8-K
TERADYNE, INC false 0000097210 0000097210 2021-10-26 2021-10-26

 

 

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): October 26, 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 October 26, 2021, Teradyne, Inc. (“Teradyne”) issued a press release regarding its financial results for the third quarter ended October 3, 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 October 26, 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: October 27, 2021     By:  

/S/ SANJAY MEHTA

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

Exhibit 99.1

Teradyne Reports Third Quarter 2021 Results

 

   

Revenue of $951 million in Q3’21 grew 16% from Q3’20 and 63% from Q3’19

 

   

GAAP Gross Margin 60% in Q3’21, up from 56% in Q3’20 and 59% in Q3’19

 

   

Q3’21 GAAP earnings per share grew 17% from Q3’20 and 88% from Q3’19

 

   

Q3’21 non-GAAP earnings per share grew 35% from Q3’20 and 106% from Q3’19

 

   

Test revenue grew 14% from Q3’20 and 67% from Q3’19 on Semiconductor Test and Wireless Test strength

 

   

Industrial Automation revenue grew 32% from Q3’20 and 32% from Q3’19 on global demand growth at Universal Robots

 

   

Q4’21 Revenue guidance at mid-point represents 13% growth from Q4’20 and 31% from Q4’19

 

     Q3’21      Q3’20      Q2’21      Q1-Q3’21      Q1-Q3’20  

Revenue (mil)

   $ 951      $ 819      $ 1,086      $ 2,818      $ 2,363  

GAAP EPS

   $ 1.41      $ 1.21      $ 1.76      $ 4.26      $ 3.23  

Non-GAAP EPS

   $ 1.59      $ 1.18      $ 1.91      $ 4.61      $ 3.52  

NORTH READING, Mass. – October 26, 2021 – Teradyne, Inc. (NASDAQ: TER) reported revenue of $951 million for the third quarter of 2021 of which $688 million was in Semiconductor Test, $103 million in System Test, $69 million in Wireless Test and $91 million in Industrial Automation (IA). GAAP net income for the third quarter was $256.7 million or $1.41 per diluted share. On a non-GAAP basis, Teradyne’s net income in the third quarter was $278.6 million, or $1.59 per diluted share, which excluded losses on convertible debt conversions, acquired intangible asset amortization, restructuring and other charges, non-cash convertible debt interest, discrete tax adjustments and included the related tax impact on non-GAAP adjustments.

“Demand for both our Test and Industrial Automation products remained strong in Q3 and we delivered our eighth consecutive quarter of double-digit, year on year revenue and profit growth,” said Teradyne CEO and President Mark Jagiela. “Higher than expected test shipments balanced lower than planned shipments from our Industrial Automation businesses as we encountered supply constraints in those product lines in the quarter.

“Q4’21 sales are expected to increase over 10% from Q4 2020’s record level on growing demand in Industrial/Automotive Test, Storage Test, and Industrial Automation. Full year company sales, GAAP EPS and non-GAAP EPS are expected to grow 18%, 28% and 27%, respectively, at the mid-point of our guidance.”

Guidance for the fourth quarter of 2021 is revenue of $820 million to $900 million, with GAAP net income of $1.08 to $1.33 per diluted share and non-GAAP net income of $1.14 to $1.40 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.


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Webcast

A conference call to discuss the third quarter results, along with management’s business outlook, is scheduled at 8:30 a.m. ET, Wednesday, October 27. 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 www.teradyne.com/investors.

Non-GAAP Results

In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain income items and charges. These results are provided as a complement to results provided in accordance with GAAP. Non-GAAP income from operations and non-GAAP net income exclude losses on convertible debt conversions, acquired intangible assets amortization, non-cash convertible debt interest, pension actuarial gains and losses, discrete income tax adjustments, fair value inventory step-up, and restructuring and other, and 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 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.


Page 3

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 over 5,700 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 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. However, Teradyne cannot be certain that the actions it takes


Page 4

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 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, shutdowns, and vaccination mandates. 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. Most recently, on September 9, 2021, President Biden issued Executive Order 14042 requiring covered employees of certain Federal contractors and subcontractors to be “fully vaccinated,” unless legally entitled to an accommodation due to a disability or religious belief, practice, or observance. Additionally, on September 9, 2021, President Biden announced that he has directed the Occupational Safety and Health Administration (OSHA) to develop a rule mandating vaccination or weekly testing for employers with 100+ employees. As Teradyne implements measures to comply with these new regulations, the Company may experience increased compliance costs, increased risk of non-compliance and increased risk of employee attrition.

The COVID-19 pandemic has adversely impacted the Company’s results of operations, including increased costs company-wide. 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


Page 5

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 (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 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 July 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 THIRD FISCAL QUARTER OF 2021

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

     Quarter Ended     Nine Months Ended  
     October 3,
2021
    July 4,
2021
    September 27,
2020
    October 3,
2021
    September 27,
2020
 

Net revenues

   $ 950,501     $ 1,085,728     $ 819,484     $ 2,817,835     $ 2,362,500  

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

     379,500       438,739       360,556       1,138,227       1,026,549  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     571,001       646,989       458,928       1,679,608       1,335,951  

Operating expenses:

          

Selling and administrative

     134,829       140,187       115,840       404,812       340,488  

Engineering and development

     107,220       110,021       94,909       317,644       274,170  

Acquired intangible assets amortization

     5,355       5,402       6,219       16,293       25,052  

Restructuring and other (2)

     1,197       2,507       (27,701     (3,426     1,915  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     248,601       258,117       189,267       735,323       641,625  

Income from operations

     322,400       388,872       269,661       944,285       694,326  

Interest and other expense (3)

     24,645       4,846       5,930       38,511       16,237  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     297,755       384,026       263,731       905,774       678,089  

Income tax provision

     41,037       55,707       41,013       115,225       90,274  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 256,718     $ 328,319     $ 222,718     $ 790,549     $ 587,815  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

          

Basic

   $ 1.56     $ 1.98     $ 1.34     $ 4.77     $ 3.54  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 1.41     $ 1.76     $ 1.21     $ 4.26     $ 3.23  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares—basic

     164,583       165,995       166,014       165,690       166,131  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares—diluted (4)

     181,987       186,750       184,338       185,492       181,777  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividend declared per common share

   $ 0.10     $ 0.10     $ 0.10     $ 0.30     $ 0.30  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(1)   Cost of revenues includes:    Quarter Ended     Nine Months Ended  
     October 3,
2021
    July 4,
2021
    September 27,
2020
    October 3,
2021
    September 27,
2020
 

Provision for excess and obsolete inventory

   $ 8,149     $ 798     $ 3,479     $ 11,775     $ 13,116  

Sale of previously written down inventory

     (824     (428     (310     (2,043     (1,722

Inventory step-up

     —         —         121       —         360  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 7,325     $ 370     $ 3,290     $ 9,732     $ 11,754  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(2)   Restructuring and other consists of:    Quarter Ended     Nine Months Ended  
     October 3,
2021
    July 4,
2021
    September 27,
2020
    October 3,
2021
    September 27,
2020
 

Employee severance

   $ 617     $ 436     $ 456     $ 1,242     $ 1,220  

Acquisition related expenses and compensation

     275       275       (1,086     313       3,418  

Contingent consideration fair value adjustment

     —         —         (27,206     (7,227     (7,967

Contract termination settlement fee

     —         —         —         —         4,000  

Other

     305       1,796       135       2,246       1,244  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 1,197     $ 2,507     $ (27,701   $ (3,426   $ 1,915  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(3)   Interest and other expense includes:    Quarter Ended     Nine Months Ended  
     October 3,
2021
    July 4,
2021
    September 27,
2020
    October 3,
2021
    September 27,
2020
 

Loss on convertible debt conversions

   $ 20,153     $ 1,175     $ —       $ 25,397     $ —    

Non-cash convertible debt interest

     2,262       3,277       3,629       9,120       10,752  

Pension actuarial (gains) losses

     —         (627     2,688       (627     2,589  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 22,415     $ 3,825     $ 6,317     $ 33,890     $ 13,341  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(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 October 3, 2021, July 4, 2021 and September 27, 2020, 6.5 million, 9.6 million and 9.2 million shares, respectively, have been included in diluted shares. For the nine months ended October 3, 2021 and September 27, 2020, 8.8 million and 8.0 million shares, respectively, have been included in diluted shares. For the quarters ended October 3, 2021, July 4, 2021 and September 27, 2020, diluted shares also included 9.8 million, 10.1 million and 7.8 million shares, respectively, from the convertible note hedge transaction. For the nine months ended October 3, 2021 and September 27, 2020, diluted shares included 9.8 million and 6.4 million shares, respectively, from the convertible note hedge transaction.


CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)    

 

     October 3,
2021
     December 31,
2020
 

Assets

     

Cash and cash equivalents

   $ 1,079,454      $ 914,121  

Marketable securities

     233,397        522,280  

Accounts receivable, net

     597,124        497,506  

Inventories, net

     224,242        222,189  

Prepayments and other current assets

     386,967        259,338  
  

 

 

    

 

 

 

Total current assets

     2,521,184        2,415,434  

Property, plant and equipment, net

     390,545        394,800  

Operating lease right-of-use assets, net

     61,608        54,569  

Marketable securities

     136,664        117,980  

Deferred tax assets

     96,808        87,913  

Retirement plans assets

     16,958        17,468  

Other assets

     23,340        9,384  

Acquired intangible assets, net

     81,677        100,939  

Goodwill

     433,398        453,859  
  

 

 

    

 

 

 

Total assets

   $ 3,762,182      $ 3,652,346  
  

 

 

    

 

 

 

Liabilities

     

Accounts payable

   $ 154,912      $ 133,663  

Accrued employees’ compensation and withholdings

     196,928        220,321  

Deferred revenue and customer advances

     140,380        134,662  

Other accrued liabilities

     135,492        77,581  

Operating lease liabilities

     20,601        20,573  

Income taxes payable

     73,077        80,728  

Current debt

     32,219        33,343  
  

 

 

    

 

 

 

Total current liabilities

     753,609        700,871  

Retirement plans liabilities

     153,249        151,140  

Long-term deferred revenue and customer advances

     60,022        58,359  

Long-term contingent consideration

     —          7,227  

Long-term other accrued liabilities

     19,704        19,352  

Deferred tax liabilities

     6,907        10,821  

Long-term operating lease liabilities

     48,492        42,073  

Long-term income taxes payable

     67,041        74,930  

Debt

     112,784        376,768  
  

 

 

    

 

 

 

Total liabilities

     1,221,808        1,441,541  
  

 

 

    

 

 

 

Mezzanine equity

     2,881        3,787  

Shareholders’ equity

     2,537,493        2,207,018  
  

 

 

    

 

 

 

Total liabilities, convertible common shares and shareholders’ equity

   $ 3,762,182      $ 3,652,346  
  

 

 

    

 

 

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

 

     Quarter Ended     Nine Months Ended  
     October 3,
2021
    September 27,
2020
    October 3,
2021
    September 27,
2020
 

Cash flows from operating activities:

        

Net income

   $ 256,718     $ 222,718     $ 790,549     $ 587,815  

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

        

Depreciation

     22,018       19,806       67,866       58,111  

Stock-based compensation

     11,418       11,661       34,649       33,028  

Amortization

     8,283       10,343       27,626       36,577  

Loss on convertible debt conversions

     20,153       —         25,397       —    

Provision for excess and obsolete inventory

     8,149       3,479       11,775       13,116  

Deferred taxes

     (9,932     2,616       (10,732     (4,547

Gains on investments

     (100     (3,046     (4,750     (3,515

Retirement plans actuarial losses (gains)

     —         2,688       (627     2,589  

Contingent consideration fair value adjustment

     —         (27,206     (7,227     (7,967

Other

     45       225       243       750  

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

        

Accounts receivable

     269,399       109,025       (103,299     (222,015

Inventories

     2,035       20,726       21,943       16,998  

Prepayments and other assets

     (21,148     8,728       (138,564     (40,751

Accounts payable and other liabilities

     (21,726     (32,020     65,064       81,557  

Deferred revenue and customer advances

     (6,490     7,934       8,699       36,589  

Retirement plans contributions

     (1,384     (1,383     (4,123     (3,884

Income taxes

     (14,778     (13,782     (17,406     24,060  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     522,660       342,512       767,083       608,511  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchases of property, plant and equipment

     (29,205     (62,858     (103,162     (146,872

Purchases of marketable securities

     (111,384     (188,880     (509,470     (488,428

Proceeds from maturities of marketable securities

     111,064       126,423       571,277       309,407  

Proceeds from sales of marketable securities

     93,325       5,950       209,437       32,611  

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

     —         —         (12,000     149  

Proceeds from life insurance

     —         —         —         546  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) investing activities

     63,800       (119,365     156,082       (292,587
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Payments of convertible debt principal

     (235,169     —         (301,997     —    

Repurchase of common stock

     (209,596     —         (406,180     (88,465

Dividend payments

     (16,440     (16,604     (49,711     (49,870

Payments related to net settlement of employee stock compensation awards

     (251     (216     (32,045     (22,735

Issuance of common stock under stock purchase and stock option plans

     9       13,771       32,590       26,528  

Payments of contingent consideration

     —         —         —         (8,852
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

     (461,447     (3,049     (757,343     (143,394
  

 

 

   

 

 

   

 

 

   

 

 

 

Effects of exchange rate changes on cash and cash equivalents

     —         (349     (489     (1,274
  

 

 

   

 

 

   

 

 

   

 

 

 

Increase in cash and cash equivalents

     125,013       219,749       165,333       171,256  

Cash and cash equivalents at beginning of period

     954,441       725,431       914,121       773,924  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 1,079,454     $ 945,180     $ 1,079,454     $ 945,180  
  

 

 

   

 

 

   

 

 

   

 

 

 


GAAP to Non-GAAP Earnings Reconciliation    

(In millions, except per share amounts)    

 

     Quarter Ended  
     October 3,
2021
    % of Net
Revenues
                July 4,
2021
    % of Net
Revenues
                September 27,
2020
    % of Net
Revenues
             

Net revenues

   $ 950.5           $ 1,085.7           $ 819.5        

Gross profit GAAP

   $ 571.0       60.1       $ 647.0       59.6       $ 458.9       56.0    

Inventory step-up

     —         —             —         —             0.1       0.0    
  

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

   $ 571.0       60.1       $ 647.0       59.6       $ 459.0       56.0    

Income from operations—GAAP

   $ 322.4       33.9       $ 388.9       35.8       $ 269.7       32.9    

Restructuring and other (1)

     1.2       0.1         2.5       0.2         (27.7     -3.4    

Acquired intangible assets amortization

     5.4       0.6         5.4       0.5         6.2       0.8    

Inventory step-up

     —         —             —         —             0.1       0.0    
  

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations - non-GAAP

   $ 329.0       34.6       $ 396.8       36.5       $ 248.3       30.3    
  

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     
                 Net Income
per Common Share
                Net Income
per Common Share
                Net Income
per Common Share
 
     October 3,
2021
    % of Net
Revenues
    Basic     Diluted     July 4,
2021
    % of Net
Revenues
    Basic     Diluted     September 27,
2020
    % of Net
Revenues
    Basic     Diluted  

Net income—GAAP

   $ 256.7       27.0   $ 1.56     $ 1.41     $ 328.3       30.2   $ 1.98     $ 1.76     $ 222.7       27.2   $ 1.34     $ 1.21  

Restructuring and other (1)

     1.2       0.1     0.01       0.01       2.5       0.2     0.02       0.01       (27.7     -3.4     (0.17     (0.15

Acquired intangible assets amortization

     5.4       0.6     0.03       0.03       5.4       0.5     0.03       0.03       6.2       0.8     0.04       0.03  

Loss on convertible debt conversions (2)

     20.2       2.1     0.12       0.11       1.2       0.1     0.01       0.01       —         —         —         —    

Interest   and other (2)

     2.3       0.2     0.01       0.01       3.3       0.3     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     2.7       0.3     0.02       0.01  

Inventory step-up

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

Exclude discrete tax adjustments

     (5.9     -0.6     (0.04     (0.03     (1.1     -0.1     (0.01     (0.01     (4.4     -0.5     (0.03     (0.02

Non-GAAP tax adjustments

     (1.3     -0.1     (0.01     (0.01     (1.5     -0.1     (0.01     (0.01     2.2       0.3     0.01       0.01  

Convertible share adjustment (3)

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income—non-GAAP

   $ 278.6       29.3   $ 1.69     $ 1.59     $ 337.5       31.1   $ 2.03     $ 1.91     $  205.4       25.1   $ 1.24     $ 1.18  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares— basic

     164.6             166.0             166.0        

GAAP weighted average common shares—diluted

     182.0             186.8             184.3        

Exclude dilutive shares related to convertible note transaction

     (6.5           (9.6           (9.2      
  

 

 

         

 

 

         

 

 

       

Non-GAAP weighted average common shares - diluted

     175.5             177.2             175.2        
  

 

 

         

 

 

         

 

 

       

(1)   Restructuring and other consists of:

    

               
     Quarter Ended  
     October 3,
2021
                      July 4,
2021
                      September 27,
2020
                   

Employee severance

   $ 0.6           $ 0.4           $ 0.5        

Acquisition related expenses and compensation

     0.3             0.3             (1.1      

Contingent consideration fair value adjustment

     —               —               (27.2      

Contract termination settlement fee

     —               —               —          

Other

     0.3             1.8             0.1        
  

 

 

         

 

 

         

 

 

       
   $ 1.2           $ 2.5           $ (27.7      
  

 

 

         

 

 

         

 

 

       

 

(2)

For the quarters ended October 3, 2021, July 4, 2021, and September 27, 2020, Interest and other included non-cash convertible debt interest expense. For the quarters ended October 3, 2021 and July 4, 2021, adjustment to exclude loss on convertible debt conversions. For the quarters ended July 4, 2021 and September 27, 2020, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

(3)

For the quarters ended October 3, 2021, July 4, 2021, and September 27, 2020, the non-GAAP diluted EPS calculation adds back $0.4 million, $0.9 million, and $1.3 million, respectively, of convertible debt interest expense to non-GAAP net income, and non-GAAP weighted average diluted common shares include 9.8 million, 10.1 million and 7.8 million shares, respectively, from the convertible note hedge transaction.


     Nine Months Ended  
     October 3,
2021
    % of Net
Revenues
                September 27,
2020
    % of Net
Revenues
             

Net Revenues

   $ 2,817.8           $ 2,362.5        

Gross profit GAAP

   $ 1,679.6       59.6       $ 1,336.0       56.6    

Inventory step-up

     —         —             0.4       0.0    
  

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

   $  1,679.6       59.6       $  1,336.4       56.6    

Income from operations—GAAP

   $ 944.3       33.5       $ 694.3       29.4    

Restructuring and other (1)

     (3.4     -0.1         1.9       0.1    

Acquired intangible assets amortization

     16.3       0.6         25.1       1.1    

Inventory step-up

     —         —             0.4       0.0    
  

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations—non-GAAP

   $ 957.2       34.0       $ 721.7       30.5    
  

 

 

   

 

 

       

 

 

   

 

 

     
                 Net Income
                Net Income
 
     October 3,
2021
    % of Net
Revenues
    Basic     Diluted     September 27,
2020
    % of Net
Revenues
    Basic     Diluted  

Net income—GAAP

   $ 790.5       28.1   $ 4.77     $ 4.26     $ 587.8       24.9   $ 3.54     $ 3.23  

Restructuring and other (1)

     (3.4     -0.1     (0.02     (0.02     1.9       0.1     0.01       0.01  

Acquired intangible assets amortization

     16.3       0.6     0.10       0.09       25.1       1.1     0.15       0.14  

Loss on convertible debt conversions (2)

     25.4       0.9     0.15       0.14       —         —         —         —    

Interest and other (2)

     9.1       0.3     0.05       0.05       10.8       0.5     0.07       0.06  

Pension mark-to-market adjustment (2)

     (0.6     0.0     (0.00     (0.00     2.6       0.1     0.02       0.01  

Inventory step-up

     —         —         —         —         0.4       0.0     0.00       0.00  

Exclude discrete tax adjustments

     (22.1     -0.8     (0.13     (0.12     (13.1     -0.6     (0.08     (0.07

Non-GAAP tax adjustments

     (3.2     -0.1     (0.02     (0.02     (8.0     -0.3     (0.05     (0.04

Convertible share adjustment (3)

     —         —         —         0.22       —         —         —         0.16  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income—non-GAAP

   $ 812.0       28.8   $ 4.90     $ 4.61     $ 607.5       25.7   $ 3.66     $ 3.52  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares - basic

     165.7             166.1        

GAAP weighted average common shares —diluted

     185.5             181.8        

Exclude dilutive shares from convertible note

     (8.8           (8.0      
  

 

 

         

 

 

       

Non-GAAP weighted average common shares—diluted

     176.7             173.8        
  

 

 

         

 

 

       

(1)   Restructuring and other consists of:

                
     Nine Months Ended                    
     October 3,
2021
                      September 27,
2020
                   

Contingent consideration fair value adjustment

   $ (7.2         $ (8.0      

Employee severance

     1.2             1.2        

Acquisition related expenses and compensation

     0.3             3.4        

Contract termination settlement fee

     —               4.0        

Other

     2.2             1.2        
  

 

 

         

 

 

       
   $ (3.4         $ 1.9        
  

 

 

         

 

 

       

 

(2)   For the nine months ended October 3, 2021 and September 27, 2020, Interest and other included non-cash convertible debt interest expense. For the nine months ended October 3, 2021, adjustment to exclude loss on convertible debt conversions. For the nine months ended October 3, 2021 and September 27, 2020, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

(3)   For the nine months ended October 3, 2021 and September 27, 2020, the non-GAAP diluted EPS calculation adds back $2.6 million and $3.9 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 6.4 million shares, respectively, related to the convertible debt hedge transaction.

 

    

    

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

 

   

GAAP and non-GAAP four quarter revenue guidance:

     $ 820 million       to     $ 900 million          

GAAP net income per diluted share

     $ 1.08       $ 1. 33          

Exclude acquired intangible assets amortization

       0.03         0.03          

Exclude non-cash convertible debt interest

       0.01         0.01          

Tax effect of non-GAAP adjustments

       (0.01       (0.01        

Convertible share adjustment

       0.02         0.03          
    

 

 

     

 

 

         

Non-GAAP net income per diluted share

     $ 1.14       $ 1.40          
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