Market Overview

Teradyne Reports Second Quarter 2018 Results

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  • Revenue of $527 million, above high end of guidance
  • Memory Test Q2'18 revenue of $67 million, up 34% from Q2'17 and 1H'18 revenue of $139 million, up 90% from 1H'17
  • Universal Robots revenue of $57 million, up 45% from Q2'17
  Q2'18 Q1'18 Q2'17
Revenue (mil) $527 $487 $697
GAAP EPS $0.52 $0.43 $0.87
Non-GAAP EPS $0.59 $0.45 $0.90

NORTH READING, Mass., July 24, 2018 (GLOBE NEWSWIRE) --  Teradyne, Inc. (NYSE:TER) reported revenue of $527 million for the second quarter of 2018 of which $360 million was in Semiconductor Test, $70 million in System Test, $62 million in Industrial Automation, and $35 million in Wireless Test. GAAP net profit for the second quarter was $101.0 million or $0.52 per share.  On a non-GAAP basis, Teradyne's net income in the second quarter was $112.8 million, or $0.59 per diluted share, which excluded acquired intangible asset amortization, restructuring and other charges, non-cash convertible debt interest, discrete income tax adjustments, and included the related tax impact on non-GAAP adjustments.

"Second quarter sales and earnings exceeded guidance as our test businesses strengthened through the quarter," said CEO and President Mark Jagiela.  "Despite the slowdown in test demand for mobile devices, other test markets grew in the quarter led by memory in Semiconductor Test, connectivity in Wireless Test at LitePoint, and storage in System Test.  In Industrial Automation, Universal Robots continued its high growth with sales up 45% from Q2 of 2017.  At newly acquired Mobile Industrial Robots (MiR), full quarter sales grew over 85% from the year ago quarter on a standalone basis."

"Reflecting a continued strong outlook in both our Test and Industrial Automation segments, Q3 company sales are expected to grow over 10% compared to Q3 2017 at the midpoint of our guidance." 

Guidance for the third quarter of 2018 is revenue of $540 million to $570 million, with GAAP net income of $0.51 to $0.59 per diluted share and non-GAAP net income of $0.59 to $0.66 per diluted share.  Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest, restructuring and other charges 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 10:00 a.m. ET, Wednesday, July 25. Interested investors should access the webcast at investors.teradyne.com/events-presentations at least five minutes before the call begins. Presentation materials will be available starting at 10:00 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 related to Mobile Industrial Robots, 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 related to Mobile Industrial Robots. 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 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 "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, autonomous mobile robots and sensing and simulation software, used by global manufacturing and light industrial customers to improve quality and increase manufacturing efficiency. In 2017, Teradyne had revenue of $2.14 billion and currently employs approximately 4,700 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, potential borrowings under a senior secured credit facility, and the impact of the U.S. tax reform, 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, availability of, or borrowing under, the credit facility, or the impact of the U.S. tax reform, 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. 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 the Industrial Automation 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; additional U.S. tax regulations or IRS guidance; the impact of any tariffs or export controls imposed in the U.S. or China; 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, 2017 and the Quarterly Report on Form 10-Q for the period ended April 1, 2018. 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 2018                    
                           
CONDENSED  CONSOLIDATED  STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)                
                           
          Quarter Ended   Six Months Ended
          July 1, 2018   April 1, 2018   July 2, 2017 (1)   July 1, 2018   July 2, 2017 (1)
                           
Net revenues   $ 526,929     $ 487,467     $ 696,901     $ 1,014,396     $ 1,153,814  
                           
  Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (2)     219,595       217,635       306,263       437,230       498,159  
                           
Gross profit     307,334       269,832       390,638       577,166       655,655  
                           
Operating expenses:                    
  Selling and administrative     99,410       90,505       90,111       189,916       174,903  
  Engineering and development     75,342       74,408       82,270       149,750       158,248  
  Acquired intangible assets amortization     9,793       7,698       8,166       17,491       16,118  
  Restructuring and other (3)     2,389       (313 )     2,288       2,076       4,799  
      Operating expenses     186,934       172,298       182,835       359,233       354,068  
                           
Income from operations     120,400       97,534       207,803       217,933       301,587  
                           
  Interest and other (4)     (388 )     (1,714 )     (926 )     (2,102 )     (2,694 )
                           
Income before income taxes     120,012       95,820       206,877       215,831       298,893  
  Income tax provision     18,975       8,846       31,901       27,821       38,696  
Net income   $ 101,037     $ 86,974     $ 174,976     $ 188,010     $ 260,197  
                           
Net income per common share:                    
Basic       $ 0.53     $ 0.45     $ 0.88     $ 0.97     $ 1.30  
Diluted       $ 0.52     $ 0.43     $ 0.87     $ 0.94     $ 1.29  
                           
Weighted average common shares - basic     190,730       195,255       198,774       192,992       199,390  
                           
Weighted average common shares - diluted (5)     194,909       203,484       201,529       199,197       201,732  
                           
                           
Cash dividend declared per common share   $ 0.09     $ 0.09     $ 0.07     $ 0.18     $ 0.14  
                           
                           
(1 ) Certain prior period amounts were reclassified to conform with the first quarter 2018 adoption of new accounting guidance for the presentation of pension and post retirement costs.
                           
(2 ) Cost of revenues includes:   Quarter Ended   Six Months Ended
          July 1, 2018   April 1, 2018   July 2, 2017   July 1, 2018   July 2, 2017
      Provision for excess and obsolete inventory   $ 2,653     $ 3,522     $ 2,569     $ 6,175     $ 5,295  
      Sale of previously written down inventory     (1,922 )     (2,243 )     (2,149 )     (4,165 )     (3,283 )
          $ 731     $ 1,279     $ 420     $ 2,010     $ 2,012  
                           
(3 ) Restructuring and other consists of:   Quarter Ended   Six Months Ended
          July 1, 2018   April 1, 2018   July 2, 2017   July 1, 2018   July 2, 2017
      Employee severance   $ 2,398     $ 3,881     $ 789     $ 6,279     $ 1,372  
      Acquisition related expenses     2,544       774       -       3,318       -  
      Other     947       -       -       947       1,294  
      Contingent consideration fair value adjustment     (3,500 )     (4,968 )     1,499       (8,468 )     2,133  
          $ 2,389     $ (313 )   $ 2,288     $ 2,076     $ 4,799  
                           
                           
(4 ) Interest and other includes:   Quarter Ended   Six Months Ended
          July 1, 2018   April 1, 2018   July 2, 2017   July 1, 2018   July 2, 2017
      Non-cash convertible debt interest   $ 3,245     $ 3,206     $ 3,088     $ 6,451     $ 6,138  
      Pension actuarial gains     (71 )     -       (2,504 )     (71 )     (2,504 )
          $ 3,174     $ 3,206     $ 584     $ 6,380     $ 3,634  
                           
(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 July 1, 2018, April 1, 2018 and July 2, 2017, 2.6 million, 4.4 million and 0.7 million shares, respectively, have been included in diluted shares. For the six months ended July 1, 2018 and July 2, 2017, 3.5 million and 0.3 million shares, respectively, have been included in diluted shares.  For the quarter ended April 1, 2018 and the six months ended July 1, 2018, diluted shares also included 1.8 million and 0.9 million shares, respectively,  from the convertible note hedge transaction.
                           
                           
                           
CONDENSED  CONSOLIDATED  BALANCE  SHEETS  (In thousands)                    
                           
          July 1, 2018   December 31, 2017            
                           
Assets                        
  Cash and cash equivalents   $ 480,384     $ 429,843              
  Marketable securities     712,309       1,347,979              
  Accounts receivable, net     454,122       272,783              
  Inventories, net     135,550       107,525              
  Prepayments  and other current assets     111,820       112,151              
      Total current assets     1,894,185       2,270,281              
                           
  Property, plant and equipment, net     285,302       268,447              
  Marketable securities     111,417       125,926              
  Deferred tax assets     73,574       84,026              
  Other assets     12,192       12,275              
  Retirement plans assets     18,252       17,491              
  Acquired intangible assets, net     148,173       79,088              
  Goodwill     388,625       252,011              
                           
      Total assets   $ 2,931,720     $ 3,109,545              
                           
Liabilities                      
  Accounts payable   $ 102,737     $ 86,393              
  Accrued employees' compensation and withholdings     115,264       141,694              
  Deferred revenue and customer advances     82,491       83,614              
  Other accrued liabilities     83,681       59,083              
  Contingent consideration     35,911       24,497              
  Income taxes payable     32,226       59,055              
                           
      Total current liabilities     452,310       454,336              
                           
  Retirement plans liabilities     124,258       119,776              
  Long-term deferred revenue and customer advances     25,375       30,127              
  Deferred tax liabilities     22,281       6,720              
  Long-term other accrued liabilities     22,296       10,273              
  Long-term contingent consideration     25,003       20,605              
  Long-term income taxes payable     147,360       148,075              
  Long-term debt     372,897       365,987              
                           
      Total liabilities     1,191,780       1,155,899              
                           
Shareholders' equity     1,739,940       1,953,646              
                           
      Total liabilities and shareholders' equity   $ 2,931,720     $ 3,109,545              
                       
                       
                       
CONDENSED  CONSOLIDATED  STATEMENTS OF CASH FLOWS (In thousands)                    
                           
          Quarter Ended   Six Months Ended    
          July 1, 2018   July 2, 2017   July 1, 2018   July 2, 2017    
Cash flows from operating activities:                    
  Net income   $ 101,037     $ 174,976     $ 188,010     $ 260,197      
  Adjustments to reconcile net income to net cash provided by operating activities:                    
    Depreciation     16,820       16,331       33,156       32,474      
    Amortization     10,973       11,342       20,177       22,412      
    Deferred taxes     8,616       (86 )     17,312       (3,563 )    
    Stock-based compensation     8,081       8,367       17,625       17,312      
    Provision for excess and obsolete inventory     2,653       2,569       6,175       5,295      
    Contingent consideration fair value adjustment     (3,500 )     1,499       (8,468 )     2,133      
    Retirement plan actuarial gains     (71 )     (2,504 )     (71 )     (2,504 )    
    Other     (225 )     1,151       1,168       1,153      
    Changes in operating assets and liabilities, net of businesses acquired:                  
      Accounts receivable     (40,332 )     (90,397 )     (179,403 )     (214,189 )    
      Inventories     (266 )     54,003       (21,283 )     (8,149 )    
      Prepayments and other assets     2,320       3,321       1,641       4,425      
      Accounts payable and accrued expenses     38,551       22,002       (8,155 )     34,504      
      Deferred revenue and customer advances     874       8,645       10,518       5,312      
      Retirement plans contributions     (1,153 )     (1,036 )     (2,173 )     (1,983 )    
      Income taxes     (14,203 )     20,130       (26,308 )     14,363      
Net cash provided by operating activities     130,175       230,313       49,921       169,192      
                           
Cash flows from investing activities:                    
  Purchases of property, plant and equipment     (27,866 )     (23,901 )     (62,663 )     (45,967 )    
  Purchases of marketable securities     (156,747 )     (181,502 )     (647,071 )     (334,819 )    
  Proceeds from sales of marketable securities     28,382       99,661       829,053       313,254      
  Proceeds from maturities of marketable securities     257,164       219,423       469,862       307,607      
  Acquisition of businesses, net of cash acquired     (145,276 )     -       (170,632 )     -      
Net cash (used for) provided by investing activities     (44,343 )     113,681       418,549       240,075      
                           
Cash flows from financing activities:                    
  Issuance of common stock under stock purchase and stock option plans     27       131       10,681       15,215      
  Repurchase of common stock     (226,519 )     (56,598 )     (360,795 )     (94,328 )    
  Dividend payments     (17,094 )     (13,904 )     (34,682 )     (27,925 )    
  Payment related to net settlement of employee stock compensation awards     (122 )     (149 )     (19,751 )     (12,438 )    
  Payment of contingent consideration     -       -       (13,571 )     (1,050 )    
Net cash used for financing activities     (243,708 )     (70,520 )     (418,118 )     (120,526 )    
                           
Effects of exchange rate changes on cash and cash equivalents     387       129       189       1,724      
                           
(Decrease) increase in cash and cash equivalents     (157,489 )     273,603       50,541       290,465      
Cash and cash equivalents at beginning of period     637,873       324,746       429,843       307,884      
Cash and cash equivalents at end of period   $ 480,384     $ 598,349     $ 480,384     $ 598,349      
                           

 

GAAP to Non-GAAP Earnings Reconciliation                                                
                                                       
(In millions, except per share amounts)                                                
                        Quarter Ended                          
        July 1,
2018
  % of Net
Revenues
          April 1,
2018 
  % of Net
Revenues
          July 2,
2017 (1)
  % of Net Revenues          
                                                       
Net revenues   $ 526.9                 $ 487.5                 $ 696.9                
                                                       
Gross profit GAAP $ 307.3       58.3 %           $ 269.8     55.3 %           $ 390.6     56.0 %          
  Inventory step-up   0.4       0.1 %             -       -                -       -             
Gross profit non-GAAP $ 307.7       58.4 %           $ 269.8     55.3 %           $ 390.6     56.0 %          
                                                       
Income from operations - GAAP $ 120.4       22.9 %           $ 97.5     20.0 %           $ 207.8     29.8 %          
  Acquired intangible assets amortization   9.8       1.9 %             7.7     1.6 %             8.2     1.2 %          
  Restructuring and other (2)   2.4       0.5 %             (0.3 )   -0.1 %             2.3     0.3 %          
  Inventory step-up   0.4       0.1 %             -       -                -       -             
Income from operations - non-GAAP $ 133.0       25.2 %           $ 104.9     21.5 %           $ 218.3     31.3 %          
                                                       
                Net Income
per Common Share
          Net Income
per Common Share
          Net Income
per Common Share
 
        July 1,
2018
  % of Net
Revenues
  Basic    Diluted   April 1,
2018 
  % of Net
Revenues
  Basic    Diluted   July 2,
2017
  % of Net Revenues   Basic    Diluted  
Net income - GAAP $ 101.0       19.2 %   $ 0.53     $ 0.52     $ 87.0     17.8 %   $ 0.45     $ 0.43     $ 175.0     25.1 %   $ 0.88     $ 0.87    
  Acquired intangible assets amortization   9.8       1.9 %     0.05       0.05       7.7     1.6 %     0.04       0.04       8.2     1.2 %     0.04       0.04    
  Interest and other (3)   3.2       0.6 %     0.02       0.02       3.2     0.7 %     0.02       0.02       3.1     0.4 %     0.02       0.02    
  Restructuring and other (2)   2.4       0.5 %     0.01       0.01       (0.3 )   -0.1 %     (0.00 )     (0.00 )     2.3     0.3 %     0.01       0.01    
  Inventory step-up   0.4       0.1 %     0.00       0.00       -       -        -       -       -       -        -       -    
  Pension mark-to-market adjustment (3)   (0.1 )     0.0 %     (0.00 )     (0.00 )     -       -        -       -       (2.5 )   -0.4 %     (0.01 )     (0.01 )  
  Exclude discrete tax adjustments (4)   (0.5 )     -0.1 %     (0.00 )     (0.00 )     (6.3 )   -1.3 %     (0.03 )     (0.03 )     0.5     0.1 %     0.00       0.00    
  Non-GAAP tax adjustments   (3.4 )     -0.6 %     (0.02 )     (0.02 )     (1.9 )   -0.4 %     (0.01 )     (0.01 )     (5.1 )   -0.7 %     (0.03 )     (0.03 )  
  Convertible share adjustment   -         -        -       0.01       -       -        -       0.01       -       -        -       -    
Net income - non-GAAP $ 112.8       21.4 %   $ 0.59     $ 0.59     $ 89.4     18.3 %   $ 0.46     $ 0.45     $ 181.5     26.0 %   $ 0.91     $ 0.90    
                                                       
GAAP and non-GAAP weighted average common shares - basic   190.7                   195.3                   198.8                
GAAP weighted average common shares - diluted   194.9                   203.5                   201.5                
  Exclude dilutive shares related to convertible note transaction   (2.6 )                 (6.2 )                 (0.7 )              
Non-GAAP weighted average common shares - diluted   192.3                   197.3                   200.8                
                                                       
                                                       
(1)   Certain prior period amounts were reclassified to conform with the first quarter 2018 adoption of new accounting guidance for the presentation of pension and post retirement costs.                      
                                                       
(2)   Restructuring and other consists of:                                                
        Quarter Ended              
        July 1,
2018
              April 1,
2018 
              July 2,
2017
             
    Employee severance $ 2.4                 $ 3.9                 $ 0.8                
    Acquisition related expenses   2.5                   0.8                   -                
    Other     0.9                   -                   -                
    Contingent consideration fair value adjustment   (3.5 )                 (5.0 )                 1.5                
        $ 2.4                 $ (0.3 )               $ 2.3                
                                                       
(3)   For the quarters ended July 1, 2018, April 1, 2018 and July 2, 2017,  adjustment to exclude non-cash convertible debt interest expense. For the quarters ended July 1, 2018 and July 2, 2017, adjustments to exclude actuarial gains recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.            
                                                       
(4)   For the quarters ended July 1, 2018, April 1, 2018 and July 2, 2017, adjustment to exclude discrete income tax items.            
        Six Months Ended                  
        July 1,
2018
  % of Net
Revenues
          July 2,
2017 (1)
  % of Net
Revenues
                         
                                                       
Net Revenues   $ 1,014.4                 $ 1,153.8                                
                                               
Gross profit GAAP $ 577.2       56.9 %           $ 655.7     56.8 %                  
  Inventory step-up   0.4       0.0 %             -       -                     
Gross profit non-GAAP $ 577.6       56.9 %           $ 655.7     56.8 %                  
                                               
Income from operations - GAAP $ 217.9       21.5 %           $ 301.6     26.1 %                  
  Acquired intangible assets amortization   17.5       1.7 %             16.1     1.4 %                  
  Restructuring and other (2)   2.1       0.2 %             4.8     0.4 %                  
  Inventory step-up   0.4       0.0 %             -       -                     
Income from operations - non-GAAP $ 237.9       23.5 %           $ 322.5     28.0 %                  
                                               
                Net Income
per Common Share
          Net Income
per Common Share
         
        July 1,
2018
  % of Net
Revenues
  Basic    Diluted   July 2,
2017
  % of Net
Revenues
  Basic    Diluted          
Net income - GAAP $ 188.0       18.5 %   $ 0.97     $ 0.94     $ 260.2     22.6 %   $ 1.30     $ 1.29            
  Acquired intangible assets amortization   17.5       1.7 %     0.09       0.09       16.1     1.4 %     0.08       0.08            
  Interest and other (3)   6.5       0.6 %     0.03       0.03       6.1     0.5 %     0.03       0.03            
  Restructuring and other (2)   2.1       0.2 %     0.01       0.01       4.8     0.4 %     0.02       0.02            
  Inventory step-up   0.4       0.0 %     0.00       0.00       -       -        -       -            
  Pension mark-to-market adjustment (3)   (0.1 )     0.0 %     (0.00 )     (0.00 )     (2.5 )   -0.2 %     (0.01 )     (0.01 )          
  Exclude discrete tax adjustments (4)   (6.8 )     -0.7 %     (0.04 )     (0.03 )     (6.5 )   -0.6 %     (0.03 )     (0.03 )          
  Non-GAAP tax adjustments   (5.3 )     -0.5 %     (0.03 )     (0.03 )     (8.2 )   -0.7 %     (0.04 )     (0.04 )          
  Convertible share adjustment   -         -        -       0.02       -       -        -       -            
Net income - non-GAAP $ 202.3       19.9 %   $ 1.05     $ 1.04     $ 270.0     23.4 %   $ 1.35     $ 1.34            
                                               
GAAP and non-GAAP weighted average common shares - basic   193.0                   199.4                        
GAAP weighted average common shares - diluted   199.2                   201.7                        
  Exclude dilutive shares from convertible note   (4.4 )                 (0.3 )                      
Non-GAAP weighted average common shares - diluted   194.8                   201.4                        
                                               
(1)   Certain prior period amounts were reclassified to conform with the first quarter 2018 adoption of new accounting guidance for the presentation of pension and post retirement costs.                  
                                               
(2)   Restructuring and other consists of:                                        
        Six Months Ended                      
        July 1,
2018
              July 2,
2017
                     
    Employee severance $ 6.3                 $ 1.4                        
    Acquisition related expenses   3.3                   -                        
    Other     0.9                   1.3                   -                
    Contingent consideration fair value adjustment   (8.5 )                 2.1                        
        $ 2.1                 $ 4.8                        
                                               
(3)   For the six months ended July 1, 2018 and July 2, 2017, Interest and other included non-cash convertible debt interest expense. For the six months ended July 1, 2018 and July 2, 2017, adjustments to exclude actuarial gains recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.              
                                               
(4)   For the six months ended July 1, 2018 and July 2, 2017, adjustment to exclude discrete income tax items.          
                                               
GAAP to Non-GAAP Reconciliation of Third Quarter 2018 guidance:                                
                                       
GAAP and non-GAAP third quarter revenue guidance:     $540 million   to $570 million                        
GAAP net income per diluted share     $ 0.51     $ 0.59                        
  Exclude acquired intangible assets amortization       0.06       0.06                        
  Exclude non-cash convertible debt interest       0.02       0.02                        
  Exclude restructuring and other       0.01       0.01                        
  Tax effect of non-GAAP adjustments       (0.02 )     (0.02 )                      
  Convertible share adjustment       0.01       0.01                        
Non-GAAP net income per diluted share     $ 0.59     $ 0.66                        
                                       

Contact: Teradyne, Inc.
Andy Blanchard 978-370-2425
Vice President of Corporate Relations

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