XML 163 R21.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Goodwill And Intangible Assets | 12 Months Ended
--- | ---
Dec. 31, 2019
Goodwill and Intangible Assets | 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 to be impaired when the net book value of a reporting unit exceeds its estimated fair value. Teradyne has the option to perform a qualitative assessment (“Step zero”) to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If Teradyne determines this is the case, Teradyne is required to perform the two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized. If Teradyne determines that it is more likely than not that the fair value of the reporting unit is greater than its carrying amounts, the two-step goodwill impairment test is not required. When performing the two-step process, the first step involves a comparison of the estimated fair value of a reporting unit to its carrying amount, including goodwill. In performing the first step, Teradyne determines the fair value of a reporting unit using the results derived from an income approach and a market approach , weighting the fair value determined under each approach to determine an estimated fair value for a report ing unit . The income approach is estimated through the discounted cash flow (“DCF”) analysis. Determining fair value requires the exercise of significant judgment, including judgments about appropriate discount rates, perpetual growth rates, and the amount and timing of expected future cash flows. Discount rates are based on a weighted average cost of capital (“WACC”), which represents the average rate a business must pay its providers of debt and equity, plus a risk premium. The WACC used to test goodwill is derived from a group of comparable companies. The cash flows employed in the DCF analysis are derived from internal forecasts and external market forecasts. The market approach estimates the fair value of the reporting unit by utilizing the market comparable method which is based on revenue and earnings multiples from comparable companies. If the estimated fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired and the second step of the impairment test is not necessary. If the carrying amount of a reporting unit exceeds its estimated fair value, then the second step of the goodwill impairment test must be performed. The second step of the goodwill impairment test compares the implied fair value of the reporting unit’s goodwill with its carrying amount of goodwill to measure the amount of impairment loss, if any. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination, whereby the estimated fair value of the reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. In the fourth quarter of 201 9 , Teradyne performed the annual goodwill impairment test. Teradyne completed step one of the two-step impairment test for the Universal Robots , MiR and Energid reporting units . Teradyne completed step zero for the Wireless Test , Defense/Aerospace and AutoGuide reporting units. There was no impairment as a result of the annual test performed in the fourth quarter of 201 9 . Based on Teradyne’s December 31, 2019 goodwill impairment test, the MiR reporting unit’s estimated fair value exceeded its carrying value by 14%. The MiR goodwill amount is $123.6 million as of December 31, 2019. Key assumptions in the goodwill valuation model are forecasted revenues, discount rate, earnings before interest and taxes, and revenue multiples from comparable companies. A change in any of these key assumptions could result in the reporting unit being impaired in a future period. In the fourth quarter of 201 8 , Teradyne performed the annual goodwill impairment test. Teradyne completed step one of the two-step impairment test for the Universal Robots reporting unit. Teradyne completed step zero for the Wireless Test and Defense/Aerospace , MiR , and Energi d reporting units. There was no impairment as a result of the annual test performed in the fourth quarter of 201 8 . In the fourth quarter of 2017, Teradyne performed the annual goodwill impairment test. Teradyne completed step one of the two-step impairment test for the Universal Robots reporting unit. Teradyne completed step zero for the Wireless Test and Defense/Aerospace reporting units. There was no impairment as a result of the annual test performed in the fourth quarter of 2017. The changes in the carrying amount of goodwill by reportable segments for the years ended December 31, 2019 and 2018 are as follows:
|  | Industrial Automation |  |  | Wireless Test |  |  | Semiconductor Test |  |  | System Test |  |  | Total |
|  | (in thousands) |
Balance at December 31, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  | $ | 233,519 |  |  | $ | 361,819 |  |  | $ | 260,540 |  |  | $ | 158,699 |  |  | $ | 1,014,577 |
Accumulated impairment losses |  |  | — |  |  |  | (353,843 | ) |  |  | (260,540 | ) |  |  | (148,183 | ) |  |  | (762,566 | )
|  |  | 233,519 |  |  |  | 7,976 |  |  |  | — |  |  |  | 10,516 |  |  |  | 252,011 |
MiR acquisition |  |  | 135,976 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 135,976 |
Energid acquisition |  |  | 14,394 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 14,394 |
Foreign currency translation adjustment |  |  | (20,531 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (20,531 | )
Balance at December 31, 2018: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 363,358 |  |  |  | 361,819 |  |  |  | 260,540 |  |  |  | 158,699 |  |  |  | 1,144,416 |
Accumulated impairment losses |  |  | — |  |  |  | (353,843 | ) |  |  | (260,540 | ) |  |  | (148,183 | ) |  |  | (762,566 | )
|  |  | 363,358 |  |  |  | 7,976 |  |  |  | — |  |  |  | 10,516 |  |  |  | 381,850 |
Lemsys acquisition |  |  | — |  |  |  | — |  |  |  | 1,428 |  |  |  | — |  |  |  | 1,428 |
Auto G uide acquisition |  |  | 41,372 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 41,372 |
Foreign currency translation adjustment |  |  | (8,247 | ) |  |  | — |  |  |  | 28 |  |  |  | — |  |  |  | (8,219 | )
Balance at December 31, 2019: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Goodwill |  |  | 396,483 |  |  |  | 361,819 |  |  |  | 261,996 |  |  |  | 158,699 |  |  |  | 1,178,997 |
Accumulated impairment losses |  |  | — |  |  |  | (353,843 | ) |  |  | (260,540 | ) |  |  | (148,183 | ) |  |  | (762,566 | )
|  | $ | 396,483 |  |  | $ | 7,976 |  |  | $ | 1,456 |  |  | $ | 10,516 |  |  | $ | 416,431 |
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. There were no events or circumstances indicating that the carrying value of intangible and long-lived assets may not be recoverable in 2019 , 2018 and 2017 . Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheets:
|  | December 31, 2019 |
|  | Gross Carrying Amount (1 ) (2) |  |  | Accumulated Amortization (2) |  |  | Foreign Currency Translation Adjustment |  |  | Net Carrying Amount |
|  | (in thousands) |
Developed technology |  | $ | 361,787 |  |  | $ | (279,000 | ) |  | $ | (5,709 | ) |  | $ | 77,078 |
Customer relationships |  |  | 75,669 |  |  |  | (59,077 | ) |  |  | (455 | ) |  |  | 16,137 |
Tradenames and trademarks |  |  | 70,120 |  |  |  | (36,671 | ) |  |  | (1,184 | ) |  |  | 32,265 |
Backlog |  |  | 260 |  |  |  | (260 | ) |  |  | — |  |  |  | — |
Total intangible assets |  | $ | 507,836 |  |  | $ | (375,008 | ) |  | $ | (7,348 | ) |  | $ | 125,480 |
|  | December 31, 2018 |
|  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Foreign Currency Translation Adjustment |  |  | Net Carrying Amount |
|  | (in thousands) |
Developed technology |  | $ | 336,308 |  |  | $ | (252,080 | ) |  | $ | (4,079 | ) |  | $ | 80,149 |
Customer relationships |  |  | 97,153 |  |  |  | (83,448 | ) |  |  | (340 | ) |  |  | 13,365 |
Tradenames and trademarks |  |  | 64,420 |  |  |  | (31,653 | ) |  |  | (799 | ) |  |  | 31,968 |
Non-compete agreement |  |  | 320 |  |  |  | (320 | ) |  |  | — |  |  |  | — |
Backlog |  |  | 30 |  |  |  | (30 | ) |  |  | — |  |  |  | — |
Total intangible assets |  | $ | 498,231 |  |  | $ | (367,531 | ) |  | $ | (5,218 | ) |  | $ | 125,482 |
(1) | Includes intangible assets acquired in 2019, $37.7 million from the AutoGuide acquisition and $4.6 million from the Lemsys acquisition.
(2) | In 2019, $32.7 million of amortizable intangible assets became fully amortized and have been eliminated from the gross carrying amount and accumulated amortization.
Aggregate intangible assets amortization expense for the years ended December 31, 2019, 2018, and 2017, was $40.1 million, $39.2 million, and $30.5 million, respectively. Estimated intangible assets amortization expense for each of the five succeeding fiscal years is as follows:
Year |  | Amortization Expense |
|  | (in thousands) |
2020 |  | $ | 30,606 |
2021 |  |  | 20,593 |
2022 |  |  | 19,700 |
2023 |  |  | 19,226 |
2024 |  |  | 18,921 |
Thereafter |  |  | 16,434 |

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration