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 2014, Teradyne had revenue of $1.65 billion and currently employs approximately 3,800 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.
Safe Harbor Statement
This release contains forward-looking statements regarding future business prospects, Teradyne’s results of operations, market conditions, the payment of a quarterly dividend, the repurchase of Teradyne common stock pursuant to a share repurchase program and a senior secured credit facility. 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. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, future events, future payment of dividends, future repurchases of common stock or future availability of, or borrowing under, a 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, dividend payments, repurchases of common stock 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; increased research and development spending; deterioration of Teradyne’s financial condition; the business judgment of the board of directors that a declaration of a dividend, the repurchase of common stock or debt 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, 2014. 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 2015 | ||||||||||||||||
CONDENSED CONSOLIDATED OPERATING STATEMENTS | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Quarter Ended | ||||||||||||||||
April 5, 2015 | December 31, 2014 | March 30, 2014 | ||||||||||||||
Net revenues | $ | 342,401 | $ | 323,236 | $ | 321,010 | ||||||||||
Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) (2) | 149,978 | 163,010 | 153,963 | |||||||||||||
Gross profit | 192,423 | 160,226 | 167,047 | |||||||||||||
Operating expenses: | ||||||||||||||||
Engineering and development (1) | 71,450 | 79,188 | 67,085 | |||||||||||||
Selling and administrative (1) (3) | 72,041 | 91,157 | 78,003 | |||||||||||||
Acquired intangible asset amortization | 13,808 | 15,957 | 18,271 | |||||||||||||
Goodwill impairment | - | 98,897 | - | |||||||||||||
Restructuring and other (4) | - | 1,198 | - | |||||||||||||
Operating expenses | 157,299 | 286,397 | 163,359 | |||||||||||||
Income (loss) from operations | 35,124 | (126,171 | ) | 3,688 | ||||||||||||
Interest and other (5) | 7,314 | 1,358 | (5,561 | ) | ||||||||||||
Income (loss) before income taxes | 42,438 | (124,813 | ) | (1,873 | ) | |||||||||||
Income tax provision (benefit) | 9,651 | (21,002 | ) | (2,802 | ) | |||||||||||
Net income (loss) | $ | 32,787 | $ | (103,811 | ) | $ | 929 | |||||||||
Net income (loss) per common share: |
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Basic | $ | 0.15 | $ | (0.48 | ) | $ | 0.00 | |||||||||
Diluted | $ | 0.15 | $ | (0.48 | ) | $ | 0.00 | |||||||||
Weighted average common shares - basic | 217,187 | 216,532 | 193,311 | |||||||||||||
- | ||||||||||||||||
Weighted average common shares - diluted (6) | 218,812 | 216,532 | 236,484 | |||||||||||||
Cash dividend declared per common share | $ | 0.06 | $ | 0.06 | $ | 0.06 | ||||||||||
Net orders | $ | 490,357 | $ | 331,993 | $ | 449,826 | ||||||||||
(1) | Pension losses included in operating results: | Quarter Ended | ||||||||||||||
April 5, 2015 | December 31, 2014 | March 30, 2014 | ||||||||||||||
Cost of revenues | $ | - | $ | 12,713 | $ | - | ||||||||||
Engineering and development | - | 12,223 | - | |||||||||||||
Selling and administrative | - | 21,628 | - | |||||||||||||
$ | - | $ | 46,564 | $ | - | |||||||||||
(2) | Cost of revenues includes: | Quarter Ended | ||||||||||||||
April 5, 2015 | December 31, 2014 | March 30, 2014 | ||||||||||||||
Provision for excess and obsolete inventory | $ | 1,440 | $ | 688 | $ | 10,039 | ||||||||||
Sale of previously written down inventory | (1,931 | ) | (3,332 | ) | (1,380 | ) | ||||||||||
$ | (491 | ) | $ | (2,644 | ) | $ | 8,659 | |||||||||
(3) | For the quarter ended March 30, 2014, selling and administrative expenses include an equity charge of $6,598 for the modification of Teradyne's retired CEO's 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 | ||||||||||||||
April 5, 2015 | December 31, 2014 | March 30, 2014 | ||||||||||||||
Employee severance | $ | - | $ | 826 | $ | - | ||||||||||
Acquisition costs | - | 372 | - | |||||||||||||
$ | - | $ | 1,198 | $ | - | |||||||||||
(5) | Interest and other includes: | Quarter Ended | ||||||||||||||
April 5, 2015 | December 31, 2014 | March 30, 2014 | ||||||||||||||
Gain from the sale of an equity investment | $ | (4,782 | ) | $ | - | $ | - | |||||||||
Non-cash convertible debt interest expense | - | - | 4,290 | |||||||||||||
$ | (4,782 | ) | $ | - | $ | 4,290 | ||||||||||
(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 March 30, 2014, 20.1 million shares have been included in diluted shares. | |||||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | ||||||||||||||||
April 5, 2015 | December 31, 2014 | |||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 218,945 | $ | 294,256 | ||||||||||||
Marketable securities | 649,219 | 533,787 | ||||||||||||||
Accounts receivable, net | 175,783 | 151,034 | ||||||||||||||
Inventories, net | 121,051 | 105,129 | ||||||||||||||
Deferred tax assets | 56,715 | 57,239 | ||||||||||||||
Prepayments | 92,484 | 95,819 | ||||||||||||||
Other current assets | 6,959 | 6,582 | ||||||||||||||
Total current assets | 1,321,156 | 1,243,846 | ||||||||||||||
Net property, plant and equipment | 308,264 | 329,038 | ||||||||||||||
Marketable securities | 402,722 | 470,789 | ||||||||||||||
Deferred tax assets | 6,683 | 7,494 | ||||||||||||||
Other assets | 10,280 | 10,419 | ||||||||||||||
Retirement plans assets | 12,847 | 12,896 | ||||||||||||||
Intangible assets, net | 176,792 | 190,600 | ||||||||||||||
Goodwill | 273,438 | 273,438 | ||||||||||||||
Total assets | $ | 2,512,182 | $ | 2,538,520 | ||||||||||||
Liabilities | ||||||||||||||||
Accounts payable | $ | 59,831 | $ | 47,763 | ||||||||||||
Accrued employees' compensation and withholdings | 65,396 | 100,994 | ||||||||||||||
Deferred revenue and customer advances | 74,252 | 71,603 | ||||||||||||||
Other accrued liabilities | 68,943 | 51,997 | ||||||||||||||
Accrued income taxes | 24,711 | 20,049 | ||||||||||||||
Total current liabilities | 293,133 | 292,406 | ||||||||||||||
Long-term deferred revenue and customer advances | 18,318 | 19,929 | ||||||||||||||
Retirement plans liabilities | 106,224 | 108,460 | ||||||||||||||
Deferred tax liabilities | 20,149 | 23,315 | ||||||||||||||
Long-term other accrued liabilities | 17,136 | 15,430 | ||||||||||||||
Total liabilities | 454,960 | 459,540 | ||||||||||||||
Shareholders' equity | 2,057,222 | 2,078,980 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 2,512,182 | $ | 2,538,520 | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||||||||||||
Quarter Ended | ||||||||||||||||
April 5, 2015 | March 30, 2014 | |||||||||||||||
Cash flows from operating activities: | ||||||||||||||||
Net income | $ | 32,787 | $ | 929 | ||||||||||||
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||||||||||||||||
Depreciation | 19,345 | 15,259 | ||||||||||||||
Amortization | 15,139 | 23,925 | ||||||||||||||
Stock-based compensation | 7,963 | 15,233 | ||||||||||||||
Provision for excess and obsolete inventory | 1,440 | 10,039 | ||||||||||||||
Gain from the sale of an equity investment | (4,782 | ) | - | |||||||||||||
Deferred taxes | (1,831 | ) | 12,699 | |||||||||||||
Other | (319 | ) | (141 | ) | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (24,749 | ) | (58,882 | ) | ||||||||||||
Inventories | 5,960 | 2,635 | ||||||||||||||
Prepayments and other assets | 2,048 | (628 | ) | |||||||||||||
Accounts payable and other accrued expenses | (20,150 | ) | (45,487 | ) | ||||||||||||
Deferred revenue and customer advances | 1,038 | 9,632 | ||||||||||||||
Retirement plans contributions | (1,019 | ) | (1,425 | ) | ||||||||||||
Accrued income taxes | 4,662 | (9,609 | ) | |||||||||||||
Net cash provided by (used for) operating activities | 37,532 | (25,821 | ) | |||||||||||||
Cash flows from investing activities: | ||||||||||||||||
Purchases of property, plant and equipment | (21,149 | ) | (31,197 | ) | ||||||||||||
Purchases of available-for-sale marketable securities | (335,635 | ) | (257,260 | ) | ||||||||||||
Proceeds from maturities of available-for-sale marketable securities | 140,222 | 280,322 | ||||||||||||||
Proceeds from sales of available-for-sale marketable securities | 148,639 | 101,363 | ||||||||||||||
Proceeds from the sale of an equity investment | 4,782 | - | ||||||||||||||
Proceeds from life insurance | 1,098 | 4,391 | ||||||||||||||
Net cash (used for) provided by investing activities | (62,043 | ) | 97,619 | |||||||||||||
Cash flows from financing activities: | ||||||||||||||||
Issuance of common stock under stock purchase and stock option plans | 8,899 | 10,165 | ||||||||||||||
Repurchase of common stock | (46,650 | ) | - | |||||||||||||
Dividend payment | (13,049 | ) | - | |||||||||||||
Payments of long-term debt | - | (190,975 | ) | |||||||||||||
Net cash used for financing activities | (50,800 | ) | (180,810 | ) | ||||||||||||
Decrease in cash and cash equivalents | (75,311 | ) | (109,012 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 294,256 | 341,638 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 218,945 | $ | 232,626 |
GAAP to Non-GAAP Earnings Reconciliation | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
April 5, 2015 |
% of Net
|
December 31,
|
% of Net
|
March 30, 2014 |
% of Net
|
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Net revenues | $ | 342.4 | $ | 323.2 | $ | 321.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit - GAAP | $ | 192.4 | 56.2 | % | $ | 160.2 | 49.6 | % | $ | 167.0 | 52.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Pension mark-to-market adjustments (1) | - | - | 12.7 | 3.9 | % | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross profit - non-GAAP | $ | 192.4 | 56.2 | % | $ | 172.9 | 53.5 | % | $ | 167.0 | 52.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from operations - GAAP | $ | 35.1 | 10.3 | % | $ | (126.2 | ) | -39.0 | % | $ | 3.7 | 1.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired intangible asset amortization | 13.8 | 4.0 | % | 16.0 | 5.0 | % | 18.3 | 5.7 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill impairment (2) | - | - | 98.9 | 30.6 | % | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and other (3) | - | - | 1.2 | 0.4 | % | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension mark-to-market adjustments (1) | - | - | 46.6 | 14.4 | % | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity modification charge (4) | - | - | - | - | 6.6 | 2.1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from operations - non-GAAP | $ | 48.9 | 14.3 | % | $ | 36.5 | 11.3 | % | $ | 28.6 | 8.9 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income
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Net Income
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Net Income
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April 5, 2015 |
% of Net
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Basic | Diluted |
December 31,
|
% of Net
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Basic | Diluted | March 30, 2014 |
% of Net
|
Basic | Diluted | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) - GAAP | $ | 32.8 | 9.6 | % | $ | 0.15 | $ | 0.15 | $ | (103.8 | ) | -32.1 | % | $ | (0.48 | ) | $ | (0.48 | ) | $ | 0.9 | 0.3 | % | $ | 0.00 | $ | 0.00 | ||||||||||||||||||||||||||||||||||||
Acquired intangible asset amortization | 13.8 | 4.0 | % | 0.06 | 0.06 | 16.0 | 5.0 | % | 0.07 | 0.07 | 18.3 | 5.7 | % | 0.09 | 0.08 | ||||||||||||||||||||||||||||||||||||||||||||||||
Interest and other (5) | (4.8 | ) | -1.4 | % | (0.02 | ) | (0.02 | ) | - | - | - | - | 4.3 | 1.3 | % | 0.02 | 0.02 | ||||||||||||||||||||||||||||||||||||||||||||||
Goodwill impairment (2) | - | - | - | - | 98.9 | 30.6 | % | 0.46 | 0.45 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and other (3) | - | - | - | - | 1.2 | 0.4 | % | 0.01 | 0.01 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Pension mark-to-market adjustments (1) | - | - | - | - | 46.6 | 14.4 | % | 0.22 | 0.21 | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||||
Equity modification charge (4) | - | - | - | - | - | - | - | - | 6.6 | 2.1 | % | 0.03 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Exclude discrete tax adjustments (6) | (1.8 | ) | -0.5 | % | (0.01 | ) | (0.01 | ) | 1.5 |
0.5 |
% |
0.01 | 0.01 | (2.4 | ) | -0.7 | % | (0.01 | ) | (0.01 | ) | ||||||||||||||||||||||||||||||||||||||||||
Tax effect of non-GAAP adjustments | (2.4 | ) | -0.7 | % | (0.01 | ) | (0.01 | ) | (29.3 | ) | -9.1 | % | (0.14 | ) | (0.13 | ) | (5.3 | ) | -1.6 | % | (0.03 | ) | (0.02 | ) | |||||||||||||||||||||||||||||||||||||||
Convertible share adjustment (7) | - | - | - | - | - | - | - | - | - | - | - | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net income - non-GAAP | $ | 37.6 | 11.0 | % | $ | 0.17 | $ | 0.17 | $ | 31.1 | 9.6 | % | $ | 0.14 | $ | 0.14 | $ | 22.4 | 7.0 | % | $ | 0.12 | $ | 0.11 | |||||||||||||||||||||||||||||||||||||||
GAAP and non-GAAP weighted average common shares - basic | 217.2 | 216.5 | 193.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP weighted average common shares - diluted | 218.8 | 216.5 | 236.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Include GAAP dilutive shares | - | 2.3 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exclude dilutive shares from convertible note | - | - | (20.1 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP weighted average common shares - diluted (7) | 218.8 | 218.8 | 216.4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) | Actuarial (gains) losses recognized under GAAP in accordance with the Company's mark-to-market pension accounting. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) | Goodwill impairment related to Teradyne's Wireless Test business segment. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) | Restructuring and other consists of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarter Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
April 5, 2015 |
December 31,
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March 30, 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee severance | $ | - | $ | 0.8 | $ | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition costs | - | 0.4 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | - | $ | 1.2 | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) | For the quarter ended March 30, 2014, selling and administrative expenses include an equity charge for the modification of Teradyne's retired CEO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his January 31, 2014 retirement. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(5) |
For the quarter ended April 5, 2015, interest and other included a gain from the sale of an equity investment. For the quarter ended March 30, 2014, interest and other included non-cash convertible debt interest expense. |
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(6) | For the quarters ended April 5, 2015, December 31, 2014 and March 30, 2014, adjustment to exclude discrete income tax items. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(7) | For the quarter ended March 30, 2014. the calculation of non-GAAP diluted earnings per share gives benefit to the Company's call option on its stock for 34.7 million shares at $5.48. As a result 20.9 million shares have been included in non-GAAP diluted shares and net interest expense of $2.0 million has been added back to non-GAAP net income for the non-GAAP diluted earnings per share calculation. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP to Non-GAAP Reconciliation of Second Quarter 2015 guidance: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP and non-GAAP second quarter revenue guidance: | $470 million | to | $500 million | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP net income per diluted share | $ | 0.37 | $ | 0.43 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exclude acquired intangible asset amortization | 0.06 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax effect of non-GAAP adjustment | (0.02 | ) | (0.02 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP net income per diluted share | $ | 0.42 | $ | 0.48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||