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ACQUISITIONS | 6 Months Ended
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Jun. 30, 2013
ACQUISITIONS [Abstract] |
ACQUISITIONS | 3. ACQUISITIONS 2013 Acquisition: On March 29, 2013, the Company acquired 100% of the outstanding shares of Transpower Technology (HK) Limited (“Transpower”), certain intellectual property and other tangible assets related to the Transpower magnetics business of TE Connectivity (“TE”) from Tyco Electronics Corporation (“Tyco”) for $22.4 million in cash and additional consideration including the assumption of $0.1 million in liabilities and the grant of a license to TE related to three of the Company’s patents. During the second quarter of 2013, the Company paid an additional $6.8 million in consideration to TE related to a working capital adjustment and $0.8 million remains accrued at June 30, 2013. Transpower is the sole shareholder of Dongguan Transpower Electronic Products Co., Ltd. in the People's Republic of China. The operations acquired are now doing business as TRP Connector (“TRP”). The Company’s purchase of the TRP magnetics business consisted of the integrated connector module (“ICM”) family of products, including RJ45, 10/100 Gigabit, 10G, PoE/PoE+, MRJ21 and RJ.5, a line of modules for smart-grid applications, and discrete magnetics. During the three and six months ended June 30, 2013, the Company incurred $0.1 million and $0.4 million, respectively, of acquisition-related costs associated with TRP. These costs are included in selling, general and administrative expense in the accompanying condensed consolidated statement of operations for the three and six months ended June 30, 2013. While the initial accounting related to the TRP acquisition is not complete as of the filing date of this Form 10-Q, the following table depicts the Company’s initial estimate of the acquisition date fair values of the consideration paid or payable and identifiable net assets acquired (in thousands):
|  |  |  |  |  | Measurement |  |  |  |
|  |  |  |  |  | Period |  |  | March 29, 2013 |
|  | March 29, 2013 |  |  |  | Adjustments |  |  | (As adjusted) |
Cash |  | $ | 8,388 |  |  |  | $ | - |  |  | $ | 8,388 |
Accounts receivable |  |  | 11,580 |  |  |  |  | (39 | ) |  |  | 11,541 |
Inventories |  |  | 6,258 |  | (a) |  |  | 707 |  |  |  | 6,965 |
Other current assets |  |  | 1,953 |  |  |  |  | - |  |  |  | 1,953 |
Property, plant and equipment |  |  | 4,693 |  | (b) |  |  | (165 | ) |  |  | 4,528 |
Intangible assets |  |  | - |  | (c) |  |  | - |  |  |  | - |
Other assets |  |  | 1,151 |  |  |  |  | - |  |  |  | 1,151 |
Total identifiable assets |  |  | 34,023 |  |  |  |  | 503 |  |  |  | 34,526 |
Accounts payable |  |  | (8,565 | ) |  |  |  | - |  |  |  | (8,565 | )
Accrued expenses |  |  | (4,003 | ) |  |  |  | (21 | ) |  |  | (4,024 | )
Other current liabilities |  |  | (25 | ) |  |  |  | 1 |  |  |  | (24 | )
Total liabilities assumed |  |  | (12,593 | ) |  |  |  | (20 | ) |  |  | (12,613 | )
Net identifiable assets acquired |  |  | 21,430 |  |  |  |  | 483 |  |  |  | 21,913 |
Goodwill |  |  | 8,278 |  | (d) |  |  | (85 | ) |  |  | 8,193 |
Net assets acquired |  | $ | 29,708 |  |  |  | $ | 398 |  |  | $ | 30,106 |
Cash paid |  | $ | 22,400 |  |  |  | $ | 6,920 |  |  | $ | 29,320 |
Assumption of severance payment |  |  | 109 |  |  |  |  | (109 | ) |  |  | - |
Fair value of grant of license |  |  | - |  | (e) |  |  | - |  |  |  | - |
Fair value of consideration transferred |  |  | 22,509 |  |  |  |  | 6,811 |  |  |  | 29,320 |
Deferred consideration |  |  | 7,199 |  | (f) |  |  | (6,413 | ) |  |  | 786 |
Total consideration paid/payable |  | $ | 29,708 |  |  |  | $ | 398 |  |  | $ | 30,106 |
(a) | The determination of fair value related to the inventory acquired was still in progress as of the date of this filing. The amount above represents only the carrying value of the inventory on TRP’s balance sheet as of the acquisition date. The measurement period adjustment noted above for inventory relates to additional inventory received from TE, as well as inventory on customer consignments that was not previously accounted for.
(b) | The appraisals related to machinery and equipment acquired were incomplete as of this filing date and, as such, the amount noted above represents only the carrying value of those assets on TRP’s balance sheet as of the acquisition date. The measurement period adjustment noted above for property, plant and equipment relates to equipment that could not be located upon a physical inventory of the assets acquired.
(c) | The Company has identified certain intangible assets related to the TRP acquisition, including technology, license agreements and customer lists, which are being valued by a third-party appraiser. These appraisals were not complete as of the date of this filing.
(d) | The amount of goodwill is provisional as of the filing date, as the fair value determination of inventory acquired, and appraisals related to property, plant and equipment and various intangible assets are still underway. As the final amount of goodwill has not yet been determined or allocated by segment, the Company is unable to determine at this time the portion of goodwill, if any, that will be deductible for tax purposes.
(e) | As part of the consideration paid or payable, the Company granted Tyco a license related to three of the Company’s patents. The valuation related to this license grant was not complete as of the date of this filing.
(f) | Deferred consideration represents the Company’s estimate of a working capital adjustment which is payable to the seller. Such adjustment must be agreed upon between the Company and the seller, and has not yet been finalized as of the date of this filing.
The results of operations of TRP have been included in the Company’s consolidated financial statements for the period subsequent to March 29, 2013. During the three and six months ended June 30, 2013, TRP contributed $22.0 million of revenues to the Company. As the Company’s determination and allocation of management fees and TRP-specific overhead charges is still underway, TRP’s contribution to the Company’s net earnings is not yet available. The unaudited pro forma information below presents the combined operating results of the Company and TRP. The unaudited pro forma results are presented for illustrative purposes only. They do not reflect the realization of any potential cost savings, or any related integration costs. Certain cost savings may result from the TRP acquisition; however, there can be no assurance that these cost savings will be achieved. These pro forma results do not purport to be indicative of the results that would have actually been obtained if the TRP acquisition had occurred as of January 1, 2012, nor is the pro forma data intended to be a projection of results that may be obtained in the future. The following unaudited pro forma consolidated results of operations assume that the acquisition of TRP was completed as of January 1, 2012. The pro forma results noted below for the three and six months ended June 30, 2012 also include the effects of the 2012 Acquisitions discussed below (dollars in thousands except per share data):
|  | Three Months Ended |  |  | Six Months Ended |
|  | June 30, |  |  | June 30, |
|  | 2013 |  |  | 2012 |  |  | 2013 |  |  | 2012 |
Revenue |  | $ | 93,981 |  |  | $ | 95,066 |  |  | $ | 177,510 |  |  | $ | 181,461 |
Net earnings |  |  | 2,427 |  |  |  | 4,474 |  |  |  | 4,575 |  |  |  | 7,254 |
Earnings per Class A common share - basic and diluted |  |  | 0.20 |  |  |  | 0.36 |  |  |  | 0.38 |  |  |  | 0.58 |
Earnings per Class B common share - basic and diluted |  |  | 0.22 |  |  |  | 0.38 |  |  |  | 0.41 |  |  |  | 0.62 |
2012 Acquisitions: On March 9, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of GigaCom with a cash payment of $2.7 million (£1.7 million). GigaCom, located in Gothenburg, Sweden, is a supplier of expanded beam fiber optic technology and a participant in the development of next-generation commercial aircraft components. GigaCom has become part of Bel’s Cinch Connector business. Management believes that GigaCom’s offering of expanded beam fiber optic (“EBOSA®”) products will enhance the Company’s position within the growing aerospace and military markets. On July 31, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Fibreco with a cash payment, net of $2.7 million of cash acquired, of $13.7 million (£8.7 million). Fibreco, located in the United Kingdom, is a supplier of a broad range of expanded beam fiber optic components for use in military communications, outside broadcast and offshore exploration applications. Fibreco has become part of Bel’s interconnect product group under the Cinch Connector business. Management believes that the addition of Fibreco’s fiber optic-based product line to Cinch’s broad range of copper-based products will increase Cinch’s presence in emerging fiber applications within the military, aerospace and industrial markets. In addition, management believes the acquisition provides access to a range of customers for the recently acquired GigaCom EBOSA® product. On September 12, 2012, the Company completed its acquisition of 100% of the issued and outstanding capital stock of Powerbox, now known as Bel Power Europe, with a cash payment, net of $0.2 million of cash acquired, of $3.0 million. The Company also granted 30,000 restricted shares of the Company’s Class B common stock in connection with this acquisition. Compensation expense equal to the grant date fair value of these restricted shares of $0.6 million is being recorded ratably through September 2014. Bel Power Europe, located near Milan, Italy, develops high-power AC-DC power conversion solutions targeted at the broadcasting market. The acquisition of Bel Power Europe will allow Bel to expand its portfolio of power product offerings to include AC-DC products and will also establish a European design center located close to several of Bel’s existing customers. Acquisition-related costs relating to the 2012 Acquisitions amounted to less than $0.1 million during each of the three-month periods ended June 30, 2013 and 2012 and $0.1 million during each of the six-month periods ended June 30, 2013 and 2012. These costs are included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations. During the year ended December 31, 2012, the Company completed the purchase accounting related to the GigaCom and Fibreco acquisitions. The initial accounting related to the Bel Power Europe acquisition is not complete as of the filing date of this Form 10-Q; accordingly, the following table reflects the Company’s initial estimate of the acquisition date fair values of the consideration transferred and identifiable net assets acquired related to Bel Power Europe, together with the finalized acquisition date fair values of the consideration transferred and identifiable net assets acquired related to the GigaCom and Fibreco acquisitions (in thousands):
|  |  |  |  | Measurement |  |  | Acquisition-Date |
|  | Acquisition-Date |  |  | Period |  |  | Fair Values |
|  | Fair Values |  |  | Adjustments |  |  | (As adjusted) |
Cash and cash equivalents |  | $ | 2,991 |  |  | $ | - |  |  | $ | 2,991 |
Accounts receivable |  |  | 3,750 |  |  |  | 3 |  |  |  | 3,753 |
Inventories |  |  | 1,061 |  |  |  | (16 | ) |  |  | 1,045 |
Other current assets |  |  | 90 |  |  |  | - |  |  |  | 90 |
Property, plant and equipment |  |  | 502 |  |  |  | 248 |  |  |  | 750 |
Intangible assets |  |  | 30 |  |  |  | 10,358 |  |  |  | 10,388 |
Total identifiable assets |  |  | 8,424 |  |  |  | 10,593 |  |  |  | 19,017 |
Accounts payable |  |  | (1,702 | ) |  |  | - |  |  |  | (1,702 | )
Accrued expenses |  |  | (1,736 | ) |  |  | - |  |  |  | (1,736 | )
Notes payable |  |  | (216 | ) |  |  | - |  |  |  | (216 | )
Income taxes payable |  |  | (264 | ) |  |  | (60 | ) |  |  | (324 | )
Deferred income tax liability, current |  |  | (70 | ) |  |  | - |  |  |  | (70 | )
Deferred income tax liability, noncurrent |  |  | - |  |  |  | (2,297 | ) |  |  | (2,297 | )
Other long-term liabilities |  |  | (216 | ) |  |  | - |  |  |  | (216 | )
Total liabilities assumed |  |  | (4,204 | ) |  |  | (2,357 | ) |  |  | (6,561 | )
Net identifiable assets acquired |  |  | 4,220 |  |  |  | 8,236 |  |  |  | 12,456 |
Goodwill |  |  | 17,965 |  |  |  | (8,020 | ) |  |  | 9,945 |
Net assets acquired |  | $ | 22,185 |  |  | $ | 216 |  |  | $ | 22,401 |
Cash paid |  | $ | 22,138 |  |  |  | 263 |  |  | $ | 22,401 |
Deferred consideration |  |  | 47 |  |  |  | (47 | ) |  |  | - |
Fair value of consideration transferred |  | $ | 22,185 |  |  | $ | 216 |  |  | $ | 22,401 |
The results of operations of the 2012 Acquired Companies have been included in the Company’s consolidated financial statements for the periods subsequent to their respective acquisition dates. During the three and six months ended June 30, 2013, Fibreco and Bel Power Europe contributed combined revenues of $3.0 million and $5.9 million, respectively, and combined net earnings of $0.1 million and $0.8 million, respectively, to the Company’s consolidated financial results. The acquisition of GigaCom has contributed to the Bel’s research and development efforts and has not resulted in third-party sales. GigaCom incurred expenses, primarily related to research and development, of $0.2 million and $0.5 million during the three and six months ended June 30, 2013, respectively.

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- 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. 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This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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