EX-99.1 2 d281446dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Teradyne Reports Fourth Quarter and Fiscal Year 2020 Results

 

  •  

Revenue of $759 million in Q4’20, growth of 16% from Q4’19

 

  •  

Full year 2020 revenue grew 36%, GAAP EPS 65%, Non-GAAP EPS 62%

 

  •  

Test Revenue growth of 18% in Q4’20 from Q4’19

 

  •  

Higher than expected Industrial Automation shipments drove Q4 revenue above the high end of guidance

 

  •  

Industrial Automation revenue growth of 4% in Q4’20 from Q4’19, 34% from Q3’20

 

  •  

Quarterly dividend of $0.10 announced

 

  •  

Board authorized a $2 billion share repurchase program, expect to repurchase a minimum of $600 million in shares in 2021

 

     Q4’20      Q4’19      Q3’20      FY 2020      FY 2019  

Revenue (mil)

    $ 759      $ 655      $ 819      $ 3,121      $ 2,295  

GAAP EPS

    $ 1.05      $ 0.69      $ 1.21      $ 4.28      $ 2.60  

Non-GAAP EPS

    $ 1.10      $ 0.88      $ 1.18      $ 4.62      $ 2.86  

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

NORTH READING, Mass. – January 27, 2021 – Teradyne, Inc. (NASDAQ: TER) reported revenue of $759 million for the fourth quarter of 2020 of which $524 million was in Semiconductor Test, $104 million in System Test, $40 million in Wireless Test and $92 million in Industrial Automation (IA). GAAP net income for the fourth quarter was $196.3 million or $1.05 per diluted share. On a non-GAAP basis, Teradyne’s net income in the fourth quarter was $193.2 million, or $1.10 per diluted share, which excluded pension actuarial losses, acquired intangible asset amortization, restructuring and other charges, non-cash convertible debt interest, and included the related tax impact on non-GAAP adjustments.

“Stronger than expected growth at Universal Robots drove Q4 sales and profits above guidance and capped an extraordinary year for Teradyne,” said CEO and President Mark Jagiela. “For the full year, company sales grew 36% and non-GAAP earnings per share 62%, the seventh consecutive year of earnings growth. The annual results were driven by increased revenue in all our test businesses, highlighted by Semiconductor Test’s 46% and System Test’s 43% growth. While the global slowdown in industrial activity compressed the automation market for much of 2020, we are encouraged by the improving global industrial outlook and the sooner-than-expected return to year-over-year growth at Universal Robots.

“After an exceptionally strong Q4, we enter 2021 expecting record Q1 level sales and profits driven by continued strong test demand, including a notable recovery in automotive related semiconductor test shipments.”

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Teradyne’s Board of Directors declared a quarterly cash dividend of $0.10 per share, payable on March 19, 2021 to shareholders of record as of the close of business on February 19, 2021. The Board also authorized a $2 billion share repurchase program and the company expects to repurchase a minimum of $600 million of its common stock in 2021.

Guidance for the first quarter of 2021 is revenue of $720 million to $780 million, with GAAP net income of $0.86 to $1.00 per diluted share and non-GAAP net income of $0.95 to $1.11 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.

Webcast

A conference call to discuss the fourth quarter results, along with management’s business outlook, will follow at 8:30 a.m. ET, Thursday, January 28. 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

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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.

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 2020, Teradyne had revenue of $3.1 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 pandemic, 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. and Chinese 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 pandemic, or the impact of U.S. and Chinese 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 and share repurchase programs 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.

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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. These new regulations have impacted our sales to Huawei, HiSilicon and their suppliers. Teradyne is taking appropriate actions, including filing for licenses with the U.S. Department of Commerce and working with the U.S. regulators to clarify the scope of the restrictions. However, Teradyne cannot be certain that the actions it takes will mitigate the risks associated with the new export controls that impact its business. It is uncertain the extent these new regulations and any other additional regulations that may be implemented by the U.S. Department of Commerce or other government agency may have on Teradyne’s business and financial results.

On April 28, 2020, the U.S. 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. In December 2020, the U.S. Department of Commerce issued a list of companies in China and other countries that it considered to be military end users. 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 U.S. Department of Commerce, to minimize any disruption. However, Teradyne cannot be certain that the actions it takes will mitigate all the risks associated with the new export controls that may impact its business.

In response to the regulations issued by the U.S. Department of Commerce, the Chinese government has passed new laws that may impact Teradyne’s business activities in China. The Company is assessing the potential impact of these new Chinese laws and monitoring relevant laws and regulations issued by the Chinese government.

The global pandemic of the 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.

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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. The Company cannot accurately estimate the amount of the impact on 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 has resulted in a significant decrease in demand for certain Teradyne products and could continue to impact demand 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 such measures will be sufficient to mitigate the risks posed by the virus, and Teradyne’s ability to perform critical functions could be impacted. 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 virus, its severity, the actions to contain the virus or the availability and impact of vaccines, 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 continued impact of the COVID-19 pandemic 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

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ended September 27, 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 FOURTH FISCAL QUARTER OF 2020

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

 

     Quarter Ended            Twelve Months Ended  
     December 31,
2020		     September 27,
2020		     December 31,
2019		            December 31,
2020		     December 31,
2019		  

Net revenues

    $ 758,968     $ 819,484     $ 654,650        $ 3,121,469     $ 2,294,965  

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

      309,179       360,556       271,412          1,335,728       955,136  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

Gross profit

      449,789       458,928       383,238          1,785,741       1,339,829  

Operating expenses:

              

Selling and administrative (2)

      124,279       115,840       117,092          464,769       437,084  

Engineering and development

      100,795       94,909       86,794          374,964       322,824  

Acquired intangible assets amortization

      5,752       6,219       9,784          30,803       40,147  

Restructuring and other (3)

      (15,117 )      (27,701 )      (2,088 )         (13,202 )      (13,880 ) 
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

Operating expenses

      215,709       189,267       211,582          857,334       786,175  

Income from operations

      234,080       269,661       171,656          928,407       553,654  

Interest and other expense (4)

      11,155       5,930       22,770          27,392       27,882  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

Income before income taxes

      222,925       263,731       148,886          901,015       525,772  

Income tax provision

      26,595       41,013       23,811          116,868       58,304  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

Net income

    $ 196,330     $ 222,718     $ 125,075        $ 784,147     $ 467,468  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

 

Net income per common share:

              

 

Basic

    $ 1.18     $ 1.34     $ 0.75        $ 4.72     $ 2.74  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

Diluted

    $ 1.05     $ 1.21     $ 0.69        $ 4.28     $ 2.60  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

 

Weighted average common shares — basic

      166,085       166,014       167,286          166,120       170,425  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

 

Weighted average common shares — diluted (5)

      186,837       184,338       181,780          183,042       179,459  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

 

Cash dividend declared per common share

    $ 0.10     $ 0.10     $ 0.09        $ 0.40     $ 0.36  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  
(1)   Cost of revenues includes:    Quarter Ended            Twelve Months Ended  
     December 31,
2020		     September 27,
2020		     December 31,
2019		            December 31,
2020		     December 31,
2019		  

Provision for excess and obsolete inventory

    $ 4,418     $ 3,479     $ 6,396        $ 17,534     $ 15,244  

Sale of previously written down inventory

      (593 )      (310 )      (1,222 )         (2,315 )      (3,184 ) 

Inventory step-up

      17       121       64          376       447  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  
   $ 3,842     $ 3,290     $ 5,238        $ 15,595     $ 12,507  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

(2)   For the twelve months ended December 31, 2019, selling and administrative expenses include an equity charge of $2.1 million 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            Twelve Months Ended  
     December 31,
2020		     September 27,
2020		     December 31,
2019		            December 31,
2020		     December 31,
2019		  

Contingent consideration fair value adjustment

    $ (15,304 )    $ (27,206 )    $ (2,796 )       $ (23,271 )    $ (19,257 ) 

Acquisition related expenses and compensation

      (902 )      (1,086 )      248          2,516       2,506  

Employee severance

      1,089       456       460          2,309       2,871  

Contract termination settlement fee

      —         —         —            4,000       —    

Other

      —         135       —            1,244       —    
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  
   $ (15,117 )    $ (27,701 )    $ (2,088 )       $ (13,202 )    $ (13,880 ) 
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  
(4)   Interest and other includes:    Quarter Ended            Twelve Months Ended  
     December 31,
2020		     September 27,
2020		     December 31,
2019		            December 31,
2020		     December 31,
2019		  

Non-cash convertible debt interest

    $ 3,674     $ 3,629     $ 3,496        $ 14,426     $ 13,728  

Pension actuarial losses

      7,694       2,688       7,727          10,284       8,176  

Investment impairment

      —         —         15,000          —         15,000  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  
   $ 11,368     $ 6,317     $ 26,223        $ 24,710     $ 36,904  
  

 

 

    

 

 

    

 

 

       

 

 

    

 

 

  

 

(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 December 31, 2020, September 27, 2020 and December 31, 2019, 10.0 million, 9.2 million and 7.3 million shares, respectively, have been included in diluted shares. For the twelve months ended December 31, 2020 and December 31, 2019, 8.5 million and 4.9 million shares, respectively, have been included in diluted shares. For the quarters ended December 31, 2020, September 27, 2020 and December 31, 2019, diluted shares also included 8.9 million, 7.8 million and 5.4 million shares, respectively from the convertible note hedge transaction. For the twelve months ended December 31, 2020 and December 31, 2019, diluted shares also included 7.0 million and 2.7 million shares, respectively, from the convertible note hedge transaction.

CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)    

 

 

     December 31,
2020		      December 31,
2019		  

Assets

      

Cash and cash equivalents

    $ 914,121      $ 773,924  

Marketable securities

      522,280        137,303  

Accounts receivable, net

      497,506        362,368  

Inventories, net

      222,189        196,691  

Prepayments and other current assets

      259,338        188,598  
  

 

 

     

 

 

  

 

Total current assets

      2,415,434        1,658,884  

Property, plant and equipment, net

      394,800        320,216  

Operating lease right-of-use assets, net

      54,569        57,539  

Marketable securities

      117,980        104,490  

Deferred tax assets

      87,913        75,185  

Retirement plans assets

      17,468        18,457  

Other assets

      9,384        10,332  

Acquired intangible assets, net

      100,939        125,480  

Goodwill

      453,859        416,431  
  

 

 

     

 

 

  

Total assets

    $ 3,652,346      $ 2,787,014  
  

 

 

     

 

 

  

Liabilities

      

Accounts payable

    $ 133,663      $ 126,617  

Accrued employees’ compensation and withholdings

      220,321        163,883  

Deferred revenue and customer advances

      134,662        104,876  

Other accrued liabilities

      77,581        70,871  

Operating lease liabilities

      20,573        19,476  

Contingent consideration

      —        9,106  

Income taxes payable

      80,728        44,200  

Current debt

      33,343        —    
  

 

 

     

 

 

  

 

Total current liabilities

      700,871        539,029  

Retirement plans liabilities

      151,140        134,471  

Long-term deferred revenue and customer advances

      58,359        45,974  

Long-term contingent consideration

      7,227        30,599  

Long-term other accrued liabilities

      19,352        19,535  

Deferred tax liabilities

      10,821        14,070  

Long-term operating lease liabilities

      42,073        45,849  

Long-term income taxes payable

      74,930        82,642  

Debt

      376,768        394,687  
  

 

 

     

 

 

  

 

Total liabilities

      1,441,541        1,306,856  
  

 

 

     

 

 

  

 

Mezzanine equity

      3,787        —    

Shareholders’ equity

      2,207,018        1,480,158  
  

 

 

     

 

 

  

Total liabilities and equity

    $ 3,652,346      $ 2,787,014  
  

 

 

     

 

 

  

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

 

 

     Quarter Ended     Twelve Months Ended  
     December 31,
2020		     December 31,
2019		     December 31,
2020		     December 31,
2019		  

Cash flows from operating activities:

         

Net income

    $ 196,330     $ 125,075     $ 784,147     $ 467,468  

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

         

Depreciation

      22,008       19,326       80,119       70,834  

Amortization

      10,047       12,972       46,624       49,821  

Stock-based compensation

      11,878       9,075       44,906       37,897  

Provision for excess and obsolete inventory

      4,418       6,396       17,534       15,244  

Retirement plan actuarial losses

      7,694       7,727       10,284       8,176  

Investment impairment

      —         15,000       —         15,000  

Contingent consideration fair value adjustment

      (15,304 )      (2,796 )      (23,271 )      (19,257 ) 

Deferred taxes

      (11,141 )      (6,478 )      (15,688 )      (9,456 ) 

Gains on investments

      (4,383 )      (1,875 )      (7,898 )      (6,033 ) 

Other

      810       153       1,557       766  

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

         

Accounts receivable

      92,564       (3,651 )      (129,451 )      (70,440 ) 

Inventories

      (25,436 )      (13,265 )      (8,438 )      (27,408 ) 

Prepayments and other assets

      (23,667 )      (7,666 )      (64,418 )      (23,784 ) 

Accounts payable and other liabilities

      (8,390 )      28,472       73,167       49,279  

Deferred revenue and customer advances

      3,385       11,534       39,974       39,313  

Retirement plans contributions

      (1,498 )      (1,311 )      (5,382 )      (5,086 ) 

Income taxes

      1,109       17,640       25,169       (13,584 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net cash provided by operating activities

      260,424       216,328       868,935       578,750  
  

 

 

    

 

 

    

 

 

    

 

 

  

Cash flows from investing activities:

         

Purchases of property, plant and equipment

      (38,105 )      (38,594 )      (184,977 )      (134,642 ) 

Purchases of marketable securities

      (411,768 )      (57,162 )      (900,196 )      (662,701 ) 

Proceeds from maturities of marketable securities

      170,271       218,455       479,678       611,927  

Proceeds from sales of marketable securities

      2,395       45,312       35,006       105,586  

Proceeds from life insurance

      —         —         546       2,912  

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

      —         (57,772 )      149       (79,742 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net cash (used for) provided by investing activities

      (277,207 )      110,239       (569,794 )      (156,660 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Cash flows from financing activities:

         

Issuance of common stock under stock purchase and stock option plans

      1,999       33       28,527       29,312  

Dividend payments

      (16,612 )      (15,036 )      (66,482 )      (61,305 ) 

Payments related to net settlement of employee stock compensation awards

      (279 )      (192 )      (23,014 )      (14,741 ) 

Repurchase of common stock

      —         (131,218 )      (88,465 )      (500,000 ) 

Payments of contingent consideration

      —         —         (8,852 )      (27,615 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net cash used for financing activities

      (14,892 )      (146,413 )      (158,286 )      (574,349 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Effects of exchange rate changes on cash and cash equivalents

      616       (169 )      (658 )      (569 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

(Decrease) increase in cash and cash equivalents

     (31,059 )      179,985       140,197       (152,828 ) 

Cash and cash equivalents at beginning of period

      945,180       593,939       773,924       926,752  
  

 

 

    

 

 

    

 

 

    

 

 

  

Cash and cash equivalents at end of period

    $ 914,121     $ 773,924     $ 914,121     $ 773,924  
  

 

 

    

 

 

    

 

 

    

 

 

  

GAAP to Non-GAAP Earnings Reconciliation    

(In millions, except per share amounts)    

 

    Quarter Ended  
    December 31,
2020		     % of Net
Revenues		                 September 27,
2020		     % of Net
Revenues		                 December 31,
2019		     % of Net
Revenues		              

Net revenues

   $ 759.0           $ 819.5           $ 654.7        

Gross profit GAAP

   $ 449.8       59.3 %        $ 458.9       56.0 %        $ 383.2       58.5 %     

Inventory step-up

     —         —             0.1       0.0 %          0.1       0.0 %     
 

 

 

    

 

 

        

 

 

    

 

 

        

 

 

    

 

 

      

Gross profit non-GAAP

   $ 449.8       59.3 %        $ 459.0       56.0 %        $ 383.3       58.5 %     

Income from operations – GAAP

   $ 234.1       30.8 %        $ 269.7       32.9 %        $ 171.7       26.2 %     

Restructuring and other (1)

     (15.1 )      -2.0 %          (27.7 )      -3.4 %          (2.1 )      -0.3 %     

Acquired intangible assets amortization

     5.8       0.8 %          6.2       0.8 %          9.8       1.5 %     

Equity modification charge

     0.8       0.1 %          —         —             —         —        

Inventory step-up

     —         —             0.1       0.0 %          0.1       0.0 %     
 

 

 

    

 

 

        

 

 

    

 

 

        

 

 

    

 

 

      

Income from operations — non-GAAP

   $ 225.6       29.7 %        $ 248.3       30.3 %        $ 179.5       27.4 %     
 

 

 

    

 

 

        

 

 

    

 

 

        

 

 

    

 

 

      
                Net Income
per Common
Share		                 Net Income
per Common
Share		                 Net Income
per Common
Share		  
    December 31,
2020		     % of Net
Revenues		     Basic     Diluted     September 27,
2020		     % of Net
Revenues		     Basic     Diluted     December 31,
2019		     % of Net
Revenues		     Basic     Diluted  

Net income — GAAP

   $ 196.3       25.9 %    $ 1.18     $ 1.05     $ 222.7       27.2 %    $ 1.34     $ 1.21     $ 125.1       19.1 %    $ 0.75     $ 0.69  

Restructuring and other (1)

     (15.1 )      -2.0 %      (0.09 )      (0.08 )      (27.7 )      -3.4 %      (0.17 )      (0.15 )      (2.1 )      -0.3 %      (0.01 )      (0.01 ) 

Acquired intangible assets amortization

     5.8       0.8 %      0.03       0.03       6.2       0.8 %      0.04       0.03       9.8       1.5 %      0.06       0.05  

Interest and other (2)

     3.7       0.5 %      0.02       0.02       3.6       0.4 %      0.02       0.02       18.5       2.8 %      0.11       0.10  

Pension mark-to-market adjustment (2)

     7.7       1.0 %      0.05       0.04       2.7       0.3 %      0.02       0.01       7.7       1.2 %      0.05       0.04  

Equity modification charge

     0.8       0.1 %      0.00       0.00       —         —         —         —         —         —         —         —    

Inventory step-up

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

Exclude discrete tax adjustments (3)

     (2.1 )      -0.3 %      (0.01 )      (0.01 )      (4.4 )      -0.5 %      (0.03 )      (0.02 )      1.4       0.2 %      0.01       0.01  

Non-GAAP tax adjustments

     (3.9 )      -0.5 %      (0.02 )      (0.02 )      2.2       0.3 %      0.01       0.01       (7.7 )      -1.2 %      (0.05 )      (0.04 ) 

Convertible share adjustment (4)

     —         —         —         0.06       —         —         —         0.06       —         —         —         0.03  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income — non-GAAP

   $ 193.2       25.5 %    $ 1.16     $ 1.10     $ 205.4       25.1 %    $ 1.24     $ 1.18     $ 152.8       23.3 %    $ 0.91     $ 0.88  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

GAAP and non-GAAP weighted average common shares — basic

     166.1             166.0             167.3        

GAAP weighted average common shares — diluted

     186.8             184.3             181.8        

Exclude dilutive shares related to convertible note transaction

     (10.0 )            (9.2 )            (7.3 )       
 

 

 

          

 

 

          

 

 

        

Non-GAAP weighted average common shares — diluted

     176.8             175.2             174.5        
 

 

 

          

 

 

          

 

 

        

(1)     Restructuring and other consists of:

 

    Quarter Ended                    
    December 31,
2020		                       September 27,
2020		                       December 31,
2019		                    

Contingent consideration fair value adjustment

   $ (15.3 )          $ (27.2 )          $ (2.8 )       

Acquisition related expenses and compensation

     (0.9 )            (1.1 )            0.2        

Employee severance

     1.1             0.5             0.5        

Contract termination settlement fee

     —               —               —          

Other

     —               0.1             —          
 

 

 

          

 

 

          

 

 

        
  $ (15.1 )          $ (27.7 )          $ (2.1 )       
 

 

 

          

 

 

          

 

 

        

 

(2)

For the quarters ended December 31, 2020, September 27, 2020, and December 31, 2019, Interest and other included non-cash convertible debt interest expense. For the quarters ended December 31, 2020, September 27, 2020, and December 31, 2019, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting. For the quarter ended December 31, 2019, adjustment to exclude impairment charge related to Realwear.    

 

(3)

For the quarters ended December 31, 2020, September 27, 2020, and December 31, 2019, adjustment to exclude discrete income tax items.     

 

(4)

For the quarters ended December 31, 2020, September 27, 2020, and December 31, 2019, 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 8.9 million, 7.8 million, and 5.4 million shares, respectively, from the convertible note hedge transaction.    

    Twelve Months Ended  
    December 31,
2020		     % of Net
Revenues		                 December 31,
2019		     % of Net
Revenues		                    

Net Revenues

   $ 3,121.5           $ 2,295.0          

Gross profit GAAP

   $ 1,785.7       57.2 %        $ 1,339.8       58.4 %       

Inventory step-up

     0.4       0.0 %          0.4       0.0 %       
 

 

 

    

 

 

        

 

 

    

 

 

        

Gross profit non-GAAP

   $ 1,786.1       57.2 %        $ 1,340.2       58.4 %       

Income from operations — GAAP

   $ 928.4       29.7 %        $ 553.7       24.1 %       

Acquired intangible assets amortization

     30.8       1.0 %          40.1       1.7 %       

Restructuring and other (1)

     (13.2 )      -0.4 %          (13.9 )      -0.6 %       

Inventory step-up

     0.4       0.0 %          0.4       0.0 %       

Equity modification charge (2)

     0.8       0.0 %          2.1       0.1 %       
 

 

 

    

 

 

        

 

 

    

 

 

        

Income from operations — non-GAAP

   $ 947.2       30.3 %        $ 582.4       25.4 %       
 

 

 

    

 

 

        

 

 

    

 

 

        
                Net Income
per Common
Share		                 Net Income
per Common
Share		        
    December 31,
2020		     % of Net
Revenues		     Basic     Diluted     December 31,
2019		     % of Net
Revenues		     Basic     Diluted        

Net income — GAAP

   $ 784.1       25.1 %    $ 4.72     $ 4.28     $ 467.5       20.4 %    $ 2.74     $ 2.60    

Acquired intangible assets amortization

     30.8       1.0 %      0.19       0.17       40.1       1.7 %      0.24       0.22    

Interest and other (3)

     14.4       0.5 %      0.09       0.08       28.7       1.3 %      0.17       0.16    

Pension mark-to-market adjustments (3)

     10.3       0.3 %      0.06       0.06       8.2       0.4 %      0.05       0.05    

Restructuring and other (1)

     (13.2 )      -0.4 %      (0.08 )      (0.07 )      (13.9 )      -0.6 %      (0.08 )      (0.08 )   

Inventory step-up

     0.4       0.0 %      0.00       0.00       0.4       0.0 %      0.00       0.00    

Equity modification charge (2)

     0.8       0.0 %      0.00       0.00       2.1       0.1 %      0.01       0.01    

Exclude discrete tax adjustments (4)

     (15.2 )      -0.5 %      (0.09 )      (0.08 )      (22.6 )      -1.0 %      (0.13 )      (0.13 )   

Non-GAAP tax adjustments

     (11.9 )      -0.4 %      (0.07 )      (0.07 )      (16.7 )      -0.7 %      (0.10 )      (0.09 )   

Convertible share adjustment (5)

     —         —         —         0.25       —         —         —         0.11    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Net income — non-GAAP

   $ 800.5       25.6 %    $ 4.82     $ 4.62     $ 493.8       21.5 %    $ 2.90     $ 2.86    
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

GAAP and non-GAAP weighted average common shares — basic

     166.1             170.4          

GAAP weighted average common shares — diluted

     183.0             179.5          

Exclude dilutive shares from convertible note

     (8.5 )            (4.9 )         
 

 

 

          

 

 

          

Non-GAAP weighted average common shares — diluted

     174.5             174.6          
 

 

 

          

 

 

          

(1)   Restructuring and other consists of:

    

    Twelve Months Ended                          
    December 31,
2020		                       December 31,
2019		                          

Contingent consideration fair value adjustment

   $ (23.3 )          $ (19.3 )         

Contract termination settlement fee

     4.0             —            

Acquisition related expenses and compensation

     2.5             2.5          

Employee severance

     2.3             2.9          

Other

     1.2             —            
 

 

 

          

 

 

          
  $ (13.2 )          $ (13.9 )         
 

 

 

          

 

 

          

 

(2)

For the twelve months ended December 31, 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 twelve months ended December 31, 2020 and December 31, 2019, Interest and other included non-cash convertible debt interest expense. For the twelve months ended December 31, 2020 and December 31, 2019, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne’s mark-to-market pension accounting. For the twelve months ended December 31, 2019, adjustment to exclude impairment charge related to Realwear.

 

(4)

For the twelve months ended December 31, 2020 and December 31, 2019, adjustment to exclude discrete income tax items. For the twelve months ended December 31, 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 twelve months ended December 31, 2020 and December 31, 2019, the non-GAAP diluted EPS calculation adds back $5.3 million and $5.2 million, respectively, of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 7.0 million and 2.7 million shares, respectively, from the convertible note hedge transaction.

 

GAAP to Non-GAAP Reconciliation of First Quarter 2021 guidance:    

 

GAAP and non-GAAP first quarter revenue guidance:

    $ 720 million       to      $ 780 million  

GAAP net income per diluted share

    $ 0.86        $ 1.00  

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

    $ 0.95        $ 1.11  

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