XML 33 R13.htm IDEA: XBRL DOCUMENT
v3.22.4

Note 4 - Goodwill and Other Intangible Assets | 12 Months Ended
--- | ---
Dec. 31, 2022
Notes to Financial Statements |
Goodwill Disclosure [Text Block] |
4. | GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill Goodwill represents the excess of the purchase price and related acquisition costs over the fair value assigned to the net tangible and other intangible assets acquired in a business acquisition. At December 31, 2022 and 2021, the Company's reportable operating segments were as follows:
| • | Connectivity Solutions: includes the 2010 acquisition of Cinch Connectors, the 2012 acquisitions of Fibreco Limited and GigaCom Interconnect, the 2013 acquisition of Array Connector, the 2014 acquisition of Emerson Network Power Connectivity Solutions, the 2021 acquisition of rms Connectors, in addition to sales and an estimated allocation of expenses related to connectivity products manufactured at Bel sites that are not product group specific.
| • | Power Solutions and Protection: includes the 2012 acquisition of Powerbox Italia, the 2014 acquisition of Power-One's Power Solutions business, the 2019 acquisition of the majority of CUI Inc.'s power products business, the 2021 acquisition of EOS, in addition to sales and an estimated allocation of expenses related to power products manufactured at Bel sites that are not product group specific.
| • | Magnetic Solutions: includes the 2013 acquisition of TE Connectivity's Coil Wound Magnetics business, our Signal Transformer business, in addition to sales and an estimated allocation of expenses related to Bel's ICM and discrete magnetic products that are manufactured at Bel sites that are not product group specific.
The changes in the carrying value of goodwill classified by our segment reporting structure for the year ended December 31, 2022 are as noted in the table below.
|  | Total |  |  | Connectivity Solutions |  |  | Power Solutions & Protection |  |  | Magnetic Solutions |
Balance at January 1, 2022: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill, gross |  | $ | 26,651 |  |  | $ | 7,735 |  |  | $ | 18,916 |  |  | $ | - |
Goodwill, net |  | $ | 26,651 |  |  | $ | 7,735 |  |  | $ | 18,916 |  |  | $ | - |
Goodwill allocation related to acquisition |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Foreign currency translation |  |  | (1,552 | ) |  |  | (788 | ) |  |  | (764 | ) |  |  | - |
Balance at December 31, 2022: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill, gross |  | $ | 25,099 |  |  | $ | 6,947 |  |  | $ | 18,152 |  |  | $ | - |
Goodwill, net |  | $ | 25,099 |  |  | $ | 6,947 |  |  | $ | 18,152 |  |  | $ | - |
The Company has accumulated impairment charges totaling $137.5 million, which were incurred under a former segment and reporting unit structure which was in place prior to October 1, 2019. As discussed in Note 5, Fair Value Measurements, goodwill is reviewed for impairment on a reporting unit basis annually during the fourth quarter of each year and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. In testing goodwill for impairment, we may perform both a qualitative assessment and quantitative assessment. For the qualitative test, the assessment is based on a review of general macroeconomic conditions, industry and market conditions, changes in cost factors, overall financial performance (both actual and expected performance) and other reporting unit-specific events such as significant changes in management, customers, litigation or a change in the carrying amount of net assets. If it is determined that a potential impairment may exist, we would proceed with a quantitative assessment. In cases where we elect to perform a quantitative assessment, we estimate the fair value of these reporting units using a weighting of fair values derived from income and market approaches. Under the income approach, we determine the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows. The market approach estimates fair value based on market multiples of revenue and earnings derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit. 2022 Annual Impairment Test The Company performed a qualitative assessment as of October 1, 2022 related to its EOS reporting unit, as the estimated fair value of this reporting unit significantly exceeded the carrying amount based on our baseline quantitative assessment, which was performed as of March 31, 2021. Our qualitative assessment determined that indicators that the fair value of this reporting unit was less than the carrying amount were not present. On October 1, 2022, the Company completed a quantitative assessment of our annual goodwill impairment test for three of our reporting units. We concluded that the fair value of the Company's Connectivity Europe, Power Europe and CUI reporting units exceeded the carrying value and that there was no indication of impairment. The excess of estimated fair values over carrying value, including goodwill for each of our reporting units that had goodwill as of the 2022 annual impairment test were as follows:
Reporting Unit |  | % by Which Estimated Fair Value Exceeds Carrying Value |
Connectivity Europe |  | 69.0 | %
Power Europe |  | 84.4 | %
CUI |  | 172.9 | %
2021 Impairment Tests On October 1, 2021, the Company completed a quantitative assessment of our annual goodwill impairment test for our reporting units. We concluded that the fair value of the Company's Connectivity Europe, Power Europe and CUI reporting units (the only reporting units with goodwill other than the 2021 acquisitions) exceeded the carrying value and that there was no indication of impairment. As noted above, the fair value determined in connection with the goodwill impairment test completed in the fourth quarter of 2022 exceeded the carrying value for each reporting unit. Therefore, there was no impairment of goodwill. However, if the fair value decreases in future periods, the Company may need to complete an interim goodwill impairment test and any potential goodwill impairment charge would be dependent upon the estimated fair value of the reporting unit at that time and the outcome of the impairment test. The fair values of the assets and liabilities of the reporting unit, including the intangible assets, could vary depending on various factors. The future occurrence of a potential indicator of impairment, such as a decrease in expected net earnings, adverse equity market conditions, a decline in current market multiples, a sustained decrease in the price of our common stock, a significant adverse change in legal factors or business climates, an adverse action or assessment by a regulator, unanticipated competition, strategic decisions made in response to economic or competitive conditions, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could require an interim assessment for some or all of the reporting units before the next required annual assessment. In the event of significant adverse changes of the nature described above, it may be necessary for us to recognize an additional non-cash impairment of goodwill, which could have a material adverse effect on our consolidated financial condition and consolidated results of operations. Other Intangible Assets Other identifiable intangible assets include patents, technology, license agreements, non-compete agreements and trademarks. Amounts assigned to these intangible assets have been determined by management. Management considered a number of factors in determining the allocations, including valuations and independent appraisals. Trademarks have indefinite lives and are reviewed for impairment on an annual basis, or when there is a triggering event. Other intangible assets, excluding trademarks, are being amortized over 1 to 16 years. The Company tests indefinite-lived intangible assets for impairment using a fair value approach, the relief-from-royalty method (a form of the income approach). At December 31, 2022, the Company's indefinite-lived intangible assets related to the trademarks acquired in the CUI, Power Solutions, Connectivity Solutions, Cinch and Fibreco acquisitions. The components of definite and indefinite-lived intangible assets are as follows:
|  | December 31, 2022 |  |  | December 31, 2021 |
|  | Gross Carrying |  |  | Accumulated |  |  | Net Carrying |  |  | Gross Carrying |  |  | Accumulated |  |  | Net Carrying |
|  | Amount |  |  | Amortization |  |  | Amount |  |  | Amount |  |  | Amortization |  |  | Amount |
Patents, licenses and technology |  | $ | 38,607 |  |  | $ | 30,156 |  |  | $ | 8,451 |  |  | $ | 38,957 |  |  | $ | 28,353 |  |  | $ | 10,604 |
Customer relationships |  |  | 56,917 |  |  |  | 28,096 |  |  |  | 28,821 |  |  |  | 58,008 |  |  |  | 24,766 |  |  |  | 33,242 |
Non-compete agreements |  |  | 2,662 |  |  |  | 2,662 |  |  |  | - |  |  |  | 2,711 |  |  |  | 2,711 |  |  |  | - |
Trademarks |  |  | 16,999 |  |  |  | 160 |  |  |  | 16,839 |  |  |  | 17,189 |  |  |  | 40 |  |  |  | 17,149 |
|  | $ | 115,185 |  |  | $ | 61,074 |  |  | $ | 54,111 |  |  | $ | 116,865 |  |  | $ | 55,870 |  |  | $ | 60,995 |
Amortization expense was $6.0 million and $7.1 million during each of 2022 and 2021, respectively. Estimated amortization expense for intangible assets for the next five years is as follows:
December 31, |  | Amortization Expense |
2023 |  | $ | 4,637 |
2024 |  |  | 4,557 |
2025 |  |  | 4,557 |
2026 |  |  | 4,432 |
2027 |  |  | 4,432 |
2022 and 2021 Impairment Tests The Company completed its annual indefinite-lived intangible assets impairment test as of October 1, 2022 and October 1, 2021. Management has concluded that the fair value of these trademarks exceeded the related carrying values at both December 31, 2022 and December 31, 2021, with no indication of impairment at either date.

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

X
- Definition The entire disclosure for goodwill. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=2144439 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 55 -Paragraph 24 -URI https://asc.fasb.org/extlink&oid=122137925&loc=d3e14258-109268 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13854-109267 + Details
Name: | us-gaap_GoodwillDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration