TERADYNE, INC [TER] Filings

10-Q 1 ter-20231001.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 1, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File No. 001-06462

TERADYNE, INC.

(Exact name of registrant as specified in its charter)


Massachusetts	04-2272148
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

600 Riverpark Drive, North Reading, Massachusetts	01864
(Address of Principal Executive Offices)	(Zip Code)

978-370-2700

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock, par value $0.125
per share

TER

Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Emerging growth company	☐

Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s only class of Common Stock as of October 30, 2023, was 152,878,728 shares.

TERADYNE, INC.

INDEX


		Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):	1

	Condensed Consolidated Balance Sheets as of October 1, 2023 and December 31, 2022	1

	Condensed Consolidated Statements of Operations for the Three and Nine Months ended October 1, 2023 and October 2, 2022	2

	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months ended October 1, 2023 and October 2, 2022	3

	Condensed Statements of Convertible Common Shares and Shareholders’ Equity for the Three and Nine Months Ended October 1, 2023 and October 2, 2022	4

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 1, 2023 and October 2, 2022	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37

Item 4.	Controls and Procedures	38

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 4.	Mine Safety Disclosures	41

Item 5.	Other Information	41

Item 6.	Exhibits	42

PART I

Item 1: Financial Statements

TERADYNE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	October 1, 2023			December 31, 2022
	(in thousands, except per share amount)
ASSETS
Current assets:
Cash and cash equivalents	$	636,961		$	854,773
Marketable securities		79,570			39,612
Accounts receivable, less allowance for credit losses of $2,191 and $1,955 at October 1, 2023 and December 31, 2022, respectively		455,878			491,145
Inventories, net		322,632			325,019
Prepayments		593,366			532,962
Other current assets		10,952			14,404
Total current assets		2,099,359			2,257,915
Property, plant and equipment, net		436,449			418,683
Operating lease right-of-use assets, net		78,978			73,734
Marketable securities		103,911			110,777
Deferred tax assets		162,669			142,784
Retirement plans assets		11,403			11,761
Other assets		37,581			28,925
Acquired intangible assets, net		39,165			53,478
Goodwill		401,140			403,195
Total assets	$	3,370,655		$	3,501,252
LIABILITIES
Current liabilities:
Accounts payable	$	176,117		$	139,722
Accrued employees’ compensation and withholdings		155,246			212,266
Deferred revenue and customer advances		109,445			148,285
Other accrued liabilities		122,609			112,271
Operating lease liabilities		18,026			18,594
Income taxes payable		35,687			65,010
Current debt		23,529			50,115
Total current liabilities		640,659			746,263
Retirement plans liabilities		123,244			116,005
Long-term deferred revenue and customer advances		34,405			45,131
Long-term other accrued liabilities		17,114			15,981
Deferred tax liabilities		238			3,267
Long-term operating lease liabilities		69,364			64,176
Long-term incomes taxes payable		44,331			59,135
Total liabilities		929,355			1,049,958
Commitments and contingencies (Note P)
SHAREHOLDERS’ EQUITY
Common stock, $0.125 par value, 1,000,000 shares authorized; 153,235 and 155,759 shares issued and outstanding at October 1, 2023 and December 31, 2022, respectively		19,154			19,470
Additional paid-in capital		1,816,137			1,755,963
Accumulated other comprehensive loss		(47,928	)		(49,868	)
Retained earnings		653,937			725,729
Total shareholders’ equity		2,441,300			2,451,294
Total liabilities and shareholders’ equity	$	3,370,655		$	3,501,252

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2022, are an integral part of the condensed consolidated financial statements.

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	October 1, 2023			October 2, 2022			October 1, 2023			October 2, 2022
	(in thousands, except per share amount)
Revenues:
Products	$	551,982		$	676,252		$	1,565,776		$	2,000,081
Services		151,750			150,821			439,923			423,128
Total revenues		703,732			827,073			2,005,699			2,423,209
Cost of revenues:
Cost of products		239,827			277,539			655,502			795,229
Cost of services		65,614			64,155			192,993			181,279
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)		305,441			341,694			848,495			976,508
Gross profit		398,291			485,379			1,157,204			1,446,701
Operating expenses:
Selling and administrative		138,330			135,632			434,979			415,351
Engineering and development		104,413			111,715			315,881			331,781
Acquired intangible assets amortization		4,720			4,729			14,348			14,663
Restructuring and other		6,856			1,796			15,251			19,554
Total operating expenses		254,319			253,872			780,459			781,349
Income from operations		143,972			231,507			376,745			665,352
Non-operating (income) expense:
Interest income		(6,873	)		(1,318	)		(18,486	)		(2,972	)
Interest expense		963			779			2,994			2,704
Other (income) expense, net		5,602			5,849			6,470			20,472
Income before income taxes		144,280			226,197			385,767			645,148
Income tax provision		16,164			42,712			54,069			101,948
Net income	$	128,116		$	183,485		$	331,698		$	543,200
Net income per common share:
Basic	$	0.83		$	1.17		$	2.14		$	3.41
Diluted	$	0.78		$	1.10		$	2.01		$	3.17
Weighted average common shares—basic		153,762			156,364			154,809			159,325
Weighted average common shares—diluted		164,050			166,733			165,037			171,156

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	For the Three Months Ended						For the Nine Months Ended
	October 1, 2023			October 2, 2022			October 1, 2023			October 2, 2022
	(in thousands)
Net income	$	128,116		$	183,485		$	331,698		$	543,200
Other comprehensive income, net of tax:
Foreign currency translation adjustment, net of tax of $0, $0, $0, $0, respectively		(14,325	)		(28,951	)		(2,073	)		(66,258	)
Available-for-sale marketable securities:
Unrealized losses on marketable securities arising during period, net of tax of $(731), $(997), $(408), and $(3,570), respectively		(2,628	)		(3,581	)		(903	)		(13,491	)
Less: Reclassification adjustment for losses included in net income, net of tax of $0, $(11), $9, $48, respectively		—			177			33			386
		(2,628	)		(3,404	)		(870	)		(13,105	)
Cash flow hedges:
Unrealized gains arising during period, net of tax of $728, $0, $1,816, $0 respectively		2,590			537			6,456			537
Less: Reclassification adjustment for losses included in net income, net of tax of $(869), $0, $(441), $0 respectively		(3,091	)		—			(1,567	)		—
		(501	)		537			4,889			537
Defined benefit post-retirement plan:
Amortization of prior service credit, net of tax of $0, $0, $(1), $(2), respectively		(2	)		(2	)		(6	)		(5	)
Other comprehensive (loss) income		(17,456	)		(31,820	)		1,940			(78,831	)
Comprehensive income	$	110,660		$	151,665		$	333,638		$	464,369

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE COMMON SHARES

AND SHAREHOLDERS’ EQUITY

(Unaudited)


			Shareholders' Equity
	Convertible Common Shares Value		Common Stock Shares			Common Stock Par Value			Additional Paid-in Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings			Total Shareholders’ Equity
			(in thousands)
For the Three Months Ended October 1, 2023
Balance, July 2, 2023	$	—		154,148		$	19,269		$	1,784,590		$	(30,472	)	$	661,496		$	2,434,883
Net issuance of common stock under stock-based plans				207			26			17,180									17,206
Stock-based compensation expense										14,367									14,367
Repurchase of common stock				(1,120	)		(141	)								(118,766	)		(118,907	)
Cash dividends ($0.11 per share)																(16,909	)		(16,909	)
Settlements of convertible notes				210			25			(25	)