Teradyne Reports Fourth Quarter and Fiscal Year 2021 Results

          
TERADYNE, INC. REPORT FOR FOURTH FISCAL QUARTER OF 2021         
             
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS   
    
             
     Quarter Ended  Twelve Months Ended
     December 31,
2021
  October 3,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
             
Net revenues$885,047  $950,501  $758,968  $3,702,881  $3,121,469 
 Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) 357,998   379,500   309,179   1,496,225      1,335,728  
                         
Gross profit   527,049       571,001       449,789       2,206,656       1,785,741  
                         
Operating expenses:                  
  Selling and administrative   142,747       134,829       124,279       547,559       464,769  
  Engineering and development   109,965       107,220       100,795       427,609       374,964  
  Acquired intangible assets amortization   5,163       5,355       5,752       21,456       30,803  
  Restructuring and other (2)   4,738       1,197       (15,117 )     1,312       (13,202 )
      Operating expenses   262,613       248,601       215,709       997,936       857,334  
                         
Income from operations   264,436       322,400       234,080       1,208,720       928,407  
                         
  Interest and other expense (3)   1,256       24,645       11,155       39,765       27,392  
                         
Income before income taxes   263,180       297,755       222,925       1,168,955       901,015  
  Income tax provision   32,896       41,037       26,595       148,122       116,868  
Net income $ 230,284     $ 256,718     $ 196,330     $ 1,020,833     $ 784,147  
                         
Net income per common share:                  
Basic     $ 1.41     $ 1.56     $ 1.18     $ 6.19     $ 4.72  
Diluted     $ 1.29     $ 1.41     $ 1.05     $ 5.56     $ 4.28  
                         
Weighted average common shares - basic   162,769       164,583       166,085       164,960       166,120  
                         
Weighted average common shares - diluted (4)   178,020       181,987       186,837       183,625       183,042  
                         
                         
Cash dividend declared per common share $ 0.10     $ 0.10     $ 0.10     $ 0.40     $ 0.40  
                         
                         
                         
(1 ) Cost of revenues includes: Quarter Ended   Twelve Months Ended
        December 31,
2021
  October 3,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
      Provision for excess and obsolete inventory $ 3,700     $ 8,149     $ 4,418     $ 15,475     $ 17,534  
      Sale of previously written down inventory   (434 )     (824 )     (593 )     (2,477 )     (2,315 )
      Inventory step-up   -       -       17       -       376  
        $ 3,266     $ 7,325     $ 3,842     $ 12,998     $ 15,595  
                         
(2 ) Restructuring and other consists of: Quarter Ended   Twelve Months Ended
        December 31,
2021
  October 3,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
      Employee severance $ 284     $ 617     $ 1,089     $ 1,525     $ 2,309  
      Acquisition related expenses and compensation   174       275       (902 )     488       2,516  
      Contingent consideration fair value adjustment   -       -       (15,304 )     (7,227 )     (23,271 )
      Other   4,280       305       -       6,526       5,244  
        $ 4,738     $ 1,197     $ (15,117 )   $ 1,312     $ (13,202 )
                         
(3 ) Interest and other expense includes: Quarter Ended   Twelve Months Ended
        December 31,
2021
  October 3,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
      Loss on convertible debt conversions $ 3,431     $ 20,153     $ -     $ 28,828     $ -  
      Non-cash convertible debt interest   1,166       2,262       3,674       10,286       14,426  
      Pension actuarial (gains) losses   (1,590 )     -       7,694       (2,217 )     10,284  
        $ 3,007     $ 22,415     $ 11,368     $ 36,897     $ 24,710  
                         
(4 ) 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 December 31, 2021, October 3, 2021 and December 31, 2020, 3.4 million, 6.5 million and 10.0 million shares, respectively, have been included in diluted shares. For the twelve months ended December 31, 2021 and December 31, 2020, 7.4 million and 8.5 million shares, respectively, have been included in diluted shares. For the quarters ended December 31, 2021, October 3, 2021 and December 31, 2020, diluted shares also included 10.5 million, 9.8 million and 8.9 million shares, respectively, from the convertible note hedge transaction. For the twelve months ended December 31, 2021 and December 31, 2020, diluted shares included 10.0 million and 7.0 million shares, respectively, from the convertible note hedge transaction.
     
     
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)                  
                         
        December 31,
2021
  December 31,
2020
           
Assets                      
  Cash and cash equivalents $ 1,122,199     $ 914,121              
  Marketable securities   244,231       522,280              
  Accounts receivable, net   550,749       497,506              
  Inventories, net   243,330       222,189              
  Prepayments and other current assets   415,718       259,338              
      Total current assets   2,576,227       2,415,434              
                         
  Property, plant and equipment, net   387,240       394,800              
  Operating lease right-of-use assets, net   68,807       54,569              
  Marketable securities   133,858       117,980              
  Deferred tax assets   100,672       87,913              
  Retirement plans assets   15,110       17,468              
  Other assets   24,096       9,384              
  Acquired intangible assets, net   75,635       100,939              
  Goodwill   426,024       453,859              
                         
      Total assets $ 3,807,669     $ 3,652,346              
                         
Liabilities                    
  Accounts payable $ 153,133     $ 133,663              
  Accrued employees' compensation and withholdings   253,667       220,321              
  Deferred revenue and customer advances   146,185       134,662              
  Other accrued liabilities   116,187       77,581              
  Operating lease liabilities   19,977       20,573              
  Income taxes payable   88,789       80,728              
  Current debt   19,182       33,343              
                         
      Total current liabilities   797,120       700,871              
                         
  Retirement plans liabilities   151,141       151,140              
  Long-term deferred revenue and customer advances   54,921       58,359              
  Long-term contingent consideration   -       7,227              
  Long-term other accrued liabilities   15,497       19,352              
  Deferred tax liabilities   6,327       10,821              
  Long-term operating lease liabilities   56,178       42,073              
  Long-term income taxes payable   67,041       74,930              
  Debt     89,244       376,768              
                         
      Total liabilities   1,237,469       1,441,541              
                         
Mezzanine equity   1,512       3,787              
                         
Shareholders' equity   2,568,688       2,207,018              
                         
      Total liabilities, convertible common shares and shareholders’ equity $ 3,807,669     $ 3,652,346              
                         
                         
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)                  
                         
        Quarter Ended   Twelve Months Ended    
        December 31,
2021
  December 31,
2020
  December 31,
2021
  December 31,
2020
   
Cash flows from operating activities:                  
  Net income $ 230,284     $ 196,330     $ 1,020,833     $ 784,147      
  Adjustments to reconcile net income to net cash provided by operating activities:                  
    Depreciation   23,207       22,008       91,073       80,119      
    Stock-based compensation   10,994       11,878       45,643       44,906      
    Amortization   6,786       10,047       34,412       46,624      
    Provision for excess and obsolete inventory   3,700       4,418       15,475       17,534      
    Loss on convertible debt conversions   3,431       -       28,828       -      
    Deferred taxes   (4,802 )     (11,141 )     (15,534 )     (15,688 )    
    Gains on investments   (1,660 )     (4,383 )     (6,410 )     (7,898 )    
    Retirement plans actuarial (gains) losses   (1,590 )     7,694       (2,217 )     10,284      
    Contingent consideration fair value adjustment   -       (15,304 )     (7,227 )     (23,271 )    
    Other   28       810       271       1,557      
                         
    Changes in operating assets and liabilities:                  
      Accounts receivable   45,521       92,564       (57,778 )     (129,451 )    
      Inventories   (15,448 )     (25,436 )     6,495       (8,438 )    
      Prepayments and other assets   (37,282 )     (23,667 )     (175,846 )     (64,418 )    
      Accounts payable and other liabilities   56,435       (8,390 )     121,499       73,167      
      Deferred revenue and customer advances   1,174       3,385       9,873       39,974      
      Retirement plans contributions   (1,282 )     (1,498 )     (5,405 )     (5,382 )    
      Income taxes   11,787       1,109       (5,619 )     25,169      
Net cash provided by operating activities   331,283       260,424       1,098,366       868,935      
                         
Cash flows from investing activities:                  
  Purchases of property, plant and equipment   (29,310 )     (38,105 )     (132,472 )     (184,977 )    
  Purchases of marketable securities   (152,311 )     (411,768 )     (661,781 )     (900,196 )    
  Proceeds from maturities of marketable securities   88,871       170,271       660,148       479,678      
  Proceeds from sales of marketable securities   57,029       2,395       266,466       35,006      
  Purchase of investment   -       -       (12,000 )     149      
  Proceeds from life insurance   -       -       -       546      
Net cash (used for) provided by investing activities   (35,721 )     (277,207 )     120,361       (569,794 )    
                         
Cash flows from financing activities:                  
  Payments of convertible debt principal   (40,993 )     -       (342,990 )     -      
  Repurchase of common stock   (193,820 )     -       (600,000 )     (88,465 )    
  Dividend payments   (16,266 )     (16,612 )     (65,977 )     (66,482 )    
  Payments related to net settlement of employee stock compensation awards   (258 )     (279 )     (32,303 )     (23,014 )    
  Issuance of common stock under stock purchase and stock option plans   96       1,999       32,686       28,527      
  Payments of contingent consideration   -       -       -       (8,852 )    
Net cash used for financing activities   (251,241 )     (14,892 )     (1,008,584 )     (158,286 )    
                         
Effects of exchange rate changes on cash and cash equivalents   (1,576 )     616       (2,065 )     (658 )    
Increase (decrease) in cash and cash equivalents   42,745       (31,059 )     208,078       140,197      
Cash and cash equivalents at beginning of period   1,079,454       945,180       914,121       773,924      
Cash and cash equivalents at end of period $ 1,122,199     $ 914,121     $ 1,122,199     $ 914,121      
                         

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