QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
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(Address of Principal Executive Offices) |
(Zip Code) |
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☒ |
Accelerated filer |
☐ | |||
Non-accelerated filer |
☐ |
Emerging growth company |
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Smaller reporting company |
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
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Page No. |
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PART I. FINANCIAL INFORMATION |
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Item 1. |
Financial Statements (Unaudited): |
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1 |
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2 |
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3 |
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4 |
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5 |
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6 |
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Item 2. |
36 |
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Item 3. |
50 |
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Item 4. |
51 |
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PART II. OTHER INFORMATION |
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Item 1. |
52 |
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Item 1A. |
52 |
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Item 2. |
53 |
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Item 4. |
53 |
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Item 6. |
53 |
Item 1: |
Financial Statements |
June 30, 2019 |
December 31, 2018 |
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(in thousands, except per share amount) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | |
$ | |
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Marketable securities |
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Accounts receivable, less allowance for doubtful accounts of $ |
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Inventories, net |
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Prepayments and other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets, net |
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— |
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Marketable securities |
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Deferred tax assets |
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Other assets |
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Retirement plans assets |
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Acquired intangible assets, net |
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Goodwill |
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Total assets |
$ | |
$ | |
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LIABILITIES |
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Current liabilities: |
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Accounts payable |
$ | |
$ | |
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Accrued employees’ compensation and withholdings |
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Deferred revenue and customer advances |
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Other accrued liabilities |
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Current operating lease liabilities |
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— |
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Contingent consideration |
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Income taxes payable |
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Total current liabilities |
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Retirement plans liabilities |
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Long-term deferred revenue and customer advances |
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Deferred tax liabilities |
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Long-term other accrued liabilities |
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Long-term contingent consideration |
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Long-term operating lease liabilities |
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— |
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Long-term incomes taxes payable |
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Debt |
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Total liabilities |
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Commitments and contingencies (See Note S) |
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SHAREHOLDERS’ EQUITY |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total shareholders’ equity |
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||||||
Total liabilities and shareholders’ equity |
$ | |
$ | |
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
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(in thousands, except per share amount) |
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Revenues: |
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Products |
$ | |
$ | |
$ | |
$ | |
||||||||
Services |
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|
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|
||||||||||||
Total revenues |
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||||||||||||
Cost of revenues: |
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Cost of products |
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Cost of services |
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Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) |
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Gross profit |
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Operating expenses: |
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Selling and administrative |
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Engineering and development |
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Acquired intangible assets amortization |
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Restructuring and other |
( |
) | |
( |
) | |
||||||||||
Total operating expenses |
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Income from operations |
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|
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Non-operating (income) expense: |
||||||||||||||||
Interest income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest expense |
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Other (income) expense, net |
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Income before income taxes |
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|
|
|
||||||||||||
Income tax provision |
|
|
|
|
||||||||||||
Net income |
$ | |
$ | 101,037 |
$ | |
$ | 188,010 |
||||||||
Net income per common share: |
||||||||||||||||
Basic |
$ | |
$ | |
$ | |
$ | |
||||||||
Diluted |
$ | |
$ | |
$ | |
$ | |
||||||||
Weighted average common shares—basic |
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||||||||||||
Weighted average common shares—diluted |
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|
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 $ |
|
( |
) |
|
( |
) | ||||||||||
Available-for-sale marketable securities: |
||||||||||||||||
Unrealized gains (losses) on marketable securities arising during period, net of tax of $ |
|
|
|
( |
) | |||||||||||
Less: Reclassification adjustment for (gains) losses included in net income, net of tax of $( |
( |
) |
( |
) |
( |
) |
|
|||||||||
|
( |
) |
|
( |
) | |||||||||||
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 $( |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Other comprehensive income (loss) |
|
( |
) |
|
( |
) | ||||||||||
Comprehensive income |
$ | |
$ |
|
$ |
|
$ |
|
||||||||
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 |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||
Net issuance of common stock under stock-based plans |
|
|
|
|
||||||||||||||||||||
Stock-based compensation expense |
|
|
||||||||||||||||||||||
Repurchase of common stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Cash dividends ($ |
( |
) | ( |
) | ||||||||||||||||||||
Net income |
|
97,397 |
||||||||||||||||||||||
Other comprehensive income |
|
|
||||||||||||||||||||||
Balance, June 30, 2019 |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||
For the Three Months Ended July 1, 2018 |
||||||||||||||||||||||||
Balance, April 1, 2018 |
|
$ | |
$ | |
$ | |
$ | |
$ | |
|||||||||||||
Net issuance of common stock under stock-based plans |
|
|
( |
) | ( |
) | ||||||||||||||||||
Stock-based compensation expense |
|
|
||||||||||||||||||||||
Repurchase of common stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Cash dividends ($ |
( |
) | ( |
) | ||||||||||||||||||||
Net income |
|
|
||||||||||||||||||||||
Other comprehensive loss |
( |
) | ( |
) | ||||||||||||||||||||
Balance, July 1, 2018 |
|
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||||
For the Six Months Ended June 30, 2019 |
||||||||||||||||||||||||
Balance, December 31, 2018 |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||
Net issuance of common stock under stock-based plans |
|
|
|
|
||||||||||||||||||||
Stock-based compensation expense |
|
|
||||||||||||||||||||||
Repurchase of common stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Cash dividends ($ |
( |
) | ( |
) | ||||||||||||||||||||
Net income |
|
206,535 |
||||||||||||||||||||||
Other comprehensive income |
|
|
||||||||||||||||||||||
Balance, June 30, 2019 |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||
For the Six Months Ended July 1, 2018 |
||||||||||||||||||||||||
Balance, December 31, 2017 |
|
$ | |
$ | |
$ | |
$ | |
$ | |
|||||||||||||
Net issuance of common stock under stock-based plans |
|
|
( |
) | ( |
) | ||||||||||||||||||
Stock-based compensation expense |
|
|
||||||||||||||||||||||
Repurchase of common stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Cash dividends ($ |
( |
) | ( |
) | ||||||||||||||||||||
Net income |
|
|
||||||||||||||||||||||
Other comprehensive loss |
( |
) | ( |
) | ||||||||||||||||||||
Reclassification of unrealized gains on equity securities |
( |
) | |
|
||||||||||||||||||||
Reclassification of tax effects resulting from the Tax Reform Act |
|
( |
) | |
||||||||||||||||||||
Cumulative effect of changes in accounting principle related to revenue recognition |
|
|
||||||||||||||||||||||
Balance, July 1, 2018 |
|
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||||
For the Six Months Ended |
||||||||
June 30, 2019 |
July 1, 2018 |
|||||||
(in thousands) |
||||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | |
$ | |
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation |
|
|
||||||
Amortization |
|
|
||||||
Stock-based compensation |
|
|
||||||
Deferred taxes |
|
|
||||||
Provision for excess and obsolete inventory |
|
|
||||||
Contingent consideration fair value adjustment |
( |
) | ( |
) | ||||
(Gains) losses on marketable securities |
( |
) | |
|||||
Retirement plan actuarial losses (gains) |
|
( |
) | |||||
Other |
|
|
||||||
Changes in operating assets and liabilities, net of businesses acquired: |
||||||||
Accounts receivable |
( |
) | ( |
) | ||||
Inventories |
( |
) | ( |
) | ||||
Prepayments and other assets |
( |
) | |
|||||
Accounts payable and other liabilities |
( |
) | ( |
) | ||||
Deferred revenue and customer advances |
|
|
||||||
Retirement plans contributions |
( |
) | ( |
) | ||||
Income taxes |
( |
) | ( |
) | ||||
Net cash provided by operating activities |
|
|
||||||
Cash flows from investing activities: |
||||||||
Purchases of property, plant and equipment |
( |
) | ( |
) | ||||
Purchases of marketable securities |
( |
) | ( |
) | ||||
Proceeds from sales of marketable securities |
|
|
||||||
Proceeds from maturities of marketable securities |
|
|
||||||
Proceeds from life insurance |
|
— |
||||||
Purchase of investments and acquisition of businesses, net of cash acquired |
( |
) | ( |
) | ||||
Net cash (used for) provided by investing activities |
( |
) | |
|||||
Cash flows from financing activities: |
||||||||
Issuance of common stock under stock purchase and stock option plans |
|
|
||||||
Repurchase of common stock |
( |
) | ( |
) | ||||
Dividend payments |
( |
) | ( |
) | ||||
Payments related to net settlement of employee stock compensation awards |
( |
) | ( |
) | ||||
Payments of contingent consideration |
( |
) | ( |
) | ||||
Net cash used for financing activities |
( |
) | ( |
) | ||||
Effects of exchange rate changes on cash and cash equivalents |
( |
) | |
|||||
(Decrease) increase in cash and cash equivalents |
( |
) | |
|||||
Cash and cash equivalents at beginning of period |
|
|
||||||
Cash and cash equivalents at end of period |
$ | |
$ | |
||||
• | semiconductor test (“Semiconductor Test”) systems; |
• | industrial automation (“Industrial Automation”) products; |
• | defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”); and |
• | wireless test (“Wireless Test”) systems. |
Purchase Price Allocation |
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(in thousands) |
||||
Goodwill |
$ | |
||
Intangible assets |
|
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Tangible assets acquired and liabilities assumed: |
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Current assets |
|
|||
Non-current assets |
|
|||
Accounts payable and current liabilities |
( |
) | ||
Long-term deferred tax liabilities |
( |
) | ||
Other long-term liabilities |
( |
) | ||
Total purchase price |
$ | |
||
Fair Value |
Estimated Useful Life |
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(in thousands) |
(in years) |
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Developed technology |
$ | |
|
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Trademarks and tradenames |
|
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Customer relationships |
|
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Backlog |
|
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Total intangible assets |
$ | |
|
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For the Three Months Ended |
For the Six Months Ended |
|||||||
July 1, 2018 |
July 1, 2018 |
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(in thousands) |
||||||||
Revenue |
$ | |
$ | |
||||
Net income |
|
|
||||||
Net income per common share: |
||||||||
Basic |
$ | |
$ | |
||||
Diluted |
$ | |
$ | |
||||
For the Three Months Ended June 30, 2019 |
|||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test |
System Test |
Industrial Automation |
Wireless Test |
Corporate and Other |
Consolidated |
||||||||||||||||||||||||||||||||||||||||
System on a chip (“SOC”) |
Memory |
Defense/ Aerospace |
Storage Test |
Production Board Test |
Universal Robots |
Mobile Industrial Robots |
Energid |
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(in thousands) |
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Americas |
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Point in time |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
— |
$ |
|
$ |
( |
) |
$ |
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Over time |
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— |
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— |
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— |
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Europe, Middle East and Africa |
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Point in time |
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— |
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— |
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— |
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||||||||||||||||||||||||||||||||||
Over time |
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— |
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— |
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|
— |
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Asia Pacific |
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Point in time |
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— |
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— |
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||||||||||||||||||||||||||||||||||
Over time |
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|
|
— |
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|
— |
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||||||||||||||||||||||||||||||||||
Lease Revenue |
|
— |
— |
— |
|
— |
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Total |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
For the Three Months Ended July 1, 2018 |
|||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test |
System Test |
Industrial Automation |
Wireless Test |
Corporate and Other |
Consolidated |
||||||||||||||||||||||||||||||||||||||||
SOC |
Memory |
Defense/ Aerospace |
Storage Test |
Production Board Test |
Universal Robots |
Mobile Industrial Robots |
Energid |
||||||||||||||||||||||||||||||||||||||
(in thousands) |
|||||||||||||||||||||||||||||||||||||||||||||
Americas |
|||||||||||||||||||||||||||||||||||||||||||||
Point in time |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
— |
$ |
|
$ |
( |
) |
$ |
|
||||||||||||||||||||||
Over time |
|
|
|
— |
|
|
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Europe, Middle East and Africa |
|||||||||||||||||||||||||||||||||||||||||||||
Point in time |
|
|
|
— |
|
|
|
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Over time |
|
|
|
— |
|
|
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Asia Pacific |
|||||||||||||||||||||||||||||||||||||||||||||
Point in time |
|
|
|
|
|
|
|
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Over time |
|
|
|
|
|
|
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Lease Revenue |
|
— |
— |
— |
|
— |
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Total |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
— |
$ |
|
$ |
( |
) |
$ |
526,929 |
||||||||||||||||||||||
For the Six Months Ended June 30, 2019 |
|||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test |
System Test |
Industrial Automation |
Wireless Test |
Corporate and Other |
Consolidated |
||||||||||||||||||||||||||||||||||||||||
SOC |
Memory |
Defense/ Aerospace |
Storage Test |
Production Board Test |
Universal Robots |
Mobile Industrial Robots |
Energid |
||||||||||||||||||||||||||||||||||||||
(in thousands) |
|||||||||||||||||||||||||||||||||||||||||||||
Americas |
|||||||||||||||||||||||||||||||||||||||||||||
Point in time |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
— |
$ |
|
$ |
( |
) |
$ |
|
||||||||||||||||||||||
Over time |
|
|
|
— |
|
|
— |
|
|
— |
|
||||||||||||||||||||||||||||||||||
Europe, Middle East and Africa |
|||||||||||||||||||||||||||||||||||||||||||||
Point in time |
|
|
|
— |
|
|
|
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Over time |
|
|
|
— |
|
|
— |
|
|
— |
|
||||||||||||||||||||||||||||||||||
Asia Pacific |
|||||||||||||||||||||||||||||||||||||||||||||
Point in time |
|
|
|
|
|
|
|
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Over time |
|
|
|
|
|
|
— |
|
|
— |
|
||||||||||||||||||||||||||||||||||
Lease Revenue |
|
— |
— |
— |
|
— |
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Total |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
||||||||||||||||||||||
For the Six Months Ended July 1, 2018 |
|||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test |
System Test |
Industrial Automation |
Wireless Test |
Corporate and Other |
Consolidated |
||||||||||||||||||||||||||||||||||||||||
SOC |
Memory |
Defense/ Aerospace |
Storage Test |
Production Board Test |
Universal Robots |
Mobile Industrial Robots |
Energid |
||||||||||||||||||||||||||||||||||||||
(in thousands) |
|||||||||||||||||||||||||||||||||||||||||||||
Americas |
|||||||||||||||||||||||||||||||||||||||||||||
Point in time |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
— |
$ |
|
$ |
( |
) |
$ |
|
||||||||||||||||||||||
Over time |
|
|
|
— |
|
|
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Europe, Middle East and Africa |
|||||||||||||||||||||||||||||||||||||||||||||
Point in time |
|
|
|
— |
|
|
|
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Over time |
|
|
|
— |
|
|
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Asia Pacific |
|||||||||||||||||||||||||||||||||||||||||||||
Point in time |
|
|
|
|
|
|
|
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Over time |
|
|
|
|
|
|
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Lease Revenue |
|
— |
— |
— |
|
— |
— |
— |
|
— |
|
||||||||||||||||||||||||||||||||||
Total |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
— |
$ |
|
$ |
( |
) |
$ |
|
||||||||||||||||||||||
June 30, 2019 |
December 31, 2018 |
|||||||
(in thousands) |
||||||||
Raw material |
$ | |
$ | |
||||
Work-in-process |
|
|
||||||
Finished goods |
|
|
||||||
$ | 164,461 |
$ | 153,541 |
|||||
June 30, 2019 |
||||||||||||||||
Quoted Prices in Active Markets for Identical Instruments (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash |
$ | $ | — |
$ | — |
$ | ||||||||||
Cash equivalents |
— |
|||||||||||||||
Available-for-sale securities: |
||||||||||||||||
U.S. Treasury securities |
— |
— |
||||||||||||||
Commercial paper |
— |
— |
||||||||||||||
Corporate debt securities |
— |
— |
||||||||||||||
Certificates of deposit and time deposits |
— |
— |
||||||||||||||
U.S. government agency securities |
— |
— |
||||||||||||||
Debt mutual funds |
— |
— |
||||||||||||||
Non-U.S. government securities |
— |
— |
||||||||||||||
Equity securities: |
||||||||||||||||
Mutual funds |
||||||||||||||||
$ | $ | $ | — |
$ | ||||||||||||
Derivative assets |
— |
— |
||||||||||||||
Total |
$ | $ | $ | — |
$ | |||||||||||
Liabilities |
||||||||||||||||
Contingent consideration |
$ | — |
$ | $ | $ | |||||||||||
Derivative liabilities |
— |
— |
||||||||||||||
Total |
$ | — |
$ | $ | $ | |||||||||||
(Level 1) |
(Level 2) |
(Level 3) |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — |
$ | |||||||||||
Marketable securities |
— |
— |
||||||||||||||
Long-term marketable securities |
— |
|||||||||||||||
Prepayments |
— |
— |
||||||||||||||
Total |
$ |
$ |
$ |
— |
$ |
|||||||||||
Liabilities |
. | |||||||||||||||
Other current liabilities |
$ | — |
$ | $ | — |
$ | ||||||||||
Contingent consideration |
— |
— |
||||||||||||||
Long-term contingent consideration |
— |
— |
||||||||||||||
Total |
$ | — |
$ | $ | $ | |||||||||||
December 31, 2018 |
||||||||||||||||
Quoted Prices in Active Markets for Identical Instruments (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash |
$ | $ | — |
$ | — |
$ | ||||||||||
Cash equivalents |
— |
|||||||||||||||
Available-for-sale securities: |
||||||||||||||||
U.S. Treasury securities |
— |
— |
||||||||||||||
Commercial paper |
— |
— |
||||||||||||||
Corporate debt securities |
— |
— |
||||||||||||||
U.S. government agency securities |
— |
— |
||||||||||||||
Certificates of deposit and time deposits |
— |
— |
||||||||||||||
Debt mutual funds |
— |
— |
||||||||||||||
Non-U.S. government securities |
— |
— |
||||||||||||||
Equity securities: |
||||||||||||||||
Mutual funds |
— |
— |
||||||||||||||
$ | $ | $ | — |
$ | ||||||||||||
Derivative assets |
— |
— |
||||||||||||||
Total |
$ | $ | $ | — |
$ | |||||||||||
Liabilities |
||||||||||||||||
Contingent consideration |
$ | — |
$ | — |
$ | $ | ||||||||||
Derivative liabilities |
— |
— |
||||||||||||||
Total |
$ | — |
$ | $ | $ | |||||||||||
(Level 1) |
(Level 2) |
(Level 3) |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | $ | $ | — |
$ | |||||||||||
Marketable securities |
— |
— |
||||||||||||||
Long-term marketable securities |
— |
|||||||||||||||
Prepayments |
— |
— |
||||||||||||||
Total |
$ | $ | $ | — |
$ | |||||||||||
Liabilities |
||||||||||||||||
Other accrued liabilities |
$ | — |
$ | $ | — |
$ | ||||||||||
Contingent consideration |
— |
— |
||||||||||||||
Long-term contingent consideration |
— |
— |
||||||||||||||
Total |
$ | — |
$ | $ | $ |
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Balance at beginning of period |
$ | |
$ | |
$ | |
$ | |
||||||||
Fair value adjustment (a) |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Foreign currency impact |
|
( |
) | ( |
) | ( |
) | |||||||||
Payments (b) |
— |
— |
( |
) | ( |
) | ||||||||||
Acquisition of MiR |
— |
|
— |
|
||||||||||||
Balance at end of period |
$ | |
$ | |
$ | |
$ | |
||||||||
(a) | In the three and six months ended June 30, 2019, the fair value of contingent consideration for the earn-out in connection with the acquisition of MiR was decreased by $ |
(b) | In the six months ended June 30, 2019, Teradyne paid $ |
Liability |
June 30, 2019 Fair Value |
Valuation Technique |
Unobservable Inputs |
Weighted Average |
|||||||||||
(in thousands) |
|||||||||||||||
Contingent consideration (MiR) |
$ | |
Monte Carlo Simulation |
Revenue volatility |
|
||||||||||
Discount rate |
|
June 30, 2019 |
December 31, 2018 |
|||||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | |
$ | |
$ | |
$ | |
||||||||
Marketable securities |
|
|
|
|
||||||||||||
Derivative assets |
|
|
|
|
||||||||||||
Liabilities |
||||||||||||||||
Contingent consideration |
|
|
|
|
||||||||||||
Derivative liabilities |
|
|
|
|
||||||||||||
Convertible debt (1) |
|
|
|
|
(1) | The carrying value represents the bifurcated debt component only, while the fair value is based on quoted market prices for the convertible note, which includes the equity conversion features. |
June 30, 2019 |
|||||||||||||||||||||
Available-for-Sale |
Fair Market |
||||||||||||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Value of Investments with Unrealized Losses |
|||||||||||||||||
(in thousands) |
|||||||||||||||||||||
U.S. Treasury securities |
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||
Commercial paper |
|
|
( |
) | |
|
|||||||||||||||
Corporate debt securities |
|
|
( |
) | |
|
|||||||||||||||
Certificates of deposit and time deposits |
|
|
— |
|
|
||||||||||||||||
U.S. government agency securities |
|
|
( |
) | |
|
|||||||||||||||
Debt mutual funds |
|
|
— |
|
— |
||||||||||||||||
Non-U.S. government securities |
|
— |
— |
|
— |
||||||||||||||||
$ | 469,504 |
$ | 3,845 |
$ | (438 |
) | $ | 472,911 |
$ | 38,277 |
|||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Marketable securities |
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
|||||||||
Long-term marketable securities |
|
|
( |
) | |
|
||||||||||||||
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||
December 31, 2018 |
|||||||||||||||||||||
Available-for-Sale |
|||||||||||||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
|||||||||||||||||
(in thousands) |
|||||||||||||||||||||
U.S. Treasury securities |
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||
Commercial paper |
|
|
( |
) | |
|
|||||||||||||||
Corporate debt securities |
|
|
( |
) | |
|
|||||||||||||||
U.S. government agency securities |
|
|
( |
) | |
|
|||||||||||||||
Certificates of deposit and time deposits |
|
— |
— |
|
— |
||||||||||||||||
Debt mutual funds |
|
|
— |
|
— |
||||||||||||||||
Non-U.S. government securities |
|
— |
— |
|
— |
||||||||||||||||
$ | 259,011 |
$ | 592 |
$ | (2,967 |
) | $ | 256,636 |
$ | 191,978 |
|||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Marketable securities |
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
|||||||||
Long-term marketable securities |
|
|
( |
) | |
|
||||||||||||||
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||
June 30, 2019 |
||||||||
Cost |
Fair Market Value |
|||||||
(in thousands) |
||||||||
Due within one year |
$ | |
$ | |
||||
Due after 1 year through 5 years |
|
|
||||||
Due after 5 years through 10 years |
|
|
||||||
Due after 10 years |
|
|
||||||
Total |
$ | |
$ | |
||||
Balance Sheet Location |
June 30, 2019 |
December 31, 2018 |
||||||||||
(in thousands) |
||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||
Foreign exchange contracts – derivative assets |
Prepayments |
$ | |
$ | |
|||||||
Foreign exchange contracts – derivative liabilities |
Other current liabilities |
( |
) | ( |
) | |||||||
Total derivatives |
$ | ( |
) | $ | ( |
) | ||||||
Location of Losses (Gains) Recognized in Statement of Operations |
|
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||||
|
(in thousands) |
|||||||||||||||||
Derivatives not designated as hedging instruments: |
|
|||||||||||||||||
Foreign exchange contracts |
Other (income) expense, net |
|
$ | |
$ | |
$ | |
$ | |
(1) | The table does not reflect the corresponding gains and losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies. |
(2) | For the three months ended June 30, 2019, net losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $ foreign currencies were $ |
(3) | For the three and six months ended July 1, 2018, net gains from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $ |
For the Three Months Ended |
For the Six Months Ended |
|||||||
June 30, 2019 |
June 30, 2019 |
|||||||
(in thousands) |
||||||||
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows: |
$ | $ | ||||||
Right-of-use assets obtained in exchange for new lease obligations |
Operating Lease |
||||
(in thousands) |
||||
2019 |
$ | |||
2020 |
||||
2021 |
||||
2022 |
||||
2023 |
||||
Thereafter |
||||
Total lease payments |
||||
Less imputed interest |
( |
) | ||
Total lease liabilities |
$ | |||
Operating Lease |
||||
(in thousands) |
||||
2019 |
$ | |||
2020 |
||||
2021 |
||||
2022 |
||||
2023 |
||||
Thereafter |
||||
Total lease payments |
$ | |||
June 30, 2019 |
December 31, 2018 |
|||||||
(in thousands) |
||||||||
Debt Principal |
$ | |
$ | |
||||
Unamortized discount |
|
|
||||||
Net Carrying amount of convertible debt |
$ | |
$ | |
||||
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Contractual interest expense on the coupon |
$ | |
$ | |
$ | |
$ | |
||||||||
Amortization of the discount component recognized as interest expense |
|
|
|
|
||||||||||||
Total interest expense on the convertible debt |
$ | |
$ | |
$ | |
$ | |
||||||||
June 30, 2019 |
December 31, 2018 |
|||||||
(in thousands) |
||||||||
Contract manufacturer and supplier prepayments |
$ | |
$ | |
||||
Prepaid taxes |
|
|
||||||
Prepaid maintenance and other services |
|
|
||||||
Other prepayments |
|
|
||||||
Total prepayments |
$ | |
$ | |
||||
June 30, 2019 |
December 31, 2018 |
|||||||
(in thousands) |
||||||||
Maintenance and training |
$ | |
$ | |
||||
Extended warranty |
|
|
||||||
Customer advances, undelivered performance obligations and other |
|
|
||||||
Total deferred revenue and customer advances |
$ | |
$ | |
||||
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Balance at beginning of period |
$ | |
$ | |
$ | |
$ | |
||||||||
Acquisition |
— |
|
|
|
||||||||||||
Accruals for warranties issued during the period |
|
|
|
|
||||||||||||
Accruals related to pre-existing warranties |
|
( |
) | |
( |
) | ||||||||||
Settlements made during the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Balance at end of period |
$ | |
$ | |
$ | |
$ | |
||||||||
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Balance at beginning of period |
$ | |
$ | |
$ | |
$ | |
||||||||
Deferral of new extended warranty revenue |
|
|
|
|
||||||||||||
Recognition of extended warranty deferred revenue |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Balance at end of period |
$ | |
$ | |
$ | |
$ | |
||||||||
For the Six Months Ended |
||||||||
June 30, 2019 |
July 1, 2018 |
|||||||
Risk-free interest rate |
|
% | |
% | ||||
Teradyne volatility-historical |
|
% | |
% | ||||
NYSE Composite Index volatility-historical |
|
% | |
% | ||||
Dividend yield |
|
% | |
% |
For the Six Months Ended |
||||||||
June 30, 2019 |
July 1, 2018 |
|||||||
Expected life (years) |
|
|
||||||
Risk-free interest rate |
|
% | |
% | ||||
Volatility-historical |
|
% | |
% | ||||
Dividend yield |
|
% | |
% |
Foreign Currency Translation Adjustment |
Unrealized Gains (Losses) on Marketable Securities |
Retirement Plans Prior Service Credit |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Six Months Ended June 30, 2019 |
||||||||||||||||
Balance at December 31, 2018, net of tax of $ |
$ | ( |
) | $ | ( |
) | $ | |
$ | ( |
) | |||||
Other comprehensive income before reclassifications, net of tax of $ |
|
|
|
|
||||||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $ |
|
( |
) | ( |
) | ( |
) | |||||||||
Net current period other comprehensive income (loss), net of tax of $ |
|
|
( |
) | |
|||||||||||
Balance at June 30, 2019, net of tax of $ |
$ | ( |
) | $ | |
$ | |
$ | ( |
) | ||||||
Foreign Currency Translation Adjustments |
Unrealized Gains (Losses) on Marketable Securities |
Retirement Plans Prior Service Credit |
Total |
|||||||||||||
(in thousands) |
||||||||||||||||
Six Months Ended July 1, 2018 |
||||||||||||||||
Balance at December 31, 2017, net of tax of $ |
$ | |
$ | |
$ | |
$ | |
||||||||
Other comprehensive income (loss) before reclassifications, net of tax of $ |
( |
) | ( |
) | — |
( |
) | |||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $ |
— |
|
( |
) | 1,346 |
|||||||||||
Net current period other comprehensive income (loss), net of tax of $ |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Reclassification of income tax effects from the Tax Reform Act, net of tax of $ |
— |
|
|
|
||||||||||||
Reclassification of unrealized gains on equity securities, net of tax of $0, $( |
— |
( |
) | — |
( |
) | ||||||||||
Balance as July 1, 2018, net of tax of $ |
$ | ( |
) | $ | ( |
) | $ | |
$ | ( |
) | |||||
(a) | In the six months ended July 1, 2018, Teradyne early adopted the ASU 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” |
(b) | In the six months ended July 1, 2018, Teradyne adopted the ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” |
Details about Accumulated Other Comprehensive Income Components |
For the Three Months Ended |
For the Six Months Ended |
Affected Line Item in the Statements of Operations |
||||||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
||||||||||||||||||
(in thousands) |
|||||||||||||||||||||
Available-for-sale marketable securities: |
|||||||||||||||||||||
Unrealized gains (losses), net of tax of $ respectively |
$ | |
$ | |
$ | |
$ | ( |
) | Interest income (expense) |
|||||||||||
Defined benefit pension and postretirement plans: |
|||||||||||||||||||||
Amortization of prior service benefit, net of tax of $ $21, $ |
|
|
|
|
(a) |
||||||||||||||||
Total reclassifications, net of tax of $ |
$ | |
$ | |
$ | 171 |
$ | (1,346 |
) | Net income |
|||||||||||
(a) | The amortization of prior service benefit is included in the computation of net periodic pension cost and postretirement benefit. See Note R: “Retirement Plans.” |
Industrial Automation |
System Test |
Wireless Test |
Semiconductor Test |
Total |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Balance at December 31, 2018 |
||||||||||||||||||||
Goodwill |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
Accumulated impairment losses |
|
( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
|
|
|
— |
|
||||||||||||||||
Lemsys acquisition |
— |
— |
— |
|
|
|||||||||||||||
Foreign currency translation adjustment |
|
— |
— |
|
|
|||||||||||||||
Balance at June 30, 2019 |
||||||||||||||||||||
Goodwill |
|
|
|
|
|
|||||||||||||||
Accumulated impairment losses |
|
( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
$ | |
$ | |
$ | |
$ | |
$ | |
|||||||||||
June 30, 2019 |
||||||||||||||||
Gross Carrying Amount (1)(2) |
Accumulated Amortization (2) |
Foreign Currency Translation Adjustment |
Net Carrying Amount |
|||||||||||||
(in thousands) |
||||||||||||||||
Developed technology |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
||||||
Customer relationships |
|
( |
) | ( |
) | |
||||||||||
Tradenames and trademarks |
|
( |
) | ( |
) | |
||||||||||
Total intangible assets |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
||||||
December 31, 2018 |
||||||||||||||||
Gross Carrying Amount |
Accumulated Amortization |
Foreign Currency Translation Adjustment |
Net Carrying Amount |
|||||||||||||
(in thousands) |
||||||||||||||||
Developed technology |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
||||||
Customer relationships |
|
( |
) | ( |
) | |
||||||||||
Tradenames and trademarks |
|
( |
) | ( |
) | |
||||||||||
Non-compete agreement |
|
( |
) | — |
— |
|||||||||||
Backlog |
|
( |
) | — |
— |
|||||||||||
Total intangible assets |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
||||||
(1) | Includes $ |
(2) |
$0.7 million of amortizable intangible assets became fully amortized and have been eliminated from the gross carrying amount and accumulated amortization. |
Year |
Amortization Expense |
|||
(in thousands) |
||||
2019 (remainder) |
|
|||
2020 |
|
|||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
Thereafter |
|
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 amounts) |
||||||||||||||||
Net income for basic and diluted net income per share |
$ | 97,397 |
$ | 101,037 |
$ | 206,535 |
$ | 188,010 |
||||||||
Weighted average common shares-basic |
171,241 |
190,730 |
172,387 |
192,992 |
||||||||||||
Effect of dilutive potential common shares: |
||||||||||||||||
Incremental shares from assumed conversion of convertible notes (1) |
|
|
|
|
||||||||||||
Convertible note hedge warrant shares (2) |
|
— |
|
|
||||||||||||
Restricted stock units |
|
|
|
|
||||||||||||
Stock options |
|
|
|
|
||||||||||||
Employee stock purchase plan |
|
|
|
|
||||||||||||
Dilutive potential common shares |
|
|
|
|
||||||||||||
Weighted average common shares-diluted |
178,590 |
194,909 |
177,781 |
199,197 |
||||||||||||
Net income per common share-basic |
$ | 0.57 |
$ | 0.53 |
$ | 1.20 |
$ | 0.97 |
||||||||
Net income per common share-diluted |
$ | 0.55 |
$ | 0.52 |
$ | 1.16 |
$ | 0.94 |
||||||||
(1) | Incremental shares from assumed conversion of the convertible notes were calculated using the difference between the average Teradyne stock price for the period and the conversion price of $ |
(2) | Convertible note hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price of $ |
For the Three Months Ended |
||||||||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||||||
United States |
Foreign |
United States |
Foreign |
|||||||||||||
(in thousands) |
||||||||||||||||
Service cost |
$ | |
$ | |
$ | |
$ | |
||||||||
Interest cost |
|
|
|
|
||||||||||||
Expected return on plan assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Amortization of prior service cost |
— |
— |
|
— |
||||||||||||
Net actuarial loss (gain) |
|
— |
( |
) | — |
|||||||||||
Settlement loss |
— |
— |
|
— |
||||||||||||
Total net periodic pension cost |
$ | |
$ | |
$ | |
$ | |
||||||||
For the Six Months Ended |
||||||||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||||||
United States |
Foreign |
United States |
Foreign |
|||||||||||||
(in thousands) |
||||||||||||||||
Service cost |
$ | |
$ | |
$ | |
$ | |
||||||||
Interest cost |
|
|
|
|
||||||||||||
Expected return on plan assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Amortization of prior service cost |
— |
— |
|
— |
||||||||||||
Net actuarial loss (gain) |
|
— |
( |
) | — |
|||||||||||
Settlement loss |
— |
— |
|
— |
||||||||||||
Total net periodic pension cost |
$ | |
$ | |
$ | |
$ | |
||||||||
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Service cost |
$ | |
$ | |
$ | |
$ | |
||||||||
Interest cost |
|
|
|
|
||||||||||||
Amortization of prior service credit |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net actuarial loss |
|
|
|
|
||||||||||||
Special termination benefits |
— |
|
— |
|
||||||||||||
Total net periodic postretirement benefit cost |
$ | |
$ | |
$ | |
$ | |
||||||||
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
US statutory federal tax rate |
|
% | |
% | |
% | |
% | ||||||||
Discrete expense related to U.S. transition tax |
|
% | |
% | |
% | |
% | ||||||||
International provisions of the U.S. Tax Cuts and Jobs Act of 2017 |
|
% | ( |
%) | |
% | ( |
%) | ||||||||
Discrete benefit related to equity compensation |
( |
%) | ( |
%) | ( |
%) | ( |
%) | ||||||||
Foreign taxes |
( |
%) | ( |
%) | ( |
%) | ( |
%) | ||||||||
Tax credits |
( |
%) | ( |
%) | ( |
%) | ( |
%) | ||||||||
Discrete benefit related to release of reserves for uncertain tax positions |
( |
%) | |
% | ( |
%) | |
% | ||||||||
Other, net |
|
% | |
% | |
% | |
% | ||||||||
Effective tax rate |
|
% | |
% | |
% | |
% |
Semiconductor Test |
Industrial Automation |
System Test |
Wireless Test |
Corporate and Other |
Consolidated |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Three Months Ended June 30, 2019 |
||||||||||||||||||||||||
Revenues |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||||
Income (loss) before income taxes (1)(2) |
|
( |
) | |
|
|
|
|||||||||||||||||
Total assets (3) |
745,073 |
601,676 |
123,460 |
93,232 |
1,108,073 |
2,671,514 |
||||||||||||||||||
Three Months Ended July 1, 2018 |
||||||||||||||||||||||||
Revenues |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | 526,929 |
|||||||||||
Income (loss) before income taxes (1)(2) |
|
( |
) | |
|
|
|
|||||||||||||||||
Total assets (3) |
765,484 |
597,293 |
107,199 |
77,638 |
1,384,106 |
2,931,720 |
||||||||||||||||||
Six Months Ended June 30, 2019 |
||||||||||||||||||||||||
Revenues |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||||
Income (loss) before income taxes (1)(2) |
|
( |
) | |
|
|
|
|||||||||||||||||
Total assets (3) |
|
|
|
|
|
|
||||||||||||||||||
Six Months Ended July 1, 2018 |
||||||||||||||||||||||||
Revenues |
$ | |
$ | |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||||||
Income (loss) before income taxes (1)(2) |
|
( |
) | |
|
|
|
|||||||||||||||||
Total assets (3) |
|
|
|
|
|
|
(1) | Included in Corporate and Other are: contingent consideration adjustments, severance charges, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, acquisition related charges, and pension and postretirement plans actuarial losses. |
(2) | Included in the income (loss) before income taxes for each of the segments are charges and credits related to restructuring and other and inventory charges. |
(3) | Total business assets are directly attributable to each business. Corporate assets consist of cash and cash equivalents, marketable securities and certain other assets. |
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Cost of revenues—inventory charge |
$ | |
$ | |
$ | |
$ | |
||||||||
Restructuring and other—employee severance |
|
|
|
|
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Restructuring and other—acquisition related expenses and compensation |
$ | |
$ | — |
$ | |
$ | — |
||||||||
Restructuring and other—employee severance |
|
|
|
|
||||||||||||
|
— |
— |
|
— |
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Cost of revenues—inventory charge |
$ | |
$ | |
$ | |
$ | |
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Cost of revenues—inventory charge |
$ | |
$ | |
$ | |
$ | |
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
(in thousands) |
||||||||||||||||
Restructuring and other—MiR contingent consideration adjustment |
$ | ( |
) | $ | — |
$ | ( |
) | $ | — |
||||||
Restructuring and other—Universal Robots contingent consideration adjustment |
— |
( |
) | — |
( |
) | ||||||||||
Restructuring and other—acquisition related expenses and compensation |
— |
|
— |
|
Item 2: |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | semiconductor test (“Semiconductor Test”) systems; |
• | industrial automation (“Industrial Automation”) products; |
• | defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”); and |
• | wireless test (“Wireless Test”) systems. |
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
June 30, 2019 |
July 1, 2018 |
June 30, 2019 |
July 1, 2018 |
|||||||||||||
Percentage of revenues: |
||||||||||||||||
Revenues: |
||||||||||||||||
Products |
81 |
% | 82 |
% | 80 |
% | 83 |
% | ||||||||
Services |
19 |
18 |
20 |
17 |
||||||||||||
Total revenues |
100 |
100 |
100 |
100 |
||||||||||||
Cost of revenues: |
||||||||||||||||
Cost of products |
34 |
34 |
34 |
36 |
||||||||||||
Cost of services |
8 |
7 |
8 |
7 |
||||||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) |
43 |
42 |
42 |
43 |
||||||||||||
Gross profit |
57 |
58 |
58 |
57 |
||||||||||||
Operating expenses: |
||||||||||||||||
Selling and administrative |
19 |
19 |
20 |
19 |
||||||||||||
Engineering and development |
14 |
14 |
15 |
15 |
||||||||||||
Acquired intangible assets amortization |
2 |
2 |
2 |
2 |
||||||||||||
Restructuring and other |
(2 |
) | — |
(1 |
) | — |
||||||||||
Total operating expenses |
34 |
35 |
36 |
35 |
||||||||||||
Income from operations |
24 |
23 |
21 |
21 |
||||||||||||
Non-operating (income) expense: |
||||||||||||||||
Interest income |
(1 |
) | (1 |
) | (1 |
) | (1 |
) | ||||||||
Interest expense |
1 |
1 |
1 |
1 |
||||||||||||
Other (income) expense, net |
— |
— |
— |
— |
||||||||||||
Income before income taxes |
23 |
23 |
21 |
21 |
||||||||||||
Income tax provision |
6 |
4 |
2 |
3 |
||||||||||||
Net income |
17 |
% | 19 |
% | 20 |
% | 19 |
% | ||||||||
For the Three Months Ended |
||||||||||||
June 30, 2019 |
July 1, 2018 |
Dollar Change |
||||||||||
(in millions) |
||||||||||||
Semiconductor Test |
$ | 374.9 |
$ | 360.1 |
$ | 14.8 |
||||||
Industrial Automation |
74.7 |
62.1 |
12.6 |
|||||||||
System Test |
73.4 |
69.7 |
3.7 |
|||||||||
Wireless Test |
41.2 |
35.2 |
6.0 |
|||||||||
$ | 564.2 |
$ | 526.9 |
$ | 37.3 |
|||||||
For the Three Months Ended |
||||||||
June 30, 2019 |
July 1, 2018 |
|||||||
Taiwan |
27 |
% | 25 |
% | ||||
China |
20 |
16 |
||||||
United States |
14 |
13 |
||||||
Europe |
9 |
10 |
||||||
Korea |
9 |
8 |
||||||
Japan |
6 |
7 |
||||||
Thailand |
4 |
6 |
||||||
Malaysia |
3 |
7 |
||||||
Singapore |
3 |
4 |
||||||
Philippines |
2 |
3 |
||||||
Rest of World |
3 |
1 |
||||||
100 |
% | 100 |
% | |||||
(1) | Revenues attributable to a country are based on location of customer site. |
For the Three Months Ended |
Dollar/ Point Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Gross profit |
$ | 323.9 |
$ | 307.3 |
$ | 16.6 |
||||||
Percent of total revenues |
57.4 |
% | 58.3 |
% | (0.9 |
) |
For the Three Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Selling and administrative |
$ | 108.8 |
$ | 99.4 |
$ | 9.4 |
||||||
Percent of total revenues |
19.3 |
% | 18.9 |
% |
For the Three Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Engineering and development |
$ | 81.4 |
$ | 75.3 |
$ | 6.1 |
||||||
Percent of total revenues |
14.4 |
% | 14.3 |
% |
For the Three Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Acquired intangible assets amortization |
$ | 10.1 |
$ | 9.8 |
$ | 0.3 |
||||||
Percent of total revenues |
1.8 |
% | 1.9 |
% |
For the Three Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Interest income |
$ | (5.4 |
) | $ | (5.4 |
) | $ | — |
||||
Interest expense |
5.8 |
5.6 |
0.2 |
|||||||||
Other (income) expense, net |
2.4 |
0.2 |
2.2 |
For the Three Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Semiconductor Test |
$ | 91.4 |
$ | 91.2 |
$ | 0.2 |
||||||
System Test |
23.5 |
20.4 |
3.1 |
|||||||||
Wireless Test |
10.9 |
10.3 |
0.6 |
|||||||||
Industrial Automation |
(3.7 |
) | (2.9 |
) | (0.8 |
) | ||||||
Corporate and Other (1) |
9.1 |
1.1 |
8.0 |
|||||||||
$ | 131.2 |
$ | 120.0 |
$ | 11.2 |
|||||||
(1) | Included in Corporate and Other are: contingent consideration adjustments, employee severance, interest income, interest expense, net foreign exchange gains and losses, intercompany eliminations, and acquisition related expenses. |
For the Six Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Semiconductor Test |
$ | 715.8 |
$ | 733.4 |
$ | (17.6 |
) | |||||
Industrial Automation |
140.9 |
110.9 |
30.0 |
|||||||||
System Test |
131.6 |
112.7 |
18.9 |
|||||||||
Wireless Test |
70.3 |
57.7 |
12.6 |
|||||||||
Corporate and Other |
(0.2 |
) | (0.3 |
) | 0.1 |
|||||||
$ | 1,058.3 |
$ | 1,014.4 |
$ | 43.9 |
|||||||
For the Six Months Ended |
||||||||
June 30, 2019 |
July 1, 2018 |
|||||||
Taiwan |
23 |
% | 27 |
% | ||||
China |
19 |
16 |
||||||
United States |
14 |
13 |
||||||
Europe |
10 |
10 |
||||||
Korea |
10 |
10 |
||||||
Japan |
9 |
6 |
||||||
Singapore |
4 |
4 |
||||||
Thailand |
4 |
4 |
||||||
Malaysia |
3 |
5 |
||||||
Philippines |
3 |
5 |
||||||
Rest of World |
1 |
— |
||||||
100 |
% | 100 |
% | |||||
(1) | Revenues attributable to a country are based on location of customer site. |
For the Six Months Ended |
Dollar/Point Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Gross profit |
$ | 611.6 |
$ | 577.2 |
$ | 34.4 |
||||||
Percent of total revenues |
57.8 |
% | 56.9 |
% | 0.9 |
For the Six Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Selling and administrative |
$ | 210.8 |
$ | 189.9 |
$ | 20.9 |
||||||
Percent of total revenues |
19.9 |
% | 18.7 |
% |
For the Six Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Engineering and development |
$ | 158.2 |
$ | 149.8 |
$ | 8.4 |
||||||
Percent of total revenues |
15.0 |
% | 14.8 |
% |
For the Six Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Acquired intangible assets amortization |
$ | 20.7 |
$ | 17.5 |
$ | 3.2 |
||||||
Percent of total revenues |
2.0 |
% | 1.7 |
% |
For the Six Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Interest income |
$ | (13.5 |
) | $ | (11.4 |
) | $ | (2.1 |
) | |||
Interest expense |
11.5 |
12.5 |
(1.0 |
) | ||||||||
Other (income) expense, net |
3.9 |
1.0 |
2.9 |
For the Six Months Ended |
Dollar Change |
|||||||||||
June 30, 2019 |
July 1, 2018 |
|||||||||||
(in millions) |
||||||||||||
Semiconductor Test |
$ | 174.4 |
$ | 179.2 |
$ | (4.8 |
) | |||||
System Test |
38.9 |
26.2 |
12.7 |
|||||||||
Wireless Test |
14.6 |
10.8 |
3.8 |
|||||||||
Industrial Automation |
(9.0 |
) | (2.1 |
) | (6.9 |
) | ||||||
Corporate and Other (1) |
6.3 |
1.7 |
4.6 |
|||||||||
$ | 225.2 |
$ | 215.8 |
$ | 9.4 |
|||||||
(1) | Included in Corporate and Other are: contingent consideration adjustments, employee severance, interest income, interest expense, net foreign exchange gains and losses, intercompany eliminations, and acquisition related expenses. |
Payments Due by Period |
||||||||||||||||||||||||
Total |
Less than 1 year |
1-3 years |
3-5 years |
More than 5 years |
Other |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Convertible debt |
$ | 460,000 |
$ | — |
$ | — |
$ | 460,000 |
$ | — |
$ | — |
||||||||||||
Purchase obligations |
306,949 |
300,663 |
6,286 |
— |
— |
— |
||||||||||||||||||
Retirement plans contributions |
127,435 |
9,406 |
20,382 |
25,188 |
72,459 |
— |
||||||||||||||||||
Transition tax payable (1) |
98,414 |
9,530 |
16,930 |
24,337 |
47,617 |
— |
||||||||||||||||||
Operating lease obligations |
78,700 |
21,018 |
32,845 |
14,398 |
10,439 |
— |
||||||||||||||||||
Fair value of contingent consideration |
26,847 |
11,753 |
15,094 |
— |
— |
— |
||||||||||||||||||
Interest on long-term debt |
25,875 |
5,750 |
11,500 |
8,625 |
— |
— |
||||||||||||||||||
Other long-term liabilities reflected on the balance sheet under GAAP (2) |
64,825 |
— |
30,093 |
7,272 |
— |
27,460 |
||||||||||||||||||
Total |
$ | 1,189,045 |
$ | 358,120 |
$ | 133,130 |
$ | 539,820 |
$ | 130,515 |
$ | 27,460 |
||||||||||||
(1) | Represents the transition tax liability associated with our accumulated foreign earnings as a result of the enactment of the Tax Reform Act on December 22, 2017. |
(2) | Included in other long-term liabilities are liabilities for customer advances, extended warranty, uncertain tax positions, deferred tax liabilities and other obligations. For certain long-term obligations, we are unable to provide a reasonably reliable estimate of the timing of future payments relating to these obligations and therefore we included these amounts in the column marked “Other.” |
Item 3: |
Quantitative and Qualitative Disclosures about Market Risks |
Hypothetical Change in Teradyne Stock Price |
Fair Value |
Estimated change in fair value |
Hypothetical percentage increase (decrease) in fair value |
|||||||||
10% Increase |
$ | 807,728 |
$ | 60,515 |
8.1 |
% | ||||||
No Change |
747,213 |
— |
— |
|||||||||
10% Decrease |
688,885 |
(58,328 |
) | (7.8 |
) |
Item 4: |
Controls and Procedures |
Item 1: |
Legal Proceedings |
Item 1A: |
Risk Factors |
Item 2: |
Unregistered Sales of Equity Securities and Use of Proceeds |
Period |
(a) Total Number of Shares (or Units) Purchased |
(b) Average Price Paid per Share (or Unit) |
(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Yet Be Purchased Under the Plans or Programs |
||||||||||||||||||||
April 1, 2019 – April 28, 2019 |
829 |
$ | 43.53 |
828 |
$ | 483,987 |
||||||||||||||||||
April 29, 2019 – May 26, 2019 |
596 |
$ | 47.66 |
595 |
$ | 455,641 |
||||||||||||||||||
May 27, 2019 – June 30, 2019 |
593 |
$ | 44.47 |
592 |
$ | 429,297 |
||||||||||||||||||
2,018 |
(1) |
$ | 45.03 |
(1) |
2,015 |
|||||||||||||||||||
(1) | Includes approximately three thousand shares at an average price of $44.36 withheld from employees for the payment of taxes. |
Item 4: |
Mine Safety Disclosures |
Item 6: |
Exhibits |
Exhibit Number |
Description | |||
10.1 |
||||
31.1 |
||||
31.2 |
||||
32.1 |
||||
32.2 |
Exhibit Number |
Description | |||
101.INS |
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||
101.SCH |
XBRL Taxonomy Extension Schema Document | |||
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document | |||
101.LAB |
XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document |
* | Management Contract or Compensatory Plan |
TERADYNE, INC. |
Registrant |
/s/ Sanjay Mehta |
Sanjay Mehta Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer) |
August 9, 2019 |