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): January 23, 2019

 

 

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 January 23, 2019, Teradyne, Inc. (“Teradyne”) issued a press release regarding its financial results for the fourth quarter ended December 31, 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 January 23, 2019.


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: January 24, 2019     By:  

/S/ GREGORY R. BEECHER

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

Exhibit 99.1

Teradyne Reports Fourth Quarter and Fiscal Year 2018 Results

 

 

   

Revenue of $520 million in Q4’18, organic growth of 5% from Q4’17

 

   

Record full year memory and analog test shipments

 

   

Record 60% quarterly and 58% full year gross margin

 

   

Expect to repurchase $500 million in shares in 2019

 

   

Quarterly dividend of $0.09 declared

 

     Q4’18      Q4’17      Q3’18      FY 2018      FY 2017  

Revenue (mil)

   $ 520      $ 479      $ 567      $ 2,101      $ 2,137  

GAAP EPS

   $ 0.79      ($ 0.54    $ 0.63      $ 2.35      $ 1.28  

Non-GAAP EPS

   $ 0.63      $ 0.46      $ 0.71      $ 2.37      $ 2.34  

==========================================

NORTH READING, Mass. – January 23, 2019 – Teradyne, Inc. (NASDAQ: TER) reported revenue of $520 million for the fourth quarter of 2018 of which $342 million was in Semiconductor Test, $84 million in Industrial Automation (IA), $54 million in System Test, and $40 million in Wireless Test. GAAP net income for the fourth quarter was $143.8 million or $0.79 per share. On a non-GAAP basis, Teradyne’s net income in the fourth quarter was $113.0 million, or $0.63 per diluted share, which excluded restructuring and other charges, acquired intangible asset amortization, pension actuarial gains, non-cash convertible debt interest, discrete income tax adjustments, and included the related tax impact on non-GAAP adjustments.

“We finished 2018 with strong fourth quarter sales above the high end of our guidance driven by upside demand in our Semiconductor and Wireless test businesses,” said CEO and President Mark Jagiela. “For the full year, our Semiconductor Test group delivered record memory and analog revenues which lessened the impact of lower mobility test shipments. Gross margin for the year was at a record level due mainly to continued Universal Robots manufacturing cost reductions and a favorable product mix overall. In IA, Universal Robots full year growth of 38%, while strong, was below our target due mainly to slowing demand in China and the automotive sector. MiR sales for the year more than doubled on a pro-forma basis.”

As part of the $1.5 billion authorization established in January 2018, Teradyne purchased $823 million of its common shares in 2018 and expects to repurchase $500 million of its common shares in 2019.

Teradyne’s Board of Directors declared a quarterly cash dividend of $0.09 per share, payable on March 22, 2019 to shareholders of record as of the close of business on February 22, 2019.

Guidance for the first quarter of 2019 is revenue of $460 million to $490 million, with GAAP net income of $0.31 to $0.39 per diluted share and non-GAAP net income of $0.39 to $0.47 per diluted share. Non-GAAP guidance excludes acquired intangible


 

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asset amortization, non-cash convertible debt interest and includes the related tax impact on non-GAAP adjustments.

Webcast

A conference call to discuss the fourth quarter results, along with management’s business outlook, will follow at 10 a.m. ET, Thursday, January 24. Interested investors should access the webcast at www.teradyne.com and click on “Investors” at least five minutes before the call begins. Presentation materials will be available starting at 10 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


 

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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.

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 2018, Teradyne had revenue of $2.1 billion and currently employs approximately 4,900 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


 

Page 4

31, 2017 and the Quarterly Report on Form 10-Q for the period ended September 30, 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.


TERADYNE, INC. REPORT FOR FOURTH FISCAL QUARTER OF 2018

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

 

     Quarter Ended     Twelve Months Ended  
     December 31,
2018
    September 30,
2018
     December 31,
2017 (1)
    December 31,
2018
     December 31,
2017 (1)
 

Net revenues

   $ 519,558     $ 566,848      $ 479,415     $ 2,100,802      $ 2,136,606  

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

     210,022       233,155        208,485       880,408        915,153  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Gross profit

     309,536       333,693        270,930       1,220,394        1,221,453  

Operating expenses:

            

Selling and administrative

     100,552       100,199        87,880       390,669        348,913  

Engineering and development

     74,706       77,049        72,070       301,505        307,305  

Acquired intangible assets amortization

     10,559       11,142        7,384       39,191        30,530  

Restructuring and other (3)

     11,446       1,710        8,970       15,232        9,362  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Operating expenses

     197,263       190,100        176,304       746,597        696,110  

Income from operations

     112,273       143,593        94,626       473,797        525,343  

Interest and other, expense (income) (4)

     1,144       2,749        (3,458     5,996        931  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Income before income taxes

     111,129       140,844        98,084       467,801        524,412  

Income tax (benefit) provision (5)

     (32,662     20,863        204,007       16,022        266,720  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Net income (loss)

   $ 143,791     $ 119,981      $ (105,923   $ 451,779      $ 257,692  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

Net income (loss) per common share:

 

            

Basic

   $ 0.80     $ 0.65      $ (0.54   $ 2.41      $ 1.30  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Diluted

   $ 0.79     $ 0.63      $ (0.54   $ 2.35      $ 1.28  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

Weighted average common shares — basic

     178,958       185,744        196,010       187,672        198,069  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

Weighted average common shares — diluted (6)

     181,520       190,505        196,010       192,605        201,641  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

Cash dividend declared per common share

   $ 0.09     $ 0.09      $ 0.07     $ 0.36      $ 0.28  
  

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

(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     Twelve Months Ended  
     December 31,
2018
    September 30,
2018
    December 31,
2017
    December 31,
2018
    December 31,
2017
 

Provision for excess and obsolete inventory

   $ 1,720     $ 3,347     $ 1,690     $ 11,242     $ 8,844  

Sale of previously written down inventory

     (1,501     (1,013     (1,048     (6,679     (7,451
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 219     $ 2,334     $ 642     $ 4,563     $ 1,393  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(3)   Restructuring and other consists of:

   Quarter Ended     Twelve Months Ended  
     December 31,
2018
    September 30,
2018
    December 31,
2017
    December 31,
2018
    December 31,
2017
 

Contingent consideration fair value adjustment

   $ 10,223     $ (768   $ 5,973     $ 987     $ 7,820  

Employee severance

     768       1,667       1,801       8,714       3,754  

Acquisition related expenses and compensation

     455       811       —         4,584       —    

Impairment of fixed assets

     —         —         1,124       —         1,124  

Other

     —         —         72       947       973  

Property insurance recovery, net

     —         —         —         —         (4,309
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 11,446     $ 1,710     $ 8,970     $ 15,232     $ 9,362  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(4)   Interest and other, (income) expense includes:

   Quarter Ended     Twelve Months Ended  
     December 31,
2018
    September 30,
2018
    December 31,
2017
    December 31,
2018
    December 31,
2017
 

Non-cash convertible debt interest

   $ 3,327     $ 3,286     $ 3,166     $ 13,064     $ 12,431  

Pension actuarial (gain) loss

     (3,512     267       (3,786     (3,316     (6,624
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ (185   $ 3,553     $ (620   $ 9,748     $ 5,807  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(5)

For the quarter and twelve months ended December 31, 2018, income tax (benefit) provision includes a $52 million tax benefit related to the finalization of our U.S. toll tax liability. For the quarter and twelve months ended December 31, 2017, income tax provision included an expense of $186 million related to the estimated impact of the U.S. Tax Reform Act.

 

(6)

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 December 31, 2018, September 30, 2018 and December 31, 2017, 0.9 million, 3.0 million and 3.3 million shares, respectively, have been included in diluted shares. For the twelve months ended December 31, 2018 and December 31, 2017, 2.7 million and 1.3 million shares, respectively, have been included in diluted shares. For the twelve months ended December 31, 2018 and December 31, 2017, diluted shares also included 0.5 million shares and 0.1 million shares, respectively, from the convertible note hedge transaction.

 


CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

 

 

     December 31,
2018
     December 31,
2017
 

Assets

     

Cash and cash equivalents

   $ 926,752      $ 429,843  

Marketable securities

     190,096        1,347,979  

Accounts receivable, net

     291,267        272,783  

Inventories, net

     153,541        107,525  

Prepayments and other current assets

     170,817        112,151  
  

 

 

    

 

 

 

 

Total current assets

     1,732,473        2,270,281  

 

Property, plant and equipment, net

     279,821        268,447  

Marketable securities

     87,731        125,926  

Deferred tax assets

     70,858        84,026  

Other assets

     11,508        12,275  

Retirement plans assets

     16,883        17,491  

Acquired intangible assets, net

     125,482        79,088  

Goodwill

     381,850        252,011  
  

 

 

    

 

 

 

 

Total assets

   $ 2,706,606      $ 3,109,545  
  

 

 

    

 

 

 

 

Liabilities

     

Accounts payable

   $ 100,688      $ 86,393  

Accrued employees’ compensation and withholdings

     148,566        141,694  

Deferred revenue and customer advances

     78,427        83,614  

Other accrued liabilities

     78,272        59,083  

Contingent consideration

     34,865        24,497  

Income taxes payable

     36,185        59,055  
  

 

 

    

 

 

 

 

Total current liabilities

     477,003        454,336  

 

Retirement plans liabilities

     117,456        119,776  

Long-term deferred revenue and customer advances

     32,033        30,127  

Deferred tax liabilities

     20,662        6,720  

Long-term other accrued liabilities

     37,548        10,273  

Long-term contingent consideration

     35,678        20,605  

Long-term income taxes payable

     83,891        148,075  

Long-term debt

     379,981        365,987  
  

 

 

    

 

 

 

 

Total liabilities

     1,184,252        1,155,899  

 

Shareholders’ equity

     1,522,354        1,953,646  
  

 

 

    

 

 

 

 

Total liabilities and shareholders’ equity

   $ 2,706,606      $ 3,109,545  
  

 

 

    

 

 

 

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

 

 

     Quarter Ended     Twelve Months Ended  
     December 31,
2018
    December 31,
2017
    December 31,
2018
    December 31,
2017
 

Cash flows from operating activities:

        

Net income (loss)

   $ 143,791     $ (105,923   $ 451,779     $ 257,692  

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

        

Depreciation

     17,485       16,879       67,415       66,122  

Amortization

     12,900       9,640       45,809       41,953  

Stock-based compensation

     8,250       8,477       33,577       34,097  

Deferred taxes

     3,898       37,784       28,340       37,105  

Provision for excess and obsolete inventory

     1,720       1,690       11,242       8,844  

Contingent consideration fair value adjustment

     10,223       5,973       987       7,820  

Losses (gains) on investments

     3,914       (953     3,494       (878

Retirement plan actuarial gains

     (3,512     (3,786     (3,316     (6,624

Property insurance recovery, net

     —         —         —         (4,309

Other

     144       891       1,083       1,585  

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

        

Accounts receivable

     59,869       (4,961     (17,938     (80,584

Inventories

     4,619       21,190       (29,498     44,960  

Prepayments and other assets

     (29,683     (5,108     (58,402     2,254  

Accounts payable and accrued expenses

     (2,431     38,276       13,693       43,574  

Deferred revenue and customer advances

     3,556       (29,551     13,379       4,984  

Retirement plans contributions

     (1,090     (1,040     (4,334     (5,902

Income taxes

     (47,277     157,994       (80,429     173,802  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     186,376       147,472       476,881       626,495  

Cash flows from investing activities:

        

Purchases of property, plant and equipment

     (26,110     (32,128     (114,379     (105,375

Proceeds from government subsidy for property, plant and equipment

     —         —         7,920       —    

Purchases of marketable securities

     (109,223     (355,394     (918,744     (1,391,917

Proceeds from sales of marketable securities

     2,958       84,577       846,122       527,746  

Proceeds from maturities of marketable securities

     336,339       228,426       1,270,439       701,681  

Proceeds from property insurance

     —         —         —         5,064  

Proceeds from life insurance

     —         —         1,126       —    

Acquisition of businesses, net of cash acquired

     —         —         (169,474     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) investing activities

     203,964       (74,519     923,010       (262,801

Cash flows from financing activities:

        

Issuance of common stock under stock purchase and stock option plans

     14       31       20,973       24,493  

Repurchase of common stock

     (261,215     (48,482     (823,478     (200,304

Dividend payments

     (16,002     (13,717     (67,322     (55,447

Payment related to net settlement of employee stock compensation awards

     (182     (297     (20,023     (12,881

Payment of contingent consideration

     —         —         (13,571     (1,050
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

     (277,385     (62,465     (903,421     (245,189

Effects of exchange rate changes on cash and cash equivalents

     (222     678       439       3,454  

Increase in cash and cash equivalents

     112,733       11,166       496,909       121,959  

Cash and cash equivalents at beginning of period

     814,019       418,677       429,843       307,884  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 926,752     $ 429,843     $ 926,752     $ 429,843  
  

 

 

   

 

 

   

 

 

   

 

 

 


GAAP to Non-GAAP Earnings Reconciliation

(In millions, except per share amounts)

 

     December 31,
2018
    % of Net
Revenues
                September 30,
2018
    % of Net
Revenues
                December 31,
2017 (1)
    % of Net
Revenues
             

Net revenues

   $ 519.6           $ 566.8           $ 479.4        

Gross profit GAAP and non-GAAP

   $ 309.5       59.6 %        $ 333.7       58.9 %        $ 270.9       56.5 %     

Income from operations — GAAP

   $ 112.3       21.6 %        $ 143.6       25.3 %        $ 94.6       19.7 %     

Acquired intangible assets amortization

     10.6       2.0 %          11.1       2.0 %          7.4       1.5 %     

Restructuring and other (2)

     11.4       2.2 %          1.7       0.3 %          9.0       1.9 %     
  

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations — non-GAAP

   $ 134.3       25.8 %        $ 156.4       27.6 %        $ 111.0       23.2 %     
  

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     
                 Net Income
per Common
Share
                Net Income
per Common
Share
                Net Income
(Loss)

per Common
Share
 
     December 31,
2018
    % of Net
Revenues
    Basic     Diluted     September 30,
2018
    % of Net
Revenues
    Basic     Diluted     December 31,
2017
    % of Net
Revenues
    Basic     Diluted  

Net income (loss) — GAAP

   $ 143.8       27.7 %    $ 0.80     $ 0.79     $ 120.0       21.2 %    $ 0.65     $ 0.63     $ (105.9     -22.1 %    $ (0.54   $ (0.54

Acquired intangible assets amortization

     10.6       2.0 %      0.06       0.06       11.1       2.0 %      0.06       0.06       7.4       1.5 %      0.04       0.04  

Interest and other (3)

     3.3       0.6 %      0.02       0.02       3.3       0.6 %      0.02       0.02       3.2       0.7 %      0.02       0.02  

Restructuring and other (2)

     11.4       2.2 %      0.06       0.06       1.7       0.3 %      0.01       0.01       9.0       1.9 %      0.05       0.05  

Pension mark-to-market adjustment (3)

     (3.5     -0.7 %      (0.02     (0.02     0.3       0.1 %      —         —         (3.8     -0.8 %      (0.02     (0.02

Exclude discrete tax adjustments (4)

     (52.9     -10.2 %      (0.30     (0.29     0.3       0.1 %      —         —         184.4       38.5 %      0.94       0.94  

Non-GAAP tax adjustments

     0.3       0.1 %      —         —         (3.4     -0.6 %      (0.02     (0.02     (2.9     -0.6     (0.01     (0.01

Convertible share adjustment

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income — non-GAAP

   $ 113.0       21.7 %    $ 0.63     $ 0.63     $ 133.3       23.5 %    $ 0.72     $ 0.71     $ 91.4       19.1 %    $ 0.47     $ 0.46  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

GAAP and non-GAAP weighted average common shares — basic

     179.0             185.7             196.0        

GAAP weighted average common shares — diluted

     181.5             190.5             196.0        

Include dilutive shares

     —               —               3.0        

Exclude dilutive shares related to convertible note transaction

     (0.9           (3.1           —          
  

 

 

         

 

 

         

 

 

       

Non-GAAP weighted average common shares — diluted

     180.6             187.4             199.0        
  

 

 

         

 

 

         

 

 

       

 

(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:

 

     December 31,
2018
                                                           September 30,
2018
                                                          December 31,
2017
                                                       

Contingent consideration fair value adjustment

   $ 10.2               $ (0.8            $ 6.0           

Employee severance

     0.8                 1.7                1.8           

Acquisition related expenses and compensation

     0.5                 0.8                —             

Impairment of fixed assets

     —                   —                  1.1           

Other

     —                   —                  0.1           
  

 

 

             

 

 

            

 

 

          
   $ 11.4               $ 1.7              $ 9.0           
  

 

 

             

 

 

            

 

 

          

 

(3)

For the quarters ended December 31, 2018, September 30, 2018 and December 31, 2017, adjustment to exclude non-cash convertible debt interest expense and adjustment to exclude actuarial (gains) losses recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

 

(4)

For the quarters ended December 31, 2018, September 30, 2018 and December 31, 2017, adjustment to exclude discrete income tax items. For the quarter ended December 31, 2018, adjustment to treat the $52 million tax benefit related to the finalization of our U.S. toll tax liability as a discrete item. For the quarter ended December 31, 2017, adjustment to treat the $186 million expense related to the estimated impact of the U.S. Tax Reform Act as a discrete item.

 


     Twelve Months Ended  
     December 31,
2018
    % of Net
Revenues
                December 31,
2017 (1)
    % of Net
Revenues
             

Net Revenues

   $ 2,100.8           $ 2,136.6        

Gross profit GAAP

   $ 1,220.4       58.1 %        $ 1,221.5       57.2 %     

Inventory step-up

     0.4       0.0 %          —         —        
  

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

   $ 1,220.8       58.1 %        $ 1,221.5       57.2 %     

Income from operations — GAAP

   $ 473.8       22.6 %        $ 525.3       24.6 %     

Acquired intangible assets amortization

     39.2       1.9 %          30.5       1.4 %     

Restructuring and other (2)

     15.2       0.7 %          9.4       0.4 %     

Inventory step-up

     0.4       0.0 %          —         —        
  

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations — non-GAAP

   $ 528.6       25.2 %        $ 565.2       26.5 %     
  

 

 

   

 

 

       

 

 

   

 

 

     
                 Net Income
per Common
Share
                Net Income
per Common
Share
 
     December 31,
2018
    % of Net
Revenues
    Basic     Diluted     December 31,
2017
    % of Net
Revenues
    Basic     Diluted  

Net income — GAAP

   $ 451.8       21.5 %    $ 2.41     $ 2.35     $ 257.7       12.1 %    $ 1.30     $ 1.28  

Acquired intangible assets amortization

     39.2       1.9 %      0.21       0.20       30.5       1.4 %      0.15       0.15  

Interest and other (3)

     13.1       0.6 %      0.07       0.07       12.4       0.6 %      0.06       0.06  

Restructuring and other (2)

     15.2       0.7 %      0.08       0.08       9.4       0.4 %      0.05       0.05  

Inventory step-up

     0.4       0.0 %      —         —         —         —         —         —    

Pension mark-to-market adjustment (3)

     (3.3     -0.2 %      (0.02     (0.02     (6.3     -0.3 %      (0.03     (0.03

Exclude discrete tax adjustments (4)

     (59.4     -2.8     (0.32     (0.31     178.3       8.3 %      0.90       0.88  

Non-GAAP tax adjustments

     (8.4     -0.4 %      (0.04     (0.04     (12.8     -0.6 %      (0.06     (0.06

Convertible share adjustment

     —         —         —         0.04       —         —         —         0.01  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income — non-GAAP

   $ 448.6       21.4 %    $ 2.39     $ 2.37     $ 469.2       22.0 %    $ 2.37     $ 2.34  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

GAAP and non-GAAP weighted average common shares — basic

     187.7             198.1        

GAAP weighted average common shares — diluted

     192.6             201.6        

Exclude dilutive shares from convertible note

     (3.2           (1.3      
  

 

 

         

 

 

       

Non-GAAP weighted average common shares — diluted

     189.4             200.3        
  

 

 

         

 

 

       

 

(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:

    

     Twelve Months Ended                    
     December 31,
2018
                      December 31,
2017
                   

Employee severance

   $ 8.7           $ 3.8        

Acquisition related expenses and compensation

     4.6             —          

Contingent consideration fair value adjustment

     1.0             7.8        

Other

     0.9             1.0        

Impairment of fixed assets

     —               1.1        

Property insurance recovery, net

     —               (4.3      
  

 

 

         

 

 

       
   $ 15.2           $ 9.4        
  

 

 

         

 

 

       

 

(3)

For the twelve months ended December 31, 2018 and December 31, 2017, interest and other included non-cash convertible debt interest expense. For the twelve months ended December 31, 2018 and December 31, 2017, adjustments to exclude actuarial gains recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

 

(4)

For the twelve months ended December 31, 2018 and December 31, 2017, adjustment to exclude discrete income tax items. For the twelve months ended December 31, 2018, adjustment to treat the $52 million tax benefit related to the finalization of our U.S. toll tax liability as a discrete item. For the twelve months ended December 31, 2017, adjustment to treat the $186 million expense related to the estimated impact of the U.S. Tax Reform Act as a discrete item.

GAAP to Non-GAAP Reconciliation of First Quarter 2019 guidance:

 

GAAP and non-GAAP first quarter revenue guidance:

   $ 460 million       to      $ 490 million  

GAAP net income per diluted share

   $ 0.31        $ 0.39  

Exclude acquired intangible assets amortization

     0.06          0.06  

Exclude non-cash convertible debt interest

     0.02          0.02  

Tax effect of non-GAAP adjustments

     (0.02        (0.02

Convertible share adjustment

     0.01          0.01  
  

 

 

      

 

 

 

Non-GAAP net income per diluted share

   $ 0.39        $ 0.47  
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