F. ACQUISITIONS

Business

LitePoint Corporation

On October 5, 2011, Teradyne completed its acquisition of LitePoint Corporation (“LitePoint”) located in Sunnyvale, California. The total purchase price of $646.0 million consisted of $572.7 million of cash paid to acquire the outstanding common and preferred stock of LitePoint, $68.9 million in fair value of contingent consideration payable upon achievement of certain revenue targets through 2012 and $4.5 million in fair value of assumed vested stock options, which were converted into stock options to purchase Teradyne’s common stock. The fair value of stock options was estimated using the following weighted average assumptions:


Expected life (years)	6.2
Expected volatility	49.1	%
Risk-free interest rate	1.3	%
Dividend yield	0.0	%

LitePoint designs, develops, and supports advanced wireless test solutions for the development and manufacturing of wireless devices, including smart phones, tablets, notebooks/laptops, personal computer peripherals, and other Wi-Fi enabled devices. LitePoint’s IQ product line consists of cellular and connectivity test solutions used by developers and manufacturers of wireless devices and consumer electronics. LitePoint is Teradyne’s Wireless Test operating and reportable segment.

The LitePoint acquisition was accounted for as a purchase business combination and, accordingly, the results have been included in Teradyne’s consolidated results of operation from the date of acquisition. The allocation of the total purchase price of LitePoint net tangible and identifiable intangible assets was based on their estimated fair values as of the acquisition date. The excess of the purchase price over the identifiable intangible and net tangible assets in the amount of $349.3 million was allocated to goodwill, which is not deductible for tax purposes. The following represents the allocation of the purchase price:


	Purchase Price Allocation
	(in thousands)
Goodwill	$	349,272
Intangible assets		310,500
Tangible assets acquired and liabilities assumed:
Cash, cash equivalents and short term marketable securities		61,250
Other current assets		75,615
Non-current assets		5,838
Accounts payable and current liabilities		(37,177	)
Long-term deferred tax liabilities		(115,463	)
Other long-term liabilities		(3,788	)

Total purchase price	$	646,047

Teradyne estimated the fair value of intangible assets using the income and cost approach. Acquired intangible assets are amortized on a straight-line basis over their estimated useful lives. The following table represents components of these intangible assets and their estimated useful lives at the acquisition date:


	Fair Value		Estimated Useful Life
	(in thousands)		(in years)
Developed technology	$	237,100		6.4
Customer relationships		53,700		7.0
Tradenames		19,000		7.0
Customer backlog		700		0.3

Total intangible assets	$	310,500		6.5

For the period from October 5, 2011 to December 31, 2011, LitePoint contributed $28.4 million of revenues and had a $(20.6) million loss from continuing operations before income taxes.

The following unaudited pro forma information gives effect to the acquisition of LitePoint as if the acquisition occurred on January 1, 2010. The unaudited pro forma results are not necessarily indicative of what actually would have occurred had the acquisition been in effect for the periods presented:


	For the Year Ended
	December 31, 2011		December 31, 2010
	(in thousands, except per share amounts)
Revenue	$	1,527,044	$	1,652,153
Income from continuing operations	$	357,060	$	309,549
Net income	$	382,976	$	314,972
Income from continuing operations per common share:
Basic	$	1.93	$	1.72

Diluted	$	1.56	$	1.42

Net income per common share:
Basic	$	2.07	$	1.75

Diluted	$	1.67	$	1.44

Pro forma results for the year ended December 31, 2010 include non-recurring expenses related to acquired inventory fair value adjustment of $18.3 million and $13.3 million of transaction fees incurred by both Teradyne and LitePoint.