Business Combinations and Investments, Goodwill and Acquired Intangible Assets

3 Months Ended

Apr. 01, 2012

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

Business Combinations and Investments, Goodwill and Acquired Intangible Assets

Note 2. Business Combinations and Investments, Goodwill and Acquired Intangible Assets

On February 25, 2012, Teledyne acquired VariSystems Inc. (“VariSystems”) for $34.9 million, net of $2.1 million in cash acquired. Teledyne expects to pay a $1.4 million purchase price adjustment in the second quarter of 2012. VariSystems, headquartered in Calgary, Alberta, Canada, is a leading supplier of custom harsh environment interconnects used in energy exploration and production. VariSystems had sales of CAD $27.5 million for its fiscal year ended May 31, 2011. VariSystems, Inc. now operates under the name Teledyne VariSystems and is part of the Aerospace and Defense Electronics segment. See also Note 15 regarding the purchase of a majority interest in the parent company of Optech Incorporated.

On February 12, 2011, the Company acquired the stock of DALSA Corporation (“DALSA”). DALSA designs and manufactures digital image capture products, primarily consisting of high performance sensors, cameras and software for use in industrial, scientific, medical and professional applications products, as well as specialty semiconductors and micro electro mechanical systems (“MEMS”). The Company acquired DALSA for an aggregate purchase price of $339.5 million in cash. Headquartered in Waterloo, Ontario, Canada, DALSA had annual revenues of CAD $212.3 million for its fiscal year ended December 2010. DALSA operates within the Digital Imaging segment.

For a description of the Company’s other acquisition and divestiture activity for the year ended January 1, 2012, please refer to Notes 3 and 16 of the Teledyne 2011 Form 10-K.

Teledyne funded the purchases primarily from borrowings under its credit facility and cash on hand.

DALSA’s results have been included since the date of the acquisition. The unaudited pro forma financial information below assumes that DALSA had been acquired at the beginning of the 2011 fiscal year and includes the effect of estimated amortization of acquired identifiable intangible assets, increased interest expense on net acquisition debt, as well as the impact of purchase accounting adjustments for certain liabilities and inventory valuation adjustments. The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have resulted had the acquisition been in effect at the beginning of the period presented. In addition, the unaudited pro forma financial results are not intended to be a projection of future results and do not reflect any operating efficiencies or cost savings that might be achievable.

	First Quarter
(unaudited-in millions, except per share amounts)	2011
Net sales	$	492.2
Net income from continuing operations	$	23.9
Net income attributable to Teledyne	$	23.4
Basic earnings per common share – continuing operations	$	0.65
Basic earnings per common share – attributable to Teledyne	$	0.64
Diluted earnings per common share – continuing operations	$	0.64
Diluted earnings per common share– attributable to Teledyne	$	0.63

(a) The above unaudited proforma information is presented for the DALSA acquisition as it is considered a material acquisition.

Teledyne’s goodwill was $737.0 million at April 1, 2012 and $717.8 million at January 1, 2012. The increase in the balance of goodwill in 2012 primarily resulted from $14.2 million from the acquisition of VariSystems and exchange rate changes. Teledyne’s net acquired intangible assets were $189.4 million at April 1, 2012 and $181.4 million at January 1, 2012. The increase in the balance of acquired intangible assets in 2012 primarily resulted from $11.9 million from the acquisition of VariSystems and exchange rate changes, partially offset by amortization. The Company’s cost to acquire VariSystems has been allocated to the assets acquired and liabilities assumed based upon their respective fair values as of the date of the completion of the acquisition. The differences between the fair value of the consideration paid and the estimated fair value of the assets and liabilities acquired has been recorded as goodwill. The Company is still in the process of specifically identifying the amount to be assigned to acquired intangible assets and the related impact on goodwill for the VariSystems acquisition. The Company made preliminary estimates as of April 1, 2012, since there was insufficient time between the acquisition date and the end of the period to finalize the analysis.

The following is a summary at the acquisition date of the estimated fair values allocated to the assets acquired and liabilities assumed for the VariSystems acquisition made in the first quarter of 2012 (in millions):

Current assets	$	11.1
Property, plant and equipment		8.0
Goodwill		14.2
Acquired intangible assets		11.9
Other long-term assets		0.1
Current liabilities		(5.1	)
Long-term liabilities		(3.9	)
Net assets acquired	$	36.3