Teradyne Reports Strong Revenue and Earnings Growth in Second Quarter and First Half 2017
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Teradyne Reports Strong Revenue and Earnings Growth in Second Quarter and First Half 2017

NORTH READING, Mass. — (BUSINESS WIRE) — July 26, 2017 — Teradyne, Inc. (NYSE: TER):

      Q2’17       Q2’16       Q1’17       1H’17       1H‘16
Orders (mil) $462 $471 $595 $1,056 $860
Revenue (mil) $697 $532 $457 $1,154 $963
GAAP EPS $0.87 $(1.10) $0.42 $1.29 $(0.85)
Non-GAAP EPS $0.90 $0.55 $0.44 $1.34 $0.86

Teradyne, Inc. (NYSE: TER) reported revenue of $697 million for the second quarter of 2017 of which $593 million was in Semiconductor Test, $39 million in Industrial Automation (UR), $37 million in System Test, and $28 million in Wireless Test. GAAP net income for the second quarter was $175.0 million or $0.87 per share. On a non-GAAP basis, Teradyne’s net income in the second quarter was $181.5 million, or $0.90 per diluted share, which excluded acquired intangible assets amortization, non-cash convertible debt interest, pension actuarial gains, restructuring and other charges, and included the related tax impact on non-GAAP adjustments.

Orders in the second quarter of 2017 were $462 million of which $369 million were in Semiconductor Test, $33 million in Industrial Automation (UR), $30 million in Wireless Test, and $29 million in System Test.

"Continued strong performance in our Semiconductor Test Business and Universal Robots drove our second quarter sales up 31% and EPS up 64% compared to last year's second quarter," said CEO and President Mark Jagiela. "Semiconductor Test shipments grew 36% year on year reflecting continued strength in mobile and microcontroller test and increasing demand in memory and analog test. Universal Robots shipments increased 57% from Q2’16 and sales continue to broaden with our expanding distribution reach and growing customer awareness of the powerful economic benefits of UR’s collaborative robots."

"Looking ahead to the 2nd half of 2017, we expect the normal seasonal pattern of slowing mobile device test shipments in Semiconductor Test and continued 50% plus growth at Universal Robots."

Guidance for the third quarter of 2017 is revenue of $455 million to $485 million, with GAAP net income of $0.35 to $0.42 per diluted share and non-GAAP net income of $0.39 to $0.46 per diluted share. Non-GAAP guidance excludes acquired intangible assets amortization, non-cash convertible debt interest, and includes the related tax impact on non-GAAP adjustments.

Webcast
A conference call to discuss the second quarter results, along with management's business outlook, will follow at 10 a.m. ET, Thursday, July 27. 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 10 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, goodwill impairment, acquired intangible assets impairment, and restructuring and other. 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 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 pension actuarial gains and losses. GAAP requires that these items 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. 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 “Investors” and then selecting 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 (NYSE: TER) is a leading supplier of automation equipment for test and industrial applications. Teradyne Automatic Test Equipment (ATE) is used to test semiconductors, wireless products, data storage and complex electronic systems, which serve consumer, communications, industrial and government customers. Our Industrial Automation products include Collaborative Robots used by global manufacturing and light industrial customers to improve quality and increase manufacturing efficiency. In 2016, Teradyne had revenue of $1.75 billion and currently employs approximately 4,400 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 Teradyne’s future business prospects, results of operations, market conditions, earnings per share, the payment of a quarterly dividend, the repurchase of Teradyne common stock pursuant to a share repurchase program, use of proceeds and potential dilution from the senior convertible notes offering and potential borrowings under a senior secured credit facility. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, events, earnings per share, use of cash, payment of dividends, repurchases of common stock, payment of the senior convertible notes or availability of, or borrowing under, the credit facility. There can be no assurance that management’s estimates of Teradyne’s future results or other forward-looking statements will be achieved. Additionally, the current dividend and share repurchase programs may be modified, suspended or discontinued at any time. Important factors that could cause actual results, earnings per share, use of cash, dividend payments, repurchases of common stock, payment of the senior convertible notes or borrowings under the credit facility to differ materially from those presently expected include: conditions affecting the markets in which Teradyne operates; decreased or delayed product demand from one or more significant customers; development, delivery and acceptance of new products; the ability to grow Universal Robots’ business; increased research and development spending; deterioration of Teradyne’s financial condition; the consummation and success of any mergers or acquisitions; unexpected cash needs; insufficient cash flow to make required payments and pay the principal amount on the senior convertible notes; the business judgment of the board of directors that a declaration of a dividend, the repurchase of common stock or borrowing under the credit facility is not in the company’s best interests; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” section of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and the Quarterly Report on Form 10-Q for the period ended April 2, 2017. 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 SECOND FISCAL QUARTER OF 2017              
                                                   
CONDENSED CONSOLIDATED OPERATING STATEMENTS            
(In thousands, except per share amounts)                                            
     
Quarter Ended Six Months Ended
July 2, 2017 April 2, 2017 July 3, 2016 July 2, 2017 July 3, 2016
 
Net revenues $ 696,901 $ 456,913 $ 531,792 $ 1,153,814 $ 962,787
 

Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) (2)

  305,682     191,980     248,922     497,662     449,584  
 

Gross profit

391,219 264,933 282,870 656,152 513,203
 
Operating expenses:
Engineering and development (1) 81,728 76,182 76,109 157,910 149,573
Selling and administrative (1) 89,131 84,906 81,425 174,037 160,599
Acquired intangible assets amortization 8,166 7,952 16,244 16,118 36,238
Restructuring and other (3) 2,288 2,511 2,608 4,799 4,195

Goodwill impairment (4)

- -

254,946

-

254,946

Acquired intangible assets impairment (4)

  -     -    

83,339

    -    

83,339

 
Operating expenses 181,313 171,551 514,671 352,864 688,890
 
Income (loss) from operations 209,906 93,382 (231,801 ) 303,288 (175,687 )
 
Interest and other (5)   (3,029 )   (1,366 )   984     (4,395 )   2,062  
 
Income (loss) before income taxes 206,877 92,016 (230,817 ) 298,893 (173,625 )
Income tax provision (benefit)   31,901     6,795     (7,271 )   38,696     (65 )
Net income (loss) $ 174,976   $ 85,221   $ (223,546 ) $ 260,197   $ (173,560 )
 

Net income (loss) per common share:

Basic $ 0.88   $ 0.43   $ (1.10 ) $ 1.30   $ (0.85 )
Diluted $ 0.87   $ 0.42   $ (1.10 ) $ 1.29   $ (0.85 )
 
Weighted average common shares - basic   198,774     200,005     203,018     199,390     203,645  

 

 

Weighted average common shares - diluted (6)

  201,529     201,936     203,018     201,732     203,645  
 
 
Cash dividend declared per common share $ 0.07   $ 0.07   $ 0.06   $ 0.14   $ 0.12  
 
 
Net orders $ 461,606   $ 594,733   $ 470,983   $ 1,056,339   $ 860,400  
 
 
(1 ) Pension actuarial gains included in our operating results were as follows:

Quarter Ended

Six Months Ended
July 2, 2017 April 2, 2017 July 3, 2016 July 2, 2017 July 3, 2016
Cost of revenues $ (664 ) $ - $ (221 ) $ (664 ) $ (614 )
Engineering and development (746 ) - (221 ) (746 ) (615 )
Selling and administrative   (1,094 )   -     (227 )   (1,094 )   (633 )
$ (2,504 ) $ -   $ (669 ) $ (2,504 ) $ (1,862 )
 
 
(2 ) Cost of revenues includes: Quarter Ended Six Months Ended
July 2, 2017 April 2, 2017 July 3, 2016 July 2, 2017 July 3, 2016
Provision for excess and obsolete inventory $ 2,569 $ 2,726 $ 7,742 $ 5,295 $ 12,115
Sale of previously written down inventory   (2,149 )   (1,134 )   (5,151 )   (3,283 )   (6,319 )
$ 420   $ 1,592   $ 2,591   $ 2,012   $ 5,796  
 
 
(3 ) Restructuring and other consists of: Quarter Ended Six Months Ended
July 2, 2017 April 2, 2017 July 3, 2016 July 2, 2017 July 3, 2016
Contingent consideration fair value adjustment $ 1,499 $ 634 $ 1,305 $ 2,133 $ 2,478
Employee severance 789 583 1,303 1,372 1,717
Facility related - 1,294 - 1,294 -
Impairment of fixed assets and expenses related to Japan earthquake - - 5,051 - 5,051
Property insurance recovery   -     -     (5,051 )   -     (5,051 )
$ 2,288   $ 2,511   $ 2,608   $ 4,799   $ 4,195  
 

(4

) Goodwill and acquired intangible assets impairment related to Teradyne's Wireless Test business segment.
 
(5 ) Interest and other includes: Quarter Ended Six Months Ended
July 2, 2017 April 2, 2017 July 3, 2016 July 2, 2017 July 3, 2016
Non-cash convertible debt interest expense $ 3,088 $ 3,050 $ - $ 6,138 $ -
 

(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 July 2, 2017 and for the six months ended July 2, 2017, 0.7 million and 0.3 million shares, respectively, have been included in diluted shares.

 
 
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
             
July 2, 2017 December 31, 2016
 
Assets
Cash and cash equivalents $ 598,349 $ 307,884
Marketable securities 809,338 871,024

Accounts receivable, net

405,946 192,444
Inventories, net 153,645 135,958
Prepayments 105,960 108,454
Other current assets   6,787   8,039
Total current assets 2,080,025 1,623,803
 
Property, plant and equipment, net 258,017 253,821
Marketable securities 212,501 433,843
Deferred tax assets 125,204 107,405
Other assets 12,429 12,165
Retirement plans assets 9,231 7,712

Acquired intangible assets, net

90,603 100,401
Goodwill   242,215   223,343
Total assets $ 3,030,225 $ 2,762,493
 
Liabilities
Accounts payable $ 103,454 $ 95,362
Accrued employees' compensation and withholdings 122,246 109,944
Deferred revenue and customer advances 81,087 84,478
Other accrued liabilities 66,176 51,382
Contingent consideration 22,432 1,050
Accrued income taxes   43,812   30,480
Total current liabilities 439,207 372,696
 
Retirement plans liabilities 111,688 106,938
Long-term deferred revenue and customer advances 32,679 23,463
Deferred tax liabilities 10,714 12,144
Long-term other accrued liabilities 11,061 28,642
Long-term contingent consideration 16,983 37,282
Long-term debt   359,245   352,669
Total liabilities 981,577 933,834
 
Shareholders' equity 2,048,648 1,828,659
   
Total liabilities and shareholders' equity $ 3,030,225 $ 2,762,493
     
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)  
                 
Quarter Ended Six Months Ended
July 2, 2017 July 3, 2016 July 2, 2017 July 3, 2016
Cash flows from operating activities:
Net income (loss) $ 174,976 $ (223,546 ) $ 260,197 $ (173,560 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation 16,331 15,976 32,474 32,168
Amortization 11,342 16,710 22,412 37,180
Stock-based compensation 8,367 7,532 17,312 15,457
Provision for excess and obsolete inventory 2,569 7,742 5,295 12,115
Contingent consideration adjustment 1,499 1,305 2,133 2,478
Goodwill impairment - 254,946 - 254,946

Acquired intangible assets impairment

- 83,339 - 83,339
Impairment of fixed assets - 4,179 - 4,179
Property insurance recovery - (5,051 ) - (5,051 )
Deferred taxes (86 ) (15,962 ) (3,563 ) (21,458 )
Retirement plans actuarial gains (2,504 ) (669 ) (2,504 ) (1,862 )
Other 1,151 92 1,153 576
Changes in operating assets and liabilities:
Accounts receivable (90,397 ) (95,678 ) (214,189 ) (138,230 )
Inventories 54,003 30,924 (8,149 ) 30,222
Prepayments and other assets 3,321 (12,509 ) 4,425 (13,657 )
Accounts payable and accrued expenses 22,002 34,745 14,449 (6,040 )
Deferred revenue and customer advances 8,645 77,777 5,312 106,072
Retirement plans contributions (1,036 ) (1,048 ) (1,983 ) (2,298 )

Income taxes

  20,130     58     34,418     6  
Net cash provided by operating activities 230,313 180,862 169,192 216,582
 
Cash flows from investing activities:
Purchases of property, plant and equipment (23,901 ) (26,259 ) (45,967 ) (46,593 )
Purchases of available-for-sale marketable securities (181,502 ) (215,533 ) (334,819 ) (437,311 )
Proceeds from maturities of available-for-sale marketable securities 219,423 54,566 307,607 128,024
Proceeds from sales of available-for-sale marketable securities 99,661 95,428 313,254 334,798
Proceeds from property insurance   -     5,051     -     5,051  
Net cash provided by (used for) investing activities 113,681 (86,747 ) 240,075 (16,031 )
 
Cash flows from financing activities:
Issuance of common stock under stock option and stock purchase plans 131 8,756 15,215 17,896
Repurchase of common stock (56,598 ) (28,782 ) (94,328 ) (56,783 )
Dividend payments (13,904 ) (12,172 ) (27,925 ) (24,425 )
Payments related to net settlement of employee stock compensation awards (149 ) (180 ) (12,438 ) (9,152 )
Payments of contingent consideration   -     -     (1,050 )   (11,697 )
Net cash used for financing activities (70,520 ) (32,378 ) (120,526 ) (84,161 )
 
Effects of exchange rate changes on cash and cash equivalents 129 - 1,724 -
 
Increase in cash and cash equivalents 273,603 61,737 290,465 116,390
Cash and cash equivalents at beginning of period   324,746     319,358     307,884     264,705  
Cash and cash equivalents at end of period $ 598,349   $ 381,095   $ 598,349   $ 381,095  
                                                           
GAAP to Non-GAAP Earnings Reconciliation
(In millions, except per share amounts)
   

Quarter Ended

July 2,
2017

% of Net
Revenues

April 2,
2017

% of Net
Revenues

July 3,
2016

% of Net
Revenues

 
Net revenues $ 696.9 $ 456.9 $ 531.8
 
Gross profit - GAAP $ 391.2 56.1 % $ 264.9 58.0 % $ 282.9 53.2 %
Pension mark-to-market adjustment (1)   (0.7 )   -0.1 %   -   -     (0.2 ) 0.0 %
Gross profit - non-GAAP $ 390.5 56.0 % $ 264.9 58.0 % $ 282.7 53.2 %
 
Income (loss) from operations - GAAP $ 209.9 30.1 % $ 93.4 20.4 % $ (231.8 ) -43.6 %

Acquired intangible assets amortization

8.2 1.2 % 8.0 1.8 % 16.2 3.0 %
Restructuring and other (2) 2.3 0.3 % 2.5 0.5 % 2.6 0.5 %
Pension mark-to-market adjustment (1) (2.5 ) -0.4 % - - (0.7 ) -0.1 %
Goodwill impairment (3) - - - - 254.9 47.9 %

Acquired intangible assets impairment (3)

  -     -     -   -     83.3   15.7 %
Income from operations - non-GAAP $ 217.9     31.3 % $ 103.9   22.7 % $ 124.5   23.4 %
 
 

Net Income
per Common Share

Net Income
per Common Share

Net (Loss) Income
per Common Share

July 2,
2017

% of Net
Revenues

Basic Diluted April 2,

2017

% of Net
Revenues

Basic Diluted

July 3,
2016

% of Net
Revenues

Basic Diluted
Net income (loss) - GAAP $ 175.0 25.1 % $ 0.88 $ 0.87 $ 85.2 18.6 % $ 0.43 $ 0.42 $ (223.5 ) -42.0 % $ (1.10 ) $ (1.10 )

Acquired intangible assets amortization

8.2 1.2 % 0.04 0.04 8.0 1.8 % 0.04 0.04 16.2 3.0 % 0.08 0.08
Interest and other (4) 3.1 0.4 % 0.02 0.02 3.1 0.7 % 0.02 0.02 - - - -
Restructuring and other (2) 2.3 0.3 % 0.01 0.01 2.5 0.5 % 0.01 0.01 2.6 0.5 % 0.01 0.01
Pension mark-to-market adjustment (1) (2.5 ) -0.4 % (0.01 ) (0.01 ) - - - - (0.7 ) -0.1 % (0.00 ) (0.00 )
Goodwill impairment (3) - - - - - - - - 254.9 47.9 % 1.26 1.24

Acquired intangible assets impairment (3)

- - - - - - - - 83.3 15.7 % 0.41 0.41
Exclude discrete tax adjustments (5) 0.5 0.1 % 0.00 0.00 (7.0 ) -1.5 % (0.04 ) (0.03 ) 25.1 4.7 % 0.12 0.12
Non-GAAP tax adjustments (6)   (5.1 )   -0.7 %   (0.03 )   (0.03 )   (3.1 ) -0.7 %   (0.02 )   (0.02 )   (45.5 ) -8.6 %   (0.22 )   (0.22 )
Net income - non-GAAP $ 181.5     26.0 % $ 0.91   $ 0.90   $ 88.7   19.4 % $ 0.44   $ 0.44   $ 112.4   21.1 % $ 0.55   $ 0.55  
 
GAAP and non-GAAP weighted average common shares - basic 198.8 200.0 203.0
GAAP weighted average common shares - diluted 201.5 201.9 203.0
Exclude dilutive shares from convertible note (0.7 ) - -
Include dilutive shares   -     -     1.9  
Non-GAAP weighted average common shares - diluted   200.8     201.9     204.9  
 
 
(1 ) Actuarial gains recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.
 
(2 ) Restructuring and other consists of:
Quarter Ended

July 2,
2017

April 2,
2017

July 3,
2016

Contingent consideration fair value adjustment $ 1.5 $ 0.6 $ 1.3
Employee severance 0.8 0.6 1.3
Facility related - 1.3 -
Impairment of fixed assets and expenses related to Japan earthquake - - 5.1
Property insurance recovery   -     -     (5.1 )
$ 2.3   $ 2.5   $ 2.6  
 
(3 ) Goodwill and acquired intangible assets impairment related to Teradyne's Wireless Test business segment.
 
(4 ) For the quarters ended July 2, 2017 and April 2, 2017, interest and other included non-cash convertible debt interest expense.
 
(5 )

For the quarters ended July 2, 2017, April 2, 2017 and July 3, 2016 adjustment to exclude discrete income tax items. For the quarter ended July 3, 2016, adjustment to treat Wireless Test business segment goodwill and intangible assets impairments as discrete tax items.

 
(6 ) For periods after December 31, 2016, the non-GAAP annual effective tax rate is based on a with and without calculation with respect to non-GAAP reconciling items.
 
 
 
Six Months Ended

July 2,
2017

% of Net
Revenues

July 3,
2016

% of Net
Revenues

 
Net Revenues $ 1,153.8 $ 962.8
 
Gross profit - GAAP $ 656.1 56.9 % $ 513.2 53.3 %
Pension mark-to-market adjustment (1)   (0.7 )   -0.1 %   (0.6 ) -0.1 %
Gross profit - non-GAAP $ 655.4 56.8 % $ 512.6 53.2 %
 
Income (loss) from operations - GAAP $ 303.3 26.3 % $ (175.7 ) -18.2 %

Acquired intangible assets amortization

16.1 1.4 % 36.2 3.8 %
Restructuring and other (2) 4.8 0.4 % 4.2 0.4 %
Pension mark-to-market adjustment (1) (2.5 ) -0.2 % (1.9 ) -0.2 %
Goodwill impairment (3) - - 254.9 26.5 %

Acquired intangible assets impairment (3)

  -     -     83.3   8.7 %
Income from operations - non-GAAP $ 321.7     27.9 % $ 201.0   20.9 %
 
 

Net Income
per Common Share

Net (Loss) Income
per Common Share

July 2,
2017

% of Net
Revenues

Basic Diluted

July 3,
2016

% of Net
Revenues

Basic Diluted
Net income (loss) - GAAP $ 260.2 22.6 % $ 1.30 $ 1.29 $ (173.6 ) -18.0 % $ (0.85 ) $ (0.85 )

Acquired intangible assets amortization

16.1 1.4 % 0.08 0.08 36.2 3.8 % 0.18 0.18
Interest and other (4) 6.1 0.5 % 0.03 0.03 - - - -
Restructuring and other (2) 4.8 0.4 % 0.02 0.02 4.2 0.4 % 0.02 0.02
Pension mark-to-market adjustment (1) (2.5 ) -0.2 % (0.01 ) (0.01 ) (1.9 ) -0.2 % (0.01 ) (0.01 )
Goodwill impairment (3) - - - - 254.9 26.5 % 1.25 1.24

Acquired intangible assets impairment (3)

- - - - 83.3 8.7 % 0.41 0.41
Exclude discrete tax adjustments (5) (6.5 ) -0.6 % (0.03 ) (0.03 ) 22.7 2.4 % 0.11 0.11
Non-GAAP tax adjustments (6)   (8.2 )   -0.7 %   (0.04 )   (0.04 )   (49.0 ) -5.1 %   (0.24 )   (0.24 )
Net income - non-GAAP $ 270.0     23.4 % $ 1.35   $ 1.34   $ 176.8   18.4 % $ 0.87   $ 0.86  
 
GAAP and non-GAAP weighted average common shares - basic 199.4 203.6
GAAP weighted average common shares - diluted 201.7 203.6
Exclude dilutive shares from convertible note (0.3 ) -
Include dilutive shares   -     1.7  
Non-GAAP weighted average common shares - diluted   201.4     205.3  
 
(1 ) Actuarial gains recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.
 
(2 ) Restructuring and other consists of:
Six Months Ended

July 2,
2017

July 3,
2016

Contingent consideration fair value adjustment $ 2.1 $ 2.5
Employee severance 1.4 1.7
Facility related 1.3 -
Impairment of fixed assets and expenses related to Japan earthquake - 5.1
Property insurance recovery   -     (5.1 )
$ 4.8   $ 4.2  
 
(3 ) Goodwill and acquired intangible assets impairment related to Teradyne's Wireless Test business segment.
 
(4 ) For the six months ended July 2, 2017, Interest and other included non-cash convertible debt interest expense.
 
(5 )

For the six months ended July 2, 2017 and July 3, 2016, adjustment to exclude discrete income tax items. For the six months ended July 3, 2016, adjustment to treat Wireless Test business segment goodwill and intangible assets impairments as discrete tax items.

 
(6 ) For periods after December 31, 2016, the non-GAAP annual effective tax rate is based on a with and without calculation with respect to non-GAAP reconciling items.
 
GAAP to Non-GAAP Reconciliation of Third Quarter 2017 guidance:
 
GAAP and non-GAAP third quarter revenue guidance: $455 million to $485 million
GAAP net income per diluted share $ 0.35 $ 0.42

Exclude acquired intangible assets amortization

0.04 0.04
Exclude non-cash convertible debt interest 0.02 0.02
Non-GAAP tax adjustment   (0.02 )   (0.02 )
Non-GAAP net income per diluted share $ 0.39 $ 0.46
 

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