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Teradyne Reports Fourth Quarter and Fiscal Year 2019 Results

January 22, 2020 5:02 PM
Q4'19Q4'18Q3'19FY 2019FY 2018
Revenue (mil)$655$520 $582 $2,295$2,101
GAAP EPS$0.75$0.79$0.75 $ 2.67$2.35
Non-GAAP EPS$0.88$0.63$0.77 $ 2.86$2.37

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NORTH READING, Mass., Jan. 22, 2020 (GLOBE NEWSWIRE) -- Teradyne, Inc. (NASDAQ: TER) reported revenue of $655 million for the fourth quarter of 2019 of which $439 million was in Semiconductor Test, $88 million in Industrial Automation (IA), $83 million in System Test, and $45 million in Wireless Test. GAAP net income for the fourth quarter was $136.8 million or $0.75 per diluted share. On a non-GAAP basis, Teradyne’s net income in the fourth quarter was $152.7 million, or $0.88 per diluted share, which excluded acquired intangible asset amortization, pension actuarial losses, restructuring and other charges, non-cash convertible debt interest, and included the related tax impact on non-GAAP adjustments.

“We delivered revenue and profits above plan in the fourth quarter on higher than expected memory and wireless test demand combined with continued 5G infrastructure test demand,” said CEO and President Mark Jagiela. “For the full year, we increased total company revenue 9% and non-GAAP earnings 21%, our sixth consecutive year of earnings growth. Despite the headwinds in global industrial automation investment, Universal Robots grew revenue 6% for the year and MiR grew 43% on a pro-forma basis. In Q4, we strengthened our IA portfolio with the addition of AutoGuide and their innovative autonomous mobile forklifts and tuggers to our line-up of easy to deploy, safe, and fast ROI automation products.”

Jagiela continued, “Beyond the strong financial performance, 2019 was a significant year for the company strategically as we introduced major new products in growing segments across our test and industrial automation businesses. These products expand our served markets and position us for continued growth in 2020. Our Q1 outlook reflects the impact of customer production ramps from several design wins using these new products along with early test demand for smartphone related silicon and storage test capacity expansions. We expect this revenue profile to continue through the second quarter before tapering in the second half of the year.”

Teradyne’s Board of Directors declared an 11% increase to the quarterly cash dividend to $0.10 per share, payable on March 20, 2020 to shareholders of record as of the close of business on February 21, 2020. The Board also authorized a $1 billion share repurchase program and the company expects to repurchase a minimum of $250 million of its common stock in 2020.

Guidance for the first quarter of 2020 is revenue of $670 million to $710 million, with GAAP net income of $0.75 to $0.85 per diluted share and non-GAAP net income of $0.86 to $0.96 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest and includes the related tax impact on non-GAAP adjustments.

Webcast A conference call to discuss the fourth quarter results, along with management's business outlook, will follow at 10 a.m. ET, Thursday, January 23. Interested investors should access the webcast at investors.teradyne.com/events-presentations at least five minutes before the call begins. Presentation materials will be available starting at 10 a.m. ET. A replay will be available on the Teradyne investor site at investors.teradyne.com.

Non-GAAP Results In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain income items and charges. These results are provided as a complement to results provided in accordance with GAAP. Non-GAAP income from operations and non-GAAP net income exclude acquired intangible assets amortization, non-cash convertible debt interest, pension actuarial gains and losses, discrete income tax adjustments, fair value inventory step-up, and restructuring and other, and includes the related tax impact on non-GAAP adjustments. GAAP requires that these items be included in determining income from operations and net income. Non-GAAP income from operations, non-GAAP net income, non-GAAP income from operations as a percentage of revenue, non-GAAP net income as a percentage of revenue, and non-GAAP net income per share are non-GAAP performance measures presented to provide meaningful supplemental information regarding Teradyne’s baseline performance before gains, losses or other charges that may not be indicative of Teradyne’s current core business or future outlook. These non-GAAP performance measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradyne’s business plan, historical operating results and the operating results of Teradyne’s competitors. Non-GAAP gross margin excludes fair value inventory step-up. GAAP requires that this item be included in determining gross margin. Non-GAAP gross margin dollar amount and percentage are non-GAAP performance measures that management believes provide useful supplemental information for management and the investor. Management uses non-GAAP gross margin as a performance measure for Teradyne’s current core business and future outlook and for comparison with Teradyne’s business plan, historical gross margin results and the gross margin results of Teradyne’s competitors. Non-GAAP diluted shares include the impact of Teradyne’s call option on its shares. Management believes each of these non-GAAP performance measures provides useful supplemental information for investors, allowing greater transparency to the information used by management in its operational decision making and in the review of Teradyne’s financial and operational performance, as well as facilitating meaningful comparisons of Teradyne’s results in the current period compared with those in prior and future periods. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the attached exhibits and on the Teradyne website at www.teradyne.com by clicking on “Investor Relations” and then selecting “Financials” and the “GAAP to Non-GAAP Reconciliation” link. The non-GAAP performance measures discussed in this press release may not be comparable to similarly titled measures used by other companies. The presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP.

About Teradyne Teradyne (NASDAQ: TER) brings high-quality innovations such as smart devices, life-saving medical equipment and data storage systems to market, faster. Its advanced test solutions for semiconductors, electronic systems, wireless devices and more ensure that products perform as they were designed. Its Industrial Automation offerings include collaborative and mobile robots that help manufacturers of all sizes improve productivity and lower costs. In 2019, Teradyne had revenue of $2.3 billion and today employs 5,400 people worldwide. For more information, visit teradyne.com. Teradyne® is a registered trademark of Teradyne, Inc. in the U.S. and other countries.

Safe Harbor StatementThis release contains forward-looking statements regarding Teradyne’s future business prospects, results of operations, market conditions, earnings per share, the payment of a quarterly dividend, the repurchase of Teradyne common stock pursuant to a share repurchase program, and the impact of the U.S. export and tariff laws. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, events, earnings per share, use of cash, payment of dividends, repurchases of common stock, payment of the senior convertible notes, or the impact of the U.S. export and tariff laws. There can be no assurance that management’s estimates of Teradyne’s future results or other forward-looking statements will be achieved. Additionally, the current dividend and share repurchase programs may be modified, suspended or discontinued at any time.

On May 16, 2019, Huawei and 68 of its affiliates, including HiSilicon, were added to the U.S. Department of Commerce Entity List under U.S. Export Administration Regulations (the “EAR”). This action by the U.S. Department of Commerce imposed new export licensing requirements on exports, re-exports, and in-country transfers of all U.S. - regulated products, software and technology to the designated Huawei entities. While most of our products are not subject to the EAR and therefore not affected by the Entity List restrictions, some of our products are currently manufactured in the U.S. and thus subject to the Entity List restrictions. Compliance with the current Entity List restrictions has not significantly impacted our sales. There have been recent news reports that the U.S. Department of Commerce plans to modify the U.S. EAR to expand the scope of the regulations to include more products that would become subject to the Entity List restrictions relating to Huawei and the designated Huawei entities including HiSilicon. These modified regulations, if implemented as currently reported, would impact our ability to continue to sell certain products directly to Huawei and HiSilicon, both of which are significant Teradyne customers. However, based on our understanding, these proposed modified regulations would not impact our sales to third party contract manufacturers used by Huawei and HiSilicon to manufacture and test semiconductor and other electronic devices. Because the business environment for Huawei is both fluid and uncertain, there are also risks that Huawei and HiSilicon may have less demand for our products and/or may purchase products from our competitors who are not impacted by the U.S. regulations. Until these or any new regulations become public and effective, we will not know the extent of the impact on our business with Huawei and HiSilicon. However, it is possible that these modified regulations and any other additional regulations that may be implemented by the U.S. Department of Commerce or other government agency would have a material impact on our business and financial results.

Important factors that could cause actual results, earnings per share, use of cash, dividend payments, repurchases of common stock, or payment of the senior convertible notes to differ materially from those presently expected include: conditions affecting the markets in which Teradyne operates; decreased or delayed product demand from one or more significant customers; development, delivery and acceptance of new products; the ability to grow the Industrial Automation business; increased research and development spending; deterioration of Teradyne’s financial condition; the consummation and success of any mergers or acquisitions; unexpected cash needs; insufficient cash flow to make required payments and pay the principal amount on the senior convertible notes; the business judgment of the board of directors that a declaration of a dividend or the repurchase of common stock is not in the company’s best interests; additional U.S. tax regulations or IRS guidance; the impact of any tariffs or export controls imposed in the U.S. or China; compliance with trade protection measures or export restrictions; the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei and HiSilicon; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” section of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 and the Quarterly Report on Form 10-Q for the period ended September 29, 2019. The forward-looking statements provided by Teradyne in this press release represent management’s views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause management’s views to change. However, while Teradyne may elect to update these forward-looking statements at some point in the future, Teradyne specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Teradyne’s views as of any date subsequent to the date of this release.

TERADYNE, INC. REPORT FOR FOURTH FISCAL QUARTER OF 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Quarter Ended Twelve Months Ended
December 31,2019 September 29,2019 December 31,2018 December 31,2019 December 31,2018
Net revenues $654,650 $582,038 $519,558 $2,294,965 $2,100,802
Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) 271,412 237,000 210,022 955,136 880,408
Gross profit 383,238 345,038 309,536 1,339,829 1,220,394
Operating expenses:
Selling and administrative (2) 117,092 109,166 100,552 437,083 390,669
Engineering and development 86,794 77,804 74,706 322,824 301,505
Acquired intangible assets amortization 9,784 9,647 10,559 40,147 39,191
Restructuring and other (3) (2,088) (6,500) 11,446 (13,880) 15,232
Total operating expenses 211,582 190,117 197,263 786,176 746,597
Income from operations 171,656 154,921 112,273 553,653 473,797
Interest and other expense (4) 7,770 3,188 1,144 12,881 5,996
Income before income taxes 163,886 151,733 111,129 540,772 467,801
Income tax provision (benefit) (5) 27,103 15,873 (32,662) 61,597 16,022
Net income $136,783 $135,860 $143,791 $479,175 $451,779
Net income per common share:
Basic $0.82 $0.80 $0.80 $2.81 $2.41
Diluted $0.75 $0.75 $0.79 $2.67 $2.35
Weighted average common shares - basic 167,286 169,641 178,958 170,425 187,672
Weighted average common shares - diluted (6) 181,780 180,494 181,520 179,459 192,605
Cash dividend declared per common share $0.09 $0.09 $0.09 $0.36 $0.36
(1)Cost of revenues includes: Quarter Ended Twelve Months Ended
December 31,2019 September 29,2019 December 31,2018 December 31,2019 December 31,2018
Provision for excess and obsolete inventory $6,396 $3,049 $1,720 $15,244 $11,242
Sale of previously written down inventory (1,222) (821) (1,501) (3,184) (6,679)
Inventory step-up 64 - - 447 372
$5,238 $2,228 $219 $12,507 $4,935
(2)For the three months ended September 29, 2019 and the twelve months ended December 31, 2019, selling and administrative expenses include an equity charge of $2.1 million for the modification of Teradyne's retired CFO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement.
(3)Restructuring and other consists of: Quarter Ended Twelve Months Ended
December 31,2019 September 29,2019 December 31,2018 December 31,2019 December 31,2018
Contingent consideration fair value adjustment $(2,796) $(7,759) $10,223 $(19,257) $987
Employee severance 460 808 768 2,871 8,714
Acquisition related expenses and compensation 248 451 455 2,506 4,584
Other - - - - 947
$(2,088) $(6,500) $11,446 $(13,880) $15,232
(4)Interest and other includes: Quarter Ended Twelve Months Ended
December 31,2019 September 29,2019 December 31,2018 December 31,2019 December 31,2018
Non-cash convertible debt interest $3,496 $3,453 $3,327 $13,728 $13,064
Pension actuarial loss (gain) 7,727 - (3,512) 8,176 (3,316)
$11,223 $3,453 $(185) $21,904 $9,748
(5)For the twelve months ended December 31, 2019, income tax provision (benefit) includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne's 2015 Federal tax return. For the quarter and twelve months ended December 31, 2018 income tax provision (benefit) includes a $52 million tax benefit related to the finalization of our toll tax charge.
(6)Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarters ended December 31, 2019, September 29, 2019 and December 31, 2018, 7.3 million, 5.8 million and 0.9 million shares, respectively, have been included in diluted shares. For the twelve months ended December 31, 2019 and December 31, 2018, 4.9 million and 2.7 million shares, respectively, have been included in diluted shares. For the three months ended December 31, 2019 and September 29, 2019, diluted shares also included 5.4 million and 3.6 million shares, respectively, from the convertible note hedge transaction. For the twelve months ended December 31, 2019 and December 31, 2018, diluted shares included 2.7 million and 0.5 million shares, respectively, from the convertible note hedge transaction.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
December 31,2019 December 31,2018
Assets
Cash and cash equivalents $773,924 $926,752
Marketable securities 137,303 190,096
Accounts receivable, net 362,368 291,267
Inventories, net 196,691 153,541
Prepayments and other current assets 188,598 170,826
Total current assets 1,658,884 1,732,482
Property, plant and equipment, net 320,216 279,821
Operating lease right-of-use assets, net 57,539 -
Marketable securities 104,490 87,731
Deferred tax assets 71,894 70,848
Other assets 22,985 11,509
Retirement plans assets 18,457 16,883
Acquired intangible assets, net 125,480 125,482
Goodwill 416,431 381,850
Total assets $2,796,376 $2,706,606
Liabilities
Accounts payable $126,617 $100,688
Accrued employees' compensation and withholdings 163,883 148,566
Deferred revenue and customer advances 104,876 77,711
Other accrued liabilities 70,871 78,272
Operating lease liabilities 19,476 -
Contingent consideration 9,106 34,865
Income taxes payable 44,200 36,185
Total current liabilities 539,029 476,287
Retirement plans liabilities 134,471 117,456
Long-term deferred revenue and customer advances 45,974 32,750
Deferred tax liabilities 14,070 20,662
Long-term other accrued liabilities 17,188 37,547
Long-term contingent consideration 30,599 35,678
Long-term operating lease liabilities 45,849 -
Long-term income taxes payable 82,642 83,891
Debt 394,687 379,981
Total liabilities 1,304,509 1,184,252
Shareholders' equity 1,491,867 1,522,354
Total liabilities and shareholders' equity $2,796,376 $2,706,606
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Quarter Ended Twelve Months Ended
December 31,2019 December 31,2018 December 31,2019 December 31,2018
Cash flows from operating activities:
Net income $136,783 $143,791 $479,175 $451,779
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 19,326 17,485 70,834 67,415
Amortization 12,972 12,900 49,821 45,809
Deferred taxes (3,186) 3,898 (6,163) 28,340
Stock-based compensation 9,075 8,250 37,897 33,577
Provision for excess and obsolete inventory 6,396 1,720 15,244 11,242
Contingent consideration fair value adjustment (2,796) 10,223 (19,257) 987
Retirement plans actuarial losses (gains) 7,727 (3,512) 8,176 (3,316)
(Gains) Losses on marketable securities (1,875) 3,914 (6,033) 3,494
Other 153 144 766 1,083
Changes in operating assets and liabilities, net of businesses acquired:
Accounts receivable (3,651) 59,869 (70,440) (17,938)
Inventories (13,265) 4,619 (27,408) (29,498)
Prepayments and other assets (5,319) (29,683) (21,437) (58,402)
Accounts payable and other liabilities 28,472 (2,431) 49,279 13,693
Deferred revenue and customer advances 11,534 3,556 39,313 13,379
Retirement plans contributions (1,311) (1,090) (5,086) (4,334)
Income taxes 15,293 (47,277) (15,931) (80,429)
Net cash provided by operating activities 216,328 186,376 578,750 476,881
Cash flows from investing activities:
Purchases of property, plant and equipment (38,594) (26,110) (134,642) (114,379)
Proceeds from government subsidy for property, plant and equipment - - - 7,920
Purchases of marketable securities (57,162) (109,223) (662,701) (918,744)
Proceeds from sales of marketable securities 45,312 2,958 105,586 846,122
Proceeds from maturities of marketable securities 218,455 336,339 611,927 1,270,439
Proceeds from life insurance - - 2,912 1,126
Purchase of investments and acquisition of businesses, net of cash acquired (57,772) - (79,742) (169,474)
Net cash provided by (used for) investing activities 110,239 203,964 (156,660) 923,010
Cash flows from financing activities:
Issuance of common stock under stock purchase and stock option plans 33 14 29,312 20,973
Repurchase of common stock (131,218) (261,215) (500,000) (823,478)
Dividend payments (15,036) (16,002) (61,305) (67,322)
Payments related to net settlement of employee stock compensation awards (192) (182) (14,741) (20,023)
Payments of contingent consideration - - (27,615) (13,571)
Net cash used for financing activities (146,413) (277,385) (574,349) (903,421)
Effects of exchange rate changes on cash and cash equivalents (169) (222) (569) 439
Increase (decrease) in cash and cash equivalents 179,985 112,733 (152,828) 496,909
Cash and cash equivalents at beginning of period 593,939 814,019 926,752 429,843
Cash and cash equivalents at end of period $773,924 $926,752 $773,924 $926,752

GAAP to Non-GAAP Earnings Reconciliation
(In millions, except per share amounts)
Quarter Ended
December 31,2019 % of NetRevenues September 29,2019 % of NetRevenues December 31,2018 % of NetRevenues
Net revenues$654.7 $582.0 $519.6
Gross profit GAAP$383.2 58.5% $345.0 59.3% $309.5 59.6%
Inventory step-up 0.1 0.0% - - - -
Gross profit non-GAAP$383.3 58.5% $345.0 59.3% $309.5 59.6%
Income from operations - GAAP$171.7 26.2% $154.9 26.6% $112.3 21.6%
Acquired intangible assets amortization 9.8 1.5% 9.6 1.6% 10.6 2.0%
Restructuring and other (2) (2.1) -0.3% (6.5) -1.1% 11.4 2.2%
Inventory step-up 0.1 0.0% - - - -
Equity modification charge (1) - - 2.1 0.4% - -
Income from operations - non-GAAP$179.5 27.4% $160.1 27.5% $134.3 25.8%
Net Income per common share Net Income per common share Net Income per common share
December 31,2019 % of NetRevenues Basic Diluted September 29,2019 % of NetRevenues Basic Diluted December 31,2018 % of NetRevenues Basic Diluted
Net income - GAAP$136.8 20.9% $0.82 $0.75 $135.9 23.4% $0.80 $0.75 $143.8 27.7% $0.80 $0.79
Acquired intangible assets amortization 9.8 1.5% 0.06 0.05 9.6 1.6% 0.06 0.05 10.6 2.0% 0.06 0.06
Interest and other (3) 3.5 0.5% 0.02 0.02 3.5 0.6% 0.02 0.02 3.3 0.6% 0.02 0.02
Equity modification charge (1) - - - - 2.1 0.4% 0.01 0.01 - - - -
Restructuring and other (2) (2.1) -0.3% (0.01) (0.01) (6.5) -1.1% (0.04) (0.04) 11.4 2.2% 0.06 0.06
Pension mark-to-market adjustment (3) 7.7 1.2% 0.05 0.04 - - - - (3.5) -0.7% (0.02) (0.02)
Inventory step-up 0.1 0.0% 0.00 0.00 - - - - - - - -
Exclude discrete tax adjustments (4) 1.4 0.2% 0.01 0.01 (7.7) -1.3% (0.05) (0.04) (52.9) -10.2% (0.30) (0.29)
Non-GAAP tax adjustments (4.5) -0.7% (0.03) (0.02) (3.5) -0.6% (0.02) (0.02) 0.3 0.1% 0.00 0.00
Convertible share adjustment (5) - - - 0.03 - - - 0.02 - - - -
Net income - non-GAAP (5)$152.7 23.3% $0.91 $0.88 $133.4 22.9% $0.79 $0.77 $113.0 21.7% $0.63 $0.63
GAAP and non-GAAP weighted average common shares - basic 167.3 169.6 179.0
GAAP weighted average common shares - diluted 181.8 180.5 181.5
Exclude dilutive shares related to convertible note transaction (7.3) (5.8) (0.9)
Non-GAAP weighted average common shares - diluted (5) 174.5 174.7 180.6
(1)For the quarter ended September 29, 2019, selling and administrative expenses include an equity charge for the modification of Teradyne's retired CFO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement.
(2)Restructuring and other consists of:
Quarter Ended
December 31,2019 September 29,2019 December 31,2018
Contingent consideration fair value adjustment$(2.8) $(7.8) $10.2
Acquisition related expenses and compensation 0.2 0.5 0.5
Employee severance 0.5 0.8 0.8
$(2.1) $(6.5) $11.4
(3)For the quarters ended December 31, 2019, September 29, 2019, and December 31, 2018, adjustment to exclude non-cash convertible debt interest expense. For the quarters ended December 31, 2019 and 2018, adjustment to exclude actuarial losses (gains) recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.
(4)For the quarters ended December 31, 2019, September 29, 2019, and December 31, 2018, adjustment to exclude discrete income tax items. For the quarter ended December 31, 2018, adjustment to treat the $52 million tax benefit related to the finalization of our toll tax charge as a discrete item.
(5)For the quarters ended December 31, 2019 and September 29, 2019, the non-GAAP diluted EPS calculation adds back $1.3 million of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 5.4 million and 3.6 million shares, respectively, related to the convertible debt hedge transaction.
Twelve Months Ended
December 31,2019 % of NetRevenues December 31,2018 % of NetRevenues
Net Revenues$2,295.0 $2,100.8
Gross profit GAAP$1,339.8 58.4% $1,220.4 58.1%
Inventory step-up 0.4 0.0% 0.4 0.0%
Gross profit non-GAAP$1,340.2 58.4% $1,220.8 58.1%
Income from operations - GAAP$553.7 24.1% $473.8 22.6%
Acquired intangible assets amortization 40.1 1.7% 39.2 1.9%
Equity modification charge (1) 2.1 0.1% - -
Restructuring and other (2) (13.9) -0.6% 15.2 0.7%
Inventory step-up 0.4 0.0% 0.4 0.0%
Income from operations - non-GAAP$582.4 25.4% $528.6 25.2%
Net Income per common share Net Income per common share
December 31,2019 % of NetRevenues Basic Diluted December 31,2018 % of NetRevenues Basic Diluted
Net income - GAAP$479.2 20.9% $2.81 $2.67 $451.8 21.5% $2.41 $2.35
Acquired intangible assets amortization 40.1 1.7% 0.24 0.22 39.2 1.9% 0.21 0.20
Interest and other (3) 13.7 0.6% 0.08 0.08 13.1 0.6% 0.07 0.07
Equity modification charge (1) 2.1 0.1% 0.01 0.01 - - - -
Restructuring and other (2) (13.9) -0.6% (0.08) (0.08) 15.2 0.7% 0.08 0.08
Inventory step-up 0.4 0.0% 0.00 0.00 0.4 0.0% 0.00 0.00
Pension mark-to-market adjustment (3) 8.2 0.4% 0.05 0.05 (3.3) -0.2% (0.02) (0.02)
Exclude discrete tax adjustments (4) (22.6) -1.0% (0.13) (0.13) (59.4) -2.8% (0.32) (0.31)
Non-GAAP tax adjustments (13.4) -0.6% (0.08) (0.07) (8.4) -0.4% (0.04) (0.04)
Convertible share adjustment (5) - - - 0.11 - - - 0.04
Net income - non-GAAP (5)$493.8 21.5% $2.90 $2.86 $448.6 21.4% $2.39 $2.37
GAAP and non-GAAP weighted average common shares - basic 170.4 187.7
GAAP weighted average common shares - diluted 179.5 192.6
Exclude dilutive shares from convertible note (4.9) (3.2)
Non-GAAP weighted average common shares - diluted (5) 174.6 189.4
(1)For the twelve months ended December 31, 2019, selling and administrative expenses include an equity charge for the modification of Teradyne's retired CFO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement.
(2)Restructuring and other consists of:
Twelve Months Ended
December 31,2019 December 31,2018
Contingent consideration fair value adjustment$(19.3) $1.0
Employee severance 2.9 8.7
Acquisition related expenses and compensation 2.5 4.6
Other - 0.9
$(13.9) $15.2
(3)For the twelve months ended December 31, 2019 and December 31, 2018, Interest and other included non-cash convertible debt interest expense. For the twelve months ended December 31, 2019 and December 31, 2018, adjustments to exclude actuarial losses (gains) recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.
(4)For the twelve months ended December 31, 2019 and December 31, 2018, adjustment to exclude discrete income tax items. For the twelve months ended December 31, 2019, GAAP income tax provision (benefit) includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne's 2015 Federal tax return. For the twelve months ended December 31, 2018, adjustment to treat the $52 million tax benefit related to the finalization of our toll tax charge as a discrete item.
(5)For the twelve months ended December 31, 2019, the non-GAAP diluted EPS calculation adds back $5.2 million of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 2.7 million shares related to the convertible debt hedge transaction.
MiR's revenue increase for the period January 1, 2019 to December 31, 2019 compared to the period April 23, 2018 to December 31, 2018 is 84%. MiR's pro-forma revenue increase for the period January 1, 2019 to December 31, 2019 compared to the period January 1, 2018 to December 31, 2018 is 43%.
GAAP to Non-GAAP Reconciliation of First Quarter 2020 guidance:
GAAP and non-GAAP first quarter revenue guidance: $670 million to$710 million
GAAP net income per diluted share $0.75 $0.85
Exclude acquired intangible assets amortization 0.05 0.05
Exclude non-cash convertible debt interest 0.02 0.02
Tax effect of non-GAAP adjustments (0.01) (0.01)
Convertible share adjustment 0.05 0.05
Non-GAAP net income per diluted share $0.86 $0.96
For press releases and other information of interest to investors, please visit Teradyne's homepage at http://www.teradyne.com.
Contact: Teradyne, Inc.
Andy Blanchard 978-370-2425
Vice President of Corporate Relations

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Source: Teradyne, Inc.

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