Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2013

J. GOODWILL AND INTANGIBLE ASSETS

Goodwill

Teradyne performs its annual goodwill impairment test as required under the provisions of ASC 350-10, “Intangibles—Goodwill and Other” on December 31 of each fiscal year unless interim indicators of impairment exist. Goodwill is considered to be impaired when the net book value of a reporting unit exceeds its estimated fair value. Fair values are estimated using a discounted cash flow methodology.

Teradyne performed step one of the two step impairment test for 2013 and 2012. Teradyne performed step zero impairment test for 2011. Annual goodwill impairment test is done at the Wireless Test reporting unit level which is an operating and reportable segment and the only operating and reportable segment that has goodwill. There was no impairment.

During 2012, Teradyne recorded a $3.5 million decrease in goodwill and a $3.5 million increase in income tax receivable.

The changes in the carrying amount of goodwill by reporting units for the years ended December 31, 2013 and 2012 are as follows:


	Semiconductor Test			System Test			Wireless Test			Total
	(in thousands)
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		—			—			(3,506	)		(3,506	)

Balance at December 31, 2012:
Goodwill		260,540			148,183			349,272			757,995
Accumulated impairment losses		(260,540	)		(148,183	)		—			(408,723	)

		—			—			349,272			349,272
ZTEC acquisition		—			—			12,520			12,520

Balance at December 31, 2013:
Goodwill		260,540			148,183			361,792			770,515
Accumulated impairment losses		(260,540	)		(148,183	)		—			(408,723	)

	$	—		$	—		$	361,792		$	361,792

Intangible Assets

Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheets:


	December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	362,055	$	193,756	$	168,299		6.3 years
Customer relationships		146,341		81,742		64,599		8.0 years
Tradenames and trademarks		33,840		14,447		19,393		9.0 years
Customer backlog		1,000		1,000		—		0.4 years

Total intangible assets	$	543,236	$	290,945	$	252,291		7.0 years


	December 31, 2012
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	357,555	$	143,126	$	214,429		6.3 years
Customer relationships		144,971		63,464		81,507		8.0 years
Tradenames and trademarks		33,840		10,909		22,931		9.0 years
Customer backlog		1,000		1,000		—		0.4 years

Total intangible assets	$	537,366	$	218,499	$	318,867		7.0 years

During the year ended December 31, 2013, Teradyne recorded intangible assets in the amount of $4.9 million related to its ZTEC acquisition.

During the year ended December 31, 2012, Teradyne reduced the gross amount of intangible assets by $0.6 million for the excess tax benefit realized due to the exercise of stock options vested as of the Nextest acquisition date.

Aggregate intangible assets amortization expense for the years ended December 31, 2013, 2012 and 2011 was $72.4 million, $73.5 million, and $40.5 million, respectively. Estimated intangible assets amortization expense for each of the five succeeding fiscal years is as follows:


Year	Amortization Expense
	(in thousands)
2014	$	70,141
2015		53,391
2016		53,391
2017		47,232
2018		22,691

- 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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