Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 23, 2018

 

 

TERADYNE, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Massachusetts   001-06462   04-2272148

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

600 Riverpark Drive, North Reading, MA   01864
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (978) 370-2700

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On October 23, 2018, Teradyne, Inc. (“Teradyne”) issued a press release regarding its financial results for the third quarter ended September 30, 2018. Teradyne’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.


Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

  

Description

99.1    Press Release dated October 23, 2018.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

    TERADYNE, INC.
Dated: October 24, 2018     By:  

/S/ GREGORY R. BEECHER

    Name:   Gregory R. Beecher
    Title:   Vice President, Chief Financial Officer and Treasurer
Exhibit 99.1

Exhibit 99.1

Teradyne Reports Third Quarter 2018 Results

 

   

Revenue of $567 million, organic growth of 11% from Q3’17

 

   

Memory Test Q3’18 revenue of $87 million, up 83% from Q3’17

 

   

Universal Robots revenue up 46% from Q3’17, Industrial Automation segment revenue up 64%

 

 

     Q3’18      Q2’18      Q3’17  

Revenue (mil)

   $ 567      $ 527      $ 503  

GAAP EPS

   $ 0.63      $ 0.52      $ 0.52  

Non-GAAP EPS

   $ 0.71      $ 0.59      $ 0.54  

NORTH READING, Mass. – October 23, 2018 – Teradyne, Inc. (NYSE: TER) reported revenue of $567 million for the third quarter of 2018 of which $417 million was in Semiconductor Test, $66 million in Industrial Automation, $50 million in System Test, and $34 million in Wireless Test. GAAP net profit for the third quarter was $120.0 million or $0.63 per diluted share. On a non-GAAP basis, Teradyne’s net income in the third quarter was $133.3 million, or $0.71 per diluted share, which excluded acquired intangible asset amortization, non-cash convertible debt interest, restructuring and other charges and included the related tax impact on non-GAAP adjustments.

“Increased third quarter sales, combined with favorable product mix, drove earnings above our guidance,” said President and CEO Mark Jagiela. “In Semiconductor Test, sales increased 5% compared to Q3’17 due to continued strength in automotive and industrial chip test markets combined with increased memory test demand for our expanded Magnum product line. Universal Robots (UR) growth, combined with 2018 acquisitions MiR and Energid, drove our Industrial Automation sales up 64% compared to Q3’17. Growing traction for UR’s next generation e-Series Cobots and expanded distribution for MiR’s mobile platform powered the growth and positions us for a strong finish to the year.

With expected strong Industrial Automation and Semiconductor Test shipments, the mid-point of our Q4 guidance delivers another year with over $2 billion in sales and over $2 of earnings per share.”

Guidance for the fourth quarter of 2018 is revenue of $480 million to $510 million, with GAAP net income of $0.39 to $0.46 per diluted share and non-GAAP net income of $0.46 to $0.54 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest, restructuring and other charges and includes the related tax impact on non-GAAP adjustments.

Webcast

A conference call to discuss the third quarter results, along with management’s business outlook, will follow at 10:00 a.m. ET, Wednesday, October 24. Interested investors should access the webcast at investors.teradyne.com/events-presentations at least five minutes before the call begins. Presentation materials will be available starting at 10:00 a.m. ET.


A replay will be available on the Teradyne website at www.teradyne.com/investors.

Non-GAAP Results

In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain income items and charges. These results are provided as a complement to results provided in accordance with GAAP. Non-GAAP income from operations and non-GAAP net income exclude acquired intangible assets amortization, non-cash convertible debt interest, pension actuarial gains and losses, discrete income tax adjustments, fair value inventory step-up related to Mobile Industrial Robots, and restructuring and other, and includes the related tax impact on non-GAAP adjustments. GAAP requires that these items be included in determining income from operations and net income. Non-GAAP income from operations, non-GAAP net income, non-GAAP income from operations as a percentage of revenue, non-GAAP net income as a percentage of revenue, and non-GAAP net income per share are non-GAAP performance measures presented to provide meaningful supplemental information regarding Teradyne’s baseline performance before gains, losses or other charges that may not be indicative of Teradyne’s current core business or future outlook. These non-GAAP performance measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradyne’s business plan, historical operating results and the operating results of Teradyne’s competitors. Non-GAAP gross margin excludes fair value inventory step-up related to Mobile Industrial Robots. GAAP requires that this item be included in determining gross margin. Non-GAAP gross margin dollar amount and percentage are non-GAAP performance measures that management believes provide useful supplemental information for management and the investor. Management uses non-GAAP gross margin as a performance measure for Teradyne’s current core business and future outlook and for comparison with Teradyne’s business plan, historical gross margin results and the gross margin results of Teradyne’s competitors. Non-GAAP diluted shares include the impact of Teradyne’s call option on its shares. Management believes each of these non-GAAP performance measures provides useful supplemental information for investors, allowing greater transparency to the information used by management in its operational decision making and in the review of Teradyne’s financial and operational performance, as well as facilitating meaningful comparisons of Teradyne’s results in the current period compared with those in prior and future periods. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the attached exhibits and on the Teradyne website at www.teradyne.com by clicking on “Investors” and then selecting the “GAAP to Non-GAAP Reconciliation” link. The non-GAAP performance measures discussed in this press release may not be comparable to similarly titled measures used by other companies. The presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP.

 

Page 2


About Teradyne

Teradyne (NYSE:TER) is a leading supplier of automation equipment for test and industrial applications. Teradyne Automatic Test Equipment (ATE) is used to test semiconductors, wireless products, data storage and complex electronic systems, which serve consumer, communications, industrial and government customers. Our Industrial Automation products include collaborative robots, autonomous mobile robots and sensing and simulation software, used by global manufacturing and industrial customers to improve quality and increase manufacturing efficiency. In 2017, Teradyne had revenue of $2.14 billion and currently employs approximately 4,800 people worldwide. For more information, visit teradyne.com. Teradyne® is a registered trademark of Teradyne, Inc. in the U.S. and other countries.

Safe Harbor Statement

This release contains forward-looking statements regarding Teradyne’s future business prospects, results of operations, market conditions, earnings per share, the payment of a quarterly dividend, the repurchase of Teradyne common stock pursuant to a share repurchase program, use of proceeds and potential dilution from the senior convertible notes offering, potential borrowings under a senior secured credit facility, and the impact of the U.S. tax reform, export and tariff laws. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, events, earnings per share, use of cash, payment of dividends, repurchases of common stock, payment of the senior convertible notes, availability of, or borrowing under, the credit facility, or the impact of the U.S. tax reform, export and tariff laws. There can be no assurance that management’s estimates of Teradyne’s future results or other forward-looking statements will be achieved. Additionally, the current dividend and share repurchase programs may be modified, suspended or discontinued at any time. Important factors that could cause actual results, earnings per share, use of cash, dividend payments, repurchases of common stock, payment of the senior convertible notes or borrowings under the credit facility to differ materially from those presently expected include: conditions affecting the markets in which Teradyne operates; decreased or delayed product demand from one or more significant customers; development, delivery and acceptance of new products; the ability to grow the Industrial Automation business; increased research and development spending; deterioration of Teradyne’s financial condition; the consummation and success of any mergers or acquisitions; unexpected cash needs; insufficient cash flow to make required payments and pay the principal amount on the senior convertible notes; the business judgment of the board of directors that a declaration of a dividend, the repurchase of common stock or borrowing under the credit facility is not in the company’s best interests; additional U.S. tax regulations or IRS guidance; the impact of any tariffs or export controls imposed in the U.S. or China; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” section of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and the Quarterly Report on Form 10-Q for the period ended July 1, 2018. The forward-looking statements provided by Teradyne in this press release represent management’s views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause management’s views to change. However, while Teradyne may elect to update these forward-looking statements at some point in the future, Teradyne specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Teradyne’s views as of any date subsequent to the date of this release.

 

Page 3


TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2018

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

 

 

    Quarter Ended     Nine Months Ended  
    September 30,
2018
    July 1,
2018
    October 1,
2017 (1)
    September 30,
2018
    October 1,
2017 (1)
 

Net revenues

  $ 566,848     $ 526,929     $ 503,378     $ 1,581,244     $ 1,657,191  

Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (2)

    233,155       219,595       208,509       670,385       706,667  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    333,693       307,334       294,869       910,859       950,524  

Operating expenses:

         

Selling and administrative

    100,199       99,410       86,130       290,115       261,034  

Engineering and development

    77,049       75,342       76,986       226,799       235,235  

Acquired intangible assets amortization

    11,142       9,793       7,028       28,633       23,145  

Restructuring and other (3)

    1,710       2,389       (4,407     3,785       392  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

    190,100       186,934       165,737       549,332       519,806  

Income from operations

    143,593       120,400       129,132       361,527       430,718  

Interest and other (4)

    (2,749     (388     (1,695     (4,852     (4,389
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    140,844       120,012       127,437       356,675       426,329  

Income tax provision

    20,863       18,975       24,017       48,684       62,713  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 119,981     $ 101,037     $ 103,420     $ 307,991     $ 363,616  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

         

Basic

  $ 0.65     $ 0.53     $ 0.52     $ 1.62     $ 1.83  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  $ 0.63     $ 0.52     $ 0.52     $ 1.57     $ 1.81  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares — basic

    185,744       190,730       197,485       190,576       198,755  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares — diluted (5)

    190,505       194,909       200,775       196,300       201,413  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividend declared per common share

  $ 0.09     $ 0.09     $ 0.07     $ 0.27     $ 0.21  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(1)   Certain prior period amounts were reclassified to conform with the first quarter 2018 adoption of new accounting guidance for the presentation of pension and post retirement costs.

    

(2)   Cost of revenues includes:

    

    Quarter Ended     Nine Months Ended  
    September 30,
2018
    July 1,
2018
    October 1,
2017
    September 30,
2018
    October 1,
2017
 

Provision for excess and obsolete inventory

  $ 3,347     $ 2,653     $ 1,859     $ 9,522     $ 7,154  

Sale of previously written down inventory

    (1,013     (1,922     (3,121     (5,178     (6,404
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 2,334     $ 731     $ (1,262   $ 4,344     $ 750  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(3)   Restructuring and other consists of:

    

    Quarter Ended     Nine Months Ended  
    September 30,
2018
    July 1,
2018
    October 1,
2017
    September 30,
2018
    October 1,
2017
 

Employee severance

  $ 1,667     $ 2,398     $ 581     $ 7,945     $ 1,953  

Acquisition related expenses and compensation

    811       2,544       —         4,129       —    

Contingent consideration fair value adjustment

    (768     (3,500     (286     (9,236     1,847  

Other

    —         947       362       947       1,656  

Property insurance recovery

    —         —         (5,064     —         (5,064
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 1,710     $ 2,389     $ (4,407   $ 3,785     $ 392  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(4)   Interest and other includes:

         
    Quarter Ended     Nine Months Ended  
    September 30,
2018
    July 1,
2018
    October 1,
2017
    September 30,
2018
    October 1,
2017
 

Non-cash convertible debt interest

  $ 3,286     $ 3,245     $ 3,127     $ 9,737     $ 9,265  

Pension actuarial loss (gain)

    267       (71     —         196       (2,504
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  $ 3,553     $ 3,174     $ 3,127     $ 9,933     $ 6,761  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(5)   Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarters ended September 30, 2018, July 1, 2018 and October 1, 2017, 3.0 million, 2.6 million and 1.1 million shares, respectively, have been included in diluted shares. For the nine months ended September 30, 2018 and October 1, 2017, 3.4 million and 0.6 million shares, respectively, have been included in diluted shares. For the quarter ended September 30, 2018 and the nine months ended September 30, 2018, diluted shares also included 0.1 million and 0.6 million shares, respectively, from the convertible note hedge transaction.

    


CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

 

 

     September 30,
2018
     December 31,
2017
 

Assets

     

Cash and cash equivalents

   $ 814,019      $ 429,843  

Marketable securities

     418,410        1,347,979  

Accounts receivable, net

     352,476        272,783  

Inventories, net

     154,705        107,525  

Prepayments and other current assets

     139,785        112,151  
  

 

 

    

 

 

 

Total current assets

     1,879,395        2,270,281  

Property, plant and equipment, net

     278,071        268,447  

Marketable securities

     91,982        125,926  

Deferred tax assets

     70,772        84,026  

Other assets

     11,421        12,275  

Retirement plans assets

     17,885        17,491  

Acquired intangible assets, net

     139,963        79,088  

Goodwill

     392,998        252,011  
  

 

 

    

 

 

 

Total assets

   $ 2,882,487      $ 3,109,545  
  

 

 

    

 

 

 

Liabilities

     

Accounts payable

   $ 107,890      $ 86,393  

Accrued employees’ compensation and withholdings

     116,546        141,694  

Deferred revenue and customer advances

     77,953        83,614  

Other accrued liabilities

     95,888        59,083  

Contingent consideration

     35,532        24,497  

Income taxes payable

     24,603        59,055  
  

 

 

    

 

 

 

Total current liabilities

     458,412        454,336  

Retirement plans liabilities

     127,037        119,776  

Long-term deferred revenue and customer advances

     29,387        30,127  

Deferred tax liabilities

     21,748        6,720  

Long-term other accrued liabilities

     28,956        10,273  

Long-term contingent consideration

     25,410        20,605  

Long-term income taxes payable

     147,360        148,075  

Long-term debt

     376,417        365,987  
  

 

 

    

 

 

 

Total liabilities

     1,214,727        1,155,899  

Shareholders’ equity

     1,667,760        1,953,646  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 2,882,487      $ 3,109,545  
  

 

 

    

 

 

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

 

 

     Quarter Ended     Nine Months Ended  
     September 30,
2018
    October 1,
2017
    September 30,
2018
    October 1,
2017
 

Cash flows from operating activities:

        

Net income

   $ 119,981     $ 103,420     $ 307,991     $ 363,616  

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation

     16,774       16,769       49,930       49,243  

Amortization

     12,732       9,901       32,909       32,313  

Stock-based compensation

     7,702       8,308       25,327       25,620  

Deferred taxes

     7,130       2,884       24,442       (679

Provision for excess and obsolete inventory

     3,347       1,859       9,522       7,154  

Contingent consideration adjustment

     (768     (286     (9,236     1,847  

Retirement plan actuarial losses

     267       —         196       (2,504

Property insurance recovery

     —         (4,309     —         (4,309

Other

     (652     36       516       429  

Changes in operating assets and liabilities, net of businesses acquired:

 

     

Accounts receivable

     101,596       137,807       (77,807     (75,623

Inventories

     (12,834     31,919       (34,117     23,770  

Prepayments and other assets

     (30,360     2,937       (28,719     7,362  

Accounts payable and other accrued expenses

     24,279       (27,778     16,124       5,298  

Deferred revenue and customer advances

     (695     29,223       9,823       34,535  

Retirement plans contributions

     (1,071     (2,875     (3,244     (4,858

Income taxes

     (6,844     15       (33,152     15,808  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     240,584       309,830       290,505       479,022  

Cash flows from investing activities:

        

Purchases of property, plant and equipment

     (25,606     (27,280     (88,269     (73,247

Proceeds from government subsidy for property, plant and equipment

     7,920       —         7,920       —    

Purchases of marketable securities

     (162,450     (701,704     (809,521     (1,036,523

Proceeds from sales of marketable securities

     14,111       129,915       843,164       443,169  

Proceeds from maturities of marketable securities

     464,238       165,648       934,100       473,255  

Proceed from property insurance

     —         5,064       —         5,064  

Proceed from life insurance

     1,126       —         1,126       —    

Acquisition of businesses, net of cash acquired

     1,158       —         (169,474     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) investing activities

     300,497       (428,357     719,046       (188,282

Cash flows from financing activities:

        

Issuance of common stock under stock purchase and stock option plans

     10,278       9,247       20,959       24,462  

Repurchase of common stock

     (201,468     (57,493     (562,263     (151,821

Dividend payments

     (16,638     (13,805     (51,320     (41,730

Payments related to net settlement of employee stock compensation awards

     (90     (146     (19,841     (12,584

Payments of contingent consideration

     —         —         (13,571     (1,050
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

     (207,918     (62,197     (626,036     (182,723

Effects of exchange rate changes on cash and cash equivalents

     472       1,052       661       2,776  

Increase (decrease) in cash and cash equivalents

     333,635       (179,672     384,176       110,793  

Cash and cash equivalents at beginning of period

     480,384       598,349       429,843       307,884  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 814,019     $ 418,677     $ 814,019     $ 418,677  
  

 

 

   

 

 

   

 

 

   

 

 

 


GAAP to Non-GAAP Earnings Reconciliation

(In millions, except per share amounts)

 

    Quarter Ended  
    September 30,
2018
    % of Net
Revenues
                July 1,
2018
    % of Net
Revenues
                October 1,
2017 (1)
    % of Net
Revenues
             

Net revenues

  $ 566.8           $ 526.9           $ 503.4        

Gross profit GAAP

  $ 333.7       58.9       $ 307.3       58.3       $ 294.8       58.6    

Inventory step-up

    —         —             0.4       0.1         —         —        
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

  $ 333.7       58.9       $ 307.7       58.4       $ 294.8       58.6    

Income from operations - GAAP

  $ 143.6       25.3       $ 120.4       22.9       $ 129.1       25.6    

Acquired intangible assets amortization

    11.1       2.0         9.8       1.9         7.0       1.4    

Restructuring and other (2)

    1.7       0.3         2.4       0.5         (4.4     -0.9    

Inventory step-up

    —         —             0.4       0.1         —         —        
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations - non-GAAP

  $ 156.4       27.6       $ 133.0       25.2       $ 131.7       26.2    
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     
                Net Income
per Common
Share
                Net Income
per Common
Share
                Net Income
per Common
Share
 
    September 30,
2018
    % of Net
Revenues
    Basic     Diluted     July 1,
2018
    % of Net
Revenues
    Basic     Diluted     October 1,
2017
    % of Net
Revenues
    Basic     Diluted  

Net income - GAAP

  $ 120.0       21.2   $ 0.65     $ 0.63     $ 101.0       19.2   $ 0.53     $ 0.52     $ 103.4       20.5   $ 0.52     $ 0.51  

Acquired intangible assets amortization

    11.1       2.0     0.06       0.06       9.8       1.9     0.05       0.05       7.0       1.4     0.04       0.03  

Interest and other (3)

    3.3       0.6     0.02       0.02       3.2       0.6     0.02       0.02       3.1       0.6     0.02       0.02  

Restructuring and other (2)

    1.7       0.3     0.01       0.01       2.4       0.5     0.01       0.01       (4.4     -0.9     (0.02     (0.02

Pension mark-to-market adjustment (3)

    0.3       0.1     0.00       0.00       (0.1     0.0     (0.00     (0.00     —         —         —         —    

Inventory step-up

    —         —         —         —         0.4       0.1     0.00       0.00       —         —         —         —    

Exclude discrete tax adjustments (4)

    0.3       0.1     0.00       0.00       (0.5     -0.1     (0.00     (0.00     0.3       0.1     0.00       0.00  

Non-GAAP tax adjustments

    (3.4     -0.6     (0.02     (0.02     (3.4     -0.6     (0.02     (0.02     (1.7     -0.3     (0.01     (0.01

Convertible share adjustment

    —         —         —         0.01       —         —         —         0.01       —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income - non-GAAP

  $ 133.3       23.5   $ 0.72     $ 0.71     $ 112.8       21.4   $ 0.59     $ 0.59     $ 107.7       21.4   $ 0.55     $ 0.54  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares - basic

    185.7             190.7             197.5        

GAAP weighted average common shares - diluted

    190.5             194.9             200.8        

Exclude dilutive shares related to convertible note transaction

    (3.1           (2.6           (1.1      
 

 

 

         

 

 

         

 

 

       

Non-GAAP weighted average common shares - diluted

    187.4             192.3             199.7        
 

 

 

         

 

 

         

 

 

       

(1)   Certain prior period amounts were reclassified to conform with the first quarter 2018 adoption of new accounting guidance for the presentation of pension and post retirement costs.

 

(2)   Restructuring and other consists of:

    

    

    Quarter Ended                    
    September 30,
2018
                      July 1,
2018
                      October 1,
2017
                   

Employee severance

  $ 1.7           $ 2.4           $ 0.6        

Acquisition related expenses and compensation

    0.8             2.5             —          

Contingent consideration fair value adjustment

    (0.8           (3.5           (0.3      

Other

    —               0.9             0.4        

Property insurance recovery

    —               —               (5.1      
 

 

 

         

 

 

         

 

 

       
  $ 1.7           $ 2.4           $ (4.4      
 

 

 

         

 

 

         

 

 

       

(3)   For the quarters ended September 30, 2018, July 1, 2018 and October 1, 2017, adjustment to exclude non-cash convertible debt interest expense. For the quarters ended September 30, 2018 and July 1, 2018, adjustments to exclude actuarial losses recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting policy.

 

(4)   For the quarters ended September 30, 2018, July 1, 2018 and October 1, 2017, adjustment to exclude discrete income tax items.

    

    


    Nine Months Ended  
    September 30,
2018
    % of Net
Revenues
                October 1,
2017 (1)
    % of Net
Revenues
             

Net Revenues

  $ 1,581.2           $ 1,657.2        

Gross profit GAAP

  $ 910.9       57.6       $ 950.5       57.4    

Inventory step-up

    0.4       0.0         —         —        
 

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

  $ 911.3       57.6       $ 950.5       57.4    

Income from operations - GAAP

  $ 361.5       22.9       $ 430.7       26.0    

Acquired intangible assets amortization

    28.6       1.8         23.1       1.4    

Restructuring and other (2)

    3.8       0.2         0.4       0.0    

Inventory step-up

    0.4       0.0         —         —        
 

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations - non-GAAP

  $ 394.3       24.9       $ 454.2       27.4    
 

 

 

   

 

 

       

 

 

   

 

 

     
                Net Income
per Common
Share
                Net Income
per Common
Share
 
    September 30,
2018
    % of Net
Revenues
    Basic     Diluted     October 1,
2017
    % of Net
Revenues
    Basic     Diluted  

Net income - GAAP

  $ 308.0       19.5   $ 1.62     $ 1.57     $ 363.6       21.9   $ 1.83     $ 1.81  

Acquired intangible assets amortization

    28.6       1.8     0.15       0.15       23.1       1.4     0.12       0.11  

Interest and other (3)

    9.7       0.6     0.05       0.05       9.3       0.6     0.05       0.05  

Restructuring and other (2)

    3.8       0.2     0.02       0.02       0.4       0.0     0.00       0.00  

Inventory step-up

    0.4       0.0     0.00       0.00       —         —         —         —    

Pension mark-to-market adjustment (3)

    0.2       0.0     0.00       0.00       (2.5     -0.2     (0.01     (0.01

Exclude discrete tax adjustments (4)

    (6.5     -0.4     (0.03     (0.03     (6.1     -0.4     (0.03     (0.03

Non-GAAP tax adjustments

    (8.7     -0.6     (0.05     (0.04     (9.9     -0.6     (0.05     (0.05

Convertible share adjustment

    —         —         —         0.03       —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income - non-GAAP

  $ 335.5       21.2   $ 1.76     $ 1.74     $ 377.9       22.8   $ 1.90     $ 1.88  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares - basic

    190.6             198.8        

GAAP weighted average common shares - diluted

    196.3             201.4        

Exclude dilutive shares from convertible note

    (4.0           (0.6      
 

 

 

         

 

 

       

Non-GAAP weighted average common shares - diluted

    192.3             200.8        
 

 

 

         

 

 

       

(1)   Certain prior period amounts were reclassified to conform with the first quarter 2018 adoption of new accounting guidance for the presentation of pension and post retirement costs.

    

(2)   Restructuring and other consists of:

    

    Nine Months Ended                    
    September 30,
2018
                      October 1,
2017
                   

Employee severance

  $ 7.9           $ 2.0        

Acquisition related expenses and compensation

    4.1             —          

Other

    0.9             1.7        

Contingent consideration fair value adjustment

    (9.2           1.8        

Property insurance recovery

    —               (5.1      
 

 

 

         

 

 

       
  $ 3.8           $ 0.4        
 

 

 

         

 

 

       

(3)   For the nine months ended September 30, 2018 and October 1, 2017, Interest and other included non-cash convertible debt interest expense. For the nine months ended September 30, 2018 and October 1, 2017, adjustments to exclude actuarial gains recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting policy.

    

(4)   For the nine months ended September 30, 2018 and October 1, 2017, adjustment to exclude discrete income tax items.

    

GAAP to Non-GAAP Reconciliation of Fourth Quarter 2018 guidance:

 

GAAP and non-GAAP fourth quarter revenue guidance:

  $ 480 million       to     $ 510 million            

GAAP net income per diluted share

  $ 0.39       $ 0.46            

Exclude acquired intangible assets amortization

    0.06         0.06            

Exclude non-cash convertible debt interest

    0.02         0.02            

Exclude restructuring and other

    0.01         0.01            

Tax effect of non-GAAP adjustments

    (0.02       (0.02          

Convertible share adjustment

    0.01         0.01            
 

 

 

     

 

 

           

Non-GAAP net income per diluted share

  $ 0.46       $ 0.54            

 

For press releases and other information of interest to investors, please visit Teradyne’s homepage at http://www.teradyne.com.    

Contact: Teradyne, Inc.    

                Andy Blanchard 978-370-2425

                Vice President of Corporate Relations