Teradyne, Inc.
TERADYNE, INC (Form: 8-K, Received: 07/27/2017 06:08:38)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 26, 2017

 

 

TERADYNE, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Massachusetts   001-06462   04-2272148

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

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

Registrant’s telephone number, including area code: (978) 370-2700

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On July 26, 2017, Teradyne, Inc. (“Teradyne”) issued a press release regarding its financial results for the second quarter ended July 2, 2017. Teradyne’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

  

Description

99.1    Press Release dated July 26, 2017.


SIGNATURES

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

 

    TERADYNE, INC.
Dated: July 27, 2017     By:  

/ S / G REGORY R. B EECHER

    Name:   Gregory R. Beecher
    Title:   Vice President, Chief Financial Officer and Treasurer


Exhibit Index

 

Exhibit
No.

  

Description

99.1    Press Release dated July 26, 2017.

Exhibit 99.1

Teradyne Reports Strong Revenue and Earnings Growth in Second Quarter and First Half 2017

 

    Q2’17 revenue of $697  million, up 31% from Q2’16 and 53% from Q1’17

 

    First half 2017 revenue up 20% from first half 2016

 

    Semiconductor Test revenue increased 36% from Q2’16; 1H’17 up 22% from 1H’16

 

    Universal Robots (UR) revenue increased 57% from Q2’16; 1H’17 up 81% from 1H’16

 

     Q2’17      Q2’16     Q1’17      1H’17      1H’16  

Orders (mil)

   $ 462      $ 471     $ 595      $ 1,056      $ 860  

Revenue (mil)

   $ 697      $ 532     $ 457      $ 1,154      $ 963  

GAAP EPS

   $ 0.87      $ (1.10   $ 0.42      $ 1.29      $ (0.85

Non-GAAP EPS

   $ 0.90      $ 0.55     $ 0.44      $ 1.34      $ 0.86  

NORTH READING, Mass. – July 26, 2017 – Teradyne, Inc. (NYSE: TER) reported revenue of $697 million for the second quarter of 2017 of which $593 million was in Semiconductor Test, $39 million in Industrial Automation (UR), $37 million in System Test, and $28 million in Wireless Test. GAAP net income for the second quarter was $175.0 million or $0.87 per share. On a non-GAAP basis, Teradyne’s net income in the second quarter was $181.5 million, or $0.90 per diluted share, which excluded acquired intangible assets amortization, non-cash convertible debt interest, pension actuarial gains, restructuring and other charges, and included the related tax impact on non-GAAP adjustments.

Orders in the second quarter of 2017 were $462 million of which $369 million were in Semiconductor Test, $33 million in Industrial Automation (UR), $30 million in Wireless Test, and $29 million in System Test.

“Continued strong performance in our Semiconductor Test Business and Universal Robots drove our second quarter sales up 31% and EPS up 64% compared to last year’s second quarter,” said CEO and President Mark Jagiela. “Semiconductor Test shipments grew 36% year on year reflecting continued strength in mobile and microcontroller test and increasing demand in memory and analog test. Universal Robots shipments increased 57% from Q2’16 and sales continue to broaden with our expanding distribution reach and growing customer awareness of the powerful economic benefits of UR’s collaborative robots.”

“Looking ahead to the 2nd half of 2017, we expect the normal seasonal pattern of slowing mobile device test shipments in Semiconductor Test and continued 50% plus growth at Universal Robots.”

Guidance for the third quarter of 2017 is revenue of $455 million to $485 million, with GAAP net income of $0.35 to $0.42 per diluted share and non-GAAP net income of $0.39 to $0.46 per diluted share. Non-GAAP guidance excludes acquired intangible assets amortization, non-cash convertible debt interest, and includes the related tax impact on non-GAAP adjustments.


Webcast

A conference call to discuss the second quarter results, along with management’s business outlook, will follow at 10 a.m. ET, Thursday, July 27. Interested investors should access the webcast at www.teradyne.com and click on “Investors” at least five minutes before the call begins. Presentation materials will be available starting at 10 a.m. ET. A replay will be available on the Teradyne website at www.teradyne.com/investors .

Non-GAAP Results

In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain income items and charges. These results are provided as a complement to results provided in accordance with GAAP. Non-GAAP income from operations and non-GAAP net income exclude acquired intangible assets amortization, non-cash convertible debt interest, pension actuarial gains and losses, discrete income tax adjustments, goodwill impairment, acquired intangible assets impairment, and restructuring and other. GAAP requires that these items be included in determining income from operations and net income. Non-GAAP income from operations, non-GAAP net income, non-GAAP income from operations and non-GAAP net income as a percentage of revenue, and non-GAAP net income per share are non-GAAP performance measures presented to provide meaningful supplemental information regarding Teradyne’s baseline performance before gains, losses or other charges that may not be indicative of Teradyne’s current core business or future outlook. These non-GAAP performance measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradyne’s business plan, historical operating results and the operating results of Teradyne’s competitors. Non-GAAP gross margin excludes pension actuarial gains and losses. GAAP requires that these items be included in determining gross margin. Non-GAAP gross margin dollar amount and percentage are non-GAAP performance measures that management believes provide useful supplemental information for management and the investor. Management uses non-GAAP gross margin as a performance measure for Teradyne’s current core business and future outlook and for comparison with Teradyne’s business plan, historical gross margin results and the gross margin results of Teradyne’s competitors. Management believes each of these non-GAAP performance measures provides useful supplemental information for investors, allowing greater transparency to the information used by management in its operational decision making and in the review of Teradyne’s financial and operational performance, as well as facilitating meaningful comparisons of Teradyne’s results in the current period compared with those in prior and future periods. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the attached exhibits and on the Teradyne website at www.teradyne.com by clicking on “Investors” and then selecting the “GAAP to Non-GAAP Reconciliation” link. The non-GAAP performance measures discussed in this press release may not be comparable to similarly titled measures used by other companies. The presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP.

About Teradyne

Teradyne (NYSE:TER) is a leading supplier of automation equipment for test and industrial applications. Teradyne Automatic Test Equipment (ATE) is used to test semiconductors, wireless products, data storage and complex electronic systems, which serve consumer, communications, industrial and government customers. Our Industrial Automation products include collaborative robots used by global manufacturing and light industrial customers to improve quality and increase manufacturing efficiency. In 2016, Teradyne had revenue of $1.75 billion and currently employs approximately 4,400 people worldwide. For more information, visit www.teradyne.com . Teradyne (R) is a registered trademark of Teradyne, Inc. in the U.S. and other countries.

 

Page 2


Safe Harbor Statement

This release contains forward-looking statements regarding Teradyne’s future business prospects, results of operations, market conditions, earnings per share, the payment of a quarterly dividend, the repurchase of Teradyne common stock pursuant to a share repurchase program, use of proceeds and potential dilution from the senior convertible notes offering and potential borrowings under a senior secured credit facility. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, events, earnings per share, use of cash, payment of dividends, repurchases of common stock, payment of the senior convertible notes or availability of, or borrowing under, the credit facility. There can be no assurance that management’s estimates of Teradyne’s future results or other forward-looking statements will be achieved. Additionally, the current dividend and share repurchase programs may be modified, suspended or discontinued at any time. Important factors that could cause actual results, earnings per share, use of cash, dividend payments, repurchases of common stock, payment of the senior convertible notes or borrowings under the credit facility to differ materially from those presently expected include: conditions affecting the markets in which Teradyne operates; decreased or delayed product demand from one or more significant customers; development, delivery and acceptance of new products; the ability to grow Universal Robots’ business; increased research and development spending; deterioration of Teradyne’s financial condition; the consummation and success of any mergers or acquisitions; unexpected cash needs; insufficient cash flow to make required payments and pay the principal amount on the senior convertible notes; the business judgment of the board of directors that a declaration of a dividend, the repurchase of common stock or borrowing under the credit facility is not in the company’s best interests; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” section of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and the Quarterly Report on Form 10-Q for the period ended April 2, 2017. The forward-looking statements provided by Teradyne in this press release represent management’s views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause management’s views to change. However, while Teradyne may elect to update these forward-looking statements at some point in the future, Teradyne specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Teradyne’s views as of any date subsequent to the date of this release.

 

Page 3


TERADYNE, INC. REPORT FOR SECOND FISCAL QUARTER OF 2017

 

 

CONDENSED CONSOLIDATED OPERATING STATEMENTS

(In thousands, except per share amounts)

 

 

     Quarter Ended     Six Months Ended  
     July 2,
2017
    April 2,
2017
    July 3,
2016
    July 2,
2017
    July 3,
2016
 

Net revenues

   $ 696,901     $ 456,913     $ 531,792     $ 1,153,814     $ 962,787  

Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) (2)

     305,682       191,980       248,922       497,662       449,584  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     391,219       264,933       282,870       656,152       513,203  

Operating expenses:

          

Engineering and development (1)

     81,728       76,182       76,109       157,910       149,573  

Selling and administrative (1)

     89,131       84,906       81,425       174,037       160,599  

Acquired intangible assets amortization

     8,166       7,952       16,244       16,118       36,238  

Restructuring and other (3)

     2,288       2,511       2,608       4,799       4,195  

Goodwill impairment (4)

     —         —         254,946       —         254,946  

Acquired intangible assets impairment (4)

     —         —         83,339       —         83,339  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     181,313       171,551       514,671       352,864       688,890  

Income (loss) from operations

     209,906       93,382       (231,801     303,288       (175,687

Interest and other (5)

     (3,029     (1,366     984       (4,395     2,062  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     206,877       92,016       (230,817     298,893       (173,625

Income tax provision (benefit)

     31,901       6,795       (7,271     38,696       (65
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 174,976     $ 85,221     $ (223,546   $ 260,197     $ (173,560
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per common share:

          

Basic

   $ 0.88     $ 0.43     $ (1.10   $ 1.30     $ (0.85
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.87     $ 0.42     $ (1.10   $ 1.29     $ (0.85
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares—basic

     198,774       200,005       203,018       199,390       203,645  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares—diluted (6)

     201,529       201,936       203,018       201,732       203,645  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividend declared per common share

   $ 0.07     $ 0.07     $ 0.06     $ 0.14     $ 0.12  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net orders

   $ 461,606     $ 594,733     $ 470,983     $ 1,056,339     $ 860,400  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


(1)    Pension actuarial gains included in our operating results were as follows:

          
     Quarter Ended     Six Months
Ended
 
     July 2,
2017
    April 2,
2017
    July 3,
2016
    July 2,
2017
    July 3,
2016
 
Cost of revenues    $ (664   $ —       $ (221   $ (664   $ (614
Engineering and development      (746     —         (221     (746     (615
Selling and administrative      (1,094     —         (227     (1,094     (633
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ (2,504   $ —       $ (669   $ (2,504   $ (1,862
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(2)    Cost of revenues includes:

          
     Quarter Ended     Six Months
Ended
 
     July 2,
2017
    April 2,
2017
    July 3,
2016
    July 2,
2017
    July 3,
2016
 
Provision for excess and obsolete inventory    $ 2,569     $ 2,726     $ 7,742     $ 5,295     $ 12,115  
Sale of previously written down inventory      (2,149     (1,134     (5,151     (3,283     (6,319
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 420     $ 1,592     $ 2,591     $ 2,012     $ 5,796  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(3)    Restructuring and other consists of:

          
     Quarter Ended     Six Months
Ended
 
     July 2,
2017
    April 2,
2017
    July 3,
2016
    July 2,
2017
    July 3,
2016
 
Contingent consideration fair value adjustment    $ 1,499     $ 634     $ 1,305     $ 2,133     $ 2,478  
Employee severance      789       583       1,303       1,372       1,717  
Facility related      —         1,294       —         1,294       —    
Impairment of fixed assets and expenses related to Japan earthquake      —         —         5,051       —         5,051  
Property insurance recovery      —         —         (5,051     —         (5,051
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 2,288     $ 2,511     $ 2,608     $ 4,799     $ 4,195  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(4)    Goodwill and acquired intangible assets impairment related to Teradyne’s Wireless Test business segment.

          

(5)    Interest and other includes:

          
     Quarter Ended     Six Months
Ended
 
     July 2,
2017
    April 2,
2017
    July 3,
2016
    July 2,
2017
    July 3,
2016
 
Non-cash convertible debt interest expense    $ 3,088     $ 3,050     $ —       $ 6,138     $ —    

 

(6) Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarter ended July 2, 2017 and for the six months ended July 2, 2017, 0.7 million and 0.3 million shares, respectively, have been included in diluted shares.


CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

 

 

     July 2,
2017
     December 31,
2016
 

Assets

     

Cash and cash equivalents

   $ 598,349      $ 307,884  

Marketable securities

     809,338        871,024  

Accounts receivable, net

     405,946        192,444  

Inventories, net

     153,645        135,958  

Prepayments

     105,960        108,454  

Other current assets

     6,787        8,039  
  

 

 

    

 

 

 

Total current assets

     2,080,025        1,623,803  

Property, plant and equipment, net

     258,017        253,821  

Marketable securities

     212,501        433,843  

Deferred tax assets

     125,204        107,405  

Other assets

     12,429        12,165  

Retirement plan assets

     9,231        7,712  

Acquired intangible assets, net

     90,603        100,401  

Goodwill

     242,215        223,343  
  

 

 

    

 

 

 

Total assets

   $ 3,030,225      $ 2,762,493  
  

 

 

    

 

 

 

Liabilities

     

Accounts payable

   $ 103,454      $ 95,362  

Accrued employees’ compensation and withholdings

     122,246        109,944  

Deferred revenue and customer advances

     81,087        84,478  

Other accrued liabilities

     66,176        51,382  

Contingent consideration

     22,432        1,050  

Accrued income taxes

     43,812        30,480  
  

 

 

    

 

 

 

Total current liabilities

     439,207        372,696  

Retirement plans liabilities

     111,688        106,938  

Long-term deferred revenue and customer advances

     32,679        23,463  

Deferred tax liabilities

     10,714        12,144  

Long-term other accrued liabilities

     11,061        28,642  

Long-term contingent consideration

     16,983        37,282  

Long-term debt

     359,245        352,669  
  

 

 

    

 

 

 

Total liabilities

     981,577        933,834  

Shareholders’ equity

     2,048,648        1,828,659  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 3,030,225      $ 2,762,493  
  

 

 

    

 

 

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

 

 

     Quarter Ended     Six Months Ended  
     July 2,
2017
    July 3,
2016
    July 2,
2017
    July 3,
2016
 

Cash flows from operating activities:

        

Net income (loss)

   $ 174,976     $ (223,546   $ 260,197     $ (173,560

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

        

Depreciation

     16,331       15,976       32,474       32,168  

Amortization

     11,342       16,710       22,412       37,180  

Stock-based compensation

     8,367       7,532       17,312       15,457  

Provision for excess and obsolete inventory

     2,569       7,742       5,295       12,115  

Contingent consideration adjustment

     1,499       1,305       2,133       2,478  

Deferred taxes

     (86     (15,962     (3,563     (21,458

Retirement plan actuarial gains

     (2,504     (669     (2,504     (1,862

Goodwill impairment

     —         254,946       —         254,946  

Acquired intangible assets impairment

     —         83,339       —         83,339  

Impairment of fixed assets

     —         4,179       —         4,179  

Property insurance recovery

     —         (5,051     —         (5,051

Other

     1,151       92       1,153       576  

Changes in operating assets and liabilities:

        

Accounts receivable

     (90,397     (95,678     (214,189     (138,230

Inventories

     54,003       30,924       (8,149     30,222  

Prepayments and other assets

     3,321       (12,509     4,425       (13,657

Accounts payable and accrued expenses

     22,002       34,745       14,449       (6,040

Deferred revenue and customer advances

     8,645       77,777       5,312       106,072  

Retirement plans contributions

     (1,036     (1,048     (1,983     (2,298

Income taxes

     20,130       58       34,418       6  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     230,313       180,862       169,192       216,582  

Cash flows from investing activities:

        

Purchases of property, plant and equipment

     (23,901     (26,259     (45,967     (46,593

Purchases of available-for-sale marketable securities

     (181,502     (215,533     (334,819     (437,311

Proceeds from maturities of available-for-sale marketable securities

     219,423       54,566       307,607       128,024  

Proceeds from sales of available-for-sale marketable securities

     99,661       95,428       313,254       334,798  

Proceeds from property insurance

     —         5,051       —         5,051  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) investing activities

     113,681       (86,747     240,075       (16,031

Cash flows from financing activities:

        

Issuance of common stock under stock purchase and stock option plans

     131       8,756       15,215       17,896  

Repurchase of common stock

     (56,598     (28,782     (94,328     (56,783

Dividend payments

     (13,904     (12,172     (27,925     (24,425

Payments related to net settlement of employee stock compensation awards

     (149     (180     (12,438     (9,152

Payments of contingent consideration

     —         —         (1,050     (11,697
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

     (70,520     (32,378     (120,526     (84,161

Effects of exchange rate changes on cash and cash equivalents

     129       —         1,724       —    

Increase in cash and cash equivalents

     273,603       61,737       290,465       116,390  

Cash and cash equivalents at beginning of period

     324,746       319,358       307,884       264,705  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 598,349     $ 381,095     $ 598,349     $ 381,095  
  

 

 

   

 

 

   

 

 

   

 

 

 


GAAP to Non-GAAP Earnings Reconciliation

(In millions, except per share amounts)

 

    Quarter Ended              
    July 2,
2017
    % of Net
Revenues
                April 2,
2017
    % of Net
Revenues
                July 3,
2016
    % of Net
Revenues
             

Net revenues

  $ 696.9           $ 456.9           $ 531.8        

Gross profit - GAAP

  $ 391.2       56.1       $ 264.9       58.0       $ 282.9       53.2    

Pension mark-to-market adjustment (1)

    (0.7     -0.1         —         —             (0.2     0.0    
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit - non-GAAP

  $ 390.5       56.0       $ 264.9       58.0       $ 282.7       53.2    

Income (loss) from operations - GAAP

  $ 209.9       30.1       $ 93.4       20.4       $ (231.8     -43.6    

Acquired intangible assets amortization

    8.2       1.2         8.0       1.8         16.2       3.0    

Restructuring and other (2)

    2.3       0.3         2.5       0.5         2.6       0.5    

Pension mark-to-market adjustment (1)

    (2.5     -0.4         —         —             (0.7     -0.1    

Goodwill impairment (3)

    —         —             —         —             254.9       47.9    

Acquired intangible assets impairment (3)

    —         —             —         —             83.3       15.7    
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations - non-GAAP

  $ 217.9       31.3       $ 103.9       22.7       $ 124.5       23.4    
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     
                Net Income
per Common
Share
                Net Income
per Common
Share
                Net (Loss) Income
per Common
Share
 
    July 2,
2017
    % of Net
Revenues
    Basic     Diluted     April 2,
2017
    % of Net
Revenues
    Basic     Diluted     July 3,
2016
    % of Net
Revenues
    Basic     Diluted  

Net income (loss) - GAAP

  $ 175.0       25.1   $ 0.88     $ 0.87     $ 85.2       18.6   $ 0.43     $ 0.42     $ (223.5     -42.0   $ (1.10   $ (1.10

Acquired intangible assets amortization

    8.2       1.2     0.04       0.04       8.0       1.8     0.04       0.04       16.2       3.0     0.08       0.08  

Interest and other (4)

    3.1       0.4     0.02       0.02       3.1       0.7     0.02       0.02       —         —         —         —    

Restructuring and other (2)

    2.3       0.3     0.01       0.01       2.5       0.5     0.01       0.01       2.6       0.5     0.01       0.01  

Pension mark-to-market adjustment (1)

    (2.5     -0.4     (0.01     (0.01     —         —         —         —         (0.7     -0.1     (0.00     (0.00

Goodwill impairment (3)

    —         —         —         —         —         —         —         —         254.9       47.9     1.26       1.24  

Acquired intangible assets impairment (3)

    —         —         —         —         —         —         —         —         83.3       15.7     0.41       0.41  

Exclude discrete tax adjustments (5)

    0.5       0.1     0.00       0.00       (7.0     -1.5     (0.04     (0.03     25.1       4.7     0.12       0.12  

Non-GAAP tax adjustments (6)

    (5.1     -0.7     (0.03     (0.03     (3.1     -0.7     (0.02     (0.02     (45.5     -8.6     (0.22     (0.22
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income - non-GAAP

  $ 181.5       26.0   $ 0.91     $ 0.90     $ 88.7       19.4   $ 0.44     $ 0.44     $ 112.4       21.1   $ 0.55     $ 0.55  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares - basic

    198.8             200.0             203.0        

GAAP weighted average common shares - diluted

    201.5             201.9             203.0        

Exclude dilutive shares from convertible note

    (0.7           —               —          

Include dilutive shares

    —               —               1.9        
 

 

 

         

 

 

         

 

 

       

Non-GAAP weighted average common shares - diluted

    200.8             201.9             204.9        
 

 

 

         

 

 

         

 

 

       

(1)    Actuarial gains recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

     


(2)    Restructuring and other consists of:

     

    Quarter Ended                    
    July 2,
2017
                      April 2,
2017
                      July 3,
2016
                   

    Contingent consideration fair value adjustment

  $ 1.5           $ 0.6           $ 1.3        

    Employee severance

    0.8             0.6             1.3        

    Facility related

    —               1.3             —          

    Impairment of fixed assets and expenses related to Japan earthquake

    —               —               5.1        

    Property insurance recovery

    —               —               (5.1      
 

 

 

         

 

 

         

 

 

       
  $ 2.3           $ 2.5           $ 2.6        
 

 

 

         

 

 

         

 

 

       

 

(3) Goodwill and acquired intangible assets impairment related to Teradyne’s Wireless Test business segment.

 

(4) For the quarters ended July 2, 2017 and April 2, 2017, interest and other included non-cash convertible debt interest expense.

 

(5) For the quarters ended July 2, 2017, April 2, 2017 and July 3, 2016 adjustment to exclude discrete income tax items. For the quarter ended July 3, 2016, adjustment to treat Wireless Test business segment goodwill and intangible assets impairments as discrete tax items.

 

(6) For periods after December 31, 2016, the non-GAAP annual effective tax rate is based on a with and without calculation with respect to non-GAAP reconciling items.


     Six Months Ended  
     July 2,
2017
    % of Net
Revenues
    July 3,
2016
    % of Net
Revenues
 

Net Revenues

   $ 1,153.8       $ 962.8    

Gross profit - GAAP

   $ 656.1       56.9   $ 513.2       53.3

Pension mark-to-market adjustment (1)

     (0.7     -0.1     (0.6     -0.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit - non-GAAP

   $ 655.4       56.8   $ 512.6       53.2

Income (loss) from operations - GAAP

   $ 303.3       26.3   $ (175.7     -18.2

Acquired intangible assets amortization

     16.1       1.4     36.2       3.8

Restructuring and other (2)

     4.8       0.4     4.2       0.4

Pension mark-to-market adjustment (1)

     (2.5     -0.2     (1.9     -0.2

Goodwill impairment (3)

     —         —         254.9       26.5

Acquired intangible assets impairment (3)

     —         —         83.3       8.7
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations - non-GAAP

   $ 321.7       27.9   $ 201.0       20.9
  

 

 

   

 

 

   

 

 

   

 

 

 

 

                 Net Income
per Common
Share
                Net (Loss) Income
per Common
Share
 
     July 2,
2017
    % of Net
Revenues
    Basic     Diluted     July 3,
2016
    % of Net
Revenues
    Basic     Diluted  

Net income (loss) - GAAP

   $ 260.2       22.6   $ 1.30     $ 1.29     $ (173.6     -18.0   $ (0.85   $ (0.85

Acquired intangible assets amortization

     16.1       1.4     0.08       0.08       36.2       3.8     0.18       0.18  

Interest and other (4)

     6.1       0.5     0.03       0.03       —         —         —         —    

Restructuring and other (2)

     4.8       0.4     0.02       0.02       4.2       0.4     0.02       0.02  

Pension mark-to-market adjustment (1)

     (2.5     -0.2     (0.01     (0.01     (1.9     -0.2     (0.01     (0.01

Goodwill impairment (3)

     —         —         —         —         254.9       26.5     1.25       1.24  

Acquired intangible assets impairment (3)

     —         —         —         —         83.3       8.7     0.41       0.41  

Exclude discrete tax adjustments (5)

     (6.5     -0.6     (0.03     (0.03     22.7       2.4     0.11       0.11  

Non-GAAP tax adjustments (6)

     (8.2     -0.7     (0.04     (0.04     (49.0     -5.1     (0.24     (0.24
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income - non-GAAP

   $ 270.0       23.4   $ 1.35     $ 1.34     $ 176.8       18.4   $ 0.87     $ 0.86  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares - basic

     199.4             203.6        

GAAP weighted average common shares - diluted

     201.7             203.6        

Exclude dilutive shares from convertible note

     (0.3           —          

Include dilutive shares

     —               1.7        
  

 

 

         

 

 

       

Non-GAAP weighted average common shares - diluted

     201.4             205.3        
  

 

 

         

 

 

       

(1)    Actuarial gains recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

     

(2)    Restructuring and other consists of:

     

     Six Months Ended                    
     July 2,
2017
                      July 3,
2016
                   

   Contingent consideration fair value adjustment

   $ 2.1           $ 2.5        

   Employee severance

     1.4             1.7        

   Facility related

     1.3             —          

   Impairment of fixed assets and expenses related to Japan earthquake

     —               5.1        

   Property insurance recovery

     —               (5.1      
  

 

 

         

 

 

       
   $ 4.8           $ 4.2        
  

 

 

         

 

 

       


(3) Goodwill and acquired intangible assets impairment related to Teradyne’s Wireless Test business segment.                

 

(4) For the six months ended July 2, 2017, interest and other included non-cash convertible debt interest expense.                

 

(5) For the six months ended July 2, 2017 and July 3, 2016, adjustment to exclude discrete income tax items. For the six months ended July 3, 2016, adjustment to treat Wireless Test business segment goodwill and intangible assets impairments as discrete tax items.

 

(6) For periods after December 31, 2016, the non-GAAP annual effective tax rate is based on a with and without calculation with respect to non-GAAP reconciling items.

GAAP to Non-GAAP Reconciliation of Third Quarter 2017 guidance:

 

GAAP and non-GAAP third quarter revenue guidance:

   $ 455 million       to      $ 485 million  

GAAP net income per diluted share

   $ 0.35        $ 0.42  

Exclude acquired intangible assets amortization

     0.04          0.04  

Exclude non-cash convertible debt interest

     0.02          0.02  

Non-GAAP tax adjustment

     (0.02        (0.02
  

 

 

      

 

 

 

Non-GAAP net income per diluted share

   $ 0.39        $ 0.46  

For press releases and other information of interest to investors, please visit Teradyne’s homepage at http://www.teradyne.com.

Contact: Teradyne, Inc.

              Andy Blanchard 978-370-2425

              Vice President of Corporate Relations