v3.7.0.1
BUSINESS COMBINATIONS
 6 Months Ended
Jun. 30, 2017
Business Combinations [Abstract]  
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS
During the first two quarters of fiscal 2017, the Company acquired seven businesses, with total cash consideration of $158.0 million. The Condensed Consolidated Statements of Income include the operating results of the businesses from the dates of acquisition. The acquisitions were not significant individually or in the aggregate. The largest acquisition was a manufacturer of vision-based automatic wayside inspection systems for the railroad industry. In the aggregate, the businesses acquired during the first two quarters of fiscal 2017 contributed less than one percent to the Company's total revenue during the first two quarters of fiscal 2017. In the beginning of the third quarter of fiscal 2017, the Company acquired privately-held Müller-Elektronik, a German company specializing in implement control and precision farming solutions. The acquisition was purchased with a portion of the Company's existing foreign cash.
The Company determined the total consideration paid for each of its acquisitions as well as the fair value of the assets acquired and liabilities assumed as of the date of acquisition. For certain acquisitions completed in the last two quarters of fiscal 2016 and the first two quarters of fiscal 2017, the fair value of the assets acquired and liabilities assumed are preliminary and may be adjusted as the Company obtains additional information, primarily related to adjustments for the true up of acquired net working capital in accordance with certain purchase agreements, and estimated values of certain net tangible assets and liabilities including tax balances, pending the completion of final studies and analyses. If there are adjustments made for these items, the fair value of intangible assets and goodwill could be impacted. Thus, the provisional measurements of fair value are subject to change. Such changes could be significant. The Company expects to finalize the valuation of the net tangible and intangible assets as soon as practicable, but not later than one-year from the acquisition date.
The fair value of identifiable assets acquired and liabilities assumed were determined under the acquisition method of accounting for business combinations. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The fair value of intangible assets acquired is generally determined based on a discounted cash flow analysis. Acquisition costs directly related to the acquisitions, including the changes in the fair value of the contingent consideration liabilities, of $4.3 million and $6.4 million for the second quarter and the first two quarters of fiscal 2017, respectively, and $0.9 million and $2.5 million for the second quarter and the first two quarters of fiscal 2016, respectively, were expensed as incurred and were included in General and administrative expense in the Condensed Consolidated Statements of Income.
The following table summarizes the Company’s business combinations completed during the first two quarters of fiscal 2017:
 
First Two Quarters of
 
 
2017
 
(In millions)
 
 
Fair value of total purchase consideration
$
158.0

 
Less fair value of net assets acquired:
 
 
Net tangible assets acquired
7.0

 
Identifiable intangible assets
91.5

 
     Deferred income taxes
(5.9
)
 
Goodwill
$
65.4

 

Intangible Assets
The following table presents details of the Company’s total intangible assets: 
As of
Second Quarter of Fiscal 2017
 
Fiscal Year End 2016
 
Gross
 
 
 
 
 
Gross
 
 
 
 
 
Carrying
 
Accumulated
 
Net Carrying
 
Carrying
 
Accumulated
 
Net Carrying
(In millions)
Amount
 
Amortization
 
Amount
 
Amount
 
Amortization
 
Amount
Developed product technology
$
853.5

 
$
(672.9
)
 
$
180.6

 
$
794.8

 
$
(620.6
)
 
$
174.2

Trade names and trademarks
54.7

 
(45.7
)
 
9.0

 
50.9

 
(42.9
)
 
8.0

Customer relationships
487.4

 
(321.9
)
 
165.5

 
438.7

 
(294.1
)
 
144.6

Distribution rights and other intellectual properties
67.2

 
(58.8
)
 
8.4

 
64.3

 
(57.8
)
 
6.5

 
$
1,462.8

 
$
(1,099.3
)
 
$
363.5

 
$
1,348.7

 
$
(1,015.4
)
 
$
333.3


The estimated future amortization expense of purchased intangible assets as of the end of the second quarter of fiscal 2017 was as follows:
 
(In millions)
 
2017 (Remaining)
$
72.6

2018
117.8

2019
77.1

2020
48.7

2021
27.0

Thereafter
20.3

Total
$
363.5


Goodwill
In March 2017, the information used to allocate resources and assess performance that is provided to the Company's chief operating decision maker, its Chief Executive Officer, changed to better reflect the Company's customer base and end markets. The new reporting structure consists of four operating segments, each representing a single reporting unit: Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation. Goodwill was reassigned to the new reporting units using the relative fair values and, as a result of this reassignment, an impairment assessment was performed immediately before and after the reorganization of the Company’s reporting structure. There was no goodwill impairment resulting from this assessment in the first quarter of fiscal 2017.
The changes in the carrying amount of goodwill by segment for the first two quarters of fiscal 2017 were as follows: 
 
Buildings and Infrastructure
 
Geospatial
 
Resources and Utilities
 
Transportation
 
Total
(In millions)
 
 
 
 
 
 
 
 
 
Balance as of fiscal year end 2016
$
663.7

 
$
405.1

 
$
217.7

 
$
791.1

 
$
2,077.6

Additions due to acquisitions


 
—

 
31.9

 
33.5

 
65.4

Purchase price adjustments- prior years' acquisitions
(0.1
)
 
—

 
—

 
—

 
(0.1
)
Foreign currency translation adjustments
27.2

 
10.8

 
5.1

 
4.6

 
47.7

Divestiture (1)
—

 
(6.9
)
 
—

 
—

 
(6.9
)
Balance as of the end of the second quarter of fiscal 2017
$
690.8

 
$
409.0

 
$
254.7

 
$
829.2

 
$
2,183.7


(1) In the first quarter of 2017, the Company sold its ThingMagic business, which was part of the Geospatial segment.