Acquisitions

12 Months Ended

Dec. 31, 2020

Special Product Company

On December 6, 2019, we purchased and assumed substantially all the assets, and certain specified liabilities of Special Product Company (SPC) for a purchase price of $22.5 million. SPC, based in Kansas City, Kansas, is a leading designer, manufacturer, and seller of outdoor cabinet products for optical fiber cable installations. The results of SPC have been included in our Consolidated Financial Statements from December 6, 2019, and are reported within the Enterprise Solutions segment. The acquisition of SPC was not material to our financial position or results of operations.

Opterna

We acquired 100% of the shares of Opterna International Corp. (Opterna) on April 15, 2019 for a purchase price, net of cash acquired, of $51.7 million. Of the $51.7 million purchase price, $45.9 million was paid in 2019 with cash on hand. The acquisition included a potential earnout, which is based upon future Opterna financial targets through April 15, 2021. The maximum earnout consideration is $25.0 million, but based upon a third party valuation specialist using certain assumptions in a discounted cash flow model, the estimated fair value of the earnout included in the purchase price is $5.8 million. Opterna is an international fiber optics solution business formerly based in Sterling, Virginia which designs and manufactures a range of

complementary fiber connectivity, cabinet, and enclosure products used in optical networks. The results of Opterna have been included in our Consolidated Financial Statements from April 15, 2019, and are reported within the Enterprise Solutions segment. Certain subsidiaries of Opterna include noncontrolling interests. Because Opterna has a controlling financial interest in these subsidiaries, they are consolidated into our financial statements. The results that are attributable to the noncontrolling interest holders are presented as net income attributable to noncontrolling interests in the Consolidated Statements of Operations. An immaterial amount of Opterna's annual revenues are generated from transactions with the noncontrolling interests. On October 25, 2019, we purchased the noncontrolling interest of one subsidiary for a purchase price of $0.8 million; of which $0.4 million was paid at closing and the remaining $0.4 million is to be paid in 2021. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed as of April 15, 2019 (in thousands):


Receivables	$	5,308
Inventory	7,359
Prepaid and other current assets	566
Property, plant, and equipment	1,328
Intangible assets	28,000
Goodwill	35,057
Deferred income taxes	80
Operating lease right-of-use assets	2,204
Other long-lived assets	2,070
Total assets acquired	$	81,972

Accounts payable	$	4,847
Accrued liabilities	4,301
Long-term deferred tax liability	6,813
Long-term operating lease liability	1,923
Other long-term liabilities	7,152
Total liabilities assumed	$	25,036
Net assets	$	56,936

Noncontrolling interest	5,195
Net assets attributable to Belden	$	51,741

The fair value of acquired receivables is $5.3 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 value assigned to each class of acquired assets and assumed liabilities could materially affect the results of our operations. We did not record any material measurement-period adjustments during 2020.

For the purpose of the above allocation, we based our estimate of fair value for the acquired inventory, intangible assets, and noncontrolling interests on valuation studies performed by a third party valuation firm. We have estimated a fair value adjustment for inventories based on the estimated selling price of the work-in-process and finished goods acquired at the closing date less the sum of the costs to complete the work-in-process, the costs of disposal, and a reasonable profit allowance for post acquisition selling efforts. We used various valuation methods including discounted cash flows, lost income, excess earnings, and relief from royalty to estimate the 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 expansion of product offerings in the optical fiber market. 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	$	3,400	5
Customer relationships	22,800		15
Sales backlog	1,300		0.5
Trademarks	500		2.0
Total intangible assets subject to amortization	$	28,000

Intangible assets not subject to amortization:
Goodwill	$	35,057
Total intangible assets not subject to amortization	$	35,057

Total intangible assets	$	63,057
Weighed average amortization period			12.9

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 of the backlog intangible asset was based on our estimate of when the ordered items would ship and control of the items transfers. The useful life for the trademarks was based on the period of time we expect to continue to go to market using the trademarks.

The following table illustrates the unaudited pro forma effect on operating results as if the Opterna acquisition had been completed January 1, 2018.


	Years Ended December 31,
	2019		2018
	(In thousands, except per share data)
	(Unaudited)
Revenues	$	2,139,894	$	2,213,781
Net income (loss) attributable to Belden common stockholders	(389,957)		123,546
Diluted income (loss) per share attributable to Belden common stockholders	$	(9.24)	$	3.02

For purposes of the pro forma disclosures, the year ended December 31, 2018 includes expenses related to the acquisition, including severance, restructuring, and acquisition costs; amortization of intangible assets; and cost of sales arising from the adjustment of inventory to fair value of $5.5 million, $3.8 million, and $0.5 million, respectively.

The above unaudited pro forma information is presented for information 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.

FutureLink

We acquired the FutureLink product line and related assets from Suttle, Inc. on April 5, 2019 for a purchase price of $5.0 million, which was funded with cash on hand. The acquisition of FutureLink allows us to offer a more complete set of fiber product offerings. The results from the acquisition of FutureLink have been included in our Condensed Consolidated Financial Statements from April 5, 2019, and are reported within the Enterprise Solutions segment. The acquisition of FutureLink was not material to our financial position or results of operations.