Note 2 - Acquisition of Businesses

6 Months Ended

Jun. 28, 2014

Disclosure Text Block Supplement [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

2. Acquisition of Businesses

The company accounts for acquisitions using the purchase method in accordance with ASC 805, “Business Combinations.” The results of operations of each acquisition have been included in the accompanying consolidated financial statements as of the dates of the acquisition.

SymCom, Inc.

On January 3, 2014, the company acquired 100% of SymCom, Inc. (“SymCom”) for $52.8 million net of cash acquired. Headquartered in Rapid City, South Dakota, SymCom provides overload relays and pump controllers primarily to the industrial market. The acquisition allows the company to strengthen its position in the relay products market by adding new products and new customers within its Electrical business unit segment. SymCom is based in Rapid City, South Dakota. The company funded the acquisition with available cash and proceeds from credit facilities.

The following table sets forth the preliminary purchase price allocation for SymCom acquisition-date net assets, in accordance with the purchase method of accounting with adjustments to record the acquired net assets at their estimated fair values. The company expects to finalize the purchase price allocation for SymCom in the third quarter of 2014 as certain areas remain to be finalized; however, the adjustments are not anticipated to be significant.

SymCom preliminary purchase price allocation (in thousands):
Cash	$	325
Current assets, net		9,479
Property, plant and equipment		11,193
Goodwill		14,738
Trademarks		17,020
Patents		1,500
Other non-current assets		20
Current liabilities		(1,182	)
	$	53,093

All SymCom goodwill and other assets and liabilities were recorded in the Electrical business unit segment and reflected in the Americas geographical area. The trademarks are being amortized over 15 to 20 years. The patents are being amortized over 16 to 17 years. The goodwill resulting from this acquisition consists largely of the company’s expected future product sales and synergies from combining SymCom’s products with the company’s existing electrical product offerings. Goodwill for the above acquisition is expected to be deductible for tax purposes.

As required by purchase accounting rules, the company initially recorded a $2.6 million step-up of inventory to its fair value as of the acquisition date based on the preliminary valuation. During the first quarter of 2014, as a portion of this inventory was sold, cost of goods sold included a $1.4 million non-cash charge for this step-up.

During the second quarter of 2014, the inventory step-up valuation was finalized at $2.8 million which resulted in an additional $1.4 million non-cash charge to cost of goods sold for the second quarter of 2014.

Pro forma financial information is not presented for the SymCom acquisition due to amounts not being materially different than actual results.

Hamlin, Inc.

On May 31, 2013, the company acquired 100% of Hamlin, Inc. (“Hamlin”) from Key Safety Systems, for $144.4 million (net of cash acquired). Hamlin is a manufacturer of sensor technology providing standard products and custom solutions for leading global manufacturers in the automotive and electronic industries. The acquisition allows the company to expand its automotive and electronics product offerings in the global sensor market in both the Automotive and Electronics business segments. Hamlin is headquartered in Lake Mills, Wisconsin and has manufacturing, engineering and sales offices in the U.S., Mexico, Europe and Asia. The company funded the acquisition with available cash raised from borrowings on the company’s new credit arrangement. (See Note 6).

The following table sets forth the final purchase price allocation, as of May 31, 2014, for Hamlin acquisition-date net assets, in accordance with the purchase method of accounting with adjustments to record the acquired net assets at their estimated fair values.

Hamlin final purchase price allocation (in thousands):
Cash	$	15,984
Current assets, net		27,811
Property, plant and equipment		24,728
Goodwill		51,218
Distribution network		35,327
Patents and licenses		16,276
Trademarks		6,522
Non-current assets		2,452
Current liabilities		(7,734	)
Non-current liabilities		(12,217	)
	$	160,367

All Hamlin goodwill and other assets and liabilities were recorded in the Automotive and Electronics business unit segments and reflected in the Americas, Europe and Asia-Pacific geographical areas. The distribution network, trademarks and patents and licenses are all being amortized over 10 years. The goodwill resulting from this acquisition consists largely of the company’s expected future product sales and synergies from combining Hamlin’s products with the company’s existing product offerings. A portion of the goodwill for the acquisition is not expected to be deductible for tax purposes.

As required by purchase accounting rules, the company recorded a $2.1 million step-up of inventory to its fair value as of the acquisition date. During the second quarter of 2013, as a portion of this inventory was sold, cost of goods sold included $1.7 million of non-cash charges for this step-up.

The following unaudited pro forma results are provided below for the company’s acquisition of Hamlin and assume that the acquisition of Hamlin had been completed as of the beginning of fiscal year 2012.

	(In thousands except for per share amounts)
	For the three months ended				For the six months ended
	June 28, 2014		June 29, 2013		June 28, 2014		June 29, 2013
	(Unaudited)		(Unaudited)		(Unaudited)		(As restated)
							(Unaudited)
Revenues	$	220,908	$	201,346	$	427,767	$	390,055
Net income	$	24,578	$	26,224	$	49,967	$	38,435
Net income per share:
Basic	$	1.09	$	1.17	$	2.22	$	1.89
Diluted	$	1.08	$	1.16	$	2.20	$	1.87
Weighted-average shares and equivalent shares outstanding:
Basic		22,579		22,296		22,536		22,197
Diluted		22,750		22,499		22,738		22,431

For the three three months ended June 28, 2014, Hamlin added approximately $14.7 million in revenue and $0.9 million net income to the company’s consolidated results. For the six months ended June 28, 2014, Hamlin added approximately $36.5 million in revenue and $1.2 million net income to the company’s consolidated results.