XML 21 R9.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Acquisitions | 9 Months Ended
--- | ---
Sep. 30, 2018
Business Combinations [Abstract] |
Acquisitions | Acquisitions Net-Tech Technology, Inc. We acquired 100% of the shares of Net-Tech Technology, Inc. (NT2) on April 25, 2018 for a preliminary purchase price of $8.5 million that was funded with cash on hand. NT2 is an integrator of optical passive components and network optimization products used within broadband network applications where optical backhaul is used. NT2 is located in the United States. The results of NT2 have been included in our Consolidated Financial Statements from April 25, 2018, and are reported within the Enterprise Solutions segment. The NT2 acquisition was not material to our financial position or results of operations. Snell Advanced Media We acquired 100% of the outstanding ownership interest in Snell Advanced Media (SAM) on February 8, 2018 for a purchase price, net of cash acquired, of $104.5 million that was funded with cash on hand. The acquisition includes a potential earnout, which is based upon future combined earnings of SAM and Grass Valley through December 31, 2019. The maximum earnout consideration is $31.4 million, but based upon a third party valuation specialist using certain assumptions in a discounted cash flow model, the preliminary estimated fair value of the earnout included in the purchase price is $29.3 million. We assumed debt of $19.3 million and paid it off during the first quarter of 2018. SAM designs, manufactures, and sells innovative content production and distribution systems for the broadcast and media markets. SAM is located in the United Kingdom. The results of SAM have been included in our Consolidated Financial Statements from February 8, 2018, and are reported within the Enterprise Solutions segment. The following table summarizes the estimated, preliminary fair value of the assets acquired and the liabilities assumed as of February 8, 2018 (in thousands):
Receivables |  | $ | 17,182 |
Inventory |  | 15,312 |
Prepaid and other current assets |  | 3,375 |
Property, plant, and equipment |  | 7,789 |
Intangible assets |  | 54,100 |
Goodwill |  | 87,853 |
Deferred taxes |  | 5,476 |
Other long-lived assets |  | 2,156 |
Total assets acquired |  | $ | 193,243 |
Accounts payable |  | $ | 11,927 |
Accrued liabilities |  | 21,614 |
Deferred revenue |  | 3,924 |
Long-term debt |  | 19,315 |
Postretirement benefits |  | 31,343 |
Other long-term liabilities |  | 591 |
Total liabilities assumed |  | $ | 88,714 |
Net assets |  | $ | 104,529 |
The above purchase price allocation is preliminary, and is subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The preliminary measurement of receivables; inventories; property, plant and equipment; intangible assets; goodwill; deferred income taxes; deferred revenue; and other assets and liabilities are subject to change. A change in the estimated fair value of the net assets acquired will change the amount of the purchase price allocable to goodwill. 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 preliminary fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations. The preliminary fair value of acquired receivables is $17.2 million, which is equivalent to its gross contractual amount. For purposes of the above allocation, we based our estimates of the preliminary fair values for the acquired inventory; property, plant, and equipment; intangible assets; and deferred revenue on preliminary valuation studies performed by a third party valuation firm. We have estimated a preliminary 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. To determine the value of the acquired property, plant, and equipment, we used various valuation methods, including both the market approach, which considers sales prices of similar assets in similar conditions (Level 2 valuation), and the cost approach, which considers the cost to replace the asset adjusted for depreciation (Level 3 valuation). We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the preliminary fair value of the identifiable intangible assets and deferred revenue (Level 3 valuation). Goodwill and other intangible assets reflected above were determined to meet the criteria 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 SAM acquisition may be gained from helping broadcast and media content creators, aggregators and distributors significantly improve their effectiveness and efficiency during a period of rapid change in technology, viewer and advertiser behavior and business models. Our tax basis in the acquired goodwill is zero. The intangible assets related to the acquisition consisted of the following:
|  | Preliminary Fair Value |  | Amortization Period
|  | (In thousands) |  | (In years)
Intangible assets subject to amortization: |  |  |  |
Developed technologies |  | $ | 38,100 |  |  | 5.0
Customer relationships |  | 12,300 |  |  | 12.0
Sales backlog |  | 2,000 |  |  | 0.3
Trademarks |  | 1,700 |  |  | 0.9
Total intangible assets subject to amortization |  | $ | 54,100 |  |  |
Intangible assets not subject to amortization: |  |  |  |
Goodwill |  | $ | 87,853 |  |  | n/a
Total intangible assets not subject to amortization |  | $ | 87,853 |  |  |
Total intangible assets |  | $ | 141,953 |  |  |
Weighted average amortization period |  |  |  | 6.3 years
The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the developed technology intangible asset was based on the estimated time that the technology provides us with a competitive advantage and thus approximates the period and pattern of consumption of the intangible asset. The useful life for the customer relationship intangible asset was based on our forecasts of estimated sales from recurring customers. The useful life of the backlog intangible asset was based on our estimate of when the ordered items would ship. The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks. Our consolidated revenues for the three and nine months ended September 30, 2018 included an estimated $25.3 million and $77.2 million, respectively, from SAM. Due to the integration of SAM into our existing business, we are unable to reasonably estimate the amount of income before taxes from SAM included in our consolidated financial statements. Our consolidated income before taxes for the three months ended September 30, 2018 included $7.1 million of severance and other restructuring costs, $3.7 million of amortization of intangible assets, and $0.6 million of cost of sales related to the adjustment of acquired inventory to fair value from SAM. Our consolidated income before taxes for the nine months ended September 30, 2018 included $36.6 million of severance and other restructuring costs, $8.7 million of amortization of intangible assets, and $1.8 million of cost of sales related to the adjustment of acquired inventory to fair value from SAM. The following table illustrates the unaudited pro forma effect on operating results as if the SAM acquisition had been completed as of January 1, 2017.
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, 2018 |  | October 1, 2017 |  | September 30, 2018 |  | October 1, 2017
|  | (In thousands, except per share data)
|  | (Unaudited)
Revenues |  | $ | 659,003 |  |  | $ | 644,017 |  |  | $ | 1,944,628 |  |  | $ | 1,857,885 |
Net income (loss) attributable to Belden common stockholders |  | 92,769 |  |  | (24,050 | ) |  | 126,937 |  |  | (19,056 | )
Diluted income (loss) per share attributable to Belden common stockholders |  | $ | 2.13 |  |  | $ | (0.57 | ) |  | $ | 3.08 |  |  | $ | (0.45 | )
For purposes of the pro forma disclosures, the three months ended October 1, 2017 includes nonrecurring expenses related to the acquisition, including severance, restructuring, and acquisition integration costs; amortization of the sales backlog intangible asset; and cost of sales arising from the adjustment of inventory to fair value of $7.1 million, $0.2 million, and $0.2 million, respectively. For purposes of the pro forma disclosures, the nine months ended October 1, 2017 includes nonrecurring expenses related to the acquisition, including severance, restructuring, and acquisition integration costs; amortization of the sales backlog intangible asset; and cost of sales arising from the adjustment of inventory to fair value of $36.6 million, $2.0 million, and $1.7 million, respectively. 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 acquisition 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 acquisition. Thinklogical Holdings, LLC We acquired 100% of the outstanding ownership interest in Thinklogical Holdings, LLC (Thinklogical) on May 31, 2017 for a purchase price, net of cash acquired, of $165.8 million. Thinklogical designs, manufactures, and markets high-bandwidth fiber matrix switches, video, and keyboard/video/mouse extender solutions, camera extenders, and console management solutions. Thinklogical is headquartered in Connecticut. The results of Thinklogical have been included in our Consolidated Financial Statements from May 31, 2017, and are reported within the Enterprise Solutions segment. The following table summarizes the estimated fair value of the assets acquired and the liabilities assumed as of May 31, 2017 (in thousands):
Receivables |  | $ | 4,355 |
Inventory |  | 16,424 |
Prepaid and other current assets |  | 320 |
Property, plant, and equipment |  | 4,289 |
Intangible assets |  | 73,400 |
Goodwill |  | 70,654 |
Deferred income taxes |  | 598 |
Total assets acquired |  | $ | 170,040 |
Accounts payable |  | $ | 1,231 |
Accrued liabilities |  | 1,353 |
Deferred revenue |  | 1,702 |
Total liabilities assumed |  | $ | 4,286 |
Net assets |  | $ | 165,754 |
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 $4.4 million, which is equivalent to its gross contractual amount. For purposes of the above allocation, we based our estimate of the fair value for the acquired inventory, intangible assets, and deferred revenue on a valuation study performed by a third party valuation firm. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the preliminary fair value of the identifiable intangible assets and deferred revenue (Level 3 valuation). The determination of the fair value of the assets acquired and liabilities assumed and the allocation of the purchase price is complete. Goodwill and other intangible assets reflected above were determined to meet the criteria 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 Thinklogical acquisition primarily consist of utilizing Belden's fiber and connectivity portfolio with Thinklogical's connections between matrix switch, control systems, transmitters and source to expand our product portfolio across our segments to both existing and new customers. Our tax basis in the acquired goodwill is approximately $43.3 million and is deductible for tax purposes over a period of 15 years up to the amount of the tax basis. The intangible assets related to the acquisition consisted of the following:
|  | Preliminary Fair Value |  | Amortization Period
|  | (In thousands) |  | (In years)
Intangible assets subject to amortization: |  |  |  |
Developed technologies |  | $ | 62,600 |  |  | 10.0
Customer relationships |  | 6,500 |  |  | 8.0
Trademarks |  | 2,900 |  |  | 10.0
Sales backlog |  | 1,400 |  |  | 0.3
Total intangible assets subject to amortization |  | $ | 73,400 |  |  |
Intangible assets not subject to amortization: |  |  |  |
Goodwill |  | $ | 70,654 |  |  | n/a
Total intangible assets not subject to amortization |  | $ | 70,654 |  |  |
Total intangible assets |  | $ | 144,054 |  |  |
Weighted average amortization period |  |  |  | 9.6
The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the customer relationship intangible asset was based on our forecasts of estimated sales from recurring customers. The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks. The useful life for the developed technology intangible asset was based on the estimated time that the technology provides us with a competitive advantage and thus approximates the period and pattern of consumption of the intangible asset. The useful life of the backlog intangible asset was based on our estimate of when the ordered items would ship. Our consolidated revenues and consolidated income before taxes for the three months ended September 30, 2018 included $15.2 million and $2.6 million, respectively, from Thinklogical. The income before taxes from Thinklogical included $3.2 million of amortization of intangible assets. Our consolidated revenues and consolidated income before taxes for the nine months ended September 30, 2018 included $32.6 million and $(0.5) million, respectively, from Thinklogical. Thinklogical's loss before taxes included $9.5 million of amortization of intangible assets and $0.5 million of severance and other restructuring costs. The following table illustrates the unaudited pro forma effect on operating results as if the Thinklogical acquisition had been completed as of January 1, 2016.
|  | Three Months Ended |  | Nine Months Ended
|  | October 1, 2017 |  | October 1, 2017
|  | (In thousands, except per share data)
|  | (Unaudited)
Revenues |  | $ | 621,745 |  |  | $ | 1,792,614 |
Net income (loss) attributable to Belden common stockholders |  | (5,128 | ) |  | 37,097 |
Diluted income (loss) per share attributable to Belden common stockholders |  | $ | (0.12 | ) |  | $ | 0.87 |
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 acquisition 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 acquisition.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration