Exhibit 99.1

Teradyne Reports Third Quarter 2020 Results

 

   

Revenue of $819 million in Q3’20 grew 41% from Q3’19

 

   

Q3’20 GAAP earnings per share grew 61% and Non-GAAP earnings per share grew 53% from Q3’19

 

   

Test revenue grew 46% from Q3’19 on Memory, Storage, and System on a Chip (SOC) Test strength

 

   

Industrial Automation revenue was up sequentially and flat with Q3’19 on improving global manufacturing conditions and new products

 

   

Q4’20 Revenue guidance at mid-point represents 8% growth from Q4’19

 

     Q3’20      Q3’19      Q2’20      9 Mos’20      9 Mos’19  

Revenue (mil)

   $ 819      $ 582      $ 839      $ 2,363      $ 1,640  

GAAP EPS

   $ 1.21      $ 0.75      $ 1.05      $ 3.23      $ 1.92  

Non-GAAP EPS

   $ 1.18      $ 0.77      $ 1.33      $ 3.52      $ 1.97  

==========================================

NORTH READING, Mass. – October 20, 2020 – Teradyne, Inc. (NASDAQ: TER) reported revenue of $819 million for the third quarter of 2020 of which $592 million was in Semiconductor Test, $118 million in System Test, $41 million in Wireless Test and $69 million in Industrial Automation. GAAP net income for the third quarter was $222.7 million or $1.21 per diluted share. On a non-GAAP basis, Teradyne’s net income in the third quarter was $205.4 million, or $1.18 per diluted share, which excluded restructuring and other charges, acquired intangible asset amortization, non-cash convertible debt interest, discrete tax adjustments and included the related tax impact on non-GAAP adjustments.

“We delivered quarterly sales above plan and generated a dollar per share or more in non-GAAP earnings for the third consecutive quarter,” said CEO and President Mark Jagiela. “The results were driven by record memory and storage test shipments along with strong System on a Chip (SOC) test demand for mobility and compute devices. In Industrial Automation, sales grew 17% from Q2’20 on the combination of improving conditions in the manufacturing sector and new products.

“Entering Q4, market conditions in our test businesses are stronger than expected and we’ve positioned our production capacity to respond to potential short lead time demands as we move through the quarter. For the full year 2020, at the mid-point of our guidance, we expect our year-over-year sales to grow more than 33% to over $3.0 billion and GAAP earnings per share to grow 58% to $4.12 and non-GAAP earnings per share to grow 57% to $4.50.”

Guidance for the fourth quarter of 2020 is revenue of $680 million to $740 million, with GAAP net income of $0.81 to $0.96 per diluted share and non-GAAP net income of $0.90 to $1.06 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest and includes the related tax impact on non-GAAP adjustments.


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Webcast

A conference call to discuss the third quarter results, along with management’s business outlook, will follow at 8:30 a.m. ET, Wednesday, October 21. 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 8:30 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, fair value inventory step-up, and restructuring and other, and includes the related tax impact on non-GAAP adjustments. 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 as a percentage of revenue, 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 fair value inventory step-up. GAAP requires that this item 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. Non-GAAP diluted shares include the impact of Teradyne’s call option on its shares. 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 “Investor Relations” and then selecting “Financials” and 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.


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About Teradyne

Teradyne (NASDAQ:TER) brings high-quality innovations such as smart devices, life-saving medical equipment and data storage systems to market, faster. Its advanced test solutions for semiconductors, electronic systems, wireless devices and more ensure that products perform as they were designed. Its Industrial Automation offerings include collaborative and mobile robots that help manufacturers of all sizes improve productivity and lower costs. In 2019, Teradyne had revenue of $2.3 billion and today employs 5,500 people worldwide. For more information, visit teradyne.com. Teradyne® is a registered trademark of Teradyne, Inc. in the U.S. and other countries.

Safe Harbor Statement

This release contains forward-looking statements regarding Teradyne’s future business prospects, the impact of the COVID-19 outbreak, 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, and the impact of U.S. export and tariff laws. 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, the impact of the COVID-19 outbreak, or the impact of U.S. export and tariff laws. 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 program may be modified, suspended or discontinued at any time.

On May 16, 2019, Huawei and 68 of its affiliates, including HiSilicon, were added to the U.S. Department of Commerce Entity List under U.S. Export Administration Regulations (the “EAR”). This action by the U.S. Department of Commerce imposed new export licensing requirements on exports, re-exports, and in-country transfers of all U.S. - regulated products, software and technology to the designated Huawei entities. While most of Teradyne’s products are not subject to the EAR and therefore not affected by the Entity List restrictions, some of its products are currently manufactured in the U.S. and thus subject to the Entity List restrictions. Compliance with the current Entity List restrictions has not significantly impacted Teradyne’s sales.

On August 17, 2020, the U.S. Department of Commerce published final regulations expanding the scope of the U.S. EAR to include additional products that would become subject to export restrictions relating to Huawei entities including HiSilicon. These new regulations restrict the sale to Huawei and the designated Huawei entities of certain non-U.S. made items, such as semiconductor devices, manufactured for or sold to Huawei entities including HiSilicon under specific, detailed conditions set forth in the new regulations. The new regulations also restrict Teradyne’s sales to Huawei, HiSilicon and their suppliers. Because the impact of these new regulations on Huawei’s business is both fluid and uncertain, at this time, Teradyne does not know the potential extent of the impact of the new regulations on its business with Huawei entities including HiSilicon and their suppliers. Teradyne is taking appropriate actions, including filing for licenses with the Department of Commerce and working with the U.S. regulators to understand the intended scope of the restrictions. However, Teradyne cannot be certain that the


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actions it takes will mitigate all of the risks associated with the new export controls that may impact its business. It is possible that these new regulations and any other additional regulations that may be implemented by the U.S. Department of Commerce or other government agency could have a material impact on Teradyne’s business and financial results.

On April 28, 2020, the Department of Commerce published new export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China, Russia and Venezuela. The definition of military end user is broad. The regulations went into effect on June 29, 2020. Teradyne does not expect that compliance with the new export controls will significantly impact its ability to sell products to its customers in China or to manufacture products in China. The new export controls, however, could disrupt the Company’s supply chain, increase compliance costs and impact the demand for the Company’s products in China and, thus, have a material adverse impact on Teradyne’s business, financial condition or results of operations. In addition, while the Company maintains an export compliance program, its compliance controls could be circumvented, exposing the Company to legal liabilities. Teradyne will continue to assess the potential impact of the new export controls on its business and operations and take appropriate actions, including filing for licenses with the Department of Commerce, to minimize any disruption. However, Teradyne cannot be certain that the actions it takes will mitigate all of the risks associated with the new export controls that may impact its business.

The global outbreak of the recent novel strain of the coronavirus (COVID-19) has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns. These measures have impacted and may further impact Teradyne’s workforce and operations, the operations of its customers, and those of its contract manufacturers and suppliers. The COVID-19 pandemic has adversely impacted the Company’s results of operations, including increased costs company-wide and decreased sales in its industrial automation businesses. At this time, the Company cannot accurately estimate the amount of the impact for Teradyne’s 2020 financial results and to its future financial results. There is considerable uncertainty regarding the impact on Teradyne’s business from the measures in place and potential future measures, and restrictions on Teradyne’s access to its manufacturing facilities or on its support operations or workforce, or similar limitations for its contractor manufacturers and suppliers, and restrictions or disruptions of transportation, such as reduced availability of transportation and increased border controls or closures, could limit Teradyne’s capacity to meet customer demand and have a material adverse effect on its financial condition and results of operations. The COVID-19 outbreak has significantly increased economic and demand uncertainty in Teradyne’s markets. This uncertainty could result in a significant decrease in demand for Teradyne’s products for an uncertain period of time. The spread of COVID-19 has caused Teradyne to modify its business practices (including employee travel, employees working remotely, and cancellation of physical participation in meetings, events and conferences), and the Company may take further actions as may be required by government authorities or that it determines are in the best interests of its employees, customers, contract manufacturers and suppliers. There is uncertainty that


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such measures will be sufficient to mitigate the risks posed by the virus, and Teradyne’s ability to perform critical functions could be impacted. Due to the uncertainty regarding the length, severity and potential business impact of the COVID-19 pandemic, Teradyne suspended its stock repurchase program announced in January 2020. At this time, Teradyne does not know whether or when it will authorize future stock repurchase programs. The degree to which COVID-19 impacts Teradyne’s results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and continued spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

Important factors that could cause actual results, earnings per share, use of cash, dividend payments, repurchases of common stock, or payment of the senior convertible notes 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 the Industrial Automation business; increased research and development spending; deterioration of Teradyne’s financial condition; the impact of the COVID-19 outbreak and related government responses on the market and demand for Teradyne’s products, on its contract manufacturers and supply chain, and on its workforce; 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 or the repurchase of common stock is not in the company’s best interests; additional U.S. tax regulations or IRS guidance; the impact of any tariffs or export controls imposed in the U.S. or China; compliance with trade protection measures or export restrictions; the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei and HiSilicon; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” sections of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2020. 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.


TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2020    

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS    

(In thousands, except per share amounts)    

 

 

     Quarter Ended     Nine Months Ended  
     September 27,
2020
    June 28,
2020
    September 29,
2019
    September 27,
2020
    September 29,
2019
 

Net revenues

   $ 819,484     $ 838,661     $ 582,038     $ 2,362,500     $ 1,640,315  

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

     360,556       367,188       237,000       1,026,549       683,724  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     458,928       471,473       345,038       1,335,951       956,591  

Operating expenses:

          

Selling and administrative (2)

     115,840       113,259       109,166       340,488       319,990  

Engineering and development

     94,909       94,102       77,804       274,170       236,030  

Acquired intangible assets amortization

     6,219       8,941       9,647       25,052       30,363  

Restructuring and other (3)

     (27,701     37,222       (6,500     1,915       (11,792
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     189,267       253,524       190,117       641,625       574,591  

Income from operations

     269,661       217,949       154,921       694,326       382,000  

Interest and other expense (4)

     5,930       658       3,188       16,237       5,111  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     263,731       217,291       151,733       678,089       376,889  

Income tax provision

     41,013       28,383       15,873       90,274       34,494  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 222,718     $ 188,908     $ 135,860     $ 587,815     $ 342,395  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income per common share:

          

Basic

   $ 1.34     $ 1.14     $ 0.80     $ 3.54     $ 2.00  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 1.21     $ 1.05     $ 0.75     $ 3.23     $ 1.92  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares — basic

     166,014       165,789       169,641       166,131       171,471  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares — diluted (5)

     184,338       180,257       180,494       181,777       178,685  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividend declared per common share

   $ 0.10     $ 0.10     $ 0.09     $ 0.30     $ 0.27  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(1)   Cost of revenues includes:    Quarter Ended     Nine Months Ended  
     September 27,
2020
    June 28,
2020
    September 29,
2019
    September 27,
2020
    September 29,
2019
 

Provision for excess and obsolete inventory

   $ 3,479     $ 5,580     $ 3,049     $ 13,116     $ 8,848  

Sale of previously written down inventory

     (310     (337     (821     (1,722     (1,962

Inventory step-up

     121       121       —         360       383  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3,290     $ 5,364     $ 2,228     $ 11,754     $ 7,269  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(2)

For the quarter and nine months ended September 29, 2019, selling and administrative expenses include an equity charge of $2,109 for the modification of Teradyne’s retired CFO’s outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement.

 

(3)   Restructuring and other consists of:    Quarter Ended     Nine Months Ended  
     September 27,
2020
    June 28,
2020
    September 29,
2019
    September 27,
2020
    September 29,
2019
 

Contingent consideration fair value adjustment

   $ (27,206   $ 29,259     $ (7,759   $ (7,967   $ (16,460

Acquisition related expenses and compensation

     (1,086     3,145       451       3,418       2,258  

Employee severance

     456       36       808       1,220       2,410  

Contract termination settlement fee

     —         4,000       —         4,000       —    

Other

     135       782       —         1,244       —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ (27,701   $ 37,222     $ (6,500   $ 1,915     $ (11,792
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
(4)   Interest and other includes:    Quarter Ended     Nine Months Ended  
     September 27,
2020
    June 28,
2020
    September 29,
2019
    September 27,
2020
    September 29,
2019
 

Non-cash convertible debt interest

   $ 3,629     $ 3,584     $ 3,453     $ 10,752     $ 10,231  

Pension actuarial losses (gains)

     2,688       (99     —         2,589       448  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
   $ 6,317     $ 3,485     $ 3,453     $ 13,341     $ 10,679  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(5)

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 quarters ended September 27, 2020, June 28, 2020 and September 29, 2019, 9.2 million, 7.6 million and 5.8 million shares, respectively, have been included in diluted shares. For the nine months ended September 27, 2020 and September 29, 2019, 8.0 million and 4.1 million shares, respectively, have been included in diluted shares. For the quarters ended September 27, 2020, June 28, 2020 and September 29, 2019, diluted shares also included 7.8 million, 5.8 million and 3.6 million shares, respectively from the convertible note hedge transaction. For the nine months ended September 27, 2020 and September 29, 2019, diluted shares also included 6.4 million and 1.8 million shares, respectively, from the convertible note hedge transaction.    


CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)    

 

 

     September 27,
2020
     December 31,
2019
 

Assets

     

Cash and cash equivalents

   $ 945,180      $ 773,924  

Marketable securities

     287,789        137,303  

Accounts receivable, net

     587,243        362,368  

Inventories, net

     191,317        196,691  

Prepayments and other current assets

     232,103        188,598  
  

 

 

    

 

 

 

Total current assets

     2,243,632        1,658,884  

Property, plant and equipment, net

     386,170        320,216  

Operating lease right-of-use assets, net

     54,724        57,539  

Marketable securities

     108,254        104,490  

Deferred tax assets

     78,243        75,185  

Retirement plans assets

     14,915        18,457  

Other assets

     11,650        10,332  

Acquired intangible assets, net

     103,672        125,480  

Goodwill

     435,252        416,431  
  

 

 

    

 

 

 

Total assets

   $ 3,436,512      $ 2,787,014  
  

 

 

    

 

 

 

Liabilities

     

Accounts payable

   $ 150,427      $ 126,617  

Accrued employees’ compensation and withholdings

     175,286        163,883  

Deferred revenue and customer advances

     129,438        104,876  

Other accrued liabilities

     117,108        70,871  

Operating lease liabilities

     20,311        19,476  

Contingent consideration

     —          9,106  

Income taxes payable

     79,270        44,200  
  

 

 

    

 

 

 

Total current liabilities

     671,840        539,029  

Retirement plans liabilities

     134,650        134,471  

Long-term deferred revenue and customer advances

     59,099        45,974  

Long-term contingent consideration

     22,531        30,599  

Long-term other accrued liabilities

     20,141        19,535  

Deferred tax liabilities

     11,462        14,070  

Long-term operating lease liabilities

     42,137        45,849  

Long-term income taxes payable

     74,930        82,642  

Debt

     406,178        394,687  
  

 

 

    

 

 

 

Total liabilities

     1,442,968        1,306,856  
  

 

 

    

 

 

 

Shareholders’ equity

     1,993,544        1,480,158  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 3,436,512      $ 2,787,014  
  

 

 

    

 

 

 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)    

 

 

     Quarter Ended     Nine Months Ended  
     September 27,
2020
    September 29,
2019
    September 27,
2020
    September 29,
2019
 

Cash flows from operating activities:

        

Net income

   $ 222,718     $ 135,860     $ 587,815     $ 342,395  

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation

     19,806       17,626       58,111       51,508  

Amortization

     10,343       11,873       36,577       36,849  

Stock-based compensation

     11,661       10,713       33,028       28,822  

Provision for excess and obsolete inventory

     3,479       3,049       13,116       8,848  

Retirement plan actuarial losses

     2,688       —         2,589       448  

Contingent consideration fair value adjustment

     (27,206     (7,759     (7,967     (16,460

Gains on investments

     (3,046     (417     (3,515     (4,158

Deferred taxes

     2,616       (3,492     (4,547     (2,977

Other

     225       181       750       610  

Changes in operating assets and liabilities, net of businesses acquired:

 

     

Accounts receivable

     109,025       12,689       (222,015     (66,789

Inventories

     20,726       (11,696     16,998       (14,143

Prepayments and other assets

     8,728       949       (40,751     (16,118

Accounts payable and other liabilities

     (32,020     35,231       81,557       20,807  

Deferred revenue and customer advances

     7,934       11,953       36,589       27,779  

Retirement plans contributions

     (1,383     (1,361     (3,884     (3,775

Income taxes

     (13,782     (16,251     24,060       (31,224
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     342,512       199,148       608,511       362,422  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchases of property, plant and equipment

     (62,858     (37,092     (146,872     (96,048

Purchases of marketable securities

     (188,880     (121,358     (488,428     (605,539

Proceeds from maturities of marketable securities

     126,423       160,279       309,407       393,472  

Proceeds from sales of marketable securities

     5,950       17,820       32,611       60,274  

Proceeds from life insurance

     —         2,639       546       2,912  

Purchase of investments and acquisition of businesses, net of cash acquired

     —         —         149       (21,970
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used for) provided by investing activities

     (119,365     22,288       (292,587     (266,899
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Issuance of common stock under stock purchase and stock option plans

     13,771       14,191       26,528       29,280  

Dividend payments

     (16,604     (15,250     (49,870     (46,269

Payments related to net settlement of employee stock compensation awards

     (216     (104     (22,735     (14,550

Repurchase of common stock

     —         (121,560     (88,465     (368,782

Payments of contingent consideration

     —         —         (8,852     (27,615
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used for financing activities

     (3,049     (122,723     (143,394     (427,936
  

 

 

   

 

 

   

 

 

   

 

 

 

Effects of exchange rate changes on cash and cash equivalents

     (349     119       (1,274     (400
  

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     219,749       98,832       171,256       (332,813

Cash and cash equivalents at beginning of period

     725,431       495,107       773,924       926,752  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 945,180     $ 593,939     $ 945,180     $ 593,939  
  

 

 

   

 

 

   

 

 

   

 

 

 


GAAP to Non-GAAP Earnings Reconciliation    

(In millions, except per share amounts)    

 

    Quarter Ended  
    September 27,
2020
    % of Net
Revenues
                June 28,
2020
    % of Net
Revenues
                September 29,
2019
    % of Net
Revenues
             

Net revenues

  $ 819.5           $ 838.7           $ 582.0        

Gross profit GAAP

  $ 458.9       56.0       $ 471.5       56.2       $ 345.0       59.3    

Inventory step-up

    0.1       0.0         0.1       0.0         —         —        
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

  $ 459.0       56.0       $ 471.6       56.2       $ 345.0       59.3    

Income from operations — GAAP

  $ 269.7       32.9       $ 217.9       26.0       $ 154.9       26.6    

Restructuring and other (1)

    (27.7     -3.4         37.2       4.4         (6.5     -1.1    

Acquired intangible assets amortization

    6.2       0.8         8.9       1.1         9.6       1.6    

Inventory step-up

    0.1       0.0         0.1       0.0         —         —        

Equity modification charge (2)

    —         —             —         —             2.1       0.4    
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations — non-GAAP

  $ 248.3       30.3       $ 264.1       31.5       $ 160.1       27.5    
 

 

 

   

 

 

       

 

 

   

 

 

       

 

 

   

 

 

     
                Net Income
per Common
Share
                Net Income
per Common
Share
                Net Income
per Common

Share
 
    September 27,
2020
    % of Net
Revenues
    Basic     Diluted     June 28,
2020
    % of Net
Revenues
    Basic     Diluted     September 29,
2019
    % of Net
Revenues
    Basic     Diluted  

Net income — GAAP

  $ 222.7       27.2   $ 1.34     $ 1.21     $ 188.9       22.5   $ 1.14     $ 1.05     $ 135.9       23.4   $ 0.80     $ 0.75  

Restructuring and other (1)

    (27.7     -3.4     (0.17     (0.15     37.2       4.4     0.22       0.21       (6.5     -1.1     (0.04     (0.04

Acquired intangible assets amortization

    6.2       0.8     0.04       0.03       8.9       1.1     0.05       0.05       9.6       1.6     0.06       0.05  

Interest and other (3)

    3.6       0.4     0.02       0.02       3.6       0.4     0.02       0.02       3.5       0.6     0.02       0.02  

Pension mark-to-market adjustment (3)

    2.7       0.3     0.02       0.01       (0.1     -0.0     (0.00     (0.00     —         —         —         —    

Inventory step-up

    0.1       0.0     0.00       0.00       0.1       0.0     0.00       0.00       —         —         —         —    

Equity modification charge (2)

    —         —         —         —         —         —         —         —         2.1       0.4     0.01       0.01  

Exclude discrete tax adjustments (4)

    (4.4     -0.5     (0.03     (0.02     (1.1     -0.1     (0.01     (0.01     (7.7     -1.3     (0.05     (0.04

Non-GAAP tax adjustments

    2.2       0.3     0.01       0.01       (8.3     -1.0     (0.05     (0.05     (3.5     -0.6     (0.02     (0.02

Convertible share adjustment (5)

    —         —         —         0.06       —         —         —         0.06       —         —         —         0.02  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income — non-GAAP

  $ 205.4       25.1   $ 1.24     $ 1.18     $ 229.2       27.3   $ 1.38     $ 1.33     $ 133.4       22.9   $ 0.79     $ 0.77  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares — basic

    166.0             165.8             169.6        

GAAP weighted average common shares — diluted

    184.3             180.3             180.5        

Exclude dilutive shares related to convertible note transaction

    (9.2           (7.6           (5.8      
 

 

 

         

 

 

         

 

 

       

Non-GAAP weighted average common shares — diluted

    175.2             172.7             174.7        
 

 

 

         

 

 

         

 

 

       

(1)   Restructuring and other consists of:

                       
    Quarter Ended                    
    September 27,
2020
                      June 28,
2020
                      September 29,
2019
                   

Contingent consideration fair value adjustment

  $ (27.2         $ 29.3           $ (7.8      

Acquisition related expenses and compensation

    (1.1           3.1             0.5        

Employee severance

    0.5             —               0.8        

Contract termination settlement fee

    —               4.0             —          

Other

    0.1             0.8             —          
 

 

 

         

 

 

         

 

 

       
  $ (27.7         $ 37.2           $ (6.5      
 

 

 

         

 

 

         

 

 

       

 

(2)

For the quarter ended September 29, 2019, selling and administrative expenses include an equity charge for the modification of Teradyne’s retired CFO’s outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement.    

 

(3)

For the quarters ended September 27, 2020, June 28, 2020, and September 29, 2019, adjustment to exclude non-cash convertible debt interest expense. For the quarters ended September 27, 2020 and June 28, 2020, adjustment to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.    

 

(4)

For the quarters ended September 27, 2020, June 28, 2020, and September 29, 2019, adjustment to exclude discrete income tax items.

 

(5)

For the quarters ended September 27, 2020 and June 28, 2020, the non-GAAP diluted EPS calculation adds back $1.3 million of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 7.8 million and 5.8 million shares, respectively, related to the convertible debt hedge transaction.    


 

    Nine Months Ended  
    September 27,
2020
    % of Net
Revenues
                September 29,
2019
    % of Net
Revenues
             

Net revenues

  $ 2,362.5           $ 1,640.3        

Gross profit GAAP

  $ 1,336.0       56.6       $ 956.6       58.3    

Inventory step-up

    0.4       0.0         0.4       0.0    
 

 

 

   

 

 

       

 

 

   

 

 

     

Gross profit non-GAAP

  $ 1,336.4       56.6       $ 957.0       58.3    

Income from operations — GAAP

  $ 694.3       29.4       $ 382.0       23.3    

Acquired intangible assets amortization

    25.1       1.1         30.4       1.9    

Restructuring and other (1)

    1.9       0.1         (11.8     -0.7    

Inventory step-up

    0.4       0.0         0.4       0.0    

Equity modification charge (2)

    —         —             2.1       0.1    
 

 

 

   

 

 

       

 

 

   

 

 

     

Income from operations — non-GAAP

  $ 721.7       30.5       $ 403.1       24.6    
 

 

 

   

 

 

       

 

 

   

 

 

     
                Net Income
per Common
Share
                Net Income
per Common
Share
 
    September 27,
2020
    % of Net
Revenues
    Basic     Diluted     September 29,
2019
    % of Net
Revenues
    Basic     Diluted  

Net income — GAAP

  $ 587.8       24.9 %    $ 3.54     $ 3.23     $ 342.4       20.9 %    $ 2.00     $ 1.92  

Acquired intangible assets amortization

    25.1       1.1 %      0.15       0.14       30.4       1.9 %      0.18       0.17  

Interest and other (3)

    10.8       0.5 %      0.07       0.06       10.2       0.6 %      0.06       0.06  

Pension mark-to-market adjustments (3)

    2.6       0.1 %      0.02       0.01       0.4       0.0 %      0.00       0.00  

Restructuring and other (1)

    1.9       0.1 %      0.01       0.01       (11.8     -0.7 %      (0.07     (0.07

Inventory step-up

    0.4       0.0 %      0.00       0.00       0.4       0.0 %      0.00       0.00  

Equity modification charge (2)

    —         —         —         —         2.1       0.1 %      0.01       0.01  

Exclude discrete tax adjustments (4)

    (13.1     -0.6 %      (0.08     (0.07     (23.9     -1.5 %      (0.14     (0.13

Non-GAAP tax adjustments

    (8.0     -0.3     (0.05     (0.04     (9.0     -0.5     (0.05     (0.05

Convertible share adjustment (5)

    —         —         —         0.16       —         —         —         0.06  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income — non-GAAP

  $ 607.5       25.7   $ 3.66     $ 3.52     $ 341.2       20.8   $ 1.99     $ 1.97  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP and non-GAAP weighted average common shares — basic

    166.1             171.5        

GAAP weighted average common shares — diluted

    181.8             178.7        

Exclude dilutive shares from convertible note

    (8.0           (5.9      
 

 

 

         

 

 

       

Non-GAAP weighted average common shares — diluted

    173.8             172.8        
 

 

 

         

 

 

       

(1)   Restructuring and other consists of:

    

    Nine Months Ended                    
    September 27,
2020
                      September 29,
2019
                   

Contingent consideration fair value adjustment

  $ (8.0         $ (16.5      

Contract termination settlement fee

    4.0             —          

Acquisition related expenses and compensation

    3.4             2.3        

Employee severance

    1.2             2.4        

Other

    1.2             —          
 

 

 

         

 

 

       
  $ 1.9           $ (11.8      
 

 

 

         

 

 

       

 

(2)

For the nine months ended September 29, 2019, selling and administrative expenses include an equity charge for the modification of Teradyne’s retired CFO’s outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement.

 

(3)

For the nine months ended September 27, 2020 and September 29, 2019, Interest and other included non-cash convertible debt interest expense. For the nine months ended September 27, 2020 and September 29, 2019, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting.

 

(4)

For the nine months ended September 27, 2020 and September 29, 2019, adjustment to exclude discrete income tax items. For the nine months ended September 29, 2019, income tax (benefit) provision includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne’s 2015 Federal tax return and includes a $15 million tax provision related to the finalization of our toll tax charge.

 

(5)

For the nine months ended September 27, 2020, the non-GAAP diluted EPS calculation adds back $3.9 million of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 6.4 million shares related to the convertible debt hedge transaction.

 

GAAP to Non-GAAP Reconciliation of Fourth Quarter 2020 guidance:

 

GAAP and non-GAAP fourth quarter revenue guidance:

   $ 680 million       to      $ 740 million  

GAAP net income per diluted share

   $ 0.81        $ 0.96  

Exclude acquired intangible assets amortization

     0.03          0.03  

Exclude non-cash convertible debt interest

     0.02          0.02  

Tax effect of non-GAAP adjustments

     (0.01        (0.01

Convertible share adjustment

     0.06          0.06  
  

 

 

      

 

 

 

Non-GAAP net income per diluted share

   $ 0.90        $ 1.06  

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

       

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