BUSINESS COMBINATIONS

During fiscal 2018, 2017, and 2016, the Company acquired multiple businesses, all with cash consideration. The Consolidated Statements of Income include the operating results of the businesses from the dates of acquisition.

During fiscal 2018, the Company acquired six businesses, with total purchase consideration of $1,782.9 million. The purchase prices ranged from less than $1.8 million to $1,211.3 million, including the acquisitions of Waterfall Holdings, Inc., the holding company of Viewpoint, Inc. (“Viewpoint”), and e-Builder, Inc. ("e-Builder") having cash transactions valued at $1,211.3 million and $485.2 million, respectively. In the aggregate, the businesses acquired during fiscal 2018 contributed approximately five percent to the Company's total revenue during fiscal 2018.

During fiscal 2017, the Company acquired ten businesses, with total purchase consideration of $331.2 million. The purchase prices ranged from less than $2.0 million to $134.0 million. The largest acquisition was Müller-Elektronik, a privately held German company specializing in implement control and precision farming solutions. In the aggregate, the businesses acquired during fiscal 2017 contributed less than two percent to the Company's total revenue during fiscal 2017.

During fiscal 2016, the Company acquired four businesses, with total purchase consideration of $27.6 million. The purchase prices ranged from less than $0.3 million to $14.0 million. The acquisitions were not significant individually or in the aggregate. The largest acquisition was of a company that manages content and software solutions that enable MEP contractors and engineers to produce intelligent and constructible models, based in Rocklin, California. In the aggregate, the businesses acquired during fiscal 2016 collectively contributed less than one percent to the Company's total revenue during fiscal 2016.

The Company determined the total consideration paid for each of its acquisitions as well as the fair value of the assets acquired and liabilities assumed as of the date of each acquisition. The fair value of liabilities assumed includes deferred revenue which is written down to the cost, plus a reasonable profit margin, to fulfill customer contractual obligations. For certain acquisitions completed in fiscal 2018, the fair value of the assets acquired and liabilities assumed are preliminary and may be adjusted as the Company obtains additional information, primarily related to adjustments for the true-up of acquired net working capital in accordance with certain purchase agreements, and estimated values of certain net tangible assets and liabilities including tax balances, pending the completion of final studies and analyses. If there are adjustments made for these items the fair value of intangible assets and goodwill could be impacted. Thus, the provisional measurements of fair value set forth below are subject to change. Such changes could be significant. The Company expects to finalize the valuation of the net tangible and intangible assets as soon as practicable, but not later than one year from the acquisition date.

The fair value of identifiable assets acquired and liabilities assumed were determined under the acquisition method of accounting for business combinations. The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The fair value of intangible assets acquired is generally determined based on a discounted cash flow analysis. Acquisition costs directly related to all acquisitions, including the changes in the fair value of the contingent consideration liabilities, a net expense of $38.9 million, $7.4 million, and $6.8 million in fiscal 2018, 2017, and 2016, respectively, were expensed as incurred and are included in General and administrative expenses in the Consolidated Statements of Income.

The following table summarizes the Company’s business combinations completed during fiscal 2018, 2017, and 2016:



Fiscal Years	2018			2017			2016
(In millions)
Fair value of total purchase consideration	$	1,782.9		$	331.2		$	27.6
Less fair value of net assets acquired:
Net tangible assets acquired	5.0			29.7			(1.9		)
Identified intangible assets	568.3			166.7			13.6
Deferred taxes	(89.2		)	(5.8		)	(1.3		)
Goodwill	$	1,298.8		$	140.6		$	17.2

Intangible Assets

The following table presents details of the Company’s total intangible assets:



		At the End of Fiscal 2018							At the End of Fiscal 2017
(In millions)	Weighted-Average Useful Lives (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Developed product technology	6	$	1,220.3	$	(825.3	)	$	395.0	$	915.3	$	(729.9	)	$	185.4
Trade names and trademarks	5	72.9		(53.3		)	19.6		58.7		(48.6		)	10.1
Customer relationships	8	715.1		(406.5		)	308.6		512.1		(351.3		)	160.8
Distribution rights and other intellectual properties	6	84.4		(63.3		)	21.1		69.2		(60.7		)	8.5
		$	2,092.7	$	(1,348.4	)	$	744.3	$	1,555.3	$	(1,190.5	)	$	364.8

The estimated future amortization expense of intangible assets at the end of fiscal 2018 is as follows (in millions):



2019	$	168.4
2020	140.4
2021	119.1
2022	99.5
2023	85.6
Thereafter	131.3
Total	$	744.3

Goodwill

The Company reports its financial performance, including revenues and operating income, based on four reportable segments: Buildings and Infrastructure, Geospatial, Resources and Utilities, and Transportation.

The changes in the carrying amount of goodwill by segment for fiscal 2018 are as follows:



(In millions)	Buildings and Infrastructure			Geospatial			Resources and Utilities			Transportation			Total
At the end of fiscal 2017	$	706.8		$	415.3		$	314.5		$	850.5		$	2,287.1
Additions due to acquisitions and current year acquisitions' purchase price adjustments	1,283.4			—			—			15.4			1,298.8
Purchase price adjustments - prior years' acquisitions	—			—			(0.4		)	(0.8		)	(1.2		)
Foreign currency translation adjustments	(20.0		)	(10.4		)	(8.4		)	(4.1		)	(42.9		)
Divestitures	—			(1.8		)	—			—			(1.8		)
At the end of fiscal 2018	$	1,970.2		$	403.1		$	305.7		$	861.0		$	3,540.0

Viewpoint and e-Builder acquisitions

On July 2, 2018, the Company acquired all of the outstanding shares of Viewpoint, in an all-cash transaction valued at $1,211.3 million. Viewpoint is a provider of construction management software, which integrates a contractor’s financial and resource management to their project operations in the field. The integration across the office, team and field workflows enable contractors to employ Viewpoint to effectively manage and gain visibility over data and workflows that span the construction lifecycle from pre-production planning, to product operations and supply chain management, through project hand over and asset operation and maintenance. The Company incurred approximately $19.0 million in acquisition-related costs, which were expensed as incurred in General and administrative expense.

On February 2, 2018, the Company completed the acquisition of e-Builder. e-Builder is a SaaS-based construction program management solution provider for capital program owners and program management firms that provides an integrated project delivery solution for owners, program managers, and contractors across the design, construct, and operate lifecycle. The Company acquired all of the outstanding shares of common stock of e-Builder for a total purchase price of $485.2 million, subject to certain adjustments described in the purchase agreement. The Company incurred approximately $18.6 million in acquisition-related costs, primarily comprising compensation costs incurred post-closing associated with options which were accelerated in connection with the acquisition transaction, which were expensed as incurred and included in Cost of Sales - Service, Research and development, Sales and marketing, and General and administrative expense.

Viewpoint and e-Builder’s results of operations since their respective acquisition dates have been included in the Company’s Consolidated Statements of Income for fiscal 2018. Both Viewpoint and e-Builder's performance are reported under the Buildings and Infrastructure segment.

The two acquisitions were funded through the use of approximately $211.2 million of the Company’s existing cash, with the remainder funded through the issuance of senior notes and the Company’s 2018 Credit Facilities (as defined below).

The following table summarizes the consideration transferred to acquire Viewpoint and e-Builder, the assets acquired and liabilities assumed, and the estimated useful lives of the identifiable intangible assets as of the date of the acquisition:




	Viewpoint				e-Builder
(In millions)
Total purchase consideration	$	1,211.3			$	485.2
Net tangible assets (liabilities) acquired	(0.9		)		2.0
Intangible assets acquired:				Estimated Useful Life				Estimated Useful Life
Developed product technology	225.4			6 years	60.5			7 years
In-Process Research & Development	12.9			n/a	—
Order backlog	—				1.7			6 months
Customer relationships	158.6			10 years	42.4			10 years
Trade name	8.9			5 years	4.8			7 years
Favorable Lease	4.3			4 - 9 years	—
Subtotal	410.1				109.4
Deferred tax liability	(61.2		)		(18.4		)
Less fair value of all assets/liabilities acquired	348.0				93.0
Goodwill	$	863.3			$	392.2

Details of the net assets (liabilities) acquired are as follows:




	Viewpoint			e-Builder
	As of July 2, 2018			As of February 2, 2018
(In millions)
Cash and cash equivalents	$	9.1		$	2.5
Accounts receivable, net	25.1			14.9
Other receivables	1.3			43.3
Other current assets	4.3			0.7
Property and equipment, net	7.5			—
Other non-current assets	3.0			0.2
Accounts payable	(1.3		)	(8.4		)
Accrued compensation and benefits	(8.0		)	—
Deferred revenue	(26.4		)	(12.1		)
Other current liabilities	(13.2		)	(39.1		)
Other non-current liabilities	(2.3		)	—
Net tangible assets (liabilities) acquired	$	(0.9	)	$	2.0

Goodwill represents the excess of the fair value of consideration paid over the fair value of the underlying net tangible and intangible assets acquired. Goodwill consisted of highly skilled and valuable assembled workforce, a proven ability to generate new products and services to drive future revenue, and a premium paid by the Company for synergies unique to its business. The Company recorded $863.3 million and $392.2 million of goodwill from Viewpoint and e-Builder acquisitions, respectively. Of the fiscal 2018 goodwill balance, $95.8 million is expected to be deductible for tax purposes for Viewpoint.

During fiscal 2018, Viewpoint and e-Builder contributed $125.2 million of revenue and $17.3 million of operating income. The following table presents pro forma results of operations of the Company, Viewpoint and e-Builder, as if the companies had been combined as of the beginning of the earliest period presented. The unaudited pro forma results of operations are not necessarily indicative of results that would have occurred had the acquisitions taken place on the first day of fiscal 2017, or of future results. Included in the pro forma results are fair value adjustments based on the fair values of assets acquired and liabilities assumed as of the applicable acquisition dates. For fiscal 2018 and 2017, the major impacts for the pro-forma results include amortization of intangible assets related to the acquisitions, impacts from adoption of Revenue from Contracts with Customers, interest expense for debt used to purchase Viewpoint and e-Builder, income tax effects, and other adjustments to reflect fair value. The pro forma information for fiscal 2018 and 2017 is as follows:



Fiscal Years	2018		2017
(In millions, except per share data)
Revenue	$	3,205.5	$	2,849.4
Net income attributable to Trimble Inc.	276.9		72.6
Basic earnings per share	1.11		0.29
Diluted earnings per share	1.09		0.28