Acquisitions

3 Months Ended

Mar. 31, 2019

D. ACQUISITIONS

Lemsys SA

On January 30, 2019, Teradyne acquired all of the issued and outstanding shares of Lemsys SA (“Lemsys”) for a total purchase price of approximately $9.1 million. Lemsys strengthens Teradyne’s position in the electrification trends of vehicles, solar, wind, and industrial applications. The Lemsys acquisition was accounted for as a business combination and, accordingly, the results have been included in Teradyne’s Semiconductor Test segment from the date of acquisition. As of the acquisition date, Teradyne’s preliminary purchase price allocation was goodwill of $1.2 million, which is not deductible for tax purposes, acquired intangible assets of $5.5 million with an average estimated useful life of 4.9 years, and $2.4 million of net tangible assets. The acquisition was not material to Teradyne’s condensed consolidated financial statements.

Mobile Industrial Robots

On April 25, 2018,

Teradyne acquired all of the issued and outstanding shares of Mobile Industrial Robots Aps (“MiR”), a Danish limited liability company located in Odense, Denmark. MiR is the leading maker of collaborative autonomous mobile robots for industrial applications. MiR is part of Teradyne’s Industrial Automation segment.

The total purchase price of $197.8 million included $145.2 million of cash paid and $52.6 million of contingent consideration measured at fair value. The contingent consideration is payable in Euros upon the achievement of certain thresholds and targets for revenue and earnings before interest and taxes for periods from January 1, 2018 to December 31, 2018; January 1, 2018 to December 31, 2019; and January 1, 2018 to December 31, 2020. The contingent consideration related to revenue for the period from January 1, 2018 to December 31, 2018 in the amount of $30.8 million was paid in March 2019. The remaining maximum contingent consideration that could be paid is $83.2 million.

The valuation of the contingent consideration is dependent on the following assumptions: forecasted revenues, revenue volatility, earnings before interest and taxes, and discount rate. These assumptions were estimated based on a review of the historical and projected results.

The MiR acquisition was accounted for as a business combination and, accordingly, the results have been included in Teradyne’s consolidated results of operations from the date of acquisition. MiR’s products will help expand the Industrial Automation segment, which is a key component

of Teradyne’s growth strategy

. The allocation of the total purchase price to MiR’s net tangible liabilities and identifiable intangible assets was based on their estimated fair values as of the acquisition date. The excess of the purchase price over the identifiable intangible assets and net tangible liabilities in the amount of $136.0 million was allocated to goodwill, which is not deductible for tax purposes. MiR’s results have been included in Teradyne’s Industrial Automation segment from the date of acquisition.

The following table represents the final allocation of the purchase price:

	Purchase Price Allocation
	(in thousands)
Goodwill	$	135,976
Intangible assets		80,670
Tangible assets acquired and liabilities assumed:
Current assets		6,039
Non-current assets		1,336
Accounts payable and current liabilities		(7,336	)
Long-term deferred tax liabilities		(18,007	)
Other long-term liabilities		(900	)
Total purchase price	$	197,778

Teradyne estimated the fair value of intangible assets using the income and cost approaches. Acquired intangible assets are amortized on a straight-line basis over their estimated useful lives. Components of these intangible assets and their estimated useful lives at the acquisition date are as follows:

	Fair Value		Estimated Useful Life
	(in thousands)		(in years)
Developed technology	$	58,900		7.0
Trademarks and tradenames		13,240		11.0
Customer relationships		8,500		2.5
Backlog		30		0.2
Total intangible assets	$	80,670		7.2

The following unaudited pro forma information gives effect to the acquisition of MiR as if the acquisition occurred on January 1, 2017. The unaudited pro forma results are not necessarily indicative of what actually would have occurred had the acquisition been in effect for the periods presented:

	For the Three Months Ended
	April 1, 2018
	(in thousands)
Revenue	$	493,017
Net income		85,151
Net income per common share:
Basic	$	0.44
Diluted	$	0.42

Pro forma results for the three months ended April 1, 2018 were adjusted to exclude $0.6 million of acquisition related costs.

Energid Technologies Corporation

On February 26, 2018,

Teradyne

acquired all of the issued and outstanding shares of Energid

Technologies Corporation (“Energid”)

for a total purchase price of approximately $27.6 million. Energid’s technology enables and simplifies the programming of complex robotic motions used in a wide variety of end markets, ranging from heavy industry to healthcare, utilizing both traditional robots and collaborative robots. The Energid acquisition was accounted for as a business combination and, accordingly, Energid’s results have been included in

Teradyne

’s Industrial Automation segment from the date of acquisition. As of the acquisition date,

Teradyne

’s purchase price allocation was goodwill of $14.4 million which is deductible for tax purposes, acquired intangible assets of $12.3 million with an average estimated useful life of 7.7 years, and $1.0 million of net tangible assets. The acquisition was not material to

Teradyne

’s condensed consolidated financial statements.