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): October 22, 2014
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) |
Registrants 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)) |
Item 2.02 | Results of Operations and Financial Condition. |
On October 22, 2014, Teradyne, Inc. (Teradyne) issued a press release regarding its financial results for the third quarter ended September 28, 2014. Teradynes 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 October 22, 2014. |
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: October 23, 2014 | By: | /S/ GREGORY R. BEECHER | ||||
Name: | Gregory R. Beecher | |||||
Title: | V.P., Chief Financial Officer and Treasurer |
Exhibit Index
Exhibit |
Description | |
99.1 | Press Release dated October 22, 2014. |
Exhibit 99.1
Teradyne Reports Third Quarter 2014 Results
| Revenue of $478 million, up 10% year over year led by strong mobility demand in Semiconductor Test |
| Year to date revenue up 16% compared with 2013 |
| Expect 15% full year growth in revenue and fifth consecutive year of above model profitability at mid-point of Q4 revenue guidance |
Q3-14 | Q2-14 | Q3-13 | ||||||||||
Orders |
$ | 273 million | $ | 627 million | $ | 271 million | ||||||
Revenue |
$ | 478 million | $ | 526 million | $ | 433 million | ||||||
Non-GAAP EPS |
$ | 0.44 | $ | 0.54 | $ | 0.46 | ||||||
GAAP EPS |
$ | 0.38 | $ | 0.47 | $ | 0.29 |
NORTH READING, Mass. October 22, 2014 Teradyne, Inc. (NYSE: TER) reported revenue of $478 million for the third quarter of 2014 of which $380 million was in Semiconductor Test, $55 million in Wireless Test and $43 million in System Test. On a non-GAAP basis, Teradynes net income in the third quarter was $95.8 million, or $0.44 per diluted share, which excluded acquired intangible asset amortization and discrete income tax adjustments. GAAP net income for the third quarter was $82.9 million or $0.38 per diluted share.
Orders in the third quarter of 2014 were $273 million of which $203 million were in Semiconductor Test, $42 million in Wireless Test, and $28 million in System Test.
The continued strong build out of electronics test capacity, combined with our market share gains, has driven our semiconductor test orders and revenue up over 30% year to date when compared with the same period in 2013, said CEO and President Mark Jagiela. As we enter the seasonally slower fourth quarter period, were encouraged by share gains at LitePoint in cellular and NFC test, broad adoption of new flash, System-on-Chip and production board test products, and improving results in analog test. At the mid-point of our Q4 guidance, well end the full year with double digit growth in both revenue and earnings for the company.
Guidance for the fourth quarter of 2014 is revenue of $305 million to $330 million, with diluted non-GAAP net income of $0.08 to $0.14 per share and diluted GAAP net loss of ($0.16) to ($0.11) per share. Non-GAAP guidance includes stock based compensation but excludes acquired intangible asset amortization, estimated fourth quarter pension actuarial loss due to updated mortality tables and the related tax impact on non-GAAP adjustments.
Webcast
A conference call to discuss the third quarter 2014 results, along with managements business outlook, will follow at 10 a.m. EDT, Thursday, October 23. The call will be broadcast simultaneously over the Internet. 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 at www.teradyne.com at 10 a.m. EDT.
A replay will be available approximately two hours after the completion of the call. The replay number in the U.S. & Canada is 855-859-2056. The replay number outside the U.S. & Canada is 404-537-3406. The pass code for both numbers is 5850439. A replay will also be available on the Teradyne website at www.teradyne.com. Click on Investors for a link to the replay.
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 asset amortization, retired CEO equity charge, non-cash convertible debt interest, discrete income tax adjustments, pension and post retirement actuarial gains and losses, restructuring and other, and a gain from the sale of an equity investment, and, prior to January 1, 2014, included income taxes on a cash basis [cash taxes reflects the usage of prior year favorable tax attributes (e.g. NOLs and credits) against current year tax liability]. 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 measures presented to provide meaningful supplemental information regarding Teradynes baseline performance before gains, losses or other charges that may not be indicative of Teradynes current core business or future outlook. These non-GAAP measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradynes business plan, historical operating results and the operating results of Teradynes competitors. Non-GAAP gross margin excludes pension and post retirement actuarial gains and losses. GAAP requires that this item be included in determining gross margin. Non-GAAP gross margin dollar amount and percentage are non-GAAP measures that management believes provide useful supplemental information for management and the investor. Management uses non-GAAP gross margin as a performance measure for Teradynes current core business and future outlook and for comparison with Teradynes business plan, historical gross margin results and the gross margin results of Teradynes competitors. Non-GAAP diluted shares include the impact of Teradynes call option on its shares. Management believes each of these non-GAAP 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 Teradynes financial and operational performance, as well as facilitating meaningful comparisons of Teradynes 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 financial 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 Automatic Test Equipment used to test semiconductors, wireless products, data storage and complex electronic systems which serve consumer, communications, industrial and government customers. In 2013, Teradyne had revenue of $1.43 billion and currently employs approximately 3,900 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 future business prospects, Teradynes results of operations, market conditions and the payment of a quarterly dividend. Such statements are based on the current assumptions and expectations of Teradynes management and are neither promises nor guarantees of future performance or future payment of dividends. You can identify these forward-looking statements based on the context of the statements and by the fact that they use words such as will, anticipate, expect, project, intend, plan, believe, target and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. There can be no assurance that managements estimates of Teradynes future results or other forward looking statements will be achieved or that dividends will be declared in the future. Important factors that could cause actual results or dividend payments to differ materially from those presently expected include: conditions affecting the markets in which Teradyne operates; decreased or delayed product demand; increased research and development spending; deterioration of Teradynes financial condition, the business judgment of the board of directors that a declaration of a dividend is not in the companys best interests and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the Risk Factors section of Teradynes Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and Quarterly Report on Form 10-Q for the period ended June 29, 2014. The forward-looking statements provided by Teradyne in this press release represent managements views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause managements 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 Teradynes views as of any date subsequent to the date of this release.
Page 3
TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2014
CONDENSED CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
Quarter Ended | Nine Months Ended | |||||||||||||||||||
September 28, 2014 | June 29, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||||||
Net revenues |
$ | 478,010 | $ | 525,567 | $ | 433,376 | $ | 1,324,587 | $ | 1,142,632 | ||||||||||
Cost of revenues (1) (2) |
216,889 | 235,154 | 179,082 | 606,006 | 493,688 | |||||||||||||||
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Gross profit |
261,121 | 290,413 | 254,294 | 718,581 | 648,944 | |||||||||||||||
Operating expenses: |
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Engineering and development (1) |
71,953 | 73,414 | 68,918 | 212,452 | 199,442 | |||||||||||||||
Selling and administrative (1) (3) |
73,064 | 77,489 | 72,917 | 228,556 | 210,037 | |||||||||||||||
Acquired intangible asset amortization |
18,271 | 18,271 | 18,064 | 54,813 | 54,163 | |||||||||||||||
Restructuring and other (4) |
(405 | ) | 572 | 889 | 167 | 1,480 | ||||||||||||||
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Operating expenses |
162,883 | 169,746 | 160,788 | 495,988 | 465,122 | |||||||||||||||
Income from operations |
98,238 | 120,667 | 93,506 | 222,593 | 183,822 | |||||||||||||||
Interest and other (5) |
2,432 | 725 | (5,954 | ) | (2,404 | ) | (17,339 | ) | ||||||||||||
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Income before income taxes |
100,670 | 121,392 | 87,552 | 220,189 | 166,483 | |||||||||||||||
Income tax provision |
17,721 | 20,187 | 18,093 | 35,106 | 23,879 | |||||||||||||||
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Net income |
$ | 82,949 | $ | 101,205 | $ | 69,459 | $ | 185,083 | $ | 142,604 | ||||||||||
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Net income per common share: |
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Basic |
$ | 0.40 | $ | 0.52 | $ | 0.36 | $ | 0.93 | $ | 0.75 | ||||||||||
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Diluted |
$ | 0.38 | $ | 0.47 | $ | 0.29 | $ | 0.83 | $ | 0.61 | ||||||||||
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Weighted average common shares - basic |
207,381 | 194,408 | 191,307 | 198,367 | 190,521 | |||||||||||||||
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Weighted average common shares - diluted (6) |
218,333 | 216,568 | 235,828 | 223,795 | 235,165 | |||||||||||||||
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Cash dividend declared per common share |
$ | 0.06 | $ | | $ | | $ | 0.12 | $ | | ||||||||||
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Net orders |
$ | 273,043 | $ | 627,088 | $ | 270,595 | $ | 1,349,957 | $ | 1,144,492 | ||||||||||
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(1) | In the first quarter of 2012, we changed our accounting method from delayed recognition of actuarial gains and losses for our defined benefit pension plans and other post retirement benefit plans to immediate recognition. We elected to immediately recognize net actuarial gains and losses and the change in the fair value of plan assets in our operating results in the year in which they occur. Below are the pension gains included in our operating results: |
Quarter Ended | Nine Months Ended | |||||||||||||||||||
September 28, 2014 | June 29, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||||||
Cost of revenues |
$ | | $ | | $ | | $ | | $ | (335 | ) | |||||||||
Engineering and development |
| | | | (659 | ) | ||||||||||||||
Selling and administrative |
| | | | (365 | ) | ||||||||||||||
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$ | | $ | | $ | | $ | | $ | (1,359 | ) | ||||||||||
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(2) | Cost of revenues includes: |
Quarter Ended | Nine Months Ended | |||||||||||||||||||
September 28, 2014 | June 29, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||||||
Provision for excess and obsolete inventory |
$ | 6,434 | $ | 5,032 | $ | 3,841 | $ | 21,505 | $ | 9,616 | ||||||||||
Sale of previously written down inventory |
(6,332 | ) | (2,014 | ) | (4,093 | ) | (9,726 | ) | (8,934 | ) | ||||||||||
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$ | 102 | $ | 3,018 | $ | (252 | ) | $ | 11,779 | $ | 682 | ||||||||||
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(3) | For the nine months ended September 28, 2014, selling and administrative expenses include an equity charge of $6,598 for the modification of Teradynes retired CEOs outstanding equity awards to allow continued vesting and maintain the original term in connection with his January 31, 2014 retirement. |
(4) | Restructuring and other consists of: |
Quarter Ended | Nine Months Ended | |||||||||||||||||||
September 28, 2014 | June 29, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||||||
Employee severance |
$ | 225 | $ | 572 | $ | 1,337 | $ | 797 | $ | 1,928 | ||||||||||
Contingent consideration fair value adjustment |
(630 | ) | | | (630 | ) | | |||||||||||||
Facility related |
| | (448 | ) | | (448 | ) | |||||||||||||
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$ | (405 | ) | $ | 572 | $ | 889 | $ | 167 | $ | 1,480 | ||||||||||
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(5) | Interest and other includes: |
Quarter Ended | Nine Months Ended | |||||||||||||||||||
September 28, 2014 | June 29, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | ||||||||||||||||
Non-cash convertible debt interest expense |
$ | | $ | | $ | 4,018 | $ | 4,290 | $ | 11,656 |
(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 September 29, 2013, and for the nine months ended September 28, 2014 and September 29, 2013, 23.3 million, 6.7 million and 23.3 million shares, respectively, have been included in diluted shares. |
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
September 28, 2014 | December 31, 2013 (1) | |||||||
(unaudited) | ||||||||
Assets |
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Cash and cash equivalents |
$ | 211,704 | $ | 341,638 | ||||
Marketable securities |
594,801 | 586,882 | ||||||
Accounts receivable |
321,312 | 157,642 | ||||||
Inventories |
108,377 | 137,939 | ||||||
Deferred tax assets |
68,791 | 72,478 | ||||||
Prepayments |
88,732 | 136,374 | ||||||
Other current assets |
7,304 | 7,324 | ||||||
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Total current assets |
1,401,021 | 1,440,277 | ||||||
Net property, plant and equipment |
335,805 | 275,236 | ||||||
Marketable securities |
374,808 | 271,078 | ||||||
Deferred tax assets |
5,353 | 5,217 | ||||||
Other assets |
9,853 | 14,591 | ||||||
Retirement plans assets |
8,871 | 9,342 | ||||||
Intangible assets |
197,477 | 252,291 | ||||||
Goodwill |
361,819 | 361,792 | ||||||
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Total assets |
$ | 2,695,007 | $ | 2,629,824 | ||||
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Liabilities |
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Accounts payable |
$ | 60,309 | $ | 62,874 | ||||
Accrued employees compensation and withholdings |
91,053 | 95,619 | ||||||
Deferred revenue and customer advances |
60,178 | 55,404 | ||||||
Other accrued liabilities |
98,424 | 63,712 | ||||||
Accrued income taxes |
19,840 | 11,360 | ||||||
Current debt |
| 186,663 | ||||||
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Total current liabilities |
329,804 | 475,632 | ||||||
Long-term deferred revenue and customer advances |
23,248 | 13,756 | ||||||
Retirement plans liabilities |
88,670 | 91,517 | ||||||
Deferred tax liabilities |
35,911 | 40,686 | ||||||
Long-term other accrued liabilities |
27,466 | 23,139 | ||||||
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Total liabilities |
505,099 | 644,730 | ||||||
Shareholders equity |
2,189,908 | 1,985,094 | ||||||
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Total liabilities and shareholders equity |
$ | 2,695,007 | $ | 2,629,824 | ||||
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(1) | The December 31, 2013 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Quarter Ended | Nine Months Ended | |||||||||||||||
September 28, 2014 | September 29, 2013 | September 28, 2014 | September 29, 2013 | |||||||||||||
Cash flows from operating activities: |
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Net income |
$ | 82,949 | $ | 69,459 | $ | 185,083 | $ | 142,604 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
19,047 | 14,321 | 52,832 | 41,873 | ||||||||||||
Amortization |
19,132 | 23,443 | 62,122 | 69,495 | ||||||||||||
Stock-based compensation |
8,343 | 9,150 | 31,873 | 27,227 | ||||||||||||
Provision for excess and obsolete inventory |
6,434 | 3,841 | 21,505 | 9,616 | ||||||||||||
Deferred taxes |
(3,050 | ) | (3,981 | ) | (8,747 | ) | (19,211 | ) | ||||||||
Contingent consideration fair value adjustment |
(630 | ) | | (630 | ) | | ||||||||||
Tax benefit related to stock options and restricted stock units |
(55 | ) | 777 | (1,726 | ) | (807 | ) | |||||||||
Retirement plans actuarial gains |
| | | (1,359 | ) | |||||||||||
Other |
183 | 1,207 | 2,110 | 2,162 | ||||||||||||
Changes in operating assets and liabilities: |
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Accounts receivable |
(20,545 | ) | 18,822 | (163,670 | ) | (55,963 | ) | |||||||||
Inventories |
19,798 | 7,821 | 38,267 | 34,194 | ||||||||||||
Prepayments and other assets |
20,784 | (9,035 | ) | 47,784 | (26,312 | ) | ||||||||||
Accounts payable and accrued expenses |
(23,687 | ) | 15,411 | 29,109 | (17 | ) | ||||||||||
Deferred revenue and customer advances |
466 | (6,438 | ) | 14,266 | (9,249 | ) | ||||||||||
Retirement plans contributions |
(893 | ) | (1,058 | ) | (3,281 | ) | (3,569 | ) | ||||||||
Accrued income taxes |
4,713 | 10,786 | 10,208 | 13,750 | ||||||||||||
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Net cash provided by operating activities |
132,989 | 154,526 | 317,105 | 224,434 | ||||||||||||
Cash flows from investing activities: |
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Purchases of property, plant and equipment |
(54,963 | ) | (32,127 | ) | (146,352 | ) | (82,925 | ) | ||||||||
Purchases of marketable securities |
(319,348 | ) | (199,372 | ) | (844,056 | ) | (658,564 | ) | ||||||||
Proceeds from maturities of marketable securities |
118,129 | 133,355 | 495,565 | 401,901 | ||||||||||||
Proceeds from sales of marketable securities |
82,602 | 282,522 | 236,060 | 332,968 | ||||||||||||
Proceeds from life insurance |
| | 4,391 | | ||||||||||||
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Net cash (used for) provided by investing activities |
(173,580 | ) | 184,378 | (254,392 | ) | (6,620 | ) | |||||||||
Cash flows from financing activities: |
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Issuance of common stock under stock option and stock purchase plans |
10,387 | 7,140 | 21,030 | 16,778 | ||||||||||||
Tax benefit related to stock options and restricted stock units |
55 | (777 | ) | 1,726 | 807 | |||||||||||
Dividend payments |
(12,772 | ) | | (24,428 | ) | | ||||||||||
Payments of long-term debt |
| | (190,975 | ) | (1,063 | ) | ||||||||||
Payments of contingent consideration |
| | | (388 | ) | |||||||||||
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Net cash (used for) provided by financing activities |
(2,330 | ) | 6,363 | (192,647 | ) | 16,134 | ||||||||||
(Decrease) increase in cash and cash equivalents |
(42,921 | ) | 345,267 | (129,934 | ) | 233,948 | ||||||||||
Cash and cash equivalents at beginning of period |
254,625 | 227,601 | 341,638 | 338,920 | ||||||||||||
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Cash and cash equivalents at end of period |
$ | 211,704 | $ | 572,868 | $ | 211,704 | $ | 572,868 | ||||||||
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GAAP to Non-GAAP Earnings Reconciliation
(In millions, except per share amounts)
Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
September 28, 2014 |
% of Net Revenues |
June 29, 2014 |
% of Net Revenues |
September 29, 2013 |
% of Net Revenues |
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Net revenues |
$ | 478.0 | $ | 525.6 | $ | 433.4 | ||||||||||||||||||||||||||||||||||||||||||
Gross profit - GAAP and non-GAAP |
$ | 261.1 | 54.6 | % | $ | 290.4 | 55.3 | % | $ | 254.3 | 58.7 | % | ||||||||||||||||||||||||||||||||||||
Income from operations - GAAP |
$ | 98.2 | 20.5 | % | $ | 120.7 | 23.0 | % | $ | 93.5 | 21.6 | % | ||||||||||||||||||||||||||||||||||||
Acquired intangible asset amortization |
18.3 | 3.8 | % | 18.3 | 3.5 | % | 18.1 | 4.2 | % | |||||||||||||||||||||||||||||||||||||||
Restructuring and other (1) |
(0.4 | ) | -0.1 | % | 0.6 | 0.1 | % | 0.9 | 0.2 | % | ||||||||||||||||||||||||||||||||||||||
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Income from operations - non-GAAP |
$ | 116.1 | 24.3 | % | $ | 139.6 | 26.6 | % | $ | 112.5 | 26.0 | % | ||||||||||||||||||||||||||||||||||||
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Net Income per Common Share |
Net Income per Common Share |
Net Income per Common Share |
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September 28, 2014 |
% of Net Revenues |
Basic | Diluted | June 29, 2014 |
% of Net Revenues |
Basic | Diluted | September 29, 2013 |
% of Net Revenues |
Basic | Diluted | |||||||||||||||||||||||||||||||||||||
Net income - GAAP |
$ | 82.9 | 17.3 | % | $ | 0.40 | $ | 0.38 | $ | 101.2 | 19.3 | % | $ | 0.52 | $ | 0.47 | $ | 69.5 | 16.0 | % | $ | 0.36 | $ | 0.29 | ||||||||||||||||||||||||
Acquired intangible asset amortization |
18.3 | 3.8 | % | 0.09 | 0.08 | 18.3 | 3.5 | % | 0.09 | 0.08 | 18.1 | 4.2 | % | 0.09 | 0.08 | |||||||||||||||||||||||||||||||||
Restructuring and other (1) |
(0.4 | ) | -0.1 | % | (0.00 | ) | (0.00 | ) | 0.6 | 0.1 | % | 0.00 | 0.00 | 0.9 | 0.2 | % | 0.00 | 0.00 | ||||||||||||||||||||||||||||||
Exclude discrete tax adjustments (2) |
(1.6 | ) | -0.3 | % | (0.01 | ) | (0.01 | ) | (0.5 | ) | -0.1 | % | (0.00 | ) | (0.00 | ) | | | | | ||||||||||||||||||||||||||||
Tax effect of non-GAAP adjustments |
(3.4 | ) | -0.7 | % | (0.02 | ) | (0.02 | ) | (3.2 | ) | -0.6 | % | (0.02 | ) | (0.01 | ) | | | | | ||||||||||||||||||||||||||||
Income tax adjustment (4) |
| | | | | | | | 2.5 | 0.6 | % | 0.01 | 0.01 | |||||||||||||||||||||||||||||||||||
Interest and other (3) |
| | | | | | | | 4.0 | 0.9 | % | 0.02 | 0.02 | |||||||||||||||||||||||||||||||||||
Convertible share adjustment (5) |
| | | | | | | | | | | 0.06 | ||||||||||||||||||||||||||||||||||||
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Net income - non-GAAP |
$ | 95.8 | 20.0 | % | $ | 0.46 | $ | 0.44 | $ | 116.4 | 22.1 | % | $ | 0.60 | $ | 0.54 | $ | 95.0 | 21.9 | % | $ | 0.50 | $ | 0.46 | ||||||||||||||||||||||||
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GAAP and non-GAAP weighted average common shares - basic |
207.4 | 194.4 | 191.3 | |||||||||||||||||||||||||||||||||||||||||||||
GAAP weighted average common shares - diluted |
218.3 | 216.6 | 235.8 | |||||||||||||||||||||||||||||||||||||||||||||
Exclude dilutive shares from convertible note |
| | (23.3 | ) | ||||||||||||||||||||||||||||||||||||||||||||
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Non-GAAP weighted average common shares - diluted (5) |
218.3 | 216.6 | 212.5 | |||||||||||||||||||||||||||||||||||||||||||||
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(1) Restructuring and other consists of: |
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Quarter Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
September 28, 2014 |
June 29, 2014 |
September 29, 2013 |
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Employee severance |
$ | 0.2 | $ | 0.6 | $ | 1.3 | ||||||||||||||||||||||||||||||||||||||||||
Contingent consideration fair value adjustment |
(0.6 | ) | | | ||||||||||||||||||||||||||||||||||||||||||||
Facility related |
| | (0.4 | ) | ||||||||||||||||||||||||||||||||||||||||||||
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$ | (0.4 | ) | $ | 0.6 | $ | 0.9 | ||||||||||||||||||||||||||||||||||||||||||
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(2) | For the quarters ended September 28, 2014 and June 29, 2014, adjustment to exclude discrete income tax items. |
(3) | For the quarter ended September 29, 2013, Interest and other included non-cash convertible debt interest expense. |
(4) | For the quarter ended September 29, 2013, adjustment to record income taxes on a cash basis. Cash taxes reflects the usage of prior year favorable tax attributes (e.g. NOLs and credits) against current year tax liability. |
(5) | For the quarter ended September 29, 2013, the calculation of non-GAAP diluted earnings per share gives benefit to the Companys call option on its stock for 34.7 million shares at $5.48. As a result, 18.7 million shares have been excluded from non-GAAP diluted shares. For the quarter ended September 29, 2013, net interest expense of $2.3 million has been added back to non-GAAP net income for the non-GAAP diluted earnings per share calculation. |
Nine Months Ended | ||||||||||||||||||||||||||||||||
September 28, 2014 |
% of Net Revenues |
September 29, 2013 |
% of Net Revenues |
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Net Revenues |
$ | 1,324.6 | $ | 1,142.6 | ||||||||||||||||||||||||||||
Gross profit - GAAP |
$ | 718.6 | 54.3 | % | $ | 648.9 | 56.8 | % | ||||||||||||||||||||||||
Pension mark-to-market adjustments (1) |
| | (0.3 | ) | 0.0 | % | ||||||||||||||||||||||||||
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Gross profit - non-GAAP |
$ | 718.6 | 54.3 | % | $ | 648.6 | 56.8 | % | ||||||||||||||||||||||||
Income from operations - GAAP |
$ | 222.6 | 16.8 | % | $ | 183.8 | 16.1 | % | ||||||||||||||||||||||||
Acquired intangible asset amortization |
54.8 | 4.1 | % | 54.2 | 4.7 | % | ||||||||||||||||||||||||||
Equity modification charge (2) |
6.6 | 0.5 | % | | | |||||||||||||||||||||||||||
Restructuring and other (3) |
0.2 | 0.0 | % | 1.5 | 0.1 | % | ||||||||||||||||||||||||||
Pension mark-to-market adjustments (1) |
| | (1.4 | ) | -0.1 | % | ||||||||||||||||||||||||||
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Income from operations - non-GAAP |
$ | 284.2 | 21.5 | % | $ | 238.1 | 20.8 | % | ||||||||||||||||||||||||
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Net Income per Common Share |
Net Income per Common Share |
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September 28, 2014 |
% of Net Revenues |
Basic | Diluted | September 29, 2013 |
% of Net Revenues |
Basic | Diluted | |||||||||||||||||||||||||
Net income - GAAP |
$ | 185.1 | 14.0 | % | $ | 0.93 | $ | 0.83 | $ | 142.6 | 12.5 | % | $ | 0.75 | $ | 0.61 | ||||||||||||||||
Acquired intangible asset amortization |
54.8 | 4.1 | % | 0.28 | 0.24 | 54.2 | 4.7 | % | 0.28 | 0.23 | ||||||||||||||||||||||
Pension mark-to-market adjustments (1) |
| | | | (1.4 | ) | -0.1 | % | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||
Equity modification charge (2) |
6.6 | 0.5 | % | 0.03 | 0.03 | | | | | |||||||||||||||||||||||
Restructuring and other (3) |
0.2 | 0.0 | % | 0.00 | 0.00 | 1.5 | 0.1 | % | 0.01 | 0.01 | ||||||||||||||||||||||
Interest and other (4) |
4.3 | 0.3 | % | 0.02 | 0.02 | 11.7 | 1.0 | % | 0.06 | 0.05 | ||||||||||||||||||||||
Exclude discrete tax adjustments (5) |
(4.5 | ) | -0.3 | % | (0.02 | ) | (0.02 | ) | | | | | ||||||||||||||||||||
Tax effect of non-GAAP adjustments |
(11.9 | ) | -0.9 | % | (0.06 | ) | (0.05 | ) | | | | | ||||||||||||||||||||
Income tax adjustment (6) |
| | | | (6.3 | ) | -0.6 | % | (0.03 | ) | (0.03 | ) | ||||||||||||||||||||
Convertible share adjustment (7) |
| | | 0.04 | | | | 0.13 | ||||||||||||||||||||||||
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Net income - non-GAAP |
$ | 234.6 | 17.7 | % | $ | 1.18 | $ | 1.09 | $ | 202.3 | 17.7 | % | $ | 1.06 | $ | 0.99 | ||||||||||||||||
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GAAP and non-GAAP weighted average common shares - basic |
198.4 | 190.5 | ||||||||||||||||||||||||||||||
GAAP weighted average common shares - diluted |
223.8 | 235.2 | ||||||||||||||||||||||||||||||
Exclude dilutive shares from convertible note |
(6.7 | ) | (23.3 | ) | ||||||||||||||||||||||||||||
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Non-GAAP weighted average common shares - diluted (7) |
217.1 | 211.9 | ||||||||||||||||||||||||||||||
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(1) Actuarial (gains) losses recognized under GAAP in accordance with the Companys mark-to-market pension accounting.
(2) For the nine months ended September 28, 2014, selling and administrative expenses include an equity charge for the modification of Teradynes retired CEOs outstanding equity awards to allow continued vesting and maintain the original term in connection with his January 31, 2014 retirement.
(3) Restructuring and other consists of: |
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Nine Months Ended | ||||||||||||||||||||||||||||||||
September 28, 2014 |
September 29, 2013 |
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Employee severance |
$ | 0.8 | $ | 1.9 | ||||||||||||||||||||||||||||
Contingent consideration fair value adjustment |
(0.6 | ) | | |||||||||||||||||||||||||||||
Facility related |
| (0.4 | ) | |||||||||||||||||||||||||||||
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$ | 0.2 | $ | 1.5 | |||||||||||||||||||||||||||||
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(4) | For the nine months ended September 28, 2014 and September 29, 2013, Interest and other included non-cash convertible debt interest expense. |
(5) | For the nine months ended September 28, 2014, adjustment to exclude discrete income tax items. |
(6) | For the nine months ended September 29, 2013, adjustment to record income taxes on a cash basis. Cash taxes reflects the usage of prior year favorable tax attributes (e.g. NOLs and credits) against current year tax liability. |
(7) | For the nine months ended September 28, 2014 and September 29, 2013, the calculation of non-GAAP diluted earnings per share gives benefit to the Companys call option on its stock for 34.7 million shares at $5.48. As a result 6.7 million and 23.3 million shares, respectively, have been excluded from non-GAAP diluted shares. For the nine months ended September 28, 2014 and September 29, 2013, net interest expense of approximately $2.0 million and $7.0 million, respectively, have been added back to non-GAAP net income for the non-GAAP diluted earnings per share calculation. |
GAAP to Non-GAAP Reconciliation of Fourth Quarter 2014 guidance:
GAAP and non-GAAP fourth quarter revenue guidance: |
$ | 305 million | to | $ | 330 million | |||||||
GAAP net loss per diluted share |
$ | (0.16 | ) | $ | (0.11 | ) | ||||||
Exclude estimated pension actuarial loss from updated mortality tables |
0.23 | 0.23 | ||||||||||
Exclude acquired intangible asset amortization |
0.07 | 0.07 | ||||||||||
Tax effect of non-GAAP adjustments |
(0.05 | ) | (0.05 | ) | ||||||||
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Non-GAAP net income per diluted share |
$ | 0.08 | $ | 0.14 |
For press releases and other information of interest to investors, please visit Teradynes homepage at http://www.teradyne.com.
Contact: | Teradyne, Inc. | |
Andy Blanchard 978-370-2425 | ||
Vice President of Corporate Relations |