Business Combinations and Investments, Goodwill and Acquired Intangible Assets

9 Months Ended

Sep. 30, 2012

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

Business Combinations and Investments, Goodwill and Acquired Intangible Assets

Business Combinations and Investments, Goodwill and Acquired Intangible Assets

In the first nine months of 2012, Teledyne spent $389.2 million on acquisitions and in the first nine months of 2011, Teledyne spent $363.5 million on acquisitions.

On August 3, 2012, Teledyne acquired LeCroy Corporation ("LeCroy") for $301.3 million, net of cash acquired. LeCroy, headquartered in Chestnut Ridge, New York is a leading supplier of oscilloscopes, protocol analyzers and signal integrity test solutions. LeCroy had sales of $178.1 million for its fiscal year ended June 30, 2011 and is part of the Instrumentation segment.

Also on August 3, 2012, a subsidiary of Teledyne acquired the parent company of PDM Neptec Limited ("PDM Neptec") for $7.4 million in cash, net of cash acquired.  PDM Neptec, located in Hampshire, United Kingdom, is part of the Instrumentation segment and operates as Teledyne Impulse-PDM Ltd. PDM Neptec had sales of GBP 5.5 million for its fiscal year ended March 31, 2012.

On July 2, 2012, a subsidiary of Teledyne acquired BlueView Technologies Inc. ("BlueView") for $16.3 million in cash, net of cash acquired. BlueView, located in Seattle, Washington, is part of the Instrumentation segment and operates as Teledyne BlueView, Inc. BlueView had sales of $7.1 million for its fiscal year ended December 31, 2011.

On April 2, 2012, Teledyne acquired a majority interest in the parent company of Optech Incorporated (“Optech”) for $27.9 million, net of cash acquired. The purchase increased Teledyne’s ownership percentage to 51 percent from 19 percent. Optech had sales of CAD $54.7 million for its fiscal year ended March 30, 2012 and is part of the Digital Imaging segment.

On February 25, 2012, Teledyne acquired VariSystems Inc. (“VariSystems”) for $34.9 million, net of cash acquired. Teledyne paid a $1.4 million purchase price adjustment in the third 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 and is part of the Aerospace and Defense Electronics segment.

On February 12, 2011, the Company acquired the stock of DALSA Corporation (“DALSA”) for an aggregate purchase price of $339.5 million. 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”). DALSA had sales of CAD $212.3 million for its fiscal year ended December 2010 and operates within the Digital Imaging segment.

The results of these acquisitions have been included in Teledyne's results since the dates of their respective acquisition.

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.

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 and 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.

	Nine Months
(amounts in millions, except per-share amounts)	2011
Net sales	$	1,491.5
Net income from continuing operations	$	96.7
Net income attributable to Teledyne	$	209.8
Basic earnings per common share – continuing operations	$	2.64
Basic earnings per common share – attributable to Teledyne	$	5.73
Diluted earnings per common share – continuing operations	$	2.59
Diluted earnings per common share – attributable to Teledyne	$	5.62

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

Teledyne’s goodwill was $990.4 million at September 30, 2012 and $717.8 million at January 1, 2012. The increase in the balance of goodwill in 2012 resulted from current year acquisitions and the impact of exchange rate changes. Teledyne’s net acquired intangible assets were $277.3 million at September 30, 2012 and $181.4 million at January 1, 2012. The increase in the balance of acquired intangible assets in 2012 resulted from current year acquisitions and the impact of exchange rate changes, partially offset by amortization. The Company’s cost to acquire LeCroy, PDM Neptec, BlueView, VariSystems and Optech 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 has completed the process of specifically identifying the amounts assigned to assets and liabilities and acquired intangible assets and the related impact on goodwill for the PDM Neptec, BlueView, VariSystems and Optech acquisitions. The Company is in the process of specifically identifying the amounts assigned to certain assets and liabilities, acquired intangible assets and the related impact on goodwill for the LeCroy acquisition.

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

Current assets	$	116.2
Property, plant and equipment	79.1
Goodwill	261.4
Acquired intangible assets	112.3
Other long-term assets	5.2
Current liabilities	(61.8		)
Long-term liabilities	(123.2		)
Net assets acquired	$	389.2

The following table is a summary at the acquisition date of the acquired intangible assets and weighted average useful life in years for the acquisitions made in 2012 (dollars in millions):

Intangibles subject to amortization			Weighted Average Useful Life in Years
Proprietary Technology	$	51.0	9.5
Customer List/Relationships	22.9		10.2
Backlog	1.2		0.4
Trademarks	0.1		1.0
Total intangibles subject to amortization	75.2		9.5
Intangibles not subject to amortization
Trademarks	37.1		n/a
Total intangibles not subject to amortization	37.1
Total acquired intangible assets	$	112.3