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 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Emerging growth company |
||||
Smaller reporting company |
Page No. |
||||||
Item 1. |
||||||
1 |
||||||
2 |
||||||
3 |
||||||
4 |
||||||
5 |
||||||
6 |
||||||
Item 2. |
27 |
|||||
Item 3. |
36 |
|||||
Item 4. |
37 |
|||||
Item 1. |
38 |
|||||
Item 1A. |
38 |
|||||
Item 2. |
39 |
|||||
Item 4. |
40 |
|||||
Item 6. |
41 |
Item 1: |
Financial Statements |
March 29, 2020 |
December 31, 2019 |
|||||||
(in thousands, except per share information) |
||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | |
$ | |
||||
Marketable securities |
|
|
||||||
Accounts receivable, less allowance for doubtful accounts of $ |
|
|
||||||
Inventories, net |
|
|
||||||
Prepayments and other current assets |
|
|
||||||
Total current assets |
|
|
||||||
Property, plant and equipment, net |
|
|
||||||
Operating lease right-of-use assets, net |
|
|
||||||
Marketable securities |
|
|
||||||
Deferred tax assets |
|
|
||||||
Retirement plans assets |
|
|
||||||
Other assets |
|
|
||||||
Acquired intangible assets, net |
|
|
||||||
Goodwill |
|
|
||||||
Total assets |
$ | |
$ | |
||||
LIABILITIES |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | |
$ | |
||||
Accrued employees’ compensation and withholdings |
|
|
||||||
Deferred revenue and customer advances |
|
|
||||||
Other accrued liabilities |
|
|
||||||
Operating lease liabilities |
|
|
||||||
Contingent consideration |
|
|
||||||
Income taxes payable |
|
|
||||||
Total current liabilities |
|
|
||||||
Retirement plans liabilities |
|
|
||||||
Long-term deferred revenue and customer advances |
|
|
||||||
Long-term other accrued liabilities |
|
|
||||||
Long-term contingent consideration |
|
|
||||||
Deferred tax liabilities |
|
|
||||||
Long-term operating lease liabilities |
|
|
||||||
Long-term incomes taxes payable |
|
|
||||||
Debt |
|
|
||||||
Total liabilities |
|
|
||||||
Commitments and contingencies (See Note Q ) |
||||||||
SHAREHOLDERS’ EQUITY |
||||||||
Common stock, $ , |
|
|
||||||
Additional paid-in capital |
|
|
||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total shareholders’ equity |
|
|
||||||
Total liabilities and shareholders’ equity |
$ | |
$ | |
||||
For the Three Months Ended |
||||||||
March 29, 2020 |
March 31, 2019 |
|||||||
(in thousands, except per share amounts) |
||||||||
Revenues: |
||||||||
Products |
$ | |
$ | |
||||
Services |
|
|
||||||
Total revenues |
|
|
||||||
Cost of revenues: |
||||||||
Cost of products |
|
|
||||||
Cost of services |
|
|
||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) |
|
|
||||||
Gross profit |
|
|
||||||
Operating expenses: |
||||||||
Selling and administrative |
|
|
||||||
Engineering and development |
|
|
||||||
Acquired intangible assets amortization |
|
|
||||||
Restructuring and other |
( |
) | |
|||||
Total operating expenses |
|
|
||||||
Income from operations |
|
|
||||||
Non-operating (income) expense: |
||||||||
Interest income |
( |
) | ( |
) | ||||
Interest expense |
|
|
||||||
Other (income) expense, net |
|
( |
) | |||||
Income before income taxes |
|
|
||||||
Income tax provision (benefit) |
|
( |
) | |||||
Net income |
$ | |
$ | |
||||
Net income per common share: |
||||||||
Basic |
$ | |
$ | |
||||
Diluted |
$ | |
$ | |
||||
Weighted average common shares—basic |
|
|
||||||
Weighted average common shares—diluted |
|
|
||||||
Cash dividend declared per common share |
$ | |
$ | |
||||
For the Three Months Ended |
||||||||
March 29, 2020 |
March 31, 2019 |
|||||||
(in thousands) |
||||||||
Net income |
$ | |
$ | |
||||
Other comprehensive income, net of tax: |
||||||||
Foreign currency translation adjustment, net of tax of $ |
( |
) | ( |
) | ||||
Available-for-sale marketable securities: |
||||||||
Unrealized gains on debt securities arising during period, net of tax of $ |
|
|
||||||
Less: Reclassification adjustment for gains 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 loss |
( |
) | ( |
) | ||||
Comprehensive income |
$ | |
$ | |
||||
Common Stock Shares |
Common Stock Par Value |
Additional Paid-in Capital |
Accumulated Other Comprehensive Loss |
Accumulated Deficit |
Total Shareholders’ Equity |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
For the Three Months Ended March 29, 2020 |
||||||||||||||||||||||||
Balance, December 31, 2019 |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||
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, March 29, 2020 |
|
|
|
( |
) | ( |
) | |
||||||||||||||||
For the Three Months Ended March 31, 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 |
|
|
||||||||||||||||||||||
Other comprehensive loss |
( |
) | ( |
) | ||||||||||||||||||||
Balance, March 31, 2019 |
|
$ | |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
|||||||||||
For the Three Months Ended |
||||||||
March 29, 2020 |
March 31, 2019 |
|||||||
(in thousands) |
||||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | |
$ | |
||||
Adjustments to reconcile net income from operations to net cash provided by operating activities: |
||||||||
Depreciation |
|
|
||||||
Amortization |
|
|
||||||
Stock-based compensation |
|
|
||||||
Provision for excess and obsolete inventory |
|
|
||||||
Deferred taxes |
( |
) | |
|||||
Contingent consideration adjustment |
( |
) | |
|||||
Losses (gains) on investments |
|
( |
) | |||||
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 maturities of marketable securities |
|
|
||||||
Proceeds from sales of marketable securities |
|
|
||||||
Acquisition of businesses, net of cash acquired |
|
( |
) | |||||
Proceeds from life insurance |
— |
|
||||||
Net cash used for 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 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; |
• |
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”); |
• |
industrial automation (“Industrial Automation”) products; and |
• |
wireless test (“Wireless Test”) systems. |
Purchase Price Allocation |
||||
(in thousands) |
||||
Goodwill |
$ | |||
Intangible assets |
||||
Tangible assets acquired and liabilities assumed: |
||||
Other current assets |
||||
Non-current assets |
||||
Accounts payable and current liabilities |
( |
) | ||
Long-term other liabilities |
( |
) | ||
Total purchase price |
$ | |||
Fair Value |
Estimated Useful Life |
|||||||
(in thousands) |
(in years) |
|||||||
Developed technology |
$ | |
|
|||||
Customer relationships |
|
|
||||||
Trademarks and tradenames |
|
|
||||||
Backlog |
|
|
||||||
Total intangible assets |
$ | |
|
|||||
For the Three Months Ended |
||||
March 31, 2019 |
||||
(in thousands, except per share amounts) |
||||
Revenue s |
$ | |
||
Net income |
$ |
|
||
Net income per common share: |
||||
Basic |
$ | |
||
Diluted |
$ | |
||
Semiconductor Test |
Industrial Automation |
Wireless Test |
Corporate and Other |
Total |
||||||||||||||||||||||||||||||||
System on a Chip |
Memory |
System Test |
Universal Robots |
Mobile Industrial Robots |
AutoGuide |
|||||||||||||||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||||||||||||||
For the Three Months Ended March 29, 2020 (1) |
||||||||||||||||||||||||||||||||||||
Timing of Revenue Recognition |
||||||||||||||||||||||||||||||||||||
Point in Time |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||
Over Time |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||
Geographical Market |
||||||||||||||||||||||||||||||||||||
Asia Pacific |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||
Americas |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||||||||
For the Three Months Ended March 31, 2019 (1) |
||||||||||||||||||||||||||||||||||||
Timing of Revenue Recognition |
||||||||||||||||||||||||||||||||||||
Point in Time |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | — |
$ | |
$ | ( |
) | $ | |
|||||||||||||||||
Over Time |
|
|
|
|
— |
— |
|
— |
|
|||||||||||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | — |
$ | |
$ | ( |
) | $ | |
|||||||||||||||||
Geographical Market |
||||||||||||||||||||||||||||||||||||
Asia Pacific |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | — |
$ | |
$ | — |
$ | |
||||||||||||||||||
Americas |
|
|
|
|
|
— |
|
( |
) | |
||||||||||||||||||||||||||
Europe, Middle East and Africa |
|
|
|
|
|
— |
|
— |
|
|||||||||||||||||||||||||||
Total |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | — |
$ | |
$ | ( |
) | $ | |
|||||||||||||||||
(1) |
Includes $ Revenue from Contracts with Customers.” |
March 29, |
December 31, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Raw material |
$ | |
$ | |
||||
Work-in-process |
|
|
||||||
Finished goods |
|
|
||||||
$ | |
$ | |
|||||
March 29, 2020 |
||||||||||||||||
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: |
||||||||||||||||
Commercial paper |
— |
|
— |
|
||||||||||||
U.S. Treasury securities |
— |
|
— |
|
||||||||||||
Corporate debt securities |
— |
|
— |
|
||||||||||||
Certificates of deposit and time deposits |
— |
|
— |
|
||||||||||||
Debt mutual funds |
|
— |
— |
|
||||||||||||
U.S. government agency securities |
— |
|
— |
|
||||||||||||
Non-U.S. government securities |
— |
|
— |
|
||||||||||||
Equity securities: |
||||||||||||||||
Mutual funds |
|
— |
— |
|
||||||||||||
$ | |
$ | |
$ | — |
$ | |
|||||||||
Derivative assets |
— |
|
— |
|
||||||||||||
Total |
$ | |
$ | |
$ | — |
$ | |
||||||||
Liabilities |
||||||||||||||||
Contingent consideration |
$ | — |
$ | — |
$ | |
$ | |
||||||||
Derivative liabilities |
— |
|
— |
|
||||||||||||
Total |
$ | — |
$ | |
$ | |
$ | |
||||||||
Reported as follows: |
|
|
|
|
||||||||||||
|
(Level 1) |
(Level 2) |
(Level 3) |
Total |
||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | |
$ | |
$ | — |
$ | |
||||||||
Marketable securities |
— |
|
— |
|
||||||||||||
Long-term marketable securities |
|
|
— |
|
||||||||||||
Prepayments and other current assets |
— |
|
— |
|
||||||||||||
Total |
$ | |
$ | |
$ | — |
$ | |
||||||||
Liabilities |
||||||||||||||||
Other current liabilities |
$ | — |
$ | |
$ | — |
$ | |
||||||||
Contingent consideration |
— |
— |
|
|
||||||||||||
Long-term contingent consideration |
— |
— |
|
|
||||||||||||
Total |
$ | — |
$ | |
$ | |
$ | |
||||||||
December 31, 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: |
|
|||||||||||||||
Corporate debt securities |
— |
|
— |
|
||||||||||||
Commercial paper |
— |
|
— |
|
||||||||||||
U.S. Treasury securities |
— |
|
— |
|
||||||||||||
U.S. government agency securities |
— |
|
— |
|
||||||||||||
Debt mutual funds |
|
— |
— |
|
||||||||||||
Certificates of deposit and time deposits |
— |
|
— |
|
||||||||||||
Non-U.S. government securities |
— |
|
— |
|
||||||||||||
Equity securities: |
||||||||||||||||
Equity mutual funds |
|
— |
— |
|
||||||||||||
$ | |
$ | |
$ | — |
$ | |
|||||||||
Derivative assets |
— |
|
— |
|
||||||||||||
Total |
$ | |
$ | |
$ | — |
$ | |
||||||||
Liabilities |
||||||||||||||||
Contingent consideration |
$ | — |
$ | — |
$ | |
$ | |
||||||||
Derivative liabilities |
— |
|
— |
|
||||||||||||
Total |
$ | — |
$ | |
$ | |
$ | |
||||||||
Reported as follows: |
|
|
|
|
||||||||||||
|
(Level 1) |
(Level 2) |
(Level 3) |
Total |
||||||||||||
(in thousands) |
||||||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents |
$ | |
$ | |
$ | — |
$ | |
||||||||
Marketable securities |
— |
|
— |
|
||||||||||||
Long-term marketable securities |
|
|
— |
|
||||||||||||
Prepayments and other current assets |
— |
|
— |
|
||||||||||||
Total |
$ | |
$ | |
$ | — |
$ | |
||||||||
Liabilities |
||||||||||||||||
Other accrued liabilities |
$ | — |
$ | |
$ | — |
$ | |
||||||||
Contingent consideration |
— |
— |
|
|
||||||||||||
Long-term contingent consideration |
— |
— |
|
|
||||||||||||
Total |
$ | — |
$ | |
$ | |
$ | |
||||||||
For the Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Balance at beginning of period |
$ | |
$ | |
||||
Foreign currency impact |
( |
) | ( |
) | ||||
Payments (a)(b) |
( |
) | ( |
) | ||||
Fair value adjustment (c)(d) |
( |
) | |
|||||
Balance at end of period |
$ | |
$ | |
||||
(a) |
In the three months ended March 29, 2020, Teradyne paid $ earn-out in connection with the acquisition of MiR. |
(b) |
In the three months ended March 31, 2019, Teradyne paid $ |
(c) |
In the three months ended March 29, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisitions of MiR and AutoGuide decreased by $ |
(d) |
In the three months ended March 31, 2019, the fair value of contingent consideration for the earn-out in connection with the acquisition of MiR increased by $ |
Liability |
March 29, 2020 Fair |
Valuation Technique |
Unobservable Inputs |
Weighted Average |
||||||||||||
(in thousands) |
||||||||||||||||
Contingent consideration (AutoGuide) |
$ | |
Monte Carlo Simulation |
Revenue volatility |
|
% | ||||||||||
Discount Rate |
|
% | ||||||||||||||
Contingent consideration (MiR) |
$ | |
Monte Carlo Simulation |
Revenue volatility |
|
% | ||||||||||
Discount Rate |
|
% |
March 29, 2020 |
December 31, 2019 |
|||||||||||||||
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. |
March 29, 2020 |
||||||||||||||||||||
Available-for-Sale |
||||||||||||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Commercial paper |
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
|||||||||
U.S. Treasury securities |
|
|
( |
) | |
|
||||||||||||||
Corporate debt securities |
|
|
( |
) | |
|
||||||||||||||
Certificates of deposit and time deposits |
|
|
— |
|
— |
|||||||||||||||
Debt mutual funds |
|
|
— |
|
— |
|||||||||||||||
U.S. government agency securities |
|
|
|
|
|
|||||||||||||||
Non-U.S. government securities |
|
— |
— |
|
— |
|||||||||||||||
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||
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, 2019 |
||||||||||||||||||||
Available-for-Sale |
||||||||||||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Corporate debt securities |
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
|||||||||
Commercial paper |
|
|
( |
) | |
|
||||||||||||||
U.S. Treasury securities |
|
|
( |
) | |
|
||||||||||||||
U.S. government agency securities |
|
|
( |
) | |
|
||||||||||||||
Debt mutual funds |
|
|
— |
|
— |
|||||||||||||||
Certificates of deposit and time deposits |
|
— |
— |
|
— |
|||||||||||||||
Non-U.S. government securities |
|
— |
— |
|
— |
|||||||||||||||
$ | |
$ | |
$ | ( |
) | $ | |
$ | |
||||||||||
Cost |
Unrealized Gain |
Unrealized (Loss) |
Fair Market Value |
Fair Market Value of Investments with Unrealized Losses |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Marketable securities |
$ | $ | $ | ( |
) | $ | $ | |||||||||||||
Long-term marketable securities |
( |
) | ||||||||||||||||||
$ | $ | $ | ( |
) | $ | $ | ||||||||||||||
March 29, 2020 |
||||||||
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 |
March 29, 2020 |
December 31, 2019 |
||||||||||
(in thousands) |
||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||
Foreign exchange contracts |
Prepayments |
$ | $ | |||||||||
Foreign exchange contracts |
Other current liabilities |
( |
) | ( |
) | |||||||
Total derivatives |
$ | $ | ||||||||||
Location of Losses |
For the Three Months Ended |
| ||||||||
Recognized in |
March 29, |
March 31, |
||||||||
|
2020 |
2019 |
||||||||
(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 the monetary assets and liabilities denominated in foreign currencies. |
(2) | For the three months ended March 29, 2020 and March 31, 2019, net gains from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $ |
March 29, 2020 |
December 31, 2019 |
|||||||
(in thousands) |
||||||||
Debt Principal |
$ | $ | ||||||
Unamortized discount |
||||||||
Net Carrying amount of convertible debt |
$ | $ | ||||||
For the Three Months Ended |
||||||||
March 29, 2020 |
March 31, 2019 |
|||||||
(in thousands) |
||||||||
Contractual interest expense on the coupon |
$ | $ | ||||||
Amortization of the discount component and debt issue fees recognized as interest expense |
||||||||
Total interest expense on the convertible debt |
$ | $ | ||||||
March 29, |
December 31, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Contract manufacturer and supplier prepayments |
$ | $ | ||||||
Prepaid taxes |
||||||||
Prepaid maintenance and other services |
||||||||
Other prepayments |
||||||||
Total prepayments |
$ | $ | ||||||
March 29, |
December 31, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Maintenance, se r vice and training |
$ | $ | ||||||
Extended warranty |
||||||||
Customer advances, undelivered elements and other |
||||||||
Total deferred revenue and customer advances |
$ | $ | ||||||
For the Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
(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 |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
(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 Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
Risk-free interest rate |
% | % | ||||||
Teradyne volatility-historical |
% | % | ||||||
NYSE Composite Index volatility-historical |
% | % | ||||||
Dividend yield |
% | % |
For the Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
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) |
||||||||||||||||
Three Months Ended March 29, 2020 |
||||||||||||||||
Balance at December 31, 2019, 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 $ |
|
( |
) | ( |
) | ( |
) | |||||||||
Net current period other comprehensive income (loss), net of tax of $ |
( |
) | |
( |
) | ( |
) | |||||||||
Balance at March 29, 2020, net of tax of $ |
$ | ( |
) | $ | |
$ | |
$ | ( |
) | ||||||
Three Months Ended March 31 , 2019 |
||||||||||||||||
Balance at December 31, 2018, 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 $ |
|
( |
) | ( |
) | ( |
) | |||||||||
Net current period other comprehensive income (loss), net of tax of $ |
( |
) | |
( |
) | ( |
) | |||||||||
Balance as March 31, 2019, net of tax of $ |
$ | ( |
) | $ | |
$ | |
$ | ( |
) | ||||||
|
For the Three Months Ended |
Affected Line Item in the Statements of Operations |
||||||||||
March 29, |
March 31, |
|||||||||||
2020 |
2019 |
|||||||||||
Details about Accumulated Other Comprehensive ( Income Components loss ) |
(in thousands) |
|||||||||||
Available-for-sale marketable securities: |
||||||||||||
Unrealized gains, net of tax of $ |
$ | |
$ | |
Interest income |
|||||||
Defined benefit pension and postretirement plans: |
||||||||||||
Amortization of prior service benefit, net of tax of $ |
|
|
(a) |
|||||||||
Total reclassifications, net of tax of $ |
$ | |
$ | |
Net income |
|||||||
(a) |
The amortization of prior service benefit is included in the computation of net periodic pension cost and postretirement benefit. See Note P: “Retirement Plans.” |
Industrial Automation |
System Test |
Wireless Test |
Semiconductor Test |
Total |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Balance at December 31, 2019 |
||||||||||||||||||||
Goodwill |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||
Accumulated impairment losses |
— |
( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
|
|
|
|
|
||||||||||||||||
AutoGuide acquisition |
( |
) | — |
— |
— |
( |
) | |||||||||||||
Foreign currency translation adjustment |
( |
) | — |
— |
|
( |
) | |||||||||||||
Balance at March 29, 2020 |
||||||||||||||||||||
Goodwill |
|
|
|
|
|
|||||||||||||||
Accumulated impairment losses |
— |
( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
$ | |
$ | |
$ | |
$ | |
$ | |
|||||||||||
Gross Carrying Amount |
Accumulated Amortization |
Foreign Currency Translation Adjustment |
Net Carrying Amount |
|||||||||||||
(in thousands) |
||||||||||||||||
Balance, March 29, 2020 |
||||||||||||||||
Developed technology |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
||||||
Customer relationships |
|
( |
) | ( |
) | |
||||||||||
Tradenames and trademarks |
|
( |
) | ( |
) | |
||||||||||
Backlog |
|
( |
) | — |
— |
|||||||||||
Total intangible assets |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
||||||
Balance, December 31, 2019 |
||||||||||||||||
Developed technology |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
||||||
Customer relationships |
|
( |
) | ( |
) | |
||||||||||
Tradenames and trademarks |
|
( |
) | ( |
) | |
||||||||||
Backlog |
|
( |
) | — |
— |
|||||||||||
Total intangible assets |
$ | |
$ | ( |
) | $ | ( |
) | $ | |
||||||
Amortization Expense |
||||
Year |
(in thousands) |
|||
2020 (remainder) |
|
|||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
2024 |
|
|||
Thereafter |
|
For the Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
(in thousands, except per share amounts) |
||||||||
Net income for basic and diluted net income per share |
$ | |
$ | |
||||
Weighted average common shares-basic |
|
|
||||||
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 |
|
|
||||||
Net income per common share-basic |
$ | |
$ | |
||||
Net income per common share-diluted |
$ | |
$ | |
||||
(1) | Incremental shares from assumed conversion of the convertible notes was calculated using the difference between the average Teradyne stock price for the period and the conversion price of $ |
(2) | Convertible notes 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 |
||||||||||||||||
March 29, 2020 |
March 31, 2019 |
|||||||||||||||
United States |
Foreign |
United States |
Foreign |
|||||||||||||
(in thousands) |
||||||||||||||||
Service cost |
$ | |
$ | |
$ | |
$ | |
||||||||
Interest cost |
|
|
|
|
||||||||||||
Expected return on plan assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total net periodic pension cost |
$ | |
$ | |
$ | |
$ | |
||||||||
For the Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Service cost |
$ |
|
$ |
|
||||
Interest cost |
|
|
||||||
Amortization of prior service credit |
( |
) |
( |
) | ||||
Total net periodic postretirement benefit cost |
$ |
|
$ |
|
||||
For the Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
US statutory federal tax rate |
|
% |
|
% | ||||
Foreign taxes |
( |
) |
( |
) | ||||
Tax credits |
( |
) |
( |
) | ||||
Discrete benefit related to equity compensation |
( |
) |
( |
) | ||||
Discrete benefit related to release of reserves for uncertain tax positions |
|
( |
) | |||||
Other, net |
|
|
||||||
Effective tax rate |
|
% |
( |
)% | ||||
Semiconductor Test |
System Test |
Industrial Automation |
Wireless Test |
Corporate and Other |
Consolidated |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Three Months Ended March 29, 2020 |
||||||||||||||||||||||||
Revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||||||
Income (loss) before taxes (1)(2) |
|
|
( |
) |
|
( |
) |
|
||||||||||||||||
Total assets (3) |
|
|
|
|
|
|
||||||||||||||||||
Three Months Ended March 31, 2019 |
||||||||||||||||||||||||
Revenues |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
|||||||||||
Income ( before taxes (1)(2) loss ) |
|
|
( |
) |
|
( |
) |
|
||||||||||||||||
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 and acquisition related charges. |
(2) |
Included in income (loss) before taxes are charges and credits related to restructuring and other, and inventory charges. |
(3) |
Total assets are attributable to each segment. Corporate assets consist of cash and cash equivalents, marketable securities and certain other assets. |
For the Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Semiconductor Test: |
||||||||
Cost of revenues—inventory charge |
$ |
|
$ |
|
||||
Industrial Automation: |
||||||||
Restructuring and other—acquisition related expenses and compensation |
|
|
||||||
Corporate and Other: |
||||||||
Restructuring and other—MiR contingent consideration adjustment |
( |
) |
|
|||||
Restructuring and other—AutoGuide 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; |
• |
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”); |
• | industrial automation (“Industrial Automation”) products; and |
• | wireless test (“Wireless Test”) systems. |
For the Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
Percentage of revenues: |
||||||||
Revenues: |
||||||||
Products |
87 |
% | 80 |
% | ||||
Services |
13 |
20 |
||||||
Total revenues |
100 |
100 |
||||||
Cost of revenues: |
||||||||
Cost of products |
37 |
33 |
||||||
Cost of services |
6 |
8 |
||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) |
42 |
42 |
||||||
Gross profit |
58 |
58 |
||||||
Operating expenses: |
||||||||
Selling and administrative |
16 |
21 |
||||||
Engineering and development |
12 |
16 |
||||||
Acquired intangible assets amortization |
1 |
2 |
||||||
Restructuring and other |
(1 |
) | 1 |
|||||
Total operating expenses |
28 |
39 |
||||||
Income from operations |
29 |
19 |
||||||
Non-operating (income) expense: |
||||||||
Interest income |
— |
(1 |
) | |||||
Interest expense |
1 |
1 |
||||||
Other (income) expense, net |
1 |
— |
||||||
Income before income taxes |
28 |
19 |
||||||
Income tax provision (benefit) |
3 |
(3 |
) | |||||
Net income |
25 |
% | 22 |
% | ||||
For the Three Months Ended |
||||||||||||
March 29, |
March 31, |
Dollar |
||||||||||
2020 |
2019 |
Change |
||||||||||
(in millions) |
||||||||||||
Semiconductor Test |
$ | 484.5 |
$ | 340.9 |
$ | 143.6 |
||||||
System Test |
116.1 |
58.2 |
57.9 |
|||||||||
Industrial Automation |
60.3 |
66.1 |
(5.8 |
) | ||||||||
Wireless Test |
43.5 |
29.0 |
14.5 |
|||||||||
$ | 704.4 |
$ | 494.1 |
$ | 210.3 |
|||||||
For the Three Months Ended |
||||||||
March 29, |
March 31, |
|||||||
2020 |
2019 |
|||||||
Taiwan |
30 |
% | 17 |
% | ||||
China |
16 |
17 |
||||||
Korea |
15 |
10 |
||||||
United States |
11 |
15 |
||||||
Europe |
8 |
11 |
||||||
Japan |
7 |
12 |
||||||
Thailand |
5 |
4 |
||||||
Singapore |
3 |
6 |
||||||
Philippines |
2 |
4 |
||||||
Malaysia |
2 |
3 |
||||||
Rest of World |
1 |
1 |
||||||
100 |
% | 100 |
% | |||||
(1) | Revenues attributable to a country are based on location of customer site. |
For the Three Months Ended |
||||||||||||
March 29, |
March 31, |
Dollar/ Point |
||||||||||
2020 |
2019 |
Change |
||||||||||
(in millions) |
||||||||||||
Gross profit |
$ | 405.6 |
$ | 287.6 |
$ | 117.9 |
||||||
Percent of total revenues |
57.6 |
% | 58.2 |
% | (0.6 |
) |
For the Three Months Ended |
||||||||||||
March 29, |
March 31, |
Dollar |
||||||||||
2020 |
2019 |
Change |
||||||||||
(in millions) |
||||||||||||
Selling and administrative |
$ | 111.4 |
$ | 102.0 |
$ | 9.4 |
||||||
Percent of total revenues |
15.8 |
% | 20.6 |
% |
For the Three Months Ended |
||||||||||||
March 29, |
March 31, |
Dollar |
||||||||||
2020 |
2019 |
Change |
||||||||||
(in millions) |
||||||||||||
Engineering and development |
$ | 85.2 |
$ | 76.8 |
$ | 8.4 |
||||||
Percent of total revenues |
12.1 |
% | 15.5 |
% |
For the Three Months Ended |
||||||||||||
March 29, |
March 31, |
Dollar |
||||||||||
2020 |
2019 |
Change |
||||||||||
(in millions) |
||||||||||||
Interest income |
$ | (2.8 |
) | $ | (5.0 |
) | $ | 2.2 |
||||
Interest expense |
5.6 |
5.5 |
0.1 |
|||||||||
Other (income) expense, net |
6.8 |
(1.4 |
) | 8.2 |
For the Three Months Ended |
||||||||||||
March 29, |
March 31, |
Dollar |
||||||||||
2020 |
2019 |
Change |
||||||||||
(in millions) |
||||||||||||
Semiconductor Test |
$ | 153.8 |
$ | 83.0 |
$ | 70.8 |
||||||
System Test |
48.4 |
15.3 |
33.1 |
|||||||||
Wireless Test |
10.2 |
3.6 |
6.6 |
|||||||||
Industrial Automation |
(15.3 |
) | (5.3 |
) | (10.0 |
) | ||||||
Corporate and Other (1) |
— |
(2.7 |
) | 2.7 |
||||||||
$ | 197.1 |
$ | 94.0 |
$ | 103.1 |
|||||||
(1) | Included in Corporate and Other are the following: contingent consideration adjustments, employee severance, interest (income) and expense, net foreign exchange (gains) and losses, intercompany eliminations, and acquisition related charges. |
Payments Due by Period |
||||||||||||||||||||||||
Total |
Less than 1 year |
1-3 years |
3-5 years |
More than 5 years |
Other |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Convertible debt |
$ | 459,987 |
$ | — |
$ | — |
$ | 459,987 |
$ | — |
$ | — |
||||||||||||
Purchase obligations |
543,774 |
529,368 |
14,406 |
— |
— |
— |
||||||||||||||||||
Retirement plans contributions |
130,923 |
5,040 |
10,408 |
10,268 |
105,207 |
— |
||||||||||||||||||
Transition tax payable (1) |
88,157 |
5,337 |
15,779 |
22,710 |
44,331 |
— |
||||||||||||||||||
Operating lease obligations |
73,708 |
22,183 |
27,730 |
13,515 |
10,280 |
— |
||||||||||||||||||
Interest on long-term debt |
23,000 |
5,750 |
11,500 |
5,750 |
— |
— |
||||||||||||||||||
Fair value of contingent consideration |
20,472 |
662 |
19,810 |
— |
— |
— |
||||||||||||||||||
Other long-term liabilities reflected on the balance sheet under GAAP (2) |
82,360 |
— |
39,492 |
10,843 |
456 |
31,569 |
||||||||||||||||||
Total |
$ | 1,422,381 |
$ | 568,340 |
$ | 139,125 |
$ | 523,073 |
$ | 160,274 |
$ | 31,569 |
||||||||||||
(1) | Represents the transition tax liability associated with our accumulated foreign earnings as a result of 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 |
$ | 901,709 |
$ | 72,271 |
8.7 |
% | ||||||
No Change |
829,438 |
— |
— |
|||||||||
10% Decrease |
759,085 |
(70,353 |
) | (8.5 |
) |
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 |
||||||||||||
January 1, 2020 – January 26, 2020 |
208 |
$ | 69.05 |
207 |
$ | 985,700 |
||||||||||
January 27, 2020 – February 23, 2020 |
595 |
$ | 69.90 |
282 |
$ | 965,901 |
||||||||||
February 24, 2020 – March 29, 2020 |
858 |
$ | 52.59 |
855 |
$ | 920,961 |
||||||||||
1,661 |
(1) | $ | 60.85 |
(1) | 1,344 |
|||||||||||
(1) | Includes approximately three hundred thousand shares at an average price of $69.52 withheld from employees for the payment of taxes. |
Item 4: |
Mine Safety Disclosures |
Item 6: |
Exhibits |
Exhibit Number |
Description | |||
31.1 |
||||
31.2 |
||||
32.1 |
||||
32.2 |
||||
101.INS |
XBRL Instance 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 | |||
104 |
Cover Page Interactive Data File (formatted as Inline XBRL, and contained in Exhibit 101) |
TERADYNE, INC. |
Registrant |
/s/ Sanjay Mehta |
Sanjay Mehta Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer) |
May 4, 2020 |