10-Q
falseP60Y0000097210Q1--12-31Includes $3.1 million and $3.1 million in 2022 and 2021, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.”(a) In the three months ended April 4, 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 April 3, 2022, the maximum amount of contingent consideration that could be paid in connection with the acquisition of AutoGuide is $87.7 million. The remaining earn-out period ends on December 31, 2022. The sellers of AutoGuide have filed an arbitration claim against Teradyne related to the earn-out alleging non-compliance with the earn-out obligations. In March 2022, both parties reached an agreement to settle it for $26.7 million.(1) The carrying value represents the bifurcated debt component only, while the fair value is based on quoted market prices for the convertible note, which includes the equity conversion features.Included in Corporate and Eliminations are: legal fees, contingent consideration fair value adjustments, interest income, interest expense, severance charges, net foreign exchange gains (losses), acquisition related charges and compensation, intercompany eliminations and for the three months ended April 4, 2021, loss on convertible debt conversions.Included in income (loss) before taxes are charges and credits related to restructuring and other, inventory charges and, for the three months ended April 4, 2021, loss on convertible debt conversions.Total assets are attributable to each segment. 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SECURITIES AND EXCHANGE COMMISSION
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 3, 2022
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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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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):
|
|
|
|
|
|
|
| Large accelerated filer |
|
☒ |
|
Accelerated filer |
|
☐ |
| |
|
|
|
Non-accelerated filer |
|
☐ |
|
Emerging growth company |
|
☐ |
| |
|
|
|
| Smaller reporting 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. ☐
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 May 2, 2022 was
shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PART I. FINANCIAL INFORMATION |
|
|
|
|
|
|
|
| |
|
Financial Statements (Unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
2 |
|
|
|
|
|
|
|
|
|
3 |
|
|
|
|
|
|
|
|
|
4 |
|
|
|
|
|
|
|
|
|
5 |
|
|
|
|
|
|
|
|
|
6 |
|
|
|
|
| |
|
|
|
|
26 |
|
|
|
|
| |
|
|
|
|
33 |
|
|
|
|
| |
|
|
|
|
34 |
|
|
|
|
|
|
PART II. OTHER INFORMATION |
|
|
|
|
|
|
|
| |
|
|
|
|
34 |
|
|
|
|
| |
|
|
|
|
35 |
|
|
|
|
| |
|
|
|
|
35 |
|
|
|
|
| |
|
|
|
|
35 |
|
|
|
|
| |
|
|
|
|
36 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
794,603 |
|
|
$ |
1,122,199 |
|
| Marketable securities |
|
|
282,016 |
|
|
|
244,231 |
|
| Accounts receivable, less allowance for credit losses of $1,891 and $2,012 at April 3, 2022 and December 31, 2021, respectively |
|
|
546,881 |
|
|
|
550,749 |
|
| Inventories, net |
|
|
259,341 |
|
|
|
243,330 |
|
| Prepayments |
|
|
479,414 |
|
|
|
406,266 |
|
| Other current assets |
|
|
12,127 |
|
|
|
9,452 |
|
| |
|
|
|
|
|
|
|
|
| Total current assets |
|
|
2,374,382 |
|
|
|
2,576,227 |
|
| Property, plant and equipment, net |
|
|
399,485 |
|
|
|
387,240 |
|
Operating lease assets, net |
|
|
67,718 |
|
|
|
68,807 |
|
| Marketable securities |
|
|
126,130 |
|
|
|
133,858 |
|
| Deferred tax assets |
|
|
113,556 |
|
|
|
102,428 |
|
| Retirement plans assets |
|
|
14,669 |
|
|
|
15,110 |
|
| Other assets |
|
|
23,480 |
|
|
|
24,096 |
|
| Acquired intangible assets, net |
|
|
69,846 |
|
|
|
75,635 |
|
| Goodwill |
|
|
419,888 |
|
|
|
426,024 |
|
| |
|
|
|
|
|
|
|
|
| Total assets |
|
$ |
3,609,154 |
|
|
$ |
3,809,425 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Accounts payable |
|
$ |
156,493 |
|
|
$ |
153,133 |
|
| Accrued employees’ compensation and withholdings |
|
|
139,287 |
|
|
|
253,667 |
|
| Deferred revenue and customer advances |
|
|
155,761 |
|
|
|
146,185 |
|
| Other accrued liabilities |
|
|
118,252 |
|
|
|
124,187 |
|
| Operating lease liabilities |
|
|
18,523 |
|
|
|
19,977 |
|
| Income taxes payable |
|
|
103,386 |
|
|
|
88,789 |
|
| Current debt |
|
|
20,497 |
|
|
|
19,182 |
|
| |
|
|
|
|
|
|
|
|
| Total current liabilities |
|
|
712,199 |
|
|
|
805,120 |
|
| Retirement plans liabilities |
|
|
151,697 |
|
|
|
151,141 |
|
| Long-term deferred revenue and customer advances |
|
|
51,698 |
|
|
|
54,921 |
|
| Long-term other accrued liabilities |
|
|
15,748 |
|
|
|
15,497 |
|
| Deferred tax liabilities |
|
|
4,927 |
|
|
|
6,327 |
|
| Long-term operating lease liabilities |
|
|
55,934 |
|
|
|
56,178 |
|
| Long-term incomes taxes payable |
|
|
67,041 |
|
|
|
67,041 |
|
| Debt |
|
|
75,378 |
|
|
|
89,244 |
|
| |
|
|
|
|
|
|
|
|
| Total liabilities |
|
|
1,134,622 |
|
|
|
1,245,469 |
|
| |
|
|
|
|
|
|
|
|
Commitments and contingencies ( N ote Q ) |
|
|
|
|
|
|
|
|
| Mezzanine equity: |
|
|
|
|
|
|
|
|
| Convertible common shares |
|
|
— |
|
|
|
1,512 |
|
|
|
|
|
|
|
|
| Common stock, $0.125 par value, 1,000,000 shares authorized; 161,053 and 162,251 shares issued and outstanding at April 3, 2022 and December 31, 2021, respectively |
|
|
20,132 |
|
|
|
20,281 |
|
Additional paid-in capital |
|
|
1,711,690 |
|
|
|
1,811,545 |
|
| Accumulated other comprehensive loss |
|
|
(19,479 |
) |
|
|
(5,948 |
) |
| Retained earnings |
|
|
762,189 |
|
|
|
736,566 |
|
| |
|
|
|
|
|
|
|
|
| Total shareholders’ equity |
|
|
2,474,532 |
|
|
|
2,562,444 |
|
| |
|
|
|
|
|
|
|
|
| Total liabilities, convertible common shares and shareholders’ equity |
|
$ |
3,609,154 |
|
|
$ |
3,809,425 |
|
| |
|
|
|
|
|
|
|
|
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, 2021, are an integral part of the condensed consolidated financial statements.
1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per
share amount) |
|
|
|
|
|
|
|
|
|
|
| Revenues: |
|
|
|
|
|
|
|
|
| Products |
|
$ |
625,875 |
|
|
$ |
660,508 |
|
| Services |
|
|
129,495 |
|
|
|
121,098 |
|
| |
|
|
|
|
|
|
|
|
| Total revenues |
|
|
755,370 |
|
|
|
781,606 |
|
| Cost of revenues: |
|
|
|
|
|
|
|
|
| Cost of products |
|
|
243,016 |
|
|
|
267,784 |
|
| Cost of services |
|
|
57,421 |
|
|
|
52,204 |
|
| |
|
|
|
|
|
|
|
|
| Total cost of revenues (exclusive of acquired intangible
assets amortization shown separately below) |
|
|
300,437 |
|
|
|
319,988 |
|
| |
|
|
|
|
|
|
|
|
| Gross profit |
|
|
454,933 |
|
|
|
461,618 |
|
| Operating expenses: |
|
|
|
|
|
|
|
|
| Selling and administrative |
|
|
140,185 |
|
|
|
129,797 |
|
| Engineering and development |
|
|
108,116 |
|
|
|
100,402 |
|
| Acquired intangible assets amortization |
|
|
5,063 |
|
|
|
5,536 |
|
| Restructuring and other |
|
|
15,714 |
|
|
|
(7,130 |
) |
| |
|
|
|
|
|
|
|
|
| Total operating expenses |
|
|
269,078 |
|
|
|
228,605 |
|
| |
|
|
|
|
|
|
|
|
| Income from operations |
|
|
185,855 |
|
|
|
233,013 |
|
Non-operating (income) expense: |
|
|
|
|
|
|
|
|
| Interest income |
|
|
(703 |
) |
|
|
(808 |
) |
| Interest expense |
|
|
1,012 |
|
|
|
6,004 |
|
| Other (income) expense, net |
|
|
5,187 |
|
|
|
3,824 |
|
| |
|
|
|
|
|
|
|
|
| Income before income taxes |
|
|
180,359 |
|
|
|
223,993 |
|
| Income tax provision |
|
|
18,431 |
|
|
|
18,481 |
|
| |
|
|
|
|
|
|
|
|
| Net income |
|
$ |
161,928 |
|
|
$ |
205,512 |
|
| |
|
|
|
|
|
|
|
|
| Net income per common share: |
|
|
|
|
|
|
|
|
| Basic |
|
$ |
1.00 |
|
|
$ |
1.23 |
|
| |
|
|
|
|
|
|
|
|
| Diluted |
|
$ |
0.92 |
|
|
$ |
1.09 |
|
| |
|
|
|
|
|
|
|
|
| Weighted average common shares—basic |
|
|
162,048 |
|
|
|
166,491 |
|
| |
|
|
|
|
|
|
|
|
| Weighted average common shares—diluted |
|
|
175,575 |
|
|
|
187,740 |
|
| |
|
|
|
|
|
|
|
|
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, 2021, are an integral part of the condensed
consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
161,928 |
|
|
|
$205,512 |
|
| Other comprehensive income, net of tax: |
|
|
|
|
|
|
|
|
| Foreign currency translation adjustment, net of tax of $0 and $0, respectively |
|
|
(8,076 |
) |
|
|
(21,123 |
) |
| |
|
|
|
|
|
|
|
|
| Unrealized losses on marketable securities arising during period, net of tax of $(1,333) and $(908), respectively |
|
|
(5,388 |
) |
|
|
(3,270 |
) |
| Less: Reclassification adjustment for gains included in net income, net of tax of $(18) and $(123), respectively |
|
|
(65 |
) |
|
|
(444 |
) |
| |
|
|
|
|
|
|
|
|
| |
|
|
(5,453 |
) |
|
|
(3,714 |
) |
| Defined benefit post-retirement plan: |
|
|
|
|
|
|
|
|
| Amortization of prior service credit, net of tax of $0 and $0, respectively |
|
|
(2 |
) |
|
|
(2 |
) |
| |
|
|
|
|
|
|
|
|
| Other comprehensive loss |
|
|
(13,531 |
) |
|
|
(24,839 |
) |
| |
|
|
|
|
|
|
|
|
| Comprehensive income |
|
|
$148,397 |
|
|
|
$180,673 |
|
| |
|
|
|
|
|
|
|
|
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, 2021, are an integral part of the condensed
consolidated financial statements.
3
CONDENSED STATEMENTS OF CONVERTIBLE COMMON SHARES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
Convertible
Common
Shares
Value |
|
|
|
|
|
|
|
|
Additional Paid-in Capital |
|
|
Accumulated
Other
Comprehensive
(Loss) Income |
|
|
|
|
|
Total
Shareholders’
Equity |
|
| |
|
|
|
|
|
|
For the Three Months Ended April 3, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, December 31, 2021 |
|
$ |
1,512 |
|
|
|
162,251 |
|
|
$ |
20,281 |
|
|
$ |
1,811,545 |
|
|
$ |
(5,948 |
) |
|
$ |
736,566 |
|
|
$ |
2,562,444 |
|
| Net issuance of common stock under stock-based plans |
|
|
|
|
|
|
552 |
|
|
|
70 |
|
|
|
(14,644 |
) |
|
|
|
|
|
|
|
|
|
|
(14,574 |
) |
| Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,204 |
|
|
|
|
|
|
|
|
|
|
|
14,204 |
|
| Repurchase of common stock |
|
|
|
|
|
|
(1,750 |
) |
|
|
(219 |
) |
|
|
|
|
|
|
|
|
|
|
(211,247 |
) |
|
|
(211,466 |
) |
| Cash dividends ($0.11 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,908 |
) |
|
|
(17,908 |
) |
| Settlements of convertible notes |
|
|
|
|
|
|
509 |
|
|
|
64 |
|
|
|
(157 |
) |
|
|
|
|
|
|
|
|
|
|
(93 |
) |
| Exercise of convertible notes hedge call options |
|
|
|
|
|
|
(509 |
) |
|
|
(64 |
) |
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
| Cumulative-effect of change in accounting principle related to convertible debt |
|
|
(1,512 |
) |
|
|
|
|
|
|
|
|
|
|
(99,322 |
) |
|
|
|
|
|
|
92,850 |
|
|
|
(6,472 |
) |
| Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
161,928 |
|
|
|
161,928 |
|
| Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13,531 |
) |
|
|
|
|
|
|
(13,531 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, April 3, 2022 |
|
$ |
— |
|
|
|
161,053 |
|
|
$ |
20,132 |
|
|
$ |
1,711,690 |
|
|
$ |
(19,479 |
) |
|
$ |
762,189 |
|
|
$ |
2,474,532 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended April 4, 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 |
|
|
|
|
|
|
670 |
|
|
|
84 |
|
|
|
(14,071 |
) |
|
|
|
|
|
|
|
|
|
|
(13,987 |
) |
| Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,359 |
|
|
|
|
|
|
|
|
|
|
|
13,359 |
|
| Repurchase of common stock |
|
|
|
|
|
|
(374 |
) |
|
|
(47 |
) |
|
|
|
|
|
|
|
|
|
|
(47,141 |
) |
|
|
(47,188 |
) |
| Cash dividends ($0.10 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,682 |
) |
|
|
(16,682 |
) |
| Settlements of convertible notes |
|
|
|
|
|
|
1,222 |
|
|
|
153 |
|
|
|
157,529 |
|
|
|
|
|
|
|
|
|
|
|
157,682 |
|
| Exercise of convertible notes hedge call options |
|
|
|
|
|
|
(1,222 |
) |
|
|
(153 |
) |
|
|
(158,723 |
) |
|
|
|
|
|
|
|
|
|
|
(158,876 |
) |
| Convertible common shares |
|
|
(2,554 |
) |
|
|
|
|
|
|
|
|
|
|
2,554 |
|
|
|
|
|
|
|
|
|
|
|
2,554 |
|
| Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
205,512 |
|
|
|
205,512 |
|
| Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24,839 |
) |
|
|
|
|
|
|
(24,839 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, April 4, 2021 |
|
$ |
1,233 |
|
|
|
166,419 |
|
|
$ |
20,802 |
|
|
$ |
1,765,971 |
|
|
$ |
8,677 |
|
|
$ |
529,103 |
|
|
$ |
2,324,553 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2021, are an integral part of the condensed
consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
161,928 |
|
|
$ |
205,512 |
|
| Adjustments to reconcile net income from operations to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| Depreciation |
|
|
22,503 |
|
|
|
23,910 |
|
| Stock-based compensation |
|
|
12,894 |
|
|
|
12,232 |
|
| Amortization |
|
|
5,233 |
|
|
|
9,822 |
|
| Deferred taxes |
|
|
11,288 |
|
|
|
(1,057 |
) |
| Losses (gains) on investments |
|
|
2,001 |
|
|
|
(2,491 |
) |
| Provision for excess and obsolete inventory |
|
|
1,590 |
|
|
|
2,285 |
|
Loss on convertible debt conversion s |
|
|
— |
|
|
|
4,069 |
|
Contingent consideration fair value adjustment s |
|
|
— |
|
|
|
(7,227 |
) |
| Other |
|
|
177 |
|
|
|
200 |
|
| Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
| Accounts receivable |
|
|
208 |
|
|
|
(87,512 |
) |
| Inventories |
|
|
(9,480 |
) |
|
|
(35,870 |
) |
| Prepayments and other assets |
|
|
(74,305 |
) |
|
|
(86,131 |
) |
| Accounts payable and other accrued expenses |
|
|
(124,382 |
) |
|
|
(10,571 |
) |
| Deferred revenue and customer advances |
|
|
6,747 |
|
|
|
7,952 |
|
| Retirement plan contributions |
|
|
(1,329 |
) |
|
|
(1,925 |
) |
| Income taxes |
|
|
(7,611 |
) |
|
|
4,941 |
|
| |
|
|
|
|
|
|
|
|
| Net cash provided by operating activities |
|
|
7,462 |
|
|
|
38,139 |
|
| |
|
|
|
|
|
|
|
|
| Cash flows from investing activities: |
|
|
|
|
|
|
|
|
| Purchases of property, plant and equipment |
|
|
(43,999 |
) |
|
|
(39,250 |
) |
| Purchases of marketable securities |
|
|
(165,977 |
) |
|
|
(211,604 |
) |
| Proceeds from maturities of marketable securities |
|
|
96,682 |
|
|
|
194,228 |
|
| Proceeds from sales of marketable securities |
|
|
30,581 |
|
|
|
61,293 |
|
| |
|
|
|
|
|
|
|
|
| Net cash (used for) provided by investing activities |
|
|
(82,713 |
) |
|
|
4,667 |
|
| |
|
|
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| Issuance of common stock under stock purchase and stock option plans |
|
|
16,475 |
|
|
|
17,144 |
|
| Repurchase of common stock |
|
|
(201,465 |
) |
|
|
(45,188 |
) |
| Payments related to net settlement of employee stock compensation awards |
|
|
(31,048 |
) |
|
|
(30,675 |
) |
| Payments of convertible debt principal |
|
|
(20,694 |
) |
|
|
(51,275 |
) |
| Dividend payments |
|
|
(17,895 |
) |
|
|
(16,667 |
) |
| |
|
|
|
|
|
|
|
|
| Net cash used for financing activities |
|
|
(254,627 |
) |
|
|
(126,661 |
) |
| |
|
|
|
|
|
|
|
|
| Effects of exchange rate changes on cash and cash equivalents |
|
|
2,282 |
|
|
|
883 |
|
| |
|
|
|
|
|
|
|
|
| Decrease in cash and cash equivalents |
|
|
(327,596 |
) |
|
|
(82,972 |
) |
| Cash and cash equivalents at beginning of period |
|
|
1,122,199 |
|
|
|
914,121 |
|
| |
|
|
|
|
|
|
|
|
| Cash and cash equivalents at end of period |
|
$ |
794,603 |
|
|
$ |
831,149 |
|
| |
|
|
|
|
|
|
|
|
Non-cash investing activities: |
|
|
|
|
|
|
|
|
| Capital expenditures incurred but not yet paid: |
|
$ |
2,500 |
|
|
$ |
3,840 |
|
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, 2021, are an integral part of the condensed
consolidated financial statements.
5
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 the 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 may have been reclassified to conform to the current year presentation. The December 31, 2021 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 23, 2022, for the year ended December 31, 2021.
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, 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 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.
Teradyne adopted Accounting Standards Update (“ASU”) ASU
2020-06
–
“Debt—Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity’s Own Equity,”
on January 1, 2022 using the modified retrospective method of adoption
Under ASU
2020-06,
Teradyne accounts for a convertible debt instrument as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. Unsettled shares are recorded in current debt, and there is no recognition of a debt discount, which was previously amortized to interest expense. Teradyne uses the
if-converted
method in the diluted earnings per share (“EPS”) calculation for convertible instruments. As a result of adoption, Teradyne recorded an increase
of
$
1.4 million to current debt for unsettled shares, an increase of $
6.6 million to long-term
debt
for unamortized debt discount, and an increase to retained earnings of $
92.8 million for the reclassification of the equity component. Mezzanine equity representing unsettled shares value was reduced to
zero and additional
paid-in
capital was reduced by $
99.3 million.
6
C. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
For the three months ended April 3, 2022, there were no recently issued accounting pronouncements that had, or are expected to have, a material impact to Teradyne’s consolidated financial statements.
D. INVESTMENT IN OTHER COMPANY
On June 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 April 3, 2022, the value of the investment was $12.0 million, and there was no change during the three months ended April 3, 2022.
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 April 3, 2022 (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Point in Time |
|
$ |
323,456 |
|
|
$ |
88,723 |
|
|
$ |
105,288 |
|
|
$ |
83,182 |
|
|
$ |
16,534 |
|
|
$ |
210 |
|
|
$ |
48,429 |
|
|
$ |
(346 |
) |
|
$ |
665,476 |
|
| Over Time |
|
|
63,129 |
|
|
|
7,033 |
|
|
|
13,380 |
|
|
|
2,102 |
|
|
|
674 |
|
|
|
487 |
|
|
|
3,089 |
|
|
|
— |
|
|
|
89,894 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
386,585 |
|
|
$ |
95,756 |
|
|
$ |
118,668 |
|
|
$ |
85,284 |
|
|
$ |
17,208 |
|
|
$ |
697 |
|
|
$ |
51,518 |
|
|
$ |
(346 |
) |
|
$ |
755,370 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asia Pacific |
|
$ |
340,741 |
|
|
$ |
93,151 |
|
|
$ |
73,784 |
|
|
$ |
18,621 |
|
|
$ |
2,592 |
|
|
$ |
— |
|
|
$ |
34,946 |
|
|
$ |
— |
|
|
$ |
563,835 |
|
| Americas |
|
|
29,714 |
|
|
|
2,046 |
|
|
|
36,608 |
|
|
|
28,148 |
|
|
|
7,867 |
|
|
|
697 |
|
|
|
9,687 |
|
|
|
(346 |
) |
|
|
114,421 |
|
| Europe, Middle East and
Africa |
|
|
16,130 |
|
|
|
559 |
|
|
|
8,276 |
|
|
|
38,515 |
|
|
|
6,749 |
|
|
|
— |
|
|
|
6,885 |
|
|
|
— |
|
|
|
77,114 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
386,585 |
|
|
$ |
95,756 |
|
|
$ |
118,668 |
|
|
$ |
85,284 |
|
|
$ |
17,208 |
|
|
$ |
697 |
|
|
$ |
51,518 |
|
|
$ |
(346 |
) |
|
$ |
755,370 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended April 4, 2021 (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Point in Time |
|
$ |
364,190 |
|
|
$ |
101,892 |
|
|
$ |
119,314 |
|
|
$ |
64,007 |
|
|
$ |
14,064 |
|
|
$ |
(120 |
) |
|
$ |
37,880 |
|
|
$ |
(143 |
) |
|
$ |
701,084 |
|
| Over Time |
|
|
56,040 |
|
|
|
5,941 |
|
|
|
13,523 |
|
|
|
1,594 |
|
|
|
67 |
|
|
|
339 |
|
|
|
3,018 |
|
|
|
— |
|
|
|
80,522 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
420,230 |
|
|
$ |
107,833 |
|
|
$ |
132,837 |
|
|
$ |
65,601 |
|
|
$ |
14,131 |
|
|
$ |
219 |
|
|
$ |
40,898 |
|
|
$ |
(143 |
) |
|
$ |
781,606 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asia Pacific |
|
$ |
387,236 |
|
|
$ |
104,049 |
|
|
$ |
99,520 |
|
|
$ |
17,833 |
|
|
$ |
3,447 |
|
|
$ |
— |
|
|
$ |
33,532 |
|
|
$ |
— |
|
|
$ |
645,617 |
|
| Americas |
|
|
20,779 |
|
|
|
3,420 |
|
|
|
27,659 |
|
|
|
18,153 |
|
|
|
5,153 |
|
|
|
219 |
|
|
|
5,769 |
|
|
|
(143 |
) |
|
|
81,009 |
|
| Europe, Middle East and
Africa |
|
|
12,215 |
|
|
|
364 |
|
|
|
5,658 |
|
|
|
29,615 |
|
|
|
5,531 |
|
|
|
— |
|
|
|
1,597 |
|
|
|
— |
|
|
|
54,980 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
420,230 |
|
|
$ |
107,833 |
|
|
$ |
132,837 |
|
|
$ |
65,601 |
|
|
$ |
14,131 |
|
|
$ |
219 |
|
|
$ |
40,898 |
|
|
$ |
(143 |
) |
|
$ |
781,606 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Includes $ 2.3 million and $ 3.1 million in 2022 and 2021, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.” |
7
During the three months ended April 3, 2022 and April 4, 2021, Teradyne recognized $
35.0 million and $
27.8 million, respectively, that was previously included within the deferred revenue and customer advances balances at the beginning of the period. This revenue primarily relates to undelivered hardware, extended warranties, training, application support, and post contract support. Each of these represents a distinct performance obligation. As of April 3, 2022, Teradyne has $
1,417.4 million of unsatisfied performance obligations. Teradyne expects to recognize
89% of the remaining performance obligations in the next
12 months
and
11% in
1-3
years.
Deferred revenue and customer advances consist of the following and are included in short and long-term deferred revenue and customer advances on the balance sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance, service and training |
|
$ |
83,212 |
|
|
$ |
81,826 |
|
Customer advances, undelivered elements and other |
|
|
58,521 |
|
|
|
55,112 |
|
| |
|
|
65,726 |
|
|
|
64,168 |
|
| |
|
|
|
|
|
|
|
|
Total deferred revenue and customer advances |
|
$ |
207,459 |
|
|
$ |
201,106 |
|
| |
|
|
|
|
|
|
|
|
During the three months ended April 3, 2022 and April 4, 2021, Teradyne sold certain trade accounts receivables on a non-recourse basis to third-party financial institutions pursuant to factoring agreements. During the three months ended April 3, 2022 and April 4, 2021, total trade accounts receivable sold under the factoring agreements were
$
19.4 million and $
7.3 million
,
respectively. Factoring fees for the sales of receivables were recorded in interest expense and were not material. Teradyne accounted for these transactions as sales of receivables and presented cash proceeds as cash provided
by
operating activities in the consolidated statements of cash flows.
Inventories, net consisted of the following at April 3, 2022 and December 31, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Raw material |
|
$ |
187,856 |
|
|
$ |
155,641 |
|
| |
|
|
30,877 |
|
|
|
37,740 |
|
| Finished goods |
|
|
40,608 |
|
|
|
49,949 |
|
| |
|
|
|
|
|
|
|
|
| |
|
$ |
259,341 |
|
|
$ |
243,330 |
|
| |
|
|
|
|
|
|
|
|
Inventory reserves at April 3, 2022 and December 31, 2021 were $112.8 million and $114.1 million, respectively.
Teradyne considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents.
Teradyne’s
debt securities are classified as Level 2 and equity and debt mutual funds are classified as Level 1. Contingent consideration is classified as Level 3. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.
During the three months ended April 3, 2022 and April 4, 2021, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.
Realized gains recorded in the three months ended April 3, 2022 and April 4, 2021 were $0.4 million and $1.2 million, respectively. Realized losses recorded in the three months ended April 3, 2022 were $0.2 million. No realized losses were recorded in the three months ended April 4, 2021. Realized gains and losses are included in other (income) expense, net.
Unrealized losses on equity securities recorded in the three months ended April 3, 2022 were $2.2 million. Unrealized gains on equity securities recorded in the three months ended April 4, 2021 were $1.4 million. Unrealized gains and losses on equity securities are included in other (income) expense, net.
Unrealized gains and losses on
debt securities are included in accumulated other comprehensive income (loss).
The cost of securities sold is based on average cost.
The following table sets forth by fair value hierarchy Teradyne’s financial assets and liabilities that were measured at fair value on a recurring basis as of April 3, 2022 and December 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
508,245 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
508,245 |
|
Cash equivalents |
|
|
212,647 |
|
|
|
73,711 |
|
|
|
— |
|
|
|
286,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper |
|
|
— |
|
|
|
179,481 |
|
|
|
— |
|
|
|
179,481 |
|
U.S. Treasury securities |
|
|
— |
|
|
|
119,837 |
|
|
|
— |
|
|
|
119,837 |
|
Corporate debt securities |
|
|
— |
|
|
|
53,161 |
|
|
|
— |
|
|
|
53,161 |
|
Debt mutual funds |
|
|
7,030 |
|
|
|
— |
|
|
|
— |
|
|
|
7,030 |
|
U.S. government agency securities |
|
|
— |
|
|
|
4,714 |
|
|
|
— |
|
|
|
4,714 |
|
Certificates of deposit and time deposits |
|
|
— |
|
|
|
1,312 |
|
|
|
— |
|
|
|
1,312 |
|
Non-U.S. government securities |
|
|
— |
|
|
|
578 |
|
|
|
— |
|
|
|
578 |
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds |
|
|
42,033 |
|
|
|
— |
|
|
|
— |
|
|
|
42,033 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$ |
769,955 |
|
|
$ |
432,794 |
|
|
$ |
— |
|
|
$ |
1,202,749 |
|
Derivative assets |
|
|
— |
|
|
|
9 |
|
|
|
— |
|
|
|
9 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
769,955 |
|
|
$ |
432,803 |
|
|
$ |
— |
|
|
$ |
1,202,758 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
|
$ |
— |
|
|
$ |
469 |
|
|
$ |
— |
|
|
$ |
469 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
— |
|
|
$ |
469 |
|
|
$ |
— |
|
|
$ |
469 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
720,892 |
|
|
$ |
73,711 |
|
|
$ |
— |
|
|
$ |
794,603 |
|
Marketable securities |
|
|
— |
|
|
|
282,016 |
|
|
|
— |
|
|
|
282,016 |
|
Long-term marketable securities |
|
|
49,063 |
|
|
|
77,067 |
|
|
|
— |
|
|
|
126,130 |
|
Prepayments |
|
|
— |
|
|
|
9 |
|
|
|
— |
|
|
|
9 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
769,955 |
|
|
$ |
432,803 |
|
|
$ |
— |
|
|
$ |
1,202,758 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current liabilities |
|
$ |
— |
|
|
$ |
469 |
|
|
$ |
— |
|
|
$ |
