Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2012

K. Goodwill and Intangible Assets

Goodwill

On October 5, 2011, Teradyne completed its acquisition of LitePoint Corporation (“LitePoint”) located in Sunnyvale, California. During the three months ended September 30, 2012, Teradyne recorded a decrease in goodwill by $3.4 million and recorded a $3.4 million income tax receivable.

The changes in the carrying amount of goodwill by reporting units are as follows:


	Semiconductor Test			Systems Test Group			Wireless Test			Total
	(in thousands)
Balance at December 31, 2010:
Goodwill	$	260,540		$	148,183		$	—		$	408,723
Accumulated impairment losses		(260,540	)		(148,183	)		—			(408,723	)

		—			—			—			—
Activity during the year		—			—			352,778			352,778

Balance at December 31, 2011:
Goodwill		260,540			148,183			352,778			761,501
Accumulated impairment losses		(260,540	)		(148,183	)		—			(408,723	)

		—			—			352,778			352,778
Activity during the year		—			—			(3,405	)		(3,405	)

Balance at September 30, 2012:
Goodwill		260,540			148,183			349,373			758,096
Accumulated impairment losses		(260,540	)		(148,183	)		—			(408,723	)

	$	—		$	—		$	349,373		$	349,373

Intangible Assets

Amortizable intangible assets consist of the following and are included in intangible assets on the balance sheet:


	September 30, 2012
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	358,155	$	130,349	$	227,806		6.3 years
Customer relationships and service and software maintenance contracts		144,971		58,905		86,066		8.0 years
Trade names and trademarks		33,840		10,024		23,816		9.0 years
Customer backlog		1,000		1,000		—		0.4 years

Total intangible assets	$	537,966	$	200,278	$	337,688		7.0 years


	December 31, 2011
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	358,155	$	91,391	$	266,764		6.3 years
Customer relationships and service and software maintenance contracts		144,971		45,230		99,741		8.0 years
Trade names and trademarks		33,840		7,370		26,470		9.0 years
Customer backlog		1,000		1,000		—		0.4 years

Total intangible assets	$	537,966	$	144,991	$	392,975		7.0 years

Aggregate intangible asset amortization expense was $18.4 million and $55.3 million, respectively, for the three and nine months ended September 30, 2012 and $6.8 million and $21.3 million, respectively, for the three and nine months ended October 2, 2011. Estimated intangible asset amortization expense for each of the five succeeding fiscal years is as follows:


Year	Amortization Expense
	(in thousands)
2012 (remainder)	$	18,221
2013		72,459
2014		69,374
2015		52,351
2016		52,351

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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