Teradyne Earnings 2019-06-30

TER 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q

Table of Contents

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 June 30, 2019

☐	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)

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

☒

☐

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

☒

☐

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

☐

☒

Securities registered purs

uant 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

The number of shares outstanding of the registrant’s only class of Common Stock as of August 5, 2019 was 169,945,820 shares.

Table of Contents

TERADYNE, INC.

INDEX


		Page No.

	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited):

	Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018		1

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and July 1, 2018		2

	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2019 and July 1, 2018		3

	Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2019 and July 1, 2018		4

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and July 1, 2018		5

	Notes to Condensed Consolidated Financial Statements		6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		36

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		50

Item 4.	Controls and Procedures		51

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings		52

Item 1A.	Risk Factors		52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		53

Item 4.	Mine Safety Disclosures		53

Item 6.	Exhibits		53

Table of Contents

PART I

Item 1:

Financial Statements

TERADYNE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	June 30, 2019			December 31, 2018
	(in thousands, except per share amount)
ASSETS
Current assets:
Cash and cash equivalents	$	495,107		$	926,752
Marketable securities		400,227			190,096
Accounts receivable, less allowance for doubtful accounts of $1,736 and $1,673 at June 30, 2019 and December 31, 2018, respectively		372,199			291,267
Inventories, net		164,461			153,541
Prepayments and other current assets		184,832			170,826

Total current assets		1,616,826			1,732,482
Property, plant and equipment, net		295,895			279,821
Operating lease right-of-use assets, net		56,315			—
Marketable securities		99,001			87,731
Deferred tax assets		67,886			70,848
Other assets		25,712			11,509
Retirement plans assets		16,449			16,883
Acquired intangible assets, net		109,494			125,482
Goodwill		383,936			381,850

Total assets	$	2,671,514		$	2,706,606
LIABILITIES
Current liabilities:
Accounts payable	$	103,449		$	100,688
Accrued employees’ compensation and withholdings		121,940			148,566
Deferred revenue and customer advances		89,837			77,711
Other accrued liabilities		77,053			78,272
Current operating lease liabilities		18,041			—
Contingent consideration		11,753			34,865
Income taxes payable		44,927			36,185

Total current liabilities		467,000			476,287
Retirement plans liabilities		122,596			117,456
Long-term deferred revenue and customer advances		37,365			32,750
Deferred tax liabilities		17,800			20,662
Long-term other accrued liabilities		9,660			37,547
Long-term contingent consideration		15,094			35,678
Long-term operating lease liabilities		46,460			—
Long-term incomes taxes payable		88,884			83,891
Debt		387,243			379,981

Total liabilities		1,192,102			1,184,252

Commitments and contingencies (See Note S)
SHAREHOLDERS’ EQUITY
Common stock, $0.125 par value, 1,000,000 shares authorized; 170,436 and 175,522 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively		21,305			21,940
Additional paid-in capital		1,688,211			1,671,645
Accumulated other comprehensive loss		(7,591	)		(13,040	)
Accumulated deficit		(222,513	)		(158,191	)

Total shareholders’ equity		1,479,412			1,522,354

Total liabilities and shareholders’ equity	$	2,671,514		$	2,706,606

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, 2018, are an integral part of the condensed

consolidated financial statements.

Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Three Months Ended						For the Six Months Ended
	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018
	(in thousands, except per share amount)
Revenues:
Products	$	457,511		$	434,051		$	850,953		$	837,976
Services		106,667			92,878			207,324			176,420

Total revenues		564,178			526,929			1,058,277			1,014,396
Cost of revenues:
Cost of products		193,299			180,777			358,667			361,735
Cost of services		46,961			38,818			88,057			75,495

Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)		240,260			219,595			446,724			437,230

Gross profit		323,918			307,334			611,553			577,166
Operating expenses:
Selling and administrative		108,811			99,410			210,824			189,916
Engineering and development		81,434			75,342			158,225			149,750
Acquired intangible assets amortization		10,083			9,793			20,717			17,491
Restructuring and other		(10,404	)		2,389			(5,292	)		2,076

Total operating expenses		189,924			186,934			384,474			359,233

Income from operations		133,994			120,400			227,079			217,933
Non-operating (income) expense:
Interest income		(5,430	)		(5,427	)		(13,482	)		(11,407	)
Interest expense		5,800			5,639			11,513			12,530
Other (income) expense, net		2,447			176			3,892			979

Income before income taxes		131,177			120,012			225,156			215,831
Income tax provision		33,780			18,975			18,621			27,821

Net income	$	97,397		$	101,037		$	206,535		$	188,010
Net income per common share:
Basic	$	0.57		$	0.53		$	1.20		$	0.97
Diluted	$	0.55		$	0.52		$	1.16		$	0.94
Weighted average common shares—basic		171,241			190,730			172,387			192,992
Weighted average common shares—diluted		178,590			194,909			177,781			199,197

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, 2018, are an integral part of the condensed

consolidated financial statements.

Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	For the Three Months Ended						For the Six Months Ended
	June 30, 2019			July 1, 2018			June 30, 2019			July 1, 2018
	(in thousands)
Net income	$	97,397		$	101,037		$	206,535		$	188,010
Other comprehensive income, net of tax:
Foreign currency translation adjustment, net of tax of $0		5,642			(29,323	)		983			(18,781	)
Available-for-sale marketable securities:
Unrealized gains (losses) on marketable securities arising during period, net of tax of $678, $(25), $1,256, $(744), respectively		2,537			198			4,637			(2,489	)
Less: Reclassification adjustment for (gains) losses included in net income, net of tax of $(6), $(68), $(26), $11, respectively		(27	)		(199	)		(97	)		1,469

		2,510			(1	)		4,540			(1,020	)
Defined benefit pension and post-retirement plans:
Amortization of prior service benefit included in net periodic pension and post-retirement benefit, net of tax of $(11), $(18), $(21), $(35), respectively		(37	)		(61	)		(74	)		(123	)

Other comprehensive income (loss)		8,115			(29,385	)		5,449			(19,924	)

Comprehensive income	$	105,512		$	71,652		$	211,984		$	168,086

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, 2018, are an integral part of the condensed

consolidated financial statements.

Table of Contents

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


	Common Stock Shares Issued			Common Stock Par Value			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Shareholders’ Equity
For the Three Months Ended June 30, 2019	(in thousands)
Balance, March 31, 2019		172,353		$	21,544		$	1,679,997	$	(15,706	)	$	(215,607	)	$	1,470,228
Net issuance of common stock under stock-based plans		99			13			679								692
Stock-based compensation expense								7,535								7,535
Repurchase of common stock		(2,016	)		(252	)							(88,902	)		(89,154	)
Cash dividends ($0.09 per share)													(15,401	)		(15,401	)
Net income													97,397			97,397
Other comprehensive income										8,115						8,115

Balance, June 30, 2019		170,436		$	21,305		$	1,688,211	$	(7,591	)	$	(222,513	)	$	1,479,412

For the Three Months Ended July 1, 2018
Balance, April 1, 2018		193,808		$	24,226		$	1,638,756	$	25,881

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$47.97	173	$8,310

10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-07-01	Quarter: 2018-07-01
10-Q	2018-04-01	Quarter: 2018-04-01
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-10-01	Quarter: 2017-10-01
10-Q	2017-07-02	Quarter: 2017-07-02
10-Q	2017-04-02	Quarter: 2017-04-02
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-10-02	Quarter: 2016-10-02
10-Q	2016-07-03	Quarter: 2016-07-03
10-Q	2016-04-03	Quarter: 2016-04-03
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-10-04	Quarter: 2015-10-04
10-Q	2015-07-05	Quarter: 2015-07-05
10-Q	2015-04-05	Quarter: 2015-04-05
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-28	Quarter: 2014-09-28
10-Q	2014-06-29	Quarter: 2014-06-29
10-Q	2014-03-30	Quarter: 2014-03-30
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-07-23	Earnings, Exhibits
8-K	2019-07-17	Officers
8-K	2019-06-27	Leave Agreement
8-K	2019-05-07	Shareholder Vote
8-K	2019-04-23	Earnings, Exhibits
8-K	2019-04-04	Officers, Other Events, Exhibits
8-K	2019-01-24	Officers
8-K	2019-01-24	Officers
8-K	2019-01-23	Earnings, Exhibits
8-K	2018-11-14	Regulation FD, Exhibits
8-K	2018-10-23	Earnings, Exhibits
8-K	2018-07-24	Earnings, Exhibits
8-K	2018-04-24	Enter Agreement, Earnings, Other Events, Exhibits
8-K	2018-01-24	Earnings, Exhibits

KO	Coca Cola	202,210
HSIC	Henry Schein	10,320
AVLR	Avalara	5,100
CHDN	Churchill Downs	3,910
UCBI	United Community Banks	2,210
HVT	Haverty Furniture Companies	380
HCLP	Hi-Crush Partners	269
FTEK	Fuel Tech	63
FCHS	First Choice Healthcare Solutions	0
PWON	Powin Energy	0

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