Acquisitions

9 Months Ended

Sep. 29, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Acquisitions

Acquisitions

On September 16, 2024, we acquired Voleatech GmbH ("Voleatech") with cash on hand for €5.0 million ($5.6 million), net of cash acquired. The acquisition includes a potential earn-out up to €3.0 million based upon certain targets over three years, which will be accounted for as compensation cost.Voleatech, based in Germany, is known for their VT AIR Next Gen Firewall and expands Belden's Firewall product portfolio and overall planning of security in OT (Operational Technology) networking. Voleatech is reported within the Automation Solutions segment and is not material to our financial position or results of operations.

On June 30, 2024, we acquired Precision Optical Technologies, Inc. (“Precision”) with cash on hand for $289.6 million, net of cash acquired. Precision, based in New York, is a leading supplier of value-added optical transceivers with proprietary software, firmware configurations, and related components. Precision is reported within the Smart Infrastructure Solutions segment. The following table summarizes the estimated, preliminary fair values of the assets acquired and liabilities assumed for Precision as of the acquisition date (in thousands):

Receivables	$	18,562
Inventory	9,215
Other current assets	2,352
Property, plant and equipment	5,330
Intangible assets	162,000
Goodwill	144,690
Operating lease right-of-use assets	3,272
Total assets acquired	$	345,421
Accounts payable	$	11,452
Accrued liabilities	3,922
Deferred income taxes	37,507
Long-term operating lease liabilities	2,950
Total liabilities assumed	$	55,831
Net assets	$	289,590

The above purchase price allocation is preliminary and subject to revision as additional information about the fair value of individual assets and liabilities becomes available. The preliminary measurement of receivables, inventory, intangible assets, goodwill, deferred income taxes, and other assets and liabilities are subject to change. A change in the estimated fair value of the net assets acquired will change the amount of the purchase price allocated to goodwill. The preliminary fair value of acquired receivables is $18.6 million, which is equivalent to its gross contractual amount. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The judgments we have used in estimating the preliminary fair values assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations.

For purposes of the above allocation, we based our preliminary estimate of the fair values for intangible assets on valuation studies performed by a third party valuation firm. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the preliminary fair value of the identifiable intangible assets (Level 3 valuation). Goodwill and other intangible assets reflected above were determined to meet the criteria for recognition apart from tangible assets acquired and liabilities assumed. The goodwill is primarily attributable to the expansion of Belden’s solution selling capabilities, particularly the ability to offer more complete fiber infrastructure solutions. Our tax basis in the acquired goodwill is zero.

The intangible assets related to the acquisition consisted of the following:

	Fair Value		Amortization Period
	(In thousands)		(In years)
Intangible assets subject to amortization:
Developed technologies	$	24,700	5.0
Customer relationships	122,800		20.0
Trademarks	3,100		2.5
Non-compete agreements	11,400		5.0
Total intangible assets subject to amortization	$	162,000
Intangible assets not subject to amortization:
Goodwill	$	144,690	n/a
Total intangible assets not subject to amortization	$	144,690
Total intangible assets	$	306,690
Weighted average amortization period			16.3

The amortizable intangible assets reflected in the table above were determined by us to have finite lives. The useful life for the developed technology intangible asset was based on the estimated time that the technology provides us with a competitive advantage and thus approximates the period and pattern of consumption of the intangible asset. The useful life for the customer relationship intangible asset was based on our forecasts of estimated sales from recurring customers. The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks.

Our consolidated revenues and income before taxes for the three and nine months ended September 29, 2024 included $34.4 million and $1.2 million, respectively, from Precision. For the three and nine months ended September 29, 2024, income before taxes included $4.1 million of severance and other restructuring costs, $3.7 million of amortization of intangible assets, and $0.3 million of cost of sales related to the adjustment of acquired inventory to fair value for Precision.

The following table illustrates the unaudited pro forma effect on operating results as if the Precision acquisition had been completed as of January 1, 2023.

	Three Months Ended				Nine Months Ended
	September 29, 2024		October 1, 2023		September 29, 2024		October 1, 2023
	(In thousands, except per share data)
	(Unaudited)
Revenues	$	654,926	$	667,789	$	1,865,778	$	2,057,521
Net income attributable to Belden stockholders	57,021		74,122		140,744		200,609
Diluted income per share attributable to Belden stockholders	$	1.38	$	1.74	$	3.40	$	4.65

The above unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our results of operations would have been had we completed the acquisition on the date assumed, nor is it necessarily indicative of the results that may be expected in future periods. Pro forma adjustments exclude cost savings from any synergies resulting from the acquisition.