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Business Combinations | 6 Months Ended
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Jun. 29, 2018
Business Combinations [Abstract] |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS During the first two quarters of fiscal 2018, the Company acquired four businesses, with total cash consideration of $543.1 million, including the acquisition of e-Builder, Inc. ("e-Builder") in an all cash transaction valued at $485.2 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. In the aggregate, the businesses acquired during the first two quarters of fiscal 2018 contributed less than two percent to the Company's total revenue during the first two quarters of fiscal 2018. On July 2, 2018, subsequent to the second quarter, the Company completed the acquisition of Waterfall Holdings, Inc., the holding company of Viewpoint, Inc., (“Viewpoint”), in an all-cash transaction valued at $1.2 billion. 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. The fair value of liabilities assumed includes deferred revenue which is written down to the cost, plus a reasonable profit margin, to fulfill customer contractual obligations. For certain acquisitions completed in the last two quarters of fiscal 2017 and the first two quarters of fiscal 2018, 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 all acquisitions, including the changes in the fair value of the contingent consideration liabilities, a net expense of $8.1 million and $24.1 million for the second quarter and the first two quarters of fiscal 2018, respectively, and $4.3 million and $6.4 million for the second quarter and the first two quarters of fiscal 2017, respectively, were expensed as incurred. The following table summarizes the Company’s business combinations completed during the first two quarters of fiscal 2018 including e-Builder (the acquisition of which is described below) but excluding Viewpoint, which occurred subsequent to quarter end:
| First Two Quarters of
| 2018
(In millions) |
Fair value of total purchase consideration | $ | 543.1 |
Less fair value of net assets acquired: |
Net tangible assets acquired | 1.5 |
Identifiable intangible assets | 144.9 |
Deferred income taxes | (25.0 | )
Goodwill | $ | 421.7 |
Intangible Assets The following table presents details of the Company’s total intangible assets:
As of | Second Quarter of Fiscal 2018 |  | Fiscal Year End 2017
| Gross |  |  |  |  |  | Gross |  |  |  |
| Carrying |  | Accumulated |  | Net Carrying |  | Carrying |  | Accumulated |  | Net Carrying
(In millions) | Amount |  | Amortization |  | Amount |  | Amount |  | Amortization |  | Amount
Developed product technology | $ | 991.9 |  |  | $ | (773.7 | ) |  | $ | 218.2 |  |  | $ | 915.3 |  |  | $ | (729.9 | ) |  | $ | 185.4 |
Trade names and trademarks | 63.9 |  |  | (50.5 | ) |  | 13.4 |  |  | 58.7 |  |  | (48.6 | ) |  | 10.1 |
Customer relationships | 556.9 |  |  | (374.4 | ) |  | 182.5 |  |  | 512.1 |  |  | (351.3 | ) |  | 160.8 |
Distribution rights and other intellectual property | 70.5 |  |  | (62.4 | ) |  | 8.1 |  |  | 69.2 |  |  | (60.7 | ) |  | 8.5 |
| $ | 1,683.2 |  |  | $ | (1,261.0 | ) |  | $ | 422.2 |  |  | $ | 1,555.3 |  |  | $ | (1,190.5 | ) |  | $ | 364.8 |
The estimated future amortization expense of purchased intangible assets as of the end of the second quarter of fiscal 2018 was as follows:
(In millions) |
2018 (Remaining) | $ | 67.9 |
2019 | 108.4 |
2020 | 80.0 |
2021 | 58.4 |
2022 | 40.7 |
Thereafter | 66.8 |
Total | $ | 422.2 |
Goodwill The changes in the carrying amount of goodwill by segment for the first two quarters of fiscal 2018 were as follows:
| Buildings and Infrastructure |  | Geospatial |  | Resources and Utilities |  | Transportation |  | Total
(In millions) |  |  |  |  |  |  |  |  |
Balance as of fiscal year end 2017 | $ | 706.8 |  |  | $ | 415.3 |  |  | $ | 314.5 |  |  | $ | 850.5 |  |  | $ | 2,287.1 |
Additions due to acquisitions | 421.7 |  |  | — |  |  | — |  |  | — |  |  | 421.7 |
Purchase price adjustments- prior years' acquisitions | — |  |  | — |  |  | (0.4 | ) |  | (0.2 | ) |  | (0.6 | )
Foreign currency translation adjustments | (8.8 | ) |  | (7.4 | ) |  | (5.0 | ) |  | (3.1 | ) |  | (24.3 | )
Divestiture (1) | — |  |  | (1.8 | ) |  | — |  |  | — |  |  | (1.8 | )
Balance as of the end of the second quarter of fiscal 2018 | $ | 1,119.7 |  |  | $ | 406.1 |  |  | $ | 309.1 |  |  | $ | 847.2 |  |  | $ | 2,682.1 |
(1) In the first quarter of 2018, the Company sold its Geoline business, which was part of the Geospatial segment. e-Builder, Inc. On February 2, 2018, the Company completed the acquisition of e-Builder. e-Builder is a SaaS-based construction program management solution for capital program owners and program management firms that is expected to extend the Company’s ability to accelerate industry transformation by providing an integrated project delivery solution for owners, program managers and contractors across the design, construct and operate lifecycle. Trimble acquired all of the issued and outstanding shares of common stock of e-Builder for a total purchase price of $485.2 million, subject to certain adjustments described in the purchase agreement. The Company incurred approximately $18.6 million in acquisition-related costs primarily comprising compensation costs incurred post-closing associated with options which were accelerated in connection with the acquisition transaction, which were expensed as incurred and included in Cost of Sales - Service, Research and development, Sales and marketing and General and administrative expense. e-Builder’s results of operations since February 2, 2018 have been included in the Company’s Condensed Consolidated Statements of Income for the first two quarters of fiscal 2018. e-Builder's performance is reported under the Buildings and Infrastructure segment. The acquisition was funded through the use of approximately $200.0 million of the Company’s existing cash, with the remainder funded through the Company’s credit facilities. The following table summarizes the consideration transferred to acquire e-Builder, the assets acquired and liabilities assumed and the estimated useful lives of the identifiable intangible assets as of the date of the acquisition:
| Estimated |  |  |
(In millions) | Fair Value |  |  |
Total purchase consideration | $ | 485.2 |  |  |  |
Net tangible assets acquired | 1.3 |  |  |  |
Intangible assets acquired: |  |  | Estimated Useful Life |
Developed product technology | 60.5 |  |  | 7 years |
Order backlog | 1.7 |  |  | 6 months |
Customer relationships | 42.4 |  |  | 10 years |
Trade name | 4.8 |  |  | 7 years |
Subtotal | 109.4 |  |  |  |
Deferred tax liability | (18.4 | ) |  |  |
Less fair value of all assets/liabilities acquired | 92.3 |  |  |  |
Goodwill | $ | 392.9 |  |  |  |
Details of the net assets acquired are as follows:
| As of February 2, 2018 |
(In millions) |  |
Cash and cash equivalents | $ | 2.5 |  |
Accounts receivable | 14.4 |  |
Other receivables | 43.3 |  |
Other current assets | 0.7 |  |
Other non-current assets | 0.2 |  |
Accounts payable | (8.4 | ) |
Accrued liabilities | (39.6 | ) |
Deferred revenue liability | (11.8 | ) |
Net tangible assets acquired | $ | 1.3 |  |
Goodwill represents the excess of the fair value of consideration paid over the fair value of the underlying net tangible and intangible assets acquired. Goodwill consisted of e-Builder’s highly skilled and valuable assembled workforce, a proven ability to generate new products and services to drive future revenue and a premium paid by the Company for synergies unique to its business. The Company recorded $392.9 million of goodwill from this acquisition. None of the goodwill recognized is expected to be deductible for income tax purposes. During the second quarter and the first two quarters of fiscal 2018, e-Builder contributed $10.6 million and $15.6 million of revenue, respectively and recorded less than $0.1 million of operating income and $1.5 million of operating loss, respectively, within the business segment. The following table presents pro forma results of operations of the Company and e-Builder, as if the companies had been combined as of the beginning of the earliest period presented. The unaudited pro forma results of operations are not necessarily indicative of results that would have occurred had the acquisition taken place on the first day of fiscal 2017, or of future results. Included in the pro forma results are fair value adjustments based on the fair values of assets acquired and liabilities assumed as of the acquisition date of February 2, 2018. For the second quarter and first two quarters of fiscal 2018 and 2017, the pro-forma results include amortization of intangible assets related to the acquisition, impacts from adoption of Revenue from Contracts with Customers, interest expense for debt used to purchase e-Builder and income tax effects. The pro forma information for the second quarter and first two quarters of fiscal 2018 and 2017 is as follows:
| Second Quarter of |  | First Two Quarters of
Fiscal Period | 2018 |  | 2017 |  | 2018 |  | 2017
(in millions, except per share data) |  |  |  |  |  |  |
Revenue | $ | 785.5 |  |  | $ | 671.0 |  |  | $ | 1,536.0 |  |  | $ | 1,291.9 |
Net income attributable to Trimble Inc. | 64.1 |  |  | 45.0 |  |  | 138.5 |  |  | 92.1 |
Basic earnings per share | 0.26 |  |  | 0.18 |  |  | 0.56 |  |  | 0.36 |
Diluted earnings per share | 0.25 |  |  | 0.17 |  |  | 0.54 |  |  | 0.36 |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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