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ACQUISITIONS | 6 Months Ended
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Jun. 30, 2014
ACQUISITIONS [Abstract] |
ACQUISITIONS | 3. ACQUISITIONS 2014 Acquisition: On June 19, 2014, the Company completed its acquisition of Power Solutions for $110.0 million, net of cash acquired. Power Solutions is a leading provider of high-efficiency and high-density power conversion products for server, storage and networking equipment, industrial applications and power systems. Power Solutions offers a premier line of standard, modified-standard and custom designed AC/DC, DC/DC and other specific power conversion products for a variety of technologies in data centers, telecommunications and industrial applications. The acquisition of Power Solutions brings a complementary, industry-leading power product portfolio to Bel’s existing line of power products, expands our current customer base in the areas of server, storage and networking equipment and adds industrial and additional transportation applications to the Company’s product offering. During the three and six months ended June 30, 2014, the Company incurred $1.0 million and $1.0 million, respectively, of acquisition-related costs associated with the acquisition of Power Solutions. These costs are included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2014. While the initial accounting related to the acquisition of Power Solutions is not complete as of the filing date of this Quarterly Report on Form 10-Q, the following table depicts the Company’s current estimate of the respective acquisition date fair values of the consideration paid and identifiable net assets acquired (in thousands):
|  | Acquisition-Date |  |
|  | Fair Values |  |
Cash and cash equivalents |  | $ | 20,913 |  |
Accounts receivable |  |  | 29,388 |  |
Inventories |  |  | 33,156 |  | (a)
Other current assets |  |  | 5,387 |  |
Property, plant and equipment |  |  | 28,176 |  | (b)
Intangible assets |  |  | 21,188 |  | (c)
Other assets |  |  | 536 |  |
Total identifiable assets |  |  | 138,744 |  |
Accounts payable |  |  | (26,180 | ) |
Accrued expenses |  |  | (20,290 | ) |
Income taxes payable |  |  | 223 |  |
Deferred income tax liability, noncurrent |  |  | 860 |  |
Other long-term liabilities |  |  | (99 | ) |
Total liabilities assumed |  |  | (45,486 | ) |
Net identifiable assets acquired |  |  | 93,258 |  |
Goodwill |  |  | 37,534 |  | (d)
Net assets acquired |  | $ | 130,792 |  |
Cash paid |  | $ | 130,792 |  |
Deferred consideration |  |  | - |  |
Fair value of consideration transferred |  | $ | 130,792 |  |
(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 Power Solutions’ balance sheet as of the acquisition date.
(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 Power Solutions’ balance sheet as of the acquisition date.
(c) | The Company has identified certain intangible assets related to the Power Solutions acquisition, including trademarks and trade names, developed technology and potential in-process research and development, license agreements, non-compete agreements, an investment in a 49%-owned joint venture and customer relationships, 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, various intangible assets and certain liabilities such as lease liabilities 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.
The results of operations of Power Solutions have been included in the Company’s consolidated financial statements for the period subsequent to the June 19, 2014 acquisition date. During each of the three and six months ended June 30, 2014, the Power Solutions acquisition contributed revenue of $7.2 million and a net loss of approximately $0.8 million to the Company’s consolidated financial results. The net loss resulted primarily from severance payments incurred by the Company immediately subsequent to the acquisition date. The following unaudited pro forma information presents a summary of the combined results of operations of the Company and the aggregate results of TRP, Array and Power Solutions for the periods presented as if the 2013 Acquisitions had occurred on January 1,2012 and the acquisition of Power Solutions had occurred on January 1, 2013, along with certain pro forma adjustments. These proforma adjustments give effect to the amortization of certain definite-lived intangible assets, adjusted depreciation based upon estimated fair value of assets acquired, interest expense and amortization of deferred financing costs related to the financing of the business combinations, and related tax effects. The 2014 unaudited pro forma net earnings were adjusted to exclude $10.2 million ($6.9 million after tax) of non-recurring expenses which were incurred in connection with the Power Solutions business combination. The 2013 unaudited pro forma net earnings were adjusted to include these charges in addition to an estimated non-recurring expense related to a fair value adjustment to acquisition-date inventory of $1.8 million and $4.4 million ($1.1 million and $2.7 million after tax) during the three and six months ended June 30, 2013, respectively. The pro forma results do not reflect the realization of any potential cost savings, or any related integration costs. Certain cost savings may result from the acquisition of Power Solutions; however, there can be no assurance that these cost savings will be achieved. The unaudited pro forma results are presented for illustrative purposes only and are not necessarily indicative of the results that would have actually been obtained if the acquisitions had occurred on the assumed dates, nor is the pro forma data intended to be a projection of results that may be obtained in the future (in thousands):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Revenue |  |  | 136,984 |  |  |  | 161,481 |  |  |  | 278,451 |  |  |  | 305,250 |
Net earnings |  |  | (3,336 | ) |  |  | 1,382 |  |  |  | 233 |  |  |  | (5,977 | )
Earnings per Class A common share - basic and diluted |  |  | (0.28 | ) |  |  | 0.11 |  |  |  | 0.01 |  |  |  | (0.51 | )
Earnings per Class B common share - basic and diluted |  |  | (0.29 | ) |  |  | 0.12 |  |  |  | 0.02 |  |  |  | (0.53 | )
2013 Acquisitions: On March 29, 2013, the Company completed its acquisition of TRP for $21.0 million, net of cash acquired. The Company’s purchase of TRP 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. On August 20, 2013, the Company completed its acquisition of Array, a manufacturer of aerospace and mil-spec connector products based in Miami, Florida, for $10.0 million in cash. The acquisition of Array expands the Company’s portfolio of connector products that can be offered to the combined customer base, and provides an opportunity to sell other products that Bel manufactures to Array’s customers. Array has become part of Bel’s Cinch Connector business. During the three and six months ended June 30, 2014, the Company incurred $0.1 million and $0.1 million, respectively, of acquisition-related costs associated with 2012 and 2013 Acquisitions. During the three and six months ended June 30, 2013, the Company incurred acquisition costs of $0.3 million and $0.7 million, respectively, related to the 2012 and 2013 Acquisitions. These costs are included in selling, general and administrative expense in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2014 and 2013. The purchase price allocations for TRP and Array were finalized during the first quarter of 2014. The following table depicts the finalized respective acquisition date fair values of the consideration paid and identifiable net assets acquired (in thousands):
|  | TRP |  |  | Array |  |  | 2013 Acquisitions |
|  |  |  |  | Measurement |  |  | March 29, |  |  |  |  |  | Measurement |  |  | August 20, |  |  | Acquisition-Date |
|  | March 29, |  |  | Period |  |  | 2013 |  |  | August 20, |  |  | Period |  |  | 2013 |  |  | Fair Values |
|  | 2013 |  |  | Adjustments |  |  | (As finalized) |  |  | 2013 |  |  | Adjustments |  |  | (As finalized) |  |  | (As finalized) |
Cash |  | $ | 8,388 |  |  | $ | - |  |  | $ | 8,388 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 8,388 |
Accounts receivable |  |  | 11,580 |  |  |  | (39 | ) |  |  | 11,541 |  |  |  | 994 |  |  |  | - |  |  |  | 994 |  |  |  | 12,535 |
Inventories |  |  | 6,258 |  |  |  | 1,097 |  |  |  | 7,355 |  |  |  | 2,588 |  |  |  | (1,595 | ) |  |  | 993 |  |  |  | 8,348 |
Other current assets |  |  | 1,953 |  |  |  | (334 | ) |  |  | 1,619 |  |  |  | 83 |  |  |  | 345 |  |  |  | 428 |  |  |  | 2,047 |
Property, plant and equipment |  |  | 4,693 |  |  |  | 1,097 |  |  |  | 5,790 |  |  |  | 2,285 |  |  |  | 1,225 |  |  |  | 3,510 |  |  |  | 9,300 |
Intangible assets |  |  | - |  |  |  | 6,110 |  |  |  | 6,110 |  |  |  | - |  |  |  | 1,470 |  |  |  | 1,470 |  |  |  | 7,580 |
Other assets |  |  | 1,151 |  |  |  | 198 |  |  |  | 1,349 |  |  |  | 84 |  |  |  | 1,663 |  |  |  | 1,747 |  |  |  | 3,096 |
Total identifiable assets |  |  | 34,023 |  |  |  | 8,129 |  |  |  | 42,152 |  |  |  | 6,034 |  |  |  | 3,108 |  |  |  | 9,142 |  |  |  | 51,294 |
Accounts payable |  |  | (8,565 | ) |  |  | 331 |  |  |  | (8,234 | ) |  |  | (677 | ) |  |  | 1 |  |  |  | (676 | ) |  |  | (8,910 | )
Accrued expenses |  |  | (4,003 | ) |  |  | (462 | ) |  |  | (4,465 | ) |  |  | (206 | ) |  |  | (79 | ) |  |  | (285 | ) |  |  | (4,750 | )
Other current liabilities |  |  | (25 | ) |  |  | (734 | ) |  |  | (759 | ) |  |  | (214 | ) |  |  | 214 |  |  |  | - |  |  |  | (759 | )
Noncurrent liabilities |  |  | - |  |  |  | (586 | ) |  |  | (586 | ) |  |  | (643 | ) |  |  | (1,105 | ) |  |  | (1,748 | ) |  |  | (2,334 | )
Total liabilities assumed |  |  | (12,593 | ) |  |  | (1,451 | ) |  |  | (14,044 | ) |  |  | (1,740 | ) |  |  | (969 | ) |  |  | (2,709 | ) |  |  | (16,753 | )
Net identifiable assets acquired |  |  | 21,430 |  |  |  | 6,678 |  |  |  | 28,108 |  |  |  | 4,294 |  |  |  | 2,139 |  |  |  | 6,433 |  |  |  | 34,541 |
Goodwill |  |  | 8,278 |  |  |  | (7,038 | ) |  |  | 1,240 |  |  |  | 5,666 |  |  |  | (2,094 | ) |  |  | 3,572 |  |  |  | 4,812 |
Net assets acquired |  | $ | 29,708 |  |  | $ | (360 | ) |  | $ | 29,348 |  |  | $ | 9,960 |  |  | $ | 45 |  |  | $ | 10,005 |  |  | $ | 39,353 |
Cash paid |  | $ | 22,400 |  |  | $ | 6,948 |  |  | $ | 29,348 |  |  | $ | 9,960 |  |  | $ | 45 |  |  | $ | 10,005 |  |  | $ | 39,353 |
Assumption of severance payment |  |  | 109 |  |  |  | (109 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Fair value of consideration |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
transferred |  |  | 22,509 |  |  |  | 6,839 |  |  |  | 29,348 |  |  |  | 9,960 |  |  |  | 45 |  |  |  | 10,005 |  |  |  | 39,353 |
Deferred consideration |  |  | 7,199 |  |  |  | (7,199 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total consideration paid |  | $ | 29,708 |  |  | $ | (360 | ) |  | $ | 29,348 |  |  | $ | 9,960 |  |  | $ | 45 |  |  | $ | 10,005 |  |  | $ | 39,353 |
The measurement period adjustments noted above primarily relate to adjustments to fair value based on the appraisals on inventory, property, plant and equipment, and intangible assets. In addition, various other asset and liability accounts had measurement period adjustments related to deferred taxes. The results of operations of the 2013 Acquired Companies have been included in the Company’s consolidated financial statements for the period subsequent to their respective acquisition dates. During the three and six months ended June 30, 2014, the 2013 Acquired Companies contributed revenue of $19.7 million and $37.6 million, respectively, and net earnings of $3.7 million and $4.8 million, respectively, to the Company’s consolidated financial results. During each of the three and six months ended June 30, 2013, the 2013 Acquired Companies contributed revenue of $22.2 million and net earnings of $3.3 million to the Company’s consolidated financial results.

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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. 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 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1383-128463 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6996-128479 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4922-128472 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4934-128472 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4926-128472 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7000-128479 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1392-128463 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1486-128463 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e6927-128479 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1497-128463 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1490-128463 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35744584&loc=d3e7008-128479 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=39739317&loc=d3e4845-128472 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1500-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=25497992&loc=d3e1524-128463 + Details
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