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.

Throughout

2018

and until

September 30, 2019,

the Company operated under

three

reportable operating segments which were geographic in nature: North America, Asia and Europe. In connection with the transition in ERP systems, and resulting discussions around how management would like to view the results of the Company on a go-forward basis, management determined that viewing the Company by product group for purposes of managing the business and asset allocation decisions was most appropriate. This change in management's view resulted in a reorganization of the Company's reportable operating segments effective

October 1, 2019.

The new reportable operating segments are:

	•	Cinch 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, 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, 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.

As of the

October 1, 2019

segment reorganization date, the remaining goodwill under the former segment structure was reassigned to the new reporting units identified within the

three

product group reportable operating segments using a relative fair value allocation approach.

The changes in the carrying value of goodwill classified by our segment reporting structure for the years ended

December 31, 2019

and

2018

are as noted in the table below.

	Segment Structure Prior to October 1, 2019
	Total			North America			Asia			Europe

Balance at January 1, 2018:
Goodwill, gross	$	148,768		$	63,364		$	54,508		$	30,896
Accumulated impairment charges		(128,591	)		(54,474	)		(54,508	)		(19,609	)
Goodwill, net		20,177			8,890			-			11,287

Goodwill allocation related to acquisition		1,290			-			-			1,290
Foreign currency translation		(1,650	)		-			-			(1,650	)

Balance at December 31, 2018:
Goodwill, gross		148,408			63,364			54,508			30,536
Accumulated impairment charges		(128,591	)		(54,473	)		(54,508	)		(19,610	)
Goodwill, net		19,817			8,891			-			10,926

Impairment charge		(8,891	)		(8,891	)		-			-
Foreign currency translation		(122	)		-			-			(122	)
Measurement period adjustment		(26	)		-			-			(26	)

Balance at September 30, 2019:
Goodwill, gross		148,260			63,364			54,508			30,388
Accumulated impairment charges		(137,482	)		(63,364	)		(54,508	)		(19,610	)
Goodwill, net	$	10,778		$	-		$	-		$	10,778

	Segment Structure Effective October 1, 2019
	Total		Cinch Connectivity Solutions		Power Solutions & Protection		Magnetic Solutions
Balance at October 1, 2019:
Goodwill, gross (reallocation)	$	10,778	$	6,467	$	4,311	$	-
Goodwill, net		10,778		6,467		4,311		-

Goodwill allocation related to acquisition		10,287		-		10,287		-
Foreign currency translation		928		712		216		-

Balance at December 31, 2019:
Goodwill, gross		21,993		7,179		14,814		-
Goodwill, net	$	21,993	$	7,179	$	14,814	$	-

The Company has

not

reallocated the historical accumulated impairment charges to its new segment structure due to impracticability.

As discussed in Note

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. We estimated 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.

2019

Interim Impairment Test

As weakened market conditions from earlier in

2019

continued into the

third

quarter without a visible rebound in incoming orders, the Company’s actual revenue and margin levels in

2019

were significantly lower than the financial projections utilized in the annual goodwill impairment analysis (performed as of

October 1, 2018),

and were

not

projected to rebound to those levels in

2019.

The Company determined that current business conditions, and the resulting decrease in the Company’s projected undiscounted and discounted cash flows, together with the accompanying stock price decline, constituted a triggering event, which required the Company to perform interim impairment tests related to its long-lived assets and goodwill during the

third

quarter of

2019.

This resulted in a full impairment of the Company's North America operating segment, and the Company recorded a resulting goodwill impairment charge of

$8.9

million in the

third

quarter of

2019.

impairment existed as of the

July 31, 2019

interim test date related to the Company's Europe operating segment. As of the interim test date, the estimated fair value of the Company's Europe operating segment exceeded its carrying value by

17.3%.

2019

Annual Impairment Test

October 1, 2019,

the Company completed step

one

of our annual goodwill impairment test for our reporting units. We concluded that the fair value of the Company's Europe reporting unit (the only remaining reporting unit with goodwill) exceeded the carrying value and that there was

indication of impairment. As described above, the Company reorganized its segment structure effective

October 1, 2019.

In connection with the segment reorganization, the Company also completed step

one

of our annual goodwill impairment test for our new reporting units. We concluded that the fair value each of the Company's reporting units exceeded the respective carrying values and that there was

indication of impairment on that date.

The excess of estimated fair values over carrying value, including goodwill for each of our reporting units that had goodwill as of the

2019

annual impairment test were as follows:

Reporting Unit	% by Which Estimated Fair Value Exceeds Carrying Value
Connectivity Europe	138.8		%
Power Europe		16.4	%

As noted above, the fair value determined in connection with the goodwill impairment test completed in the

fourth

quarter of

2019

exceeded the carrying value for each reporting unit. Therefore, there was

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 decline in our common stock price, 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.

2018

Annual Impairment Test

Based on annual impairment tests performed in the prior year, there was

indication of goodwill impairment at the

October 1, 2018

testing date.

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. Other intangible assets, excluding trademarks, are being amortized over

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, 2019

, 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, 2019						December 31, 2018
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount

Patents, licenses and technology	$	38,885	$	21,757	$	17,128	$	38,845	$	18,281	$	20,564
Customer relationships		55,656		17,231		38,425		44,588		14,193		30,395
Non-compete agreements		2,701		2,701		-		2,683		2,683		-
Trademarks		16,852		40		16,812		11,770		40		11,730

	$	114,094	$	41,729	$	72,365	$	97,886	$	35,197	$	62,689

Amortization expense was

$6.4

million and

$6.4

million in

2019

and

2018

, respectively.

Estimated amortization expense for intangible assets for the next

five

years is as follows:

Year Ended December 31,	Amortization Expense

2020	$	7,112
2021		7,108
2022		5,735
2023		4,473
2024		4,412

2019

Impairment Tests

Due to weakened market conditions discussed above, the Company completed an interim impairment test related to its indefinite-lived intangible assets as of

July 31, 2019,

noting

impairment. The Company also completed its annual indefinite-lived intangible assets impairment test during the

fourth

quarter of

2019

, noting

impairment. Management has concluded that the fair value of these trademarks exceeded the related carrying values at

December 31, 2019

and that there was

indication of impairment.