
     on its 12% Senior Subordinated Notes Due 2007 (the 12% Notes). The 30-day
     grace period for such payment expired on March 18, 2002, resulting in an
     event of default under the indenture governing the 12% Notes, as well as a
     cross-default under the Parent's Senior Secured Credit facility (the
     Amended Credit Agreement). Further, on March 31, 2002, the Parent failed to
     meet the EBITDA covenant under its Amended Credit Agreement and was in
     default on its Amended Credit Agreement and its 12% Notes. Subsequently,
     the Parent did not make the $7.2 million August 15, 2002 required interest
     payment on its 12% Notes and did not meet the EBITDA covenants under its
     Amended Credit Agreement for June 30 and September 30, 2002. At September
     30, 2002, the Parent continued to operate under these defaults and,
     therefore, has classified as current, its debt obligations under the
     Amended Credit Agreement, the 12% Notes and the 14% Senior Discount Notes
     Due 2008 (the 14% Notes).

     On May 3, 2002, the Parent and the lenders under the Amended Credit
     Agreement (the Lenders) entered into a forbearance agreement (Forbearance
     Agreement). Under the Forbearance Agreement, the Lenders agreed that,
     absent a further default, they would not (a) accelerate the maturity of the
     debt under the Amended Credit Agreement, (b) take enforcement action
     against any collateral, including effecting any rights of setoff, or (c)
     commence any legal action to enforce rights or remedies pursuant to the
     terms of the Amended Credit Agreement, for the period from May 3, 2002
     until July 10, 2002 (the Forbearance Period). This agreement was
     subsequently amended to extend the Forbearance Period through November 4,
     2002. The purpose of the Forbearance Period was to allow the Parent time to
     evaluate and pursue strategic alternatives, such as a sale of all or some
     of the business, a Chapter 11 bankruptcy filing, or other remedies
     appropriate for the circumstances. To that end, the Parent engaged in
     active discussions with potential purchasers of substantially all of the
     assets of its three business segments, including the Passive Components
     Group, which the Parent anticipates will result in multiple sales of these
     business segments through Chapter 11 bankruptcy proceedings.

     The Parent's recent losses and highly leveraged position raise substantial
     doubt about the Parent's and the Companies' ability to continue as a going
     concern. The combined financial statements do not include any adjustments
     relating to recoverability and classification of recorded asset amounts or
     the amount and classification of liabilities that might be necessary should
     the Parent and the Companies become unable to continue as a going concern.

13.  SUBSEQUENT EVENT

     On December 16, 2002, Insilco Holding Co., the parent company of Insilco,
     Insilco and several of Insilco's subsidiaries, including the Companies,
     filed voluntary petitions for relief under Chapter 11 of the United States
     Bankruptcy Code with the United States Bankruptcy Court for the District of
     Delaware. The debtors continue to manage their properties and operate their
     businesses as "debtors-in-possession" under the jurisdiction of the
     Bankruptcy Code.


                                     - 24 -


<PAGE>
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     In addition, Insilco Holding Co. completed its review of strategic
     alternatives for addressing its capital structure issues and its primary
     operating subsidiary, Insilco, has entered into definitive agreements to
     sell substantially all of the assets of its three business segments,
     including the Passive Components Group, for which the Parent and certain of
     its subsidiaries have agreed to sell to Bel Fuse Ltd. for approximately $35
     million.

     None of Insilco's operations located outside of the United States were
     included in the Chapter 11 filings, though the shares of certain foreign
     subsidiaries and certain foreign assets will be included in the sale
     transactions. The Chapter 11 filings allow the sale of the assets of the
     domestic entities to be free and clear from certain liabilities that the
     prospective purchasers do not wish to assume.

     On January 14, 2003, the Parent notified the Pension Benefit Guaranty
     Corporation (PBGC) that a reportable event occurred in regards to the
     defined benefit pension plan due to the Chapter 11 filing. The Parent
     intends to terminate the plan as the potential buyers of the various
     businesses will not sponsor the existing plan. The plan was in an
     under-funded position of approximately $17 million, on a termination basis,
     as of December 31, 2002. Management expects the PBGC to take over as
     trustee of the plan and that the PBGC will make all future benefit payments
     to the covered employees after such time.



                                     - 25 -

<PAGE>

PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31, 2002 (IN THOUSANDS)
--------------------------------------------------------------------------

                                                            December 31,
                                                                2002
                                                          ----------------
                                                             (Unaudited)
ASSETS
Current Assets
   Cash and cash equivalants                               $    10,849
   Trade receivables, net                                       13,181
   Other Receivables                                             1,544
   Inventories, net                                             12,326
   Prepaid expenses and other current assets                       793
                                                          ----------------

   Total current assets                                         38,693
                                                          ----------------

   Property, plant and equipment, net                           11,384
   Other assets and deferred charges                               262
                                                          ----------------

      Total Assets                                        $     50,339
                                                          ================

LIABILITIES AND EQUITY
Current liabilities
   Current portion of long term debt                      $     24,711
   Accounts payable                                              2,522
   Prepetition liability                                         2,467
   Accrued expenses and other accrued liabilities                4,602
   Income taxes payable                                            730
                                                          ----------------

   Total current liabilities                                    35,032
                                                          ----------------

Long term debt, excluding current portion                          137

Other long term liabilities                                         --
                                                          ----------------

   Total liabilities                                            35,169
                                                          ----------------

Comitments and contingencies
   Equity
   Insilco Technologies, Inc
      Net investment and advances                               13,969
   Accumulated other comprehensive income                        1,201
                                                          ----------------

   Total equity                                                 15,170
                                                          ----------------

   Total liabilities and equity                           $     50,339
                                                          ================

                  See notes to unaudited financial statements.


                                     - 26 -

<PAGE>

PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002 (IN THOUSANDS)
----------------------------------------------------------------------------

                                                            December 31,
                                                                2002
                                                          ----------------
                                                             (Unaudited)

        NET SALES                                               71,561

        COST OF PRODUCTS SOLD                                   54,263
        DEPRECIATION AND AMORTIZATION                            4,471
        SELLING. GENERAL AND ADMINISTRATIVE EXP                 16,894
        GOODWILL IMPAIRMENT CHARGES                                 --
        RESTRUCTURING CHARGE                                     1,744
        ALLOCATED CORPORATE COSTS                                1,391
                                                          ----------------

        OPERATING (LOSS) INCOME                                 (7,202)
                                                          ----------------

        OTHER INCOME (EXPENSE)
               INTEREST EXPENSE                                 (1,522)
               ALLOCATED CAPITAL COSTS                          (3,270)
               INTEREST INCOME                                     210
               OTHER INCOME(EXPENSE), NET                         (619)
                                                          ----------------

        TOTAL OTHER INCOME (EXPENSE)                            (5,201)
                                                          ----------------

        LOSS (INCOME)FROM OPERATIONS BEFORE INCOME TAX         (12,403)

        INCOME TAX EXPENSE                                         730
                                                          ----------------

        NET (LOSS) INCOME                                 $    (13,133)
                                                          ================

                  See notes to unaudited financial statements.


                                     - 27 -

<PAGE>

PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)


COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2002

                                                           December 31,
                                                                2002
                                                          ----------------
                                                             (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
     Net (loss) income                                         (13,133)
     Adjustments to reconcile net (loss) income to net
      cash (used in) provided for by operating activies:
           Depreciation and amortization                         4,471
           Changes in operating assets and liabilities:
               Trade and other receivables                         893
               Inventories                                       2,470
               Prepaid expenses and other current assets           (59)
               Accounts payable                                 (2,611)
               Other current liabilities and other                 291
                                                          -----------------

           Net cash provided by operating activties             (7,678)
                                                          -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures and other investing activities        (1,783)
                                                          -----------------

           Net cash used in investing activities                (1,783)
                                                          -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Payments on long-term debt                                    (90)
     Debt issuance and tender cost                                 (59)
     Net changes to Insilco Technologies, Inc. net
       investment and advances                                  10,697
                                                          -----------------

     Net cash provided by(used in) financing activities         10,548
                                                          -----------------

     Effect of exchange rates on cash                              850
                                                          -----------------

     Net increase in cash and equivalents                        1,937

     Cash and equivalents at beginning of period                 6,445
                                                          -----------------
     Cash and equivalents at end of period                $      8,382
                                                          =================


                  See notes to unaudited financial statements.


                                     - 28 -

<PAGE>

PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

1.       BASIS OF PRESENTATION

         The combined financial statements reflect the financial position,
         results of operations and cash flows of the Passive Components Group
         for the year ended December 31, 2002. The Passive Components Group
         consists of three business units and their subsidiaries (all of which
         are wholly owned subsidiaries of Insilco Technologies, Inc.) (Insilco
         or the Parent): Signal Transformer Co., Inc. (Signal); InNet
         Technologies, Inc. (InNet), which was purchased on January 10, 2001;
         and Stewart Connector Systems, Inc. (SCS), herein referred to as
         Passive Components or the Companies. The Companies' operations consist
         of the manufacturing and sale of telecommunications and electrical
         component products. Passive Components is not a separate legal entity
         and since no direct ownership in the Companies as a combined group
         exists, Insilco's net investment and advances in the Companies is shown
         in lieu of stockholder's equity in the combined financial statements
         and includes the accumulation of transactions between the Companies and
         Insilco described below. All intercompany accounts and transactions
         amongst the Passive Components Group have been eliminated. Sales to
         other subsidiaries of Insilco were approximately $28,000 for the year
         ended December 31, 2002.

         Management believes the assumptions underlying the combined financial
         statements are reasonable. However, the combined financial position,
         results of operations and cash flows presented herein may not be the
         same as would have occurred had the Companies operated as stand-alone
         entities during the period presented and may not be indicative of
         future financial results.

         INTERCOMPANY RELATIONSHIP WITH THE PARENT
         The combined financial statements include allocations of Insilco's
         corporate overhead, executive management and administrative expenses
         amounting to $1.4 million for the year ended December 31, 2002,, which
         are included in the Allocated corporate costs line in the statement of
         operations. These allocations include the general administrative
         expenses of Insilco's corporate office, such as accounting, information
         technology, human resources, legal, environmental, treasury, and tax.
         As specific identification of these expenses was not practical,
         allocations were charged based on a formula factoring in the ratio of
         the Companies' forecasted annual sales, forecasted assets, and actual
         number of employees in proportion to Insilco's consolidated numbers for
         these categories. The resulting ratio was applied to Insilco's
         forecasted corporate expenses and allocated to the Companies rateably
         for the year.

         Insilco's management believes that this allocation method is
         reasonable, however, the allocations do not necessarily represent what
         the Companies would have incurred on a stand-alone basis. As the
         Companies were operated in a decentralized manner with their own
         administrative infrastructure, and the Companies would likely make
         different decisions regarding administrative initiatives, their
         overhead expenses as a separate company would be different than that
         reflected in the combined financial statements.


                                     - 29 -

<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

The Companies' combined financial statements also include allocations of
Insilco's interest expense totaling $3.3 million for the year ended December 31,
2002, which are included in the Allocated interest expense line in the statement
of operations. Interest expense has been allocated generally based on the
Companies' net assets in proportion to Insilco's consolidated net assets. The
interest rate applied was 10.0%, which represents an estimated weighted average
cost of capital.

The amounts used to calculate interest expense do not necessarily reflect the
level of indebtedness the Companies would incur as a separate entity. Insilco's
management believes these are reasonable estimates of the cost of financing the
Companies' assets and operations in the past. However, the Companies may not be
able to obtain financing at interest rates similar to those used for the
interest expense calculation. Accordingly, the Companies' interest expense and
financing costs as a separate entity may be different than that reflected in the
combined financial statements.

Insilco uses a centralized approach to cash management and the financing of its
operations. The Companies' cash accounts are swept on a daily basis and are
netted against the net investment and advances account. As a result, none of
Insilco's cash, cash equivalents or debt at the corporate level has been
allocated to the Companies in the combined financial statements, other than the
$25 million portion of the credit facility drawn specifically to fund the
acquisition of InNet in 2001. Cash in the combined financial statements
primarily represents amounts held locally by the Companies' operations in their
various geographic areas.

ACQUISITION
On January 10, 2001, Insilco acquired the outstanding equity interests in InNet,
excluding approximately 16% of the outstanding equity interests that Insilco
already owned. InNet, now a wholly owned subsidiary of Insilco, is a
California-based designer, developer and marketer of a broad range of magnetic
interface products for networking, computer and telecommunications original
equipment manufacturers. The gross purchase price paid for the remaining equity
interests was $44.9 million and was financed with cash and additional borrowings
of $25.0 million under the Parent's credit facility. The purchase method of
accounting has been used to account for the purchase; accordingly, the results
of operations of InNet have been included in the Companies' combined financial
statements from January 10, 2001. The purchase price, net of cash acquired and
including costs incurred directly related to the transaction, was $44.2 million.
The excess of the purchase price over identifiable assets acquired was $37.9
million, which was being amortized on a straight-line basis over 20 years. InNet
subsequently evaluated the recoverability of the goodwill and recorded a pretax
impairment charge of $35.l million in 2001. For further discussion, see Note 11,
Impairment of Goodwill.



                                     - 30 -


<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         CASH EQUIVALENTS
         Cash equivalents include time deposits and highly liquid investments
         with original maturities of three months or less.

         TRADE RECEIVABLES
         Trade receivables are presented net of allowances for doubtful accounts
         and sales returns of $1.7 million at December 31, 2002.

         INVENTORIES
         Inventories are valued at the lower of cost or net realizable value.
         Cost is generally determined using the first-in, first-out cost method.

         PROPERTY, PLANT AND EQUIPMENT
         Property, plant and equipment are stated at cost. Depreciation of plant
         and equipment is calculated on the straight-line method over the assets
         estimated useful lives, which is 25 years for new buildings and ranges
         from 3 to 9 years for machinery and equipment. The cost of assets sold
         or retired and the related accumulated depreciation are removed from
         the accounts, with any resulting gain or loss included in net income.
         Maintenance and repairs are charged to expense as incurred. Major
         renewals and betterments that extend service lives are capitalized.

         Long-lived assets are reviewed for impairment whenever events or
         changes in circumstances indicate that full recoverability is
         questionable. Factors used in the valuation include, but are not
         limited to, management's plans for future operations, recent operating
         results and projected cash flows.

         DEFERRED FINANCING COSTS
         Deferred financing costs are being amortized using the effective
         interest method over the life of the related debt. Amortization expense
         was approximately $1,373,000 for 2002 which includes a $1,098,000 write
         off of the remaining balance during December 2002.

         REVENUE RECOGNITION
         Revenue from product sales is recognized upon shipment to customers.
         Provisions for returns and other adjustments are provided for in the
         same period the related sales are recorded.

         FOREIGN CURRENCY TRANSLATION
         Assets and liabilities of the Companies' foreign subsidiaries are
         translated at the balance sheet date exchange rates and statement of
         operations accounts are translated at the average rates prevailing
         during the period. Adjustments resulting from the translation are
         recorded as a separate component of equity.


                                     - 31 -

<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         ENVIRONMENTAL REMEDIATION AND COMPLIANCE
         Environmental remediation and compliance expenditures are expensed or
         capitalized in accordance with accounting principles generally accepted
         in the United States of America. Liabilities are recorded when it is
         probable the obligations have been incurred and the amounts can be
         reasonably estimated.

         FAIR VALUE OF FINANCIAL INSTRUMENTS
         Fair value of cash, accounts receivable, accounts payable and accrued
         liabilities approximate book value at December 31, 2002. Due to the
         situation described in Notes 12 and 13, management is not able to make
         a fair determination of the fair value of the debt.

         CONCENTRATIONS OF CREDIT RISK
         The Companies are subject to concentration of credit risk relating to
         cash and equivalents. The Companies maintain cash and cash equivalents
         with various financial institutions. The Companies monitor the relative
         credit standing of these financial institutions and other entities and
         limit the amounts of credit exposure with any one entity. The Companies
         also monitor the creditworthiness of the entities to which they grant
         credit terms in the normal course of business.

         The Companies are exposed to market risk for changes in interest rates.

         No customer accounted for more than 10% of the Companies' combined
         revenues in 2002.

         INCOME TAXES
         Passive Components is not a separate tax paying entity. Passive
         Components is included in Insilco's combined federal and certain state
         income tax groups for income tax reporting purposes and is responsible
         for its proportionate share of income taxes calculated upon its federal
         taxable income at a current estimate of the annual effective tax rate.

         Income taxes are accounted for under the asset and liability method.
         Deferred tax assets and liabilities are determined based upon
         differences between the financial reporting and tax basis of assets and
         liabilities and are measured by applying enacted tax rates and laws to
         taxable years in which such differences are expected to reverse.
         Determination of the amount of valuation allowance recognized is based
         upon an assessment of whether it is more likely than not that all or
         some portion of the deferred tax assets will not be realized.

         COMPREHENSIVE INCOME (LOSS)
         Comprehensive income (loss) consists of net income (loss) and foreign
         currency translation adjustments and is presented in the combined
         statements of equity and comprehensive income (loss).


                                     - 32 -


<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         ESTIMATES
         In conformity with accounting principles generally accepted in the
         United States of America, the preparation of financial statements
         requires management to make estimates and assumptions that affect the
         amounts reported in the financial statements and, therefore, actual
         results may ultimately differ from those estimates.

         IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
         In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
         Associated with Exit or Disposal Activities. Statement No. 146 requires
         that a liability for a cost associated with an exit or disposal
         activity be recognized when the liability is incurred. Statement No.
         146 eliminates the definition and requirement for recognition of exit
         costs in Emerging Issues Task Force (EITF) Issue No. 94-3 where a
         liability for an exit cost was recognized at the date of an entity's
         commitment to an exit plan. This statement is effective for exit or
         disposal activities initiated after December 31, 2002. The Companies
         believe that the adoption of this statement will not have a significant
         impact on the results of operations or financial position.

         In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
         Guarantor's Accounting and Disclosure Requirements for Guarantees,
         Including Indirect Guarantees of Indebtedness of Others, an
         interpretation of FA SB Statements No. 5, 57, and 107 and Rescission of
         FASB Interpretation No. 34. FIN 45 clarifies the requirements of FASB
         Statement No. 5, Accounting for Contingencies, relating to the
         guarantor's accounting for, and disclosure of, the issuance of certain
         types of guarantees. This interpretation clarifies that a guarantor is
         required to recognize, at the inception of certain types of guarantees,
         a liability for the fair value of the obligation undertaken in issuing
         the guarantee. The initial recognition and measurement provisions of
         this Interpretation are applicable on a prospective basis to guarantees
         issued or modified after December 31, 2002, irrespective of the
         guarantor's fiscal year-end. The disclosure requirements in this
         interpretation are effective for financial statements of annual periods
         ending after December 15, 2002. The Companies are assessing the impact
         the adoption of this interpretation will have on the results of
         operations or financial position.


                                     - 33 -


<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

3.       INVENTORIES

         A summary of inventories at December 31, 2002 follows (in thousands):

                                        December 31,
                                      -----------------
                                            2002
                                      -----------------

         Raw material and supplies      $    4,609
         Work in process                     2,378
         Finished goods                      5,339
                                      -----------------

               Total inventories =      $   12,326
                                      =================


4.       PROPERTY, PLANT AND EQUIPMENT

         A summary of property, plant and equipment December 31, 2002 follows
         (in thousands):

                                        December 31,
                                      -----------------
                                            2002
                                      -----------------

         Land                           $      623
         Buildings                           4,359
         Machinery and equipment            39,231
                                      -----------------
                                            44,213
         Less accumulated
          depreciation                     (32,829)
                                      -----------------
                                        $   11,384
                                      =================


                                     - 34 -

<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

5.       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

         A summary of accrued expenses and other current liabilities at December
         31, 2002 follows (in thousands):

                                        December 31,
                                      -----------------
                                            2002
                                      -----------------

         Salaries and wages payable     $       787
         Pension                                473
         Insurance                              418
         Commissions                            427
         Miscellaneous taxes                     93
         Restructuring                        1,728
         Other accrued expenses                 676
                                      -----------------
                                        $     4,602
                                      =================

6.       LONG-TERM DEBT

         On January 10, 2001, Insilco increased its credit facility by $25.0
         million to fund the acquisition of InNet. This debt is reflected in the
         combined balance sheet of the Companies at December 31, 2002. The
         related interest expense, deferred financing costs, amortization
         expense and accumulated amortization have also been reflected on the
         combined balance sheets and combined statements of operations of the
         Companies.

         The outstanding balance under the credit facility is subject to
         twenty-three mandatory quarterly payments of $62,500 and two payments
         of $l1,781,250 in each of year six and seven. Interest accrues under
         the credit facility at floating rates calculated with respect to either
         the London Interbank Offered Rate (LIBOR) or Bank One's Base Rate, plus
         an applicable margin. The margin, in turn, fluctuates based on
         Insilco's debt covenant ratios. LIBOR at December 31, 2002 was 1.45%.
         At December 31, 2002, the applicable margin for the credit facility was
         LJBOR plus 4.5%.

         The credit facilities of the Parent are guaranteed by all of Insilco's
         subsidiaries, including the Companies. In addition, the obligations
         thereunder are collateralized by substantially all assets of the
         Companies.

         The credit facility contains certain financial covenants including, but
         not limited to, covenants related to minimum EBITDA, maximum debt and a
         limit on annual capital expenditures. The credit facility also contains
         certain negative covenants typical of credit agreements of this type
         including, but not limited to, a prohibition on the ability of Insilco
         and its domestic subsidiaries to incur additional indebtedness in
         excess of certain agreed upon amounts, and to make investments other
         than permitted investments, and also restricts Insilco and its
         subsidiaries from paying any


                                     - 35 -

<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         dividends, redeeming, repurchasing or acquiring any Insilco or Insilco
         Holding Co. shares or paying any principal, premium or interest (in
         excess of certain agreed upon amounts) on any subordinated obligations.

         As a result of the situation described in Notes 12 and 13, the
         outstanding debt obligation under the credit facility has been
         classified as current.

7.       BENEFIT PLANS

         Certain Signal and SCS employees participate in Insilco's defined
         benefit pension plans. The benefits under these plans are based
         primarily on employees' years of service and compensation near
         retirement. The Companies' funding policy is consistent with the
         funding requirements of federal laws and regulations. The net periodic
         pension cost allocated to the Companies associated with Insilco's
         defined benefit pension plans was $213,000 during 2002.

         Signal also contributes to a multi-employer plan sponsored by a
         bargaining unit for its union employees. Signal recognized expenses of
         $249,000 in 2002 related to contributions to this multi-employer plan.

         In addition to the defined benefit plans described above, Signal and
         SCS employees may participate in a qualified defined contribution
         401(k) plan sponsored by lnsilco, which covers substantially all
         nonunion employees of the Companies and their subsidiaries, and which
         covers union employees at one of the Companies' subsidiaries. The
         Companies match 50% of participants' voluntary contributions up to a
         maximum of 3% of each participant's eligible compensation, subject to
         limitations required by government laws or regulations. The Companies'
         expense related to this plan was approximately $79,000 for the year
         ended December 31, 2002.

         InNet sponsors a SIMPLE IRA plan for its employees. InNet's
         contributions to this plan on behalf of its employees were $42,000 for
         the year ended December 31, 2002.


                                     - 36 -


<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

8.       INCOME TAXES

         The Passive Components combined financial statements reflect a charge
         (benefit) for federal, state and foreign income taxes as if Passive
         Components had been subject to tax on a separate company basis during
         the periods presented.

         The components of total income tax expense follow (in thousands):

                                              December 31,
                                                  2002
                                            -----------------

         Current
               Federal                               --
               State                                  3
               Foreign                              727
                                            -----------------

                                                    730
                                            -----------------

         Deferred
               Federal                               --
               State                                 --
               Foreign                               --
                                            -----------------
                                                     --
                                            -----------------

                    Total income tax
                     provision                $     730
                                            =================


         Domestic current income tax obligations (benefits) are treated as
         having been settled through the intercompany account as if Passive
         Components were filing its income tax returns on a separate company
         basis. Such amounts were insignificant for the year ended December 31,
         2002. Foreign income tax obligations have been paid directly by the
         foreign subsidiaries.



                                     - 37 -

<page>



PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         The significant components of deferred income tax expense (benefit)
         follow (in thousands):

                                                            December 31,
                                                                2002
                                                          -----------------

         Deferred tax expense (benefit)
             exclusive of the effects of
             the following component                            (2,725)
         Changes in the valuation allowance
             for deferred tax assets
             allocated to income tax expense                     2,725
                                                          -----------------
                                                            $       --
                                                          =================

         Pretax income (loss) by domestic and foreign sources follows (in
         thousands):

                                       December 31,
                                           2002
                                    ------------------


         Domestic                        (16,668)
         Foreign                           4,265
                                    ------------------

                                       $ (12,403)
                                    ==================

         Income tax expense differs from the amount computed by applying the
         Federal statutory rate to pretax income due to the following (in
         thousands):

                                                             December 31,
                                                                 2002
                                                          ------------------

         Computed statutory expense                          $   (4,343)
         Goodwill book write off/amortization                        --
         State and local taxes                                     (332)
         Foreign tax rate differential                             (890)
         U.S. possession income                                      --
         Subpart foreign income deemed taxable in the U.S.        3,545
         Other                                                       25
         Valuation allowance                                      2,725
                                                          ------------------
                      Income tax expense                     $      730
                                                          ==================


                                     - 38 -

<page>

PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         The tax effects of temporary differences that gives rise to significant
         portions of deferred tax assets and deferred tax liabilities are offset
         by valuation allowances resulting in no net deferred tax assets or
         liabilities.

         The tax effects of temporary differences that give rise to significant
         portions of the deferred tax assets and deferred tax liabilities
         follows (in thousands):

         In 2002, current taxes were provided on the earnings of foreign
         subsidiaries because it is expected that the earnings will not be
         permanently reinvested due to financial obligations of Insilco.

         At December 31, 2002, the Companies had net operating loss
         carryforwards for Federal tax purposes of $20.9 million, which will
         begin to expire in 2022.

         Insilco and its domestic subsidiaries file a consolidated U.S. federal
         income tax return.

9.       RESTRUCTURING AND PLANT CLOSING COSTS

         During the years ended December 31, 2002, the Companies recorded
         $1,744,000 of restructuring and plant closing costs relating to the
         closure of facilities in New York and the Dominican Republic and a
         sales office located in Japan. These closings were under taken to
         reduce operating costs.

         All of these costs have been reflected in the Restructuring charge line
         item on the combined statements of operations.

         As of December 31, 2002, the Companies had an accrual of $l,728,000
         relating to these restructuring charges, which is included in accrued
         expenses on the balance sheet. A summary of this accrual is as follows
         (in thousands):
<TABLE>
<CAPTION>

                                         As of                                                      As of
                                      December 31,       Restructuring           Cash           December 31,
                                          2001               Charge             Outlays             2002
                                    -----------------   -----------------  -----------------  ------------------
<S>                                 <C>                 <C>                <C>                <C>
Restructuring charges:
    Employee separations              $        --         $      1,037       $        --        $     1,037
    Other exit costs                           --                   16               (16)                --
    Remaining noncancelable
     lease costs                               --                  691                --                691
                                    -----------------   -----------------  -----------------  ------------------

         Total restructuring charge   $        --         $      1,744       $       (16)       $     1,728
                                    =================   =================  =================  ==================
</TABLE>

         The headcount reduction from these activities was approximately 73
         employees.

                                     - 39 -

<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

10.      COMMITMENTS AND CONTINGENCIES

         Rental expense for operating leases totaled $l.4 million, for the year
         ended December 31, 2002. These leases primarily relate to production
         facilities.

         Future minimum lease payments under contractually noncancelable
         operating leases (with initial lease terms in excess of one year) for
         years subsequent to December 31, 2002 are as follows (in thousands):

                                    2003        $1,050
                                    2004           540
                                    2005           269
                                    2006           177
                                    2007            --
                              Thereafter            --

         The Companies are subject to various claims and legal actions arising
         in the ordinary course of business. The Companies accrue for amounts
         related to legal matters if it is probable that a liability has been
         incurred and an amount is reasonably estimable. No amounts were accrued
         related to legal matters at December 31, 2002.

         The Companies' operations are subject to extensive federal, state and
         local laws and regulations relating to the generation, storage,
         handling, emission, transportation and discharge of materials into the
         environment. The Companies have a program for monitoring its compliance
         with applicable environmental regulations, the interpretation of which
         often is subjective. The Companies have taken significant measures to
         (1) address emissions, discharges and waste generation and disposal,
         (2) improve management practices and operations in response to legal
         requirements, and (3) internally review compliance with applicable
         environmental regulations and approved practices. In order to achieve
         these goals, the Companies have instituted several programs including
         (1) raw material and process substitution, recycling and material
         management, (2) periodic review of hazardous waste storage and disposal
         practices, and (3) review of compliance and financial status and
         management practices of our offsite third-party waste management firms.

         In the opinion of management, the ultimate disposition of the matters
         discussed above will not have a material adverse effect on the
         Companies' combined financial position, results of operations or
         liquidity.


                                     - 40 -

<page>


PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

11.      IMPAIRMENT OF GOODWILL

         During the first half of 2001, the Companies experienced a significant
         decrease in the rate of growth due to a dramatic decline in capital
         spending in the telecommunications industry. During the second quarter
         of 2001, major customers further reduced their order forecasts and
         canceled orders already placed. Management believed that the growth
         prospects for these business segments were significantly less than
         previously expected and those of historical periods.

         The Companies review the value of their long-lived assets when events
         or changes in circumstances occur that indicate the carrying value of
         the asset may be impaired. As a result of the business conditions noted
         above, Insilco concluded such a review was required for its recent
         acquisition of InNet, acquired in January 2001, and the related
         goodwill. The review was completed in a series of tests. The first test
         included the following steps: (1) management estimated the undiscounted
         future cash flows of the asset based on estimated growth levels; (2)
         management estimated the terminal value of the asset based on an
         appropriate multiple of EBITDA; and (3) management compared the sum of
         the future cash flows and terminal value to the carrying value of long
         lived assets to determine if an impairment has occurred. If an
         impairment had occurred, management performed a second test as follows:
         (1) management discounted the future cash flows and terminal value,
         using EBITDA as a proxy for cash flow, to a present value using an
         appropriate discount rate; and (2) management compared the discounted
         net present value to the carrying value of long lived assets to
         determine the amount of the impairment.

         As a result of this review, management determined that the goodwill
         related to the acquisition of InNet was impaired and, in accordance
         with Insilco's policy it was necessary to write down the goodwill. Thus
         in 2001, InNet recorded a pretax impairment charge of $35.1 million.


                                     - 41 -

<page>



PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

12.      GOING CONCERN MATTERS

         On February 15, 2002, the Parent failed to make a required interest
         payment on its 12% Senior Subordinated Notes Due 2007 (the 12% Notes).
         The 30-day grace period for such payment expired on March 18, 2002,
         resulting in an event of default under the indenture governing the 12%
         Notes, as well as a cross-default under the Parent's Senior Secured
         Credit facility (the Amended Credit Agreement). Further, on March 31,
         2002, the Parent failed to meet the EBITDA covenant under its Amended
         Credit Agreement and was in default on its Amended Credit Agreement and
         its 12% Notes. Subsequently, the Parent did not make the $7.2 million
         August 15, 2002 required interest payment on its 12% Notes and did not
         meet the EBITDA covenants under its Amended Credit Agreement for June
         30 and September 30, 2002. At September 30, 2002, the Parent continued
         to operate under these defaults and, therefore, has classified as
         current, its debt obligations under the Amended Credit Agreement, the
         12% Notes and the 14% Senior Discount Notes Due 2008 (the 14% Notes).

         On May 3, 2002, the Parent and the lenders under the Amended Credit
         Agreement (the Lenders) entered into a forbearance agreement
         (Forbearance Agreement). Under the Forbearance Agreement, the Lenders
         agreed that, absent a further default, they would not (a) accelerate
         the maturity of the debt under the Amended Credit Agreement, (b) take
         enforcement action against any collateral, including effecting any
         rights of setoff, or (c) commence any legal action to enforce rights or
         remedies pursuant to the terms of the Amended Credit Agreement, for the
         period from May 3, 2002 until July 10, 2002 (the Forbearance Period).
         This agreement was subsequently amended to extend the Forbearance
         Period through November 4, 2002. The purpose of the Forbearance Period
         was to allow the Parent time to evaluate and pursue strategic
         alternatives, such as a sale of all or some of the business, a Chapter
         11 bankruptcy filing, or other remedies appropriate for the
         circumstances. To that end, the Parent engaged in active discussions
         with potential purchasers of substantially all of the assets of its
         three business segments, including the Passive Components Group, which
         the Parent anticipates will result in multiple sales of these business
         segments through Chapter 11 bankruptcy proceedings.

         The Parent's recent losses and highly leveraged position raise
         substantial doubt about the Parent's and the Companies' ability to
         continue as a going concern. The combined financial statements do not
         include any adjustments relating to recoverability and classification
         of recorded asset amounts or the amount and classification of
         liabilities that might be necessary should the Parent and the Companies
         become unable to continue as a going concern.

13.      SUBSEQUENT EVENT

         On December 16, 2002, Insilco Holding Co., the parent company of
         Insilco, Insilco and several of Insilco's subsidiaries, including the
         Companies, filed voluntary petitions for relief under Chapter 11 of the
         United States Bankruptcy Code with the United States Bankruptcy Court
         for the District of Delaware. The debtors continue to manage their
         properties and operate their businesses as "debtors-in-possession"
         under the jurisdiction of the Bankruptcy Code.


                                     - 42 -

<PAGE>

PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

 NOTES TO COMBINED FINANCIAL STATEMENTS
 DECEMBER 31, 2002 (Unaudited)

         In addition, Insilco Holding Co. completed its review of strategic
         alternatives for addressing its capital structure issues and its
         primary operating subsidiary, Insilco, has entered into definitive
         agreements to sell substantially all of the assets of its three
         business segments, including the Passive Components Group, for which
         the Parent and certain of its subsidiaries have agreed to sell to Bel
         Fuse Ltd. for approximately $35 million.

         None of Insilco's operations located outside of the United States were
         included in the Chapter 11 filings, though the shares of certain
         foreign subsidiaries and certain foreign assets will be included in the
         sale transactions. The Chapter 11 filings allow the sale of the assets
         of the domestic entities to be free and clear from certain liabilities
         that the prospective purchasers do not wish to assume.

         On January 14, 2003, the Parent notified the Pension Benefit Guaranty
         Corporation (PBGC) that a reportable event occurred in regards to the
         defined benefit pension plan due to the Chapter 11 filing. The Parent
         intends to terminate the plan as the potential buyers of the various
         businesses will not sponsor the existing plan. The plan was in an
         under-funded position of approximately $17 million, on a termination
         basis, as of December 31, 2002. Management expects the PBGC to take
         over as trustee of the plan and that the PBGC will make all future
         benefit payments to the covered employees after such time.


                                     - 43 -

<page>


                          Unaudited Pro Forma Condensed
     Combining Financial Statements of Registrant and the Passive Component
                       Group of Insilco Technologies, Inc.
               as of December 31, 2002 and for the year then ended

         The following unaudited pro forma condensed combining financial
statements give pro forma effect to the acquisition using the purchase method of
accounting and the assumptions and adjustments set forth in the accompanying
notes to the pro forma condensed combining financial statements. This
presentation assumes a purchase price of approximately $35 million in cash and
the assumption of certain liabilities.

         The purchase price has been allocated based on preliminary estimates of
the fair market value of Passive Components assets and liabilities. See Note 1
to the Notes to Unaudited Pro Forma Condensed Combining Financial Statements.
The pro forma adjustments are subject to change pending a final analysis of the
fair values of the assets acquired and liabilities assumed. The impact of these
changes could be material.

Periods Covered

         The unaudited pro forma condensed combing balance sheet as of December
31, 2002 is based on the individual historical balance sheets of Bel Fuse Inc.
and Passive Components and gives effect to the acquisition as if it had occurred
on December 31, 2002. The unaudited pro forma condensed combining statement of
operations for the year ended December 31, 2002 is based on the individual
historical statements of operations of Bel Fuse Inc. and Passive Components and
combines the results of operations of Bel Fuse Inc. and Passive Components for
the year ended December 31, 2002, as if the merger had occurred on January 1,
2002.

         The unaudited pro forma condensed combining financial statements are
based on estimates and assumptions. These estimates and assumptions are
preliminary and have been made solely for the purpose of developing this pro
forma information. Unaudited pro forma condensed combining financial information
is presented for illustrative purposes only and is not necessarily indicative of
the operating results that would have been achieved if the acquisition of
Passive Components had been consummated as of the beginning of the period
indicated, nor is it necessarily indicative of future results of operations. The
pro forma condensed combining financial information does not give effect to any
cost savings or restructuring and integration costs that may result from the
integration of Bel Fuse Inc. and Passive Components businesses. Costs related to
restructuring and integration have not yet been determined.


                                     - 44 -

<page>


                        BEL FUSE INC - PASSIVE COMPONENTS
                   UNAUDITED PRO FORMA COMBINED BALANCE SHEET
                             AS OF DECEMBER 31, 2002
                             (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                       Adjusted
                                                       Passive                         Passive
                                                      Components                      Components    Pro Forma
                                         Bel Fuse       Group         Adjustments        Group      Adjustments     Total
                                       ------------- -------------   -------------    -----------   -----------   -------------
<S>                                    <C>           <C>             <C>              <C>           <C>           <C>
Current Assets:

   Cash and cash equivalents            $  59,003      $ 10,849       $ (10,849)(1)    $     --        9,950   3d|  $ 33,953
                                                                                                     (35,000)  3d|

   Marketable securities                    4,966                                                                      4,966
   Accounts receivable - net               16,840        13,181                          13,181                       30,021
   Inventories                             12,384        12,326                          12,326                       24,710
   Prepaid expenses and other current
    assets                                    190         2,337                           2,337                        2,527
   Refundable income taxes                    682                                                                        682
   Deferred income taxes                      439            --              --              --           --             439
                                       ------------- -------------   -------------    -----------   -----------   -------------

       Total Current Assets                94,504        38,693         (10,849)         27,844      (25,050)         97,298
                                       ------------- -------------   -------------    -----------   -----------   -------------

Property, plant and equipment - net        37,605        11,384                          11,384                       48,989


Goodwill - net                              4,820                                                                      4,820
                                                                                                         919   3f|
                                                                                                         274   3a|     6,632
Identifiable intangible assets-net          2,805                                                      2,634   3b|

                                                                                                          50   3d|
Other assets                                7,159           262              --             262         (919)  3f|     6,552
                                       ------------- -------------   -------------    -----------   -----------   -------------

   TOTAL ASSETS                         $ 146,893      $ 50,339        $(10,849)        $39,490     $(22,092)      $ 164,291
                                       ============= =============   =============    ===========   ===========   =============
</TABLE>

   See notes to unaudited pro forma condensed combining financial statements.


                                     - 45 -

<page>



                        BEL FUSE INC - PASSIVE COMPONENTS
                   UNAUDITED PRO FORMA COMBINED BALANCE SHEET
                             AS OF DECEMBER 31, 2002
                             (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                       Adjusted
                                                       Passive                         Passive
                                                      Components                      Components    Pro Forma
                                         Bel Fuse       Group         Adjustments        Group      Adjustments     Total
                                       ------------- -------------   -------------    -----------   -----------   -------------
<S>                                    <C>           <C>             <C>              <C>           <C>           <C>
Accounts payable                           5,100         2,522                            2,522                       7,622
Accrued expenses                           6,203         4,602                            4,602           274   3a   11,079
Current portion of LT Debt                              24,711          (24,711)(1)          --         2,000   3d    2,000
Prepetition liability                                    2,467           (2,467)(1)          --                          --
Income taxes payable                                       730             (730)(1)          --                          --
Dividends payable                            412            --               --              --                         412
                                       ------------- -------------   -------------    -----------   -----------   -------------
    Total Current Liabilities             11,715        35,032          (27,908)          7,124         2,274        21,113
                                       ------------- -------------   -------------    -----------   -----------   -------------

Long term debt, excluding current
 portion                                                   137             (137)(1)          --         8,000   3d    8,000
Deferred income taxes                      4,519            --               --              --            --         4,519
                                       ------------- -------------   -------------    -----------   -----------   -------------
      Total Liabilities                   16,234        35,169          (28,045)          7,124        10,274        33,632
                                       ------------- -------------   -------------    -----------   -----------   -------------
Commitments and Contingencies

Stockholders' Equity:
  Common stock                             1,094                                             --                       1,094
  Additional paid-in capital              13,982                                             --                      13,982
  Retained earnings                      115,633                                             --                     115,633
  Net investment and advances                           13,969           17,196          31,165       (31,165)  3b       --
  Cumulative other comprehensive
   income                                    (50)        1,201               --           1,201        (1,201)          (50)
                                       ------------- -------------   -------------    -----------   -----------   -------------
      Total Stockholders' Equity         130.659        15,170           17,196          32,366       (32,366)       130,659
                                       ------------- -------------   -------------    -----------   -----------   -------------
      TOTAL LIABILITIES AND
        STOCKHOLDERS' EQUITY           $ 145,893      $ 50,339        $ (10,849)       $ 39,490     $ (22,092)     $ 164,291
                                       ============= =============   =============    ===========   ===========   =============
</TABLE>



   See notes to unaudited pro forma condensed combining financial statements.

                                     - 46 -

<page>


                        BEL FUSE INC - PASSIVE COMPONENTS
              UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2002
                             (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                    Pro Forma
                                                  Passive                           Combined
                                                 Components       Pro Forma       Statement of
                                     Bel Fuse      Group         Adjustments       Operations
                                    ----------- -------------    -------------    --------------
<S>                                 <C>          <C>              <C>              <C>
Net sales                            $ 95,528     $  71,561                          $ 167,089
                                    ----------  -------------                     --------------

Costs and expenses:
    Cost of sales                      72,420        58,734                            131,154
    Selling, general and
     administrative                    22,270        20,029   a          765   3c       43,064
                                    ----------- -------------    -------------    --------------
                                       94,690        78,763              765           174,218
                                    ----------- -------------    -------------    --------------

Income (loss) from operations             838        (7,202)            (765)           (7,129)
                                    ----------- -------------    -------------    --------------
Other income (expense)
    Interest Expense                                 (1,522)  b         (357)  3d       (1,879)
    Allocated capital costs                          (3,270)  c                         (3,270)
    Interest income                                     210   d                            210
    Other income (expense), net           940          (619)  e         (420) 3e           (99)
                                     ----------- -------------    -------------    --------------
                                          940        (5,201)            (777)           (5,038)
                                    ----------- -------------    -------------    --------------

Earnings (loss) before provision
 for income taxes
                                        1,778       (12,403)          (1,542)          (12,167)

Provision (benefit) for income
taxes                                   1,199           730               --             1,929
                                    ----------- -------------    -------------    --------------
Net earnings (loss)                    $  579     $ (13,133)       $  (1,542)        $ (14,096)
                                    =========== =============    =============    ==============

Earnings (loss) per common share-
    basic                              $ 0.05                                        $   (1.29)
                                    ===========                                   ==============

Earnings (loss) per common share-
    diluted                            $ 0.05                                        $   (1.29)
                                    ===========                                   ==============

Weighted average number of
    common shares outstanding-
    basic                              10,907                                           10,907
                                    ===========                                   ==============

Weighted average number of
    common shares outstanding-
    diluted                            11,086                                           10,907
                                    ===========                                   ==============
</TABLE>

a   Includes $1,391 of allocated corporate expenses that are charged by an
    unconsolidated entity of Insilco. Management believes that this charge will
    not be required after the consumation of the acquisition.

b   Represents interest expense on Long-term debt charged by an unconsolidated
    entity of Insilco. Management believes that this charge will not be required
    after the consumation of the acquisition.

c   Represents interest expense on intercompany loans. Bel Fuse Inc. is not
    assuming the affiliated company liabilities and would not necessarily incur
    this interest cost.

d   Represents interest income on cash balances. Bel Fuse Inc. is not acquiring
    any cash and would not receive the interest income.

e   Includes the write-off of deferred financing charges in the amount of $1,373
    relating to the prepayment of long-term debt. This would not be a recurring
    cost to Bel Fuse Inc.


   See notes to unaudited pro forma condensed combining financial statements.

                                     - 47 -

<page>


    NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
                 AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2002
                                 (IN THOUSANDS)

1.       Adjustments to Passive Components Financial Statements

                 The proforma condensed balance sheet of Passive Components
                 Group as at December 31, 2002 eliminates certain assets and
                 liabilities that are excluded from the acquisition agreement.
                 These comprise the following:


                  Cash                                       $ 10,849
                  Long-term debt                               24,711
                  Prepetition liabilities                       2,467
                  Income taxes payable                            730
                  Notes payable                                   137

2.       Allocation of Purchase Price

         The allocation of Passive Components purchase price among the tangible
         and intangible assets acquired and liabilities assumed is based on
         management's preliminary estimates of fair market value. These
         estimates of fair market value could change based on Bel Fuse Inc's
         finalization of an independent appraisal of the assets acquired.

         The following table sets forth the estimated purchase price:

                  Cash paid                                 $   35,000
                  Accrued transaction costs                      1,193
                                                            -----------

                  Total purchase price                      $   36,193
                                                            ===========

         The following table is a preliminary allocation of the purchase price:

         Assets
           Accounts receivable                              $   13,181
           Inventories                                          12,326
           Prepaid expenses and other                            2,337
           Property, plant and equipment                        11,384
           Goodwill                                                --
           Identifiable intangible assets (other than
            goodwill)                                            3,827
           Other non current assets                                262

         Liabilities
           Accounts payable and other accrued
            liabilties                                          (7,124)
                                                           -------------

            Total purchase price                            $   36,193
                                                           =============


                                     - 48 -

<PAGE>

         In June 2001, the Financial Accounting Standards Board issued
         Statements of Financial Accounting Standards No. 141, Business
         Combinations, and No. 142, Goodwill and Other Intangible Assets,
         effective for fiscal years beginning after December 15, 2001. Under the
         new rules, goodwill and intangible assets deemed to have indefinite
         lives will no longer be amortized but will be subject to an impairment
         test at least annually. Other intangible assets will continue to be
         amortized over their useful lives. Identifiable intangibles in
         connection with this acquisition include patents and product
         information.

3.       Pro Forma Adjustments

         (a)  Estimated unpaid transaction costs.

         (b)  Elimination of outstanding equity balances of Passive Components
              as of December 31, 2002.

         (c)  Amortization expense of identifiable intangible assets based on a
              five-year amortization period.

         (d)  Bel Fuse Inc. intends to finance $10 million under a term loan
              agreement with The Bank of New York. Principal and interest are
              payable in arrears quarterly over five years with interest of
              Libor plus 1.25% (3.75% at December 31, 2002). Under the terms of
              the agreement, Bel Fuse Inc. will pay a $50 fee and provide an
              unconditional joint and several guarantee, as defined, by all
              direct and indirect domestic subsidiaries secured by a first
              priority security interest in and lien on 65% of all of the issued
              and outstanding shares of the capital stock of each direct
              Material Foreign Subsidiary, as defined in the loan agreement, of
              such subsidiaries and all other personal property of such
              subsidiaries.

         (e)  Estimated reduction of interest income related to the cash portion
              of the purchase price of $35,000.

         (f)  Reflects reclassification of transaction costs incurred by Bel
              Fuse Inc. as of December 31, 2002 to identifiable intangible
              assets from other assets.

         (g)  No tax benefit has been provided on the proforma adjustments
              because the tax jurisdictions that the adjustments apply to
              preclude such a tax benefit.

                                     - 49 -

<page>

                                   SIGNATURES

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

                                                      BEL FUSE INC.


                                                      By:  /s/ Daniel Bernstein
                                                           ---------------------
                                                           Daniel Bernstein
                                                           President


Dated:  March 26, 2003

                                     - 50 -
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{"company-data": {"conformed-name": "BEL FUSE INC /NJ", "cik": "0000729580", "assigned-sic": "3677", "irs-number": "221463699", "state-of-incorporation": "NJ", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-11676", "film-number": "03617863"}, "business-address": {"street1": "206 VAN VORST ST.", "city": "JERSEY CITY", "state": "NJ", "zip": "07032", "phone": "2014320463"}, "mail-address": {"street1": "206 VAN VORST ST.", "city": "JERSEY CITY", "state": "NJ", "zip": "07032"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                       ----------------------------------

                                    FORM 8-K
                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 21, 2003

                                  BEL FUSE INC.
--------------------------------------------------------------------------------
               (Exact name of registrant as specified in charter)

  New Jersey                     0-11676                      22-1463699
---------------                -----------                ------------------
(State or other                (Commission                  (IRS Employer
jurisdiction of                File Number)                 Identification
incorporation)                                              Number)

206 Van Vorst Street, Jersey City, New Jersey                    07302
---------------------------------------------                 ----------
(Address of principal executive offices)                      (Zip Code)

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

--------------------------------------------------------------------------------
                (Former name or former address, if changed since
                                  last report)
Item 2.  Acquisition or Disposition of Assets.
                  -------------------------------------

         On March 21, 2003, Bel Fuse Inc., a New Jersey corporation (the
"Registrant"), completed its acquisition of the Passive Components Group of
Insilco Technologies, Inc. ("Insilco"). Pursuant to a stock and asset purchase
agreement, dated as of December 15, 2002, as amended by Amendment No. 1 to such
stock and asset purchase agreement, dated as of March 21, 2003 (as so amended,
the "Purchase Agreement"), among the Registrant, certain subsidiaries of the
Registrant, Insilco and certain of Insilco's subsidiaries, the Registrant and
Registrant's subsidiaries acquired substantially all of the assets, subject to
certain of the liabilities, of Stewart Connector Systems, Inc., InNet
Technologies, Inc. and Signal Transformer Co., Inc., as well as the stock of
several of Insilco's foreign subsidiaries. The net purchase price paid by the
Registrant amounted to $35 million in cash plus the assumption of certain
liabilities. The Registrant funded approximately $10 million of the purchase
price by means of a loan made in the ordinary course of business by a banking
institution, whose name has been omitted from this Report but furnished by
separate correspondence to the SEC, and the remainder of the purchase price from
internally generated funds.

         The transactions contemplated by the Purchase Agreement were approved
by the United States Bankruptcy Court for the District of Delaware on March 10,
2003 as part of Chapter XI bankruptcy proceedings commenced voluntarily by
Insilco and several of its affiliated companies.

         The Registrant intends to continue the use of the assets acquired in
the passive components business.

                                      - 2 -
Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits
         ------------------------------------------------------------------

         a.  With respect to the acquisition of the Passive Components Group of
             Insilco Technologies, Inc. by Bel Fuse Inc. and subsidiaries of
             Bel Fuse Inc., the following financial statements are included
             herein:

             Passive Components Group Financial Statements:

             (1)  Report of Independent Accountants

             (2)  Combined Balance Sheets at November 1, 2002 and December 31,
                  2001 and 2000

             (3)  Combined Statements of Operations for the ten months ended
                  November 1, 2002 and for the years ended December 31, 2001
                  and 2000

             (4)  Combined Statements of Equity and Comprehensive Income (Loss)
                  for the ten months ended November 1, 2002 and for the years
                  ended December 31, 2001 and 2000

             (5)  Combined Statements of Cash Flows for the ten months ended
                  November 1, 2002 and for the years ended December 31, 2001
                  and 2000

             (6)  Notes to Combined Financial Statements, November 1, 2002 and
                  December 31, 2001 and 2000

         b.  The following unaudited financial statements of the Passive
             Components Group are included herein:

             (1)  Combined Balanced Sheet at December 31, 2002

             (2)  Combined Statement of Operations for the year ended December
                  31, 2002

             (3)  Combined Statement of Cash Flows for the year ended December
                  31, 2002

             (4)  Notes to Combined Financial Statements, December 31, 2002

                                      - 3 -
c.  The following unaudited pro forma financial statements are
             included herein:

             (1)  Introduction to Unaudited Pro Forma Condensed Combining
                  Financial Statements of Registrant and the Passive Component
                  Group of Insilco Technologies, Inc. as of December 31, 2002
                  and for the year then ended

             (2)  Unaudited Pro Forma Condensed Combined Balance Sheet as of
                  December 31, 2002

             (3)  Unaudited Pro Forma Condensed Combined Statement of Operations
                  for the year ended December 31, 2002

             (4)  Notes to the Unaudited Pro Forma Condensed Combining Financial
                  Statements as of and for the year ended December 31, 2002

         d.  Exhibits:

             2.1  Stock and Asset Purchase Agreement, among Bel Fuse Ltd., Bel
                  Fuse Macau, L.D.A., Bel Connector Inc. and Bel Transformer,
                  Inc. and Insilco Technologies, Inc. and Certain of its
                  Subsidiaries, dated as of December 15, 2002, as amended by
                  Amendment No. 1 to Stock and Asset Purchase Agreement, dated
                  as of March 21, 2003, among Bel Fuse Inc., Bel Fuse Ltd., Bel
                  Fuse Macau, L.D.A., Bel Connector Inc. and Bel Transformer,
                  Inc. and Insilco Technologies, Inc. and Certain of its
                  Subsidiaries are incorporated by reference to Exhibit 10.6 of
                  the Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 2002.

             23.1 Consent of Pricewaterhouse Coopers LLP

             99.1 Certification of the Chief Executive Officer pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002

             99.2 Certification of the Vice President of Finance pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002

                                      - 4 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)
COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000

                                      - 5 -
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholder of Insilco Technologies, Inc.

In our opinion, the accompanying combined balance sheets and the related
combined statements of operations, of equity and comprehensive income (loss) and
of cash flows present fairly, in all material respects, the combined financial
position of the Passive Components Group (the Companies), wholly owned
subsidiaries of Insilco Technologies, Inc. (Insilco), at November 1, 2002 and
December 31, 2001 and 2000, and the results of their combined operations and
their combined cash flows for the ten months ended November 1, 2002 and for the
years ended December 31, 2001 and 2000 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of Insilco's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

As explained in Note 1, the combined financial statements include certain costs
allocated by Insilco that are not necessarily indicative of the amounts that
would have been recorded by the Companies on a stand-alone basis.

As explained in Note 12, there is substantial doubt about Insilco's and the
Companies' ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

January 14, 2003

                                     - 6 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED BALANCE SHEETS
AT NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)
--------------------------------------------------------------------------------
DECEMBER 31,
                                                 NOVEMBER 1,   -------------------
                                                    2002        2001        2000
                                                 -----------   -------     -------
ASSETS
  Cash and cash equivalents                        $10,545     $ 6,445     $ 2,772
  Trade receivables, net                            14,140      14,074      17,738
  Other receivables                                  1,171         398         577
  Inventories, net                                  13,177      14,796      19,061
  Prepaid expenses and other current assets            896         734         872
                                                   -------     -------     -------
    Total current assets                            39,929      36,447      41,020
                                                   -------     -------     -------
Property, plant and equipment, net                  11,992      14,231      16,634
Other assets and deferred charges                    1,400       1,620         913
                                                   -------     -------     -------
      Total assets                                 $53,321     $52,298     $58,567
                                                   =======     =======     =======
LIABILITIES AND EQUITY
Current liabilities
  Current portion of long-term debt                $24,713     $24,780     $    15
  Accounts payable                                   4,352       5,133      10,701
  Accrued expenses and other current liabilities     4,902       3,493       3,917
  Income taxes payable                                 730         333       1,127
                                                   -------     -------     -------
    Total current liabilities                       34,697      33,739      15,760
                                                   -------     -------     -------
Long-term debt, excluding current portion              138         160         169
Other long-term liabilities                             60         805       1,629
                                                   -------     -------     -------
    Total liabilities                               34,895      34,704      17,558
                                                   -------     -------     -------
Commitments and contingencies
Equity
  Insilco Technologies, Inc.
    Net investment and advances                     15,718      13,932      40,545
  Accumulated other comprehensive income             2,708       3,662         464
                                                   -------     -------     -------
    Total equity                                    18,426      17,594      41,009
                                                   -------     -------     -------
      Total liabilities and equity                 $53,321     $52,298     $58,567
                                                   =======     =======     =======
The accompanying notes are an integral part
                    of these combined financial statements.

                                     - 7 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED STATEMENTS OF OPERATIONS
FOR THE TEN MONTHS ENDED NOVEMBER 1, 2002 AND FOR THE
YEARS ENDED DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)
--------------------------------------------------------------------------------
DECEMBER 31,
                                                          NOVEMBER 1,     ------------------------
                                                             2002            2001           2000
                                                          -----------     ---------      ---------
Net sales                                                  $  60,541      $  78,781      $ 105,113
                                                           ---------      ---------      ---------
Cost of products sold                                         46,708         63,373         71,558
Depreciation and amortization                                  3,635          8,429          4,564
Selling, general and administrative expenses                  13,809         16,924         17,163
Goodwill impairment charge                                        --         35,105             --
Restructuring charge                                           1,744            181             --
Allocated corporate costs, Insilco Technologies, Inc.          1,160          1,980          1,248
                                                           ---------      ---------      ---------
    Operating (loss) income                                   (6,515)       (47,211)        10,580
                                                           ---------      ---------      ---------
Other (expense) income:
Interest expense                                              (1,267)        (1,624)            (8)
Allocated interest expense, Insilco Technologies, Inc.        (2,773)        (7,120)        (4,213)
Interest income                                                  178             45              2
Other income (expense), net                                    1,389         (1,075)        (1,130)
                                                           ---------      ---------      ---------
    Total other (expense) income                              (2,473)        (9,774)        (5,349)
                                                           ---------      ---------      ---------
(Loss) Income from operations before
  income taxes                                                (8,988)       (56,985)         5,231

Income tax expense                                               730             30          2,796
                                                           ---------      ---------      ---------
Net (loss) income                                          $  (9,718)     $ (57,015)     $   2,435
                                                           =========      =========      =========
The accompanying notes are an integral part
                    of these combined financial statements.

                                     - 8 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED STATEMENTS OF EQUITY AND COMPREHENSIVE INCOME (LOSS)
FOR THE TEN MONTHS ENDED NOVEMBER 1, 2002 AND FOR THE
YEARS ENDED DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)
--------------------------------------------------------------------------------
INSILCO
                                                           TECHNOLOGIES INC.
                                                                 NET            ACCUMULATED
                                                              INVESTMENT           OTHER
                                                                 AND            COMPREHENSIVE           TOTAL
                                                               ADVANCES         INCOME (LOSS)           EQUITY
                                                           -----------------    -------------          --------
Balances at December 31, 1999                                  $ 40,256            $    584            $ 40,840

  Net income                                                      2,435                  --               2,435
  Foreign currency translation                                       --                (120)               (120)
                                                                                                       --------
  Total comprehensive income                                                                              2,315
  Changes in Insilco Technologies, Inc. net investment
    and advances                                                 (2,146)                 --              (2,146)
                                                               --------            --------            --------
Balances at December 31, 2000                                    40,545                 464              41,009

  Net loss                                                      (57,015)                 --             (57,015)
  Foreign currency translation                                       --               3,198               3,198
                                                                                                       --------
  Total comprehensive loss                                                                              (53,817)
  Changes in Insilco Technologies, Inc. net investment
    and advances                                                 30,402                  --              30,402
                                                               --------            --------            --------
Balances at December 31, 2001                                    13,932               3,662              17,594

  Net loss                                                       (9,718)                 --              (9,718)
  Foreign currency translation                                       --                (954)               (954)
                                                                                                       --------
  Total comprehensive loss                                                                              (10,672)
  Changes in Insilco Technologies, Inc. net investment
    and advances                                                 11,504                  --              11,504
                                                               --------            --------            --------
Balances at November 1, 2002                                   $ 15,718            $  2,708            $ 18,426
                                                               ========            ========            ========
The accompanying notes are an integral part
                    of these combined financial statements.

                                     - 9 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED STATEMENTS OF CASH FLOWS
FOR THE TEN MONTHS ENDED NOVEMBER 1, 2002 AND FOR THE
YEARS ENDED DECEMBER 31, 2001 AND 2000 (IN THOUSANDS)
--------------------------------------------------------------------------------
DECEMBER 31,
                                                                NOVEMBER 1,     ------------------------
                                                                  2002            2001            2000
                                                               -----------      --------        --------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net (loss) income                                             $ (9,718)       $(57,015)       $  2,435
  Adjustments to reconcile net (loss) income to net cash
    (used in) provided by operating activities:
    Depreciation and amortization                                  3,635           8,429           4,564
    Deferred tax benefit (provision)                                  --            (806)           (255)
    Write-down of fixed assets                                        --           1,138              --
    Goodwill impairment charge                                        --          35,105              --
    Changes in operating assets and liabilities:
      Trade and other receivables                                   (186)          8,713          (2,641)
      Inventories                                                  1,846           8,836          (5,100)
      Prepaid expenses and other current assets                     (178)            214             180
      Accounts payable                                              (799)         (8,738)          4,837
      Other current liabilities and other                         (1,000)           (151)          3,543
                                                                --------        --------        --------
  Net cash (used in) provided by operating activities             (6,400)         (4,275)          7,563
                                                                --------        --------        --------
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisitions, net of cash acquired                                  --         (44,174)             --
  Capital expenditures and other investing activities             (1,594)         (1,913)         (2,885)
                                                                --------        --------        --------
    Net cash used in investing activities                         (1,594)        (46,087)         (2,885)
                                                                --------        --------        --------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of long-term debt                            --          25,000              --
  Payments on long-term debt                                         (89)           (454)            (14)
  Debt issuance and tender costs                                     (59)           (808)           (794)
  Net change in Insilco Technologies, Inc. net investment
    and advances                                                  11,504          30,402          (2,146)
                                                                --------        --------        --------
    Net cash provided by (used in) financing activities           11,356          54,140          (2,954)
                                                                --------        --------        --------
  Effect of exchange rate changes on cash                            738            (105)            (50)
                                                                --------        --------        --------
  Net increase in cash and cash equivalents                        4,100           3,673           1,674

  Cash and cash equivalents at beginning of period                 6,445           2,772           1,098
                                                                --------        --------        --------
  Cash and cash equivalents at end of period                    $ 10,545        $  6,445        $  2,772
                                                                ========        ========        ========
The accompanying notes are an integral part
                    of these combined financial statements.

                                     - 10 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

1.   BASIS OF PRESENTATION

     The combined financial statements reflect the financial position, results
     of operations and cash flows of the Passive Components Group for the ten
     months ended November 1, 2002 and the years ended December 31, 2001 and
     2000. The Passive Components Group consists of three business units and
     their subsidiaries (all of which are wholly owned subsidiaries of Insilco
     Technologies, Inc.) (Insilco or the Parent): Signal Transformer Co., Inc.
     (Signal); InNet Technologies, Inc. (InNet), which was purchased on January
     10, 2001; and Stewart Connector Systems, Inc. (SCS), herein referred to as
     Passive Components or the Companies. The Companies' operations consist of
     the manufacturing and sale of telecommunications and electrical component
     products. Passive Components is not a separate legal entity and since no
     direct ownership in the Companies as a combined group exists, Insilco's net
     investment and advances in the Companies is shown in lieu of stockholder's
     equity in the combined financial statements and includes the accumulation
     of transactions between the Companies and Insilco described below. All
     intercompany accounts and transactions amongst the Passive Components Group
     have been eliminated. Sales to other subsidiaries of Insilco were
     approximately $45,000 for the ten months ended November 1, 2002 and $20,000
     and $41,000 for the years ended December 31, 2001 and 2000, respectively.

     Management believes the assumptions underlying the combined financial
     statements are reasonable. However, the combined financial position,
     results of operations and cash flows presented herein may not be the same
     as would have occurred had the Companies operated as stand-alone entities
     during the periods presented and may not be indicative of future financial
     results.

     INTERCOMPANY RELATIONSHIP WITH THE PARENT
     The combined financial statements include allocations of Insilco's
     corporate overhead, executive management and administrative expenses
     amounting to $1.2 million for the ten months ended November 1, 2002 and
     $2.0 million and $1.2 million for the years ended December 31, 2001 and
     2000, respectively, which are included in the Allocated corporate costs
     line in the statement of operations. These allocations include the general
     administrative expenses of Insilco's corporate office, such as accounting,
     information technology, human resources, legal, environmental, treasury,
     and tax. As specific identification of these expenses was not practical,
     allocations were charged based on a formula factoring in the ratio of the
     Companies' forecasted annual sales, forecasted assets, and actual number of
     employees in proportion to Insilco's consolidated numbers for these
     categories. The resulting ratio was applied to Insilco's forecasted
     corporate expenses and allocated to the Companies rateably over each year.

     Insilco's management believes that this allocation method is reasonable,
     however, the allocations do not necessarily represent what the Companies
     would have incurred on a stand-alone basis. As the Companies were operated
     in a decentralized manner with their own administrative infrastructure, and
     the Companies would likely make different decisions regarding
     administrative initiatives, their overhead expenses as a separate company
     would be different than that reflected in the combined financial
     statements.

                                     - 11 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     The Companies' combined financial statements also include allocations of
     Insilco's interest expense totalling $2.8 million for the ten months ended
     November 1, 2002 and $7.1 million and $4.2 million for the years ended
     December 31, 2001 and 2000, respectively, which are included in the
     Allocated interest expense line in the statement of operations. Interest
     expense has been allocated generally based on the Companies' net assets in
     proportion to Insilco's consolidated net assets. The interest rate applied
     was 10.0% in 2002, 2001 and 2000, which represents an estimated weighted
     average cost of capital.

     The amounts used to calculate interest expense do not necessarily reflect
     the level of indebtedness the Companies would incur as a separate entity.
     Insilco's management believes these are reasonable estimates of the cost of
     financing the Companies' assets and operations in the past. However, the
     Companies may not be able to obtain financing at interest rates similar to
     those used for the interest expense calculation. Accordingly, the
     Companies' interest expense and financing costs as a separate entity may be
     different than that reflected in the combined financial statements.

     Insilco uses a centralized approach to cash management and the financing of
     its operations. The Companies' cash accounts are swept on a daily basis and
     are netted against the net investment and advances account. As a result,
     none of Insilco's cash, cash equivalents or debt at the corporate level has
     been allocated to the Companies in the combined financial statements, other
     than the $25 million portion of the credit facility drawn specifically to
     fund the acquisition of InNet in 2001. Cash in the combined financial
     statements primarily represents amounts held locally by the Companies'
     operations in their various geographic areas.

     ACQUISITION
     On January 10, 2001, Insilco acquired the outstanding equity interests in
     InNet, excluding approximately 16% of the outstanding equity interests that
     Insilco already owned. InNet, now a wholly owned subsidiary of Insilco, is
     a California-based designer, developer and marketer of a broad range of
     magnetic interface products for networking, computer and telecommunications
     original equipment manufacturers. The gross purchase price paid for the
     remaining equity interests was $44.9 million and was financed with cash and
     additional borrowings of $25.0 million under the Parent's credit facility.
     The purchase method of accounting has been used to account for the
     purchase; accordingly, the results of operations of InNet have been
     included in the Companies' combined financial statements from January 10,
     2001. The purchase price, net of cash acquired and including costs incurred
     directly related to the transaction, was $44.2 million. The excess of the
     purchase price over identifiable assets acquired was $37.9 million, which
     was being amortized on a straight-line basis over 20 years. InNet
     subsequently evaluated the recoverability of the goodwill and recorded a
     pretax impairment charge of $35.1 million in 2001. For further discussion,
     see Note 11, Impairment of Goodwill.

                                     - 12 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CASH EQUIVALENTS
     Cash equivalents include time deposits and highly liquid investments with
     original maturities of three months or less.

     TRADE RECEIVABLES
     Trade receivables are presented net of allowances for doubtful accounts and
     sales returns of $1.8 million, $1.5 million and $1.2 million at November 1,
     2002, December 31, 2001 and 2000, respectively.

     INVENTORIES
     Inventories are valued at the lower of cost or net realizable value. Cost
     is generally determined using the first-in, first-out cost method.

     PROPERTY, PLANT AND EQUIPMENT
     Property, plant and equipment are stated at cost. Depreciation of plant and
     equipment is calculated on the straight-line method over the assets'
     estimated useful lives, which is 25 years for new buildings and ranges from
     3 to 9 years for machinery and equipment. The cost of assets sold or
     retired and the related accumulated depreciation are removed from the
     accounts, with any resulting gain or loss included in net income.
     Maintenance and repairs are charged to expense as incurred. Major renewals
     and betterments that extend service lives are capitalized.

     Long-lived assets are reviewed for impairment whenever events or changes in
     circumstances indicate that full recoverability is questionable. Factors
     used in the valuation include, but are not limited to, management's plans
     for future operations, recent operating results and projected cash flows.

     DEFERRED FINANCING COSTS
     Deferred financing costs are being amortized using the effective interest
     method over the life of the related debt. Deferred financing costs were
     $1,134,000, $1,313,000 and $749,000, net of accumulated amortization of
     approximately $528,000, $289,000 and $45,000 at November 1, 2002 and
     December 31, 2001 and 2000, respectively. Amortization expense was
     approximately $239,000 for the period ended November 1, 2002, $244,000 in
     2001 and $45,000 in 2000.

     REVENUE RECOGNITION
     Revenue from product sales is recognized upon shipment to customers.
     Provisions for returns and other adjustments are provided for in the same
     period the related sales are recorded.

     FOREIGN CURRENCY TRANSLATION
     Assets and liabilities of the Companies' foreign subsidiaries are
     translated at the balance sheet date exchange rates and statement of
     operations accounts are translated at the average rates prevailing during
     the period. Adjustments resulting from the translation are recorded as a
     separate component of equity.

                                     - 13 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     ENVIRONMENTAL REMEDIATION AND COMPLIANCE
     Environmental remediation and compliance expenditures are expensed or
     capitalized in accordance with accounting principles generally accepted in
     the United States of America. Liabilities are recorded when it is probable
     the obligations have been incurred and the amounts can be reasonably
     estimated.

     FAIR VALUE OF FINANCIAL INSTRUMENTS
     Fair value of cash, accounts receivable, accounts payable and accrued
     liabilities approximate book value at November 1, 2002, December 31, 2001
     and 2000. Due to the situation described in Notes 12 and 13, management is
     not able to make a fair determination of the fair value of the debt.

     CONCENTRATIONS OF CREDIT RISK
     The Companies are subject to concentration of credit risk relating to cash
     and equivalents. The Companies maintain cash and cash equivalents with
     various financial institutions. The Companies monitor the relative credit
     standing of these financial institutions and other entities and limit the
     amounts of credit exposure with any one entity. The Companies also monitor
     the creditworthiness of the entities to which they grant credit terms in
     the normal course of business.

     The Companies are exposed to market risk for changes in interest rates.

     No customer accounted for more than 10% of the Companies' combined revenues
     in 2002, 2001 or 2000.

     INCOME TAXES
     Passive Components is not a separate tax paying entity. Passive Components
     is included in Insilco's combined federal and certain state income tax
     groups for income tax reporting purposes and is responsible for its
     proportionate share of income taxes calculated upon its federal taxable
     income at a current estimate of the annual effective tax rate.

     Income taxes are accounted for under the asset and liability method.
     Deferred tax assets and liabilities are determined based upon differences
     between the financial reporting and tax basis of assets and liabilities and
     are measured by applying enacted tax rates and laws to taxable years in
     which such differences are expected to reverse. Determination of the amount
     of valuation allowance recognized is based upon an assessment of whether it
     is more likely than not that all or some portion of the deferred tax assets
     will not be realized.

     COMPREHENSIVE INCOME (LOSS)
     Comprehensive income (loss) consists of net income (loss) and foreign
     currency translation adjustments and is presented in the combined
     statements of equity and comprehensive income (loss).

                                     - 14 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     ESTIMATES
     In conformity with accounting principles generally accepted in the United
     States of America, the preparation of financial statements requires
     management to make estimates and assumptions that affect the amounts
     reported in the financial statements and, therefore, actual results may
     ultimately differ from those estimates.

     IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
     In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
     with Exit or Disposal Activities. Statement No. 146 requires that a
     liability for a cost associated with an exit or disposal activity be
     recognized when the liability is incurred. Statement No. 146 eliminates the
     definition and requirement for recognition of exit costs in Emerging Issues
     Task Force (EITF) Issue No. 94-3 where a liability for an exit cost was
     recognized at the date of an entity's commitment to an exit plan. This
     statement is effective for exit or disposal activities initiated after
     December 31, 2002. The Companies believe that the adoption of this
     statement will not have a significant impact on the results of operations
     or financial position.

     In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
     Guarantor's Accounting and Disclosure Requirements for Guarantees,
     Including Indirect Guarantees of Indebtedness of Others, an interpretation
     of FASB Statements No. 5, 57, and 107 and Rescission of FASB Interpretation
     No. 34. FIN 45 clarifies the requirements of FASB Statement No. 5,
     Accounting for Contingencies, relating to the guarantor's accounting for,
     and disclosure of, the issuance of certain types of guarantees. This
     interpretation clarifies that a guarantor is required to recognize, at the
     inception of certain types of guarantees, a liability for the fair value of
     the obligation undertaken in issuing the guarantee. The initial recognition
     and measurement provisions of this Interpretation are applicable on a
     prospective basis to guarantees issued or modified after December 31, 2002,
     irrespective of the guarantor's fiscal year-end. The disclosure
     requirements in this interpretation are effective for financial statements
     of annual periods ending after December 15, 2002. The Companies are
     assessing the impact the adoption of this interpretation will have on the
     results of operations or financial position.

                                     - 15 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------
3.   INVENTORIES

     A summary of inventories at November 1, 2002 and December 31, 2001 and 2000
     follows (in thousands):

                                                          DECEMBER 31,
                                      NOVEMBER 1,    ---------------------
                                         2002          2001          2000
                                      -----------    -------       -------
      Raw materials and supplies       $ 5,139       $ 5,528       $ 6,221
      Work in process                    2,880         3,317         6,225
      Finished goods                     5,158         5,951         6,615
                                       -------       -------       -------
          Total inventories            $13,177       $14,796       $19,061
                                       =======       =======       =======

4.   PROPERTY, PLANT AND EQUIPMENT

     A summary of property, plant and equipment at November 1, 2002 and December
     31, 2001 and 2000 follows (in thousands):

                                                          DECEMBER 31,
                                      NOVEMBER 1,    ---------------------
                                         2002          2001          2000
                                      -----------    -------       -------
      Land                             $    623      $    623      $    623
      Buildings                           4,313         4,067         4,100
      Machinery and equipment            39,088        40,095        37,257
                                       --------      --------      --------
                                         44,024        44,785        41,980
      Less accumulated depreciation     (32,032)      (30,554)      (25,346)
                                       --------      --------      --------
                                       $ 11,992      $ 14,231      $ 16,634
                                       ========      ========      ========

                                     - 16 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

5.   ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

     A summary of accrued expenses and other current liabilities at November 1,
     2002 and December 31, 2001 and 2000 follows (in thousands):
DECEMBER 31,
                                              NOVEMBER 1,    -------------------
                                                 2002         2001         2000
                                              -----------    ------       ------
Salaries and wages payable       $1,230       $  970       $1,901
               Pension                             413          213           87
               Insurance                           487          542          504
               Commissions                         431          468          526
               Miscellaneous taxes                  99          188          699
               Restructuring                     1,728           --           --
               Other accrued expenses              514        1,112          200
                                                ------       ------       ------
                                                $4,902       $3,493       $3,917
                                                ======       ======       ======
6.   LONG-TERM DEBT

     On January 10, 2001, Insilco increased its credit facility by $25.0 million
     to fund the acquisition of InNet. This debt is reflected in the combined
     balance sheets of the Companies at December 31, 2001 and November 1, 2002.
     The related interest expense, deferred financing costs, amortization
     expense and accumulated amortization have also been reflected on the
     combined balance sheets and combined statements of operations of the
     Companies.

     The outstanding balance under the credit facility is subject to
     twenty-three mandatory quarterly payments of $62,500 and two payments of
     $11,781,250 in each of year six and seven. Interest accrues under the
     credit facility at floating rates calculated with respect to either the
     London Interbank Offered Rate (LIBOR) or Bank One's Base Rate, plus an
     applicable margin. The margin, in turn, fluctuates based on Insilco's debt
     covenant ratios. LIBOR at November 1, 2002 was 1.66%. At November 1, 2002,
     the applicable margin for the credit facility was LIBOR plus 4.5%.

     The credit facilities of the Parent are guaranteed by all of Insilco's
     subsidiaries, including the Companies. In addition, the obligations
     thereunder are collateralized by substantially all assets of the Companies.

     The credit facility contains certain financial covenants including, but not
     limited to, covenants related to minimum EBITDA, maximum debt and a limit
     on annual capital expenditures. The credit facility also contains certain
     negative covenants typical of credit agreements of this type including, but
     not limited to, a prohibition on the ability of Insilco and its domestic
     subsidiaries to incur additional indebtedness in excess of certain agreed
     upon amounts, and to make investments other than permitted investments, and
     also restricts Insilco and its subsidiaries from paying any

                                     - 17 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     dividends, redeeming, repurchasing or acquiring any Insilco or Insilco
     Holding Co. shares or paying any principal, premium or interest (in excess
     of certain agreed upon amounts) on any subordinated obligations.

     As a result of the situation described in Notes 12 and 13, the outstanding
     debt obligation under the credit facility has been classified as current.

7.   BENEFIT PLANS

     Certain Signal and SCS employees participate in Insilco's defined benefit
     pension plans. The benefits under these plans are based primarily on
     employees' years of service and compensation near retirement. The
     Companies' funding policy is consistent with the funding requirements of
     federal laws and regulations. The net periodic pension cost allocated to
     the Companies associated with Insilco's defined benefit pension plans was
     $164,000 during the ten months ended November 1, 2002, $127,000 during 2001
     and $(71,000) during 2000.

     Signal also contributes to a multi-employer plan sponsored by a bargaining
     unit for its union employees. Signal recognized expenses of $201,000 during
     the ten months ended November 1, 2002, $295,000 in 2001, and $313,000 in
     2000 related to contributions to this multi-employer plan.

     In addition to the defined benefit plans described above, Signal and SCS
     employees may participate in a qualified defined contribution 401(k) plan
     sponsored by Insilco, which covers substantially all nonunion employees of
     the Companies and their subsidiaries, and which covers union employees at
     one of the Companies' subsidiaries. The Companies match 50% of
     participants' voluntary contributions up to a maximum of 3% of each
     participant's eligible compensation, subject to limitations required by
     government laws or regulations. The Companies' expense related to this plan
     was approximately $76,000 during the ten months ended November 1, 2002, and
     $119,000 and $174,000 for the years ended December 31, 2001 and 2000,
     respectively.

     InNet sponsors a SIMPLE IRA plan for its employees. InNet's contributions
     to this plan on behalf of its employees were $36,000 during the ten months
     ended November 1, 2002 and $37,000 for the year ended December 31, 2001.

                                     - 18 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

8.   INCOME TAXES

     The Passive Components combined financial statements reflect a charge
     (benefit) for federal, state and foreign income taxes as if Passive
     Components had been subject to tax on a separate company basis during the
     periods presented.

     The components of total income tax expense follow (in thousands):
DECEMBER 31,
                                              NOVEMBER 1,      ----------------------
                                                 2002           2001           2000
                                              -----------      -------        -------
Current
                 Federal                        $    --        $    --        $ 1,247
                 State                                3              3             43
                 Foreign                            727            833          1,761
                                                -------        -------        -------
                                                    730            836          3,051
                                                -------        -------        -------
               Deferred
                 Federal                             --           (739)          (322)
                 State                               --            (67)            67
                 Foreign                             --             --             --
                                                -------        -------        -------
                                                     --           (806)          (255)
                                                -------        -------        -------
               Total income tax provision       $   730        $    30        $ 2,796
                                                =======        =======        =======
Domestic current income tax obligations (benefits) are treated as having
     been settled through the intercompany account as if Passive Components were
     filing its income tax returns on a separate company basis. Such amounts
     were insignificant for the ten months ended November 1, 2002 and the year
     ended December 31, 2001 and approximately $1,006,000 for the year ended
     December 31, 2000. Foreign income tax obligations have been paid directly
     by the foreign subsidiaries.

                                     - 19 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     The significant components of deferred income tax expense (benefit) follow
     (in thousands):
DECEMBER 31,
                                                     NOVEMBER 1,   ---------------------
                                                        2002         2001         2000
                                                     -----------   --------     --------
Deferred tax expense (benefit)
                 exclusive of the effects
                 of the following component           $(1,528)     $(8,348)     $  (255)

               Changes in the valuation allowance
                 for deferred tax assets
                 allocated to income tax expense        1,528        7,542           --
                                                      -------      -------      -------
                                                      $    --      $  (806)     $  (255)
                                                      =======      =======      =======
Pretax income (loss) by domestic and foreign sources follows (in
     thousands):
DECEMBER 31,
                                                     NOVEMBER 1,   ---------------------
                                                        2002         2001         2000
                                                     -----------   --------     --------
Domestic                               $(13,609)    $(60,108)    $  1,913
               Foreign                                   4,621        3,123        3,318
                                                      --------     --------     --------
                                                      $ (8,988)    $(56,985)    $  5,231
                                                      ========     ========     ========
Income tax expense differs from the amount computed by applying the Federal
     statutory rate to pretax income due to the following (in thousands):
DECEMBER 31,
                                                     NOVEMBER 1,   ---------------------
                                                        2002         2001         2000
                                                     -----------   --------     --------
Computed statutory expense             $ (3,146)    $(19,945)    $  1,831
               Goodwill book write off/amortization         --       13,368           --
               State and local taxes                      (332)        (691)          94
               Foreign tax rate differential              (890)        (260)         600
               U.S. possession income                       --           --          265
               Subpart foreign income deemed
                 taxable in the U.S.                     3,545           --           --
               Other                                        25           16            6
               Valuation allowance                       1,528        7,542           --
                                                      --------     --------     --------
                   Income tax expense                 $    730     $     30     $  2,796
                                                      ========     ========     ========
- 20 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     The tax effects of temporary differences that give rise to significant
     portions of the deferred tax assets and deferred tax liabilities follows
     (in thousands):
DECEMBER 31,
                                                     NOVEMBER 1,   --------------------
                                                        2002        2001         2000
                                                     -----------   -------      -------
Deferred tax assets
                 Net operating loss carryforwards     $ 8,293      $ 7,437      $   104
                 Accrued liabilities-receivables          329          308          205
                 Accrued liabilities-inventory            350          442          351
                 Accrued liabilities-other                898          828          496
                                                      -------      -------      -------
                   Total gross deferred tax asset       9,870        9,015        1,156
                   Less: valuation allowance           (9,093)      (7,565)         (23)
                                                      -------      -------      -------
                   Total gross deferred tax asset
                    after valuation allowance             777        1,450        1,133
               Deferred tax liabilities
                 Plant and equipment                     (777)      (1,450)      (1,894)
                                                      -------      -------      -------
               Net deferred tax (liability)           $    --      $    --      $  (761)
                                                      =======      =======      =======
Deferred taxes were not provided on cumulative unremitted earnings of
     $8,961,000 and $9,238,000 at December 31, 2001 and 2000, respectively, for
     certain subsidiaries outside the United States because it was expected that
     the earnings would be permanently reinvested and determination was not
     practical. In 2002, current taxes were provided on the earnings of those
     foreign subsidiaries because it is expected that the earnings will not be
     permanently reinvested due to financial obligations of Insilco.

     At November 1, 2002, the Companies had net operating loss carryforwards for
     Federal tax purposes of $20.9 million, which will begin to expire in 2022.

     Insilco and its domestic subsidiaries file a consolidated U.S. federal
     income tax return.

9.   RESTRUCTURING AND PLANT CLOSING COSTS

     During the ten months ended November 1, 2002 and the year ended December
     31, 2001, the Companies recorded $1,744,000 and $181,000, respectively, of
     restructuring and plant closing costs relating to the closure of facilities
     in New York and the Dominican Republic and a sales office located in Japan.
     These closings were under taken to reduce operating costs. During 2001, the
     Companies paid approximately $181,000 related to these restructuring
     charges. There were no charges during 2000.

                                     - 21 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     All of these costs have been reflected in the Restructuring charge line
     item on the combined statements of operations.

     As of November 1, 2002, the Companies had an accrual of $1,728,000 relating
     to these restructuring charges, which is included in accrued expenses on
     the balance sheet. A summary of this accrual is as follows (in thousands):
AS OF                                         AS OF
                                                     DECEMBER 31,    RESTRUCTURING       CASH      NOVEMBER 1,
                                                         2001            CHARGE         OUTLAYS       2002
                                                     ------------    -------------      -------    -----------
Restructuring charges:
                 Employee separations                   $   --          $1,037          $   --        $1,037
                 Other exit costs                           --              16             (16)           --
                 Remaining noncancelable
                   lease costs                              --             691              --           691
                                                        ------          ------          -------       ------
                   Total restructuring charge           $   --          $1,744          $  (16)       $1,728
                                                        ======          ======          ======        ======
The headcount reduction from these activities was approximately 73
     employees.

10.  COMMITMENTS AND CONTINGENCIES

     Rental expense for operating leases totaled $1.2 million, $2.0 million, and
     $824,000 for the ten months ended November 1, 2002 and the years ended
     December 31, 2001 and 2000, respectively. These leases primarily relate to
     production facilities.

     Future minimum lease payments under contractually noncancelable operating
     leases (with initial lease terms in excess of one year) for years
     subsequent to November 1, 2002 are as follows (in thousands):
2003                            $ 1,050
                2004                                504
                2005                                258
                2006                                207
                2007                                 30
                Thereafter                            -
The Companies are subject to various claims and legal actions arising in
     the ordinary course of business. The Companies accrue for amounts related
     to legal matters if it is probable that a liability has been incurred and
     an amount is reasonably estimable. No amounts were accrued related to legal
     matters at November 1, 2002, December 31, 2001 or 2000.

     The Companies' operations are subject to extensive federal, state and local
     laws and regulations relating to the generation, storage, handling,
     emission, transportation and discharge of materials

                                     - 22 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     into the environment. The Companies have a program for monitoring its
     compliance with applicable environmental regulations, the interpretation of
     which often is subjective. The Companies have taken significant measures to
     (1) address emissions, discharges and waste generation and disposal, (2)
     improve management practices and operations in response to legal
     requirements, and (3) internally review compliance with applicable
     environmental regulations and approved practices. In order to achieve these
     goals, the Companies have instituted several programs including (1) raw
     material and process substitution, recycling and material management, (2)
     periodic review of hazardous waste storage and disposal practices, and (3)
     review of compliance and financial status and management practices of our
     offsite third-party waste management firms.

     In the opinion of management, the ultimate disposition of the matters
     discussed above will not have a material adverse effect on the Companies'
     combined financial position, results of operations or liquidity.

11.  IMPAIRMENT OF GOODWILL

     During the first half of 2001, the Companies experienced a significant
     decrease in the rate of growth due to a dramatic decline in capital
     spending in the telecommunications industry. During the second quarter of
     2001, major customers further reduced their order forecasts and canceled
     orders already placed. Management believed that the growth prospects for
     these business segments were significantly less than previously expected
     and those of historical periods.

     The Companies review the value of their long-lived assets when events or
     changes in circumstances occur that indicate the carrying value of the
     asset may be impaired. As a result of the business conditions noted above,
     Insilco concluded such a review was required for its recent acquisition of
     InNet, acquired in January 2001, and the related goodwill. The review was
     completed in a series of tests. The first test included the following
     steps: (1) management estimated the undiscounted future cash flows of the
     asset based on estimated growth levels; (2) management estimated the
     terminal value of the asset based on an appropriate multiple of EBITDA; and
     (3) management compared the sum of the future cash flows and terminal value
     to the carrying value of long lived assets to determine if an impairment
     has occurred. If an impairment had occurred, management performed a second
     test as follows: (1) management discounted the future cash flows and
     terminal value, using EBITDA as a proxy for cash flow, to a present value
     using an appropriate discount rate; and (2) management compared the
     discounted net present value to the carrying value of long lived assets to
     determine the amount of the impairment.

     As a result of this review, management determined that the goodwill related
     to the acquisition of InNet was impaired and, in accordance with Insilco's
     policy it was necessary to write down the goodwill. Thus in 2001, InNet
     recorded a pretax impairment charge of $35.1 million.

                                     - 23 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

12.  GOING CONCERN MATTERS

     On February 15, 2002, the Parent failed to make a required interest payment
     on its 12% Senior Subordinated Notes Due 2007 (the 12% Notes). The 30-day
     grace period for such payment expired on March 18, 2002, resulting in an
     event of default under the indenture governing the 12% Notes, as well as a
     cross-default under the Parent's Senior Secured Credit facility (the
     Amended Credit Agreement). Further, on March 31, 2002, the Parent failed to
     meet the EBITDA covenant under its Amended Credit Agreement and was in
     default on its Amended Credit Agreement and its 12% Notes. Subsequently,
     the Parent did not make the $7.2 million August 15, 2002 required interest
     payment on its 12% Notes and did not meet the EBITDA covenants under its
     Amended Credit Agreement for June 30 and September 30, 2002. At September
     30, 2002, the Parent continued to operate under these defaults and,
     therefore, has classified as current, its debt obligations under the
     Amended Credit Agreement, the 12% Notes and the 14% Senior Discount Notes
     Due 2008 (the 14% Notes).

     On May 3, 2002, the Parent and the lenders under the Amended Credit
     Agreement (the Lenders) entered into a forbearance agreement (Forbearance
     Agreement). Under the Forbearance Agreement, the Lenders agreed that,
     absent a further default, they would not (a) accelerate the maturity of the
     debt under the Amended Credit Agreement, (b) take enforcement action
     against any collateral, including effecting any rights of setoff, or (c)
     commence any legal action to enforce rights or remedies pursuant to the
     terms of the Amended Credit Agreement, for the period from May 3, 2002
     until July 10, 2002 (the Forbearance Period). This agreement was
     subsequently amended to extend the Forbearance Period through November 4,
     2002. The purpose of the Forbearance Period was to allow the Parent time to
     evaluate and pursue strategic alternatives, such as a sale of all or some
     of the business, a Chapter 11 bankruptcy filing, or other remedies
     appropriate for the circumstances. To that end, the Parent engaged in
     active discussions with potential purchasers of substantially all of the
     assets of its three business segments, including the Passive Components
     Group, which the Parent anticipates will result in multiple sales of these
     business segments through Chapter 11 bankruptcy proceedings.

     The Parent's recent losses and highly leveraged position raise substantial
     doubt about the Parent's and the Companies' ability to continue as a going
     concern. The combined financial statements do not include any adjustments
     relating to recoverability and classification of recorded asset amounts or
     the amount and classification of liabilities that might be necessary should
     the Parent and the Companies become unable to continue as a going concern.

13.  SUBSEQUENT EVENT

     On December 16, 2002, Insilco Holding Co., the parent company of Insilco,
     Insilco and several of Insilco's subsidiaries, including the Companies,
     filed voluntary petitions for relief under Chapter 11 of the United States
     Bankruptcy Code with the United States Bankruptcy Court for the District of
     Delaware. The debtors continue to manage their properties and operate their
     businesses as "debtors-in-possession" under the jurisdiction of the
     Bankruptcy Code.

                                     - 24 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
NOVEMBER 1, 2002 AND DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

     In addition, Insilco Holding Co. completed its review of strategic
     alternatives for addressing its capital structure issues and its primary
     operating subsidiary, Insilco, has entered into definitive agreements to
     sell substantially all of the assets of its three business segments,
     including the Passive Components Group, for which the Parent and certain of
     its subsidiaries have agreed to sell to Bel Fuse Ltd. for approximately $35
     million.

     None of Insilco's operations located outside of the United States were
     included in the Chapter 11 filings, though the shares of certain foreign
     subsidiaries and certain foreign assets will be included in the sale
     transactions. The Chapter 11 filings allow the sale of the assets of the
     domestic entities to be free and clear from certain liabilities that the
     prospective purchasers do not wish to assume.

     On January 14, 2003, the Parent notified the Pension Benefit Guaranty
     Corporation (PBGC) that a reportable event occurred in regards to the
     defined benefit pension plan due to the Chapter 11 filing. The Parent
     intends to terminate the plan as the potential buyers of the various
     businesses will not sponsor the existing plan. The plan was in an
     under-funded position of approximately $17 million, on a termination basis,
     as of December 31, 2002. Management expects the PBGC to take over as
     trustee of the plan and that the PBGC will make all future benefit payments
     to the covered employees after such time.

                                     - 25 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED BALANCE SHEET
FOR THE YEAR ENDED DECEMBER 31, 2002 (IN THOUSANDS)
--------------------------------------------------------------------------

                                                            December 31,
                                                                2002
                                                          ----------------
                                                             (Unaudited)
ASSETS
Current Assets
   Cash and cash equivalants                               $    10,849
   Trade receivables, net                                       13,181
   Other Receivables                                             1,544
   Inventories, net                                             12,326
   Prepaid expenses and other current assets                       793
                                                          ----------------

   Total current assets                                         38,693
                                                          ----------------

   Property, plant and equipment, net                           11,384
   Other assets and deferred charges                               262
                                                          ----------------

      Total Assets                                        $     50,339
                                                          ================

LIABILITIES AND EQUITY
Current liabilities
   Current portion of long term debt                      $     24,711
   Accounts payable                                              2,522
   Prepetition liability                                         2,467
   Accrued expenses and other accrued liabilities                4,602
   Income taxes payable                                            730
                                                          ----------------

   Total current liabilities                                    35,032
                                                          ----------------

Long term debt, excluding current portion                          137

Other long term liabilities                                         --
                                                          ----------------

   Total liabilities                                            35,169
                                                          ----------------

Comitments and contingencies
   Equity
   Insilco Technologies, Inc
      Net investment and advances                               13,969
   Accumulated other comprehensive income                        1,201
                                                          ----------------

   Total equity                                                 15,170
                                                          ----------------

   Total liabilities and equity                           $     50,339
                                                          ================

                  See notes to unaudited financial statements.

                                     - 26 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002 (IN THOUSANDS)
----------------------------------------------------------------------------

                                                            December 31,
                                                                2002
                                                          ----------------
                                                             (Unaudited)

        NET SALES                                               71,561

        COST OF PRODUCTS SOLD                                   54,263
        DEPRECIATION AND AMORTIZATION                            4,471
        SELLING. GENERAL AND ADMINISTRATIVE EXP                 16,894
        GOODWILL IMPAIRMENT CHARGES                                 --
        RESTRUCTURING CHARGE                                     1,744
        ALLOCATED CORPORATE COSTS                                1,391
                                                          ----------------

        OPERATING (LOSS) INCOME                                 (7,202)
                                                          ----------------

        OTHER INCOME (EXPENSE)
               INTEREST EXPENSE                                 (1,522)
               ALLOCATED CAPITAL COSTS                          (3,270)
               INTEREST INCOME                                     210
               OTHER INCOME(EXPENSE), NET                         (619)
                                                          ----------------

        TOTAL OTHER INCOME (EXPENSE)                            (5,201)
                                                          ----------------

        LOSS (INCOME)FROM OPERATIONS BEFORE INCOME TAX         (12,403)

        INCOME TAX EXPENSE                                         730
                                                          ----------------

        NET (LOSS) INCOME                                 $    (13,133)
                                                          ================

                  See notes to unaudited financial statements.

                                     - 27 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

COMBINED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2002

                                                           December 31,
                                                                2002
                                                          ----------------
                                                             (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
     Net (loss) income                                         (13,133)
     Adjustments to reconcile net (loss) income to net
      cash (used in) provided for by operating activies:
           Depreciation and amortization                         4,471
           Changes in operating assets and liabilities:
               Trade and other receivables                         893
               Inventories                                       2,470
               Prepaid expenses and other current assets           (59)
               Accounts payable                                 (2,611)
               Other current liabilities and other                 291
                                                          -----------------

           Net cash provided by operating activties             (7,678)
                                                          -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures and other investing activities        (1,783)
                                                          -----------------

           Net cash used in investing activities                (1,783)
                                                          -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Payments on long-term debt                                    (90)
     Debt issuance and tender cost                                 (59)
     Net changes to Insilco Technologies, Inc. net
       investment and advances                                  10,697
                                                          -----------------

     Net cash provided by(used in) financing activities         10,548
                                                          -----------------

     Effect of exchange rates on cash                              850
                                                          -----------------

     Net increase in cash and equivalents                        1,937

     Cash and equivalents at beginning of period                 6,445
                                                          -----------------
     Cash and equivalents at end of period                $      8,382
                                                          =================

                  See notes to unaudited financial statements.

                                     - 28 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

1.       BASIS OF PRESENTATION

         The combined financial statements reflect the financial position,
         results of operations and cash flows of the Passive Components Group
         for the year ended December 31, 2002. The Passive Components Group
         consists of three business units and their subsidiaries (all of which
         are wholly owned subsidiaries of Insilco Technologies, Inc.) (Insilco
         or the Parent): Signal Transformer Co., Inc. (Signal); InNet
         Technologies, Inc. (InNet), which was purchased on January 10, 2001;
         and Stewart Connector Systems, Inc. (SCS), herein referred to as
         Passive Components or the Companies. The Companies' operations consist
         of the manufacturing and sale of telecommunications and electrical
         component products. Passive Components is not a separate legal entity
         and since no direct ownership in the Companies as a combined group
         exists, Insilco's net investment and advances in the Companies is shown
         in lieu of stockholder's equity in the combined financial statements
         and includes the accumulation of transactions between the Companies and
         Insilco described below. All intercompany accounts and transactions
         amongst the Passive Components Group have been eliminated. Sales to
         other subsidiaries of Insilco were approximately $28,000 for the year
         ended December 31, 2002.

         Management believes the assumptions underlying the combined financial
         statements are reasonable. However, the combined financial position,
         results of operations and cash flows presented herein may not be the
         same as would have occurred had the Companies operated as stand-alone
         entities during the period presented and may not be indicative of
         future financial results.

         INTERCOMPANY RELATIONSHIP WITH THE PARENT
         The combined financial statements include allocations of Insilco's
         corporate overhead, executive management and administrative expenses
         amounting to $1.4 million for the year ended December 31, 2002,, which
         are included in the Allocated corporate costs line in the statement of
         operations. These allocations include the general administrative
         expenses of Insilco's corporate office, such as accounting, information
         technology, human resources, legal, environmental, treasury, and tax.
         As specific identification of these expenses was not practical,
         allocations were charged based on a formula factoring in the ratio of
         the Companies' forecasted annual sales, forecasted assets, and actual
         number of employees in proportion to Insilco's consolidated numbers for
         these categories. The resulting ratio was applied to Insilco's
         forecasted corporate expenses and allocated to the Companies rateably
         for the year.

         Insilco's management believes that this allocation method is
         reasonable, however, the allocations do not necessarily represent what
         the Companies would have incurred on a stand-alone basis. As the
         Companies were operated in a decentralized manner with their own
         administrative infrastructure, and the Companies would likely make
         different decisions regarding administrative initiatives, their
         overhead expenses as a separate company would be different than that
         reflected in the combined financial statements.

                                     - 29 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

The Companies' combined financial statements also include allocations of
Insilco's interest expense totaling $3.3 million for the year ended December 31,
2002, which are included in the Allocated interest expense line in the statement
of operations. Interest expense has been allocated generally based on the
Companies' net assets in proportion to Insilco's consolidated net assets. The
interest rate applied was 10.0%, which represents an estimated weighted average
cost of capital.

The amounts used to calculate interest expense do not necessarily reflect the
level of indebtedness the Companies would incur as a separate entity. Insilco's
management believes these are reasonable estimates of the cost of financing the
Companies' assets and operations in the past. However, the Companies may not be
able to obtain financing at interest rates similar to those used for the
interest expense calculation. Accordingly, the Companies' interest expense and
financing costs as a separate entity may be different than that reflected in the
combined financial statements.

Insilco uses a centralized approach to cash management and the financing of its
operations. The Companies' cash accounts are swept on a daily basis and are
netted against the net investment and advances account. As a result, none of
Insilco's cash, cash equivalents or debt at the corporate level has been
allocated to the Companies in the combined financial statements, other than the
$25 million portion of the credit facility drawn specifically to fund the
acquisition of InNet in 2001. Cash in the combined financial statements
primarily represents amounts held locally by the Companies' operations in their
various geographic areas.

ACQUISITION
On January 10, 2001, Insilco acquired the outstanding equity interests in InNet,
excluding approximately 16% of the outstanding equity interests that Insilco
already owned. InNet, now a wholly owned subsidiary of Insilco, is a
California-based designer, developer and marketer of a broad range of magnetic
interface products for networking, computer and telecommunications original
equipment manufacturers. The gross purchase price paid for the remaining equity
interests was $44.9 million and was financed with cash and additional borrowings
of $25.0 million under the Parent's credit facility. The purchase method of
accounting has been used to account for the purchase; accordingly, the results
of operations of InNet have been included in the Companies' combined financial
statements from January 10, 2001. The purchase price, net of cash acquired and
including costs incurred directly related to the transaction, was $44.2 million.
The excess of the purchase price over identifiable assets acquired was $37.9
million, which was being amortized on a straight-line basis over 20 years. InNet
subsequently evaluated the recoverability of the goodwill and recorded a pretax
impairment charge of $35.l million in 2001. For further discussion, see Note 11,
Impairment of Goodwill.

                                     - 30 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         CASH EQUIVALENTS
         Cash equivalents include time deposits and highly liquid investments
         with original maturities of three months or less.

         TRADE RECEIVABLES
         Trade receivables are presented net of allowances for doubtful accounts
         and sales returns of $1.7 million at December 31, 2002.

         INVENTORIES
         Inventories are valued at the lower of cost or net realizable value.
         Cost is generally determined using the first-in, first-out cost method.

         PROPERTY, PLANT AND EQUIPMENT
         Property, plant and equipment are stated at cost. Depreciation of plant
         and equipment is calculated on the straight-line method over the assets
         estimated useful lives, which is 25 years for new buildings and ranges
         from 3 to 9 years for machinery and equipment. The cost of assets sold
         or retired and the related accumulated depreciation are removed from
         the accounts, with any resulting gain or loss included in net income.
         Maintenance and repairs are charged to expense as incurred. Major
         renewals and betterments that extend service lives are capitalized.

         Long-lived assets are reviewed for impairment whenever events or
         changes in circumstances indicate that full recoverability is
         questionable. Factors used in the valuation include, but are not
         limited to, management's plans for future operations, recent operating
         results and projected cash flows.

         DEFERRED FINANCING COSTS
         Deferred financing costs are being amortized using the effective
         interest method over the life of the related debt. Amortization expense
         was approximately $1,373,000 for 2002 which includes a $1,098,000 write
         off of the remaining balance during December 2002.

         REVENUE RECOGNITION
         Revenue from product sales is recognized upon shipment to customers.
         Provisions for returns and other adjustments are provided for in the
         same period the related sales are recorded.

         FOREIGN CURRENCY TRANSLATION
         Assets and liabilities of the Companies' foreign subsidiaries are
         translated at the balance sheet date exchange rates and statement of
         operations accounts are translated at the average rates prevailing
         during the period. Adjustments resulting from the translation are
         recorded as a separate component of equity.

                                     - 31 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         ENVIRONMENTAL REMEDIATION AND COMPLIANCE
         Environmental remediation and compliance expenditures are expensed or
         capitalized in accordance with accounting principles generally accepted
         in the United States of America. Liabilities are recorded when it is
         probable the obligations have been incurred and the amounts can be
         reasonably estimated.

         FAIR VALUE OF FINANCIAL INSTRUMENTS
         Fair value of cash, accounts receivable, accounts payable and accrued
         liabilities approximate book value at December 31, 2002. Due to the
         situation described in Notes 12 and 13, management is not able to make
         a fair determination of the fair value of the debt.

         CONCENTRATIONS OF CREDIT RISK
         The Companies are subject to concentration of credit risk relating to
         cash and equivalents. The Companies maintain cash and cash equivalents
         with various financial institutions. The Companies monitor the relative
         credit standing of these financial institutions and other entities and
         limit the amounts of credit exposure with any one entity. The Companies
         also monitor the creditworthiness of the entities to which they grant
         credit terms in the normal course of business.

         The Companies are exposed to market risk for changes in interest rates.

         No customer accounted for more than 10% of the Companies' combined
         revenues in 2002.

         INCOME TAXES
         Passive Components is not a separate tax paying entity. Passive
         Components is included in Insilco's combined federal and certain state
         income tax groups for income tax reporting purposes and is responsible
         for its proportionate share of income taxes calculated upon its federal
         taxable income at a current estimate of the annual effective tax rate.

         Income taxes are accounted for under the asset and liability method.
         Deferred tax assets and liabilities are determined based upon
         differences between the financial reporting and tax basis of assets and
         liabilities and are measured by applying enacted tax rates and laws to
         taxable years in which such differences are expected to reverse.
         Determination of the amount of valuation allowance recognized is based
         upon an assessment of whether it is more likely than not that all or
         some portion of the deferred tax assets will not be realized.

         COMPREHENSIVE INCOME (LOSS)
         Comprehensive income (loss) consists of net income (loss) and foreign
         currency translation adjustments and is presented in the combined
         statements of equity and comprehensive income (loss).

                                     - 32 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         ESTIMATES
         In conformity with accounting principles generally accepted in the
         United States of America, the preparation of financial statements
         requires management to make estimates and assumptions that affect the
         amounts reported in the financial statements and, therefore, actual
         results may ultimately differ from those estimates.

         IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
         In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
         Associated with Exit or Disposal Activities. Statement No. 146 requires
         that a liability for a cost associated with an exit or disposal
         activity be recognized when the liability is incurred. Statement No.
         146 eliminates the definition and requirement for recognition of exit
         costs in Emerging Issues Task Force (EITF) Issue No. 94-3 where a
         liability for an exit cost was recognized at the date of an entity's
         commitment to an exit plan. This statement is effective for exit or
         disposal activities initiated after December 31, 2002. The Companies
         believe that the adoption of this statement will not have a significant
         impact on the results of operations or financial position.

         In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
         Guarantor's Accounting and Disclosure Requirements for Guarantees,
         Including Indirect Guarantees of Indebtedness of Others, an
         interpretation of FA SB Statements No. 5, 57, and 107 and Rescission of
         FASB Interpretation No. 34. FIN 45 clarifies the requirements of FASB
         Statement No. 5, Accounting for Contingencies, relating to the
         guarantor's accounting for, and disclosure of, the issuance of certain
         types of guarantees. This interpretation clarifies that a guarantor is
         required to recognize, at the inception of certain types of guarantees,
         a liability for the fair value of the obligation undertaken in issuing
         the guarantee. The initial recognition and measurement provisions of
         this Interpretation are applicable on a prospective basis to guarantees
         issued or modified after December 31, 2002, irrespective of the
         guarantor's fiscal year-end. The disclosure requirements in this
         interpretation are effective for financial statements of annual periods
         ending after December 15, 2002. The Companies are assessing the impact
         the adoption of this interpretation will have on the results of
         operations or financial position.

                                     - 33 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

3.       INVENTORIES

         A summary of inventories at December 31, 2002 follows (in thousands):

                                        December 31,
                                      -----------------
                                            2002
                                      -----------------

         Raw material and supplies      $    4,609
         Work in process                     2,378
         Finished goods                      5,339
                                      -----------------

               Total inventories =      $   12,326
                                      =================

4.       PROPERTY, PLANT AND EQUIPMENT

         A summary of property, plant and equipment December 31, 2002 follows
         (in thousands):

                                        December 31,
                                      -----------------
                                            2002
                                      -----------------

         Land                           $      623
         Buildings                           4,359
         Machinery and equipment            39,231
                                      -----------------
                                            44,213
         Less accumulated
          depreciation                     (32,829)
                                      -----------------
                                        $   11,384
                                      =================

                                     - 34 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

5.       ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

         A summary of accrued expenses and other current liabilities at December
         31, 2002 follows (in thousands):

                                        December 31,
                                      -----------------
                                            2002
                                      -----------------

         Salaries and wages payable     $       787
         Pension                                473
         Insurance                              418
         Commissions                            427
         Miscellaneous taxes                     93
         Restructuring                        1,728
         Other accrued expenses                 676
                                      -----------------
                                        $     4,602
                                      =================

6.       LONG-TERM DEBT

         On January 10, 2001, Insilco increased its credit facility by $25.0
         million to fund the acquisition of InNet. This debt is reflected in the
         combined balance sheet of the Companies at December 31, 2002. The
         related interest expense, deferred financing costs, amortization
         expense and accumulated amortization have also been reflected on the
         combined balance sheets and combined statements of operations of the
         Companies.

         The outstanding balance under the credit facility is subject to
         twenty-three mandatory quarterly payments of $62,500 and two payments
         of $l1,781,250 in each of year six and seven. Interest accrues under
         the credit facility at floating rates calculated with respect to either
         the London Interbank Offered Rate (LIBOR) or Bank One's Base Rate, plus
         an applicable margin. The margin, in turn, fluctuates based on
         Insilco's debt covenant ratios. LIBOR at December 31, 2002 was 1.45%.
         At December 31, 2002, the applicable margin for the credit facility was
         LJBOR plus 4.5%.

         The credit facilities of the Parent are guaranteed by all of Insilco's
         subsidiaries, including the Companies. In addition, the obligations
         thereunder are collateralized by substantially all assets of the
         Companies.

         The credit facility contains certain financial covenants including, but
         not limited to, covenants related to minimum EBITDA, maximum debt and a
         limit on annual capital expenditures. The credit facility also contains
         certain negative covenants typical of credit agreements of this type
         including, but not limited to, a prohibition on the ability of Insilco
         and its domestic subsidiaries to incur additional indebtedness in
         excess of certain agreed upon amounts, and to make investments other
         than permitted investments, and also restricts Insilco and its
         subsidiaries from paying any

                                     - 35 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         dividends, redeeming, repurchasing or acquiring any Insilco or Insilco
         Holding Co. shares or paying any principal, premium or interest (in
         excess of certain agreed upon amounts) on any subordinated obligations.

         As a result of the situation described in Notes 12 and 13, the
         outstanding debt obligation under the credit facility has been
         classified as current.

7.       BENEFIT PLANS

         Certain Signal and SCS employees participate in Insilco's defined
         benefit pension plans. The benefits under these plans are based
         primarily on employees' years of service and compensation near
         retirement. The Companies' funding policy is consistent with the
         funding requirements of federal laws and regulations. The net periodic
         pension cost allocated to the Companies associated with Insilco's
         defined benefit pension plans was $213,000 during 2002.

         Signal also contributes to a multi-employer plan sponsored by a
         bargaining unit for its union employees. Signal recognized expenses of
         $249,000 in 2002 related to contributions to this multi-employer plan.

         In addition to the defined benefit plans described above, Signal and
         SCS employees may participate in a qualified defined contribution
         401(k) plan sponsored by lnsilco, which covers substantially all
         nonunion employees of the Companies and their subsidiaries, and which
         covers union employees at one of the Companies' subsidiaries. The
         Companies match 50% of participants' voluntary contributions up to a
         maximum of 3% of each participant's eligible compensation, subject to
         limitations required by government laws or regulations. The Companies'
         expense related to this plan was approximately $79,000 for the year
         ended December 31, 2002.

         InNet sponsors a SIMPLE IRA plan for its employees. InNet's
         contributions to this plan on behalf of its employees were $42,000 for
         the year ended December 31, 2002.

                                     - 36 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

8.       INCOME TAXES

         The Passive Components combined financial statements reflect a charge
         (benefit) for federal, state and foreign income taxes as if Passive
         Components had been subject to tax on a separate company basis during
         the periods presented.

         The components of total income tax expense follow (in thousands):

                                              December 31,
                                                  2002
                                            -----------------

         Current
               Federal                               --
               State                                  3
               Foreign                              727
                                            -----------------

                                                    730
                                            -----------------

         Deferred
               Federal                               --
               State                                 --
               Foreign                               --
                                            -----------------
                                                     --
                                            -----------------

                    Total income tax
                     provision                $     730
                                            =================

         Domestic current income tax obligations (benefits) are treated as
         having been settled through the intercompany account as if Passive
         Components were filing its income tax returns on a separate company
         basis. Such amounts were insignificant for the year ended December 31,
         2002. Foreign income tax obligations have been paid directly by the
         foreign subsidiaries.

                                     - 37 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         The significant components of deferred income tax expense (benefit)
         follow (in thousands):

                                                            December 31,
                                                                2002
                                                          -----------------

         Deferred tax expense (benefit)
             exclusive of the effects of
             the following component                            (2,725)
         Changes in the valuation allowance
             for deferred tax assets
             allocated to income tax expense                     2,725
                                                          -----------------
                                                            $       --
                                                          =================

         Pretax income (loss) by domestic and foreign sources follows (in
         thousands):

                                       December 31,
                                           2002
                                    ------------------

         Domestic                        (16,668)
         Foreign                           4,265
                                    ------------------

                                       $ (12,403)
                                    ==================

         Income tax expense differs from the amount computed by applying the
         Federal statutory rate to pretax income due to the following (in
         thousands):

                                                             December 31,
                                                                 2002
                                                          ------------------

         Computed statutory expense                          $   (4,343)
         Goodwill book write off/amortization                        --
         State and local taxes                                     (332)
         Foreign tax rate differential                             (890)
         U.S. possession income                                      --
         Subpart foreign income deemed taxable in the U.S.        3,545
         Other                                                       25
         Valuation allowance                                      2,725
                                                          ------------------
                      Income tax expense                     $      730
                                                          ==================

                                     - 38 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

         The tax effects of temporary differences that gives rise to significant
         portions of deferred tax assets and deferred tax liabilities are offset
         by valuation allowances resulting in no net deferred tax assets or
         liabilities.

         The tax effects of temporary differences that give rise to significant
         portions of the deferred tax assets and deferred tax liabilities
         follows (in thousands):

         In 2002, current taxes were provided on the earnings of foreign
         subsidiaries because it is expected that the earnings will not be
         permanently reinvested due to financial obligations of Insilco.

         At December 31, 2002, the Companies had net operating loss
         carryforwards for Federal tax purposes of $20.9 million, which will
         begin to expire in 2022.

         Insilco and its domestic subsidiaries file a consolidated U.S. federal
         income tax return.

9.       RESTRUCTURING AND PLANT CLOSING COSTS

         During the years ended December 31, 2002, the Companies recorded
         $1,744,000 of restructuring and plant closing costs relating to the
         closure of facilities in New York and the Dominican Republic and a
         sales office located in Japan. These closings were under taken to
         reduce operating costs.

         All of these costs have been reflected in the Restructuring charge line
         item on the combined statements of operations.

         As of December 31, 2002, the Companies had an accrual of $l,728,000
         relating to these restructuring charges, which is included in accrued
         expenses on the balance sheet. A summary of this accrual is as follows
         (in thousands):
As of                                                      As of
                                      December 31,       Restructuring           Cash           December 31,
                                          2001               Charge             Outlays             2002
                                    -----------------   -----------------  -----------------  ------------------
Restructuring charges:
    Employee separations              $        --         $      1,037       $        --        $     1,037
    Other exit costs                           --                   16               (16)                --
    Remaining noncancelable
     lease costs                               --                  691                --                691
                                    -----------------   -----------------  -----------------  ------------------

         Total restructuring charge   $        --         $      1,744       $       (16)       $     1,728
                                    =================   =================  =================  ==================
The headcount reduction from these activities was approximately 73
         employees.

                                     - 39 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

10.      COMMITMENTS AND CONTINGENCIES

         Rental expense for operating leases totaled $l.4 million, for the year
         ended December 31, 2002. These leases primarily relate to production
         facilities.

         Future minimum lease payments under contractually noncancelable
         operating leases (with initial lease terms in excess of one year) for
         years subsequent to December 31, 2002 are as follows (in thousands):

                                    2003        $1,050
                                    2004           540
                                    2005           269
                                    2006           177
                                    2007            --
                              Thereafter            --

         The Companies are subject to various claims and legal actions arising
         in the ordinary course of business. The Companies accrue for amounts
         related to legal matters if it is probable that a liability has been
         incurred and an amount is reasonably estimable. No amounts were accrued
         related to legal matters at December 31, 2002.

         The Companies' operations are subject to extensive federal, state and
         local laws and regulations relating to the generation, storage,
         handling, emission, transportation and discharge of materials into the
         environment. The Companies have a program for monitoring its compliance
         with applicable environmental regulations, the interpretation of which
         often is subjective. The Companies have taken significant measures to
         (1) address emissions, discharges and waste generation and disposal,
         (2) improve management practices and operations in response to legal
         requirements, and (3) internally review compliance with applicable
         environmental regulations and approved practices. In order to achieve
         these goals, the Companies have instituted several programs including
         (1) raw material and process substitution, recycling and material
         management, (2) periodic review of hazardous waste storage and disposal
         practices, and (3) review of compliance and financial status and
         management practices of our offsite third-party waste management firms.

         In the opinion of management, the ultimate disposition of the matters
         discussed above will not have a material adverse effect on the
         Companies' combined financial position, results of operations or
         liquidity.

                                     - 40 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

11.      IMPAIRMENT OF GOODWILL

         During the first half of 2001, the Companies experienced a significant
         decrease in the rate of growth due to a dramatic decline in capital
         spending in the telecommunications industry. During the second quarter
         of 2001, major customers further reduced their order forecasts and
         canceled orders already placed. Management believed that the growth
         prospects for these business segments were significantly less than
         previously expected and those of historical periods.

         The Companies review the value of their long-lived assets when events
         or changes in circumstances occur that indicate the carrying value of
         the asset may be impaired. As a result of the business conditions noted
         above, Insilco concluded such a review was required for its recent
         acquisition of InNet, acquired in January 2001, and the related
         goodwill. The review was completed in a series of tests. The first test
         included the following steps: (1) management estimated the undiscounted
         future cash flows of the asset based on estimated growth levels; (2)
         management estimated the terminal value of the asset based on an
         appropriate multiple of EBITDA; and (3) management compared the sum of
         the future cash flows and terminal value to the carrying value of long
         lived assets to determine if an impairment has occurred. If an
         impairment had occurred, management performed a second test as follows:
         (1) management discounted the future cash flows and terminal value,
         using EBITDA as a proxy for cash flow, to a present value using an
         appropriate discount rate; and (2) management compared the discounted
         net present value to the carrying value of long lived assets to
         determine the amount of the impairment.

         As a result of this review, management determined that the goodwill
         related to the acquisition of InNet was impaired and, in accordance
         with Insilco's policy it was necessary to write down the goodwill. Thus
         in 2001, InNet recorded a pretax impairment charge of $35.1 million.

                                     - 41 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF INSILCO TECHNOLOGIES, INC.)

NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2002 (Unaudited)

12.      GOING CONCERN MATTERS

         On February 15, 2002, the Parent failed to make a required interest
         payment on its 12% Senior Subordinated Notes Due 2007 (the 12% Notes).
         The 30-day grace period for such payment expired on March 18, 2002,
         resulting in an event of default under the indenture governing the 12%
         Notes, as well as a cross-default under the Parent's Senior Secured
         Credit facility (the Amended Credit Agreement). Further, on March 31,
         2002, the Parent failed to meet the EBITDA covenant under its Amended
         Credit Agreement and was in default on its Amended Credit Agreement and
         its 12% Notes. Subsequently, the Parent did not make the $7.2 million
         August 15, 2002 required interest payment on its 12% Notes and did not
         meet the EBITDA covenants under its Amended Credit Agreement for June
         30 and September 30, 2002. At September 30, 2002, the Parent continued
         to operate under these defaults and, therefore, has classified as
         current, its debt obligations under the Amended Credit Agreement, the
         12% Notes and the 14% Senior Discount Notes Due 2008 (the 14% Notes).

         On May 3, 2002, the Parent and the lenders under the Amended Credit
         Agreement (the Lenders) entered into a forbearance agreement
         (Forbearance Agreement). Under the Forbearance Agreement, the Lenders
         agreed that, absent a further default, they would not (a) accelerate
         the maturity of the debt under the Amended Credit Agreement, (b) take
         enforcement action against any collateral, including effecting any
         rights of setoff, or (c) commence any legal action to enforce rights or
         remedies pursuant to the terms of the Amended Credit Agreement, for the
         period from May 3, 2002 until July 10, 2002 (the Forbearance Period).
         This agreement was subsequently amended to extend the Forbearance
         Period through November 4, 2002. The purpose of the Forbearance Period
         was to allow the Parent time to evaluate and pursue strategic
         alternatives, such as a sale of all or some of the business, a Chapter
         11 bankruptcy filing, or other remedies appropriate for the
         circumstances. To that end, the Parent engaged in active discussions
         with potential purchasers of substantially all of the assets of its
         three business segments, including the Passive Components Group, which
         the Parent anticipates will result in multiple sales of these business
         segments through Chapter 11 bankruptcy proceedings.

         The Parent's recent losses and highly leveraged position raise
         substantial doubt about the Parent's and the Companies' ability to
         continue as a going concern. The combined financial statements do not
         include any adjustments relating to recoverability and classification
         of recorded asset amounts or the amount and classification of
         liabilities that might be necessary should the Parent and the Companies
         become unable to continue as a going concern.

13.      SUBSEQUENT EVENT

         On December 16, 2002, Insilco Holding Co., the parent company of
         Insilco, Insilco and several of Insilco's subsidiaries, including the
         Companies, filed voluntary petitions for relief under Chapter 11 of the
         United States Bankruptcy Code with the United States Bankruptcy Court
         for the District of Delaware. The debtors continue to manage their
         properties and operate their businesses as "debtors-in-possession"
         under the jurisdiction of the Bankruptcy Code.

                                     - 42 -
PASSIVE COMPONENTS GROUP
(WHOLLY OWNED SUBSIDIARIES OF LNSILCO TECHNOLOGIES, INC.)

 NOTES TO COMBINED FINANCIAL STATEMENTS
 DECEMBER 31, 2002 (Unaudited)

         In addition, Insilco Holding Co. completed its review of strategic
         alternatives for addressing its capital structure issues and its
         primary operating subsidiary, Insilco, has entered into definitive
         agreements to sell substantially all of the assets of its three
         business segments, including the Passive Components Group, for which
         the Parent and certain of its subsidiaries have agreed to sell to Bel
         Fuse Ltd. for approximately $35 million.

         None of Insilco's operations located outside of the United States were
         included in the Chapter 11 filings, though the shares of certain
         foreign subsidiaries and certain foreign assets will be included in the
         sale transactions. The Chapter 11 filings allow the sale of the assets
         of the domestic entities to be free and clear from certain liabilities
         that the prospective purchasers do not wish to assume.

         On January 14, 2003, the Parent notified the Pension Benefit Guaranty
         Corporation (PBGC) that a reportable event occurred in regards to the
         defined benefit pension plan due to the Chapter 11 filing. The Parent
         intends to terminate the plan as the potential buyers of the various
         businesses will not sponsor the existing plan. The plan was in an
         under-funded position of approximately $17 million, on a termination
         basis, as of December 31, 2002. Management expects the PBGC to take
         over as trustee of the plan and that the PBGC will make all future
         benefit payments to the covered employees after such time.

                                     - 43 -
Unaudited Pro Forma Condensed
     Combining Financial Statements of Registrant and the Passive Component
                       Group of Insilco Technologies, Inc.
               as of December 31, 2002 and for the year then ended

         The following unaudited pro forma condensed combining financial
statements give pro forma effect to the acquisition using the purchase method of
accounting and the assumptions and adjustments set forth in the accompanying
notes to the pro forma condensed combining financial statements. This
presentation assumes a purchase price of approximately $35 million in cash and
the assumption of certain liabilities.

         The purchase price has been allocated based on preliminary estimates of
the fair market value of Passive Components assets and liabilities. See Note 1
to the Notes to Unaudited Pro Forma Condensed Combining Financial Statements.
The pro forma adjustments are subject to change pending a final analysis of the
fair values of the assets acquired and liabilities assumed. The impact of these
changes could be material.

Periods Covered

         The unaudited pro forma condensed combing balance sheet as of December
31, 2002 is based on the individual historical balance sheets of Bel Fuse Inc.
and Passive Components and gives effect to the acquisition as if it had occurred
on December 31, 2002. The unaudited pro forma condensed combining statement of
operations for the year ended December 31, 2002 is based on the individual
historical statements of operations of Bel Fuse Inc. and Passive Components and
combines the results of operations of Bel Fuse Inc. and Passive Components for
the year ended December 31, 2002, as if the merger had occurred on January 1,
2002.

         The unaudited pro forma condensed combining financial statements are
based on estimates and assumptions. These estimates and assumptions are
preliminary and have been made solely for the purpose of developing this pro
forma information. Unaudited pro forma condensed combining financial information
is presented for illustrative purposes only and is not necessarily indicative of
the operating results that would have been achieved if the acquisition of
Passive Components had been consummated as of the beginning of the period
indicated, nor is it necessarily indicative of future results of operations. The
pro forma condensed combining financial information does not give effect to any
cost savings or restructuring and integration costs that may result from the
integration of Bel Fuse Inc. and Passive Components businesses. Costs related to
restructuring and integration have not yet been determined.

                                     - 44 -
BEL FUSE INC - PASSIVE COMPONENTS
                   UNAUDITED PRO FORMA COMBINED BALANCE SHEET
                             AS OF DECEMBER 31, 2002
                             (AMOUNTS IN THOUSANDS)
Adjusted
                                                       Passive                         Passive
                                                      Components                      Components    Pro Forma
                                         Bel Fuse       Group         Adjustments        Group      Adjustments     Total
                                       ------------- -------------   -------------    -----------   -----------   -------------
Current Assets:

   Cash and cash equivalents            $  59,003      $ 10,849       $ (10,849)(1)    $     --        9,950   3d|  $ 33,953
                                                                                                     (35,000)  3d|

   Marketable securities                    4,966                                                                      4,966
   Accounts receivable - net               16,840        13,181                          13,181                       30,021
   Inventories                             12,384        12,326                          12,326                       24,710
   Prepaid expenses and other current
    assets                                    190         2,337                           2,337                        2,527
   Refundable income taxes                    682                                                                        682
   Deferred income taxes                      439            --              --              --           --             439
                                       ------------- -------------   -------------    -----------   -----------   -------------

       Total Current Assets                94,504        38,693         (10,849)         27,844      (25,050)         97,298
                                       ------------- -------------   -------------    -----------   -----------   -------------

Property, plant and equipment - net        37,605        11,384                          11,384                       48,989

Goodwill - net                              4,820                                                                      4,820
                                                                                                         919   3f|
                                                                                                         274   3a|     6,632
Identifiable intangible assets-net          2,805                                                      2,634   3b|

                                                                                                          50   3d|
Other assets                                7,159           262              --             262         (919)  3f|     6,552
                                       ------------- -------------   -------------    -----------   -----------   -------------

   TOTAL ASSETS                         $ 146,893      $ 50,339        $(10,849)        $39,490     $(22,092)      $ 164,291
                                       ============= =============   =============    ===========   ===========   =============
See notes to unaudited pro forma condensed combining financial statements.

                                     - 45 -
BEL FUSE INC - PASSIVE COMPONENTS
                   UNAUDITED PRO FORMA COMBINED BALANCE SHEET
                             AS OF DECEMBER 31, 2002
                             (AMOUNTS IN THOUSANDS)
Adjusted
                                                       Passive                         Passive
                                                      Components                      Components    Pro Forma
                                         Bel Fuse       Group         Adjustments        Group      Adjustments     Total
                                       ------------- -------------   -------------    -----------   -----------   -------------
Accounts payable                           5,100         2,522                            2,522                       7,622
Accrued expenses                           6,203         4,602                            4,602           274   3a   11,079
Current portion of LT Debt                              24,711          (24,711)(1)          --         2,000   3d    2,000
Prepetition liability                                    2,467           (2,467)(1)          --                          --
Income taxes payable                                       730             (730)(1)          --                          --
Dividends payable                            412            --               --              --                         412
                                       ------------- -------------   -------------    -----------   -----------   -------------
    Total Current Liabilities             11,715        35,032          (27,908)          7,124         2,274        21,113
                                       ------------- -------------   -------------    -----------   -----------   -------------

Long term debt, excluding current
 portion                                                   137             (137)(1)          --         8,000   3d    8,000
Deferred income taxes                      4,519            --               --              --            --         4,519
                                       ------------- -------------   -------------    -----------   -----------   -------------
      Total Liabilities                   16,234        35,169          (28,045)          7,124        10,274        33,632
                                       ------------- -------------   -------------    -----------   -----------   -------------
Commitments and Contingencies

Stockholders' Equity:
  Common stock                             1,094                                             --                       1,094
  Additional paid-in capital              13,982                                             --                      13,982
  Retained earnings                      115,633                                             --                     115,633
  Net investment and advances                           13,969           17,196          31,165       (31,165)  3b       --
  Cumulative other comprehensive
   income                                    (50)        1,201               --           1,201        (1,201)          (50)
                                       ------------- -------------   -------------    -----------   -----------   -------------
      Total Stockholders' Equity         130.659        15,170           17,196          32,366       (32,366)       130,659
                                       ------------- -------------   -------------    -----------   -----------   -------------
      TOTAL LIABILITIES AND
        STOCKHOLDERS' EQUITY           $ 145,893      $ 50,339        $ (10,849)       $ 39,490     $ (22,092)     $ 164,291
                                       ============= =============   =============    ===========   ===========   =============
See notes to unaudited pro forma condensed combining financial statements.

                                     - 46 -
BEL FUSE INC - PASSIVE COMPONENTS
              UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2002
                             (AMOUNTS IN THOUSANDS)
Pro Forma
                                                  Passive                           Combined
                                                 Components       Pro Forma       Statement of
                                     Bel Fuse      Group         Adjustments       Operations
                                    ----------- -------------    -------------    --------------
Net sales                            $ 95,528     $  71,561                          $ 167,089
                                    ----------  -------------                     --------------

Costs and expenses:
    Cost of sales                      72,420        58,734                            131,154
    Selling, general and
     administrative                    22,270        20,029   a          765   3c       43,064
                                    ----------- -------------    -------------    --------------
                                       94,690        78,763              765           174,218
                                    ----------- -------------    -------------    --------------

Income (loss) from operations             838        (7,202)            (765)           (7,129)
                                    ----------- -------------    -------------    --------------
Other income (expense)
    Interest Expense                                 (1,522)  b         (357)  3d       (1,879)
    Allocated capital costs                          (3,270)  c                         (3,270)
    Interest income                                     210   d                            210
    Other income (expense), net           940          (619)  e         (420) 3e           (99)
                                     ----------- -------------    -------------    --------------
                                          940        (5,201)            (777)           (5,038)
                                    ----------- -------------    -------------    --------------

Earnings (loss) before provision
 for income taxes
                                        1,778       (12,403)          (1,542)          (12,167)

Provision (benefit) for income
taxes                                   1,199           730               --             1,929
                                    ----------- -------------    -------------    --------------
Net earnings (loss)                    $  579     $ (13,133)       $  (1,542)        $ (14,096)
                                    =========== =============    =============    ==============

Earnings (loss) per common share-
    basic                              $ 0.05                                        $   (1.29)
                                    ===========                                   ==============

Earnings (loss) per common share-
    diluted                            $ 0.05                                        $   (1.29)
                                    ===========                                   ==============

Weighted average number of
    common shares outstanding-
    basic                              10,907                                           10,907
                                    ===========                                   ==============

Weighted average number of
    common shares outstanding-
    diluted                            11,086                                           10,907
                                    ===========                                   ==============
a   Includes $1,391 of allocated corporate expenses that are charged by an
    unconsolidated entity of Insilco. Management believes that this charge will
    not be required after the consumation of the acquisition.

b   Represents interest expense on Long-term debt charged by an unconsolidated
    entity of Insilco. Management believes that this charge will not be required
    after the consumation of the acquisition.

c   Represents interest expense on intercompany loans. Bel Fuse Inc. is not
    assuming the affiliated company liabilities and would not necessarily incur
    this interest cost.

d   Represents interest income on cash balances. Bel Fuse Inc. is not acquiring
    any cash and would not receive the interest income.

e   Includes the write-off of deferred financing charges in the amount of $1,373
    relating to the prepayment of long-term debt. This would not be a recurring
    cost to Bel Fuse Inc.

   See notes to unaudited pro forma condensed combining financial statements.

                                     - 47 -
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
                 AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2002
                                 (IN THOUSANDS)

1.       Adjustments to Passive Components Financial Statements

                 The proforma condensed balance sheet of Passive Components
                 Group as at December 31, 2002 eliminates certain assets and
                 liabilities that are excluded from the acquisition agreement.
                 These comprise the following:

                  Cash                                       $ 10,849
                  Long-term debt                               24,711
                  Prepetition liabilities                       2,467
                  Income taxes payable                            730
                  Notes payable                                   137

2.       Allocation of Purchase Price

         The allocation of Passive Components purchase price among the tangible
         and intangible assets acquired and liabilities assumed is based on
         management's preliminary estimates of fair market value. These
         estimates of fair market value could change based on Bel Fuse Inc's
         finalization of an independent appraisal of the assets acquired.

         The following table sets forth the estimated purchase price:

                  Cash paid                                 $   35,000
                  Accrued transaction costs                      1,193
                                                            -----------

                  Total purchase price                      $   36,193
                                                            ===========

         The following table is a preliminary allocation of the purchase price:

         Assets
           Accounts receivable                              $   13,181
           Inventories                                          12,326
           Prepaid expenses and other                            2,337
           Property, plant and equipment                        11,384
           Goodwill                                                --
           Identifiable intangible assets (other than
            goodwill)                                            3,827
           Other non current assets                                262

         Liabilities
           Accounts payable and other accrued
            liabilties                                          (7,124)
                                                           -------------

            Total purchase price                            $   36,193
                                                           =============

                                     - 48 -
In June 2001, the Financial Accounting Standards Board issued
         Statements of Financial Accounting Standards No. 141, Business
         Combinations, and No. 142, Goodwill and Other Intangible Assets,
         effective for fiscal years beginning after December 15, 2001. Under the
         new rules, goodwill and intangible assets deemed to have indefinite
         lives will no longer be amortized but will be subject to an impairment
         test at least annually. Other intangible assets will continue to be
         amortized over their useful lives. Identifiable intangibles in
         connection with this acquisition include patents and product
         information.

3.       Pro Forma Adjustments

         (a)  Estimated unpaid transaction costs.

         (b)  Elimination of outstanding equity balances of Passive Components
              as of December 31, 2002.

         (c)  Amortization expense of identifiable intangible assets based on a
              five-year amortization period.

         (d)  Bel Fuse Inc. intends to finance $10 million under a term loan
              agreement with The Bank of New York. Principal and interest are
              payable in arrears quarterly over five years with interest of
              Libor plus 1.25% (3.75% at December 31, 2002). Under the terms of
              the agreement, Bel Fuse Inc. will pay a $50 fee and provide an
              unconditional joint and several guarantee, as defined, by all
              direct and indirect domestic subsidiaries secured by a first
              priority security interest in and lien on 65% of all of the issued
              and outstanding shares of the capital stock of each direct
              Material Foreign Subsidiary, as defined in the loan agreement, of
              such subsidiaries and all other personal property of such
              subsidiaries.

         (e)  Estimated reduction of interest income related to the cash portion
              of the purchase price of $35,000.

         (f)  Reflects reclassification of transaction costs incurred by Bel
              Fuse Inc. as of December 31, 2002 to identifiable intangible
              assets from other assets.

         (g)  No tax benefit has been provided on the proforma adjustments
              because the tax jurisdictions that the adjustments apply to
              preclude such a tax benefit.

                                     - 49 -
SIGNATURES

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

                                                      BEL FUSE INC.

                                                      By:  /s/ Daniel Bernstein
                                                           ---------------------
                                                           Daniel Bernstein
                                                           President

Dated:  March 26, 2003

                                     - 50 -