Business Combinations, Dispositions, Goodwill and Acquired Intangible Assets

9 Months Ended

Oct. 02, 2016

Business Combinations and Investments, Goodwill and Acquired Intangible Assets [Abstract]

Business Combinations, Dispositions, Goodwill and Acquired Intangible Assets

Business Combinations, Dispositions, Goodwill and Acquired Intangible Assets

On May 3, 2016, Teledyne DALSA, Inc., a Canadian-based subsidiary, acquired the assets and business of CARIS, Inc. (“CARIS”) for an initial cash payment of $26.6 million, net of cash acquired. Teledyne received a $0.4 million purchase price adjustment in the fourth quarter of 2016. Based in Fredericton, New Brunswick, Canada, CARIS is a leading developer of geospatial software designed for the hydrographic and marine community and is part of the Digital Imaging segment.

On April 15, 2016, Teledyne LeCroy, Inc., a U.S.-based subsidiary, acquired assets of Quantum Data, Inc. (“Quantum Data”) for $17.3 million in cash. Based in Elgin, Illinois, Quantum Data provides electronic test and measurement instrumentation and is a market leader in video protocol analysis test tools. On April 6, 2016, Teledyne LeCroy, Inc. also acquired Frontline Test Equipment, Inc. (“Frontline”) for $13.7 million in cash. Based in Charlottesville, Virginia, Frontline provides electronic test and measurement instrumentation and is a market leader in wireless protocol analysis test tools. Quantum Data and Frontline are part of the Instrumentation segment.

Teledyne spent $66.7 million on acquisitions and other investments in 2015, of which $63.7 million was spent in the first nine months of 2015. In June 2015, Teledyne DALSA BV, a Netherlands-based subsidiary, acquired Industrial Control Machines SA. In April 2015, Teledyne DALSA, Inc. acquired the remaining 49% noncontrolling interest in the parent company of Optech Incorporated. On February 2015, Teledyne acquired Bowtech Products Limited through a U.K.-based subsidiary. Also in 2016 and 2015, Teledyne made additional investments in Ocean Aero, Inc.

Teledyne funded the purchases from borrowings under its credit facility and cash on hand. The results of the acquisitions have been included in Teledyne’s results since the dates of the respective acquisition.

For a further description of the Company’s acquisition activity for the fiscal year ended January 3, 2016, please refer to Note 3 of our 2015 Form 10-K.

Teledyne’s goodwill was $1,183.5 million at October 2, 2016 and $1,140.2 million at January 3, 2016. The increase in the balance of goodwill in 2016 included $40.5 million in goodwill from recent acquisitions and also the impact of exchange rate changes. Goodwill from the 2016 acquisitions will be deductible for tax purposes. Teledyne’s net acquired intangible assets were $237.7 million at October 2, 2016 and $243.3 million at January 3, 2016. The decrease in the balance of acquired intangible assets in 2016 reflected $21.5 million of amortization, partially offset by $15.6 million of intangible assets from recent acquisitions. The Company is in the process of specifically identifying the amount to be assigned to certain assets, including acquired intangible assets, and liabilities and the related impact on taxes and goodwill for the 2016 acquisitions. The Company made preliminary estimates as of October 2, 2016 since there was insufficient time between the acquisition dates and the end of the period to finalize the analysis.

See Note 14 to these condensed consolidated financial statements for additional information on the sale of the PCT business.

In the second quarter of 2016, Teledyne sold a former operating facility in California for net proceeds of $19.5 million. The gain on the sale of $17.9 million is included in other income. In conjunction with the sale of this former operating facility, Teledyne entered into a like-kind exchange agreement under Section 1031 of the U.S. Internal Revenue Code with a qualified intermediary. Pursuant to the like-kind exchange agreement, the net proceeds of $19.5 million were placed into an escrow account administered by a qualified intermediary. Accordingly, the net proceeds of $19.5 million were classified as restricted cash on the condensed consolidated balance sheet as of October 2, 2016. On October 14, 2016, Teledyne completed the Section 1031 like-kind real estate exchange and the restricted cash was used in the transaction.