Teradyne Reports Fourth Quarter and Fiscal Year 2021 Results


TERADYNE, INC. REPORT FOR FOURTH FISCAL QUARTER OF 2021

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


					Quarter Ended									Twelve Months Ended
					December 31, 2021			October 3, 2021			December 31, 2020			December 31, 2021			December 31, 2020

Net revenues					$	885,047		$	950,501		$	758,968		$	3,702,881		$	3,121,469
		Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1)				357,998			379,500			309,179			1,496,225			1,335,728

Gross profit						527,049			571,001			449,789			2,206,656			1,785,741

Operating expenses:
		Selling and administrative				142,747			134,829			124,279			547,559			464,769
		Engineering and development				109,965			107,220			100,795			427,609			374,964
		Acquired intangible assets amortization				5,163			5,355			5,752			21,456			30,803
		Restructuring and other (2)				4,738			1,197			(15,117	)		1,312			(13,202	)
				Operating expenses		262,613			248,601			215,709			997,936			857,334

Income from operations						264,436			322,400			234,080			1,208,720			928,407

		Interest and other expense (3)				1,256			24,645			11,155			39,765			27,392

Income before income taxes						263,180			297,755			222,925			1,168,955			901,015
		Income tax provision				32,896			41,037			26,595			148,122			116,868
Net income					$	230,284		$	256,718		$	196,330		$	1,020,833		$	784,147

Net income per common share:
Basic					$	1.41		$	1.56		$	1.18		$	6.19		$	4.72
Diluted					$	1.29		$	1.41		$	1.05		$	5.56		$	4.28

Weighted average common shares - basic						162,769			164,583			166,085			164,960			166,120

Weighted average common shares - diluted (4)						178,020			181,987			186,837			183,625			183,042


Cash dividend declared per common share					$	0.10		$	0.10		$	0.10		$	0.40		$	0.40



(1	)	Cost of revenues includes:			Quarter Ended									Twelve Months Ended
					December 31, 2021			October 3, 2021			December 31, 2020			December 31, 2021			December 31, 2020
				Provision for excess and obsolete inventory	$	3,700		$	8,149		$	4,418		$	15,475		$	17,534
				Sale of previously written down inventory		(434	)		(824	)		(593	)		(2,477	)		(2,315	)
				Inventory step-up		-			-			17			-			376
					$	3,266		$	7,325		$	3,842		$	12,998		$	15,595

(2	)	Restructuring and other consists of:			Quarter Ended									Twelve Months Ended
					December 31, 2021			October 3, 2021			December 31, 2020			December 31, 2021			December 31, 2020
				Employee severance	$	284		$	617		$	1,089		$	1,525		$	2,309
				Acquisition related expenses and compensation		174			275			(902	)		488			2,516
				Contingent consideration fair value adjustment		-			-			(15,304	)		(7,227	)		(23,271	)
				Other		4,280			305			-			6,526			5,244
					$	4,738		$	1,197		$	(15,117	)	$	1,312		$	(13,202	)

(3	)	Interest and other expense includes:			Quarter Ended									Twelve Months Ended
					December 31, 2021			October 3, 2021			December 31, 2020			December 31, 2021			December 31, 2020
				Loss on convertible debt conversions	$	3,431		$	20,153		$	-		$	28,828		$	-
				Non-cash convertible debt interest		1,166			2,262			3,674			10,286			14,426
				Pension actuarial (gains) losses		(1,590	)		-			7,694			(2,217	)		10,284
					$	3,007		$	22,415		$	11,368		$	36,897		$	24,710

(4	)	Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarters ended December 31, 2021, October 3, 2021 and December 31, 2020, 3.4 million, 6.5 million and 10.0 million shares, respectively, have been included in diluted shares. For the twelve months ended December 31, 2021 and December 31, 2020, 7.4 million and 8.5 million shares, respectively, have been included in diluted shares. For the quarters ended December 31, 2021, October 3, 2021 and December 31, 2020, diluted shares also included 10.5 million, 9.8 million and 8.9 million shares, respectively, from the convertible note hedge transaction. For the twelve months ended December 31, 2021 and December 31, 2020, diluted shares included 10.0 million and 7.0 million shares, respectively, from the convertible note hedge transaction.


CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

					December 31, 2021			December 31, 2020
Assets
		Cash and cash equivalents			$	1,122,199		$	914,121
		Marketable securities				244,231			522,280
		Accounts receivable, net				550,749			497,506
		Inventories, net				243,330			222,189
		Prepayments and other current assets				415,718			259,338
				Total current assets		2,576,227			2,415,434

		Property, plant and equipment, net				387,240			394,800
		Operating lease right-of-use assets, net				68,807			54,569
		Marketable securities				133,858			117,980
		Deferred tax assets				100,672			87,913
		Retirement plans assets				15,110			17,468
		Other assets				24,096			9,384
		Acquired intangible assets, net				75,635			100,939
		Goodwill				426,024			453,859

				Total assets	$	3,807,669		$	3,652,346

Liabilities
		Accounts payable			$	153,133		$	133,663
		Accrued employees' compensation and withholdings				253,667			220,321
		Deferred revenue and customer advances				146,185			134,662
		Other accrued liabilities				116,187			77,581
		Operating lease liabilities				19,977			20,573
		Income taxes payable				88,789			80,728
		Current debt				19,182			33,343

				Total current liabilities		797,120			700,871

		Retirement plans liabilities				151,141			151,140
		Long-term deferred revenue and customer advances				54,921			58,359
		Long-term contingent consideration				-			7,227
		Long-term other accrued liabilities				15,497			19,352
		Deferred tax liabilities				6,327			10,821
		Long-term operating lease liabilities				56,178			42,073
		Long-term income taxes payable				67,041			74,930
		Debt				89,244			376,768

				Total liabilities		1,237,469			1,441,541

Mezzanine equity						1,512			3,787

Shareholders' equity						2,568,688			2,207,018

				Total liabilities, convertible common shares and shareholders’ equity	$	3,807,669		$	3,652,346


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

					Quarter Ended						Twelve Months Ended
					December 31, 2021			December 31, 2020			December 31, 2021			December 31, 2020
Cash flows from operating activities:
		Net income			$	230,284		$	196,330		$	1,020,833		$	784,147
		Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation			23,207			22,008			91,073			80,119
			Stock-based compensation			10,994			11,878			45,643			44,906
			Amortization			6,786			10,047			34,412			46,624
			Provision for excess and obsolete inventory			3,700			4,418			15,475			17,534
			Loss on convertible debt conversions			3,431			-			28,828			-
			Deferred taxes			(4,802	)		(11,141	)		(15,534	)		(15,688	)
			Gains on investments			(1,660	)		(4,383	)		(6,410	)		(7,898	)
			Retirement plans actuarial (gains) losses			(1,590	)		7,694			(2,217	)		10,284
			Contingent consideration fair value adjustment			-			(15,304	)		(7,227	)		(23,271	)
			Other			28			810			271			1,557

			Changes in operating assets and liabilities:
				Accounts receivable		45,521			92,564			(57,778	)		(129,451	)
				Inventories		(15,448	)		(25,436	)		6,495			(8,438	)
				Prepayments and other assets		(37,282	)		(23,667	)		(175,846	)		(64,418	)
				Accounts payable and other liabilities		56,435			(8,390	)		121,499			73,167
				Deferred revenue and customer advances		1,174			3,385			9,873			39,974
				Retirement plans contributions		(1,282	)		(1,498	)		(5,405	)		(5,382	)
				Income taxes		11,787			1,109			(5,619	)		25,169
Net cash provided by operating activities						331,283			260,424			1,098,366			868,935

Cash flows from investing activities:
		Purchases of property, plant and equipment				(29,310	)		(38,105	)		(132,472	)		(184,977	)
		Purchases of marketable securities				(152,311	)		(411,768	)		(661,781	)		(900,196	)
		Proceeds from maturities of marketable securities				88,871			170,271			660,148			479,678
		Proceeds from sales of marketable securities				57,029			2,395			266,466			35,006
		Purchase of investment				-			-			(12,000	)		149
		Proceeds from life insurance				-			-			-			546
Net cash (used for) provided by investing activities						(35,721	)		(277,207	)		120,361			(569,794	)

Cash flows from financing activities:
		Payments of convertible debt principal				(40,993	)		-			(342,990	)		-
		Repurchase of common stock				(193,820	)		-			(600,000	)		(88,465	)
		Dividend payments				(16,266	)		(16,612	)		(65,977	)		(66,482	)
		Payments related to net settlement of employee stock compensation awards				(258	)		(279	)		(32,303	)		(23,014	)
		Issuance of common stock under stock purchase and stock option plans				96			1,999			32,686			28,527
		Payments of contingent consideration				-			-			-			(8,852	)
Net cash used for financing activities						(251,241	)		(14,892	)		(1,008,584	)		(158,286	)

Effects of exchange rate changes on cash and cash equivalents						(1,576	)		616			(2,065	)		(658	)
Increase (decrease) in cash and cash equivalents						42,745			(31,059	)		208,078			140,197
Cash and cash equivalents at beginning of period						1,079,454			945,180			914,121			773,924
Cash and cash equivalents at end of period					$	1,122,199		$	914,121		$	1,122,199		$	914,121

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