Teradyne, Inc.
TERADYNE, INC (Form: 10-Q, Received: 05/10/2013 13:06:38)
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

 

 

(Mark One)

 

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

For the quarterly period ended March 31, 2013

OR

 

¨ 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

 

 

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)

 

 

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   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files)    Yes   x     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨    Smaller reporting company   ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

The number of shares outstanding of the registrant’s only class of Common Stock as of May 3, 2013 was 190,641,051 shares.

 

 

 


Table of Contents

TERADYNE, INC.

INDEX

 

         Page No.  
PART I. FINANCIAL INFORMATION   
Item 1.   Financial Statements (Unaudited):   
 

Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012

     1   
 

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2013 and April 1, 2012

     2   
 

Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2013 and April 1, 2012

     3   
 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and April 1, 2012

     4   
 

Notes to Condensed Consolidated Financial Statements

     5   
Item 2.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     22   
Item 3.  

Quantitative and Qualitative Disclosures about Market Risk

     30   
Item 4.  

Controls and Procedures

     30   
PART II. OTHER INFORMATION   
Item 1.   Legal Proceedings      31   
Item 1A.   Risk Factors      31   
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds      31   
Item 4.   Mine Safety Disclosures      31   
Item 6.   Exhibits      32   


Table of Contents

PART I

 

Item 1: Financial Statements

TERADYNE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

     March 31,
2013
     December 31,
2012
 
    

(in thousands,

except per share information)

 
ASSETS      

Current assets:

     

Cash and cash equivalents

   $ 305,219       $ 338,920   

Marketable securities

     404,781         431,516   

Accounts receivable, less allowance for doubtful accounts of $4,180 and $4,118 at March 31, 2013 and December 31, 2012, respectively

     166,614         153,423   

Inventories:

     

Parts

     85,502         89,598   

Assemblies in process

     29,208         32,303   

Finished goods

     34,348         17,509   
  

 

 

    

 

 

 
     149,058         139,410   

Deferred tax assets

     83,869         77,305   

Prepayments and other current assets

     97,909         95,487   
  

 

 

    

 

 

 

Total current assets

     1,207,450         1,236,061   

Net property, plant and equipment

     264,043         265,782   

Marketable securities

     246,253         235,872   

Other assets

     18,583         20,209   

Retirement plans assets

     3,106         3,282   

Intangible assets, net

     300,831         318,867   

Goodwill

     349,272         349,272   
  

 

 

    

 

 

 

Total assets

   $ 2,389,538       $ 2,429,345   
  

 

 

    

 

 

 
LIABILITIES      

Current liabilities:

     

Accounts payable

   $ 59,100       $ 58,324   

Accrued employees’ compensation and withholdings

     54,555         86,264   

Deferred revenue and customer advances

     71,816         81,357   

Other accrued liabilities

     51,918         57,249   

Accrued income taxes

     3,221         12,306   

Current debt

     176,835         2,328   
  

 

 

    

 

 

 

Total current liabilities

     417,445         297,828   

Long-term deferred revenue and customer advances

     15,622         16,227   

Retirement plans liabilities

     94,592         94,373   

Deferred tax liabilities

     50,201         50,201   

Long-term other accrued liabilities

     20,413         21,302   

Long-term debt

     —           171,059   
  

 

 

    

 

 

 

Total liabilities

     598,273         650,990   
  

 

 

    

 

 

 

Commitments and contingencies (Note N)

     
SHAREHOLDERS’ EQUITY      

Common stock, $0.125 par value, 1,000,000 shares authorized, 190,422 shares and 187,908 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively

     23,803         23,488   

Additional paid-in capital

     1,353,789         1,347,762   

Accumulated other comprehensive income

     5,799         5,820   

Retained earnings

     407,874         401,285   
  

 

 

    

 

 

 

Total shareholders’ equity

     1,791,265         1,778,355   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 2,389,538       $ 2,429,345   
  

 

 

    

 

 

 

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, 2012, are an integral part of the condensed

consolidated financial statements.

 

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Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

     For the Three  Months
Ended
 
         March 31,    
2013
        April 1,    
2012
 
     (in thousands
except per share amounts)
 

Net revenues:

    

Products

   $ 214,300      $ 330,891   

Services

     66,067        65,777   
  

 

 

   

 

 

 

Total net revenues

     280,367        396,668   

Cost of revenues:

    

Cost of products

     96,793        174,001   

Cost of services

     30,157        31,741   
  

 

 

   

 

 

 

Total cost of revenues

     126,950        205,742   
  

 

 

   

 

 

 

Gross profit

     153,417        190,926   

Operating expenses:

    

Engineering and development

     62,751        61,279   

Selling and administrative

     67,890        66,633   

Acquired intangible assets amortization

     18,036        18,429   

Restructuring and other

     332        (1,825
  

 

 

   

 

 

 

Total operating expenses

     149,009        144,516   
  

 

 

   

 

 

 

Income from operations

     4,408        46,410   

Interest income

     1,072        893   

Interest expense and other

     (6,906     (6,059
  

 

 

   

 

 

 

(Loss) income before income taxes

     (1,426     41,244   

Income tax (benefit) provision

     (8,015     7,680   
  

 

 

   

 

 

 

Net income

   $ 6,589      $ 33,564   
  

 

 

   

 

 

 

Net income per common share:

    

Basic

   $ 0.03      $ 0.18   
  

 

 

   

 

 

 

Diluted

   $ 0.03      $ 0.15   
  

 

 

   

 

 

 

Weighted average common share—basic

     189,686        185,838   
  

 

 

   

 

 

 

Weighted average common share—diluted

     234,757        231,153   
  

 

 

   

 

 

 

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, 2012, are an integral part of the condensed

consolidated financial statements.

 

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TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

     For the Three  Months
Ended
 
         March 31,    
2013
        April 1,    
2012
 
     (in thousands)  

Net income

   $ 6,589      $ 33,564   
  

 

 

   

 

 

 

Other comprehensive (loss) income:

    

Available-for-sale marketable securities:

    

Net unrealized gains on marketable securities arising during period

     363        744   

Less: Reclassification adjustment for net gains included in net income

     (275     (466
  

 

 

   

 

 

 

Net change

     88        278   

Defined benefit pension and postretirement plans:

    

Amortization of prior service benefit included in net periodic pension and postretirement cost

     (109     (92
  

 

 

   

 

 

 

Other comprehensive (loss) income

     (21     186   
  

 

 

   

 

 

 

Comprehensive income

   $ 6,568      $ 33,750   
  

 

 

   

 

 

 

 

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, 2012, are an integral part of the condensed

consolidated financial statements.

 

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TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     For the Three  Months
Ended
 
         March 31,    
2013
        April 1,    
2012
 
     (in thousands)  

Cash flows from operating activities:

    

Net income

   $ 6,589      $ 33,564   

Adjustments to reconcile net income to net cash (used for) provided by operating activities:

    

Depreciation

     14,115        12,288   

Amortization

     21,884        21,815   

Stock-based compensation

     9,023        10,766   

Provision for excess and obsolete inventory

     3,800        1,574   

Deferred taxes

     (6,183     7,699   

Non cash charge for the sale of inventories revalued at the date of acquisition

     —          4,871   

Contingent consideration adjustment

     —          (1,825

Other

     131        (487

Changes in operating assets and liabilities:

    

Accounts receivable

     (13,191     (92,217

Inventories

     (4,040     23,636   

Prepayments and other assets

     (1,070     1,885   

Accounts payable and other accrued expenses

     (47,258     (9,259

Deferred revenue and customer advances

     (10,146     (1,704

Retirement plans contributions

     (1,063     (1,061

Accrued income taxes

     (9,085     (376
  

 

 

   

 

 

 

Net cash (used for) provided by operating activities

     (36,494     11,169   

Cash flows from investing activities:

    

Purchases of property, plant and equipment

     (22,547     (27,074

Purchases of marketable securities

     (124,514     (80,095

Proceeds from maturities of marketable securities

     119,552        46,549   

Proceeds from sales of marketable securities

     21,694        6,256   
  

 

 

   

 

 

 

Net cash used for investing activities

     (5,815     (54,364

Cash flows from financing activities:

    

Issuance of common stock under employee stock option and stock purchase plans

     8,921        9,925   

Payments of long-term debt

     —          (1,246

Payments of contingent consideration

     (313     (5,824
  

 

 

   

 

 

 

Net cash provided by financing activities

     8,608        2,855   
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (33,701     (40,340

Cash and cash equivalents at beginning of period

     338,920        573,736   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 305,219      $ 533,396   
  

 

 

   

 

 

 

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, 2012, are an integral part of the condensed

consolidated financial statements.

 

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TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A. The Company

Teradyne, Inc. (the “Company” or “Teradyne”) is a leading global supplier of automatic test equipment. Teradyne’s automatic test equipment products and services include:

 

   

semiconductor test (“Semiconductor Test”) systems;

 

   

wireless test (“Wireless Test”) systems; and

 

   

military/aerospace (“Mil/Aero”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test and inspection (“Commercial Board Test”) systems (collectively these products represent “Systems Test”).

B. Accounting Policies

Basis of Presentation

The condensed 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 presentation of such interim financial statements. Certain prior year’s amounts were reclassified to conform to the current year presentation. The December 31, 2012 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

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. Security and Exchange Commission (“SEC”) on March 1, 2013, for the year ended December 31, 2012.

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 reported in the financial statements. Actual results may differ significantly from these estimates.

C. Recently Issued Accounting Pronouncements

In December 2011, the FASB issued ASU No. 2011-11, “ Disclosures about Offsetting Assets and Liabilities.” This ASU is intended to enhance the understanding of the effects of netting arrangements on an entity’s financial statements, including financial instruments and derivative instruments that are either offset or subject to a master netting arrangement. The scope of this ASU includes derivatives, sale and repurchase agreements, reverse sale and repurchase agreements, and securities borrowing and lending arrangements. The provisions of this ASU are effective for interim and annual periods beginning on or after January 1, 2013. Teradyne adopted this ASU effective January 1, 2013. See Note D “Financial Instruments and Derivatives.”

In February 2013, the Financial Accounting Standards Board (FASB) issued ASU 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income” amending the disclosure requirements regarding the reporting of amounts reclassified out of accumulated other comprehensive income. The amendment does not change the current requirement for reporting net income or other comprehensive income, but requires additional disclosures about significant amounts reclassified out of accumulated other comprehensive income including the effect of the reclassification

 

5


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on the related net income line items. The provisions of this ASU are effective for interim and annual periods beginning on or after January 1, 2013. Teradyne adopted this amendment effective January 1, 2013. See Note I “Accumulated Other Comprehensive Income.”

D. Financial Instruments and Derivatives

Financial Instruments

Teradyne uses the market and income approach to value its financial instruments and there was no change in valuation techniques used by Teradyne during the three months ended March 31, 2013 and April 1, 2012. As defined in ASC 820-10, “Fair Value Measurements and Disclosures,” fair value is the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820-10 requires that assets and liabilities are carried at fair value and are classified in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets as of the reporting date.

Level 2: Inputs other than Level 1, that are observable either directly or indirectly as of the reporting date. For example, a common approach for valuing fixed income securities is the use of matrix pricing. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices.

Level 3: Unobservable inputs that are not supported by market data. Unobservable inputs are developed based on the best information available, which might include Teradyne’s own data.

Most of Teradyne’s fixed income securities are classified as Level 2, with the exception of U.S. Treasury securities and investments in equity and debt mutual funds, which are classified as Level 1, and contingent consideration, which is classified as Level 3. The majority of Level 2 securities are 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.

There were no realized losses recorded in the three months ended March 31, 2013 and April 1, 2012. Realized gains recorded in the three months ended March 31, 2013 and April 1, 2012 were $0.3 million and $0.3 million, respectively. Realized gains are included in interest income.

During the three months ended March 31, 2013 and April 1, 2012, there were no transfers in or out of Level 1, Level 2 or Level 3 financial instruments.

 

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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 March 31, 2013 and December 31, 2012.

 

     March 31, 2013  
     Quoted Prices
in Active
Markets for
Identical
Instruments
(Level  1)
     Significant
Other
Observable
Inputs
(Level 2)
     Significant
Unobservable
Inputs
(Level 3)
     Total  
     (in thousands)  

Assets

           

Cash

   $ 118,176       $ —        $ —        $ 118,176   

Cash equivalents

     179,798         7,245         —          187,043   

Available-for-sale securities:

           

U.S. Treasury securities

     315,107         —          —          315,107   

U.S. government agency securities

     —          211,341         —          211,341   

Commercial paper

     —          65,349         —          65,349   

Corporate debt securities

     —          47,704         —          47,704   

Equity and debt mutual funds

     11,189                —          11,189   

Certificates of deposit and time deposits

     —          259         —          259   

Non-U.S. government securities

     —          85         —          85   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 624,270       $ 331,983       $ —         $ 956,253   
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Contingent consideration

   $ —        $ —        $ 75       $ 75   

Derivatives

     —          475         —          475   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ —        $ 475       $ 75       $ 550   
  

 

 

    

 

 

    

 

 

    

 

 

 

Reported as follows:

 

       (Level 1)      (Level 2)      (Level 3)      Total  
     (in thousands)  

Assets

           

Cash and cash equivalents

   $ 297,974       $ 7,245       $  —        $ 305,219   

Marketable securities

     232,452         172,329         —          404,781   

Long-term marketable securities

     93,844         152,409         —          246,253   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 624,270       $ 331,983       $  —        $ 956,253   
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities

           

Other accrued liabilities

   $ —        $ 475       $ 75       $ 550   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ —        $ 475       $ 75       $ 550   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents
    December 31, 2012  
    Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)
    Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
    Total  
    (in thousands)  

Assets

       

Cash

  $ 139,354      $ —       $  —       $ 139,354   

Cash equivalents

    183,039        16,527        —         199,566   

Available-for-sale securities:

       

U.S. Treasury securities

    312,116        —         —         312,116   

U.S. government agency securities

    —         217,655        —         217,655   

Commercial paper

    —         70,434        —         70,434   

Corporate debt securities

    —         55,755        —         55,755   

Equity and debt mutual funds

    9,717        —         —         9,717   

Certificates of deposit and time deposits

    —         1,627        —         1,627   

Non-U.S. government securities

    —         84        —         84   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

    644,226        362,082        —         1,006,308   

Derivatives

    —         121        —         121   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 644,226      $ 362,203      $  —       $ 1,006,429   
 

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities

       

Contingent consideration

  $ —       $ —       $ 388      $ 388   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ —       $ —       $ 388      $ 388   
 

 

 

   

 

 

   

 

 

   

 

 

 

Reported as follows:

 

     (Level 1)      (Level 2)        (Level 3)     Total  
     (in thousands)  

Assets

            

Cash and cash equivalents

   $ 322,393       $ 16,527         $  —       $ 338,920   

Marketable securities

     239,192         192,324           —         431,516   

Long-term marketable securities

     82,641         153,231           —         235,872   

Prepayments and other current assets

     —          121           —         121   
  

 

 

    

 

 

      

 

 

   

 

 

 
   $ 644,226       $ 362,203         $  —       $ 1,006,429   
  

 

 

    

 

 

      

 

 

   

 

 

 

Liabilities

            

Other accrued liabilities

   $ —        $ —          $ 388      $ 388   
  

 

 

    

 

 

      

 

 

   

 

 

 
   $ —        $ —          $ 388      $ 388   
  

 

 

    

 

 

      

 

 

   

 

 

 

 

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Changes in the fair value of Level 3 contingent consideration for the three months ended March 31, 2013 were as follows:

 

     Contingent consideration  
     (in thousands)  

Balance at December 31, 2012

   $ 388   

Payments

     (313
  

 

 

 

Balance at March 31, 2013

   $ 75   
  

 

 

 

The carrying amounts and fair values of financial instruments at March 31, 2013 and December 31, 2012 were as follows:

 

     March 31, 2013      December 31, 2012  
     Carrying Value      Fair Value      Carrying Value      Fair Value  
     (in thousands)  

Cash and cash equivalents

   $ 305,219       $ 305,219       $ 338,920       $ 338,920   

Marketable securities

     651,034         651,034         667,388         667,388   

Convertible debt(1)

     173,648         564,294         169,896         589,000   

Japan loan

     3,187         3,187         3,491         3,491   

 

(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 feature.

The fair values of cash and cash equivalents, accounts receivable, net and accounts payable approximate the carrying amount due to the short-term maturities of these instruments.

The following tables summarize the composition of available-for-sale marketable securities at March 31, 2013 and December 31, 2012:

 

     March 31, 2013  
     Available-for-Sale      Fair Market
Value of
Investments
with  Unrealized
Losses
 
     Cost      Unrealized
Gain
     Unrealized
(Loss)
    Fair Market
Value
    
     (in thousands)  

U.S. Treasury securities

   $ 314,902       $ 231       $ (26   $ 315,107       $ 2,827   

U.S. government agency securities

     211,108         235         (2     211,341         8,013   

Commercial paper

     65,341         13         (5     65,349         15,484   

Corporate debt securities

     45,867         1,937         (100     47,704         16,307   

Equity and debt mutual funds

     9,626         1,577         (14     11,189         726   

Certificates of deposit and time deposits

     259         —          —         259         —    

Non-U.S. government securities

     85         —          —         85         —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
   $ 647,188       $ 3,993       $ (147   $ 651,034       $ 43,357   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

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Reported as follows:

 

     Cost      Unrealized
Gain
     Unrealized
(Loss)
    Fair Market
Value
     Fair Market
Value of
Investments
with Unrealized
Losses
 
     (in thousands)  

Marketable securities

   $ 404,576       $ 212       $ (7   $ 404,781       $ 23,651   

Long-term marketable securities

     242,612         3,781         (140     246,253         19,706   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
   $ 647,l88       $ 3,993       $ (147   $ 651,034       $ 43,357   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

 

     December 31, 2012  
     Available-for-Sale      Fair Market
Value of
Investments
with  Unrealized
Losses
 
     Cost      Unrealized
Gain
     Unrealized
(Loss)
    Fair Market
Value
    
     (in thousands)  

U.S. Treasury securities

   $ 311,915       $ 216       $ (15   $ 312,116       $ 1,018   

U.S. government agency securities

     217,396         262         (3   $ 217,655         9,018   

Commercial paper

     70,431         9         (6     70,434         25,209   

Corporate debt securities

     53,405         2,414         (64     55,755         23,255   

Equity and debt mutual funds

     8,767         961         (11     9,717         600   

Certificates of deposit and time deposits

     1,627         —          —         1,627         —    

Non-U.S. government securities

     84         —          —         84         —    
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
   $ 663,625       $ 3,862       $ (99   $ 667,388       $ 59,100   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Reported as follows:

 

     Cost      Unrealized
Gain
     Unrealized
(Loss)
    Fair Market
Value
     Fair Market
Value of
Investments
with Unrealized
Losses
 
     (in thousands)  

Marketable securities

   $ 431,324       $ 203       $ (11   $ 431,516       $ 41,110   

Long-term marketable securities

     232,301         3,659         (88     235,872         17,990   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 
   $ 663,625       $ 3,862       $ (99   $ 667,388       $ 59,100   
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

As of March 31, 2013, the fair market value of marketable securities with unrealized losses totaled $43.4 million. Of this value, $0.3 million had unrealized losses greater than one year and $43.1 million had unrealized losses less than one year. As of December 31, 2012, the fair market value of marketable securities with unrealized losses totaled $59.1 million. There were no unrealized losses greater than one year.

The contractual maturities of available-for-sale marketable securities at March 31, 2013 were as follows:

 

     March 31, 2013  
     Cost      Fair Market
Value
 
     (in thousands)  

Due within one year

   $ 404,576       $ 404,781   

Due after 1 year through 5 years

     221,440         223,236   

Due after 5 years through 10 years

     2,684         2,895   

Due after 10 years

     18,488         20,122   
  

 

 

    

 

 

 

Total

   $ 647,188       $ 651,034   
  

 

 

    

 

 

 

 

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Table of Contents

Derivatives

Teradyne conducts business in a number of foreign countries, with certain transactions denominated in local currencies. The purpose of Teradyne’s foreign currency management is to minimize the effect of exchange rate fluctuations on certain foreign currency denominated net monetary assets. Teradyne does not use derivative financial instruments for trading or speculative purposes.

To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings, and is used to offset the change in fair value of the monetary assets and liabilities denominated in foreign currencies.

The notional amount of foreign exchange contracts hedging monetary assets and liabilities denominated in foreign currencies was $69.0 million and $64.1 million at March 31, 2013 and December 31, 2012, respectively.

The following table summarizes the fair value of derivative instruments at March 31, 2013 and December 31, 2012.

 

     Balance Sheet Location    March 31,
2013
     December 31,
2012
 
          (in thousands)  

Derivatives not designated as hedging instruments:

        

Foreign exchange contracts

   Prepayments and other current assets    $  —         $ 121   

Foreign exchange contracts

   Other accrued liabilities      475         —     
     

 

 

    

 

 

 
      $ 475       $ 121   
     

 

 

    

 

 

 

Teradyne had no offsetting foreign exchange contracts at March 31, 2013 and December 31, 2012.

The following table summarizes the effect of derivative instruments recognized in the statement of operations during the three months ended March 31, 2013 and April 1, 2012. The table does not reflect the corresponding gains (losses) from the remeasurement of the monetary assets and liabilities denominated in foreign currencies.

 

     Location of Gains
Recognized in Statement
of Operations
     For the Three Months
Ended
 
      March 31,
2013
     April 1,
2012
 
            (in thousands)  

Derivatives not designated as hedging instruments:

        

Foreign exchange contracts

     Interest expense and other       $ 2,248       $ 2,880  
     

 

 

    

 

 

 
      $ 2,248       $ 2,880   
     

 

 

    

 

 

 

See Note E “Debt” regarding derivatives related to convertible senior notes.

E. Debt

Loan Agreement

On March 31, 2009, Teradyne K.K., Teradyne’s wholly-owned subsidiary in Japan, entered into a loan agreement with a local bank in Japan to borrow approximately $10.0 million (the loan is denominated in Japanese Yen). The loan has a term of 5 years and a fixed interest rate of 0.8%. Approximately $6.0 million of the loan is collateralized by a real estate mortgage on Teradyne K.K.’s building and land in Kumamoto, Japan

 

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Table of Contents

and approximately $4.0 million is unsecured. Teradyne, Inc. has guaranteed payment of the loan obligation. The loan is amortized over the term of the loan with semiannual principal payments of approximately $1.0 million payable on September 30 and March 30 each year. At March 31, 2013, the outstanding loan principal of approximately $3.2 million is included in current debt.

Convertible Senior Notes

In April 2009, Teradyne issued 4.50% convertible senior notes (the “Notes”) at an aggregate principal amount of $190 million. The Notes will mature on March 15, 2014, unless earlier repurchased by Teradyne or converted. The Notes are senior unsecured obligations and rank equally with all of Teradyne’s existing and future senior debt and senior to any of Teradyne’s subordinated debt.

The Notes may be converted, at the option of the holder, under certain circumstances and during certain periods, at an initial conversion rate of approximately 182.65 shares of Teradyne’s common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $5.48, a 25% conversion premium based on the last reported sale price of $4.38 per share of Teradyne’s common stock on March 31, 2009. The conversion rate is subject to adjustment in certain circumstances including but not limited to Teradyne issuing a cash or stock dividend or effecting a stock split.

During the three months ended March 31, 2013, the following circumstance occurred that allows holders to convert their Notes at their option prior to December 15, 2013: the last reported sale price of Teradyne’s common stock for 20 or more trading days in a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter exceeded 130% of the conversion price in effect on the last trading day of the immediately preceding calendar quarter. As of May 10, 2013, one holder exercised the option to convert two thousand dollars worth of Notes.

Concurrently with the offering of the Notes, Teradyne entered into a convertible note hedge transaction with a strike price equal to the initial conversion price of the Notes, or approximately $5.48. The convertible note hedge allows Teradyne to receive shares of its common stock and/or cash related to the excess conversion value that it would pay to the holders of the Notes upon conversion. The convertible note hedges will cover, subject to customary antidilution adjustments, approximately 34,703,196 shares of Teradyne’s common stock. Teradyne paid approximately $64.6 million for the convertible note hedges.

On March 31, 2009, Teradyne entered into a warrant transaction with a strike price of approximately $7.67 per share, which was 75% higher than the closing price of Teradyne’s common stock. Teradyne received approximately $43.0 million for the warrants.

The convertible note hedge and warrant transaction will generally have the effect of increasing the conversion price of the Notes to approximately $7.67 per share of Teradyne’s common stock, representing a 75% conversion premium based upon the closing price of Teradyne’s common stock on March 31, 2009.

 

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Table of Contents

The Notes are classified as current debt in the balance sheet at March 31, 2013. The tables below represent the components of Teradyne’s convertible senior notes:

 

     March 31,
2013
     December 31,
2012
 
     (in thousands)  

Debt principal

   $ 189,998       $ 190,000   

Unamortized debt discount

     16,350         20,104   
  

 

 

    

 

 

 

Net carrying amount of the convertible debt

   $ 173,648       $ 169,896   
  

 

 

    

 

 

 

 

     For the Three Months
Ended
 
     March 31, 
2013
     April 1, 
2012
 
     (in thousands)  

Contractual interest expense

   $ 2,137       $ 2,161   

Amortization of the discount component and debt issue fees

     3,957         3,479   
  

 

 

    

 

 

 

Total interest expense on the convertible debt

   $ 6,094       $ 5,640   
  

 

 

    

 

 

 

As of March 31, 2013, the unamortized discount was $16.4 million, which will be amortized over the next twelve months, and the carrying amount of the equity component was $63.4 million. As of March 31, 2013, the conversion rate was equal to the initial conversion price of approximately $5.48 per share and the if-converted value of the Notes was $562.9 million.

F. Deferred Revenue and Customer Advances

Deferred revenue and customer advances consist of the following and are included in short- and long-term deferred revenue and customer advances.

 

     March 31,
2013
     December 31,
2012
 
     (in thousands)  

Customer advances

   $ 29,951       $ 39,613   

Maintenance, training and extended warranty

     50,021         51,198   

Undelivered elements

     7,466         6,773   
  

 

 

    

 

 

 

Total deferred revenue and customer advances

   $ 87,438       $ 97,584   
  

 

 

    

 

 

 

G. Product Warranty

Teradyne generally provides a one-year warranty on its products commencing upon installation or shipment. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. Related costs are charged to the warranty accrual as incurred. The balance below is included in other accrued liabilities.

 

     For the Three Months
Ended
 
     March 31,
2013
    April 1,
2012
 
     (in thousands)  

Balance at beginning of period

   $ 9,786      $ 8,153   

Accruals for warranties issued during the period

     1,423        3,776   

Adjustments related to pre-existing warranties

     (929     (260

Settlements made during the period

     (3,205     (2,947
  

 

 

   

 

 

 

Balance at end of period

   $ 7,075      $ 8,722   
  

 

 

   

 

 

 

 

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Table of Contents

When Teradyne receives revenue for extended warranties beyond one year, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. The balance below is included in deferred revenue and customer advances and long-term other accrued liabilities.

 

     For the Three Months
Ended
 
     March 31,
2013
    April 1,
2012
 
     (in thousands)  

Balance at beginning of period

   $ 26,987      $ 12,742   

Deferral of new extended warranty revenue

     3,471        2,347   

Recognition of extended warranty deferred revenue

     (1,859     (2,162
  

 

 

   

 

 

 

Balance at end of period

   $ 28,599      $ 12,927   
  

 

 

   

 

 

 

H. Stock-Based Compensation

Restricted stock unit awards granted to employees vest in equal installments over four years. A portion of restricted stock unit awards granted to executive officers is subject to time-based vesting and a portion is subject to performance-based vesting. The percentage level of performance satisfied for performance-based grants is assessed on or near the anniversary of the grant date and, in turn, that percentage level determines the number of performance-based restricted stock units available for vesting over the vesting period; portions of the performance-based grants not available for vesting will be forfeited. Stock options vest in equal installments over four years, and have a term of seven years from the date of grant.

During the three months ended March 31, 2013, Teradyne granted 1.8 million of restricted stock unit awards to employees at a weighted average grant date fair value of $16.57 and 0.2 million of service-based stock options to executive officers at a weighted average grant date fair value of $6.09.

During the three months ended April 1, 2012, Teradyne granted 1.5 million of restricted stock unit awards to employees at a weighted average grant date fair value of $16.88 and 0.2 million of service-based stock options to executive officers at a weighted average grant date fair value of $6.85.

The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:

 

     For the Three Months
Ended
 
     March 31,
2013
    April 1,
2012
 

Expected life (years)

     4.0        3.5   

Interest rate

     0.6     0.4

Volatility-historical

     46.8     56.0

Dividend yield

     0.0     0.0

Teradyne determined the stock options’ expected life based upon historical exercise data for executive officers, the age of the executive officers and the terms of the stock option grant. Volatility was determined using historical volatility for a period equal to the expected life. The risk-free rate was determined using the U.S. Treasury yield curve in effect at the time of grant.

Effective January 1, 2013, the price paid by employees for Teradyne’s common stock purchased through the employee stock purchase plan is equal to 85% of the stock price on the last business day of the purchase period.

During 2012, the price paid by employees for Teradyne’s common stock purchased through the employee stock purchase plan was equal to 85% of the lower of the stock price on the first or last business day of the purchase period.

 

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Table of Contents

The weighted-average fair value of employee stock purchase rights granted in the three months ended April 1, 2012 was $4.09. The fair value of the employees’ purchase rights granted in the three months ended April 1, 2012 was estimated using the Black-Scholes option-pricing model with the following assumptions:

 

     For the Three Months Ended
April 1,
2012
 

Expected life (years)

     0.5   

Interest rate

     0.06

Volatility-historical

     52.6

Dividend yield

     0.0

I. Accumulated Other Comprehensive Income

At March 31, 2013 and December 31, 2012, the accumulated other comprehensive income balances were as follows:

 

    March 31,
2013
    December 31,
2012
 
    (in thousands)  

Retirement plans prior service benefit, net of tax of $(125) and $(125)

  $ 2,786      $ 2,895   

Unrealized gains on marketable securities, net of tax of $835 and $835

    3,013        2,925   
 

 

 

   

 

 

 

Total accumulated other comprehensive income

  $ 5,799      $ 5,820   
 

 

 

   

 

 

 

Reclassifications out of accumulated other comprehensive income to the statement of operations for the three months ended March 31, 2013 and April 1, 2012, were as follows:

 

Details about Accumulated Other Comprehensive Income
Components

   For the Three Months Ended      Affected Line Item
in the  Statements of Operations
     March 31,
2013
     April 1,
2012
      
     (in thousands)       

Available-for-Sale Marketable Securities

        

Unrealized gains

   $ 275       $ 466       Interest income
  

 

 

    

 

 

    
   $ 275       $ 466       Net income

Amortization of Defined Benefit Pension and
Postretirement Plans

   

  

Prior service benefit

   $ 109       $ 92       (a)
  

 

 

    

 

 

    
   $ 109       $ 92       (a)
  

 

 

    

 

 

    

Total Reclassifications

   $ 384       $ 558       Net income
  

 

 

    

 

 

    

 

(a) The amortization of prior service benefit is included in the computation of net periodic pension and postretirement benefit costs; see Note M “Retirement Plans.”

 

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Table of Contents

J. Intangible Assets

Amortizable intangible assets consist of the following and are included in intangible assets on the balance sheet:

 

     March 31, 2013  
     Gross
Carrying

Amount
     Accumulated
Amortization
     Net
Carrying
Amount
     Weighted
Average
Useful Life
 
     (in thousands)  

Developed technology

   $ 357,555       $ 155,720       $ 201,835         6.3 years   

Customer relationships and service and software maintenance contracts

     144,971         68,022         76,949         8.0 years   

Trade names and trademarks

     33,840         11,793         22,047         9.0 years   

Customer backlog

     1,000         1,000         —          0.4 years   
  

 

 

    

 

 

    

 

 

    

Total intangible assets

   $ 537,366       $ 236,535       $ 300,831         7.0 years   
  

 

 

    

 

 

    

 

 

    

 

     December 31, 2012  
     Gross
Carrying
Amount
     Accumulated
Amortization
     Net
Carrying
Amount
     Weighted
Average
Useful Life
 
     (in thousands)  

Developed technology

   $ 357,555       $ 143,126       $ 214,429         6.3 years   

Customer relationships and service and software maintenance contracts

     144,971         63,464         81,507         8.0 years   

Trade names and trademarks

     33,840         10,909         22,931         9.0 years   

Customer backlog

     1,000         1,000         —          0.4 years   
  

 

 

    

 

 

    

 

 

    

Total intangible assets

   $ 537,366       $ 218,499       $ 318,867         7.0 years   
  

 

 

    

 

 

    

 

 

    

Aggregate intangible asset amortization expense was $18.0 million and $18.4 million, respectively, for the three months ended March 31, 2013 and April 1, 2012. Estimated intangible asset amortization expense for each of the five succeeding fiscal years is as follows:

 

Year

   Amortization Expense  
     (in thousands)  

2013 (remainder)

   $ 54,096   

2014

     69,102   

2015

     52,351   

2016

     52,351   

2017

     46,193   

 

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Table of Contents

K. Net Income per Common Share

The following table sets forth the computation of basic and diluted net income per common share:

 

     For the Three Months Ended  
         March 31,    
2013
         April 1,    
2012
 
     (in thousands except per share
amounts)
 

Net income for basic net income per share

   $ 6,589       $ 33,564   
  

 

 

    

 

 

 

Weighted average common shares-basic

     189,686         185,838   

Effect of dilutive potential common shares:

     

Incremental shares from assumed conversion of convertible Note(1)

     23,386         23,000   

Convertible note hedge warrant shares(2)

     18,859         18,319   

Restricted stock units

     1,123         1,647   

Stock options

     1,676         2,325   

Employee stock purchase rights

     27         24   
  

 

 

    

 

 

 

Dilutive potential common shares

     45,071         45,315   
  

 

 

    

 

 

 

Weighted average common shares-diluted

     234,757         231,153   
  

 

 

    

 

 

 

Net income per common share-basic

   $ 0.03       $ 0.18   
  

 

 

    

 

 

 

Net income per common share-diluted

   $ 0.03       $ 0.15   
  

 

 

    

 

 

 

 

(1) Incremental shares from assumed conversion of the convertible notes for the three months ended March 31, 2013 and April 1, 2012 are calculated using the difference between the average Teradyne stock price for the period and the conversion price of $5.48, multiplied by the 34.7 million shares that would be issued upon conversion. The result of this calculation, representing the total intrinsic value of the convertible debt, is divided by the average Teradyne stock price for the period.
(2) Convertible note hedge warrant shares for the three months ended March 31, 2013 and April 1, 2012 are calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.67, multiplied by the 34.7 million shares that would be issued upon conversion. The result of this calculation, representing the total intrinsic value of the warrant, is divided by the average Teradyne stock price for the period.

The computation of diluted net income per common share for the three months ended March 31, 2013 excludes the effect of the potential exercise of stock options to purchase approximately 0.4 million shares because the effect would have been anti-dilutive.

The computation of diluted net income per common share for the three months ended April 1, 2012 excludes the effect of the potential exercise of stock options to purchase approximately 0.3 million shares and restricted stock units of 1.0 million because the effect would have been anti-dilutive.

With respect to Teradyne’s convertible debt, Teradyne intends to settle its conversion spread (i.e., the intrinsic value of the embedded option feature contained in the convertible debt) in shares. Teradyne accounts for its conversion spread using the treasury stock method.

L. Restructuring and Other

Other

During the three months ended April 1, 2012, Teradyne recorded a $1.9 million fair value adjustment to decrease the LitePoint acquisition contingent consideration.

 

17


Table of Contents

Restructuring

In response to a downturn in the industry in 2008 and 2009, Teradyne initiated restructuring activities across its Semiconductor Test and Systems Test segments to reduce costs, principally through headcount reductions and facility consolidations. The remaining accrual for severance and benefits of $0.2 million is reflected in the accrued employees’ compensation and withholdings on the balance sheet and is expected to be paid by October 2013. The remaining accrual for lease payments on vacated facilities of $0.8 million is reflected in the other accrued liabilities and is expected to be paid by October 2013. As of March 31, 2013, Teradyne subleased approximately 20% of its unoccupied space.

 

     Severance
and
Benefits
    Facility
Exit
Costs
    Total  
     (in thousands)  
Pre-2012 Activities       

Balance at December 31, 2011

   $ 325      $ 1,862      $ 2,187   

Cash payments

     (325     (778     (1,103
  

 

 

   

 

 

   

 

 

 

Balance at December 31, 2012

     —         1,084        1,084   

Change in estimate

     —         (105     (105

Cash payments

     —         (183     (183
  

 

 

   

 

 

   

 

 

 

Balance at March 31, 2013

   $ —       $ 796      $ 796   
  

 

 

   

 

 

   

 

 

 
2012 Activities       

Q2 2012 Activity:

      

Provision

   $ 286      $ —       $ 286   

Change in estimate

     (4     —         (4

Cash payments

     (282     —         (282
  

 

 

   

 

 

   

 

 

 

Balance at December 31, 2012

   $ —       $ —       $ —    
  

 

 

   

 

 

   

 

 

 

Q3 2012 Activity:

      

Provision

   $ 687      $ —       $ 687   

Cash payments

     (444     —         (444
  

 

 

   

 

 

   

 

 

 

Balance at December 31, 2012

     243        —         243   

Cash payments

     (243     —         (243
  

 

 

   

 

 

   

 

 

 

Balance at March 31, 2013

   $ —       $ —       $ —    
  

 

 

   

 

 

   

 

 

 
2013 Activities       

Q1 2013 Activity:

      

Provision

   $ 437      $ —       $ 437   

Cash payments

     (194     —         (194
  

 

 

   

 

 

   

 

 

 

Balance at March 31, 2013

   $ 243      $ —       $ 243   
  

 

 

   

 

 

   

 

 

 

Balance at March 31, 2013

   $ 243      $ 796      $ 1,039   
  

 

 

   

 

 

   

 

 

 

During the three months ended March 31, 2013, Teradyne recorded a $0.4 million of severance charges related to headcount reductions of 2 people in Systems Test and 2 people in Semiconductor Test.

M. Retirement Plans

Defined Benefit Pension Plans

Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to these plans in accordance with local laws

 

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and to the extent that such contributions are tax deductible. The assets of these plans consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (“IRC”), as well as unfunded foreign plans.

Teradyne’s net periodic pension cost was comprised of the following:

 

     For the Three Months
Ended
 
     March 31,
2013
    April 1,
2012
 
     (in thousands)  

Service cost

   $ 834      $ 722   

Interest cost

     3,294        4,083   

Expected return on plan assets

     (3,630     (4,087

Amortization of unrecognized prior service cost

     41        58   

Settlement loss

     76        —    
  

 

 

   

 

 

 

Total net periodic pension cost

   $ 615      $ 776   
  

 

 

   

 

 

 

In the three months ended March 31, 2013, Teradyne contributed $0.4 million to the U.S. supplemental executive defined benefit pension plan and $0.3 million to certain qualified plans for non-U.S. subsidiaries.

Postretirement Benefit Plans

In addition to receiving pension benefits, U.S. Teradyne employees who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes death, and medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits, and the existing benefit obligation relates primarily to those employees.

Teradyne’s net periodic postretirement benefit was comprised of the following:

 

     For the Three Months
Ended
 
     March 31,
2013
    April,
2012
 
     (in thousands)  

Service cost

   $ 16      $ 19   

Interest cost

     87        110   

Amortization of unrecognized prior service benefit

     (150     (150
  

 

 

   

 

 

 

Total net periodic postretirement benefit

   $ (47   $ (21
  

 

 

   

 

 

 

N. Commitments and Contingencies

Purchase Commitments

As of March 31, 2013, Teradyne had entered into purchase commitments for certain components and materials. The purchase commitments aggregate to approximately $192.6 million, of which $190.2 million is for less than one year.

Legal Claims

Teradyne is subject to various legal proceedings and claims which have arisen in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on Teradyne’s results of operations, financial condition or cash flows.

 

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O. Income Taxes

The income tax benefit of $8.0 million for the three months ended March 31, 2013, included approximately a $6.7 million of discrete tax benefit related to 2012 U.S. federal research and development tax credit retrospectively reinstated under the American Taxpayer Relief Act of 2012. The income tax expense for the three months ended April 1, 2012, of $7.7 million included a $3.2 million of discrete tax benefit resulting from reductions in uncertain tax positions related to statute expirations of transfer pricing issues.

P. Segment Information

Teradyne has three operating segments (Semiconductor Test, Wireless Test, and Systems Test), which are its reportable segments. The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test products and services. The Wireless Test segment includes operations related to design, manufacturing and marketing of wireless test products and services. The Systems Test segment includes operations related to design, manufacturing and marketing of products and services for military/aerospace instrumentation test, storage test and circuit-board test. Each operating segment has a segment manager who is directly accountable to and maintains regular contact with Teradyne’s chief operating decision maker (Teradyne’s chief executive officer) to discuss operating activities, financial results, forecasts, and plans for the segment.

Teradyne evaluates performance based on several factors, of which the primary financial measure is business segment income before income taxes. The accounting policies of the business segments are the same as those described in Note B “Accounting Policies” in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2012. Segment information is as follows:

 

     Semiconductor
Test
     Wireless
Test
    Systems
Test
     Corporate
and
Eliminations
    Consolidated  
     (in thousands)  

Three months ended March 31, 2013:

            

Net revenues

   $ 211,506       $ 33,598      $ 35,263       $ —       $ 280,367   

Income (loss) before income taxes(1)(2)

     13,766         (9,997     1,530         (6,725     (1,426

Three months ended April 1, 2012:

            

Net revenues

   $ 267,588       $ 31,328      $ 97,752       $ —       $ 396,668   

Income (loss) before income taxes(1)(2)

     34,998         (12,312     21,978         (3,420     41,244   

 

(1) Interest income and interest expense and other are included in Corporate and Eliminations.
(2) Included in the income (loss) before income taxes for each of the segments are charges and credits for the three months ended March 31, 2013 and April 1, 2012 that include restructuring and other, and provision for excess and obsolete inventory, as follows:

Included in the Semiconductor Test segment are charges for the following:

 

     For the Three Months
Ended
 
     March 31,
2013
     April 1,
2012
 
     (in thousands)  

Cost of revenues—provision for excess and obsolete inventory

   $ 213       $ 212   
  

 

 

    

 

 

 

Total

   $ 213       $ 212   
  

 

 

    

 

 

 

 

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Included in the Wireless Test segment are charges for the following:

 

     For the Three Months
Ended
 
     March 31, 
2013
     April 1, 
2012
 
     (in thousands)  

Cost of revenues—inventory step-up

   $ —        $ 4,871   

Cost of revenues—provision for excess and obsolete inventory

     2,668         473   
  

 

 

    

 

 

 

Total

   $ 2,668       $ 5,344   
  

 

 

    

 

 

 

Included in the Systems Test segment are charges for the following:

 

     For the Three Months
Ended
 
     March 31, 
2013
     April 1, 
2012
 
     (in thousands)  

Cost of revenues—provision for excess and obsolete inventory

   $ 919       $ 889   

Restructuring and other

     244         —    
  

 

 

    

 

 

 

Total

   $ 1,163       $ 889   
  

 

 

    

 

 

 

Included in Corporate and Eliminations are credits for the following:

 

     For the Three Months
Ended
 
     March 31, 
2013
     April 1, 
2012
 
     (in thousands)  

Restructuring and other

   $  —        $ (1,825
  

 

 

    

 

 

 

Total

   $ —        $ (1,825
  

 

 

    

 

 

 

Q. Stock Repurchase Program

In November 2010, Teradyne’s board of directors authorized a stock repurchase program for up to $200 million. In the three months ended March 31, 2013 and April 1, 2012, Teradyne did not repurchase any shares. Cumulatively, as of March 31, 2013, Teradyne has repurchased 2.6 million shares of common stock for $31.2 million at an average price of $11.84.

 

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Table of Contents
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements in this Quarterly Report on Form 10-Q which are not historical facts, so called “forward looking statements,” are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward looking statements involve risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. See also Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

Overview

We are a leading global supplier of automatic test equipment. We design, develop, manufacture and sell automatic test systems and solutions used to test semiconductors, wireless products, hard disk drives and circuit boards in the consumer electronics, wireless, automotive, industrial, computing, communications and aerospace and defense industries. Our automatic test equipment products and services include:

 

   

semiconductor test (“Semiconductor Test”) systems;

 

   

wireless test (“Wireless Test”) systems; and

 

   

military/aerospace (“Mil/Aero”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test and inspection (“Commercial Board Test”) systems, collectively these products represent “Systems Test”.

We have a broad customer base which includes integrated device manufacturers (“IDMs”), outsourced semiconductor assembly and test providers (“OSATs”), wafer foundries, fabless companies that design, but contract with others for the manufacture of integrated circuits (“ICs”), developers of wireless devices and consumer electronics, manufacturers of circuit boards, automotive suppliers, wireless product manufacturers, storage device manufacturers, aerospace and military contractors.

In 2011, we acquired LitePoint Corporation (“LitePoint”) to expand our product portfolio of test equipment in the wireless test sector. LitePoint designs, develops, and supports advanced wireless test solutions for the development and manufacturing of wireless devices, including smart phones, tablets, notebooks/laptops, personal computer peripherals, and other Wi-Fi and cellular enabled devices. LitePoint is our Wireless Test segment.

The sales of our products and services are dependent, to a large degree, on customers who are subject to cyclical trends in the demand for their products. These cyclical periods have had, and will continue to have, a significant effect on our business since our customers often delay or accelerate purchases in reaction to changes in their businesses and to demand fluctuations in the semiconductor industry. Historically, these demand fluctuations have resulted in significant variations in our results of operations. This was particularly relevant beginning in the fourth quarter of fiscal year 2008 where we saw a significant decrease in revenues in our Semiconductor Test business which was impacted by the deteriorating global economy, which negatively impacted the entire semiconductor industry. The sharp swings in the semiconductor industry in recent years have generally affected the semiconductor test equipment and services industry more significantly than the overall capital equipment sector.

We believe our acquisitions of LitePoint, Eagle Test and Nextest, and our entry into the high speed memory and storage test markets have enhanced our opportunities for growth. We will continue to invest in our business to expand further our addressable markets while tightly managing our costs.

 

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Critical Accounting Policies and Estimates

We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the three months ended March 31, 2013 to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

 

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SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

 

     For the Three Months
Ended
 
     March 31,
2013
    April 1,
2012
 

Percentage of total net revenues:

    

Net revenues:

    

Products

     76     83

Services

     24        17   
  

 

 

   

 

 

 

Total net revenues

     100        100   

Cost of revenues:

    

Cost of products

     35        44   

Cost of services

     11        8   
  

 

 

   

 

 

 

Total cost of revenues

     45        52   
  

 

 

   

 

 

 

Gross profit

     55        48   

Operating expenses:

    

Engineering and development

     22        15   

Selling and administrative

     24        17   

Acquired intangible asset amortization

     6        5   

Restructuring and other

     —         —    
  

 

 

   

 

 

 

Total operating expenses

     53        36   
  

 

 

   

 

 

 

Income from operations

     2        12   

Interest income

     —         —    

Interest expense and other

     (2     (2
  

 

 

   

 

 

 

(Loss) income before income taxes

     (1     10   

Income tax (benefit) provision

     (3     2   
  

 

 

   

 

 

 

Net income

     2     8
  

 

 

   

 

 

 

Results of Operations

First Quarter 2013 Compared to First Quarter 2012

Book to Bill Ratio

Book to bill ratio is calculated as net bookings divided by net sales. Book to bill ratio by reportable segment was as follows:

 

     For the Three Months
Ended
 
     March 31,
2013
     April 1,
2012
 

Semiconductor Test

     1.2         1.4   

Wireless Test

     3.3         1.3   

Systems Test

     0.9         0.5   

Total Company

     1.4         1.2   

 

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Table of Contents

Revenues

Net revenues by reportable segments were as follows:

 

     For the Three Months
Ended
     Dollar
Change
 
     March 31,
2013
     April 1,
2012
    
     (in millions)  

Semiconductor Test

   $ 211.5       $ 267.6       $ (56.1

Wireless Test

     33.6         31.3         2.3   

Systems Test

     35.3         97.8         (62.5
  

 

 

    

 

 

    

 

 

 
   $ 280.4       $ 396.7       $ (116.3
  

 

 

    

 

 

    

 

 

 

The decrease of $56.1 million or 21% in Semiconductor Test revenues from the three months ended April 1, 2012 to the three months ended March 31, 2013, was primarily due to a decrease in system-on-a-chip (“SOC”) test product sales. The decrease in Systems Test revenue of $62.5 million or 64% was primarily due to a decrease in sales due to lower product volume in Storage Test systems.

Our revenues by region as a percentage of total net revenue were as follows:

 

     For the Three Months
Ended
 
     March 31,
2013
    April 1,
2012
 

United States

     21     12

China

     17        14   

Taiwan

     15        14   

Korea

     8        16   

Europe

     8        6   

Singapore

     8        6   

Malaysia

     7        4   

Japan

     6        8   

Philippines

     5        7   

Thailand

     4        13   

Rest of World

     1         
  

 

 

   

 

 

 
     100     100
  

 

 

   

 

 

 

Gross Profit

Our gross profit was as follows:

 

     For the Three Months
Ended
    Dollar/Point
Change
 
     March 31,
2013
    April 1,
2012
   
     (in millions)  

Gross Profit

   $ 153.4      $ 190.9      $ (37.5

Percent of Total Revenue

     54.7     48.1     6.6   

Gross profit as a percent of revenue increased by 6.6 percentage points from the three months ended April 1, 2012 to the three months ended March 31, 2013, primarily due to a favorable product mix in SOC Semiconductor Test products and lower Storage Test systems sales.

 

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We assess the carrying value of our inventory on a quarterly basis by estimating future demand and comparing that demand against on-hand and on-order inventory positions. Forecasted revenue information is obtained from the sales and marketing groups and incorporates factors such as backlog and future revenue demand. This quarterly process identifies obsolete and excess inventory. Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed during the next four quarters, is written-down to estimated net realizable value.

During the three months ended March 31, 2013, we recorded an inventory provision of $3.8 million due to the downward revisions to previously forecasted demand levels. Of the $3.8 million of total excess and obsolete provisions, $2.7 million was related to Wireless Test, $0.9 million was related to Systems Test, and $0.2 million was related to Semiconductor Test.

During the three months ended April 1, 2012, we recorded an inventory provision of $1.6 million included in cost of revenues, due to the downward revisions to previously forecasted demand levels. Of the $1.6 million of total excess and obsolete provisions recorded in the three months ended April 1, 2012, $0.9 million was related to Systems Test, $0.5 million was related to Wireless Test, and $0.2 million was related to Semiconductor Test.

During the three months ended March 31, 2013 and April 1, 2012, we scrapped $0.6 million and $4.1 million of inventory, respectively. During the three months ended March 31, 2013 and April 1, 2012, we sold $1.8 million and $1.3 million, respectively, of previously written-down or written-off inventory. As of March 31, 2013, we had inventory related reserves for amounts which had been written-down or written-off totaling $143.3 million. We have no pre-determined timeline to scrap the remaining inventory.

Engineering and Development

Engineering and development expenses were as follows:

 

     For the Three Months
Ended
    Dollar
Change
 
     March 31,
2013
    April 1,
2012
   
     (in millions)  

Engineering and Development

   $ 62.8      $ 61.3      $ 1.5   

Percent of Total Revenue

     22.4     15.4  

The increase of $1.5 million in engineering and development expenses from the three months ended April 1, 2012 to the three months ended March 31, 2013, was due primarily to increased spending in Semiconductor Test, partially offset by lower variable compensation.

Selling and Administrative

Selling and administrative expenses were as follows:

 

     For the Three Months
Ended
    Dollar
Change
 
     March 31,
2013
    April 1,
2012
   
     (in millions)  

Selling and Administrative

   $ 67.9      $ 66.6      $ 1.3   

Percent of Total Revenue

     24.2     16.8  

The increase of $1.3 million in selling and administrative expenses from the three months ended April 1, 2012 to the three months ended March 31, 2013, was due primarily to increased sales and marketing spending in Wireless Test and Semiconductor Test, partially offset by lower variable compensation.

 

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Restructuring and Other

Other

During the three months ended April 1, 2012, we recorded a $1.9 million fair value adjustment to decrease the LitePoint acquisition contingent consideration.

Restructuring

In response to a downturn in the industry in 2008 and 2009, we initiated restructuring activities across our Semiconductor Test and Systems Test segments to reduce costs, principally through headcount reductions and facility consolidations. The remaining accrual for severance and benefits of $0.2 million is reflected in the accrued employees’ compensation and withholdings on the balance sheet and is expected to be paid by October 2013. The remaining accrual for lease payments on vacated facilities of $0.8 million is reflected in the other accrued liabilities and is expected to be paid by October 2013. As of March 31, 2013, we subleased approximately 20% of our unoccupied space.

During the three months ended March 31, 2013, we recorded $0.4 million of severance charges related to headcount reductions of 2 people in Systems Test and 2 people in Semiconductor Test.

Interest and Other

Interest income increased by $0.2 million from the three months ended April 1, 2012 to the three months ended March 31, 2013, due primarily to higher cash and marketable securities balances in the first quarter of 2013. Interest expense and other increased by $0.8 million from the three months ended April 1, 2012 to the three months ended March 31, 2013, due primarily to higher interest expense from increased convertible debt discount amortization.

Income Taxes

For the three months ended March 31, 2013, we recorded a tax benefit of $8.0 million which consisted primarily of foreign tax provisions and a U.S. deferred tax benefit. The tax benefit of $8.0 million included approximately $6.7 million of a discrete tax benefit related to a 2012 U.S. federal research and development tax credit retrospectively reinstated under the American Taxpayer Relief Act of 2012. For the three months ended April 1, 2012, we recorded a tax provision of $7.7 million, which primarily consisted of foreign taxes and a U.S. deferred tax provision.

On a quarterly basis, we evaluate the realizability of our deferred tax assets by jurisdiction and assess the need for a valuation allowance. At March 31, 2013, we believe that we will ultimately realize the deferred tax assets recorded on our condensed consolidated balance sheet. However, should we believe that it is more likely than not that our deferred tax assets would not be realized, our tax provision would increase in the period in which we determined that the realizability was not likely. We consider the probability of future taxable income and our historical profitability, among other factors, in assessing the realizability of our deferred tax assets.

 

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Table of Contents

Contractual Obligations

The following table reflects our contractual obligations at March 31, 2013:

 

     Payments Due by Period  
     Total      Less than
1 year
     1-3 years      3-5 years      More than
5 years
     Other  
     (in thousands)  

Debt Obligations

   $ 193,185       $ 193,185       $ —         $ —        $ —        $ —    

Interest on Debt

     8,572         8,572         —           —          —          —    

Contingent Acquisition Payments

     75         75         —          —          —          —    

Operating Lease Obligations

     51,706         13,938         20,635         10,313         6,820         —    

Purchase Obligations

     192,624         190,155         2,469         —          —          —    

Retirement Plan Contributions

     53,333         5,130         10,574         10,762         26,867         —    

Other Long-Term Liabilities Reflected on the Balance Sheet under GAAP(1)

     86,236         —          15,622         —          —          70,614   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 585,731       $ 411,055       $ 49,300       $ 21,075       $ 33,687       $ 70,614   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Included in Other Long-Term Liabilities are liabilities for customer advances, extended warranty, uncertain tax positions and other obligations. For certain long-term obligations, we are unable to provide a reasonably reliable estimate of the timing of future payments relating to these obligations and therefore we included these amounts in the column marked “Other”.

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities balances decreased by $50.1 million in the three months ended March 31, 2013, to $956.3 million. Cash activity for the three months ended March 31, 2013 and April 1, 2012 was as follows:

 

     For the Three Months
Ended
 
     March 31,
2013
    April 1,
2012
 
     (in millions)  

Cash provided by operating activities:

    

Net income, adjusted for non-cash items

   $ 49.4      $ 90.3   

Change in operating assets and liabilities

     (85.9     (79.1
  

 

 

   

 

 

 

Total cash (used for) provided by operating activities

     (36.5     11.2   
  

 

 

   

 

 

 

Total cash used for investing activities

     (5.8     (54.4
  

 

 

   

 

 

 

Total cash provided by financing activities

     8.6        2.9   
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

   $ (33.7   $ (40.3
  

 

 

   

 

 

 

In the three months ended March 31, 2013, changes in operating assets and liabilities used cash of $85.9 million. This was due to an $18.3 million increase in operating assets and a $67.6 million decrease in operating liabilities.

The increase in operating assets was due to a $13.2 million increase in accounts receivable due to higher sales volume, a $4.0 million increase in inventories, and $1.1 million increase in other assets primarily due to an increase in prepayments. The decrease in operating liabilities was due to a $43.3 million decrease in accrued employee compensation due primarily to variable compensation and employee stock awards payroll taxes payments, a $10.1 million decrease in customer advance payments and deferred revenue, a $9.1 million decrease in accrued income taxes, a $4.8 million decrease in other accrued liabilities and a $1.1 million of retirement plan contributions, partially offset by a $0.8 million increase in accounts payable due to increased sales volume.

 

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Investing activities during the three months ended March 31, 2013 used cash of $5.8 million, due to $124.5 million used for purchases of marketable securities and $22.5 million used for purchases of property, plant and equipment, partially offset by proceeds from maturities and sales of marketable securities that provided cash of $119.5 million and $21.7 million, respectively.

Financing activities during the three months ended March 31, 2013 provided cash of $8.6 million, $8.9 million was from the issuance of common stock under stock option and stock purchase plans, partially offset by $0.3 million of cash used for payments related to LitePoint acquisition contingent consideration.

In the three months ended April 1, 2012, changes in operating assets and liabilities used cash of $79.1 million. This was due to a $66.7 million increase in operating assets and a $12.4 million decrease in operating liabilities.

The increase in operating assets was due to a $92.2 million increase in accounts receivable resulting from higher sales volume, partially offset by $23.6 million decrease in inventories and a $1.9 million decrease in prepayments. The decrease in operating liabilities was due to a $46.1 million decrease in accrued employee compensation due primarily to variable compensation payments, a $4.2 million decrease in customer advance payments due to shipments of systems prepaid by customers, $1.1 million of retirement plan contributions, partially offset by a $36.5 million increase in accounts payable due to increase sales volume, and a $2.5 million increase in deferred revenue.

Investing activities during the three months ended April 1, 2012 used cash of $54.4 million, due to $80.1 million used for purchases of marketable securities and $27.1 million used for purchases of property, plant and equipment, partially offset by proceeds from maturities and sales of marketable securities that provided cash of $46.5 million and $6.3 million, respectively.

Financing activities during the three months ended April 1, 2012 provided cash of $2.9 million, $9.9 million was from the issuance of common stock under stock option and stock purchase plans, partially offset by $5.8 million of cash used for payments related to LitePoint acquisition contingent consideration and $1.2 million of cash used for payments on long-term debt related to the Japan loan.

We believe our cash, cash equivalents and marketable securities balance will be sufficient to meet working capital and expenditure needs for at least the next twelve months. The amount of cash, cash equivalents and marketable securities in the U.S. and our operations in the U.S. provide sufficient liquidity to fund our business activities in the U.S. We have approximately $300 million of cash outside the U.S. that if repatriated would incur additional taxes. Inflation has not had a significant long-term impact on earnings.

Equity Compensation Plans

As discussed in Note P “Stock Based Compensation” in our 2012 Form 10-K, we have a 1996 Employee Stock Purchase Plan and a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”).

The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers, directors, consultants and/or advisors. Both plans were approved by our shareholders.

Recently Issued Accounting Pronouncements

In December 2011, the FASB issued ASU No. 2011-11, “ Disclosures about Offsetting Assets and Liabilities.” This ASU is intended to enhance the understanding of the effects of netting arrangements on an entity’s financial statements, including financial instruments and derivative instruments that are either offset or

 

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subject to a master netting arrangement. The scope of this ASU includes derivatives, sale and repurchase agreements, reverse sale and repurchase agreements, and securities borrowing and lending arrangements. The provisions of this ASU are effective for interim and annual periods beginning on or after January 1, 2013. We adopted this ASU effective January 1, 2013. See Note D “Financial Instruments and Derivatives.”

In February 2013, the Financial Accounting Standards Board (FASB) issued ASU 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income” amending the disclosure requirements regarding the reporting of amounts reclassified out of accumulated other comprehensive income. The amendment does not change the current requirement for reporting net income or other comprehensive income, but requires additional disclosures about significant amounts reclassified out of accumulated other comprehensive income including the effect of the reclassification on the related net income line items. The provisions of this ASU are effective for interim and annual periods beginning on or after January 1, 2013. We adopted this amendment effective January 1, 2013. See Note I “Accumulated Other Comprehensive Income.”

 

Item 3: Quantitative and Qualitative Disclosures about Market Risk

For “Quantitative and Qualitative Disclosures about Market Risk” affecting Teradyne, see Item 7a, “Quantitative and Qualitative Disclosures about Market Risks,” in our Annual Report on Form 10-K filed with the SEC on March 1, 2013. There were no material changes in our exposure to market risk from those set forth in our Annual Report for the fiscal year ended December 31, 2012.

 

Item 4: Controls and Procedures

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

During the period covered by this report, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

 

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PART II. OTHER INFORMATION

 

Item 1: Legal Proceedings

We are subject to various legal proceedings and claims which have arisen in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our results of operations, financial condition or cash flows.

 

Item 1A: Risk Factors

You should carefully consider the factors discussed in Part I, “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Form 10-K remain applicable to our business.

The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

In November 2010, Teradyne’s board of directors authorized a stock repurchase program for up to $200 million. Cumulatively, as of March 31, 2013, we have repurchased 2.6 million shares of common stock for $31.2 million at an average price of $11.84.

The following table includes information with respect to repurchases we made of our common stock during the three months ended March 31, 2013 (in thousands except per share price):

 

Period

   (a) Total
Number of
Shares
(or Units)
Purchased
     (b) Average
Price Paid per
Share (or Unit)
     (c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
     (d) Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that may Yet Be
Purchased Under the
Plans or Programs
 

January 1, 2013 – January 27, 2013

     —        $ —          —        $ 168,825   

January 28, 2013 – February 24, 2013

     —        $ —          —        $ 168,825   

February 25, 2013 – March 31, 2013

     —        $ —          —        $ 168,825   
  

 

 

    

 

 

    

 

 

    

 

 

 
     —        $ —           —        $ 168,825   
  

 

 

    

 

 

    

 

 

    

 

 

 

We satisfy the U.S. minimum statutory withholding tax obligation due upon the vesting and the conversion of restricted stock units into shares of our common stock, by automatically withholding from the shares being issued a number of shares with an aggregate fair market value on the date of such vesting and conversion that would satisfy the minimum withholding amount due.

 

Item 4: Mine Safety Disclosures

Not Applicable

 

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Item 6: Exhibits

 

Exhibit
Number

  

Description

  31.1    Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
  31.2    Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
  32.1    Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
  32.2    Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS    XBRL Instance Document
101.SCH    XBRL Taxonomy Extension Schema Document
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document
101.LAB    XBRL Taxonomy Extension Label Linkbase Document
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

TERADYNE, INC.
Registrant

/ S /    G REGORY R. B EECHER

Gregory R. Beecher

Vice President,

Chief Financial Officer and Treasurer

(Duly Authorized Officer

and Principal Financial Officer)

May 10, 2013

 

33

Exhibit 31.1

CERTIFICATIONS

I, Michael A. Bradley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2013

 

By:  

/ S /    M ICHAEL A. B RADLEY

 

Michael A. Bradley

Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Gregory R. Beecher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2013

 

By:

 

/ S /    G REGORY R. B EECHER

 

Gregory R. Beecher

Chief Financial Officer and Treasurer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Teradyne, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael A. Bradley, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C (S) 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

 

/ S /    M ICHAEL A. B RADLEY

Michael A. Bradley

Chief Executive Officer

May 10, 2013

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Teradyne, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory R. Beecher, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C (S) 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

 

/ S /    G REGORY R. B EECHER

Gregory R. Beecher

Chief Financial Officer and Treasurer

May 10, 2013