Goodwill and Intangible Assets

3 Months Ended

Apr. 02, 2017

L. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Teradyne performs its annual goodwill impairment test as required under the provisions of ASC 350-10, “Intangibles—Goodwill and Other” on December 31 of each fiscal year unless interim indicators of impairment exist. Goodwill is considered impaired when the net book value of a reporting unit exceeds its estimated fair value.

The changes in the carrying amount of goodwill by reportable segments for the three months ended April 2, 2017, were as follows:


	Industrial Automation		System Test			Wireless Test			Semiconductor Test			Total
	(in thousands)
Balance at December 31, 2016
Goodwill	$	204,851	$	158,699		$	361,819		$	260,540		$	985,909
Accumulated impairment losses		—		(148,183	)		(353,843	)		(260,540	)		(762,566	)

		204,851		10,516			7,976			—			223,343
Foreign currency translation adjustment		6,722		—			—			—			6,722

Balance at April 2, 2017
Goodwill		211,573		158,699			361,819			260,540			992,631
Accumulated impairment losses		—		(148,183	)		(353,843	)		(260,540	)		(762,566	)

	$	211,573	$	10,516		$	7,976		$	—		$	230,065

Intangible Assets

Teradyne reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate.

Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheet:


	April 2, 2017
	Gross Carrying Amount		Accumulated Amortization			Cumulative Foreign Currency Translation Adjustment			Net Carrying Amount
	(in thousands)
Developed technology	$	270,877	$	(211,065	)	$	(3,292	)	$	56,520
Customer relationships		92,741		(79,114	)		(348	)		13,279
Tradenames and trademarks		50,100		(24,331	)		(845	)		24,924
Non-compete agreement		320		(200	)		—			120
Customer backlog		170		(170	)		—			—

Total intangible assets	$	414,208	$	(314,880	)	$	(4,485	)	$	94,843


	December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Cumulative Foreign Currency Translation Adjustment			Net Carrying Amount
	(in thousands)
Developed technology	$	270,877	$	(206,376	)	$	(5,093	)	$	59,408
Customer relationships		92,741		(76,707	)		(538	)		15,496
Tradenames and trademarks		50,100		(23,435	)		(1,308	)		25,357
Non-compete agreement		320		(180	)		—			140
Customer backlog		170		(170	)		—			—

Total intangible assets	$	414,208	$	(306,868	)	$	(6,939	)	$	100,401

Aggregate intangible asset amortization expense was $8.0 million and $20.0 million, respectively, for the three months ended April 2, 2017 and April 3, 2016.

Estimated intangible asset amortization expense for each of the five succeeding fiscal years is as follows:


Year	Amortization Expense
	(in thousands)
2017 (remainder)		21,621
2018		27,475
2019		23,622
2020		10,325
2021		3,504
Thereafter		8,296

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details