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): July 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))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $0.125 per share   TER   Nasdaq Stock Market LLC

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 July 23, 2019, Teradyne, Inc. (“Teradyne”) issued a press release regarding its financial results for the second quarter ended June 30, 2019. 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 July 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: July 24, 2019     By:  

/S/ SANJAY MEHTA

    Name:   Sanjay Mehta
    Title:   Vice President, Chief Financial Officer and Treasurer
EX-99.1

Exhibit 99.1

Teradyne Reports Second Quarter 2019 Results

 

   

Q2’19 GAAP earnings per share grew 6% and Non-GAAP earnings per share grew 12% from Q2’18

 

   

Semiconductor Test revenue up 4% from Q2’18

 

   

Industrial Automation revenue up 20% from Q2’18

 

     Q2’19      Q2’18      Q1’19  

Revenue (mil)

   $ 564      $ 527      $ 494  

GAAP EPS

   $ 0.55      $ 0.52      $ 0.62  

Non-GAAP EPS

   $ 0.66      $ 0.59      $ 0.54  

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

NORTH READING, Mass. – July 23, 2019 – Teradyne, Inc. (NASDAQ: TER) reported revenue of $564 million for the second quarter of 2019 of which $375 million was in Semiconductor Test, $75 million in Industrial Automation, $73 million in System Test, and $41 million in Wireless Test. GAAP net income for the second quarter was $97.4 million or $0.55 per share. On a non-GAAP basis, Teradyne’s net income in the second quarter was $113.2 million, or $0.66 per diluted share, which excluded acquired intangible asset amortization, restructuring and other, non-cash convertible debt interest, discrete income tax adjustments, and included the related tax impact on non-GAAP adjustments.

“We exceeded our revenue and profit guidance for the second quarter on stronger than expected results in semiconductor test as continued growth in 5G infrastructure, networking, and memory test spending more than offset lower demand from automotive and industrial device makers,” said Teradyne President and CEO Mark Jagiela. “In Industrial Automation, our Universal Robots and MiR collaborative robots business grew 20% in the quarter, highlighting their compelling value even in a challenging global industrial investment environment.”

Guidance for the third quarter of 2019 is revenue of $540 million to $580 million, with GAAP net income of $0.53 to $0.63 per diluted share and non-GAAP net income of $0.64 to $0.74 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest, restructuring and other, and includes the related tax impact on non-GAAP adjustments.

Webcast

A conference call to discuss the second quarter results, along with management’s business outlook, will follow at 10 a.m. ET, Wednesday, July 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.


Page 2

 

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, and restructuring and other, and include 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. 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.

About Teradyne

Teradyne (NASDAQ:TER) brings high-quality innovations such as smart devices, life-saving medical equipment and data storage systems to market, faster. Its advanced test solutions for semiconductors, electronic systems, wireless devices and more ensure that products perform as they were designed. Its Industrial Automation offerings include collaborative and mobile robots that help manufacturers of all sizes improve productivity and lower costs. In 2018, Teradyne had revenue of $2.1 billion and today employs 5,200 people worldwide. For more information, visit teradyne.com. Teradyne® is a registered trademark of Teradyne, Inc. in the U.S. and other countries.


Page 3

 

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, 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, 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. On May 16, 2019, Huawei and 68 of its affiliates, including HiSilicon, were added to the U.S. Department of Commerce Entity List under U.S. Export Administration Regulations (the “EAR”). This action by the U.S. Department of Commerce imposes new export licensing requirements on exports, re-exports, and in-country transfers of all U.S. - regulated products, software and technology to the designated Huawei entities. While most of our products are not subject to the EAR and therefore not affected by the Entity List restrictions, certain of our products are currently manufactured in the U.S. and thus subject to the Entity List restrictions. Compliance with the Entity List restrictions has not significantly impacted our sales, but could limit sales in the future. Important factors that could cause actual results, earnings per share, use of cash, dividend payments, repurchases of common stock, or payment of the senior convertible notes 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 or the repurchase of common stock 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; compliance with trade protection measures or export restrictions, including the addition of Huawei and HiSilicon to the U.S. Department of Commerce Entity List; 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, 2018 and the Quarterly Report on Form 10-Q for the period ended March 31, 2019. 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 SECOND FISCAL QUARTER OF 2019

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

 

     Quarter Ended     Six Months Ended  
     June 30, 2019     March 31, 2019     July 1, 2018     June 30, 2019     July 1, 2018  

Net revenues

   $ 564,178     $ 494,099     $ 526,929     $ 1,058,277     $ 1,014,396  

Cost of revenues (exclusive of acquired intangible assets
amortization shown separately below) (1)

     240,260       206,464       219,595       446,724       437,230  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     323,918       287,635       307,334       611,553       577,166  

Operating expenses:

          

Selling and administrative

     108,811       102,013       99,410       210,824       189,916  

Engineering and development

     81,434       76,791       75,342       158,225       149,750  

Acquired intangible assets amortization

     10,083       10,634       9,793       20,717       17,491  

Restructuring and other (2)

     (10,404     5,112       2,389       (5,292     2,076  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     189,924       194,550       186,934       384,474       359,233  

Income from operations

     133,994       93,085       120,400       227,079       217,933  

Interest and other (income) expense (3)

     2,817       (894     388       1,923       2,102  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     131,177       93,979       120,012       225,156       215,831  

Income tax provision (benefit) (4)

     33,780       (15,159     18,975       18,621       27,821  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 97,397     $ 109,138     $ 101,037     $ 206,535     $ 188,010  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Net income per common share:

          

 

Basic

   $ 0.57     $ 0.63     $ 0.53     $ 1.20     $ 0.97  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.55     $ 0.62     $ 0.52     $ 1.16     $ 0.94  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Weighted average common shares — basic

     171,241       173,532       190,730       172,387       192,992  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Weighted average common shares — diluted (5)

     178,590       176,972       194,909       177,781       199,197  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Cash dividend declared per common share

   $ 0.09     $ 0.09     $ 0.09     $ 0.18     $ 0.18  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(1)   Cost of revenues includes:    Quarter Ended     Six Months Ended  
     June 30, 2019     March 31, 2019     July 1, 2018     June 30,
2019
    July 1, 2018  

Provision for excess and obsolete inventory

   $ 3,402     $ 2,397     $ 2,653     $ 5,799     $ 6,175  

Sale of previously written down inventory

     (363     (778     (1,922     (1,141     (4,165

Inventory step-up

     383       —         372       383       372  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3,422     $ 1,619     $ 1,103     $ 5,041     $ 2,382  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(2)   Restructuring and other consists of:    Quarter Ended     Six Months Ended  
     June 30, 2019     March 31, 2019     July 1, 2018     June 30,
2019
    July 1, 2018  

Contingent consideration fair value adjustment

   $ (11,671   $ 2,970     $ (3,500   $ (8,701   $ (8,468

Employee severance

     803       799       2,398       1,602       6,279  

Acquisition related expenses and compensation

     464       1,343       2,544       1,807       3,318  

Other

     —         —         947       —         947  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ (10,404   $ 5,112     $ 2,389     $ (5,292   $ 2,076  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(3)   Interest and other includes:    Quarter Ended     Six Months Ended  
     June 30, 2019     March 31, 2019     July 1, 2018     June 30,
2019
    July 1, 2018  

Non-cash convertible debt interest

   $ 3,410     $ 3,368     $ 3,245     $ 6,778     $ 6,451  

Pension actuarial loss (gain)

     448       —         (71     448       (71
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3,858     $ 3,368     $ 3,174     $ 7,226     $ 6,380  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


(4)

For the quarter ended June 30, 2019, income tax provision (benefit) includes a $15 million tax provision related to the finalization of our toll tax charge. For the quarter ended March 31, 2019, income tax provision (benefit) includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne’s 2015 Federal tax return.

 

(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 June 30, 2019, March 31, 2019 and July 1, 2018, 4.4 million, 2.2 million and 2.6 million shares, respectively, have been included in diluted shares. For the six months ended June 30, 2019 and July 1, 2018, 3.3 million and 3.5 million shares, respectively, have been included in diluted shares. For the three months ended June 30, 2019, diluted shares also included 1.8 million shares from the convertible note hedge transaction. For the six months ended June 30, 2019 and July 1, 2018, diluted shares included 0.9 million shares from the convertible note hedge transaction.


CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

 

 

     June 30,
2019
     December 31,
2018
 

Assets

     

Cash and cash equivalents

   $ 495,107      $ 926,752  

Marketable securities

     400,227        190,096  

Accounts receivable, net

     372,199        291,267  

Inventories, net

     164,461        153,541  

Prepayments and other current assets

     184,832        170,826  
  

 

 

    

 

 

 

 

Total current assets

     1,616,826        1,732,482  

Property, plant and equipment, net

     295,895        279,821  

Operating lease right-of-use assets, net

     56,315        —    

Marketable securities

     99,001        87,731  

Deferred tax assets

     67,886        70,848  

Other assets

     25,712        11,509  

Retirement plans assets

     16,449        16,883  

Acquired intangible assets, net

     109,494        125,482  

Goodwill

     383,936        381,850  
  

 

 

    

 

 

 

Total assets

   $ 2,671,514      $ 2,706,606  
  

 

 

    

 

 

 

 

Liabilities

     

Accounts payable

   $ 103,449      $ 100,688  

Accrued employees’ compensation and withholdings

     121,940        148,566  

Deferred revenue and customer advances

     89,837        77,711  

Other accrued liabilities

     77,053        78,272  

Operating lease liabilities

     18,041        —    

Contingent consideration

     11,753        34,865  

Income taxes payable

     44,927        36,185  
  

 

 

    

 

 

 

 

Total current liabilities

     467,000        476,287  

Retirement plans liabilities

     122,596        117,456  

Long-term deferred revenue and customer advances

     37,365        32,750  

Deferred tax liabilities

     17,800        20,662  

Long-term other accrued liabilities

     9,660        37,547  

Long-term contingent consideration

     15,094        35,678  

Long-term operating lease liabilities

     46,460        —    

Long-term income taxes payable

     88,884        83,891  

Long-term debt

     387,243        379,981  
  

 

 

    

 

 

 

Total liabilities

     1,192,102        1,184,252  

 

Shareholders’ equity

     1,479,412        1,522,354  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 2,671,514      $ 2,706,606  
  

 

 

    

 

 

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

 

 

     Quarter Ended     Six Months Ended  
     June 30,
2019
    July 1,
2018
    June 30,
2019
    July 1,
2018
 

Cash flows from operating activities:

        

Net income

   $ 97,397     $ 101,037     $ 206,535     $ 188,010  

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

        

Depreciation

     17,231       16,820       33,882       33,156  

Amortization

     12,034       10,973       24,976       20,177  

Deferred taxes

     (691     8,616       515       17,312  

Stock-based compensation

     8,635       8,081       18,109       17,625  

Provision for excess and obsolete inventory

     3,402       2,653       5,799       6,175  

Contingent consideration fair value adjustment

     (11,671     (3,500     (8,701     (8,468

Retirement plan actuarial loss (gain)

     448       (71     448       (71

(Gains) losses on marketable securities

     (913     (479     (3,741     762  

Other

     210       254       429       406  

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

        

Accounts receivable

     (37,772     (40,332     (79,478     (179,403

Inventories

     470       (266     (2,447     (21,283

Prepayments and other assets

     1,581       2,320       (17,067     1,641  

Accounts payable and accrued expenses

     38,887       38,551       (14,436     (8,155

Deferred revenue and customer advances

     9,371       874       15,826       10,518  

Retirement plans contributions

     (1,204     (1,153     (2,414     (2,173

Income taxes

     7,831       (14,203     (14,973     (26,308
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     145,246       130,175       163,262       49,921  

Cash flows from investing activities:

        

Purchases of property, plant and equipment

     (33,245     (27,866     (58,956     (62,663

Purchases of marketable securities

     (108,997     (156,747     (484,181     (647,071

Proceeds from sales of marketable securities

     37,014       28,382       42,454       829,053  

Proceeds from maturities of marketable securities

     91,992       257,164       233,193       469,862  

Proceeds from life insurance

     —         —         273       —    

Purchase of investments and acquisition of businesses, net of cash acquired

     (15,000     (145,276     (21,970     (170,632
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used for) provided by investing activities

     (28,236     (44,343     (289,187     418,549  

Cash flows from financing activities:

        

Issuance of common stock under stock purchase and stock option plans

     833       27       15,101       10,681  

Repurchase of common stock

     (90,754     (226,519     (247,222     (360,795

Dividend payments

     (15,392     (17,094     (31,019     (34,682

Payment related to net settlement of employee stock compensation awards

     (128     (122     (14,446     (19,751

Payment of contingent consideration

     —         —         (27,615     (13,571
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

     (105,441     (243,708     (305,201     (418,118

Effects of exchange rate changes on cash and cash equivalents

     (190     387       (519     189  

Increase (decrease) in cash and cash equivalents

     11,379       (157,489     (431,645     50,541  

Cash and cash equivalents at beginning of period

     483,728       637,873       926,752       429,843  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 495,107     $ 480,384     $ 495,107     $ 480,384  
  

 

 

   

 

 

   

 

 

   

 

 

 


GAAP to Non-GAAP Earnings Reconciliation

(In millions, except per share amounts)

 

     Quarter Ended  
     June 30,
2019
    % of Net
Revenues
                March 31,
2019
    % of Net
Revenues
                July 1,
2018
    % of Net
Revenues
             

Net revenues

   $ 564.2           $ 494.1           $ 526.9        

Gross profit GAAP

   $ 323.9       57.4       $ 287.6       58.2       $ 307.3       58.3    

Inventory step-up

     0.4       0.1         —         —             0.4       0.1    
  

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

   $ 324.3       57.5       $ 287.6       58.2       $ 307.7       58.4    

Income from operations — GAAP

   $ 134.0       23.8       $ 93.1       18.8       $ 120.4       22.9    

Acquired intangible assets amortization

     10.1       1.8         10.6       2.1         9.8       1.9    

Restructuring and other (1)

     (10.4     -1.8         5.1       1.0         2.4       0.5    

Inventory step-up

     0.4       0.1         —         —             0.4       0.1    
  

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations — non-GAAP

   $ 134.1       23.8       $ 108.8       22.0       $ 133.0       25.2    
  

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     
                 Net Income
per Common
Share
                Net Income
per Common
Share
                Net Income
per Common
Share
 
     June 30,
2019
    % of Net
Revenues
    Basic     Diluted     March 31,
2019
    % of Net
Revenues
    Basic     Diluted     July 1,
2018
    % of Net
Revenues
    Basic     Diluted  

Net income — GAAP

   $ 97.4       17.3   $ 0.57     $ 0.55     $ 109.1       22.1   $ 0.63     $ 0.62     $ 101.0       19.2   $ 0.53     $ 0.52  

Acquired intangible assets amortization

     10.1       1.8     0.06       0.06       10.6       2.1     0.06       0.06       9.8       1.9     0.05       0.05  

Interest and other (2)

     3.4       0.6     0.02       0.02       3.4       0.7     0.02       0.02       3.2       0.6     0.02       0.02  

Restructuring and other (1)

     (10.4     -1.8     (0.06     (0.06     5.1       1.0     0.03       0.03       2.4       0.5     0.01       0.01  

Pension mark-to-market adjustment (2)

     0.4       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       —         —         —         —         0.4       0.1     0.00       0.00  

Exclude discrete tax adjustments (3)

     13.9       2.5     0.08       0.08       (30.1     -6.1     (0.17     (0.17     (0.5     -0.1     (0.00     (0.00

Non-GAAP tax adjustments

     (2.0     -0.4     (0.01     (0.01     (3.5     -0.7     (0.02     (0.02     (3.4     -0.6     (0.02     (0.02

Convertible share adjustment

     —         —         —         0.02       —         —         —         —         —         —         —         0.01  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income — non-GAAP

   $ 113.2       20.1   $ 0.66     $ 0.66     $ 94.6       19.1   $ 0.55     $ 0.54     $ 112.8       21.4   $ 0.59     $ 0.59  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares — basic

     171.2             173.5             190.7        

GAAP weighted average common shares — diluted

     178.6             177.0             194.9        

Exclude dilutive shares related to convertible note transaction

     (6.2           (2.2           (2.6      
  

 

 

         

 

 

         

 

 

       

Non-GAAP weighted average common shares — diluted

     172.4             174.8             192.3        
  

 

 

         

 

 

         

 

 

       

(1)   Restructuring and other consists of:

                        
     Quarter Ended                    
     June 30,
2019
                      March 31,
2019
                      July 1,
2018
                   

Contingent consideration fair value adjustment

   $ (11.7         $ 3.0           $ (3.5      

Acquisition related expenses and compensation

     0.5             1.3             2.5        

Employee severance

     0.8             0.8             2.4        

Other

     —               —               0.9        
  

 

 

         

 

 

         

 

 

       
   $ (10.4         $ 5.1           $ 2.4        
  

 

 

         

 

 

         

 

 

       

 

(2)

For the quarters ended June 30, 2019, March 31, 2019, and July 1, 2018, adjustment to exclude non-cash convertible debt interest expense. For the quarters ended June 30, 2019 and July 1, 2018, adjustment to exclude actuarial loss (gain) recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

 

(3)

For the quarters ended June 30, 2019, March 31, 2019, and July 1, 2018, adjustment to exclude discrete income tax items. For the quarter ended June 30, 2019, income tax (benefit) provision includes a $15 million tax provision related to the finalization of our toll tax charge. For the quarter ended March 31, 2019, income tax (benefit) provision includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne’s 2015 Federal tax return.


     Six Months Ended  
     June 30,
2019
    % of Net
Revenues
                July 1,
2018
    % of Net
Revenues
             

Net Revenues

   $ 1,058.3           $ 1,014.4        

Gross profit GAAP

   $ 611.6       57.8       $ 577.2       56.9    

Inventory step-up

     0.4       0.0         0.4       0.0    
  

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

   $ 612.0       57.8       $ 577.6       56.9    

Income from operations — GAAP

   $ 227.1       21.5       $ 217.9       21.5    

Acquired intangible assets amortization

     20.7       2.0         17.5       1.7    

Restructuring and other (1)

     (5.3     -0.5         2.1       0.2    

Inventory step-up

     0.4       0.0         0.4       0.0    
  

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations — non-GAAP

   $ 242.9       23.0       $ 237.9       23.5    
  

 

 

   

 

 

       

 

 

   

 

 

     
                 Net Income
per Common
Share
                Net Income
per Common
Share
 
     June 30,
2019
    % of Net
Revenues
    Basic     Diluted     July 1,
2018
    % of Net
Revenues
    Basic     Diluted  

Net income — GAAP

   $ 206.5       19.5   $ 1.20     $ 1.16     $ 188.0       18.5   $ 0.97     $ 0.94  

Acquired intangible assets amortization

     20.7       2.0     0.12       0.12       17.5       1.7     0.09       0.09  

Interest and other (2)

     6.8       0.6     0.04       0.04       6.5       0.6     0.03       0.03  

Restructuring and other (1)

     (5.3     -0.5     (0.03     (0.03     2.1       0.2     0.01       0.01  

Inventory step-up

     0.4       0.0     0.00       0.00       0.4       0.0     0.00       0.00  

Pension mark-to-market adjustment (2)

     0.4       0.0     0.00       0.00       (0.1     0.0     (0.00     (0.00

Exclude discrete tax adjustments (3)

     (16.2     -1.5     (0.09     (0.09     (6.8     -0.7     (0.04     (0.03

Non-GAAP tax adjustments

     (5.5     -0.5     (0.03     (0.03     (5.3     -0.5     (0.03     (0.03

Convertible share adjustment

     —         —         —         0.03       —         —         —         0.02  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income — non-GAAP

   $ 207.8       19.6   $ 1.21     $ 1.20     $ 202.3       19.9   $ 1.05     $ 1.04  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares — basic

     172.4             193.0        

GAAP weighted average common shares — diluted

     177.8             199.2        

Exclude dilutive shares from convertible note

     (4.2           (4.4      
  

 

 

         

 

 

       

Non-GAAP weighted average common shares — diluted

     173.6             194.8        
  

 

 

         

 

 

       

(1)   Restructuring and other consists of:

                
     Six Months Ended                    
     June 30,
2019
                      July 1,
2018
                   

Contingent consideration fair value adjustment

   $ (8.7         $ (8.5      

Acquisition related expenses and compensation

     1.8             3.3        

Employee severance

     1.6             6.3        

Other

     —               0.9        
  

 

 

         

 

 

       
   $ (5.3         $ 2.1        
  

 

 

         

 

 

       

 

(2)

For the six months ended June 30, 2019 and July 1, 2018, Interest and other included non-cash convertible debt interest expense. For the six months ended June 30, 2019 and July 1, 2018, adjustments to exclude actuarial loss (gain) recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

 

(3)

For the six months ended June 30, 2019 and July 1, 2018, adjustment to exclude discrete income tax items. For the six months ended June 30, 2019, income tax (benefit) provision includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne’s 2015 Federal tax return and includes a $15 million tax provision related to the finalization of our toll tax charge.


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

 

GAAP and non-GAAP third quarter revenue guidance:

   $ 540 million       to      $ 580 million  

GAAP net income per diluted share

   $ 0.53        $ 0.63  

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

     (0.01        (0.01

Convertible share adjustment

     0.02          0.02  
  

 

 

      

 

 

 

Non-GAAP net income per diluted share

   $ 0.64        $ 0.74  
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