8-K
TERADYNE, INC false 0000097210 0000097210 2021-07-27 2021-07-27

 

 

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 27, 2021

 

 

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 27, 2021, Teradyne, Inc. (“Teradyne”) issued a press release regarding its financial results for the second quarter ended July 4, 2021. 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 27, 2021.
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 28, 2021     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 2021 Results

 

   

Revenue of $1,086 million in Q2’21 grew 29% from Q2’20 and 92% from Q2’19

 

   

GAAP Gross Margin 59.6% in Q2’21, up from 56.2% in Q2’20 and 57.4% in Q2’19

 

   

Q2’21 GAAP earnings per share grew 68% from Q2’20 and 220% from Q2’19

 

   

Q2’21 non-GAAP earnings per share grew 44% from Q2’20 and 189% from Q2’19

 

   

Test revenue grew 27% from Q2’20 and 103% from Q2’19 on Semiconductor Test strength

 

   

Industrial Automation revenue grew 57% from Q2’20 and 23% from Q2’19 on global demand growth at Universal Robots

 

   

Q3’21 Revenue guidance at mid-point represents 12% growth from Q3’20 and 58% from Q3’19

 

     Q2’21      Q2’20      Q1’21      1H’21      1H’20  

Revenue (mil)

   $ 1,086      $ 839      $ 782      $ 1,867      $ 1,543  

GAAP EPS

   $ 1.76      $ 1.05      $ 1.09      $ 2.85      $ 2.02  

Non-GAAP EPS

   $ 1.91      $ 1.33      $ 1.11      $ 3.02      $ 2.34  

 

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

NORTH READING, Mass. – July 27, 2021 – Teradyne, Inc. (NASDAQ: TER) reported revenue of $1,086 million for the second quarter of 2021 of which $834 million was in Semiconductor Test, $105 million in System Test, $55 million in Wireless Test and $92 million in Industrial Automation (IA). GAAP net income for the second quarter was $328.3 million or $1.76 per diluted share. On a non-GAAP basis, Teradyne’s net income in the second quarter was $337.5 million, or $1.91 per diluted share, which excluded acquired intangible asset amortization, restructuring and other charges, non-cash convertible debt interest, and included the related tax impact on non-GAAP adjustments.

“Test demand across all of our end markets remained high in the second quarter and the strong recovery in our Industrial Automation business broadened geographically,” said Teradyne CEO and President Mark Jagiela. “System on a chip (SOC) test shipments were exceptionally strong in the quarter growing nearly 30% from last year’s record level. In Industrial Automation, Universal Robots delivered growth in North America, Europe and China compared with both 2020 and 2019 as the improving global economy and expanding range of automation solutions we offer powered our highest quarterly group revenue on record.

“As we look ahead, our Q3 outlook reflects continued strong demand from both our Test and Industrial Automation end markets and, at the mid-point of our guidance, puts us on track to grow sales 12% and GAAP and non-GAAP earnings per share 7% and 20%, respectively, from our Q3’20 levels.”


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Guidance for the third quarter of 2021 is revenue of $880 million to $960 million, with GAAP net income of $1.17 to $1.41 per diluted share and non-GAAP net income of $1.29 to $1.55 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest 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, Wednesday, July 28. 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 8:30 a.m. ET. A replay will be available on the Teradyne website at https://investors.teradyne.com/events-presentations.

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, losses on convertible debt conversions, pension actuarial gains and losses, discrete income tax adjustments, fair value inventory step-up, and restructuring and other, and includes the related tax impact on non-GAAP adjustments. GAAP requires that these items be included in determining income from operations and net income. Non-GAAP income from operations, non-GAAP net income, non-GAAP income from operations as a percentage of revenue, non-GAAP net income as a percentage of revenue, and non-GAAP net income per share are non-GAAP performance measures presented to provide meaningful supplemental information regarding Teradyne’s baseline performance before gains, losses or other charges that may not be indicative of Teradyne’s current core business or future outlook. These non-GAAP performance measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradyne’s business plan, historical operating results and the operating results of Teradyne’s competitors. Non-GAAP gross margin excludes fair value inventory step-up. 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


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this press release is contained in the attached exhibits and on the Teradyne website at 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) 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 2020, Teradyne had revenue of $3.1 billion and today employs 5,600 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, the impact of the COVID-19 pandemic, 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, and the impact of U.S. and Chinese 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, the impact of the COVID-19 pandemic, or the impact of U.S. and Chinese 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 imposed 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 Teradyne’s products are not subject to the EAR and therefore were not affected by the Entity List restrictions, some of its products are currently manufactured in the U.S. and thus subject to the Entity List restrictions.

On August 17, 2020, the U.S. Department of Commerce published final regulations expanding the scope of the U.S. EAR to include additional products that became subject to export restrictions relating to Huawei entities including HiSilicon. These new regulations restrict the sale to Huawei and the designated Huawei entities of certain non-U.S. made items, such as semiconductor devices, manufactured for or sold to Huawei


Page 4

 

entities including HiSilicon under specific, detailed conditions set forth in the new regulations. These new regulations have impacted our sales to Huawei, HiSilicon and their suppliers. Teradyne is taking appropriate actions, including filing for licenses with the U.S. Department of Commerce and working with the U.S. regulators to clarify the scope of the restrictions. However, Teradyne cannot be certain that the actions it takes will mitigate the risks associated with the new export controls that impact its business. It is uncertain the extent these new regulations and any other additional regulations that may be implemented by the U.S. Department of Commerce or other government agency may have on Teradyne’s business and financial results.

On April 28, 2020, the U.S. Department of Commerce published new export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China, Russia and Venezuela. The definition of military end user is broad. The regulations went into effect on June 29, 2020. In December 2020, the U.S. Department of Commerce issued a list of companies in China and other countries that it considered to be military end users. Teradyne does not expect that compliance with the new export controls will significantly impact its ability to sell products to its customers in China or to manufacture products in China. The new export controls, however, could disrupt the Company’s supply chain, increase compliance costs and impact the demand for the Company’s products in China and, thus, have a material adverse impact on Teradyne’s business, financial condition or results of operations. In addition, while the Company maintains an export compliance program, its compliance controls could be circumvented, exposing the Company to legal liabilities. Teradyne continues to assess the potential impact of the new export controls on its business and operations and take appropriate actions, including filing for licenses with the U.S. Department of Commerce, to minimize any disruption. However, Teradyne cannot be certain that the actions it takes will mitigate all the risks associated with the new export controls that may impact its business.

In response to the regulations issued by the U.S. Department of Commerce, the Chinese government has passed new laws that may impact Teradyne’s business activities in China. The Company is assessing the potential impact of these new Chinese laws and monitoring relevant laws and regulations issued by the Chinese government.

The global pandemic of the novel strain of the coronavirus (COVID-19) has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns. These measures have impacted and may further impact Teradyne’s workforce and operations, the operations of its customers, and those of its contract manufacturers and suppliers. The COVID-19 pandemic has adversely impacted the Company’s results of operations, including increased costs company-wide and decreased sales in its industrial automation businesses. The Company cannot accurately estimate the amount of the impact on Teradyne’s 2021 financial results and to its future financial results. The COVID-19 outbreak has significantly increased economic and demand uncertainty in Teradyne’s markets. This uncertainty resulted in a significant decrease in demand for certain Teradyne products and could continue to impact demand for an uncertain period of time. The spread of COVID-19 has caused Teradyne to modify its business practices


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(including employee travel, employees working remotely, and cancellation of physical participation in meetings, events and conferences) and the Company may take further actions as may be required by government authorities or that it determines are in the best interests of its employees, customers, contract manufacturers and suppliers. There is uncertainty that such measures will be sufficient to mitigate the risks posed by the virus, and Teradyne’s ability to perform critical functions could be impacted. The degree to which COVID-19 impacts Teradyne’s results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and continued surge of the virus, its severity, the actions to contain the virus or the availability and impact of vaccines in countries where the Company does business, and how quickly and to what extent normal economic and operating conditions can resume.

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 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 the global semiconductor 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. 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; the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei and HiSilicon; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” sections of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2021. 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 2021

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

     Quarter Ended     Six Months Ended  
     July 4,
2021
    April 4,
2021
    June 28,
2020
    July 4,
2021
    June 28,
2020
 

Net revenues

   $ 1,085,728     $ 781,606     $ 838,661     $ 1,867,334     $ 1,543,016  

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

     438,739       319,988       367,188       758,727       665,993  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     646,989       461,618       471,473       1,108,607       877,023  

Operating expenses:

          

Selling and administrative

     140,187       129,797       113,259       269,984       224,647  

Engineering and development

     110,021       100,402       94,102       210,423       179,261  

Acquired intangible assets amortization

     5,402       5,536       8,941       10,938       18,832  

Restructuring and other (2)

     2,507       (7,130     37,222       (4,623     29,616  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     258,117       228,605       253,524       486,722       452,356  

Income from operations

     388,872       233,013       217,949       621,885       424,667  

Interest and other expense (3)

     4,846       9,020       658       13,866       10,308  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     384,026       223,993       217,291       608,019       414,359  

Income tax provision

     55,707       18,481       28,383       74,188       49,261  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 328,319     $ 205,512     $ 188,908     $ 533,831     $ 365,098  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

          

Basic

   $ 1.98     $ 1.23     $ 1.14     $ 3.21     $ 2.20  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 1.76     $ 1.09     $ 1.05     $ 2.85     $ 2.02  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares — basic

     165,995       166,491       165,789       166,243       166,189  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares — diluted (4)

     186,750       187,740       180,257       187,245       180,497  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividend declared per common share

   $ 0.10     $ 0.10     $ 0.10     $ 0.20     $ 0.20  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(1)   Cost of revenues includes:    Quarter Ended     Six Months Ended  
     July 4,
2021
    April 4,
2021
    June 28,
2020
    July 4,
2021
    June 28,
2020
 

Provision for excess and obsolete inventory

   $ 798     $ 2,827     $ 5,580     $ 3,625     $ 9,637  

Sale of previously written down inventory

     (428     (790     (337     (1,218     (1,414

Inventory step-up

     —         —         121       —         239  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 370     $ 2,037     $ 5,364     $ 2,407     $ 8,462  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(2)   Restructuring and other consists of:    Quarter Ended     Six Months Ended  
     July 4,
2021
    April 4,
2021
    June 28,
2020
    July 4,
2021
    June 28,
2020
 

Employee severance

   $ 436     $ 188     $ 36     $ 624     $ 764  

Acquisition related expenses and compensation

     275       (237     3,145       38       4,503  

Contingent consideration fair value adjustment

     —         (7,227     29,259       (7,227     19,239  

Contract termination settlement fee

     —         —         4,000       —         4,000  

Other

     1,796       146       782       1,942       1,110  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 2,507     $ (7,130)     $ 37,222     $ (4,623)     $ 29,616  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(3)   Interest and other includes:    Quarter Ended     Six Months Ended  
     July 4,
2021
    April 4,
2021
    June 28,
2020
    July 4,
2021
    June 28,
2020
 

Non-cash convertible debt interest

   $ 3,277     $ 3,581     $ 3,584     $ 6,858     $ 7,124  

Loss on convertible debt conversions

     1,175       4,069       —         5,244       —    

Pension actuarial gains

     (627     —         (99     (627     (99
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3,825     $ 7,650     $ 3,485     $ 11,475     $ 7,025  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(4)

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 4, 2021, April 4, 2021 and June 28, 2020, 9.6 million, 10.3 million and 7.6 million shares, respectively, have been included in diluted shares. For the six months ended July 4, 2021 and June 28, 2020, 9.9 million and 7.5 million shares, respectively have been included in diluted shares. For the quarters ended July 4, 2021, April 4, 2021, and June 28, 2020, diluted shares also included 10.1 million, 9.4 million and 5.8 million shares, respectively from the convertible note hedge transaction. For the six months ended July 4, 2021, and June 28, 2020, diluted shares included 9.8 million and 5.7 million shares, respectively from the convertible note hedge transaction.


CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

 

 

     July 4,
2021
     December 31,
2020
 

Assets

     

Cash and cash equivalents

   $ 954,441      $ 914,121  

Marketable securities

     282,121        522,280  

Accounts receivable, net

     868,457        497,506  

Inventories, net

     226,138        222,189  

Prepayments and other current assets

     368,315        259,338  
  

 

 

    

 

 

 

 

Total current assets

     2,699,472        2,415,434  

Property, plant and equipment, net

     395,395        394,800  

Operating lease right-of-use assets, net

     61,849        54,569  

Marketable securities

     181,560        117,980  

Deferred tax assets

     94,438        87,913  

Retirement plans assets

     17,170        17,468  

Other assets

     21,320        9,384  

Acquired intangible assets, net

     88,121        100,939  

Goodwill

     441,597        453,859  
  

 

 

    

 

 

 

Total assets

   $ 4,000,922      $ 3,652,346  
  

 

 

    

 

 

 

Liabilities

     

Accounts payable

   $ 156,103      $ 133,663  

Accrued employees’ compensation and withholdings

     205,717        220,321  

Deferred revenue and customer advances

     148,882        134,662  

Other accrued liabilities

     146,484        77,581  

Operating lease liabilities

     20,539        20,573  

Income taxes payable

     93,876        80,728  

Current debt

     213,761        33,343  
  

 

 

    

 

 

 

 

Total current liabilities

     985,362        700,871  

Retirement plans liabilities

     154,311        151,140  

Long-term deferred revenue and customer advances

     58,534        58,359  

Long-term contingent consideration

     —          7,227  

Long-term other accrued liabilities

     19,387        19,352  

Deferred tax liabilities

     8,961        10,821  

Long-term operating lease liabilities

     49,066        42,073  

Long-term income taxes payable

     67,041        74,930  

Debt

     143,618        376,768  
  

 

 

    

 

 

 

Total liabilities

     1,486,280        1,441,541  
  

 

 

    

 

 

 

Mezzanine equity

     21,386        3,787  

Shareholders’ equity

     2,493,256        2,207,018  
  

 

 

    

 

 

 

Total liabilities, convertible common shares and shareholders’ equity

   $ 4,000,922      $ 3,652,346  
  

 

 

    

 

 

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

 

 

     Quarter Ended     Six Months Ended  
     July 4,
2021
    June 28,
2020
    July 4,
2021
    June 28,
2020
 

Cash flows from operating activities:

        

Net income

   $ 328,319     $ 188,908     $ 533,831     $ 365,098  

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

        

Depreciation

     21,938       19,816       45,848       38,305  

Stock-based compensation

     10,999       10,907       23,231       21,367  

Amortization

     9,521       12,843       19,343       26,234  

Loss on convertible debt conversions

     1,175       —         5,244       —    

Provision for excess and obsolete inventory

     798       5,580       3,625       9,637  

Deferred taxes

     257       (5,338     (800     (7,163

Gains on investments

     (2,159     (5,126     (4,650     (469

Retirement plans actuarial gains

     (627     (99     (627     (99

Contingent consideration fair value adjustment

     —         29,259       (7,227     19,239  

Other

     (1     19       199       523  

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

        

Accounts receivable

     (285,186     (204,261     (372,698     (331,040

Inventories

     56,320       (19,546     19,908       (3,728

Prepayments and other assets

     (31,285     (9,859     (117,416     (49,479

Accounts payable and other liabilities

     97,361       148,901       86,790       113,578  

Deferred revenue and customer advances

     7,237       29,568       15,189       28,655  

Retirement plans contributions

     (814     (1,239     (2,739     (2,501

Income taxes

     (7,569     22,564       (2,628     37,842  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     206,284       222,897       244,423       265,999  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchases of property, plant and equipment

     (34,707     (47,314     (73,957     (84,014

Purchases of marketable securities

     (186,482     (112,429     (398,086     (299,548

Proceeds from maturities of marketable securities

     265,985       84,527       460,213       182,984  

Proceeds from sales of marketable securities

     54,819       11,656       116,112       26,661  

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

     (12,000     —         (12,000     149  

Proceeds from life insurance

     —         546       —         546  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) investing activities

     87,615       (63,014     92,282       (173,222
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Issuance of common stock under stock purchase and stock option plans

     15,437       5       32,581       12,757  

Repurchase of common stock

     (151,396     (9,426     (196,584     (88,465

Dividend payments

     (16,604     (16,580     (33,271     (33,266

Payments of convertible debt principal

     (15,553     —         (66,828     —    

Payments related to net settlement of employee stock compensation awards

     (1,119     (449     (31,794     (22,519

Payments of contingent consideration

     —         —         —         (8,852
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

     (169,235     (26,450     (295,896     (140,345
  

 

 

   

 

 

   

 

 

   

 

 

 

Effects of exchange rate changes on cash and cash equivalents

     (1,372     (1,496     (489     (925
  

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     123,292       131,937       40,320       (48,493

Cash and cash equivalents at beginning of period

     831,149       593,494       914,121       773,924  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 954,441     $ 725,431     $ 954,441     $ 725,431  
  

 

 

   

 

 

   

 

 

   

 

 

 


GAAP to Non-GAAP Earnings Reconciliation    

(In millions, except per share amounts)    

 

    Quarter Ended  
    July 4,
2021
    % of Net
Revenues
                April 4,
2021
    % of Net
Revenues
                June 28,
2020
    % of Net
Revenues
             

Net revenues

  $ 1,085.7           $ 781.6           $ 838.7        

Gross profit GAAP

  $ 647.0       59.6       $ 461.6       59.1       $ 471.5       56.2    

Inventory step-up

    —         —             —         —             0.1       0.0    
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

  $ 647.0       59.6       $ 461.6       59.1       $ 471.6       56.2    

Income from operations — GAAP

  $ 388.9       35.8       $ 233.0       29.8       $ 217.9       26.0    

Restructuring and other (1)

    2.5       0.2         (7.1     -0.9         37.2       4.4    

Acquired intangible assets amortization

    5.4       0.5         5.5       0.7         8.9       1.1    

Inventory step-up

    —         —             —         —             0.1       0.0    
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations — non-GAAP

  $ 396.8       36.5       $ 231.4       29.6       $ 264.1       31.5    
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     
                Net Income
per Common
Share
                Net Income
per Common
Share
                Net Income
per Common
Share
 
    July 4,
2021
    % of Net
Revenues
    Basic     Diluted     April 4,
2021
    % of Net
Revenues
    Basic     Diluted     June 28,
2020
    % of Net
Revenues
    Basic     Diluted  

Net income — GAAP

  $ 328.3       30.2   $ 1.98     $ 1.76     $ 205.5       26.3   $ 1.23     $ 1.09     $ 188.9       22.5   $ 1.14     $ 1.05  

Restructuring and other (1)

    2.5       0.2     0.02       0.01       (7.1     -0.9     (0.04     (0.04     37.2       4.4     0.22       0.21  

Acquired intangible assets amortization

    5.4       0.5     0.03       0.03       5.5       0.7     0.03       0.03       8.9       1.1     0.05       0.05  

Loss on convertible debt conversions (2)

    1.2       0.1     0.01       0.01       4.1       0.5     0.02       0.02       —         —         —         —    

Interest and other (2)

    3.3       0.3     0.02       0.02       3.6       0.5     0.02       0.02       3.6       0.4     0.02       0.02  

Pension mark-to-market adjustment (2)

    (0.6     -0.1     (0.00     (0.00     —         —         —         —         (0.1     0.0     (0.00     (0.00

Inventory step-up

    —         —         —         —         —         —         —         —         0.1       0.0     0.00       0.00  

Exclude discrete tax adjustments

    (1.1     -0.1     (0.01     (0.01     (15.1     -1.9     (0.09     (0.08     (1.1     -0.1     (0.01     (0.01

Non-GAAP tax adjustments

    (1.5     -0.1     (0.01     (0.01     (0.3     0.0     (0.00     (0.00     (8.3     -1.0     (0.05     (0.05

Convertible share adjustment (3)

    —         —         —         0.10       —         —         —         0.06       —         —         —         0.06  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income — non-GAAP

  $ 337.5       31.1   $ 2.03     $ 1.91     $ 196.2       25.1   $ 1.18     $ 1.11     $ 229.2       27.3   $ 1.38     $ 1.33  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares — basic

    166.0             166.5             165.8        

GAAP weighted average common shares — diluted

    186.8             187.7             180.3        

Exclude dilutive shares related to convertible note transaction

    (9.6           (10.3           (7.6      
 

 

 

         

 

 

         

 

 

       

Non-GAAP weighted average common shares — diluted

    177.2             177.4             172.7        
 

 

 

         

 

 

         

 

 

       

(1)    Restructuring and other consists of:

                       
    Quarter Ended                    
    July 4,
2021
                      April 4,
2021
                      June 28,
2020
                   

Employee severance

  $ 0.4           $ 0.2           $ —          

Acquisition related expenses and compensation

    0.3             (0.2           3.1        

Contingent consideration fair value adjustment

    —               (7.2           29.3        

Contract termination settlement fee

    —               —               4.0        

Other

    1.8             0.1             0.8        
 

 

 

         

 

 

         

 

 

       
  $ 2.5           $ (7.1)           $ 37.2        
 

 

 

         

 

 

         

 

 

       

 

(2)

For the quarters ended July 4, 2021, April 4, 2021, and June 28, 2020, Interest and other included non-cash convertible debt interest expense. For the quarters ended July 4, 2021 and April 4, 2021, adjustment to exclude loss on convertible debt conversions. For the quarters ended July 4, 2021 and June 28, 2020, adjustments to exclude actuarial (gain) recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

 

(3)

For the quarters ended July 4, 2021, April 4, 2021, and June 28, 2020, the non-GAAP diluted EPS calculation adds back $0.9 million, $1.2 million, and $1.3 million of convertible debt interest expense to non-GAAP net income, and non-GAAP weighted average diluted common shares include 10.1 million, 9.4 million and 5.8 million shares, respectively, from the convertible note hedge transaction.


     Six Months Ended  
     July 4,
2021
    % of Net
Revenues
                June 28,
2020
    % of Net
Revenues
             

Net Revenues

   $ 1,867.3           $ 1,543.0        

Gross profit GAAP

   $ 1,108.6       59.4       $ 877.0       56.8    

Inventory step-up

     —         —             0.2       0.0    
  

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

   $ 1,108.6       59.4       $ 877.2       56.9    

Income from operations — GAAP

   $ 621.9       33.3       $ 424.7       27.5    

Restructuring and other (1)

     (4.6     -0.2         29.6       1.9    

Acquired intangible assets amortization

     10.9       0.6         18.8       1.2    

Inventory step-up

     —         —             0.2       0.0    
  

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations — non-GAAP

   $ 628.2       33.6       $ 473.3       30.7    
  

 

 

   

 

 

       

 

 

   

 

 

     
                 Net Income
per Common
Share
                Net Income
per Common
Share
 
     July 4,
2021
    % of Net
Revenues
    Basic     Diluted     June 28,
2020
    % of Net
Revenues
    Basic     Diluted  

Net income — GAAP

   $ 533.8       28.6   $ 3.21     $ 2.85     $ 365.1       23.7   $ 2.20     $ 2.02  

Restructuring and other (1)

     (4.6     -0.2     (0.03     (0.02     29.6       1.9     0.18       0.16  

Acquired intangible assets amortization

     10.9       0.6     0.07       0.06       18.8       1.2     0.11       0.10  

Loss on convertible debt conversions (2)

     5.2       0.3     0.03       0.03       —         —         —         —    

Interest and other (2)

     6.9       0.4     0.04       0.04       7.1       0.5     0.04       0.04  

Inventory step-up

     —         —         —         —         0.2       0.0     0.00       0.00  

Pension mark-to-market adjustment (2)

     (0.6     0.0     (0.00     (0.00     (0.1     0.0     (0.00     (0.00

Exclude discrete tax adjustments

     (16.3     -0.9     (0.10     (0.09     (8.7     -0.6     (0.05     (0.05

Non-GAAP tax adjustments

     (1.9     -0.1     (0.01     (0.01     (10.1     -0.7     (0.06     (0.06

Convertible share adjustment (3)

     —         —         —         0.16       —         —         —         0.10  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income — non-GAAP

   $ 533.4       28.6   $ 3.21     $ 3.02     $ 401.9       26.0   $ 2.42     $ 2.34  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares — basic

     166.2             166.2        

GAAP weighted average common shares — diluted

     187.2             180.5        

Exclude dilutive shares from convertible note

     (9.9           (7.5      
  

 

 

         

 

 

       

Non-GAAP weighted average common shares — diluted

     177.3             173.0        
  

 

 

         

 

 

       

(1)    Restructuring and other consists of:

                
     Six Months Ended                    
     July 4,
2021
                      June 28,
2020
                   

Contingent consideration fair value adjustment

   $ (7.2)           $ 19.2        

Employee severance

     0.6             0.8        

Acquisition related expenses and compensation

     —               4.5        

Contract termination settlement fee

     —               4.0        

Other

     1.9             1.1        
  

 

 

         

 

 

       
   $ (4.6)           $ 29.6        
  

 

 

         

 

 

       

 

(2)

For the six months ended July 4, 2021 and June 28, 2020, Interest and other included non-cash convertible debt interest expense. For the six months ended July 4, 2021, adjustment to exclude loss on convertible debt conversions. For the six months ended July 4, 2021 and June 28, 2020, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

 

(3)

For the six months ended July 4, 2021 and June 28, 2020, the non-GAAP diluted EPS calculation adds back $2.1 million and $2.6 million, respectively of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 9.8 million and 5.7 million shares, respectively related to the convertible debt hedge transaction.

GAAP to Non-GAAP Reconciliation of Third Quarter 2021 guidance:

GAAP and non-GAAP third quarter revenue guidance:

   $ 880 million       to      $ 960 million  

GAAP net income per diluted share

   $ 1.17        $ 1.41  

Exclude acquired intangible assets amortization

     0.03          0.03  

Exclude non-cash convertible debt interest

     0.02          0.02  

Tax effect of non-GAAP adjustments

     (0.01        (0.01

Convertible share adjustment

     0.08          0.09  
  

 

 

      

 

 

 

Non-GAAP net income per diluted share

   $ 1.29        $ 1.55  

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