SEC Filing | Teradyne Inc.

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 2, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File

No. 001-06462

TERADYNE, INC.

(Exact name of registrant as specified in its charter)



Massachusetts		04-2272148
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

600 Riverpark Drive, North Reading, Massachusetts		01864
(Address of Principal Executive Offices)		(Zip Code)

978-370-2700

(Registrant’s Telephone Number, Including Area Code)

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: (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 October 31, 2022 was 155,756,146 shares.

TERADYNE, INC.

INDEX


		Page No.
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of October 2, 2022 and December 31, 2021		1
	Condensed Consolidated Statements of Operations for the Three and Nine Months ended October 2, 2022 and October 3, 2021		2
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months ended October 2, 2022 and October 3, 2021		3
	Condensed Consolidated Statements of Convertible Common Shares and Shareholders’ Equity for the Three and Nine Months ended October 2, 2022 and October 3, 2021		4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 2, 2022 and October 3, 2021		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		41
Item 4.	Controls and Procedures		42

	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		42
Item 1A.	Risk Factors		42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		44
Item 4.	Mine Safety Disclosures		45
Item 6.	Exhibits		46

PART I

Item 1:

Financial Statements

TERADYNE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	October 2, 2022			December 31, 2021
	(in thousands, except per share amount)

ASSETS
Current assets:
Cash and cash equivalents	$	710,746		$	1,122,199
Marketable securities		65,310			244,231
Accounts receivable, less allowance for credit losses of $1,865 and $2,012 at October 2, 2022 and December 31, 2021, respectively		530,349			550,749
Inventories, net		310,754			243,330
Prepayments		502,678			406,266
Other current assets		7,717			9,452

Total current assets		2,127,554			2,576,227
Property, plant and equipment, net		415,181			387,240
Operating lease right-of-use assets, net		61,430			68,807
Marketable securities		111,039			133,858
Deferred tax assets		130,207			102,428
Retirement plans assets		13,805			15,110
Other assets		29,311			24,096
Acquired intangible assets, net		55,580			75,635
Goodwill		375,799			426,024

Total assets	$	3,319,906		$	3,809,425


LIABILITIES
Current liabilities:
Accounts payable	$	167,975		$	153,133
Accrued employees’ compensation and withholdings		168,102			253,667
Deferred revenue and customer advances		143,591			146,185
Other accrued liabilities		126,457			124,187
Operating lease liabilities		17,079			19,977
Income taxes payable		64,141			88,789
Current debt		14,596			19,182

Total current liabilities		701,941			805,120
Retirement plans liabilities		137,317			151,141
Long-term deferred revenue and customer advances		48,488			54,921
Long-term other accrued liabilities		15,506			15,497
Deferred tax liabilities		1,327			6,327
Long-term operating lease liabilities		51,872			56,178
Long-term incomes taxes payable		59,135			67,041
Debt		50,195			89,244

Total liabilities		1,065,781			1,245,469

Commitments and contingencies (Note Q)
Mezzanine equity:
Convertible common shares		—			1,512

SHAREHOLDERS’ EQUITY
Common stock , $0.125 par value, 1,000,000 shares authorized; 155,782 and 162,251 shares issued and outstanding at October 2, 2022 and December 31, 2021, respectively		19,473			20,281
Additional paid-in capital		1,746,779			1,811,545
Accumulated other comprehensive loss		(84,779	)		(5,948	)
Retained earnings		572,652			736,566

Total shareholders’ equity		2,254,125			2,562,444

Total liabilities, convertible common shares and shareholders’ equity	$	3,319,906		$	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.

Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	October 2, 2022			October 3, 2021			October 2, 2022			October 3, 2021
	(in thousands, except per share amount)
Revenues:
Products	$	676,252		$	825,448		$	2,000,081		$	2,437,901
Services		150,821			125,053			423,128			379,934

Total revenues		827,073			950,501			2,423,209			2,817,835
Cost of revenues:
Cost of products		277,539			333,229			795,229			989,859
Cost of services		64,155			46,271			181,279			148,368

Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)		341,694			379,500			976,508			1,138,227

Gross profit		485,379			571,001			1,446,701			1,679,608
Operating expenses:
Selling and administrative		135,632			134,829			415,351			404,812
Engineering and development		111,715			107,220			331,781			317,644
Acquired intangible assets amortization		4,729			5,355			14,663			16,293
Restructuring and other		1,796			1,197			19,554			(3,426	)

Total operating expenses		253,872			248,601			781,349			735,323

Income from operations		231,507			322,400			665,352			944,285
Non-operating (income) expense:
Interest income		(1,318	)		(626	)		(2,972	)		(2,066	)
Interest expense		779			3,785			2,704			15,354
Other (income) expense, net		5,849			21,486			20,472			25,223

Income before income taxes		226,197			297,755			645,148			905,774
Income tax provision		42,712			41,037			101,948			115,225

Net income	$	183,485		$	256,718		$	543,200		$	790,549

Net income per common share:
Basic	$	1.17		$	1.56		$	3.41		$	4.77

Diluted	$	1.10		$	1.41		$	3.17		$	4.26

Weighted average common shares—basic		156,364			164,583			159,325			165,690

Weighted average common shares—diluted		166,733			181,987			171,156			185,492

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.

Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	October 2, 2022			October 3, 2021			October 2, 2022			October 3, 2021
	(in thousands)
Net income	$	183,485		$	256,718		$	543,200		$	790,549
Other comprehensive income, net of tax:
Foreign currency translation adjustment, net of tax of $0, $0, $0, $0, respectively		(28,951	)		(10,698	)		(66,258	)		(26,672	)
Available-for-sale marketable securities:
Unrealized losses arising during period, net of tax of $(997), $(44), $(3,570), $(516), respectively		(3,581	)		(176	)		(13,491	)		(1,952	)
Less: Reclassification adjustment for losses (gains) included in net income, net of tax of $(11), $(65), $48, $(186), respectively		177			(229	)		386			(670	)

		(3,404	)		(405	)		(13,105	)		(2,622	)
Cash flow hedges:
Unrealized gains arising during period, net of tax of $0, $0, $0, $0, respectively		537			—			537			—
Defined benefit post-retirement plan:
Amortization of prior service credit, net of tax of $0, $0, $(2), $(2), respectively		(2	)		(2	)		(5	)		(5	)

Other comprehensive loss		(31,820	)		(11,105	)		(78,831	)		(29,299	)

Comprehensive income	$	151,665		$	245,613		$	464,369		$	761,250

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.

Table of Contents

TERADYNE, INC.

CONDENSED STATEMENTS OF CONVERTIBLE COMMON SHARES

AND SHAREHOLDERS’ EQUITY

(Unaudited)


				Shareholders’ Equity
	Convertible Common Shares Value			Common Stock Shares			Common Stock Par Value			Additional Paid-in Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings			Total Shareholders’ Equity
				(in thousands)

For the Three Months Ended October 2, 2022
Balance, July 3, 2022	$	—			157,880		$	19,735		$	1,721,586		$	(52,959	)	$	610,234		$	2,298,596
Net issuance of common stock under stock-based plans					169			21			12,031									12,052
Stock-based compensation expense											13,194									13,194
Repurchase of common stock					(2,267	)		(283	)								(203,918	)		(204,201	)
Cash dividends ($ 0.11 per share)																	(17,149	)		(17,149	)
Settlements of convertible notes					207			26			(58	)								(32	)
Exercise of convertible notes hedge call options					(207	)		(26	)		26									—
Net income																	183,485			183,485
Other comprehensive loss														(31,820	)					(31,820	)

Balance, October 2, 2022	$	—			155,782		$	19,473		$	1,746,779		$	(84,779	)	$	572,652		$	2,254,125

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 Nine Months Ended October 2, 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					754			95			(4,287	)								(4,192	)
Stock-based compensation expense											39,056									39,056
Repurchase of common stock					(7,223	)		(903	)								(749,097	)		(750,000	)
Cash dividends ($0.33 per share)																	(52,617	)		(52,617	)
Settlements of convertible notes					1,211			151			(364	)								(213	)
Exercise of convertible notes hedge call options					(1,211	)		(151	)		151									—
Convertible common shares		(1,512	)								1,512									1,512
Cumulative-effect of change in accounting principle related to convertible debt											(100,834	)					94,600			(6,234	)
Net income																	543,200			543,200
Other comprehensive loss														(78,831	)					(78,831	)

Balance, October 2, 2022	$	—			155,782		$	19,473		$	1,746,779		$	(84,779	)	$	572,652		$	2,254,125

For the Nine Months Ended October 3, 2021