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. 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 FIRST FISCAL QUARTER OF 2017 | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||
| Quarter Ended | ||||||||||||||
| April 2, 2017 | December 31, 2016 | April 3, 2016 | ||||||||||||
| Net revenues | $ | 456,913 | $ | 379,989 | $ | 430,994 | ||||||||
| Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) (2) | 191,980 | 160,983 | 200,662 | |||||||||||
| Gross profit | 264,933 | 219,006 | 230,332 | |||||||||||
| Operating expenses: | ||||||||||||||
| Engineering and development (1) | 76,182 | 70,052 | 73,464 | |||||||||||
| Selling and administrative (1) | 84,906 | 76,289 | 79,174 | |||||||||||
| Acquired intangible assets amortization | 7,952 | 7,923 | 19,994 | |||||||||||
| Restructuring and other (3) | 2,511 | 5,570 | 1,587 | |||||||||||
| Operating expenses | 171,551 | 159,834 | 174,219 | |||||||||||
| Income from operations | 93,382 | 59,172 | 56,113 | |||||||||||
| Interest and other (4) | (1,366 | ) | (288 | ) | 1,079 | |||||||||
| Income before income taxes | 92,016 | 58,884 | 57,192 | |||||||||||
| Income tax provision (benefit) | 6,795 | (7,461 | ) | 7,206 | ||||||||||
| Net income | $ | 85,221 | $ | 66,345 | $ | 49,986 | ||||||||
|
Net income per common share: |
||||||||||||||
| Basic | $ | 0.43 | $ | 0.33 | $ | 0.24 | ||||||||
| Diluted | $ | 0.42 | $ | 0.33 | $ | 0.24 | ||||||||
| Weighted average common shares - basic | 200,005 | 200,810 | 204,271 | |||||||||||
| Weighted average common shares - diluted | 201,936 | 202,947 | 205,732 | |||||||||||
| Cash dividend declared per common share | $ | 0.07 | $ | 0.06 | $ | 0.06 | ||||||||
| . | ||||||||||||||
| Net orders | $ | 594,733 | $ | 628,284 | $ | 389,417 | ||||||||
|
(1) Pension actuarial gains included in our operating results were as follows: |
||||||||||||||
| Quarter Ended | ||||||||||||||
| April 2, 2017 | December 31, 2016 | April 3, 2016 | ||||||||||||
| Cost of revenues | $ | - | $ | (774 | ) | $ | (393 | ) | ||||||
| Engineering and development | - | (725 | ) | (394 | ) | |||||||||
| Selling and administrative | - | (502 | ) | (406 | ) | |||||||||
| $ | - | $ | (2,001 | ) | $ | (1,193 | ) | |||||||
|
(2) Cost of revenues includes: |
Quarter Ended | |||||||||||||
| April 2, 2017 | December 31, 2016 | April 3, 2016 | ||||||||||||
| Provision for excess and obsolete inventory | $ | 2,726 | $ | 2,345 | $ | 4,373 | ||||||||
| Sale of previously written down inventory | (1,134 | ) | (1,924 | ) | (1,168 | ) | ||||||||
| $ | 1,592 | $ | 421 | $ | 3,205 | |||||||||
|
(3) Restructuring and other consists of: |
Quarter Ended | |||||||||||||
| April 2, 2017 | December 31, 2016 | April 3, 2016 | ||||||||||||
| Facility related | $ | 1,294 | $ | - | $ | - | ||||||||
| Contingent consideration fair value adjustment | 634 | 5,445 | 1,173 | |||||||||||
| Employee severance | 583 | 125 | 414 | |||||||||||
| $ | 2,511 | $ | 5,570 | $ | 1,587 | |||||||||
|
(4) Interest and other includes: |
Quarter Ended | |||||||||||||
| April 2, 2017 | December 31, 2016 | April 3, 2016 | ||||||||||||
| Non-cash convertible debt interest expense | $ | 3,050 | $ | 642 | $ | - | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | ||||||||
| April 2, 2017 | December 31, 2016 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 324,746 | $ | 307,884 | ||||
| Marketable securities | 895,578 | 871,024 | ||||||
| Accounts receivable | 314,962 | 192,444 | ||||||
| Inventories, net | 203,278 | 135,958 | ||||||
| Prepayments | 106,987 | 108,454 | ||||||
| Other current assets | 8,602 | 8,039 | ||||||
| Total current assets | 1,854,153 | 1,623,803 | ||||||
| Property, plant and equipment, net | 253,548 | 253,821 | ||||||
| Marketable securities | 262,061 | 433,843 | ||||||
| Deferred tax assets | 127,918 | 107,405 | ||||||
| Other assets | 12,175 | 12,165 | ||||||
| Retirement plans assets | 7,517 | 7,712 | ||||||
| Intangible assets, net | 94,843 | 100,401 | ||||||
| Goodwill | 230,065 | 223,343 | ||||||
| Total assets | $ | 2,842,280 | $ | 2,762,493 | ||||
| Liabilities | ||||||||
| Accounts payable | $ | 121,417 | $ | 95,362 | ||||
| Accrued employees' compensation and withholdings | 79,018 | 109,944 | ||||||
| Deferred revenue and customer advances | 78,794 | 84,478 | ||||||
| Other accrued liabilities | 67,651 | 51,382 | ||||||
| Contingent consideration | 21,711 | 1,050 | ||||||
| Accrued income taxes | 24,466 | 30,480 | ||||||
| Total current liabilities | 393,057 | 372,696 | ||||||
| Retirement plans liabilities | 110,069 | 106,938 | ||||||
| Long-term deferred revenue and customer advances | 25,983 | 23,463 | ||||||
| Deferred tax liabilities | 11,255 | 12,144 | ||||||
| Long-term other accrued liabilities | 9,921 | 28,642 | ||||||
| Long-term contingent consideration | 16,205 | 37,282 | ||||||
| Long-term debt | 355,937 | 352,669 | ||||||
| Total liabilities | 922,427 | 933,834 | ||||||
| Shareholders' equity | 1,919,853 | 1,828,659 | ||||||
| Total liabilities and shareholders' equity | $ | 2,842,280 | $ | 2,762,493 | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||||||
| Quarter Ended | ||||||||||
| April 2, 2017 | April 3, 2016 | |||||||||
| Cash flows from operating activities: | ||||||||||
| Net income | $ | 85,221 | $ | 49,986 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation | 16,143 | 16,192 | ||||||||
| Amortization | 11,070 | 20,470 | ||||||||
| Stock-based compensation | 8,945 | 7,925 | ||||||||
| Provision for excess and obsolete inventory | 2,726 | 4,373 | ||||||||
| Contingent consideration adjustment | 634 | 1,173 | ||||||||
| Deferred taxes | (3,477 | ) | (5,496 | ) | ||||||
| Retirement plans actuarial gains | - | (1,193 | ) | |||||||
| Other | 2 | 484 | ||||||||
|
Changes in operating assets and liabilities: |
||||||||||
| Accounts receivable | (123,792 | ) | (42,552 | ) | ||||||
| Inventories | (62,152 | ) | (702 | ) | ||||||
| Prepayments and other assets | 1,104 | (1,148 | ) | |||||||
| Accounts payable and accrued expenses | (7,553 | ) | 1,346 | |||||||
| Deferred revenue and customer advances | (3,333 | ) | (13,836 | ) | ||||||
| Retirement plans contributions | (947 | ) | (1,250 | ) | ||||||
| Accrued income taxes | 14,288 | (52 | ) | |||||||
| Net cash (used for) provided by operating activities | (61,121 | ) | 35,720 | |||||||
| Cash flows from investing activities: | ||||||||||
| Purchases of property, plant and equipment | (22,066 | ) | (20,334 | ) | ||||||
| Purchases of available-for-sale marketable securities | (153,317 | ) | (221,778 | ) | ||||||
| Proceeds from sales of available-for-sale marketable securities | 213,593 | 239,370 | ||||||||
| Proceeds from maturities of available-for-sale marketable securities | 88,184 | 73,458 | ||||||||
| Net cash provided by investing activities | 126,394 | 70,716 | ||||||||
| Cash flows from financing activities: | ||||||||||
| Issuance of common stock under stock purchase and stock option plans | 15,084 | 9,140 | ||||||||
| Repurchase of common stock | (37,730 | ) | (28,001 | ) | ||||||
| Dividend payments | (14,021 | ) | (12,253 | ) | ||||||
| Payment related to net settlement of employee stock compensation awards | (12,289 | ) | (8,972 | ) | ||||||
| Payment of contingent consideration | (1,050 | ) | (11,697 | ) | ||||||
| Net cash used for financing activities | (50,006 | ) | (51,783 | ) | ||||||
| Effects of exchange rate changes on cash and cash equivalents | 1,595 | - | ||||||||
| Increase in cash and cash equivalents | 16,862 |
|
54,653 | |||||||
| Cash and cash equivalents at beginning of period | 307,884 | 264,705 | ||||||||
| Cash and cash equivalents at end of period | $ | 324,746 | $ | 319,358 | ||||||
| GAAP to Non-GAAP Earnings Reconciliation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
April 2,
|
% of Net
|
December 31,
|
% of Net
|
April 3,
|
% of Net
|
|||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | $ | 456.9 | $ | 380.0 | $ | 431.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Gross profit - GAAP | $ | 264.9 | 58.0 | % | $ | 219.0 | 57.6 | % | $ | 230.3 | 53.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Pension mark-to-market adjustments (1) | - | - | (0.8 | ) | -0.2 | % | (0.4 | ) | -0.1 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Gross profit - non-GAAP | $ | 264.9 | 58.0 | % | $ | 218.2 | 57.4 | % | $ | 229.9 | 53.3 | % | ||||||||||||||||||||||||||||||||||||||||||
| Income from operations - GAAP | $ | 93.4 | 20.4 | % | $ | 59.2 | 15.6 | % | $ | 56.1 | 13.0 | % | ||||||||||||||||||||||||||||||||||||||||||
| Acquired intangible assets amortization | 8.0 | 1.8 | % | 7.9 | 2.1 | % | 20.0 | 4.6 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other (2) | 2.5 | 0.5 | % | 5.6 | 1.5 | % | 1.6 | 0.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
| Pension mark-to-market adjustments (1) | - | - | (2.0 | ) | -0.5 | % | (1.2 | ) | -0.3 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Income from operations - non-GAAP | $ | 103.9 | 22.7 | % | $ | 70.7 | 18.6 | % | $ | 76.5 | 17.7 | % | ||||||||||||||||||||||||||||||||||||||||||
|
Net Income
|
Net Income
|
Net Income
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
April 2,
|
% of Net
|
Basic |
Diluted |
December 31,
|
% of Net
|
Basic | Diluted |
April 3,
|
% of Net
|
Basic | Diluted | |||||||||||||||||||||||||||||||||||||||||||
| Net income - GAAP | $ | 85.2 | 18.6 | % | $ | 0.43 | $ | 0.42 | $ | 66.3 | 17.4 | % | $ | 0.33 | $ | 0.33 | $ | 50.0 | 11.6 | % | $ | 0.24 | $ | 0.24 | ||||||||||||||||||||||||||||||
| Acquired intangible assets amortization | 8.0 | 1.8 | % | 0.04 | 0.04 | 7.9 | 2.1 | % | 0.04 | 0.04 | 20.0 | 4.6 | % | 0.10 | $ | 0.10 | ||||||||||||||||||||||||||||||||||||||
| Restructuring and other (2) | 2.5 | 0.5 | % | 0.01 | 0.01 | 5.6 | 1.5 | % | 0.03 | 0.03 | 1.6 | 0.4 | % | 0.01 | $ | 0.01 | ||||||||||||||||||||||||||||||||||||||
| Pension mark-to-market adjustments (1) | - | - | - | - | (2.0 | ) | -0.5 | % | (0.01 | ) | (0.01 | ) | (1.2 | ) | -0.3 | % | (0.01 | ) | $ | (0.01 | ) | |||||||||||||||||||||||||||||||||
| Interest and other (3) | 3.1 | 0.7 | % | 0.02 | 0.02 | 0.6 | 0.2 | % | 0.00 | 0.00 | - | - | - | $ | - | |||||||||||||||||||||||||||||||||||||||
| Exclude discrete tax adjustments (4) | (7.0 | ) | -1.5 | % | (0.04 | ) | (0.03 | ) | (16.2 | ) | -4.3 | % | (0.08 | ) | (0.08 | ) | (2.5 | ) | -0.6 | % | (0.01 | ) | $ | (0.01 | ) | |||||||||||||||||||||||||||||
| Non-GAAP tax adjustments (5) | (3.1 | ) | -0.7 | % | (0.02 | ) | (0.02 | ) | 2.4 | 0.6 | % | 0.01 | 0.01 | (3.5 | ) | -0.8 | % | (0.02 | ) | $ | (0.02 | ) | ||||||||||||||||||||||||||||||||
| Net income - non-GAAP | $ | 88.7 | 19.4 | % | $ | 0.44 | $ | 0.44 | $ | 64.6 | 17.0 | % | $ | 0.32 | $ | 0.32 | $ | 64.4 | 14.9 | % | $ | 0.32 | $ | 0.31 | ||||||||||||||||||||||||||||||
| GAAP and non-GAAP weighted average common shares - basic | 200.0 | 200.8 | 204.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP and non-GAAP weighted average common shares - diluted | 201.9 | 202.9 | 205.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
(1) Actuarial (gains) losses recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(2) Restructuring and other consists of: |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
April 2,
|
December 31,
|
April 3,
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| Facility related | $ | 1.3 | $ | - | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Contingent consideration fair value adjustment | 0.6 | 5.4 | 1.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee severance | 0.6 | 0.1 | 0.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 2.5 | $ | 5.6 | $ | 1.6 | |||||||||||||||||||||||||||||||||||||||||||||||||
|
(3) For the quarters ended April 2, 2017 and December 31, 2016, interest and other included non-cash convertible debt interest expense. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(4) For the quarters ended April 2, 2017, December 31, 2016 and April 3, 2016, adjustment to exclude discrete income tax items. For the quarter ended December 31, 2016, adjustment to treat Wireless Test business segment goodwill and intangible assets impairments as discrete tax items. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(5) 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. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
December 31,
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues | $ | 318.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Net (Loss)
per Common
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
December 31,
|
% of Net
|
Diluted | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss - GAAP | $ | (0.6 | ) | -0.2 | % | $ | (0.00 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Acquired intangible assets amortization | 19.9 | 6.3 | % | 0.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Restructuring and other (6) | 5.2 | 1.6 | % | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Pension mark-to-market adjustments (7) | 17.8 | 5.6 | % | 0.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exclude discrete tax adjustments (8) | (6.3 | ) | -2.0 | % | (0.03 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP tax adjustments | (9.9 | ) | -3.1 | % | (0.05 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net income - non-GAAP | $ | 26.1 | 8.2 | % | $ | 0.13 | ||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP weighted average common shares - diluted | 205.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Include dilutive shares | 2.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP weighted average common shares - diluted | 207.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(6) Actuarial (gains) losses recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(7) Restructuring and other consists of: |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
December 31,
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contingent consideration fair value adjustment | $ | 5.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Employee severance | 0.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 5.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
|
(8) Adjustment to exclude discrete income tax items. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP to Non-GAAP Reconciliation of Second Quarter 2017 guidance: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP and non-GAAP second quarter revenue guidance: | $660 million | to | $700 million | |||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP net income per diluted share | $ | 0.77 | $ | 0.86 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exclude acquired intangible assets amortization | 0.04 | 0.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exclude non-cash convertible debt interest | 0.02 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax effect of non-GAAP adjustments | (0.02 | ) | (0.02 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP net income per diluted share | $ | 0.81 | $ | 0.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||
