☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Massachusetts |
04-2272148 | |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
600 Riverpark Drive, North Reading, Massachusetts |
01864 | |
(Address of Principal Executive Offices) |
(Zip Code) |
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 |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☐ | Emerging growth company | ☐ | |||
Smaller reporting company | ☐ |
TERADYNE, INC.
INDEX
Page No. | ||||||
PART I. FINANCIAL INFORMATION | ||||||
Item 1. |
||||||
Condensed Consolidated Balance Sheets as of April 2, 2023 and December 31, 2022 |
1 | |||||
2 | ||||||
3 | ||||||
4 | ||||||
5 | ||||||
6 | ||||||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
26 | ||||
Item 3. |
32 | |||||
Item 4. |
33 | |||||
PART II. OTHER INFORMATION | ||||||
Item 1. |
33 | |||||
Item 1A. |
33 | |||||
Item 2. |
34 | |||||
Item 4. |
34 | |||||
Item 6. |
35 |
Item 1: |
Financial Statements |
April 2, 2023 |
December 31, 2022 |
|||||||
|
|
|||||||
(in thousands, except per share amount) |
||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 649,208 | $ | 854,773 | ||||
Marketable securities |
92,895 | 39,612 | ||||||
Accounts receivable, less allowance for credit losses of $1,973 and $1,955 at April 2, 2023 and December 31, 2022, respectively |
455,334 | 491,145 | ||||||
Inventories, net |
352,058 | 325,019 | ||||||
Prepayments |
549,114 | 532,962 | ||||||
Other current assets |
13,367 | 14,404 | ||||||
|
|
|
|
|||||
Total current assets |
2,111,976 | 2,257,915 | ||||||
Property, plant and equipment, net |
432,381 | 418,683 | ||||||
Operating lease right-of-use |
74,939 | 73,734 | ||||||
Marketable securities |
116,938 | 110,777 | ||||||
Deferred tax assets |
148,527 | 142,784 | ||||||
Retirement plans assets |
11,650 | 11,761 | ||||||
Other assets |
27,922 | 28,925 | ||||||
Acquired intangible assets, net |
49,246 | 53,478 | ||||||
Goodwill |
409,828 | 403,195 | ||||||
|
|
|
|
|||||
Total assets |
$ | 3,383,407 | $ | 3,501,252 | ||||
|
|
|
|
|||||
LIABILITIES |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 142,382 | $ | 139,722 | ||||
Accrued employees’ compensation and withholdings |
119,433 | 212,266 | ||||||
Deferred revenue and customer advances |
119,355 | 148,285 | ||||||
Other accrued liabilities |
114,739 | 112,271 | ||||||
Operating lease liabilities |
19,985 | 18,594 | ||||||
Income taxes payable |
77,089 | 65,010 | ||||||
Current debt |
35,109 | 50,115 | ||||||
|
|
|
|
|||||
Total current liabilities |
628,092 | 746,263 | ||||||
Retirement plans liabilities |
121,303 | 116,005 | ||||||
Long-term deferred revenue and customer advances |
41,797 | 45,131 | ||||||
Long-term other accrued liabilities |
16,211 | 15,981 | ||||||
Deferred tax liabilities |
2,325 | 3,267 | ||||||
Long-term operating lease liabilities |
65,082 | 64,176 | ||||||
Long-term incomes taxes payable |
59,135 | 59,135 | ||||||
|
|
|
|
|||||
Total liabilities |
933,945 | 1,049,958 | ||||||
|
|
|
|
|||||
Commitments and contingencies (Note P) |
||||||||
SHAREHOLDERS’ EQUITY |
||||||||
Common stock, $0.125 par value, 1,000,000 shares authorized; 155,445 and 155,759 shares issued and outstanding at April 2, 2023 and December 31, 2022, respectively |
19,431 | 19,470 | ||||||
Additional paid-in capital |
1,772,352 | 1,755,963 | ||||||
Accumulated other comprehensive loss |
(36,466 | ) | (49,868 | ) | ||||
Retained earnings |
694,145 | 725,729 | ||||||
|
|
|
|
|||||
Total shareholders’ equity |
2,449,462 | 2,451,294 | ||||||
|
|
|
|
|||||
Total liabilities and shareholders’ equity |
$ | 3,383,407 | $ | 3,501,252 | ||||
|
|
|
|
For the Three Months Ended |
||||||||
April 2, |
April 3, |
|||||||
2023 |
2022 |
|||||||
|
|
|||||||
(in thousands, except per share amount) |
||||||||
Revenues: |
||||||||
Products |
$ | 473,418 | $ | 625,875 | ||||
Services |
144,111 | 129,495 | ||||||
|
|
|
|
|||||
Total revenues |
617,529 | 755,370 | ||||||
Cost of revenues: |
||||||||
Cost of products |
198,665 | 243,016 | ||||||
Cost of services |
62,444 | 57,421 | ||||||
|
|
|
|
|||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) |
261,109 | 300,437 | ||||||
|
|
|
|
|||||
Gross profit |
356,420 | 454,933 | ||||||
Operating expenses: |
||||||||
Selling and administrative |
150,955 | 140,185 | ||||||
Engineering and development |
105,762 | 108,116 | ||||||
Acquired intangible assets amortization |
4,802 | 5,063 | ||||||
Restructuring and other |
2,037 | 15,714 | ||||||
|
|
|
|
|||||
Total operating expenses |
263,556 | 269,078 | ||||||
|
|
|
|
|||||
Income from operations |
92,864 | 185,855 | ||||||
Non-operating (income) expense: |
||||||||
Interest income |
(5,258 | ) | (703 | ) | ||||
Interest expense |
987 | 1,012 | ||||||
Other (income) expense, net |
51 | 5,187 | ||||||
|
|
|
|
|||||
Income before income taxes |
97,084 | 180,359 | ||||||
Income tax provision |
13,553 | 18,431 | ||||||
|
|
|
|
|||||
Net income |
$ | 83,531 | $ | 161,928 | ||||
|
|
|
|
|||||
Net income per common share: |
||||||||
Basic |
$ | 0.54 | $ | 1.00 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.50 | $ | 0.92 | ||||
|
|
|
|
|||||
Weighted average common shares—basic |
155,904 | 162,048 | ||||||
|
|
|
|
|||||
Weighted average common shares—diluted |
166,308 | 175,575 | ||||||
|
|
|
|
For the Three Months Ended |
||||||||
April 2, |
April 3, |
|||||||
2023 |
2022 |
|||||||
|
|
|||||||
(in thousands) |
||||||||
Net income |
$ | 83,531 | $ | 161,928 | ||||
Other comprehensive income (loss) , net of tax: |
||||||||
Foreign currency translation adjustment, net of tax of $0 and $0, respectively |
9,309 | (8,076 | ) | |||||
Available-for-sale |
||||||||
Unrealized gains (losses) on marketable securities arising during period, net of tax of $503 and $(1,333), respectively |
2,294 | (5,388 | ) | |||||
Less: Reclassification adjustment for losses (gains) included in net income, net of tax of $2 and $(18), respectively |
5 | (65 | ) | |||||
|
|
|
|
|||||
2,299 | (5,453 | ) | ||||||
Cash flow hedges: |
||||||||
Unrealized gains arising during period, net of tax of $167, $0, respectively |
596 | — | ||||||
Less: Reclassification adjustment for losses included in net income, net of tax of $338 and $0, respectively |
1,200 | — | ||||||
|
|
|
|
|||||
1,796 | — | |||||||
Defined benefit post-retirement plan: |
||||||||
Amortization of prior service credit, net of tax of $0 and $0, respectively |
(2 | ) | (2 | ) | ||||
|
|
|
|
|||||
Other comprehensive income (loss) |
13,402 | (13,531 | ) | |||||
|
|
|
|
|||||
Comprehensive income |
$ | 96,933 | $ | 148,397 | ||||
|
|
|
|
Shareholders’ Equity |
||||||||||||||||||||||||||||
Convertible Common Shares Value |
Common Stock Shares |
Common Stock Par Value |
Additional Paid-in Capital |
Accumulated Other Comprehensive (Loss) Income |
Retained Earnings |
Total Shareholders’ Equity |
||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||||||
For the Three Months Ended April 2, 2023 |
||||||||||||||||||||||||||||
Balance, December 31, 2022 |
$ | — | 155,759 | $ | 19,470 | $ | 1,755,963 | $ | (49,868 | ) | $ | 725,729 | $ | 2,451,294 | ||||||||||||||
Net issuance of common stock under stock-based plans |
579 | 73 | (3,943 | ) | (3,870 | ) | ||||||||||||||||||||||
Stock-based compensation expense |
20,332 | 20,332 | ||||||||||||||||||||||||||
Repurchase of common stock |
(893 | ) | (112 | ) | (97,936 | ) | (98,048 | ) | ||||||||||||||||||||
Cash dividends ($0.11 per share) |
(17,179 | ) | (17,179 | ) | ||||||||||||||||||||||||
Settlements of convertible notes |
324 | 41 | (41 | ) | — | |||||||||||||||||||||||
Exercise of convertible notes hedge call options |
(324 | ) | (41 | ) | 41 | — | ||||||||||||||||||||||
Net income |
83,531 | 83,531 | ||||||||||||||||||||||||||
Other comprehensive income |
13,402 | 13,402 | ||||||||||||||||||||||||||
Balance, April 2, 2023 |
$ | — | 155,445 | $ | 19,431 | $ | 1,772,352 | $ | (36,466 | ) | $ | 694,145 | $ | 2,449,462 | ||||||||||||||
For the Three Months Ended April 3, 2022 |
||||||||||||||||||||||||||||
Balance, December 31, 2021 |
$ | 1,512 | 162,251 | $ | 20,281 | $ | 1,811,545 | $ | (5,948 | ) | $ | 736,566 | $ | 2,562,444 | ||||||||||||||
Net issuance of common stock under stock-based plans |
552 | 70 | (14,644 | ) | (14,574 | ) | ||||||||||||||||||||||
Stock-based compensation expense |
14,204 | 14,204 | ||||||||||||||||||||||||||
Repurchase of common stock |
(1,750 | ) | (219 | ) | (211,247 | ) | (211,466 | ) | ||||||||||||||||||||
Cash dividends ($0.11 per share) |
(17,908 | ) | (17,908 | ) | ||||||||||||||||||||||||
Settlements of convertible notes |
509 | 64 | (157 | ) | (93 | ) | ||||||||||||||||||||||
Exercise of convertible notes hedge call options |
(509 | ) | (64 | ) | 64 | — | ||||||||||||||||||||||
Cumulative-effect of change in accounting principle related to convertible debt |
(1,512 | ) | (99,322 | ) | 92,850 | (6,472 | ) | |||||||||||||||||||||
Net income |
161,928 | 161,928 | ||||||||||||||||||||||||||
Other comprehensive loss |
(13,531 | ) | (13,531 | ) | ||||||||||||||||||||||||
Balance, April 3, 2022 |
$ | — | 161,053 | $ | 20,132 | $ | 1,711,690 | $ | (19,479 | ) | $ | 762,189 | $ | 2,474,532 | ||||||||||||||
For the Three Months Ended |
||||||||
April 2, |
April 3, |
|||||||
2023 |
2022 |
|||||||
(in thousands) |
||||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 83,531 | $ | 161,928 | ||||
Adjustments to reconcile net income from operations to net cash provided by operating activities: |
||||||||
Depreciation |
22,680 | 22,503 | ||||||
Stock-based compensation |
18,885 | 12,894 | ||||||
Provision for excess and obsolete inventory |
5,610 | 1,590 | ||||||
Amortization |
4,926 | 5,233 | ||||||
Deferred taxes |
(7,634 | ) | 11,288 | |||||
(Gains) losses on investments |
(2,238 | ) | 2,001 | |||||
Other |
108 | 177 | ||||||
Changes in operating assets and liabilities |
||||||||
Accounts receivable |
37,204 | 208 | ||||||
Inventories |
(23,697 | ) | (9,480 | ) | ||||
Prepayments and other assets |
(15,380 | ) | (74,305 | ) | ||||
Accounts payable and other accrued expenses |
(83,208 | ) | (124,382 | ) | ||||
Deferred revenue and customer advances |
(32,705 | ) | 6,747 | |||||
Retirement plan contributions |
(1,234 | ) | (1,329 | ) | ||||
Income taxes |
12,488 | (7,611 | ) | |||||
Net cash provided by operating activities |
19,336 | 7,462 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of property, plant and equipment |
(41,444 | ) | (43,999 | ) | ||||
Purchases of marketable securities |
(69,276 | ) | (165,977 | ) | ||||
Proceeds from sales of marketable securities |
7,929 | 30,581 | ||||||
Proceeds from maturities of marketable securities |
7,468 | 96,682 | ||||||
Proceeds from life insurance |
460 | — | ||||||
Net cash used for investing activities |
(94,863 | ) | (82,713 | ) | ||||
Cash flows from financing activities: |
||||||||
Issuance of common stock under stock purchase and stock option plans |
15,997 | 16,475 | ||||||
Repurchase of common stock |
(93,308 | ) | (201,465 | ) | ||||
Payments related to net settlement of employee stock compensation awards |
(19,870 | ) | (31,048 | ) | ||||
Dividend payments |
(17,165 | ) | (17,895 | ) | ||||
Payments of convertible debt principal |
(15,155 | ) | (20,694 | ) | ||||
Net cash used for financing activities |
(129,501 | ) | (254,627 | ) | ||||
Effects of exchange rate changes on cash and cash equivalents |
(537 | ) | 2,282 | |||||
Decrease in cash and cash equivalents |
(205,565 | ) | (327,596 | ) | ||||
Cash and cash equivalents at beginning of period |
854,773 | 1,122,199 | ||||||
Cash and cash equivalents at end of period |
$ | 649,208 | $ | 794,603 | ||||
Non-cash investing activities: |
||||||||
Capital expenditures incurred but not yet paid: |
$ | 3,823 | $ | 2,500 |
• | semiconductor test (“Semiconductor Test”) systems; |
• | storage and system level test (“Storage Test”) systems, defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”); |
• | wireless test (“Wireless Test”) systems; and |
• | robotics (“Robotics”) products. |
Semiconductor Test |
Robotics |
|||||||||||||||||||||||||||||||
System on- a-Chip |
Memory |
System Test |
Universal Robots |
Mobile Industrial Robots |
Wireless Test |
Corporate and Eliminations |
Total |
|||||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||||||||||
For the Three Months Ended April 2, 2023 (1) |
||||||||||||||||||||||||||||||||
Timing of Revenue Recognition |
||||||||||||||||||||||||||||||||
Point in Time |
$ | 273,275 | $ | 61,258 | $ | 56,857 | $ | 70,029 | $ | 15,959 | $ | 35,363 | $ | — | $ | 512,741 | ||||||||||||||||
Over Time |
73,559 | 6,917 | 17,774 | 2,008 | 1,218 | 3,312 | — | 104,788 | ||||||||||||||||||||||||
Total |
$ | 346,834 | $ | 68,175 | $ | 74,631 | $ | 72,037 | $ | 17,177 | $ | 38,675 | $ | — | $ | 617,529 | ||||||||||||||||
Geographical Market |
||||||||||||||||||||||||||||||||
Asia Pacific |
$ | 283,259 | $ | 63,695 | $ | 39,590 | $ | 13,217 | $ | 1,502 | $ | 23,231 | $ | — | $ | 424,494 | ||||||||||||||||
Americas |
41,568 | 2,944 | 28,980 | 20,447 | 11,806 | 12,846 | — | 118,591 | ||||||||||||||||||||||||
Europe, Middle East and Africa |
22,007 | 1,536 | 6,061 | 38,373 | 3,869 | 2,598 | — | 74,444 | ||||||||||||||||||||||||
Total |
$ | 346,834 | $ | 68,175 | $ | 74,631 | $ | 72,037 | $ | 17,177 | $ | 38,675 | $ | — | $ | 617,529 | ||||||||||||||||
For the Three Months Ended April 3, 2022 (1) |
||||||||||||||||||||||||||||||||
Timing of Revenue Recognition |
||||||||||||||||||||||||||||||||
Point in Time |
$ | 323,456 | $ | 88,723 | $ | 105,288 | $ | 83,182 | $ | 16,744 | $ | 48,429 | $ | (346 | ) | $ | 665,476 | |||||||||||||||
Over Time |
63,129 | 7,033 | 13,380 | 2,102 | 1,161 | 3,089 | — | 89,894 | ||||||||||||||||||||||||
Total |
$ | 386,585 | $ | 95,756 | $ | 118,668 | $ | 85,284 | $ | 17,905 | $ | 51,518 | $ | (346 | ) | $ | 755,370 | |||||||||||||||
Geographical Market |
||||||||||||||||||||||||||||||||
Asia Pacific |
$ | 340,741 | $ | 93,151 | $ | 73,784 | $ | 18,621 | $ | 2,592 | $ | 34,946 | $ | — | $ | 563,835 | ||||||||||||||||
Americas |
29,714 | 2,046 | 36,608 | 28,148 | 8,564 | 9,687 | (346 | ) | 114,421 | |||||||||||||||||||||||
Europe, Middle East and Africa |
16,130 | 559 | 8,276 | 38,515 | 6,749 | 6,885 | — | 77,114 | ||||||||||||||||||||||||
Total |
$ | 386,585 | $ | 95,756 | $ | 118,668 | $ | 85,284 | $ | 17,905 | $ | 51,518 | $ | (346 | ) | $ | 755,370 | |||||||||||||||
(1) | Includes $1.3 million and $2.3 million in 2023 and 2022, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.” |
April 2, 2023 |
December 31, 2022 |
|||||||
(in thousands) |
||||||||
Maintenance, service and training |
$ | 70,609 | $ | 78,089 | ||||
Extended warranty |
49,343 | 56,180 | ||||||
Customer advances, undelivered elements and other |
41,200 | 59,147 | ||||||
Total deferred revenue and customer advances |
$ | 161,152 | $ | 193,416 | ||||
April 2, 2023 |
December 31, 2022 |
|||||||
(in thousands) |
||||||||
Raw material |
$ | 264,035 | $ | 256,065 | ||||
Work-in-process |
43,987 | 37,982 | ||||||
Finished goods |
44,036 | 30,972 | ||||||
$ | 352,058 | $ | 325,019 | |||||
April 2, 2023 |
||||||||||||||||
Quoted Prices in Active Markets for Identical Instruments (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash |
$ | 244,542 | $ | — | $ | — | $ | 244,542 | ||||||||
Cash equivalents |
252,374 | 152,292 | — | 404,666 | ||||||||||||
Available-for-sale |
||||||||||||||||
U.S. Treasury securities |
— | 52,168 | — | 52,168 | ||||||||||||
Corporate debt securities |
— | 51,369 | — | 51,369 | ||||||||||||
Commercial paper |
— | 47,548 | — | 47,548 | ||||||||||||
U.S. government agency securities |
— | 7,394 | — | 7,394 | ||||||||||||
Debt mutual funds |
6,800 | — | — | 6,800 | ||||||||||||
Certificates of deposit and time deposits |
— | 1,754 | — | 1,754 | ||||||||||||
Non-U.S. government securities |
— | 554 | — | 554 | ||||||||||||
Equity securities: |
||||||||||||||||
Mutual funds |
42,246 | — | — | 42,246 | ||||||||||||
Total |
$ | 545,962 | $ | 313,079 | $ | — | $ | 859,041 | ||||||||
Liabilities |
||||||||||||||||
Derivative liabilities |
$ | — | $ | 1,980 | $ | — | $ | 1,980 | ||||||||
Total |
$ | — | $ | 1,980 | $ | — | $ | 1,980 | ||||||||
(Level 1) |
(Level 2) |
(Level 3) |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | 496,916 | $ | 152,292 | $ | — | $ | 649,208 | ||||||||
Marketable securities |
— | 92,895 | — | 92,895 | ||||||||||||
Long-term marketable securities |
49,046 | 67,892 | — | 116,938 | ||||||||||||
Total |
$ | 545,962 | $ | 313,079 | $ | — | $ | 859,041 | ||||||||
Liabilities |
||||||||||||||||
Other current liabilities |
$ | — | $ | 1,980 | $ | — | $ | 1,980 | ||||||||
Total |
$ | — | $ | 1,980 | $ | — | $ | 1,980 | ||||||||
December 31, 2022 |
||||||||||||||||
Quoted Prices in Active Markets for Identical Instruments (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash |
$ | 632,417 | $ | — | $ | — | $ | 632,417 | ||||||||
Cash equivalents |
161,767 | 60,589 | — | 222,356 | ||||||||||||
Available for sale securities: |
||||||||||||||||
Corporate debt securities |
— | 50,856 | — | 50,856 | ||||||||||||
U.S. Treasury securities |
— | 39,649 | — | 39,649 | ||||||||||||
Commercial paper |
— | 7,159 | — | 7,159 | ||||||||||||
Debt mutual funds |
6,580 | — | — | 6,580 | ||||||||||||
U.S. government agency securities |
— | 6,352 | — | 6,352 | ||||||||||||
Certificates of deposit and time deposits |
— | 1,740 | — | 1,740 | ||||||||||||
Non-U.S. government securities |
— | 535 | — | 535 | ||||||||||||
Equity securities: |
||||||||||||||||
Mutual funds |
37,518 | — | — | 37,518 | ||||||||||||
Total |
$ | 838,282 | $ | 166,880 | $ | — | $ | 1,005,162 | ||||||||
Derivative assets |
— | 86 | — | 86 | ||||||||||||
Total |
$ | 838,282 | $ | 166,966 | $ | — | $ | 1,005,248 | ||||||||
Liabilities |
||||||||||||||||
Derivative liabilities |
$ | — | $ | 4,215 | $ | — | $ | 4,215 | ||||||||
Total |
$ | — | $ | 4,215 | $ | — | $ | 4,215 | ||||||||
(Level 1) |
(Level 2) |
(Level 3) |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | 794,184 | $ | 60,589 | $ | — | $ | 854,773 | ||||||||
Marketable securities |
— | 39,612 | — | 39,612 | ||||||||||||
Long-term marketable securities |
44,098 | 66,679 | — | 110,777 | ||||||||||||
Prepayments |
— | 86 | — | 86 | ||||||||||||
Total |
$ | 838,282 | $ | 166,966 | $ | — | $ | 1,005,248 | ||||||||
Liabilities |
||||||||||||||||
Other current liabilities |
$ | — | $ | 4,215 | $ | — | $ | 4,215 | ||||||||
Total |
$ | — | $ | 4,215 | $ | — | $ | 4,215 | ||||||||
April 2, 2023 |
December 31, 2022 |
|||||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | 649,208 | $ | 649,208 | $ | 854,773 | $ | 854,773 | ||||||||
Marketable securities |
209,833 | 209,833 | 150,389 | 150,389 | ||||||||||||
— | — | 86 | 86 | |||||||||||||
Liabilities |
||||||||||||||||
1,980 | 1,980 | 4,215 | 4,215 | |||||||||||||
Convertible debt |
35,109 | 119,586 | 50,115 | 139,007 |
April 2, 2023 |
||||||||||||||||||||
Available-for-Sale |
||||||||||||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
U.S. Treasury securities |
$ | 55,615 | $ | 38 | $ | (3,485 | ) | $ | 52,168 | $ | 49,669 | |||||||||
Corporate debt securities |
56,040 | 41 | (4,712 | ) | 51,369 | 49,131 | ||||||||||||||
Commercial paper |
47,225 | 337 | (14 | ) | 47,548 | 16,845 | ||||||||||||||
U.S. government agency securities |
7,427 | 9 | (42 | ) | 7,394 | 4,419 | ||||||||||||||
Debt mutual funds |
7,130 | — | (330 | ) | 6,800 | 3,312 | ||||||||||||||
Certificates of deposit and time deposits |
1,754 | — | — | 1,754 | — | |||||||||||||||
Non-U.S. government securities |
554 | — | — | 554 | — | |||||||||||||||
$ | 175,745 | $ | 425 | $ | (8,583 | ) | $ | 167,587 | $ | 123,376 | ||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Marketable securities |
$ | 92,915 | $ | 337 | $ | (357 | ) | $ | 92,895 | $ | 60,438 | |||||||||
Long-term marketable securities |
82,830 | 88 | (8,226 | ) | 74,692 | 62,938 | ||||||||||||||
$ | 175,745 | $ | 425 | $ | (8,583 | ) | $ | 167,587 | $ | 123,376 | ||||||||||
December 31, 2022 |
||||||||||||||||||||
Available-for-Sale |
||||||||||||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Corporate debt securities |
$ | 57,006 | $ | 3 | $ | (6,153 | ) | $ | 50,856 | $ | 50,667 | |||||||||
U.S. Treasury securities |
44,030 | — | (4,381 | ) | 39,649 | 39,649 | ||||||||||||||
Commercial paper |
7,089 | 70 | — | 7,159 | — | |||||||||||||||
Debt mutual funds |
6,997 | — | (417 | ) | 6,580 | 3,095 | ||||||||||||||
U.S. government agency securities |
6,442 | — | (90 | ) | 6,352 | 6,352 | ||||||||||||||
Certificates of deposit and time deposits |
1,740 | — | — | 1,740 | — | |||||||||||||||
Non-U.S. government securities |
535 | — | — | 535 | — | |||||||||||||||
$ | 123,839 | $ | 73 | $ | (11,041 | ) | $ | 112,871 | $ | 99,763 | ||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Marketable securities |
$ | 39,950 | $ | 70 | $ | (408 | ) | $ | 39,612 | $ | 30,713 | |||||||||
Long-term marketable securities |
83,889 | 3 | (10,633 | ) | 73,259 | 69,050 | ||||||||||||||
$ | 123,839 | $ | 73 | $ | (11,041 | ) | $ | 112,871 | $ | 99,763 | ||||||||||
April 2, 2023 |
||||||||
Cost |
Fair Market Value |
|||||||
(in thousands) |
||||||||
Due within one year |
$ | 92,915 | $ | 92,895 | ||||
Due after 1 year through 5 years |
31,721 | 30,672 | ||||||
Due after 5 years through 10 years |
5,022 | 4,612 | ||||||
Due after 10 years |
38,957 | 32,608 | ||||||
Total |
$ | 168,615 | $ | 160,787 | ||||
April 2, 2023 |
December 31, 2022 |
|||||||||||||||||||||||
Buy Position |
Sell Position |
Net Total |
Buy Position |
Sell Position |
Net Total |
|||||||||||||||||||
(in millions) |
||||||||||||||||||||||||
Japanese Yen |
$ | (57.7 | ) | $ | — | $ | (57.7 | ) | $ | (37.1 | ) | $ | — | $ | (37.1 | ) | ||||||||
Taiwan Dollar |
(38.3 | ) | — | (38.3 | ) | (29.2 | ) | — | (29.2 | ) | ||||||||||||||
Korean Won |
(3.1 | ) | — | (3.1 | ) | (6.4 | ) | — | (6.4 | ) | ||||||||||||||
British Pound Sterling |
(1.2 | ) | — | (1.2 | ) | (1.2 | ) | — | (1.2 | ) | ||||||||||||||
Singapore Dollar |
— | 35.7 | 35.7 | — | 33.5 | 33.5 | ||||||||||||||||||
Euro |
— | 24.3 | 24.3 | — | 38.4 | 38.4 | ||||||||||||||||||
Philippine Peso |
— | 2.5 | 2.5 | — | 2.7 | 2.7 | ||||||||||||||||||
Chinese Yuan |
— | 1.9 | 1.9 | — | 2.2 | 2.2 | ||||||||||||||||||
Total |
$ | (100.3 | ) | $ | 64.4 | $ | (35.9 | ) | $ | (73.9 | ) | $ | 76.8 | $ | 2.9 | |||||||||
April 2, 2023 |
December 31, 2022 |
|||||||||||||||||||||||
Buy Position |
Sell Position |
Net Total |
Buy Position |
Sell Position |
Net Total |
|||||||||||||||||||
(in millions) |
||||||||||||||||||||||||
Japanese Yen |
$ | (13.6 | ) | $ | 30.2 | $ | 16.6 | $ | (23.4 | ) | $ | 61.2 | $ | 37.8 | ||||||||||
Taiwan Dollar |
— | — | — | (5.5 | ) | 10.9 | 5.4 | |||||||||||||||||
Total |
$ | (13.6 | ) | $ | 30.2 | $ | 16.6 | $ | (28.9 | ) | $ | 72.1 | $ | 43.2 | ||||||||||
Balance Sheet Location |
April 2, 2023 |
December 31, 2022 |
||||||||||
(in thousands) |
||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||
Foreign exchange forward contracts |
Prepayments | $ | — | $ | 86 | |||||||
Foreign exchange forward contracts |
Other current liabilities | (1,057 | ) | (990 | ) | |||||||
Derivatives designated as hedging instruments: |
||||||||||||
Foreign exchange option contracts |
Other current liabilities | (923 | ) | (3,225 | ) | |||||||
Total derivatives |
$ | (1,980 | ) | $ | (4,129 | ) | ||||||
For the Three Months Ended |
||||||||||||
Location of Losses (Gains) Recognized in Statement of Operations |
April 2, 2023 |
April 3, 2022 |
||||||||||
(in thousands) |
||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||
Foreign exchange forward contracts |
Other (income) expense, net | $ | 1,259 | $ | (1,752 | ) | ||||||
Derivatives designated as hedging instruments: |
||||||||||||
Foreign exchange option contracts |
Revenue | 1,538 | — | |||||||||
|
|
|
|
|||||||||
Total Derivatives |
$ | 2,797 | $ | (1,752 | ) | |||||||
|
|
|
|
April 2, 2023 |
December 31, 2022 |
|||||||
(in thousands) |
||||||||
Debt principal |
$ | 35,109 | $ | 50,228 | ||||
Unamortized debt issuance fees |
— | 113 | ||||||
|
|
|
|
|||||
Net carrying amount of convertible debt |
$ | 35,109 | $ | 50,115 | ||||
|
|
|
|
For the Three Months Ended |
||||||||
April 2, 2023 |
April 3, 2022 |
|||||||
(in thousands) |
||||||||
Contractual interest expense on the coupon |
$ | 138 | $ | 311 | ||||
Amortization of the issue fees recognized as interest expense |
113 | 66 | ||||||
|
|
|
|
|||||
Total interest expense on the convertible debt |
$ | 251 | $ | 377 | ||||
|
|
|
|
April 2, 2023 |
December 31, 2022 |
|||||||
(in thousands) |
||||||||
Contract manufacturer and supplier prepayments |
$ | 494,849 | $ | 491,105 | ||||
Prepaid taxes |
22,677 | 18,625 | ||||||
Prepaid maintenance and other services |
16,591 | 14,545 | ||||||
Other prepayments |
14,997 | 8,687 | ||||||
|
|
|
|
|||||
Total prepayments |
$ | 549,114 | $ | 532,962 | ||||
|
|
|
|
For the Three Months Ended |
||||||||
April 2, 2023 |
April 3, 2022 |
|||||||
(in thousands) |
||||||||
Balance at beginning of period |
$ | 14,181 | $ | 24,577 | ||||
Accruals for warranties issued during the period |
4,117 | 4,100 | ||||||
Accruals related to pre-existing warranties |
(405 | ) | (2,758 | ) | ||||
Settlements made during the period |
(4,992 | ) | (5,814 | ) | ||||
|
|
|
|
|||||
Balance at end of period |
$ | 12,901 | $ | 20,105 | ||||
|
|
|
|
For the Three Months Ended |
||||||||
April 2, 2023 |
April 3, 2022 |
|||||||
(in thousands) |
||||||||
Balance at beginning of period |
$ | 56,180 | $ | 64,168 | ||||
Deferral of new extended warranty revenue |
4,413 | 11,774 | ||||||
Recognition of extended warranty deferred revenue |
(11,250 | ) | (10,216 | ) | ||||
|
|
|
|
|||||
Balance at end of period |
$ | 49,343 | $ | 65,726 | ||||
|
|
|
|
For the Three Months Ended |
||||||||
April 2, 2023 |
April 3, 2022 |
|||||||
Risk-free interest rate |
3.9 | % | 1.4 | % | ||||
Teradyne volatility-historical |
50.2 | % | 47.1 | % | ||||
NYSE Composite Index volatility-historical |
24.8 | % | 22.7 | % | ||||
Dividend yield |
0.4 | % | 0.4 | % |
For the Three Months Ended |
||||||||
April 2, 2023 |
April 3, 2022 |
|||||||
Expected life (years) |
4.0 | 4.0 | ||||||
Risk-free interest rate |
3.7 | % | 1.6 | % | ||||
Volatility-historical |
46.7 | % | 43.7 | % | ||||
Dividend yield |
0.4 | % | 0.4 | % |
Foreign Currency Translation Adjustment |
Unrealized (Losses) Gains on Marketable Securities |
Unrealized (Losses) Gains on Cash Flow Hedges |
Retirement Plans Prior Service Credit |
Total |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Three Months Ended April 2, 2023 |
||||||||||||||||||||
Balance at December 31, 2022, net of tax of $0, $(2,308), $(708), $(1,130), respectively |
$ | (39,849 | ) | $ | (8,661 | ) | $ | (2,517 | ) | $ | 1,159 | $ | (49,868 | ) | ||||||
Other comprehensive gain before reclassifications, net of tax of $0, $503, $167, $0, respectively |
9,309 | 2,294 | 596 | — | 12,199 | |||||||||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $2, $338, $0, respectively |
— | 5 | 1,200 | (2 | ) | 1,203 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net current period other comprehensive gain (loss), net of tax of $0, $505, $505 $0, respectively |
9,309 | 2,299 | 1,796 | (2 | ) | 13,402 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at April 2, 2023, net of tax of $0, $(1,803), $(203), $(1,130) respectively |
$ | (30,540 | ) | $ | (6,362 | ) | $ | (721 | ) | $ | 1,157 | $ | (36,466 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Three Months Ended April 3, 2022 |
||||||||||||||||||||
Balance at December 31, 2021, net of tax of $0, $1,055, $0, $(1,128), respectively |
$ | (10,818 | ) | $ | 3,704 | $ | — | $ | 1,166 | $ | (5,948 | ) | ||||||||
Other comprehensive loss before reclassifications, net of tax of $0, $(1,333), $0, $0, respectively |
(8,076 | ) | (5,388 | ) | — | — | (13,464 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(18), $0, $0, respectively |
— | (65 | ) | — | (2 | ) | (67 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net current period other comprehensive loss, net of tax of $0, $(1,351), $0, $0, respectively |
(8,076 | ) | (5,453 | ) | — | (2 | ) | (13,531 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at April 3, 2022, net of tax of $0, $(296), $0, $(1,128), respectively |
$ | (18,894 | ) | $ | (1,749 | ) | $ | — | $ | 1,164 | $ | (19,479 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
Details about Accumulated Other Comprehensive Income (Loss) Components |
For the Three Months Ended |
Affected Line Item in the Statements of Operations |
||||||||||
April 2, |
April 3, |
|||||||||||
2023 |
2022 |
|||||||||||
(in thousands) |
||||||||||||
Available-for-sale |
||||||||||||
Unrealized (losses) gains, net of tax of $(2) and $18, respectively |
$ | (5 | ) | $ | 65 | Other (income) expense, net |
| |||||
Cash flow hedges: |
||||||||||||
Unrealized losses, net of tax of $(338) and $0, respectively |
(1,200 | ) | — | Revenue | ||||||||
Defined benefit pension and postretirement plans: |
||||||||||||
Amortization of prior service benefit, net of tax of $0 and $0, respectively |
2 | 2 | (a) | |||||||||
|
|
|
|
|||||||||
Total reclassifications, net of tax of $(340) and $18, respectively |
$ | (1,203 | ) | $ | 67 | Net income | ||||||
|
|
|
|
(a) | The amortization of prior service credit is included in the computation of net periodic postretirement benefit cost. See Note O : “Retirement Plans.” |
Robotics |
Wireless Test |
Semiconductor Test |
System Test |
Total |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Balance at December 31, 2022 |
||||||||||||||||||||
Goodwill |
$ | 383,166 | $ | 361,819 | $ | 262,077 | $ | 158,699 | $ | 1,165,761 | ||||||||||
Accumulated impairment losses |
— | (353,843 | ) | (260,540 | ) | (148,183 | ) | (762,566 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
383,166 | 7,976 | 1,537 | 10,516 | 403,195 | ||||||||||||||||
Foreign currency translation adjustment |
6,609 | — | 24 | — | 6,633 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at April 2, 2023 |
||||||||||||||||||||
Goodwill |
389,775 | 361,819 | 262,101 | 158,699 | 1,172,394 | |||||||||||||||
Accumulated impairment losses |
— | (353,843 | ) | (260,540 | ) | (148,183 | ) | (762,566 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 389,775 | $ | 7,976 | $ | 1,561 | $ | 10,516 | $ | 409,828 | |||||||||||
|
|
|
|
|
|
|
|
|
|
Gross Carrying Amount |
Accumulated Amortization |
Foreign Currency Translation Adjustment |
Net Carrying Amount |
|||||||||||||
(in thousands) |
||||||||||||||||
Balance at April 2, 2023 |
||||||||||||||||
Developed technology |
$ | 270,967 | $ | (237,269 | ) | $ | (5,560 | ) | $ | 28,138 | ||||||
Customer relationships |
57,739 | (51,756 | ) | 184 | 6,167 | |||||||||||
Tradenames and trademarks |
59,387 | (43,101 | ) | (1,345 | ) | 14,941 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total intangible assets |
$ | 388,093 | $ | (332,126 | ) | $ | (6,721 | ) | $ | 49,246 | ||||||
|
|
|
|
|
|
|
|
|||||||||
Balance, December 31, 2022 |
||||||||||||||||
Developed technology |
$ | 270,967 | $ | (234,208 | ) | $ | (5,935 | ) | $ | 30,824 | ||||||
Customer relationships |
57,739 | (51,186 | ) | 172 | 6,725 | |||||||||||
Tradenames and trademarks |
59,387 | (41,930 | ) | (1,528 | ) | 15,929 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total intangible assets |
$ | 388,093 | $ | (327,324 | ) | $ | (7,291 | ) | $ | 53,478 | ||||||
|
|
|
|
|
|
|
|
Year |
Amortization Expense |
|||
(in thousands) |
||||
2023 |
$ | 14,219 | ||
2024 |
18,749 | |||
2025 |
11,320 | |||
2026 |
2,371 | |||
2027 |
1,155 | |||
Thereafter |
1,432 |
For the Three Months Ended |
||||||||
April 2, |
April 3, |
|||||||
2023 |
2022 |
|||||||
(in thousands, except per share amounts) |
||||||||
Net income for basic and diluted net income per share |
$ | 83,531 | $ | 161,928 | ||||
|
|
|
|
|||||
Weighted average common shares-basic |
155,904 | 162,048 | ||||||
Effect of dilutive potential common shares: |
||||||||
Convertible note hedge warrant shares (1) |
8,983 | 10,028 | ||||||
Incremental shares from assumed conversion of convertible notes (2) |
914 | 2,541 | ||||||
Restricted stock units |
453 | 875 | ||||||
Stock options |
48 | 69 | ||||||
Employee stock purchase plan |
6 | 14 | ||||||
|
|
|
|
|||||
Dilutive potential common shares |
10,404 | 13,527 | ||||||
|
|
|
|
|||||
Weighted average common shares-diluted |
166,308 | 175,575 | ||||||
|
|
|
|
|||||
Net income per common share-basic |
$ | 0.54 | $ | 1.00 | ||||
|
|
|
|
|||||
Net income per common share-diluted |
$ | 0.50 | $ | 0.92 | ||||
|
|
|
|
(1) | Convertible notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price, multiplied by the number of warrant shares. The result of this calculation, representing the total intrinsic value of the warrant, was divided by the average Teradyne stock price for the period. |
(2) | Incremental shares from assumed conversion of the convertible notes were calculated using the difference between the average Teradyne stock price for the period and the conversion price, multiplied by the number of convertible notes shares. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period. |
For the Three Months Ended |
||||||||||||||||
April 2, 2023 |
April 3, 2022 |
|||||||||||||||
United States |
Foreign |
United States |
Foreign |
|||||||||||||
(in thousands) |
||||||||||||||||
Service cost |
$ | 272 | $ | 109 | $ | 397 | $ | 206 | ||||||||
Interest cost |
1,711 | 262 | 1,222 | 118 | ||||||||||||
Expected return on plan assets |
(1,285 | ) | (9 | ) | (732 | ) | (20 | ) | ||||||||
Total net periodic pension cost |
$ | 698 | $ | 362 | $ | 887 | $ | 304 | ||||||||
For the Three Months Ended |
||||||||
April 2, |