3. ACQUISITIONS

2013 Acquisitions:

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 an additional net payment of $0.1 million was made in the third quarter of 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.

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.

During the three and nine months ended September 30, 2013, the Company incurred $0.1 million and $0.6 million, respectively, of acquisition-related costs associated with the 2013 Acquisitions. These costs are included in selling, general and administrative expense in the accompanying condensed consolidated statement of operations for the three and nine months ended September 30, 2013.

While the initial accounting related to the acquisitions of TRP and Array is not complete as of the filing date of this Form 10-Q, the following table depicts the Company’s initial estimate of the respective acquisition date fair values of the consideration paid or payable and identifiable net assets acquired (in thousands):

	TRP										Array			2013 Acquisitions
					Measurement			March 29,						Acquisition-Date
	March 29,				Period			2013			August 20,			Fair Values
	2013				Adjustments			(As adjusted)			2013			(As adjusted)
Cash	$	8,388			$	-		$	8,388		$	-		$	8,388
Accounts receivable		11,580				(39	)		11,541			994			12,535
Inventories		6,258		(a)		707			6,965			2,588			9,553
Other current assets		1,953				-			1,953			83			2,036
Property, plant and equipment		4,693		(b)		(165	)		4,528			2,285			6,813
Intangible assets		-		(c)		-			-			-			-
Other assets		1,151				-			1,151			84			1,235
Total identifiable assets		34,023				503			34,526			6,034			40,560

Accounts payable		(8,565	)			-			(8,565	)		(677	)		(9,242	)
Accrued expenses		(4,003	)			132			(3,871	)		(206	)		(4,077	)
Other current liabilities		(25	)			(671	)		(696	)		(214	)		(910	)
Noncurrent liabilities		-				-			-			(643	)		(643	)
Total liabilities assumed		(12,593	)			(539	)		(13,132	)		(1,740	)		(14,229	)
Net identifiable assets acquired		21,430				(36	)		21,394			4,294			25,688
Goodwill		8,278		(d)		(313	)		7,965			5,666			13,631
Net assets acquired	$	29,708			$	(349	)	$	29,359		$	9,960		$	39,319


Cash paid	$	22,400			$	6,959		$	29,359		$	9,960		$	39,319
Assumption of severance payment		109				(109	)		-			-			-
Fair value of grant of license		-		(e)		-			-			-			-
Fair value of consideration transferred		22,509				6,850			29,359			9,960			39,319
Deferred consideration		7,199		(f)		(7,199	)		-			-			-
Total consideration paid/payable	$	29,708			$	(349	)	$	29,359		$	9,960		$	39,319

(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 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 nine months ended September 30, 2013, the 2013 Acquired Companies contributed $26.4 million and $48.6 million of revenue, respectively, and $4.6 million and $8.7 million of net earnings, respectively, to the Company’s consolidated financial results. The Company is still in the process of revising its corporate overhead allocations, and the results disclosed related to the 2013 Acquisitions do not yet include such allocations.

The unaudited pro forma information below presents the combined operating results of the Company and the 2013 Acquired Companies. 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 2013 Acquisitions; 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 2013 Acquisitions 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 acquisitions of the 2013 Acquired Companies were completed as of January 1, 2012. The pro forma results noted below for the three and nine months ended September 30, 2012 also include the effects of the 2012 Acquisitions discussed below (dollars in thousands except per share data):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2013		2012		2013		2012

Revenue	$	102,056	$	97,982	$	283,137	$	283,986
Net earnings		7,882		5,295		12,606		12,578
Earnings per Class A common share - basic and diluted		0.66		0.42		1.05		1.00
Earnings per Class B common share - basic and diluted		0.70		0.45		1.12		1.08

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. 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 and $0.6 million during the three-month periods ended September 30, 2013 and 2012, respectively, and $0.1 million and $0.6 million during the nine-month periods ended September 30, 2013 and 2012, respectively. 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. During the third quarter of 2013, the Company completed the purchase accounting related to its acquisition of Bel Power Europe. The following table reflects the finalized acquisition date fair values of the consideration transferred and identifiable net assets acquired related to the 2012 acquisitions (in thousands):

				Measurement			Acquisition-Date
	Acquisition-Date			Period			Fair Values
	Fair Values			Adjustments			(As finalized)
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			263			765
Intangible assets		30			11,626			11,656
Total identifiable assets		8,424			11,876			20,300

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		-			(2,700	)		(2,700	)
Other long-term liabilities		(216	)		-			(216	)
Total liabilities assumed		(4,204	)		(2,760	)		(6,964	)
Net identifiable assets acquired		4,220			9,116			13,336
Goodwill		17,965			(8,900	)		9,065
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 fair value of identifiable intangible assets noted above (as adjusted) consists of the following:

	Weighted-Average Life	Acquisition-Date Fair Value
Trademarks	Indefinite	$	1,264
Technology	20 years		6,542
Customer relationships	16 years		3,292
Non-compete agreements	2 years		558
Total identifiable intangible assets acquired		$	11,656

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-month periods ended September 30, 2013 and 2012, Fibreco and Bel Power Europe contributed combined revenues of $1.8 million and $0.9 million, respectively, and combined net earnings of $0.1 million and less than $0.1 million, respectively, to the Company’s consolidated financial results. During the nine-month periods ended September 30, 2013 and 2012, Fibreco and Bel Power Europe contributed combined revenues of $7.7 million and $0.9 million, respectively, and combined net earnings of $0.7 million and less than $0.1 million, respectively, to the Company’s consolidated financial results. The acquisition of GigaCom has contributed to Bel’s research and development efforts and its technology has been incorporated into products now being sold by Fibreco. GigaCom incurred expenses, primarily related to research and development, of $0.2 million and $0.1 million during the three-month periods ended September 30, 2013 and 2012, respectively, and $0.7 million and $0.3 million during the nine-month periods ended September 30, 2013 and 2012, respectively.