0001193125-23-195224 8-K 13 20230726 2.02 9.01 20230727 20230727 TERADYNE, INC 0000097210 3825 042272148 MA 1231 8-K 34 001-06462 231115144 600 RIVERPARK DRIVE NORTH READING MA 01864 978-370-2700 600 RIVERPARK DRIVE NORTH READING MA 01864 TERADYNE INC 19920703 8-K 1 d454874d8k.htm 8-K TERADYNE, INC false 0000097210 0000097210 2023-07-26 2023-07-26 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 26, 2023 TERADYNE, INC. (Exact Name of Registrant as Specified in Charter) Massachusetts 001-06462 04-2272148 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) 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: Trading Name of each exchange Title of each class Symbol(s) 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. ? -------------------------------------------------------------------------------- Item2.02 Results of Operations and Financial Condition. On July 26, 2023, Teradyne, Inc. (“Teradyne”) issued a press release regarding its financial results for the second quarter ended July 2, 2023. 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 26, 2023. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) -------------------------------------------------------------------------------- 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 27, 2023 By: /s/ SANJAY MEHTA Name: Sanjay Mehta Vice President, Chief Financial Title: Officer and Treasurer EX-99.1 2 d454874dex991.htm EX-99.1 Exhibit 99.1 Teradyne Reports Second Quarter 2023 Results • Revenue and earnings above the mid-point of Q2 guidance • Revenue of $684 million in Q2’23, down 19% from Q2’22 • Returned $152 million to shareholders in share repurchases and dividends in Q2’23 Q2’23 Q2’22 Q1’23 Revenue (mil) $ 684 $ 841 $ 618 GAAP EPS $ 0.73 $ 1.16 $ 0.50 Non-GAAP EPS $ 0.79 $ 1.21 $ 0.55 NORTH READING, Mass. – July 26, 2023 – Teradyne, Inc. (NASDAQ: TER) reported revenue of $684 million for the second quarter of 2023 of which $475 million was in Semiconductor Test, $94 million in System Test, $44 million in Wireless Test and $72 million in Robotics. GAAP net income for the second quarter was $120.1 million or $0.73 per diluted share. On a non-GAAP basis, Teradyne’s net income in the second quarter was $129.0 million, or $0.79 per diluted share, which excluded restructuring and other charges, acquired intangible asset amortization, and included the related tax impact on non-GAAP adjustments. “We delivered revenue at the high end of our guidance range with higher semiconductor test shipments which more than offset weaker robotics demand in the quarter while profits exceeded plan on higher gross margins,” said Teradyne CEO Greg Smith. “As we enter Q3, test demand for DRR5 and HBM memory devices for data center applications remains strong and SOC test demand for automotive applications is incrementally stronger. In robotics, we expect order rates to decline as customers navigate slowing global industrial activity and macro-economic headwinds.” Guidance for the third quarter of 2023 is revenue of $650 million to $710 million, with GAAP net income of $0.57 to $0.77 per diluted share and non-GAAP net income of $0.61 to $0.81 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, restructuring and other charges 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 8:30 a.m. ET, Thursday, July 27. Interested investors should access the webcast at http://investors.teradyne.com/events-presentations. Presentation materials will be available starting at 8:30 a.m. ET. A replay will also be available at the website. -------------------------------------------------------------------------------- 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, restructuring and other, pension actuarial gains and losses, stock compensation modification expense, discrete income tax adjustments, 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 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 “Investor Relations” and then selecting “Financials” and 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) test technology helps bring 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 robotics offerings include collaborative and mobile robots that help manufacturers of all sizes increase productivity, improve safety, and lower costs. In 2022, Teradyne had revenue of $3.2 billion and today employs over 6,500 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 impact of supply chain conditions on the business, customer sales expectations, the payment of a quarterly dividend, the repurchase of Teradyne common stock pursuant to a share -------------------------------------------------------------------------------- Page 3 repurchase program, the continued impact of the global COVID-19 pandemic, and the impact of U.S. and Chinese export and tariff laws, including regulations published by the U.S. Department of Commerce on October 7, 2022. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, events, customer sales, supply chain conditions or improvements, earnings per share, use of cash, payment of dividends, repurchases of common stock, payment of the senior convertible notes, the impact of the COVID-19 pandemic, the impact of any tariffs or export controls imposed by the U.S. or China, compliance with trade protection measures or export restrictions, the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei, HiSilicon and other customers or potential customers, the impact of U.S. Department of Commerce export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China, or the impact of regulations published by the U.S. Department of Commerce relating to the export of semiconductors and semiconductor manufacturing equipment destined to certain end users and for certain end uses in China. There can be no assurance that management’s estimates of Teradyne’s future results or other forward-looking statements will be achieved. Specifically, Teradyne’s 2026 earnings model is aspirational and includes many assumptions. There can be no assurance that these assumptions will be accurate or that model results will be achieved. As set forth below, there are many factors that could cause our 2026 earnings model and actual results to differ materially from those presently expected. Additionally, the current dividend and share repurchase programs may be modified, suspended or discontinued at any time. On October 7, 2022, the U.S. Department of Commerce published regulations restricting the export to China of advanced semiconductors, supercomputer technology, equipment for the manufacturing of advanced semiconductors and components and technology for the manufacturing in China of certain semiconductor manufacturing equipment. The restrictions on the sale of semiconductor testers in China to test certain advanced semiconductors impact Teradyne’s sales to certain companies in China. Several multinational companies manufacturing these advanced semiconductors in China have obtained one-yearlicenses allowing suppliers such as Teradyne to continue to provide testers to the facilities operated by these companies. We expect that other companies manufacturing advanced semiconductors in China will not receive licenses, thereby restricting Teradyne’s ability to provide testers to the facilities operated by these companies that do not receive a license. The Company has filed license applications to sell to and support certain customers in China for certain end uses. Several applications have been denied or granted with limitations so that our business will continue to be impacted by the regulation restrictions. In addition to the specific restrictions impacting Teradyne’s business, the regulations may have an adverse impact on certain actual or potential customers and on the global semiconductor industry. To the extent the regulations impact actual and potential customers or disrupt the global semiconductor industry, Teradyne’s business and revenues will be adversely impacted. The Company also has determined that the restrictions on the export of certain US origin components and technology for use in the development and production in China of certain semiconductor manufacturing equipment impact its manufacturing and development operations in China. Teradyne received a temporary authorization from the -------------------------------------------------------------------------------- Page 4 Department of Commerce allowing the Company to continue its manufacturing and development operations. On May 25, 2023, the Department of Commerce issued an export license to replace this temporary authorization. The license is effective through May 31, 2027. Important factors that could cause actual results, the 2026 earnings model, 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 Robotics business; increased research and development spending; deterioration of Teradyne’s financial condition; the continued impact of the COVID-19 pandemic and related government responses on the market and demand for Teradyne’s products, on its contract manufacturers and supply chain, and on its workforce; the impact of a supply shortage on our supply chain and contract manufacturers; 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. or global tax regulations or guidance; the impact of any tariffs or export controls imposed by the U.S. or China; compliance with trade protection measures or export restrictions; the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei, HiSilicon and other customers or potential customers; the impact of U.S. Department Commerce export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China; the impact of regulations published by the U.S. Department of Commerce relating to semiconductors and semiconductor manufacturing equipment destined for certain end uses in 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, 2022 and Quarterly Report on Form 10-Q for the fiscal quarter ended April 2, 2023. 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 2023 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ended Six Months Ended July 2, April 2, July 3, July 2, July 3, 2023 2023 2022 2023 2022 Net revenues $ 684,437 $ 617,529 $ 840,766 $ 1,301,966 $ 1,596,136 Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) 281,945 261,109 334,377 543,054 634,814 Gross profit 402,492 356,420 506,389 758,912 961,322 Operating expenses: Selling and administrative (2) 145,695 150,955 139,533 296,650 279,718 Engineering and development 105,706 105,762 111,951 211,468 220,067 Acquired intangible assets amortization 4,825 4,802 4,871 9,627 9,934 Restructuring and other (3) 6,358 2,037 2,044 8,395 17,758 Operating expenses 262,584 263,556 258,399 526,140 527,477 Income from operations 139,908 92,864 247,990 232,772 433,845 Interest and other (income) expense (4) (4,494 ) (4,220 ) 9,398 (8,714 ) 14,894 Income before income taxes 144,402 97,084 238,592 241,486 418,951 Income tax provision 24,352 13,553 40,805 37,905 59,236 Net income $ 120,050 $ 83,531 $ 197,787 $ 203,581 $ 359,715 Net income per common share: Basic $ 0.78 $ 0.54 $ 1.24 $ 1.31 $ 2.24 Diluted $ 0.73 $ 0.50 $ 1.16 $ 1.23 $ 2.07 Weighted average common shares - basic 154,760 155,904 159,563 155,332 160,805 Weighted average common shares - diluted (5) 164,751 166,308 171,159 165,530 173,367 Cash dividend declared per common share $ 0.11 $ 0.11 $ 0.11 $ 0.22 $ 0.22 (1) Cost of revenues includes: Quarter Ended Six Months Ended July 2, April 2, July 3, July 2, July 3, 2023 2023 2022 2023 2022 Provision for excess and obsolete inventory $ 5,731 $ 5,610 $ 5,105 $ 11,341 $ 6,695 Sale of previously written down inventory (2,463 ) (385 ) (449 ) (2,848 ) (711 ) $ 3,268 $ 5,225 $ 4,656 $ 8,493 $ 5,984 (2) For the quarter ended April 2, 2023 and the six months ended July 2, 2023, selling and administrative expenses included an equity charge of $5.9 million for the modification of Teradyne’s retired CEO’s outstanding equity awards in connection with his February 1, 2023 retirement. (3) Restructuring and other consists of: Quarter Ended Six Months Ended July 2, April 2, July 3, July 2, July 3, 2023 2023 2022 2023 2022 Employee severance $ 5,140 $ 2,037 $ 383 $ 7,177 $ 934 Litigation settlement — — — — 14,700 Acquisition related expenses and compensation — — — — (201 ) Other 1,218 — 1,661 1,218 2,325 $ 6,358 $ 2,037 $ 2,044 $ 8,395 $ 17,758 (4) Interest and other includes: Quarter Ended Six Months Ended July 2, April 2, July 3, July 2, July 3, 2023 2023 2022 2023 2022 Pension actuarial losses $ 53 $ — $ — $ 53 $ — $ 53 $ — $ — $ 53 $ — (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 July 2, 2023, April 2, 2023 and July 3, 2022, 0.7 million, 0.9 million and 1.9 million shares, respectively, have been included in diluted shares. For the six months ended July 2, 2023 and July 3, 2022, 0.8 million and 2.2 million shares, respectively, have been included in diluted shares. For the quarters ended July 2, 2023, April 2, 2023 and July 3, 2022, diluted shares also included 8.9 million, 9.0 million and 9.0 million shares, respectively, from the convertible note hedge transaction. For the six months ended July 2, 2023 and July 3, 2022, diluted shares included 8.9 million and 9.5 million shares, respectively, from the convertible note hedge transaction. -------------------------------------------------------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) July 2, December 31, 2023 2022 Assets Cash and cash equivalents $ 613,208 $ 854,773 Marketable securities 95,199 39,612 Accounts receivable, net 493,234 491,145 Inventories, net 347,295 325,019 Prepayments 560,682 532,962 Other current assets 14,222 14,404 Total current assets 2,123,840 2,257,915 Property, plant and equipment, net 437,077 418,683 Operating lease right-of-use assets, net 75,889 73,734 Marketable securities 104,685 110,777 Deferred tax assets 152,471 142,784 Retirement plans assets 11,514 11,761 Other assets 32,699 28,925 Acquired intangible assets, net 44,611 53,478 Goodwill 412,110 403,195 Total assets $ 3,394,896 $ 3,501,252 Liabilities Accounts payable $ 153,157 $ 139,722 Accrued employees’ compensation and withholdings 163,653 212,266 Deferred revenue and customer advances 120,085 148,285 Other accrued liabilities 114,435 112,271 Operating lease liabilities 20,212 18,594 Income taxes payable 65,437 65,010 Current debt 32,806 50,115 Total current liabilities 669,785 746,263 Retirement plans liabilities 124,040 116,005 Long-term deferred revenue and customer advances 38,999 45,131 Long-term other accrued liabilities 16,475 15,981 Deferred tax liabilities 1,304 3,267 Long-term operating lease liabilities 65,079 64,176 Long-term income taxes payable 44,331 59,135 Total liabilities 960,013 1,049,958 Shareholders’ equity 2,434,883 2,451,294 Total liabilities and shareholders’ equity $ 3,394,896 $ 3,501,252 -------------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Quarter Ended Six Months Ended July 2, July 3, July 2, July 3, 2023 2022 2023 2022 Cash flows from operating activities: Net income $ 120,050 $ 197,787 $ 203,581 $ 359,715 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 22,551 21,957 45,231 44,460 Stock-based compensation 13,564 12,228 32,449 25,122 Provision for excess and obsolete inventory 5,731 5,105 11,341 6,695 Amortization 4,654 4,862 9,580 10,095 Deferred taxes (5,937 ) (34,885 ) (13,571 ) (23,597 ) (Gains) losses on investments (2,507 ) 6,972 (4,745 ) 8,973 Other (201 ) 345 (92 ) 522 Changes in operating assets and liabilities Accounts receivable (39,897 ) (146,592 ) (2,693 ) (146,384 ) Inventories 9,852 (37,202 ) (13,845 ) (46,682 ) Prepayments and other assets (14,204 ) (25,597 ) (29,584 ) (99,902 ) Accounts payable and other liabilities 58,694 85,922 (24,514 ) (38,460 ) Deferred revenue and customer advances (2,233 ) 7,416 (34,938 ) 14,163 Retirement plans contributions (1,248 ) (1,289 ) (2,482 ) (2,618 ) Income taxes (26,102 ) 18,426 (13,614 ) 10,815 Net cash provided by operating activities 142,767 115,455 162,104 122,917 Cash flows from investing activities: Purchases of property, plant and equipment (39,258 ) (45,744 ) (80,702 ) (89,743 ) Purchases of marketable securities (29,742 ) (81,904 ) (99,018 ) (247,881 ) Proceeds from sales of marketable securities 27,648 113,061 35,577 143,642 Proceeds from maturities of marketable securities 14,529 42,970 21,997 139,652 Proceeds from life insurance — — 460 — Net cash (used for) provided by investing activities (26,823 ) 28,383 (121,686 ) (54,330 ) Cash flows from financing activities: Repurchase of common stock (134,537 ) (331,334 ) (227,845 ) (532,799 ) Dividend payments (17,019 ) (17,547 ) (34,184 ) (35,442 ) Payments of convertible debt principal (2,303 ) (21,598 ) (17,458 ) (42,292 ) Payments related to net settlement of employee stock compensation awards (438 ) (1,732 ) (20,308 ) (32,780 ) Issuance of common stock under stock purchase and stock option plans 602 61 16,599 16,536 Net cash used for financing activities (153,695 ) (372,150 ) (283,196 ) (626,777 ) Effects of exchange rate changes on cash and cash equivalents 1,751 5,732 1,213 8,014 Decrease in cash and cash equivalents (36,000 ) (222,580 ) (241,565 ) (550,176 ) Cash and cash equivalents at beginning of period 649,208 794,603 854,773 1,122,199 Cash and cash equivalents at end of period $ 613,208 $ 572,023 $ 613,208 $ 572,023 -------------------------------------------------------------------------------- GAAP to Non-GAAP Earnings Reconciliation (In millions, except per share amounts) Quarter Ended July 2, % of Net April 2, % of Net July 3, % of Net 2023 Revenues 2023 Revenues 2022 Revenues Net revenues $ 684.4 $ 617.5 $ 840.8 Gross profit GAAP and non-GAAP $ 402.5 58.8 % $ 356.4 57.7 % $ 506.4 60.2 % Income from operations - GAAP $ 139.9 20.4 % $ 92.9 15.0 % $ 248.0 29.5 % Restructuring and other (1) 6.4 0.9 % 2.0 0.3 % 2.0 0.2 % Acquired intangible assets amortization 4.8 0.7 % 4.8 0.8 % 4.9 0.6 % Equity modification charge (2) — — 5.9 1.0 % — — Income from operations - non-GAAP $ 151.1 22.1 % $ 105.6 17.1 % $ 254.9 30.3 % Net Income Net Income Net Income per Common Share per Common Share per Common Share July 2, % of Net April 2, % of Net July 3, % of Net 2023 Revenues Basic Diluted 2023 Revenues Basic Diluted 2022 Revenues Basic Diluted Net income - GAAP $ 120.1 17.5 % $ 0.78 $ 0.73 $ 83.5 13.5 % $ 0.54 $ 0.50 $ 197.8 23.5 % $ 1.24 $ 1.16 Restructuring and other (1) 6.4 0.9 % 0.04 0.04 2.0 0.3 % 0.01 0.01 2.0 0.2 % 0.01 0.01 Acquired intangible assets amortization 4.8 0.7 % 0.03 0.03 4.8 0.8 % 0.03 0.03 4.9 0.6 % 0.03 0.03 Pension mark-to-market adjustment (3) 0.1 0.0 % 0.00 0.00 — — — — — — — — Equity modification charge (2) — — — — 5.9 1.0 % 0.04 0.04 — — — — Exclude discrete tax adjustments 0.5 0.1 % 0.00 0.00 (2.5 ) -0.4 % (0.02 ) (0.02 ) 1.6 0.2 % 0.01 0.01 Non-GAAP tax adjustments (2.9 ) -0.4 % (0.02 ) (0.02 ) (2.4 ) -0.4 % (0.02 ) (0.01 ) (2.3 ) -0.3 % (0.01 ) (0.01 ) Convertible share adjustment (4) — — — — — — — — — — — 0.01 Net income - non-GAAP $ 129.0 18.8 % $ 0.83 $ 0.79 $ 91.3 14.8 % $ 0.59 $ 0.55 $ 204.0 24.3 % $ 1.28 $ 1.21 GAAP and non-GAAP weighted average common shares - basic 154.8 155.9 159.6 GAAP weighted average common shares - diluted 164.8 166.3 171.2 Exclude dilutive shares related to convertible note transaction (0.7 ) (0.9 ) (1.9 ) Non-GAAP weighted average common shares - diluted 164.1 165.4 169.3 (1) Restructuring and other consists of: Quarter Ended July 2, April 2, July 3, 2023 2023 2022 Employee severance $ 5.1 $ 2.0 $ 0.4 Other 1.2 — 1.7 $ 6.4 $ 2.0 $ 2.0 (2) For the quarter ended April 2, 2023, selling and administrative expenses include an equity charge of $5.9 million for the modification of Teradyne’s retired CEO’s outstanding equity awards in connection with his February 1, 2023 retirement. (3) For the quarter ended July 2, 2023 adjustment to exclude actuarial loss recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting (4) For the quarters ended April 2, 2023, and July 3, 2022, the non-GAAP diluted EPS calculation adds back $0.1 million, and $0.2 million, respectively, of convertible debt interest expense to non-GAAP net income. For the quarters ended July 2, 2023, April 2, 2023, and July 3, 2022, non-GAAP weighted average diluted common shares include 8.9 million, 9.0 million and 9.0 million shares, respectively, from the convertible note hedge transaction -------------------------------------------------------------------------------- Six Months Ended July 2, % of Net July 3, % of Net 2023 Revenues 2022 Revenues Net Revenues $ 1,302.0 $ 1,596.1 Gross profit GAAP and non-GAAP $ 758.9 58.3 % $ 961.3 60.2 % Income from operations - GAAP $ 232.8 17.9 % $ 433.8 27.2 % Acquired intangible assets amortization 9.6 0.7 % 9.9 0.6 % Restructuring and other (1) 8.4 0.6 % 17.8 1.1 % Equity modification charge (2) 5.9 0.5 % Income from operations - non-GAAP $ 256.7 19.7 % $ 461.5 28.9 % Net Income Net Income per Common Share per Common Share July 2, % of Net July 3, % of Net 2023 Revenues Basic Diluted 2022 Revenues Basic Diluted Net income - GAAP $ 203.6 15.6 % $ 1.31 $ 1.23 $ 359.7 22.5 % $ 2.24 $ 2.07 Acquired intangible assets amortization 9.6 0.7 % 0.06 0.06 9.9 0.6 % 0.06 0.06 Restructuring and other (1) 8.4 0.6 % 0.05 0.05 17.8 1.1 % 0.11 0.10 Equity modification charge (2) 5.9 0.5 % 0.04 0.04 — — — — Pension mark-to-market adjustment (3) 0.1 0.0 % 0.00 0.00 — — — — Exclude discrete tax adjustments (1.9 ) -0.1 % (0.01 ) (0.01 ) (8.8 ) -0.6 % (0.05 ) (0.05 ) Non-GAAP tax adjustments (5.3 ) -0.4 % (0.03 ) (0.03 ) (5.6 ) -0.4 % (0.03 ) (0.03 ) Convertible share adjustment (4) — — — 0.01 — — — 0.03 Net income - non-GAAP $ 220.4 16.9 % $ 1.42 $ 1.34 $ 373.0 23.4 % $ 2.32 $ 2.18 GAAP and non-GAAP weighted average common shares - basic 155.3 160.8 GAAP weighted average common shares - diluted 165.5 173.4 Exclude dilutive shares from convertible note (0.8 ) (2.2 ) Non-GAAP weighted average common shares - diluted 164.7 171.2 (1) Restructuring and other consists of: Six Months Ended July 2, July 3, 2023 2022 Employee severance $ 7.2 $ 0.9 Litigation settlement — 14.7 Acquisition related expenses and compensation — (0.2 ) Other 1.2 2.3 $ 8.4 $ 17.8 (2) For the six months ended July 2, 2023, selling and administrative expenses include an equity charge of $5.9 million for the modification of Teradyne’s retired CEO’s outstanding equity awards in connection with his February 1, 2023 retirement. (3) For the six months ended July 2, 2023 adjustment to exclude actuarial loss recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting. (4) For the six months ended July 2, 2023 and July 3, 2022, the non-GAAP diluted EPS calculation adds back $0.2 million and $0.5 million, respectively, of convertible debt interest expense to non-GAAP net income. For the six months ended July 2, 2023 and July 3, 2022, non-GAAP weighted average diluted common shares include 8.9 million and 9.5 million shares, respectively, related to the convertible debt hedge transaction. GAAP to Non-GAAP Reconciliation of Third Quarter 2023 guidance: GAAP and non-GAAP third quarter revenue guidance: $ 650 million to $ 710 million GAAP net income per diluted share $ 0.57 $ 0.77 Exclude acquired intangible assets amortization 0.03 0.03 Exclude acquired restructuring and other charges 0.02 0.02 Non-GAAP tax adjustments (0.01 ) (0.01 ) Non-GAAP net income per diluted share $ 0.61 $ 0.81 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