Note 2 - Acquisition

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Business Combination Disclosure [Text Block]

2. ACQUISITION

On December 3, 2019, the Company completed the acquisition of the majority of the power supply products business of CUI Inc. ("CUI") 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 the Company to better address all of its 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.  The acquisition of CUI has also created the opportunity for expense reduction and the elimination of redundancies.  The combination of these factors has given rise to $10.9 million of goodwill.

During the nine months ended September 30, 2020, the Company expensed $0.2 million of acquisition-related costs.  These costs are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

While the purchase price allocation related to CUI is substantially complete, the allocations are currently under review and are subject to change.  The Company expects to finalize the purchase price allocation as soon as practicable, but no later than one year from the acquisition date.

CUI’s results of operations have been included in the Company’s condensed consolidated financial statements for the period subsequent to the acquisition date.  CUI contributed revenues of $10.9 million and estimated net earnings of $1.4 million to the Company for the three months ended September 30, 2020 and revenues of $29.8 million and estimated net earnings of $4.6 million to the Company for the nine months ended September 30, 2020.  The following unaudited pro forma information presents the combined operating results of the Company and CUI, assuming that the acquisition of CUI was completed as of January 1, 2019:

	Three Months Ended			Nine Months Ended
	September 30, 2019			September 30, 2019
Revenue	$	132,105		$	402,609
Net loss		(6,209	)		(1,140	)
Loss per Class A common share - basic and diluted		(0.49	)		(0.10	)
Loss per Class B common share - basic and diluted		(0.51	)		(0.09	)