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Acquisitions | 12 Months Ended
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Dec. 31, 2013
Business Combinations [Abstract] |
Acquisitions | Note 3: Acquisitions Softel Limited We acquired Softel Limited (Softel) for $9.1 million, net of cash acquired, on January 25, 2013. Softel is a key technology supplier to the media sector with a portfolio of technologies well aligned with industry trends and growing demand. Softel is located in the United Kingdom. The results of Softel have been included in our Consolidated Financial Statements from January 25, 2013, and are reported within the Broadcast segment. The Softel acquisition was not material to our financial position or results of operations reported as of and for the year ended December 31, 2013. PPC Broadband, Inc. We acquired 100% of the outstanding shares of PPC Broadband, Inc. (PPC) in exchange for cash of $522.4 million on December 10, 2012. PPC is a leading manufacturer and developer of advanced connectivity technologies for the broadband market and expands our solution offerings in the broadband end-market. PPC is headquartered in Syracuse, New York. PPC’s strong brands and technology enhance our portfolio of broadband products. The results of PPC have been included in our Consolidated Financial Statements from December 10, 2012, and are reported within the Broadcast segment. The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed as of December 10, 2012 (in thousands).
Cash |  | $ | 6,874 |
Receivables |  |  | 26,612 |
Inventories |  |  | 45,465 |
Other current assets |  |  | 868 |
Property, plant and equipment |  |  | 26,856 |
Goodwill |  |  | 277,091 |
Intangible assets |  |  | 164,500 |
Other non-current assets |  |  | 1,308 |
Total assets |  | $ | 549,574 |
Accounts payable |  | $ | 22,499 |
Accrued liabilities |  |  | 4,104 |
Other long-term liabilities |  |  | 579 |
Total liabilities |  | $ | 27,182 |
Net assets |  | $ | 522,392 |
A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations. The fair value of acquired receivables is $26.6 million, with a gross contractual amount of $27.7 million. We do not expect to collect $1.1 million of the acquired receivables. For purposes of the above allocation, we have estimated a fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for our post acquisition selling efforts. We based our estimate of the fair value for the acquired property, plant, and equipment on a valuation study performed by a third party valuation firm. We used various valuation methods including discounted cash flows to estimate the fair value of the identifiable intangible assets. Goodwill and other intangible assets reflected above were determined to meet the criterion for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to expected synergies and the assembled workforce. The expected synergies for the PPC acquisition primarily consist of cost savings from the ability to consolidate existing and acquired operating facilities and other support functions. Our tax basis in the acquired goodwill is $277.1 million. The goodwill balance we recorded is deductible for tax purposes up to the amount of the tax basis. Intangible assets related to the PPC acquisition consisted of the following:
|  | Estimated Fair |  |  | Amortization |
|  | Value |  |  | Period |
|  | (In thousands) |  |  | (In years) |
Intangible assets subject to amortization: |  |  |  |  |  |  |  |
Developed technologies |  | $ | 76,000 |  |  |  | 5.0 |
Customer relationships |  |  | 55,000 |  |  |  | 20.0 |
Backlog |  |  | 1,500 |  |  |  | 0.5 |
Total intangible assets subject to amortization |  |  | 132,500 |  |  |  |  |
Intangible assets not subject to amortization: |  |  |  |  |  |  |  |
Goodwill |  |  | 277,091 |  |  |  |  |
In-process research and development |  |  | 5,000 |  |  |  |  |
Trademarks |  |  | 27,000 |  |  |  |  |
Total intangible assets not subject to amortization |  |  | 309,091 |  |  |  |  |
Total intangible assets |  | $ | 441,591 |  |  |  |  |
Weighted average amortization period |  |  |  |  |  |  | 11.2 |
Trademarks have been determined by us to have indefinite lives and are not being amortized, based on our expectation that the trademarked products will generate cash flows for us for an indefinite period. We expect to maintain use of trademarks on existing products and introduce new products in the future that will also display the trademarks, thus extending their lives indefinitely. In-process research and development assets are considered indefinite-lived intangible assets until the completion or abandonment of the associated research and development efforts. Upon completion of the development process, we will make a determination of the useful life of the asset and begin amortizing the assets over that period. If the project is abandoned, we will write-off the asset at such time. The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the developed technologies intangible asset was based on the estimated time that the technology provides us with a competitive advantage and thus approximates the period of consumption of the intangible asset. The useful life for the customer relationship intangible asset was based on our forecasts of customer turnover. The useful life of the backlog intangible asset was based on our estimate of when the ordered items would ship. Miranda Technologies Inc. We acquired 97.37% of the shares of Miranda Technologies Inc. (Miranda) for cash of $364.8 million on July 27, 2012, and we acquired the remaining 2.63% of shares of Miranda for cash of $9.9 million on July 30, 2012. Miranda is a leading provider of hardware and software solutions for the broadcast infrastructure industry and expands our solution offerings in the broadcast end-market. Miranda is headquartered in Montreal, Quebec, Canada. Miranda’s strong brands and technology enhance our portfolio of broadcast products. The results of Miranda have been included in our Consolidated Financial Statements from July 27, 2012, and are reported within the Broadcast segment. The impact of the noncontrolling interest from July 27, 2012 to July 30, 2012 was not material to our financial position or results of operations. The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed as of July 27, 2012 (in thousands).
Cash |  | $ | 33,324 |
Receivables |  |  | 27,592 |
Inventories |  |  | 31,109 |
Other current assets |  |  | 1,924 |
Property, plant and equipment |  |  | 23,930 |
Goodwill |  |  | 161,206 |
Intangible assets |  |  | 159,991 |
Total assets |  | $ | 439,076 |
Accounts payable |  | $ | 23,917 |
Accrued liabilities |  |  | 5,730 |
Current deferred tax liabilities |  |  | 844 |
Other long-term liabilities |  |  | 8,699 |
Non-current deferred tax liabilities |  |  | 25,207 |
Total liabilities |  | $ | 64,397 |
Net assets |  | $ | 374,679 |
A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations. The fair value of acquired receivables is $27.6 million, with a gross contractual amount of $28.3 million. We do not expect to collect $0.7 million of the acquired receivables. For purposes of the above allocation, we have estimated a fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for our post acquisition selling efforts. We based our estimate of the fair value for the acquired property, plant, and equipment on a valuation study performed by a third party valuation firm. We used various valuation methods including discounted cash flows to estimate the fair value of the identifiable intangible assets. Goodwill and other intangible assets reflected above were determined to meet the criterion for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to expected synergies and the assembled workforce. The primary expected synergy for the Miranda acquisition is due to expanded access to the broadcast market, which we expect will generate significant opportunities to sell our existing product lines to Miranda’s existing customers. None of the goodwill related to the Miranda acquisition is deductible for tax purposes. Intangible assets related to the acquisition consisted of the following:
|  | Estimated Fair |  |  | Amortization |
|  | Value |  |  | Period |
|  | (In thousands) |  |  | (In years) |
Intangible assets subject to amortization: |  |  |  |  |  |  |  |
Developed technologies |  | $ | 69,132 |  |  |  | 4.0 |
Customer relationships |  |  | 44,442 |  |  |  | 20.0 |
Backlog |  |  | 3,950 |  |  |  | 1.0 |
Total intangible assets subject to amortization |  |  | 117,524 |  |  |  |  |
Intangible assets not subject to amortization: |  |  |  |  |  |  |  |
Goodwill |  |  | 161,206 |  |  |  |  |
Trademarks |  |  | 35,554 |  |  |  |  |
In-process research and development |  |  | 6,913 |  |  |  |  |
Total intangible assets not subject to amortization |  |  | 203,673 |  |  |  |  |
Total intangible assets |  | $ | 321,197 |  |  |  |  |
Weighted average amortization period |  |  |  |  |  |  | 9.9 |
Trademarks have been determined by us to have indefinite lives and are not being amortized, based on our expectation that the trademarked products will generate cash flows for us for an indefinite period. We expect to maintain use of trademarks on existing products and introduce new products in the future that will also display the trademarks, thus extending their lives indefinitely. In-process research and development assets are considered indefinite-lived intangible assets until the completion or abandonment of the associated research and development efforts. Upon completion of the development process, we will make a determination of the useful life of the asset and begin amortizing the assets over that period. If the project is abandoned, we will write-off the asset at such time. The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the developed technologies intangible asset was based on the estimated time that the technology provides us with a competitive advantage and thus approximates the period of consumption of the intangible asset. The useful life for the customer relationship intangible asset was based on our forecasts of customer turnover. The useful life of the backlog intangible asset was based on our estimate of when the ordered items would ship. Pro forma – PPC and Miranda The following table illustrates the unaudited pro forma effect on operating results as if the Miranda and PPC acquisitions had been completed as of January 1, 2011.
|  | Years Ended December 31, |
|  | 2012 |  |  | 2011 |
|  | (In thousands, except per share data) |
|  | (Unaudited) |
Revenues |  | $ | 2,163,302 |  |  | $ | 2,280,189 |
Income from continuing operations |  |  | 78,827 |  |  |  | 108,117 |
Diluted income per share from continuing operations |  | $ | 1.72 |  |  | $ | 2.25 |
For purposes of the unaudited pro forma disclosures, the year ended December 31, 2011 includes nonrecurring expenses from the effects of purchase accounting, including inventory cost step-up of $19.2 million, amortization of sales backlog intangible assets of $6.7 million, and Belden’s transaction costs of $3.5 million. For both years ended December 31, 2012 and 2011, the pro forma information above also reflects interest expense from the term loan borrowed to finance the acquisition of Miranda and from the borrowings under our senior secured credit facility to finance the acquisition of PPC. The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would have been had we completed the acquisitions on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. Pro forma adjustments exclude cost savings from any synergies resulting from the acquisitions. ICM Corp. We acquired 100% of the outstanding shares of ICM Corp. (ICM) for cash of $21.8 million on January 7, 2011. ICM is a broadcast connectivity product manufacturer, and its strong brands and technology enhance our portfolio of broadcast products. The results of ICM have been included in our Consolidated Financial Statements from the acquisition date and are reported within the Broadcast segment. Poliron Cabos Electricos Especiais Ltda We acquired Poliron Cabos Electricos Especiais Ltda (Poliron) for cash of $28.7 million on April 1, 2011. Poliron is an industrial cable manufacturer located in Sao Paulo, Brazil. The acquisition of Poliron expands our presence in emerging markets. The results of Poliron have been included in our Consolidated Financial Statements from the acquisition date and are reported within the Industrial Connectivity segment. Byres Security, Inc. We acquired Byres Security, Inc. (Byres Security) for cash of $7.2 million on August 31, 2011. Byres Security is an industrial network security company located in Vancouver, Canada. The acquisition of Byres Security expands our industrial networking product capabilities. The results of Byres Security have been included in our Consolidated Financial Statements from the acquisition date and are reported within the Industrial IT segment. The acquisitions of ICM, Poliron, and Byres Security are not material to our financial position or results of operations reported as of and for the year ended December 31, 2011. During the year ended December 31, 2011, we recorded $27.8 million and $21.3 million of goodwill and intangible assets, respectively, due to the ICM, Poliron, and Byres Security acquisitions.

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