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Note 2 - Acquisitions | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Business Combination Disclosure [Text Block] |
2. | ACQUISITIONS
On December 3, 2019, the Company completed the acquisition of the majority of the power supply products business of CUI Inc. (the "CUI power business") through an asset purchase agreement with CUI Global Inc. for $29.2 million (after a working capital adjustment), plus the assumption of certain liabilities. The CUI power business designs and markets a broad portfolio of AC/DC and DC/DC power supplies and board level components. The CUI power business is headquartered in Tualatin, Oregon and had sales of $32.0 million for the year ended December 31, 2019. The acquisition of the CUI power business enhances Bel's existing offering of power products, allowing us to better address all of our customer power needs. It also introduces an alternative business model to Bel's, one which carries a higher gross margin profile and lower manufacturing risk. On October 1, 2018, the Company completed the acquisition of BCMZ Precision Engineering Limited ("BCMZ"), a U.K. manufacturer of precision machined components, for approximately $2.6 million in cash. The transaction was funded with cash on hand. BCMZ has a diversified portfolio of customers in the automotive, aerospace, defense, telecommunication, fiber-optic and medical industrial sectors and has been a long-term key supplier of precision machined components for our Cinch Connectivity Solutions U.K. business. BCMZ is additionally expected to give Cinch the capability to continue to support key defense and industrial customers across Europe with localized in-house machining ability. The results of operations of the CUI Power business and BCMZ have been included in the Company's consolidated financial statements for the period subsequent to their respective acquisition dates. During the year ended December 31, 2019, the CUI power business contributed revenue of $2.2 million and an operating loss of $ 0.4 million. During the years ended December 31, 2019 and December 31, 2018, BCMZ contributed revenue of $1.0 million and $0.5 million, respectively, and operating income (loss) of less than $0.1 million and less than ( $0.1 ) million, respectively, to the Company's consolidated financial results. During the years ended December 31, 2019 and December 31, 2018, the Company incurred $0.2 million and less than $0.1 million, respectively, in acquisition-related costs relating the previously-mentioned acquisitions. These costs are included in selling, general and administrative expense in the accompanying consolidated statement of operations. Due to the proximity of the acquisition date to the filing date of this Annual Report on Form 10 -K, the initial accounting related to the acquisition of the CUI power business is still under review as of the filing date of this Annual Report on Form 10 -K. The following table depicts the Company’s estimated acquisition date fair values of the combined consideration transferred and identifiable net assets acquired in this transaction:
|  |  |  |  |  | Measurement |  |  | Acquisition-Date |
|  | Acquisition-Date |  |  | Period |  |  | Fair Values |
|  | Fair Values |  |  | Adjustments |  |  | (As adjusted) |
Cash and cash equivalents |  | $ | 193 |  |  | $ | - |  |  | $ | 193 |
Accounts receivable |  |  | 3,404 |  |  |  | - |  |  |  | 3,404 |
Inventories |  |  | 4,686 |  |  |  | - |  |  |  | 4,686 |
Other current assets |  |  | 101 |  |  |  | - |  |  |  | 101 |
Property, plant and equipment |  |  | 81 |  |  |  | - |  |  |  | 81 |
Right-of-use asset |  |  | 1,299 |  |  |  | - |  |  |  | 1,299 |
Intangible assets |  |  | - |  |  |  | 16,000 |  |  |  | 16,000 |
Total identifiable assets |  |  | 9,764 |  |  |  | 16,000 |  |  |  | 25,764 |
Accounts payable |  |  | (3,599 | ) |  |  | - |  |  |  | (3,599 | )
Accrued expenses |  |  | (879 | ) |  |  | - |  |  |  | (879 | )
Refund liability |  |  | (1,078 | ) |  |  | - |  |  |  | (1,078 | )
Operating lease liability, current |  |  | (230 | ) |  |  | - |  |  |  | (230 | )
Operating lease liability, long-term |  |  | (1,069 | ) |  |  | - |  |  |  | (1,069 | )
Total liabilities assumed |  |  | (6,855 | ) |  |  | - |  |  |  | (6,855 | )
Net identifiable assets acquired |  |  | 2,909 |  |  |  | 16,000 |  |  |  | 18,909 |
Goodwill |  |  | 29,091 |  |  |  | (18,804 | ) |  |  | 10,287 |
Net assets acquired |  | $ | 32,000 |  |  | $ | (2,804 | ) |  | $ | 29,196 |
Cash paid |  |  | 32,000 |  |  |  | (2,804 | ) |  |  | 29,196 |
Fair value of consideration transferred |  | $ | 32,000 |  |  | $ | (2,804 | ) |  | $ | 29,196 |
The identifiable assets acquired included $11.0 million assigned to customer relationships, which will be amortized over its estimated future life of 13 years utilizing the straight-line method, and $5.0 million assigned to the CUI tradename, which is concluded to have an indefinite life. The final determination of the assets acquired and liabilities assumed will be based on the established fair value of the assets acquired and the liabilities assumed as of the acquisition date. The excess of the purchase price over the fair value of net assets acquired is allocated to goodwill. The goodwill noted above related to the CUI acquisition was allocated to the Company's Power Solutions and Protection operating segment at the time of acquisition. The Company has determined that all of the goodwill and intangible assets associated with the CUI acquisition will be deductible for tax purposes. The following unaudited pro forma information presents a summary of the combined results of operations of the Company and the results of CUI for the periods presented as if the acquisition had occurred on January 1, 2018, along with certain pro forma adjustments. These pro forma adjustments give effect to the amortization of certain definite-lived intangible assets, interest expense related to the financing of the business combination, and related tax effects. 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; 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 acquisition had occurred on the assumed date, nor is the pro forma data intended to be a projection of results that may be obtained in the future:
|  | Year Ended |
|  | December 31, |
|  | 2019 |  |  | 2018 |
Revenue |  | $ | 522,128 |  |  | $ | 588,425 |
Net earnings |  |  | (7,715 | ) |  |  | 25,232 |
Earnings per Class A common share - basic and diluted |  |  | (0.63 | ) |  |  | 1.98 |
Earnings per Class B common share - basic and diluted |  |  | (0.63 | ) |  |  | 2.11 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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