10-Q
falseP60Y2017-06-150000097210Q3--12-31NASDAQIncludes $3.8 million and $1.7 million in 2021 and 2020, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.Includes $11.1 million and $6.1 million in 2021 and 2020, respectively, for leases of Teradyne’s systems recognized outside ASC 606 “Revenue from Contracts with Customers.In the nine months ended September 27, 2020, Teradyne paid $8.9 million of contingent consideration for the earn-out in connection with the acquisition of MiR.In the three and nine months ended September 27, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide decreased by $27.2 million and $4.4 million, respectively, due to lower forecasted revenues and earnings before interest and taxes.In the nine months ended September 27, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisition of Mobile Industrial Robots (“MiR”) decreased by $3.5 million due to lower forecasted results.In the nine months ended October 3, 2021, the fair value of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide was reduced to zero, which resulted in a benefit of $7.2 million, primarily due to a decrease in forecasted revenues and earnings before interest and taxes. As of October 3, 2021, the maximum amount of contingent consideration that could be paid in connection with the acquisition of AutoGuide is $100.2 million. The remaining earn-out periods end on December 31, 2021 and December 31, 2022. The sellers of AutoGuide have filed an arbitration claim against Teradyne related to allegations of non-compliance with its earn-out obligations. The ultimate amount of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide may be affected by the outcome of the arbitration (see Note R: “Commitments and Contingencies”).The carrying value represents the bifurcated debt component only, while the level 2 fair value is based on quoted market prices for the convertible note, which includes the equity conversion features.The amortization of prior service credit is included in the computation of net periodic postretirement benefit cost. See Note Q: “Retirement Plans.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 of $31.53 and $31.54, multiplied by 8.7 million shares and 11.7 million shares, for the three and nine months ended October 3, 2021, respectively. 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.Convertible notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price of $39.56 and $39.58, multiplied by 14.6 million shares and 14.6 million shares for the three and nine months ended October 3, 2021, respectively. The result of this calculation, representing the total intrinsic value of the warrant, was divided by the average Teradyne stock price for the period.The (loss) before income taxes for the nine months ended October 3, 2021 for Industrial Automation has been decreased and Corporate and Other has been increased to correctly eliminate a $10.1 million immaterial error in the three and six months ended July 4, 2021 related to intercompany charges. The error is not material to any historical periods.Included in income (loss) before taxes are charges and credits related to restructuring and other, loss on convertible debt conversions and inventory charges.Included in Corporate and Other are: contingent consideration adjustments, loss on convertible debt conversions, interest income, interest expense, net foreign exchange gains (losses), pension, intercompany eliminations and acquisition related: (a) charges; (b) legal fees; (c) compensation.Total assets are attributable to each segment. 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SECURITIES AND EXCHANGE COMMISSION
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended October 3, 2021
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from
to
Commission File
No. 001-06462
(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
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600 Riverpark Drive, North Reading, |
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(Address of Principal Executive Offices) |
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(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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Common Stock, par value $0.125 per share |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in
Rule 12b-2
of the Exchange Act (check one):
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Large accelerated filer |
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☒ |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
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☐ |
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Emerging growth company |
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☐ |
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Smaller reporting company |
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☐ |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act). Yes ☐ No
☒ The number of shares outstanding of the registrant’s only class of Common Stock as of November 1, 2021 was 163,004,340 shares.
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Item 1. |
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Financial Statements (Unaudited): |
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Condensed Consolidated Balance Sheets as of October 3, 2021 and December 31, 2020 |
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1 |
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Condensed Consolidated Statements of Operations for the Three and Nine Months Ended October 3, 2021 and September 27, 2020 |
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2 |
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Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended October 3, 2021 and September 27, 2020 |
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3 |
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Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended October 3, 2021 and September 27, 2020 |
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4 |
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Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 3, 2021 and September 27, 2020 |
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5 |
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Notes to Condensed Consolidated Financial Statements |
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6 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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28 |
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Item 3. |
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Quantitative and Qualitative Disclosures about Market Risk |
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38 |
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Item 4. |
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Controls and Procedures |
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39 |
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Item 1. |
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Legal Proceedings |
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39 |
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Item 1A. |
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Risk Factors |
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39 |
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Item 2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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40 |
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Item 4. |
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Mine Safety Disclosures |
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41 |
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Item 6. |
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Exhibits |
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42 |
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(in thousands, except per share amount) |
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Cash and cash equivalents |
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$ |
1,079,454 |
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$ |
914,121 |
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233,397 |
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522,280 |
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Accounts receivable, less allowance for credit losses of $1,913 and $2,034 at October 3, 2021 and December 31, 2020, respectively |
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597,124 |
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497,506 |
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224,242 |
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222,189 |
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Prepayments and other current assets |
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386,967 |
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259,338 |
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2,521,184 |
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2,415,434 |
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Property, plant and equipment, net |
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390,545 |
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394,800 |
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Operating lease assets, net |
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61,608 |
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54,569 |
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136,664 |
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117,980 |
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96,808 |
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87,913 |
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16,958 |
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17,468 |
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23,340 |
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9,384 |
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Acquired intangible assets, net |
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81,677 |
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100,939 |
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433,398 |
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453,859 |
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$ |
3,762,182 |
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$ |
3,652,346 |
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$ |
154,912 |
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$ |
133,663 |
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Accrued employees’ compensation and withholdings |
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196,928 |
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220,321 |
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Deferred revenue and customer advances |
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140,380 |
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134,662 |
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Other accrued liabilities |
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135,492 |
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77,581 |
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Operating lease liabilities |
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20,601 |
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20,573 |
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73,077 |
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80,728 |
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32,219 |
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33,343 |
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Total current liabilities |
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753,609 |
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700,871 |
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Retirement plans liabilities |
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153,249 |
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151,140 |
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Long-term deferred revenue and customer advances |
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60,022 |
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58,359 |
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Long-term contingent consideration |
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— |
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7,227 |
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Long-term other accrued liabilities |
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19,704 |
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19,352 |
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6,907 |
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10,821 |
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Long-term operating lease liabilities |
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48,492 |
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42,073 |
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Long-term incomes taxes payable |
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67,041 |
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74,930 |
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112,784 |
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376,768 |
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1,221,808 |
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1,441,541 |
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Commitments and contingencies |
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Convertible common shares |
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2,881 |
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3,787 |
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Common stock, $0.125 par value, 1,000,000 shares authorized; 163,728 and 166,123 shares issued and outstanding at October 3, 2021 and December 31, 2020, respectively |
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20,466 |
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20,765 |
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Additional paid-in capital |
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1,800,373 |
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1,765,323 |
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Accumulated other comprehensive income |
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4,217 |
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33,516 |
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712,437 |
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387,414 |
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Total shareholders’ equity |
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2,537,493 |
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2,207,018 |
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Total liabilities, convertible common shares and shareholders’ equity |
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$ |
3,762,182 |
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$ |
3,652,346 |
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The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s
Annual Report on Form
10-K
for the year ended December 31, 2020, are an integral part of the condensed
consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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(in thousands, except per share amount) |
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Products |
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$ |
825,448 |
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$ |
697,745 |
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$ |
2,437,901 |
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$ |
2,043,281 |
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Services |
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|
125,053 |
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121,739 |
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|
379,934 |
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319,219 |
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Total revenues |
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950,501 |
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819,484 |
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2,817,835 |
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2,362,500 |
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Cost of revenues: |
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Cost of products |
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|
333,229 |
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300,174 |
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|
989,859 |
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|
882,902 |
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Cost of services |
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|
46,271 |
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|
60,382 |
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148,368 |
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143,647 |
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Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) |
|
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379,500 |
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360,556 |
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1,138,227 |
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1,026,549 |
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Gross profit |
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571,001 |
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458,928 |
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1,679,608 |
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1,335,951 |
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Operating expenses: |
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Selling and administrative |
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134,829 |
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|
115,840 |
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|
404,812 |
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|
340,488 |
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Engineering and development |
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|
107,220 |
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|
94,909 |
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|
317,644 |
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|
274,170 |
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Acquired intangible assets amortization |
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5,355 |
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|
6,219 |
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16,293 |
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|
25,052 |
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Restructuring and other |
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|
1,197 |
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(27,701 |
) |
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(3,426 |
) |
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1,915 |
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Total operating expenses |
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|
248,601 |
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|
189,267 |
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|
735,323 |
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641,625 |
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Income from operations |
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|
322,400 |
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|
269,661 |
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|
|
944,285 |
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|
694,326 |
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Non-operating (income) expense: |
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Interest income |
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|
(626 |
) |
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|
(1,071 |
) |
|
|
(2,066 |
) |
|
|
(5,189 |
) |
Interest expense |
|
|
3,785 |
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|
|
6,237 |
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|
15,354 |
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|
|
17,831 |
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Other (income) expense, net |
|
|
21,486 |
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|
|
764 |
|
|
|
25,223 |
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|
|
3,595 |
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|
|
|
|
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|
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Income before income taxes |
|
|
297,755 |
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|
|
263,731 |
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|
|
905,774 |
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|
678,089 |
|
Income tax provision |
|
|
41,037 |
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|
|
41,013 |
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|
115,225 |
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|
|
90,274 |
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Net income |
|
$ |
256,718 |
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|
$ |
222,718 |
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$ |
790,549 |
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|
$ |
587,815 |
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Net income per common share: |
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Basic |
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$ |
1.56 |
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|
$ |
1.34 |
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|
$ |
4.77 |
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|
$ |
3.54 |
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Diluted |
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$ |
1.41 |
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$ |
1.21 |
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$ |
4.26 |
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$ |
3.23 |
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Weighted average common shares—basic |
|
|
164,583 |
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|
|
166,014 |
|
|
|
165,690 |
|
|
|
166,131 |
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|
Weighted average common shares—diluted |
|
|
181,987 |
|
|
|
184,338 |
|
|
|
185,492 |
|
|
|
181,777 |
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|
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s
Annual Report on Form
10-K
for the year ended December 31, 2020, are an integral part of the condensed
consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
256,718 |
|
|
$ |
222,718 |
|
|
$ |
790,549 |
|
|
$ |
587,815 |
|
Other comprehensive income, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment, net of tax of $0, $0, $0, $0, respectively |
|
|
(10,698 |
) |
|
|
17,104 |
|
|
|
(26,672 |
) |
|
|
24,131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (losses) gains on marketable securities arising during period, net of tax of $(44), $139, $(516), and $1,410, respectively |
|
|
(176 |
) |
|
|
335 |
|
|
|
(1,952 |
) |
|
|
5,165 |
|
Less: Reclassification adjustment for gains included in net income, net of tax of $(65), $(194), $(186), $(615), respectively |
|
|
(229 |
) |
|
|
(689 |
) |
|
|
(670 |
) |
|
|
(2,188 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(405 |
) |
|
|
(354 |
) |
|
|
(2,622 |
) |
|
|
2,977 |
|
Defined benefit post-retirement plan: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior service credit, net of tax of $0, $0, $(2), $(1), respectively |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(5 |
) |
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss) income |
|
|
(11,105 |
) |
|
|
16,748 |
|
|
|
(29,299 |
) |
|
|
27,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income |
|
$ |
245,613 |
|
|
$ |
239,466 |
|
|
$ |
761,250 |
|
|
$ |
614,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s
Annual Report on Form
10-K
for the year ended December 31, 2020, are an integral part of the condensed
consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE COMMON SHARES
|
|
|
|
|
|
|
|
|
Convertible Common Share s Value |
|
|
|
|
|
|
|
|
Additional Paid-in Capital |
|
|
Accumulated Other Comprehensive Income (Loss) |
|
|
Retained Earnings (Accumulated Deficit) |
|
|
Total Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended October 3, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 4, 2021 |
|
$ |
21,386 |
|
|
|
165,444 |
|
|
$ |
20,680 |
|
|
$ |
1,772,302 |
|
|
$ |
15,322 |
|
|
$ |
684,952 |
|
|
$ |
2,493,256 |
|
Net issuance of common stock under stock-based plans |
|
|
|
|
|
|
8 |
|
|
|
1 |
|
|
|
(259 |
) |
|
|
|
|
|
|
|
|
|
|
(258 |
) |
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,042 |
|
|
|
|
|
|
|
|
|
|
|
10,042 |
|
Repurchase of common stock |
|
|
|
|
|
|
(1,724 |
) |
|
|
(215 |
) |
|
|
|
|
|
|
|
|
|
|
(212,781 |
) |
|
|
(212,996 |
) |
Cash dividends ($0.10 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,452 |
) |
|
|
(16,452 |
) |
Settlements of convertible notes |
|
|
|
|
|
|
5,589 |
|
|
|
699 |
|
|
|
636,798 |
|
|
|
|
|
|
|
|
|
|
|
637,497 |
|
Exercise of convertible notes hedge call options |
|
|
|
|
|
|
(5,589 |
) |
|
|
(699 |
) |
|
|
(637,015 |
) |
|
|
|
|
|
|
|
|
|
|
(637,714 |
) |
Convertible common shares |
|
|
(18,505 |
) |
|
|
|
|
|
|
|
|
|
|
18,505 |
|
|
|
|
|
|
|
|
|
|
|
18,505 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
256,718 |
|
|
|
256,718 |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,105 |
) |
|
|
|
|
|
|
(11,105 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 3, 2021 |
|
$ |
2,881 |
|
|
|
163,728 |
|
|
$ |
20,466 |
|
|
$ |
1,800,373 |
|
|
$ |
4,217 |
|
|
$ |
712,437 |
|
|
$ |
2,537,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 27, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 28, 2020 |
|
$ |
— |
|
|
|
165,806 |
|
|
$ |
20,725 |
|
|
$ |
1,730,716 |
|
|
$ |
(8,500 |
) |
|
$ |
1,610 |
|
|
$ |
1,744,551 |
|
Net issuance of common stock under stock-based plans |
|
|
|
|
|
|
237 |
|
|
|
30 |
|
|
|
13,515 |
|
|
|
|
|
|
|
|
|
|
|
13,545 |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,600 |
|
|
|
|
|
|
|
|
|
|
|
12,600 |
|
Cash dividends ($0.10 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,618 |
) |
|
|
(16,618 |
) |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
222,718 |
|
|
|
222,718 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,748 |
|
|
|
|
|
|
|
16,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 27, 2020 |
|
$ |
— |
|
|
|
166,043 |
|
|
$ |
20,755 |
|
|
$ |
1,756,831 |
|
|
$ |
8,248 |
|
|
$ |
207,710 |
|
|
$ |
1,993,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended October 3, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020 |
|
$ |
3,787 |
|
|
|
166,123 |
|
|
$ |
20,765 |
|
|
$ |
1,765,323 |
|
|
$ |
33,516 |
|
|
$ |
387,414 |
|
|
$ |
2,207,018 |
|
Net issuance of common stock under stock-based plans |
|
|
|
|
|
|
893 |
|
|
|
112 |
|
|
|
(48 |
) |
|
|
|
|
|
|
|
|
|
|
64 |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,915 |
|
|
|
|
|
|
|
|
|
|
|
35,915 |
|
Repurchase of common stock |
|
|
|
|
|
|
(3,288 |
) |
|
|
(411 |
) |
|
|
|
|
|
|
|
|
|
|
(415,769 |
) |
|
|
(416,180 |
) |
Cash dividends ($0.30 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49,757 |
) |
|
|
(49,757 |
) |
Settlements of convertible notes |
|
|
|
|
|
|
7,178 |
|
|
|
897 |
|
|
|
840,305 |
|
|
|
|
|
|
|
|
|
|
|
841,202 |
|
Exercise of convertible notes hedge call options |
|
|
|
|
|
|
(7,178 |
) |
|
|
(897 |
) |
|
|
(842,028 |
) |
|
|
|
|
|
|
|
|
|
|
(842,925 |
) |
Convertible common shares |
|
|
(906 |
) |
|
|
|
|
|
|
|
|
|
|
906 |
|
|
|
|
|
|
|
|
|
|
|
906 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
790,549 |
|
|
|
790,549 |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29,299 |
) |
|
|
|
|
|
|
(29,299 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, October 3, 2021 |
|
$ |
2,881 |
|
|
|
163,728 |
|
|
$ |
20,466 |
|
|
$ |
1,800,373 |
|
|
$ |
4,217 |
|
|
$ |
712,437 |
|
|
$ |
2,537,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 27, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2019 |
|
$ |
— |
|
|
|
166,410 |
|
|
$ |
20,801 |
|
|
$ |
1,720,129 |
|
|
$ |
(18,854 |
) |
|
$ |
(241,918 |
) |
|
$ |
1,480,158 |
|
Net issuance of common stock under stock-based plans |
|
|
|
|
|
|
1,150 |
|
|
|
144 |
|
|
|
3,019 |
|
|
|
|
|
|
|
|
|
|
|
3,163 |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,683 |
|
|
|
|
|
|
|
|
|
|
|
33,683 |
|
Repurchase of common stock |
|
|
|
|
|
|
(1,517 |
) |
|
|
(190 |
) |
|
|
|
|
|
|
|
|
|
|
(88,275 |
) |
|
|
(88,465 |
) |
Cash dividends ($0.30 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49,912 |
) |
|
|
(49,912 |
) |
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
587,815 |
|
|
|
587,815 |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,102 |
|
|
|
|
|
|
|
27,102 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 27, 2020 |
|
$ |
— |
|
|
|
166,043 |
|
|
$ |
20,755 |
|
|
$ |
1,756,831 |
|
|
$ |
8,248 |
|
|
$ |
207,710 |
|
|
$ |
1,993,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s
Annual Report on Form
10-K
for the year ended December 31, 2020, are an integral part of the condensed
consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
790,549 |
|
|
$ |
587,815 |
|
Adjustments to reconcile net income from operations to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
67,866 |
|
|
|
58,111 |
|
Stock-based compensation |
|
|
34,649 |
|
|
|
33,028 |
|
Amortization |
|
|
27,626 |
|
|
|
36,577 |
|
Loss on convertible debt conversion |
|
|
25,397 |
|
|
|
— |
|
Provision for excess and obsolete inventory |
|
|
11,775 |
|
|
|
13,116 |
|
Deferred taxes |
|
|
(10,732 |
) |
|
|
(4,547 |
) |
Contingent consideration adjustment |
|
|
(7,227 |
) |
|
|
(7,967 |
) |
Gains on investments |
|
|
(4,750 |
) |
|
|
(3,515 |
) |
Retirement plan actuarial (gains) losses |
|
|
(627 |
) |
|
|
2,589 |
|
Other |
|
|
243 |
|
|
|
750 |
|
Changes in operating assets and liabilities, net of businesses acquired: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(103,299 |
) |
|
|
(222,015 |
) |
Inventories |
|
|
21,943 |
|
|
|
16,998 |
|
Prepayments and other assets |
|
|
(138,564 |
) |
|
|
(40,751 |
) |
Accounts payable and other liabilities |
|
|
65,064 |
|
|
|
81,557 |
|
Deferred revenue and customer advances |
|
|
8,699 |
|
|
|
36,589 |
|
Retirement plans contributions |
|
|
(4,123 |
) |
|
|
(3,884 |
) |
Income taxes |
|
|
(17,406 |
) |
|
|
24,060 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
767,083 |
|
|
|
608,511 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(103,162 |
) |
|
|
(146,872 |
) |
Purchases of marketable securities |
|
|
(509,470 |
) |
|
|
(488,428 |
) |
Proceeds from maturities of marketable securities |
|
|
571,277 |
|
|
|
309,407 |
|
Proceeds from sales of marketable securities |
|
|
209,437 |
|
|
|
32,611 |
|
Purchase of investment and acquisition of business |
|
|
(12,000 |
) |
|
|
149 |
|
Proceeds from life insurance |
|
|
— |
|
|
|
546 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities |
|
|
156,082 |
|
|
|
(292,587 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Issuance of common stock under stock purchase and stock option plans |
|
|
32,590 |
|
|
|
26,528 |
|
Repurchase of common stock |
|
|
(406,180 |
) |
|
|
(88,465 |
) |
Payments of convertible debt principal |
|
|
(301,997 |
) |
|
|
— |
|
Dividend payments |
|
|
(49,711 |
) |
|
|
(49,870 |
) |
Payments related to net settlement of employee stock compensation awards |
|
|
(32,045 |
) |
|
|
(22,735 |
) |
Payments of contingent consideration |
|
|
— |
|
|
|
(8,852 |
) |
|
|
|
|
|
|
|
|
|
Net cash used for financing activities |
|
|
(757,343 |
) |
|
|
(143,394 |
) |
|
|
|
|
|
|
|
|
|
Effects of exchange rate changes on cash and cash equivalents |
|
|
(489 |
) |
|
|
(1,274 |
) |
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents |
|
|
165,333 |
|
|
|
171,256 |
|
Cash and cash equivalents at beginning of period |
|
|
914,121 |
|
|
|
773,924 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
1,079,454 |
|
|
$ |
945,180 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures incurred but not yet paid: |
|
$ |
2,286 |
|
|
$ |
3,119 |
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s
Annual Report on Form
10-K
for the year ended December 31, 2020, are an integral part of the condensed
consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Teradyne, Inc. (“Teradyne”) is a leading global supplier of automation equipment for test and industrial applications. Teradyne designs, develops, manufactures and sells automatic test systems used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Teradyne’s industrial automation products include collaborative robotic arms, autonomous mobile robots, and advanced robotic control software used by global manufacturing, logistics and light industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Teradyne’s automatic test equipment and industrial automation products and services include:
|
• |
|
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 |
|
• |
|
industrial automation (“Industrial Automation”) products. |
The consolidated interim financial statements include th
e
accounts of Teradyne and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These interim financial statements are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair statement of such interim financial statements. Certain prior year amounts were reclassified to conform to the current year presentation. The December 31, 2020 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by United States of America generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying financial information should be read in conjunction with the consolidated financial statements and notes thereto contained in Teradyne’s Annual Report on Form
10-K,
filed with the U.S. Securities and Exchange Commission (“SEC”) on February 22, 2021, for the year ended December 31, 2020.
Preparation of Financial Statements and Use of Estimates
The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent liabilities. On an
on-going
basis, management evaluates its estimates, including those related to inventories, investments, goodwill, intangible and other long-lived assets, accounts receivable, income taxes, deferred tax assets and liabilities, pensions, warranties, contingent consideration liabilities, and loss contingencies. Management bases its estimates on historical experience and on appropriate and customary assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Due to the
COVID-19
pandemic, there has been uncertainty and disruption in the global economy and our markets. Management is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of November 5, 2021, the date of issuance of this Quarterly Report on Form
10-Q.
These estimates may change, as new events occur and additional information is obtained. Actual results may differ significantly from these estimates under different assumptions or conditions.
C. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2020-06
– “Debt—Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity,” which simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. This ASU requires a convertible debt instrument to be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. This ASU requires an entity to use the
if-converted
method in the diluted earnings per share calculation for convertible instruments. This ASU will be effective for Teradyne on January 1, 2022. This ASU permits the use of either the modified retrospective or fully retrospective method of transition. Teradyne is evaluating the effects of the adoption of this ASU on its financial statements.
On November
4
, 2021, Teradyne made an irrevocable election under the indenture entered into between Teradyne and Wilmington Trust, National Association, as trustee (the “Indenture”) for the issuance of the
1.25% convertible senior unsecured notes (the “Notes”) due December 15, 2023 to require the principal portion of the remaining Notes to be settled in cash. Upon adoption of ASU
2020-06,
only the amounts settled in excess of the principal will be considered in diluted earnings per share under the
if-converted
method.
D. INVESTMENT IN OTHER COMPANY
1, 2021, Teradyne invested $
12.0 million in MachineMetrics, Inc. (“MachineMetrics”), a private company that develops and sells products to improve manufacturing performance through automated machine data collection, alerting, and analytics. Teradyne’s investment in MachineMetrics aligns with its strategy of providing and investing in leading edge products for automating industrial production processes in growing markets. The investment was recorded at cost and is evaluated for impairment or an indication of changes in fair value resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer on a quarterly basis. At October 3, 2021, the value of the investment was $
12.0 million, and there was
no change during the three months ended October 3, 2021.
Disaggregation of Revenue
The following table provides information about disaggregated revenue by timing of revenue recognition, primary geographical market, and major product lines.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended October 3, 2021 (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
508,747 |
|
|
$ |
105,454 |
|
|
$ |
88,155 |
|
|
$ |
76,008 |
|
|
$ |
12,351 |
|
|
$ |
226 |
|
|
$ |
65,409 |
|
|
$ |
(63 |
) |
|
$ |
856,287 |
|
|
|
|
66,270 |
|
|
|
7,761 |
|
|
|
14,450 |
|
|
|
1,742 |
|
|
|
607 |
|
|
|
80 |
|
|
|
3,304 |
|
|
|
— |
|
|
|
94,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
575,017 |
|
|
$ |
113,215 |
|
|
$ |
102,605 |
|
|
$ |
77,750 |
|
|
$ |
12,958 |
|
|
$ |
306 |
|
|
$ |
68,713 |
|
|
$ |
(63 |
) |
|
$ |
950,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
519,886 |
|
|
$ |
110,362 |
|
|
$ |
62,757 |
|
|
$ |
19,654 |
|
|
$ |
2,788 |
|
|
$ |
— |
|
|
$ |
54,344 |
|
|
$ |
— |
|
|
$ |
769,791 |
|
|
|
|
29,119 |
|
|
|
2,281 |
|
|
|
34,560 |
|
|
|
23,429 |
|
|
|
5,015 |
|
|
|
306 |
|
|
|
11,352 |
|
|
|
(63 |
) |
|
|
105,999 |
|
Europe, Middle East and Africa |
|
|
26,012 |
|
|
|
572 |
|
|
|
5,288 |
|
|
|
34,667 |
|
|
|
5,155 |
|
|
|
— |
|
|
|
3,017 |
|
|
|
— |
|
|
|
74,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
575,017 |
|
|
$ |
113,215 |
|
|
$ |
102,605 |
|
|
$ |
77,750 |
|
|
$ |
12,958 |
|
|
$ |
306 |
|
|
$ |
68,713 |
|
|
$ |
(63 |
) |
|
$ |
950,501 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 27, 2020 (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
393,717 |
|
|
$ |
137,929 |
|
|
$ |
101,045 |
|
|
$ |
51,523 |
|
|
$ |
10,175 |
|
|
$ |
4,076 |
|
|
$ |
37,901 |
|
|
$ |
(41 |
) |
|
$ |
736,325 |
|
|
|
|
55,988 |
|
|
|
4,507 |
|
|
|
17,124 |
|
|
|
1,686 |
|
|
|
59 |
|
|
|
1,192 |
|
|
|
2,603 |
|
|
|
— |
|
|
|
83,159 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
449,705 |
|
|
$ |
142,436 |
|
|
$ |
118,169 |
|
|
$ |
53,209 |
|
|
$ |
10,234 |
|
|
$ |
5,268 |
|
|
$ |
40,504 |
|
|
$ |
(41 |
) |
|
$ |
819,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|