☒ | ANNUAL 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 |
MASSACHUSETTS | 04-2272148 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) |
600 RIVERPARK DRIVE NORTH READING, MASSACHUSETTS | 01864 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of | Trading Symbol(s) | Name of | ||
which registered | ||||
Common Stock, par value $0.125 per share | TER | Nasdaq Stock Market LLC |
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
| Emerging growth company | ☐ | |||||
TERADYNE, INC.
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TERADYNE, INC.
FORM
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form
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PART I
| Item 1: | Business |
Teradyne, Inc. (“Teradyne”) was founded in 1960 and is a leading global supplier of automationautomated test equipment for test and industrial applications.
We design, develop, manufacture and sell automatic test systems and robotics products. Our automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in themany industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our industrial automationrobotics products include collaborative robotic arms and autonomous mobile robots and advanced robotic control software(“AMRs”) used by global manufacturing, logistics and light industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Our automatic test equipment and industrial automationrobotics products and services include:
semiconductor test (“Semiconductor Test”) systems;
storage and system level test (“Storage 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”);
wireless test (“Wireless Test”) systems.systems; and
robotics (“Robotics”) products.
The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our products both through direct sales and sales to the customer’s supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.
In 2019, revenue2022, the demand in the mobility and compute segments of our test businesses exceeded our planSemiconductor Test business was lower due to end market slowdown in these segments as well as a result of Semiconductor Test demandslower technology transition in China, early 5G test investments and strength in our System Test businesses. The revenue growthone of our Industrial Automation business was below our plan. In 2020,largest end-markets. While the depth of the slowdown and the timing of the recovery are uncertain, we expect continued strong momentumthe ramp of 3 nanometer process technology starting in 2023 followed by gate-all-around process technology, increasing multichip packaging, additional device complexity and unit growth will drive additional demand for test over our test businessesfour year forecast period.
Our Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms and improvement in the growth of our Industrial Automation businesses.
Both our test and robotics businesses may continue to be influenced by supply constraints, which could impact our revenue and costs in 2023. In 2022, inflation had minimal effect on our results. In 2022, we were unable to supply approximately $20 million of revenue in our test businesses for which we had customer demand.
Our financial statements are denominated in U.S. dollars. While the majority of our revenues are in U.S. dollars, approximately 70 percent of our Robotics revenue is denominated in foreign currencies. In 2022, the strengthening of the global forklift market. The total purchase priceU.S. dollar was approximately $81.7 million, which included cash paid of approximately $57.8 million and $24.0 milliona factor in fair value of contingent consideration payable upon achievement of certain performance targets, extending potentially through 2022. The maximum contingent consideration that could be paid is $106.9 million. AutoGuide’s AMRs are used for material transport of payloads up to 4,500 kg in manufacturing, warehouse and logistics applications. These products complement MiR’s lower payload products. AutoGuide is includedthan forecasted revenues in our Industrial AutomationRobotics segment. Continued strengthening of the U.S. dollar would adversely affect Robotics revenue growth in 2023.
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Our corporate strategy continues to focus on profitably gaining market share in our test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our Robotics businesses. We plan to continue investing in our growth while balancing capital allocations between returning capital to our shareholders through stock repurchases and dividends and using capital for acquisitions.
Investor Information
We are a Massachusetts corporation incorporated on September 23, 1960. We are subject to the informational requirements of the Securities Exchange Act of 1934 (“Exchange Act”). We file periodic reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”).SEC. The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file documents electronically.
You can access financial and other information, including the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, our Corporate Governance Guidelines and Code of Conduct, by clicking the Investors link on our web site at www.teradyne.com. We make available, free of charge, copies of our filings with the SEC, including our annual reports on Form
Products
Semiconductor Test
We design, manufacture, sell and support Semiconductor Test products and services on a worldwide basis. The test systems we provide are used both for wafer level and device package testing.testing of semiconductor devices. These chipsdevices are used in automotive, industrial, communications, consumer, smartphones, andcloud, computer and electronic game applications, among others. Semiconductor devices span a broad range of functionality, from very simple
improve and control product quality;
measure and improve product performance;
reduce time to market; and
increase production yields.
Our FLEX Test Platform architecture advances our core technologies to produce test equipment that is designed for high efficiency multi-site testing. Multi-site testing involves the simultaneous testing of many devices in parallel. Leading semiconductor manufacturers are using multi-site testing to significantly improve their “Cost of Test” economics. The FLEX Test Platform architecture addresses customer requirements through the following key capabilities:
A high efficiency multi-site architecture that reduces tester overhead such as instrument setup, synchronization and data movement, and signal processing;
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The
Broad technology coverage by instruments designed to cover the range of test parameters, coupled with a universal slot test head design that allows easy test system reconfiguration to address changing test needs.
FLEX Test Platform purchases are made by IDMs, OSATs, Foundries and Fabless customers. The FLEX Test Platform has become a widely used test solution at OSATs by providing versatile testers that can handle the widest range of devices, allowing OSATs to leverage their capital investments. The broad consumer, automotive and broadband markets have historically driven most of the device volume growth in the semiconductor industry. These markets include smartphones, cellmobile phones and tablets, set top boxes, HDTVs, game controllers, computer graphics,PCs, servers, networking and automotive controllers to name a few.electronics. These end use markets continue to be drivers for the FLEX
Our J750
Our Magnum platform addresses the requirements of mass production test of memory devices such asfor flash memory and DRAM.DRAM memory. Flash and DRAM memory are widely used core building blocks in modern electronic products finding wide application in consumer, industrial, and computing equipment. Magnum V,7, the newest member of the family introduced at the end of 2021, is a next generation memory test solution designed for parallel memory test in the flash, DRAM and multi-chip package markets. In 2019, we introduced a high-speed DRAM test version of our Magnum platform called Magnum EpicEPIC giving us full product coverage of the memory test market. The Magnum platform has an installed base of over 2,800 systems.
Our ETS platform is used by semiconductor manufacturers and assembly and test subcontractors, primarily in the analog/mixed signal markets that cover more cost sensitive applications. Our proprietary SmartPin
System Test
Our System Test segment is comprised of three business units: Defense/Aerospace, Storage Test, Defense/Aerospace, and Production Board Test.
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Storage Test
The Storage Test business unit addresses the high throughput, automated manufacturing test requirements of hard disk drive (“HDD”) and semiconductor manufacturers. Our HDD products address the client and enterprise storage markets. The client market is driven by the needs of desktop, laptop, and external HDD storage products. The enterprise market is driven by the needs of data centers and cloud storage. Our system level test product for the semiconductor production market is used to test devices following wafer and package test. The business unit’s products lead in addressing customer requirements related to factory density, throughput and thermal performance.
Defense/Aerospace
We are a leading provider of high performance test systems, subsystems, instruments and service for the defense and aerospace markets. Our test products are used to ensure the readiness of military and commercial aerospace electronics systems. New programs, such as tactical aircraft and missile systems, as well as upgrade programs, continue to fuel the demand for high performance test systems in this market. Our test products are well-suited to the demands of defense/aerospace electronics manufacturers and repair depots worldwide. Our leadership in this market is underscored by our success with major Department of Defense programs across all U.S. military service branches and many allied defense services worldwide.
Production Board Test
Our test systems are used by electronics manufacturers and OEMs worldwide to perform
Wireless Test
Our acquisition of LitePoint in 2011 and ZTEC Instruments Inc. (“ZTEC”) in 2013 expanded our product offerings in the wireless test market. UnderWireless Test business operates under the LitePoint brand name these products provideand provides test solutions utilized in the development and manufacturing of wireless devices.devices and modules. The world’s leading makers of smartphones, tablets, notebooks, laptops, peripherals, and
LitePoint hardware and software wireless test solutions are used in test insertions that span design verification to high volume manufacturing and are deployed across the entire production
Design verification is an important step in the development process for evaluating product performance prior to starting production. As end market unit volumes have increased, the quantity of units and the amount of data that must be analyzed for a successful product launch continues to grow. LitePoint products provide easy to use, domain specific tools for rapid analysis of product performance. This helps to speed time to market.
In high volume manufacturing, before products are packaged and shipped, wireless test enables the calibration of each individual product’s wireless performance to improve range, data throughput and battery life. Testing also verifies product specifications for product quality control. As markets become increasingly competitive, product performance and quality provide brand differentiation.
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Wireless standards can be thought of in two categories,three categories: connectivity, cellular and cellular.location. Connectivity covers many standards such as
The IQxel product family’s high-performancehigh performance wireless and multi-device testing economics isare aligned with the needs of networking equipment, Internet gateways, IoT products and embedded modules used in smartphones, tablets, and PCs. In 2019, we2021, LitePoint introduced a new product in the IQxel familyIQxel-MX testing solution for the testing 7GHz WiFiof Wi-Fi devices. Another connectivity product, the IQnfc, addresses the growing use of NFC technology for payments with mobile devices.
Cellular standards include 2G, 3G, 4G and emergingthe new 5G mobile phone technologies. LitePoint’s IQxstream is a multi-device production test optimized solution for high-speedhigh speed testing of GSM, EDGE, CDMA2000,
Location technologies have traditionally been satellite-based wireless signals such as GPS and GLONASS, which are tested on LitePoint’s connectivity and cellular equipment. A new producttechnology called Ultra-WideBand is being adopted in the IQgig family for testing
To complement the test systems, LitePoint offers turnkey test software for over 350 of the most popular wireless chipsets. These optimized solutions provide rapid development of high volume manufacturing solutions with a minimum of engineering effort by customers.
Robotics
Our Robotics segment is comprised of two business units: Universal Robots and Mobile Industrial Robots.
Universal Robots
Universal Robots is a leading supplier of collaborative robots, which are low-cost, easy-to-deploy and simple-to-program robots that work side by side with production workers to improve quality, increase manufacturing efficiency and decrease manufacturing costs. Collaborative robots are designed to mimic the motion of a human arm and can be fitted with task specific grippers or end effectors to support a wide range of applications. Universal Robots offers a variety of collaborative robot models, including the UR3, UR5, UR10, UR16 and UR20, each with different weight carrying capacity and arm reach. All models are easily integrated into existing production environments. Universal Robots’ products are differentiated by their:
easy programming using a graphical interface which allows users to program the collaborative robot in a few hours;
flexibility and ease of use in allowing customers to change the task the collaborative robot is performing as their production demands dictate;
safe operations as collaborative robots can assist workers in side-by-side production environments requiring no special safety enclosures or shielding to protect workers; and
short payback period, on average 12-18 months.
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In 2018, Universal Robots introduced its e-Series collaborative robots which include technology advances that enable faster development of applications, greater precision and improved safety. Universal Robots offers four e-Series collaborative robot models UR3e, UR5e, UR10e, and UR16e. In 2021, Universal Robots introduced the upgraded version of its UR10e with 25% more payload to address market demand. In 2022, Universal Robots introduced the first of its next generation industrial collaborative robots, the UR20. This model, which begins shipment in the first half of 2023, has a 1750 millimeter reach and 20 kg payload capacity. UR20 handles more tasks, fits more applications and assists in more environments.
Mobile Industrial Robots
In September 2022, we merged MiR and AutoGuide to become a single supplier of AMRs to accelerate the creation of the industry’s widest ranging autonomous mobile robot platform for the manufacturing and logistics segments. MiR is a leading supplier of AMRs, which are low-cost, easy-to-deploy and simple-to-program mobile robots that increase manufacturing and warehouse efficiency and decrease costs. Collaborative autonomous mobile robots are designed to move material from point to point via autonomous navigation rather than the need for traditional mobile robot guidance infrastructure such as painted or magnetic strips and are designed to navigate safely around obstacles and people. MiR offers four collaborative autonomous mobile robot models, MiR100, MiR250, MiR600 and MiR1350, each with different payload carrying capacity. MiR 600 and MiR1350 were launched in the fall 2021. All models can be easily integrated into existing production environments. MiR’s products are differentiated by their:
easy programming using a graphical interface which allows users to program the AMR in a few hours;
ease of use, speed of deployment and flexibility in allowing customers to change the task as their demands dictate;
reliable autonomous navigation over large manufacturing and warehouse areas; and
short payback period, on average 12–24 months.
MiR also supports high payload AMRs, an emerging and fast-growing segment of the global forklift market used for material transport of payloads up to 4,500 kg in manufacturing, warehouse and logistics applications. These products complement MiR’s lower payload products.
Sales and Distribution
In 20192021 and 2018, no single direct customer accounted for more than 10% of our consolidated revenues. In 2017,2020, revenues from Taiwan Semiconductor Manufacturing Company Ltd. accounted for 13% of our consolidated revenues. Taiwan Semiconductor Manufacturing Company Ltd. is, a customer of our Semiconductor Test segment.segment, accounted for 12% and 15%, respectively, of our consolidated revenues. In each of the years, 2019, 20182022, 2021 and 2017,2020, our five largest direct customers in aggregate accounted for 27%26%, 27%33% and 32%36% of our consolidated revenues, respectively.
OSAT customers, such as Taiwan Semiconductor Manufacturing Company Ltd., often purchase our test systems based upon recommendations from OEMs, IDMs and Fabless companies. In all cases when an OSAT customer purchases a test system from us, we consider the OSAT as the customer since credit risk, title and risk of loss, among other things, are between Teradyne and the OSAT. We estimate consolidated revenues driven by Huawei Technologies Co. Ltd. (“Huawei”),Qualcomm, a customer of our Semiconductor Test, System Test, and Wireless Test segments, combining direct and indirect sales, to that customer with sales to the customer’s OSATs, accounted for approximately 11%, 4% and 1% of our consolidated revenues in 2019, 20182022 and 2017,
We have sales and service offices located throughout North America, Central America, Asia and Europe. We sell in these areas predominantly through a direct sales force, except for Industrial AutomationRobotics products, which are sold
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principally through distributors. Our manufacturing activities for our test businesses are primarily conducted through subcontractors and outsourced contract manufacturers with significant operations in China and Malaysia.
Sales to customers outside the United States were 85%, 87%89%, and 88%90%, respectively, of our consolidated revenues in 2019, 20182022, 2021 and 2017.2020. Sales are attributed to geographic areas based on the location of the customer site.
See also “Item 1A: Risk Factors” and Note T: “Operating Segment, Geographic and Significant Customer Information” in Notes to Consolidated Financial Statements.
Competition
We face significant competition throughout the world in each of our reportable segments. Competitors in the Semiconductor Test segment include, among others, Advantest Corporation and Cohu, Inc.
Competitors in the System Test segment include, among others, Keysight Technologies, Inc., Advantest Corporation, Test Research, Inc. and SPEA S.p.A.
Competitors in our Industrial AutomationWireless Test segment include, among others, Rohde & Schwarz GmbH & Co. KG, Anritsu Company, Keysight Technologies, Inc., National Instruments Corporation, Welzek and iTest.
Competitors in our Robotics segment include manufacturers of traditional industrial robots such as KUKA Robotics Corporation, ABB, FANUC and Yaskawa Electric Corporation, companies with emerging collaborative robot offerings such as Techman, Doosan, and AUBO Robotics, and manufacturers of autonomous mobile robots such as Omron, Fetch, OTTO Motors, Vecna, Seegrid and Balyo.
Some of our competitors may have substantially greater financial and other resources to pursue engineering, manufacturing, marketing, and distribution of their products. We also face competition from emerging Asian companies and from internal suppliers at several of our customers. Some of our competitors have introduced or announced new products with certain performance characteristics which may be considered equal or superior to those we currently offer. We expect our competitors to continue to improve the performance of their current products and to introduce new products or new technologies that provide improved cost of ownership and performance characteristics. See also “Item 1A: Risk Factors.”
Backlog
At December 31, 20192022 and 2018,2021, our backlog of unfilled orders in our four reportable segments was as follows:
2019 | 2018 | |||||||
(in millions) | ||||||||
Semiconductor Test | $ | 543.2 | $ | 367.5 | ||||
System Test | 206.0 | 149.5 | ||||||
Wireless Test | 42.9 | 32.0 | ||||||
Industrial Automation | 17.9 | 19.7 | ||||||
| $ | 810.0 | $ | 568.7 | |||||
| 2022 | 2021 | |||||||
| (in millions) | ||||||||
Semiconductor Test | $ | 879.6 | $ | 824.1 | ||||
System Test | 253.0 | 375.4 | ||||||
Wireless Test | 60.0 | 56.8 | ||||||
Robotics | 42.6 | 28.1 | ||||||
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| |||||
| $ | 1,235.2 | $ | 1,284.4 | |||||
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Customers may delay delivery of products or cancel orders suddenly and without advanced notice, subject to possible cancellation penalties. Due to possible customer changes in delivery schedules and cancellation of orders, our backlog at any particular date is not necessarily indicative of the actual sales for any succeeding
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period. Delays in delivery schedules or cancellations of backlog during any particular period could have a material adverse effect on our business, financial condition or results of operations.
Raw Materials
Our products contain electronic and mechanical components that are provided by a wide range of suppliers. Some of these components are standard products, while others are manufactured to our specifications. We can experience occasionalhave experienced delays in obtaining timely delivery of certain items.components. These delays have impacted and may continue to impact the manufacturing of certain products and the timing of delivery of those products to our customers. While the majority of our components are available from multiple suppliers, certain items are obtained from sole sources. We may experience a temporary adverse impact if any of our sole source suppliers delay or cease to deliver products.
Intellectual Property and Licenses
The development of our products, both hardware and software, is based in significant part on proprietary information, our brands and technology. We protect our rights in proprietary information, brands and technology through various methods, such as:
patents;
copyrights;
trademarks;
trade secrets;
standards of business conduct and related business practices; and
technology license agreements, software license agreements,
However, these protections might not be effective in all circumstances. Competitors might independently develop similar technology or exploit our proprietary information and our brands in countries where we lack enforceable intellectual property rights or where enforcement of such rights through the legal system provides an insufficient deterrent. Also, intellectual property protections can lapse or be invalidated through appropriate legal processes. We do not believe that any single piece of intellectual property or proprietary rights is essential to our business.
Human Capital
We believe that our future success depends upon our continued ability to attract, develop, and retain a high-performance workforce, comprised of people with shared values. As of December 31, 2019,2022, we employed approximately 5,400 people.6,500 employees, of whom approximately 2,000 were employed in the United States and approximately 4,500 were employed outside of the United States. Our largest non-US employee populations are in the Philippines (17%), Denmark (12%), China (11%), Taiwan (6%) and Costa Rica (6%). We also leverage contractors to provide flexibility for our business and manufacturing needs. As of December 31, 2022, we worked with approximately 300 contractors globally. Since the inception of our business, we have experienced no work stoppages or other labor disturbances.
Corporate Culture
Our core values are conducting business with honesty and integrity, collaborating with our colleagues as a company without doors, and partnering with our customers every step of the way, because customers count on us.
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We strive to foster a positive work environment that helps employees thrive. It is a priority for us to ensure that our people feel inspired, supported, safe and able to achieve their personal best. We are committed to equality through nondiscrimination, harassment prevention and pay equity policies. We value a diverse, inclusive and respectful work environment where all employees enjoy challenging assignments, development opportunities and a safe, positive culture.
We are committed to conducting business in a responsible manner, with strategic operational policies, procedures and values that support transparency, sustainability and legal compliance. We ensure ethical operations and business commitments through robust governance of the company’s code of conduct and global environmental, health and safety programs.
Competitive Pay and Benefits
The primary objective of our compensation program is to provide a compensation and benefits package that will continue to attract, retain, motivate and reward high performing employees who operate in a highly competitive and technologically challenging environment. We seek to achieve this objective by linking a significant portion of compensation to company and business unit performance. We enable employees worldwide to share in the success of the company through various programs including a stock purchase program, equity compensation, profit sharing and bonus plans. We seek competitiveness and fairness in total compensation with reference to peer comparisons and internal equity.
In addition to providing our employees with competitive compensation packages, we offer benefits designed to meet the needs of employees and their families worldwide, including paid time off, parental leave, bereavement leave, health insurance coverage, flexible work arrangements, contributions to retirement savings, and access to employee assistance and work-life programs.
Employee Development and Training
We believe that employee development and training is a key factor in attracting, motivating, improving and retaining a strong, competitive global workforce. We provide continual development to our employees focused on developing their job skills and competencies. Examples include new manager competencies like giving feedback and coaching, and training in software development tools and project management. Our employees worldwide also receive annual performance reviews and are involved in setting goals for their own development and performance. Employees and managers look back on the previous year, review career development plans and create goals for the next year. In 2022, we implemented a new learning management system integrated with our human resource system. This enabled our business to more easily create and offer business training courses.
We are committed to recruiting and developing talent at the collegiate level to help advance Science, Technology, Engineering and Mathematics (“STEM”) education for the future generation. For example, our paid internships and entry-level positions offer real-world experience, and our co-op program offers higher education students a unique learning opportunity as students alternate one semester in a work assignment and one semester in the classroom. Additionally, we offer reimbursement for educational courses related to an employee’s work or as part of a degree program, including tuition, lab fees and books. We also offer a scholarship program for employees with college-age children and grandchildren. In 2022, almost half of the scholarship recipients were outside of the United States.
Employee Engagement
We conduct regular employee surveys to check in with our global workforce and obtain input on a number of topics. The feedback we receive from these surveys helps us assess employee sentiment, identify areas of improvement and guides our decision-making as it relates to people management. In addition, our CEO and other executives meet with employees wordwide on a frequent basis through exchange meetings and quarterly
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webcasts. The exchange meetings allow the executives to directly interact with a small group of employees, while the global webcasts enable all employees to engage with senior leaders and ask questions in an open Q&A session.
We also offer employees worldwide an opportunity to network and connect with colleagues who share similar interests. This includes global groups such as New Employees to Teradyne, Woman’s Affinity Group, Veterans, Blue and Green (for team members that are committed to the environment), Runner’s affinity group and LGBTQ+ advocates.
Diversity and Inclusion
We believe in fostering a diverse workforce and equitable and inclusive culture in order to build a stronger and more resilient company for our customers, our employees and our communities worldwide. To support this effort, we have a Diversity and Inclusion Charter which was developed by our Diversity, Equity and Inclusion (“DEI”) executive sub-committee and designed to ensure that we build diversity across our workforce. In addition, in 2021, we hired our first DEI program manager and launched an internal DEI website for employees. We have established programs for recruiting and hiring candidates from various backgrounds and experiences. We have implemented policies regarding gender pay equity and have conducted audits in the United States which have not identified any pay equity issues in the employee populations tested. We conduct mandatory DEI-related training for our employees worldwide and offer a wide variety of optional DEI-related training courses as well. We are an equal opportunity and affirmative action employer committed to making employment decisions without regard to race, religion, ethnicity or national origin, gender, sexual orientation, gender identity or expression, age, disability, protected veteran status or any other characteristics protected by law.
We have a tradition of amplifying the charitable actions of our employees and responding to the needs of the communities where we work. To support positive change in society, we have donated to organizations fighting for social justice and racial equality. We also sponsor the Massachusetts Conference for Women and the California Conference for Women offering opportunities for business networking, professional development and personal growth. To make it easier for employees to support charitable activities and magnify the impact of support, we established a formal matching gift program, “Teradyne Cares.” The program matches up to $1,000 per year of an employee’s donations to qualified non-profit organizations.
Additionally, advancing education for future generations is a primary initiative at Teradyne. We support STEM programs at the middle, high school and collegiate level ranging from middle and high school robotics competitions to college scholarships, to underwriting university programs to increase the diversity of STEM graduates worldwide. We also donate test equipment and robots to colleges, universities, and vocational programs.
Health and Safety
The health and safety of our employees worldwide is our highest priority. We are committed to complying with all applicable regulatory health and safety requirements wherever we operate. We conduct internal audits, regular reviews and monitoring of regulations to ensure compliance with laws and regulations at the local, state, province and country levels. We ensure workers are provided with the knowledge to perform their jobs safely by deploying mandatory environmental, health and safety training. We also require contractors to complete safety training prior to working at any Teradyne site. We monitor, track and report common safety metrics such as accidents, near misses and illness. Our injury and illness rate is below the industry average. We also provide our employees with a flexible and adjustable workspace, which includes reviewing ergonomics issues in the workplace, educating employees to self-identify risks and ensuring they have the work environment they need to do their jobs safely and effectively.
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Throughout the novel coronavirus (COVID-19) pandemic, we have focused on ensuring the health and safety of our employees and providing the resources to effectively work remotely and to work in a safe environment when on site. We have encouraged our workforce to become fully vaccinated. We have also supported our global workforce by sending regular all-employee communications, providing development opportunities for managers and employees to support effectively working virtually, establishing emergency response teams to empower local decision-making, conducting surveys to check in with employees, sharing regular video updates from our leadership team, and establishing a well-defined return to work process.
Regulatory Environment
We are subject to various federal, state, and local government laws and regulations relating to international trade, business conduct, the protection of employee health and safety and the environment.
We accrue for all known environmental liabilities when it becomes probable that we will incur cleanup costs and those costs can reasonably be estimated. Estimated environmental costs are not expected to materially affect the financial position or results of our operations in future periods. However, estimates of future costs are subject to change due to protracted cleanup periods and changing environmental remediation laws and regulations.
We are subject to U.S. laws and regulations that limit and restrict the export of some of our products and services and may restrict our transactions with certain customers, business partners and other persons. In certain circumstances, export control and economic sanctions regulations prohibit the export of certain products, services, and technologies, and in other circumstances we are required to obtain an export license before exporting the controlled item. For example, we must comply with current U.S. Department of Commerce export control regulations restricting transactions with certain customers in China. We must also comply with export restrictions and laws imposed by other countries affecting trade and investments. We maintain an export compliance program but there are risks that the compliance controls could be circumvented, exposing us to legal liabilities. Compliance with these laws has limited our sales and likely will continue to limit sales to certain customers in the future. Changes in, and responses to, U.S. trade policy could reduce the competitiveness of our products and cause our sales to drop, which could have a material adverse effect on our business, financial condition or results of operations.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Pursuant to General Instruction G (3) of Form
Executive Officer | Age | Position | ||||||
Business Experience for The Past 5 Years | ||||||||
Gregory S. Smith | 59 | Chief Executive Officer, President and President | Chief Executive Officer since February | |||||
Sanjay Mehta | 54 | |||||||
Vice President, Chief Financial Officer and Treasurer | Vice President, Chief Financial Officer and Treasurer of Teradyne since April 2019; Senior Vice President and General Manager of Compute and XR Products at Qualcomm Technologies, Inc. (“Qualcomm”) from June 2018 to March 2019; President of Qualcomm’s semiconductor segment (“QCT”) China from March 2016 to June 2018; Senior Vice President Business Operations of QCT at Qualcomm from November 2015 to March 2016; Chief Financial Officer and Senior Vice President, Sales Operations, of QCT at Qualcomm from October 2010 to November 2015. | |||||||
Charles J. Gray | 61 | |||||||
Vice President, General Counsel and Secretary | Vice President, General Counsel and Secretary of Teradyne since April 2009. | |||||||
Bradford B. Robbins | 64 | |||||||
President of Wireless Test | President of Wireless Test since August 2014; Chief Operating Officer of LitePoint Corporation from 2012 to 2014; Vice President of Teradyne since 2001. | |||||||
Richard J. Burns | 60 | |||||||
President of Semiconductor Test | President of Semiconductor Test since | |||||||
| Item 1A: | Risk Factors |
The risks described below are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
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Risks Associated with Teradyne’s Markets
Our business is impacted by global and industry-specific economic cycles, which are difficult to predict, and actions we have taken or may take to offset these cycles may not be sufficient.
Capital equipment providers in the electronics, semiconductor industries and industrial automation,robotics, such as Teradyne, have, in the past, been negatively impacted by both sudden slowdowns in the global economies and recurring cyclicality within those industries. These cycles have resulted in periods of over-supply; a trend we believe will continue to occur. Our business and results of operations depend, in significant part, upon capital expenditures of manufacturers of semiconductors electronics and other industrial products, which in turn depend upon the current and anticipated market demand for those products. Disruption or deterioration in economic conditions may reduce customer purchases of our products, thereby reducing our revenues and earnings. In addition, such adverse changes in economic conditions, and resulting slowdowns in the market for our products, may, among other things, result in increased price competition for our products, increased risk of excess and obsolete inventories, increased risk in the collectability of our accounts receivable from our customers, potential reserves for doubtful accounts and write-offs of accounts receivable, increased risk of restructuring charges, and higher operating costs as a percentage of revenues, which, in each case and together, adversely affect our operating results. We are unable to predict the likely duration, frequency and severity of disruptions in financial markets, credit availability, and adverse economic conditions throughout the world, and we cannot ensure that the level of revenues or new orders for a fiscal quarter will be sustained in subsequent quarters. We have taken actions to address the effects of general economic variability and recurring industry cyclicality, including implementing cost control and reduction measures. We cannot predict whether these measures will be sufficient to offset global or market-specific disruptions that might affect our test businesses and we may need to take additional or different measures in the future.
We are subject to intense competition.
We face significant competition throughout the world in each of our reportable segments. Some of our competitors have substantial financial and other resources to pursue engineering, manufacturing, marketing and distribution of their products. We also face competition from emerging Asian companies and internal development at several of our customers. Some of our competitors have introduced or announced new products with certain performance characteristics that may be considered equal or superior to those we currently offer. We expect our competitors to continue to improve the performance of their current products and to introduce new products or new technologies that provide improved cost of ownership and performance characteristics. New product introductions by competitors could cause a decline in revenues or loss of market acceptance of our products.
The market for our products is concentrated, and our business depends, in part, on obtaining orders from a few significant customers.
The market for our products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. In each of the years, 2019, 20182022, 2021 and 2017,2020, our five largest direct customers in aggregate accounted for 27%26%, 27%33% and 32%36% of consolidated revenues, respectively.
We estimate consolidated revenues driven by Huawei,Qualcomm, a customer of our Semiconductor Test, System Test, and Wireless Test segments, combining direct and indirect sales to that customer with sales to the customer’s OSATs,Qualcomm, accounted for approximately 11%, 4% and 1% of our consolidated revenues in 2019, 20182022 and 2017, respectively.less than 10% in 2021 and 2020. We estimate consolidated revenues driven by anotherone OEM customer, of our Semiconductor Test and Wireless Test segments, combining direct sales to that customer with sales to the customer’s OSATs (which include Taiwan Semiconductor Manufacturing Company Ltd.), accounted for approximatelyless than 10%, 13% and 22% of our consolidated revenues in 2019, 20182022, and 2017, respectively. In any one reporting period, a single customer or several customers may contribute even a larger percentage19% and 25% of our consolidated revenues.revenues in 2021 and 2020, respectively.
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If we fail to develop new technologies to adapt to our customers’ needs and if our customers fail to accept our new products, our revenues will be adversely affected.
We believe that our technological position depends primarily on the technical competence and creative ability of our engineers. In addition,a rapidly evolving market, such as ours, the development or acquisition of new technologies, commercialization of those technologies into products and market acceptance and customer demand for those products are critical to our success. Successful product development or acquisition, introduction and acceptance depend upon a number of factors, including:
new product selection;
ability to increase sales will depend, in part, on our abilitymeet customer requirements including with respect to obtain orders from current or new significant customers. The opportunities to obtain orders from these customers may be limited, which may impair our ability to grow revenues. We expect that salessafety and cyber security;
development of competitive products by competitors;
timely and efficient completion of product design;
timely and efficient implementation of manufacturing and manufacturing processes;
timely remediation of product performance issues, if any, identified during testing;
assembly processes and product performance at customer locations;
differentiation of our products will continue to be concentrated with a limited numberfrom our competitors’ products;
management of significant customers for the foreseeable future. The
transition of customers to wait until late in a quarter to commit to purchase due to capital expenditure approvals and constraints occurring at the end of a quarter, or the hope of obtaining more favorable pricing from a competitor seeking the business;
compliance with product safety regulations;
ability to expandprotect products from cyber attacks when used by our global distribution channel for our collaborativecustomers;
ability to attract and mobile robots;retain technical talent; and
innovation that does not infringe on the intellectual property rights of third parties.
Risks Associated with Operating a decrease in the ultimate size of the market for our semiconductor and electronic test products; and
We are subject to risks of operating internationally.
A significant portion of our total revenues is derived from customers outside the United States. Our international sales and operations are subject to significant risks and difficulties, including:
unexpected changes in legal and regulatory requirements affecting international markets;
cost increases due to inflation
changes in tariffs and exchange rates;
social, political and economic instability, acts of terrorism and international conflicts;
disruption caused by health epidemics,pandemics, such as the coronavirus outbreak;coronavirus;
difficulties in protecting intellectual property;
difficulties in accounts receivable collection;
cultural differences in the conduct of business;
difficulties in staffing and managing international operations;
compliance with anti-corruption laws;
compliance with data privacy regulations;
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compliance with customs and trade regulations; and
compliance with international tax laws and regulations.
In addition, an increasing portion of our products and the products we purchase from our suppliers are sourced or manufactured in foreign locations, including China, Malaysia and Malaysia,Denmark, and a large portion of the devices our products test are fabricated and tested by foundries and subcontractors in Taiwan, China, Korea and other parts of Asia. As a result, we are subject to a number of economic and other risks, particularly during times of political, health or financial instability in these regions. Disruption of manufacturing or supply sources in these international locations could materially adversely impact our ability to fill customer orders and potentially result in lost business.
Risks Related to the technologies that will be covered, the new export controls could cover technologies used in one or more Teradyne products and, therefore, could impact the sale of certain Teradyne products and have a material adverse effect on our business, financial condition or results of operations.
We may not fully realize the benefits of our acquisitions or strategic alliances.
In June 2015, we acquired Universal Robots, in 2018, we acquired Energid and MiR and, in 2019, we acquired Lemsys and AutoGuide. We may not be able to realize the benefitbenefits of acquiring or successfully growing these businesses. We may continue to acquire additional businesses, form strategic alliances, or create joint ventures with third parties that we believe will complement or augment our existing businesses. We may not be able to realize the expected synergies and cost savings from the integration with our existing operations of other businesses or technologies that we may acquire. In addition, the integration process for our acquisitions may be complex, costly and time consuming and include unanticipated issues, expenses, and liabilities. We may have difficulty in developing, manufacturing, and marketing the products of a newly acquired company in a manner that enhances the performance of our combined businesses or product lines and allows us to realize value from expected synergies. Following an acquisition, we may not achieve the revenue or net income levels that justify the acquisition. Acquisitions may also result in
We may incur significanthigher tax rates than we expect and may have exposure to additional international tax liabilities if we fail to comply with environmental regulations.
We are subject to both domesticpaying income taxes in the United States and international environmentalother countries where we operate. Our effective tax rate is dependent on where our earnings are generated and the tax regulations and statutory strictthe interpretation and judgment of administrative tax or revenue authorities in the United States and other countries. We have pursued a global tax strategy that could be adversely affected by the mix of earnings and tax rates in the countries where we operate, changes to tax laws, tax regulations or an adverse tax ruling by administrative authorities. We are also subject to tax audits in the countries where we operate. Any material change in our tax liability resulting from changes in tax laws, tax regulations, administrative rulings or audits from an administrative tax or revenue authority could negatively affect our financial results.
As a multinational corporation, we are subject to income taxes as well as non-income-based taxes, in both the United States and various foreign jurisdictions. In certain foreign jurisdictions, we qualify for tax incentives and tax holidays based on our ability to meet, on a continuing basis, various tests relating to the use, storage, discharge, site cleanupour employment levels, research and disposal of hazardous chemicals useddevelopment expenditures and other qualification requirements in a particular foreign jurisdiction. While we intend to operate in such a manner to maintain and maximize our manufacturing processes.tax incentives and tax holidays, no assurance can be given that we have so qualified or that we will so qualify for any particular year or jurisdiction. If we fail to comply with presentqualify or fail to remain qualified for certain foreign tax incentives and future regulations, or are required to perform site remediation,tax holidays, we could be subject to future liabilities or cost, including penalties or the suspension of production. Present and future regulations may also:
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Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2020. The new tax holiday is scheduled to expire on December 31, 2025.
The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2022, 2021 and 2020 were $16.0 million or $0.09 per diluted share, $33.3 million or $0.18 per diluted share, and $29.9 million or $0.16 per diluted share, respectively. These tax savings may not be achievable in subsequent years due to changes in Singapore’s tax laws, issuance of new global minimum tax laws, or the expiration of the tax holiday.
In addition, we may incur additional costs, including headcount expenses, in order to maintain or obtain a foreign tax incentive or tax holiday in a particular foreign jurisdiction.
We have an adverse effect on our business.
From time to time, we make guarantees to customers regarding the delivery, price and performance of our products and guarantee certain indebtedness, performance obligations or lease commitments of our subsidiary and affiliate companies. We also have agreed to provide indemnification to our officers, directors, employees and agents, to the extent permitted by law, arising from certain events or occurrences, while the officer, director, employee or agent, is or was serving at our request in such capacity. Additionally, we have confidentiality obligations to certain customers and if breached would require the payment of significant penalties. If we become liable under any of these obligations, it could materially and adversely affect our business, financial condition or operating results. For additional information see Note M: “Commitments and Contingencies—Guarantees and Indemnification Obligations” in Notes to Consolidated Financial Statements.
We may discontinue or reduce our quarterly cash dividend or share repurchase program.
In January 2014, our Board of Directors initiated a quarterly cash dividend. Since 2014, the Board of Directors has increased our quarterly cash dividend from $0.06 per share to $0.11 per share. Holders of our common stock are only entitled to receive dividends when and if they are declared by our Board of Directors.
In January 2021, our Board of Directors approved a $2.0 billion share repurchase program. In 2022 and 2021, we repurchased $752.1 million, and $600.0 million, respectively of common stock. In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new $2.0 billion share repurchase program. Under the share repurchase program, we may repurchase outstanding shares of our common stock from time to time in the open market and through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the share repurchase program.
Future cash dividends and share repurchases are subject to the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition. While we have declared a quarterly cash dividend on our common stock and authorized a share repurchase program, we are not required to do either and may reduce or eliminate our cash dividend or share repurchase program in the future. The reduction or elimination of our cash dividend or our share repurchase program could adversely affect the market price of our common stock.
We have incurred indebtedness and may incur additional indebtedness.
On December 12, 2016, we completed a private offering of $460.0 million aggregate principal amount of 1.25% convertible senior unsecured notes (the “Notes”) due December 15, 2023 and received net proceeds, after issuance costs, of approximately $450.8 million, $33.0 million of which was used to pay the net cost, after being partially offset by proceeds from the sale of the warrants, of the convertible note hedge transactions and $50.1 million of which was used to repurchase 2.0 million shares of our common stock. Holders of the Notes may require us to repurchase the Notes upon the occurrence of certain fundamental changes involving us or the holders may elect to convert into shares of our common stock. As of February 22, 2023, one hundred and twenty four holders had converted $424.9 million worth of notes.
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On May 1, 2020, we entered into a three-year, senior secured revolving credit facility of up to $400.0 million. On December 10, 2021, the credit agreement was amended to extend the maturity date of the credit facility to December 10, 2026. On October 5, 2022, the credit agreement was amended to increase the amount of the credit facility to $750.0 million from $400.0 million. The amended credit agreement provides that, subject to customary conditions, we may seek to obtain from existing or new lenders the available incremental amount under the credit facility, not to exceed the greater of $200.0 million or 15% of consolidated EBIDTA. We could borrow funds under this credit facility at any time for general corporate purposes and working capital. As of February 22, 2023, we have not borrowed any funds under this credit facility.
The issuance of the Notes and any additional indebtedness, among other things, could:
make it difficult to make payments on this indebtedness and our other obligations;
make it difficult to obtain any necessary future financing for working capital, capital expenditures, debt service requirements or other purposes;
require the dedication of a substantial portion of any cash flows from operations to service for indebtedness, thereby reducing the amount of cash flows available for other purposes, including capital expenditures; and
limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we compete.
Restrictive covenants in the agreement governing our senior secured revolving credit facility may restrict our ability to pursue business strategies.
The agreement governing our senior secured revolving credit facility limits our ability, among other things, to incur additional secured indebtedness; sell, transfer, license or dispose of assets; consolidate or merge; enter into transactions with our affiliates; and incur liens. In addition, our senior secured revolving credit facility contains financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest, such as, subject to litigationpermitted exceptions, making capital expenditures in excess of certain thresholds, making investments, loans and other advances, and prepaying any additional indebtedness while our indebtedness under our senior secured revolving credit facility is outstanding. Our failure to comply with financial and other restrictive covenants could result in an event of default, which if not cured or waived, could result in the lenders requiring immediate payment of all outstanding borrowings or foreclosing on collateral pledged to them to secure the indebtedness.
Our convertible note hedge and warrant transactions could impact the value of our stock.
Concurrent with the offering of the Notes, we entered into convertible note hedge transactions (the “Note Hedge Transactions”) with the initial purchasers or their affiliates (the “Option Counterparties”). The Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of our common stock that underlie the Notes, with a strike price equal to the conversion price of the Notes of $31.46. The Note Hedge Transactions cover, subject to customary anti-dilution adjustments, approximately 1.6 million shares of our common stock. On November 4, 2021, we made an irrevocable election under the indenture to require the principal portion of the remaining Notes to be settled in cash.
Separately and concurrent with the pricing of the Notes, we entered into warrant transactions with the Option Counterparties (the “Warrant Transactions”) in which we sold net-share-settled (or, at our election subject to certain conditions, cash-settled) warrants to the Option Counterparties. The Warrant Transactions cover, subject to customary anti-dilution adjustments, approximately 14.6 million shares of our common stock. The strike price of the warrants is $39.48 per share. The Warrant Transactions could have a dilutive effect to our common stock to the extent that the market price per share of our common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants.
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The Note Hedge Transactions are expected to reduce the potential dilution to our common stock upon any conversion of the Notes. However, the Warrant Transactions could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the applicable strike price of the warrants. The net cost of the Note Hedge Transactions, after being partially offset by the proceeds from the sale of the warrants, was approximately $33.0 million.
In connection with establishing their initial hedge of these convertible note hedge and warrant transactions, the Option Counterparties have entered into various derivative transactions with respect to our common stock and/or purchase shares of our common stock or other administrative, regulatorysecurities, including the Notes, concurrent with, or governmental proceedings,shortly after, the pricing of the Notes. In addition, the Option Counterparties may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock or by selling our common stock or other securities, including tax auditsthe Notes, in secondary market transactions (and may do so during any observation period related to the conversion of the Notes). These activities could adversely impact the value of our common stock and resulting claims thatthe Notes.
We may not be able to pay our debt and other obligations.
If our cash flows are inadequate to meet our obligations, we could require significant management timeface substantial liquidity problems. If we are unable to generate sufficient cash flows or otherwise obtain funds necessary to make required payments on the Notes or certain of our other obligations, we would be in default under the terms thereof, which would permit the holders of those obligations to accelerate their maturity and resources andalso could cause us to incur expenses and, in the event of an adverse decision, pay damages or incur costs in an amount thatdefaults under future indebtedness we may incur. Any such default could have a material adverse effect on our business, prospects, financial position and operating results. In addition, we cannot be certain that we would be able to repay amounts due on the Notes if those obligations were to be accelerated following the occurrence of any other event of default as defined in the instruments creating those obligations, or if the holders of the Notes require us to repurchase the Notes upon the occurrence of a fundamental change involving us. Moreover, we cannot be certain that we will have sufficient funds or will be able to arrange for financing to pay the principal amount due on the Notes at maturity.
Foreign currency exchange rates and fluctuations in those rates may affect the Company’s ability to realize projected growth rates in its sales and earnings.
Our financial statements are denominated in U.S. dollars. While the majority of our revenues are in U.S. dollars, approximately 70 percent of our Robotics revenue is denominated in foreign currencies. Correspondingly, our results of operations and our ability to realize projected growth rates in sales and earnings in Robotics could be adversely affected if the U.S. dollar strengthens significantly against foreign currencies.
Risks Related to Operations
Our operating results are likely to fluctuate significantly.
Our operating results are affected by a wide variety of factors that could materially adversely affect revenues or profitability. The following factors could impact future operations:
a worldwide economic slowdown or disruption in the global financial or industrial markets;
cost increases from inflation on materials, employee wages, third party labor, and contract manufacturing;
competitive pressures on selling prices;
our ability to introduce, and the market acceptance of, new products;
changes in product revenues mix resulting from changes in customer demand;
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the level of orders received which can be shipped in a quarter because of the tendency of customers to wait until late in a quarter to commit to purchase due to capital expenditure approvals and constraints occurring at the end of a quarter, or the hope of obtaining more favorable pricing from a competitor seeking the business;
engineering and development investments relating to new product introductions, and the expansion of manufacturing, outsourcing and engineering operations in Asia;
provisions for excess and obsolete inventory relating to the lack of demand for and the discontinuance of products;
impairment charges for certain long-lived and intangible assets, and goodwill;
an increase in the leasing of our products to customers;
disruption caused by health pandemics, such as the coronavirus;
the success of sales channel expansion in Robotics;
our ability to expand our global distribution channel for our collaborative and mobile robots;
parallel or multi-site testing which could lead to a decrease in the ultimate size of the market for our semiconductor and electronic test products; and
the ability of our suppliers and subcontractors to meet product quality or delivery requirements needed to satisfy customer orders for our products, especially if consolidated revenues increase.
As a result of the foregoing and other factors, we have experienced and may continue to experience material fluctuations in future operating results on a quarterly or annual basis which could materially and adversely affect our business, financial condition, operating results or stock price.
If our suppliers do not meet product or delivery requirements, we could have reduced revenues and earnings.
If any of our suppliers were to cancel contracts or commitments or fail to meet the quality or delivery requirements needed to satisfy customer orders for our products, we could lose time-sensitive customer orders, have significantly decreased revenues and earnings and be subject to contractual penalties, which would have a material adverse effect on our business, results of operations and financial condition. In addition, we rely on contract manufacturers for certain of our products, and our ability to meet customer orders for those products depends upon the timeliness and quality of the work performed by these subcontractors, over whom we do not exercise any control.
To a certain extent, we are dependent upon the ability of our suppliers and contract manufacturers to help meet increased product or delivery requirements. It may be difficult for certain suppliers to meet delivery requirements in a period of rapid growth, therefore impacting our ability to meet our customers’ demands.
Our suppliers are subject to trade regulations, including tariffs and export restrictions imposed by the United States Government and by the governments of other countries. These regulations could impact our suppliers’ ability to provide us with components for our products or could increase the price of those components.
We rely on the financial strength of our suppliers. There can be no assurance that the loss of suppliers either as a result of financial viability, bankruptcy or otherwise will not have a material adverse effect on our business, results of operations or financial condition.
Our operations may be adversely impacted if our outsourced contract manufacturers or service providers fail to perform.
We depend on Flex Ltd. (“Flex”) to manufacture and test our FLEX and J750 family of products from its facilities in China and, starting in 2022, also Malaysia; Plexus Corp. (“Plexus”) to manufacture and test our
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Magnum products from its facilities in Malaysia and, starting in 2023, also Thailand and ETS family of products from its facility in Malaysia; SAM Meerkat to manufacture and test our storage test family of products from its facilities in Malaysia and Thailand and on other contract manufacturers to manufacture other products. If for any reason these contract manufacturers cannot provide us with these products in a timely fashion, or at all, we may not be able to sell these products to our customers until we enter a similar arrangement with an alternative contract manufacturer. The Flex facility located in China may be impacted by the ongoing trade dispute between the United States and China, by regulations implemented by the United States or China, or disruption caused by health pandemics, such as the coronavirus.
If we experience a problem with our supply of products from Flex, Plexus, SAM Meerkat, or our other contract manufacturers, it may take us significant time to either manufacture the product or find an alternate contract manufacturer, which could result in substantial expense and disruption to our business.
We have also outsourced certain general and administrative functions to reputable service providers, many of which are in foreign countries, sometimes impacting communication with them because of language and time differences. Their presence in foreign countries also increases the risk they could be exposed to political risk. Additionally, there may be difficulties encountered in coordinating the outsourced operations with existing functions and operations. If we fail in successfully coordinating and managing the outsourced service providers, it may cause an adverse effect on our operations which could have a material adverse effect on our business, results of operations or financial condition.
Our business may suffer if we are unable to attract and retain key employees.
Competition for employees with skills we require is intense in the high technology industry. We expect intense competition for employees to continue in 2023. Our success will depend on our ability to attract and retain key technical employees. The loss of one or more key or other employees, a decrease in our ability to attract additional qualified employees, or the delay in hiring key personnel could each have a material adverse effect on our business, results of operations or financial condition.
Our operations, and the operations of our customers and suppliers, are subject to risks of natural catastrophic events, severe weather, widespread health epidemics, acts of war, terrorist attacks and the threat of domestic and international terrorist attacks, any one of which could result in cancellation of orders, delays in deliveries or other business activities, or loss of customers and could negatively affect our business and results of operations.
Our business is international in nature, with our sales, service and administrative personnel and our customers and suppliers located in numerous countries throughout the world. Our operations, and those of our customers and suppliers, are subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, health epidemics, fires, earthquakes, hurricanes, typhoons, volcanic eruptions, energy shortages, telecommunication failures, tsunamis, flooding or other natural disasters. Such disruption could materially increase our costs and expenses as well as cause delays in, among other things, shipments of products to our customers, our ability to perform services requested by our customers, or the installation and acceptance of our products at customer sites. Any of these conditions could have a material adverse effect on our business, financial condition or results of operations.
Global climate change can result in natural disasters occurring more frequently, with greater intensity and with less predictability. For example, in December 2021, our operations in Cebu, Philippines experienced a devastating typhoon. Our employees in Cebu succeeded in restoring most of our operations within days despite the severity of the damage in the region. We have offered support services to many of our employees impacted by the typhoon and have incurred additional costs to maintain our operations following the disaster. The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear but could be severe.
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The global supply shortage of electrical components and inflationary cost increases has impacted our ability to meet customer demand and could adversely affect our business and financial results.
The global supply shortage of electrical components, including semiconductor chips, continued to impact our supply chain in 2022. As a result, we have experienced, and expect to continue to experience, increases in our lead times and costs for certain components for certain products and delays in the delivery of some orders placed by our customers. In addition, in 2022, inflationary pressures contributed to increased costs for product components and wage inflation, which had minimal impact on our cost of products, gross margin and profit for the year. Our supply chain team, and our suppliers, continue to manage numerous supply, production and logistics obstacles. In an effort to mitigate these risks, in some cases, we have incurred higher costs due to investment in supply chain resiliency and to secure available inventory or have extended or placed non-cancellable purchase commitments with semiconductor suppliers, which introduces inventory risk if our forecasts and assumptions prove inaccurate. We have also sourced components from additional suppliers and multi-sourced and pre-ordered components and finished goods inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced. However, if we are unable to secure manufacturing capacities from our current or new suppliers and contract manufacturers, on acceptable terms or at all, or successfully manage our purchase commitments and inventory for components, our ability to deliver our products to our customers in the desired quantities, at competitive prices or in a timely manner may be negatively impacted for 2023. Also, our suppliers and contract manufacturers have increased their prices, which increased our cost of products. We have been and may continue to be, affected by wage inflation. We also have been, and may continue to attempt to, offset the effect of these inflationary pressures by increasing the prices of our products. However, we may not be fully able to pass additional costs on to our customers, which could have a negative impact on our results of operations and financial condition. In 2022, we were unable to supply approximately $20 million of revenue in our test businesses for which we had customer demand.
Risks Related to Intellectual Property (“IP”) and Cybersecurity
Third parties may claim we are infringing their intellectual property and we could suffer significant litigation costs, licensing expenses or be prevented from selling our products.
We have been sued for patent infringement in the past and receive notifications from time to time that we may be in violation of patents held by others. An assertion of patent infringement against us, if successful, could have a material adverse effect on our ability to sell our products or it could force us to seek a license to the intellectual property rights of others or alter such products so that they no longer infringe the intellectual property rights of others. A license could be very expensive to obtain or may not be available at all. Similarly, changing our products or processes to avoid infringing the rights of others may be costly or impractical. Additionally, patent litigation could require a significant use of management resources and involve a lengthy and expensive defense, even if we eventually prevail. If we do not prevail, we might be forced to pay significant damages, obtain licenses, modify our products, or stop making our products; each of which could have a material adverse effect on our financial condition, operating results or cash flows.
If we are unable to protect our intellectual property (“IP”),IP, we may lose a valuable asset or may incur costly litigation to protect our rights.
We protect the technology that is incorporated in our products in several ways, including through patent, copyright, trademark and trade secret protection and by contractual agreement. However, even with these protections, our IP may still be challenged, invalidated or subject to other infringement actions. While we believe that our IP has value in the aggregate, no single element of our IP is in itself essential. If a significant portion of our IP is invalidated or ineffective, our business could be materially adversely affected.
A breach of our operational or security systems could negatively affect our business and results of operations.
We rely on various information technology networks and systems to process, transmit and store electronic information, including proprietary and confidential data, and to carry out and support a variety of business
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activities, including manufacturing, research and development, supply chain management, sales and accounting. We have experienced several attempted cyber-attacks of our network. None of the attempted attacks hashave caused a disruption to our operations or had a material adverse effect on our business or financial results. As a result of the attempts, we have taken further preventive security measures to protect our systems. Despite these preventative security measures we have implemented, we may continue to be vulnerable to attempts by third parties to gain unauthorized access to our networks or sabotage our systems. These attempts, which might be related to criminal hackers, industrial espionage or state-sponsored intrusions, include trying to covertly introduce malware to our computers, networks and systems and impersonating authorized users. In addition, third party suppliers and service providers that we rely on to manage our networks and systems and process and store our proprietary and confidential data, including the data of our customers and suppliers, may also be subject to similar attacks. Employees and contractors may also attempt to gain unauthorized access to our systems and steal proprietary and confidential data. Such attempts could result in the misappropriation, theft, misuse, disclosure or loss or destruction of the intellectual property, or the proprietary, confidential or personal information, of Teradyne or our employees, customers, suppliers or other third parties, as well as damage to or disruptions in our information technology networks and systems. These threats are constantly evolving, thereby increasing the difficulty of defending against them or implementing adequate preventative measures. While we seek to detect and investigate all security incidents and to prevent their recurrence, attempts to gain unauthorized access to our information technology networks and systems may be successful, and in some cases, we might be unaware of an incident or its magnitude and effects. A failure in or a breach of our operational or security systems or infrastructure, or those of our suppliers and other service providers, including as a result of cyber-attacks, could have a material adverse effect on our business or financial results, disrupt our business, result in the disclosure or misuse of proprietary or confidential information, damage our reputation, cause losses and increase our costs. We expect to continue to devote significant resources to the security of our information technology networks and systems.
A breach of the security of our products could negatively affect our business and results of operations.
We may be subject to security breaches of certain of our products caused by viruses, illegal break-ins or hacking, sabotage, or acts of vandalism by third parties or our employees or contractors. A breach of our product security systems could have a material adverse effect on our business or financial results, disrupt our business, result in the disclosure or misuse of proprietary or confidential information, damage our reputation, cause losses, and increase our costs. We expect to continue to devote significant resources to the security of our products.
Risks Related to the COVID-19 Pandemic
The novel coronavirus (COVID-19) pandemic has impacted our business and could materially adversely affect our results of operations, financial condition, liquidity, or cash flows.
During the global COVID-19 pandemic, government authorities implemented numerous measures in an effort to contain the spread of the virus, such as travel bans and restrictions, limitations on gatherings or social distancing requirements, quarantines, shelter-in-place orders, vaccination and testing mandates, and business limitations and shutdowns. These measures impacted our day-to-day operations and disrupted our business, workforce and operations, as well as the operations of our customers, contract manufacturers and suppliers. The COVID-19 pandemic also significantly increased economic and demand uncertainty in our markets. The COVID-19 pandemic, and the numerous measures implemented in response, adversely impacted our results of operations, including increasing costs company-wide, but we cannot accurately estimate the full extent of the impact to our 2022, 2021 and 2020 financial results or to our future financial results.
We will continue to monitor the COVID-19 pandemic. However, we are unable to accurately predict the future of COVID-19, which will depend on future developments that are highly uncertain and cannot be predicted with accuracy, including, but not limited to, any new surges or new strains or variants of the virus in areas where we do business, the availability and use of vaccinations and any further actions we may take as required by government authorities or that we determine are in the best interest of our employees, customers, contract manufacturers and suppliers.
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Risks Related to Legal and Regulatory Compliance
The implementation of tariffs on our products may have a material impact on our business.
Our business operations and supply chain are global and may be disrupted by the implementation of tariffs.
In 2018, the United States Trade Representative imposed a 25% tariff on many lists of products, including certain Teradyne products that are made in China and imported into the United States. We have implemented operational changes that mitigate the impact of the 25% tariff on the import of our impacted products into the United States. As a result, the existing tariff has not had a material adverse effect on our business, financial condition or results of operations. The implementation of additional tariffs by the United States could have a material adverse effect on our business, financial condition or results of operations.
In addition to the actions taken by the United States, China has implemented retaliatory tariffs on products made in the United States and imported into China, including certain Teradyne products. We have implemented, if appropriate, operational changes that would mitigate the impact of the retaliatory tariffs. However, notwithstanding our efforts, the retaliatory tariffs or other trade restrictions implemented by China could disrupt our business operations, sales and supply chain and, therefore, have a material adverse effect on our business, financial condition or results of operations.
Trade regulations and restrictions impact our ability to manufacture certain products and to sell products to and support certain customers, which may materially adversely affect our sales and results of operations.
We are subject to U.S. laws and regulations that limit and restrict the export of some of our products and services and may restrict our transactions with certain customers, business partners and other persons. In certain circumstances, export control and economic sanctions regulations prohibit the export of certain products, services and technologies, and in other circumstances are required to obtain an export license before exporting the controlled item. We must also comply with export restrictions and laws imposed by other countries affecting trade and investments. We maintain an export compliance program but there are risks that the compliance controls could be circumvented, exposing us to legal liabilities. Compliance with these laws has not significantly limited our sales but could significantly limit them in the future. Changes in, and responses to, U.S. trade policy could reduce the competitiveness of our products and cause our sales to drop, which could have a material adverse effect on our business, financial condition or results of operations.
The U.S. government from time to time has issued export restrictions that prohibit U.S. companies from exporting U.S. manufactured products, foreign manufactured products with more than 25% controlled U.S. content, as well as U.S. origin technology. For example, the U.S. Department of Commerce has restricted the access of U.S. origin technologies to certain Chinese semiconductor companies including YMTC and CXMT by adding those companies to the Entity List under U.S. Export Administration Regulations (“EAR”). The addition of certain of these companies to the entity list has had and will continue to have an adverse impact on our business with these customers. We will take appropriate actions, including filing for licenses with the U.S. Department of Commerce to attempt to minimize the impact of the restrictions on these companies.
On May 16, 2019, Huawei and 68 of its affiliates, including HiSilicon, were added to the U.S. Department of Commerce Entity List under 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. On August 17, 2020, the U.S. Department of Commerce published final regulations expanding the scope of the U.S. EAR to include additional products that would become subject to export restrictions relating to Huawei entities including HiSilicon. These new regulations restrict the sale to Huawei and the designated Huawei entities of certain non-U.S. made items, such as semiconductor devices, manufactured for or sold to Huawei entities including HiSilicon under specific, detailed conditions set forth in the new regulations. These new regulations have impacted our sales to Huawei, HiSilicon and their suppliers. We are taking appropriate actions, including filing license applications and obtaining licenses
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from the U.S. Department of Commerce. However, we do not expect these actions will mitigate the impact of the regulations on our sales to Huawei, HiSilicon and other suppliers. As a result, the regulations will continue to have an adverse impact on our business and financial results. It is uncertain the extent these new regulations and any additional regulations that may be implemented by the U.S. Department of Commerce or other government agency may have on our business with other customers or potential customers. Also, our controls related to Entity List compliance could be circumvented, exposing us to legal liabilities.
On April 28, 2020, the U.S. Department of Commerce published new export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China, Russia and Venezuela. The definition of military end user is broad. The regulations went into effect on June 29, 2020. In December 2020, the U.S. Department of Commerce issued a list of companies in China and other countries that it considered to be military end users. Compliance with the new export controls has impacted our ability to sell products to certain customers in China. In addition, while we maintain an export compliance program, our compliance controls could be circumvented, exposing us to legal liabilities. We will continue to assess the impact of the new export controls on our business and operations and take appropriate actions, including filing for licenses with the U.S. Department of Commerce, to minimize any disruption. However, we cannot be certain that the actions we take will mitigate all the risks associated with the export controls that may impact our business.
On October 7, 2022, the U.S. Department of Commerce published new regulations restricting the export to China of advanced semiconductors, supercomputer technology, equipment for the manufacturing of advanced semiconductors and components and technology for the manufacturing in China of certain semiconductor manufacturing equipment. The new restrictions are lengthy and complex. We continue to assess the impact of these regulations on our business. We have determined that restrictions on the sale of semiconductor testers in China to test certain advanced semiconductors will impact our sales to certain companies in China. Several multinational companies manufacturing these advanced semiconductors in China have obtained one-year licenses allowing suppliers such as Teradyne to continue to provide testers to the facilities operated by these companies. We expect that other companies manufacturing advanced semiconductors in China will not receive licenses, thereby restricting our ability to provide testers to the facilities operated by these companies that do not receive a license. We also are filing license requests to sell to and support certain customers in China for certain end uses that, if granted, may reduce the impact of these restrictions on our business. At this time, we do not know the impact these end user and end use restrictions will have on our business in China or on future revenues. In addition to the specific restrictions impacting our business, the regulations may have an adverse impact on certain actual or potential customers and on the global semiconductor industry. To the extent the regulations impact actual and potential customers or disrupt the global semiconductor industry, our business and revenues will be adversely impacted. We also have determined that the restrictions on the export of certain US origin components and technology for use in the development and production in China of certain semiconductor manufacturing equipment impact our manufacturing and development operations in China. We have received a temporary authorization from the U.S. Department of Commerce allowing us to continue our manufacturing and development operations in China until the U.S. Department of Commerce issues a license to replace this temporary authorization. We cannot assess the likelihood or timing of receiving this license. In addition to requesting a license, we are implementing procedures for minimizing the impact of these new regulations on our operations in China, but there is no assurance that these procedures will succeed.
In response to the regulations issued by the U.S. Department of Commerce, the Chinese government has passed new laws, including blocking legislation, which may impact our business activities in China. The Company is assessing the potential impact of these new Chinese laws and monitoring relevant laws and regulations issued by the Chinese government. The impact of these new Chinese laws on our business activities in China remains uncertain at this time.
We may be subject to product recalls and warranty and product liability claims.
We invest significant resources in the design, manufacturing and testing of our products. However, from time to time, we discover design or manufacturing defects in our products after they have been shipped and, as a
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result, we have incurred development and remediation costs and settled warranty and product liability claims. In addition, when our products contain defects or have reliability, quality or safety issues, we have conducted a product recall which resulted in significant repair or replacement costs and substantial delays in product shipments and may damage our reputation which could make it more difficult to sell our products. We could continue to have warranty and product liability claims or product recalls in the future. Any of these results could have a material adverse effect on our business, results of operations or financial condition.
We may incur significant costs of complying with present and future environmental regulations and may incur significant liabilities if we fail to comply with such environmental regulations.
We are subject to both domestic and international environmental regulations and statutory strict liability relating to the use, storage, discharge, site cleanup and disposal of hazardous chemicals used in our manufacturing processes. In addition, future regulations in response to global climate change may affect us, our suppliers, and our customers. Such regulations could cause us to incur additional direct costs for compliance, as well as increased indirect costs resulting from our customers, suppliers, or both incurring additional compliance costs that are passed on to us. Future climate change regulations could result in decreased demand for our products. If we fail to comply with present and future regulations, or are required to perform site remediation, we could be subject to future liabilities or cost, including penalties or the suspension of production. Present and future regulations may also:
restrict our ability to expand facilities;
restrict our ability to ship certain products;
require us to modify our operations logistics;
require us to acquire costly equipment; or
require us to incur other significant costs and expenses.
Pursuant to present regulations and agreements, we are conducting groundwater and subsurface assessment and monitoring and are implementing remediation and corrective action plans for facilities located in Massachusetts and New Hampshire which are no longer conducting manufacturing operations. As of December 31, 2022, we have not incurred material costs as a result of the monitoring and remediation steps taken at the Massachusetts and New Hampshire sites.
The directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (the “RoHS Directive”) and the directive on Waste Electrical and Electronic Equipment (the “WEEE Directive”) altered the form and manner in which electronic equipment is imported, sold and handled in the European Union. Other jurisdictions, such as China, have followed the European Union’s lead in enacting legislation with respect to hazardous substances and waste removal. Ensuring compliance with the RoHS Directive, the WEEE Directive and similar legislation in other jurisdictions, and integrating compliance activities with our suppliers and customers could result in additional costs and disruption to operations and logistics and thus, could have a negative impact on our business, operations or financial condition.
We currently are, and in the future may be, subject to litigation or regulatory proceedings that could have an adverse effect on our business.
From time to time, we may be subject to litigation or other administrative, regulatory or governmental proceedings, including tax audits and resulting claims that could require significant management time and resources and cause us to incur expenses and, in the event of an adverse decision, pay damages or incur costs in an amount that could have a material adverse effect on our financial position or results of operations.
We may face risks associated with shareholder activism.
We may become subject to campaigns by shareholders advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases or divestitures. We may become subject in the future to such shareholder activity and demands. Such activities could
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interfere with our ability to execute our business plans, be costly and time-consuming, disrupt our operations, divert the attention of management, or result in our initiating borrowing or increasing our share repurchase plan or dividend, any of which could have an adverse effect on our business or stock price.
Provisions of our charter andby-lawsand Massachusetts law may make a takeover of Teradyne more difficult.
There are provisions in our basic corporate documents and under Massachusetts law that could discourage, delay or prevent a change in control, even if a change in control may be regarded as beneficial to some or all of our stockholders.
| Item 1B: | Unresolved Staff Comments |
None.
| Item 2: | Properties |
We conduct manufacturing, engineering, sales and marketing, service, corporate administration and other operations in various leased and owned facilities throughout the world. We own approximately 720,000 square feet of office space and lease over 1,500,000 square feet of office space. Our corporate headquarters is located in North Reading, Massachusetts, in buildings that we own consisting of approximately 422,000 square feet. We conduct manufacturing, engineering, sales and marketing, service, corporate administration and other operations in many locations worldwide. We own approximately 600,000 square feet and lease over 1,400,000 square feet of office space for these operations. We believe our existing facilities and planned expansions noted below are adequate to meet our current and reasonably foreseeable requirements. We regularly evaluate our expected facility needs and periodically makesmake adjustments based on these evaluations. During the next two years,In 2019, we planpurchased land in Denmark to purchase property and buildconstruct a new buildings in Odense, Denmarkbuilding for our robotics operations and in San Jose, Costa Rica for our service and manufacturingRobotics operations.
| Item 3: | Legal Proceedings |
We are subject to legal proceedings, claims and investigations that arise in the ordinary course of business such as, but not limited to, patent, employment, commercial and environmental matters. We believe that we have meritorious defenses against all pending claims and intend to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending claims or to provide possible ranges of losses that may arise, we believe the potential losses associated with all of these actions are unlikely to have a material adverse effect on our results of operations, financial condition or cash flows.
| Item 4: | Mine Safety Disclosure |
Not Applicable.
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PART II
| Item 5: | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities |
Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “TER”.
See “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for information on the frequency and amounts of our quarterly cash dividends, equity compensation plans and performance graph.
The following table includes information with respect to repurchases we made of our common stock during the three months ended December 31, 20192022 (in thousands except per share price):
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 | ||||||||||||
September 30, 2019 – October 27, 2019 | 757 | $ | 59.49 | 756 | $ | 262,786 | ||||||||||
October 28, 2019 – November 24, 2019 | 690 | $ | 63.81 | 689 | $ | 218,846 | ||||||||||
November 25, 2019 – December 31, 2019 | 658 | $ | 64.38 | 657 | $ | 176,522 | ||||||||||
2,105 | (1) | $ | 62.43 | (1) | 2,102 | |||||||||||
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 | ||||||||||||
October 3, 2022 – October 30, 2022 | 30 | $ | 69.41 | 30 | $ | 647,918,955 | ||||||||||
October 31, 2022 – November 27, 2022 | 1 | 82.03 | — | 647,918,955 | ||||||||||||
November 28, 2022 – December 31, 2022 | 1 | 92.64 | — | 647,918,955 | ||||||||||||
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| 32 | (1) | $ | 70.14 | (1) | 30 | |||||||||||
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| (1) | Includes approximately |
| (2) | In January 2021, the Board of Directors authorized the repurchase of up to $2.0 billion of common stock. In January 2023, the Board of Directors cancelled the 2021 repurchase program and approved a new $2.0 billion of common stock. Unless terminated by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all shares authorized for repurchase under the share repurchase program. |
We satisfy U.S. federal and state minimum withholding tax obligations due upon the vesting and the conversion of restricted stock units into shares of our common stock, by automatically withholding from the shares being issued, a number of shares with an aggregate fair market value on the date of such vesting and conversion that would satisfy the minimum withholding amount due.
| Item 6: | (Reserved) |
Years Ended December 31, | ||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||||||
Consolidated Statement of Operations Data (1)(2)(3)(4)(5): | ||||||||||||||||||||
Revenues | $ | 2,294,965 | $ | 2,100,802 | $ | 2,136,606 | $ | 1,753,250 | $ | 1,639,578 | ||||||||||
Net income (loss) | $ | 467,468 | $ | 451,779 | $ | 257,692 | $ | (43,421 | ) | $ | 206,477 | |||||||||
Net income (loss) per common share-basic | $ | 2.74 | $ | 2.41 | $ | 1.30 | $ | (0.21 | ) | $ | 0.98 | |||||||||
Net income (loss) per common share-diluted | $ | 2.60 | $ | 2.35 | $ | 1.28 | $ | (0.21 | ) | $ | 0.97 | |||||||||
Cash dividend declared per common share | $ | 0.36 | $ | 0.36 | $ | 0.28 | $ | 0.24 | $ | 0.24 | ||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||
Total assets | $ | 2,787,014 | $ | 2,706,606 | $ | 3,109,545 | $ | 2,762,493 | $ | 2,548,674 | ||||||||||
Long-term debt obligations | $ | 394,687 | $ | 379,981 | $ | 365,987 | $ | 352,669 | $ | — | ||||||||||
| Item 7: | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Overview
We are a leading global supplier of automationautomated test equipment for test and industrial applications.robotics products. We design, develop, manufacture and sell automatic test systems and robotics products. Our automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in themany industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our industrial automationRobotics products include collaborative robotic arms and autonomous mobile robots and advanced robotic control software(“AMRs”) used by global manufacturing, logistics and light industrial customers to improve quality, increase manufacturing and
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material handling efficiency and decrease manufacturing and logistics costs. Our automatic test equipment and industrial automationrobotics products and services include:
semiconductor test (“Semiconductor Test”) systems;
storage and system level test (“Storage 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”);
wireless test (“Wireless Test”) systems.systems; and
robotics (“Robotics”) products.
The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our test products both through direct sales and sales to the customers’customer’s supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.
Our Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms and improvement in the growth of our Industrial Automation businesses.
Both our test and robotics businesses may continue to be influenced by supply constraints, which could impact our revenue and costs in 2023. In 2022, inflation had minimal effect on our results. In 2022, we were unable to supply approximately $20 million of revenue in our test businesses for which we had customer demand.
Our financial statements are denominated in U.S. dollars. While the majority of our revenues are in U.S. dollars, approximately 70 percent of our Robotics revenue is denominated in foreign currencies. In 2022, the strengthening of the global forklift market. The total purchase priceU.S. dollar was approximately $81.7 million, which included cash paid of approximately $57.8 million and $24.0 milliona factor in fair value of contingent consideration payable upon achievement of certain performance targets, extending potentially through 2022. The maximum contingent consideration that could be paid is $106.9 million. AutoGuide’s AMRs are used for material transport of payloads up to 4,500 kg in manufacturing, warehouse and logistics applications. These products complement MiR’s lower payload products. AutoGuide is includedthan forecasted revenues in our Industrial Automation segment, which is a key componentRobotics segment. Continued strengthening of ourthe U.S. dollar would negatively affect Robotics revenue growth strategy.
Our corporate strategy continues to continue to invest in our business, growfocus on profitably gaining market share in our marketstest businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our Robotics businesses. We plan to continue investing in our growth while balancing capital allocations between returning capital to our shareholders through stock repurchases and dividends and using capital for acquisitions.
Impact of the COVID-19 Pandemic on our Business
During the novel coronavirus (COVID-19) pandemic, government authorities implemented numerous measures in an effort to contain the spread of the virus, such as travel bans and restrictions, limitations on
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gatherings or social distancing requirements, quarantines, shelter-in-place orders, vaccination and testing mandates, and business limitations and shutdowns. Additionally, we took proactive, aggressive action to protect the health and safety of our employees, customers, contract manufacturers and suppliers, and to comply with all government orders around the globe. The spread of COVID-19 caused us to modify our business practices, which included implementing social distancing protocols, limiting employee travel and requiring employees to work remotely. These measures impacted our day-to-day operations and disrupted our business, workforce and operations, as well as the operations of our customers, contract manufacturers and suppliers. Due to the COVID-19 pandemic, there has also been uncertainty and disruption in the global economy and our markets. We are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of February 22, 2023, the date of issuance of this Annual Report on Form 10-K.
We believe the COVID-19 pandemic, and the numerous measures implemented by authorities in response, adversely impacted our results of operations, including by increasing costs, but we cannot accurately estimate the amount of the impact to our 2022 and 2021 financial results or to our future financial results. In addition, the pandemic has disrupted our contract manufacturers and suppliers, and has resulted in some instances in short-term cost increases to meet customer demand. While a continuation of the pandemic may further expandimpact our addressable markets while tightly managingworkforce and operations, as well as those of our costs.customers, contract manufacturers and suppliers, we expect that our manufacturing facilities will remain operational, at sufficient capacity to support production demand. We are monitoring our operations closely in an effort to avoid any potential productivity loss caused by responses to the COVID-19 pandemic.
We experienced interruptions to our supply chain as a result of the COVID-19 pandemic. Our suppliers have faced and may continue to face difficulties maintaining operations in light of COVID-19 disruptions and government-ordered restrictions. Our supply chain team, and our suppliers, continue to manage numerous supply, production, and logistics obstacles caused by the pandemic. There is no assurance that these efforts will be successful. The COVID-19 pandemic may continue to disrupt our ability to obtain components required to manufacture our products, adversely affecting our operations and in some instances resulting in higher costs and delays, both for obtaining components and shipping finished goods to customers.
We will continue to monitor the COVID-19 pandemic. We may take further actions as may be required or recommended by government authorities or that we determine are in the best interests of our employees, customers, contract manufacturers and suppliers. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan. As a result, given the uncertain nature of this situation, we are not able to accurately predict the full extent of the impact of COVID-19 on our business, financial condition, results of operations, liquidity, or cash flows in the future.
Supply Chain Constraints and Inflationary Pressures
The global supply shortage of electrical components, including semiconductor chips, continued to impact our supply chain in 2022. As a result, we experienced, and expect to continue to experience, increases in our lead times and costs for certain components for certain of our products. In addition, in 2022, inflationary pressures contributed to increased costs for product components and wage inflation, which had minimal impact on our cost of products, gross margin and profit for the year. Our supply chain team, and our suppliers, continue to manage numerous supply, production, and logistics obstacles. In an effort to mitigate these risks, in some cases, we have incurred higher costs due to investment in supply chain resiliency and to secure available inventory or have extended or placed non-cancellable purchase commitments with semiconductor suppliers, which introduces inventory risk if our forecasts and assumptions prove inaccurate. We have also sourced components from additional suppliers and multi-sourced and pre-ordered components and finished goods inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced. However, if we are unable to secure manufacturing capacities from our current or new suppliers and contract manufacturers, on
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acceptable terms or at all, or successfully manage our purchase commitments and inventory for components, our ability to deliver our products to our customers in the desired quantities, at competitive prices or in a timely manner may be negatively impacted for 2023.
Impact of Russia’s invasion of Ukraine on our Business
Russia’s invasion of Ukraine, in February 2022, did not have a significant direct impact on our business as we have minimal business in Russia and Ukraine. However, following the invasion, the U.S. and other countries imposed significant sanctions against the Russian government and many Russian companies and individuals. Although we do not have significant operations in Russia, the sanctions and Russia’s response to the sanctions, have impacted our business in other countries and could have a negative impact on our future revenue and supply chain, either of which could adversely affect our business and financial results. In addition, the global economic uncertainty following the invasion, sanctions and Russia’s response to the sanctions could impact demand for our products.
Impact of October 7, 2022 U.S. Department of Commerce Regulations on our Business
On October 7, 2022, the U.S. Department of Commerce published new regulations restricting the export to China of advanced semiconductors, supercomputer technology, equipment for the manufacturing of advanced semiconductors and components and technology for the manufacturing in China of certain semiconductor manufacturing equipment. The new restrictions are lengthy and complex. We continue to assess the impact of these regulations on our business. We have determined that restrictions on the sale of semiconductor testers in China to test certain advanced semiconductors will impact our sales to certain companies in China. Several multinational companies manufacturing these advanced semiconductors in China have obtained one-year licenses allowing suppliers such as Teradyne to continue to provide testers to the facilities operated by these companies. We expect that other companies manufacturing advanced semiconductors in China will not receive licenses, thereby restricting our ability to provide testers to the facilities operated by these companies that do not receive a license. We are also filing license requests to sell to and support certain customers in China for certain end uses that, if granted, may reduce the impact of these restrictions on our business. At this time, we do not know the impact these end user and end use restrictions will have on our business in China or on future revenues. In addition to the specific restrictions impacting our business, the regulations may have an adverse impact on certain actual or potential customers and on the global semiconductor industry. To the extent the regulations impact actual and potential customers or disrupt the global semiconductor industry, our business and revenues will be adversely impacted. We also have determined that the restrictions on the export of certain U.S. origin components and technology for use in the development and production in China of certain semiconductor manufacturing equipment impact our manufacturing and development operations in China. We have received a temporary authorization from the U.S. Department of Commerce allowing us to continue our manufacturing and development operations in China until the U.S. Department of Commerce issues a license to replace this temporary authorization. We cannot assess the likelihood or timing of receiving this license. In addition to requesting a license, we are implementing procedures for minimizing the impact of these new regulations on our operations in China, but there is no assurance that these procedures will succeed.
See Part II—Item 1A, “Risk Factors,” included herein for updates to our risk factors regarding risks associated with the COVID-19 pandemic, supply chain issues and international conflicts.
Critical Accounting Policies and Estimates
We have identified the policies and estimates discussed below as critical to understanding our business and our results of operations and financial condition. The impact and any associated risks related to these policiesestimates on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. For a full description of our accounting policies related to the below items refer to Note B. Accounting Policies, included in the Notes to Consolidated Financial Statements in this Annual Report.
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Revenue from Contracts with Customers
In accordance with ASC 606, “
Inventories
Inventories are stated at the lower of cost using a standard costing system which approximates cost based on a first-in, first-out basis or cost plusnet realizable value. On a reasonable margin analysis. Any discountsquarterly basis, we evaluate all inventories for net realizable value. This quarterly process identifies obsolete and excess inventory. Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed within the forecasted demand window, is written down to estimated net realizable value. Forecasted demand information is obtained from standalone selling price are spread proportionally to each performance obligation.
Retirement and Postretirement Plans
We recognize net actuarial gains and losses and the change in the fair value of the plan assets in our operating results in the year in which they occur or upon any interim remeasurement of the plans. Discount rate and expected return on assets are two assumptions which are important elements of pension plan expense and asset/liability measurement. We calculate
In developing the expected return on planU.S. Qualified Pension Plan (“U.S. Plan”) assets usingassumption, we evaluated input from our investment manager and pension consultants, including their forecast of asset class return expectations. We believe that 2.0% was an appropriate rate of return on assets to use for 2022. The December 31, 2022 asset allocation for our U.S. Plan was 94% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities. Our investment manager regularly reviews the fair valueactual asset allocation and periodically rebalances the portfolio to ensure alignment with our target allocations.
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 4.95% at December 31, 2022, up from 2.65% at December 31, 2021. We estimate that in 2023 we will recognize approximately $0.4 million of pension expense for the planU.S. Plan. The U.S. Plan pension expense estimate for 2023 is based on a 4.95%
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discount rate and a 4.75% return on assets. Actuarial gainsFuture pension expense or income will depend on future investment performance, changes in future discount rates and losses are generally measuredvarious other factors related to the employee population participating in our pension plans.
Goodwill, Intangible and Long-Lived Assets
We assess goodwill for impairment at least annually in the fourth quarter, as of December 31, on a reporting unit basis, or more frequently, when events and accordingly,circumstances occur indicating that the recorded duringgoodwill may be impaired. We review intangible and long-lived assets for impairment whenever events or changes in business circumstances indicate that the fourth quarter of each year or upon any interim remeasurementcarrying amount of the plans.
Convertible Debt
We adopted Accounting Standards BoardUpdate (“FASB”ASU”) issued ASU
Income Taxes
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The measurement of deferred tax assets is reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized. We performedEvaluating the required assessment of positive and negative evidence regarding the realization of the net deferred tax assets in accordance with ASC 740, “
Results of Operations
Information pertaining to fiscal year 20172020 results of operations, including a
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The following table sets forth the percentage of total net revenues included in our consolidated statements of operations:
Years Ended December 31, | ||||||||
2019 | 2018 | |||||||
Percentage of revenues: | ||||||||
Revenues: | ||||||||
Products | 82.3 | % | 82.3 | % | ||||
Services | 17.7 | 17.7 | ||||||
Total revenues | 100.0 | 100.0 | ||||||
Cost of revenues: | ||||||||
Cost of products | 34.1 | 34.6 | ||||||
Cost of services | 7.5 | 7.3 | ||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 41.6 | 41.9 | ||||||
Gross profit | 58.4 | 58.1 | ||||||
Operating expenses: | ||||||||
Selling and administrative | 19.0 | 18.6 | ||||||
Engineering and development | 14.1 | 14.4 | ||||||
Acquired intangible assets amortization | 1.7 | 1.9 | ||||||
Restructuring and other | (0.6 | ) | 0.7 | |||||
Total operating expenses | 34.3 | 35.5 | ||||||
Income from operations | 24.1 | 22.6 | ||||||
Non-operating (income) expenses: | ||||||||
Interest income | (1.1 | ) | (1.3 | ) | ||||
Interest expense | 1.0 | 1.5 | ||||||
Other (income) expense, net | 1.3 | 0.1 | ||||||
Income before income taxes | 22.9 | 22.3 | ||||||
Income tax provision | 2.5 | 0.8 | ||||||
Net income | 20.4 | % | 21.5 | % | ||||
| Years Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
Percentage of revenues: | ||||||||
Revenues: | ||||||||
Products | 82.1 | % | 86.3 | % | ||||
Services | 17.9 | 13.7 | ||||||
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Total revenues | 100.0 | 100.0 | ||||||
Cost of revenues: | ||||||||
Cost of products | 33.0 | 35.1 | ||||||
Cost of services | 7.8 | 5.3 | ||||||
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Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 40.8 | 40.4 | ||||||
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Gross profit | 59.2 | 59.6 | ||||||
Operating expenses: | ||||||||
Selling and administrative | 17.7 | 14.8 | ||||||
Engineering and development | 14.0 | 11.5 | ||||||
Acquired intangible assets amortization | 0.6 | 0.6 | ||||||
Restructuring and other | 0.5 | 0.3 | ||||||
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Total operating expenses | 32.8 | 27.2 | ||||||
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Income from operations | 26.4 | 32.4 | ||||||
Non-operating (income) expenses: | ||||||||
Interest income | (0.2 | ) | (0.1 | ) | ||||
Interest expense | 0.1 | 0.5 | ||||||
Other (income) expense, net | (0.2 | ) | 0.7 | |||||
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Income before income taxes | 26.6 | 31.4 | ||||||
Income tax provision | 4.0 | 4.0 | ||||||
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Net income | 22.7 | % | 27.4 | % | ||||
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Revenues
Revenues for our reportable segments were as follows:
| 2022 | 2021 | 2021-2022 Dollar Change | ||||||||||
| (in millions) | ||||||||||||
Semiconductor Test | $ | 2,080.6 | $ | 2,642.3 | $ | (561.7 | ) | |||||
System Test | 469.3 | 467.7 | 1.6 | |||||||||
Robotics | 403.1 | 375.9 | 27.2 | |||||||||
Wireless Test | 201.7 | 216.9 | (15.2 | ) | ||||||||
Corporate and Eliminations | 0.3 | — | 0.3 | |||||||||
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| $ | 3,155.0 | $ | 3,702.9 | $ | (547.9 | ) | ||||||
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2019 | 2018 | 2018-2019 Dollar Change | ||||||||||
(in millions) | ||||||||||||
Semiconductor Test | $ | 1,552.6 | $ | 1,492.4 | $ | 60.2 | ||||||
Industrial Automation | 298.1 | 261.5 | 36.6 | |||||||||
System Test | 287.5 | 216.1 | 71.4 | |||||||||
Wireless Test | 157.3 | 132.0 | 25.3 | |||||||||
Corporate and Other | (0.5 | ) | (1.2 | ) | 0.7 | |||||||
| $ | 2,295.0 | $ | 2,100.8 | $ | 194.2 | |||||||
The increasedecrease in Semiconductor Test revenues of $60.2$561.7 million, or 4%21.3%, from 2018 to 2019 was driven primarily by lower tester sales in mobile and high performance compute processor applications, partially offset by an increase in semiconductoradvance driver assistance systems (“ADAS”) tester sales for 5G infrastructure and image sensors and higher service revenue, partially offset by a decrease in sales in the automotive and analog test segments.
Our reportable segments accounted for the following percentages of consolidated revenues:
2019 | 2018 | |||||||
Semiconductor Test | 68 | % | 71 | % | ||||
Industrial Automation | 13 | 12 | ||||||
System Test | 13 | 10 | ||||||
Wireless Test | 7 | 6 | ||||||
100 | % | 100 | % | |||||
| 2022 | 2021 | |||||||
Semiconductor Test | 66 | % | 71 | % | ||||
System Test | 15 | 13 | ||||||
Robotics | 13 | 10 | ||||||
Wireless Test | 6 | 6 | ||||||
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| 100 | % | 100 | % | |||||
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Revenues by country as a percentage of total revenues were as follows (1):
2019 | 2018 | |||||||
China | 22 | % | 17 | % | ||||
Taiwan | 21 | 25 | ||||||
United States | 15 | 13 | ||||||
Korea | 10 | 8 | ||||||
Europe | 10 | 11 | ||||||
Japan | 8 | 8 | ||||||
Thailand | 4 | 3 | ||||||
Singapore | 4 | 5 | ||||||
Malaysia | 3 | 6 | ||||||
Philippines | 2 | 4 | ||||||
Rest of the World | 2 | 2 | ||||||
100 | % | 100 | % | |||||
| 2022 | 2021 | |||||||
Taiwan | 20 | % | 30 | % | ||||
Korea | 17 | 14 | ||||||
China | 16 | 17 | ||||||
United States | 15 | 11 | ||||||
Europe | 9 | 7 | ||||||
Japan | 5 | 4 | ||||||
Malaysia | 5 | 4 | ||||||
Thailand | 4 | 4 | ||||||
Philippines | 4 | 5 | ||||||
Singapore | 3 | 3 | ||||||
Rest of the World | 2 | 1 | ||||||
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| 100 | % | 100 | % | |||||
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| (1) | Revenues attributable to a country are based on the location of the customer site. |
The breakout of product and service revenues was as follows:
| 2022 | 2021 | 2021-2022 Dollar Change | ||||||||||
| (in millions) | ||||||||||||
Product revenues | $ | 2,591.6 | $ | 3,196.6 | $ | (605.0 | ) | |||||
Service revenues | 563.5 | 506.3 | 57.2 | |||||||||
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| $ | 3,155.0 | $ | 3,702.9 | $ | (547.9 | ) | ||||||
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2019 | 2018 | 2018-2019 Dollar Change | ||||||||||
(in millions) | ||||||||||||
Products revenues | $ | 1,887.7 | $ | 1,729.6 | $ | 158.1 | ||||||
Services revenues | 407.3 | 371.2 | 36.1 | |||||||||
| $ | 2,295.0 | $ | 2,100.8 | $ | 194.2 | |||||||
Our product revenues increased $158.1decreased $605.0 million, or 9%18.9%, in 2019 from 2018 primarily due to higherlower tester sales in Semiconductor Test of testers for 5G infrastructuremobile and image sensors, higherhigh performance compute processor applications, and a decrease in cellular test product sales in StorageWireless Test, of 3.5” hard disk drive testers, and higher demand in Industrial Automation, partially offset by a decreasethe rise in salesRobotics revenues driven primarily by elevated demand for collaborative robotic arms and autonomous mobile robots. Our service revenues increased $57.2 million or 11.3% primarily in Semiconductor Test automotive and analog test segments. ServiceStorage Test.
In 2021, revenues increased $36.1 million or 10%.
Gross Profit
2019 | 2018 | 2018-2019 Dollar / Point Change | ||||||||||
(dollars in millions) | ||||||||||||
Gross profit | $ | 1,339.8 | $ | 1,220.4 | $ | 119.4 | ||||||
Percent of total revenues | 58.4 | % | 58.1 | % | 0.3 | |||||||
| 2022 | 2021 | 2021-2022 Dollar / Point Change | ||||||||||
| (in millions) | ||||||||||||
Gross profit | $ | 1,867.2 | $ | 2,206.7 | $ | (339.5 | ) | |||||
Percent of total revenues | 59.2 | % | 59.6 | % | (0.4 | ) | ||||||
Gross profit as a percent of total revenues increased from 2018 to 2019decreased by 0.30.4 points, primarily due to higher service costs partially offset by favorable product mix in Semiconductor Test and Storage Test.
The breakout of product and service gross profit was as follows:
2019 | 2018 | 2018-2019 Dollar / Point Change | ||||||||||
(dollars in millions) | ||||||||||||
Product gross profit | $ | 1,105.6 | $ | 1,002.5 | $ | 103.1 | ||||||
Percent of product revenues | 58.6 | % | 58.0 | % | 0.6 | |||||||
Service gross profit | $ | 234.2 | $ | 217.9 | $ | 16.3 | ||||||
Percent of service revenues | 57.5 | % | 58.7 | % | (1.2 | ) | ||||||
| 2022 | 2021 | 2021-2022 Dollar / Point Change | ||||||||||
| (in millions) | ||||||||||||
Product gross profit | $ | 1,549.0 | $ | 1,896.5 | $ | (347.5 | ) | |||||
Percent of product revenues | 59.8 | % | 59.3 | % | 0.5 | |||||||
Service gross profit | $ | 318.1 | $ | 310.2 | $ | 7.9 | ||||||
Percent of service revenues | 56.5 | % | 61.3 | % | (4.8 | ) | ||||||
Service revenues gross profit percentage decreased 4.8% primarily due to lower margins in Semiconductor Test driven by an increase in headcount.
We assess the carrying value of our inventory on a quarterly basis by estimating future demand and comparing that demand against
During the year ended December 31, 2019,2022, we recorded an inventory provision of $15.2$31.5 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $15.2$31.5 million of total excess and obsolete provisions, $8.7$21.5 million was related to Semiconductor Test, $4.0$4.6 million was related to Wireless Test, $2.0$3.7 million was related to Robotics, and $1.7 million was related to System Test, and $0.5 million was related to Industrial Automation.Test.
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During the year ended December 31, 2018,2021, we recorded an inventory provision of $11.2$15.5 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $11.2$15.5 million of total excess and obsolete provisions, $6.8$6.7 million was related to Semiconductor Test, $2.5$6.4 million was related to Robotics, $1.8 million was related to Wireless Test, $1.2and $0.6 million was related to System Test, and $0.7 million was related to Industrial Automation.
During the years ended December 31, 20192022 and 2018,2021, we scrapped $9.2$8.8 million and $7.0$10.9 million of inventory, respectively, and sold $3.2$1.8 million and $6.7$2.5 million of previously written-down or
Selling and Administrative
Selling and administrative expenses were as follows:
2019 | 2018 | 2018-2019 Change | ||||||||||
(dollars in millions) | ||||||||||||
Selling and administrative | $ | 437.1 | $ | 390.7 | $ | 46.4 | ||||||
Percent of total revenues | 19.0 | % | 18.6 | % | ||||||||
| 2022 | 2021 | 2021-2022 Change | ||||||||||
| (in millions) | ||||||||||||
Selling and administrative | $ | 558.1 | $ | 547.6 | $ | 10.5 | ||||||
Percent of total revenues | 17.7 | % | 14.8 | % | ||||||||
The increase of $46.4$10.5 million in selling and administrative expenses from 2018 to 2019 was due primarily to higherdriven by increase in headcount and greater spending in Industrial Automation from higher sales and marketing spending in Universal Robots and MiR, which was acquired on April 25, 2018, higher sales and marketing spending in Semiconductor Test and higherRobotics, partially offset by lower variable compensation.
Engineering and Development
Engineering and development expenses were as follows:
2019 | 2018 | 2018-2019 Change | ||||||||||
(dollars in millions) | ||||||||||||
Engineering and development | $ | 322.8 | $ | 301.5 | $ | 21.3 | ||||||
Percent of total revenues | 14.1 | % | 14.4 | % | ||||||||
| 2022 | 2021 | 2021-2022 Change | ||||||||||
| (in millions) | ||||||||||||
Engineering and development | $ | 440.6 | $ | 427.6 | $ | 13.0 | ||||||
Percent of total revenues | 14.0 | % | 11.5 | % | ||||||||
The increase of $21.3$13.0 million in engineering and development expenses from 2018 to 2019 was due primarily to higherdriven by increase in headcount and greater spending in Industrial AutomationRobotics and WirelessSemiconductor Test, and higherpartially offset by lower variable compensation.
Restructuring and Other
During the year ended December 31, 2019,2022, we recorded a gaincharge of $22.2$14.7 million fromrelated to the decreasearbitration claim filed against Teradyne and AutoGuide related to an earn-out dispute, which was settled on March 25, 2022 for $26.7 million, $2.9 million of severance charges primarily in the fair valueRobotics, and a charge of the MiR contingent consideration liability,$2.7 million for an increase in environmental and legal liabilities, partially offset by a $3.0$3.4 million gain on sale of an asset.
During the year ended December 31, 2021, we recorded a charge of $12.0 million related to the arbitration claim filed against Teradyne and AutoGuide related to an earn-out dispute, $1.5 million of severance charges primarily in Robotics, $0.5 million of acquisition related compensation and expenses and $2.5 million for an increase in environmental and legal liabilities, offset by a $7.2 million gain for the decrease in the fair value of the AutoGuide contingent consideration $2.9 million of severance charges related to headcount reductions primarily in Semiconductor Test and Industrial Automation, and $2.5 million for acquisition related expenses and compensation.liability.
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Interest and Other
2019 | 2018 | 2018-2019 Change | ||||||||||
(in millions) | ||||||||||||
Interest income | $ | (24.8 | ) | $ | (26.7 | ) | $ | 1.9 | ||||
Interest expense | 23.1 | 31.3 | (8.2 | ) | ||||||||
Other (income) expense, net | 29.5 | 1.4 | 28.1 | |||||||||
| 2022 | 2021 | 2021-2022 Change | ||||||||||
| (in millions) | ||||||||||||
Interest income | $ | (6.4 | ) | $ | (2.6 | ) | $ | (3.8 | ) | |||
Interest expense | 3.7 | 17.8 | (14.1 | ) | ||||||||
Other (income) expense, net | (5.8 | ) | 24.6 | (30.4 | ) | |||||||
Interest income decreased by $1.9increased $3.8 million from 2018due to 2019 due primarily to lower cash and marketable securities balances in 2019.higher interest rates. Interest expense decreased by $8.2$14.1 million from 2018primarily due to 2019 due primarily to unrealized losses on equity marketable securities recognizedthe January 1, 2022 adoption of ASU 2020-06 which eliminated the amortization of the debt discount which was $10.3 million in 2018.2021. Other (income) expense, net increaseddecreased by $28.1$30.4 million from 2018primarily due to 2019 due primarily to a $15.0$28.8 million charge for the impairment of the investmentlosses on convertible debt conversions recognized in RealWear2021 and an $11.5 million changeincrease in pension actuarial (gains) lossesgains, from a $3.3$2.2 million gain in 20182021 to an $8.2$25.6 million gain in 2022, partially offset by changes in gains/losses on equity securities, from a $7.2 million gain in 2021 to a $9.0 million loss in 2019.
Income (Loss) Before Income Taxes
2019 | 2018 | 2018-2019 Change | ||||||||||
(in millions) | ||||||||||||
Semiconductor Test | $ | 417.0 | $ | 397.6 | $ | 19.4 | ||||||
System Test | 93.5 | 48.9 | 44.6 | |||||||||
Wireless Test | 35.6 | 29.1 | 6.5 | |||||||||
Industrial Automation | (5.9 | ) | 7.7 | (13.6 | ) | |||||||
Corporate and Other (1) | (14.4 | ) | (15.4 | ) | 1.0 | |||||||
| $ | 525.8 | $ | 467.8 | $ | 58.0 | |||||||
| 2022 | 2021 | 2021-2022 Change | ||||||||||
| (in millions) | ||||||||||||
Semiconductor Test | $ | 634.5 | $ | 977.0 | $ | (342.5 | ) | |||||
System Test | 166.9 | 163.1 | 3.8 | |||||||||
Wireless Test | 66.8 | 83.5 | (16.7 | ) | ||||||||
Robotics | (16.2 | ) | (8.2 | ) | (8.0 | ) | ||||||
Corporate and Eliminations (1) | (11.6 | ) | (54.5 | ) | 42.9 | |||||||
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| $ | 840.4 | $ | 1,161.0 | $ | (320.6 | ) | ||||||
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| (1) | Included in Corporate and |
The increasedecrease in income before income taxes in Semiconductor Test from 2018 to 2019 was driven primarily by an increaselower revenues in semiconductor tester sales for 5G infrastructuremobile and image sensors,high performance compute processor applications, partially offset by a decrease in sales in the automotive and analog test segments.lower variable compensation. The increase in income before income taxes in System Test from 2018 to 2019 was primarily due to higher sales in Storage Test of 3.5” hard disk drive testers, higher sales in Defense/Aerospace test instrumentation and systems, and higher sales in Production Board Test,
Income Taxes
Income tax expense for 2019, 20182022 and 20172021, totaled $58.3 million, $16.0$124.9 million and $266.7$146.4 million, respectively. The effective tax rate for 2019, 20182022 and 20172021 was 11.1%, 3.4%14.9% and 50.9%12.6%, respectively.
The increase in the effective tax rate from 20182021 to 20192022 is primarily attributable to increases in expense associated with U.S. global intangible
38
from non-deductible officer compensation. These increases in expense were partially offset by increases in benefits from the U.S. foreign derived intangible income deduction and increases in discrete benefit from
We qualify for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2019, 20182022 and 20172021 were $15.1$16.0 million or $0.08 per diluted share, $11.9 million or $0.06$0.09 per diluted share and $24.8$33.3 million or $0.12$0.18 per diluted share, respectively. In November 2020, we entered into an agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2020. The new tax holiday is scheduled to expire on December 31, 2020.
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 | 415,582 | $ | 412,948 | 2,634 | — | — | — | |||||||||||||||||
Retirement plans contributions | 139,451 | 5,069 | 10,464 | 10,336 | 113,582 | — | ||||||||||||||||||
Transition tax payable (1) | 88,157 | 5,515 | 15,741 | 22,628 | 44,273 | — | ||||||||||||||||||
Operating lease obligations | 72,505 | 21,933 | 30,582 | 11,602 | 8,388 | — | ||||||||||||||||||
Interest on long term debt | 23,000 | 5,750 | 11,500 | 5,750 | — | — | ||||||||||||||||||
Fair value of contingent consideration | 39,705 | 9,106 | 30,599 | — | — | — | ||||||||||||||||||
Other long-term liabilities reflected on the balance sheet under GAAP (2) | 79,579 | — | 39,156 | 6,348 | 470 | 33,605 | ||||||||||||||||||
Total | $ | 1,317,979 | $ | 460,321 | $ | 140,676 | $ | 516,664 | $ | 166,713 | $ | 33,605 | ||||||||||||
Capital Resources and Capital Resources
Our cash, cash equivalents and marketable securities balance decreased by $189$495 million from 2018in 2022 to 2019$1,005 million. Cash decreased due to $1,016 million.
Operating activities during 20192022 provided cash of $578.8$577.9 million. Changes in operating assets and liabilities used cash of $51.7 million$272.6 million. This was due to a $121.6$170.9 million increase in operating assets and a $69.9$101.7 million increasedecrease in operating liabilities.
The increase in operating assets was due to a $70.4 million increase in accounts receivable due to increased sales, a $27.4 million increase in inventories, and a $23.8$140.7 million increase in prepayments and other assets.
The increasedecrease in operating liabilities was due to a $39.3$40.3 million increasedecrease in accrued employee compensation, a $29.8 million decrease in income taxes, a $10.8 million decrease in accounts payable, a $9.3 million decrease in other accrued liabilities, a $6.2 million decrease in deferred revenue and customer advance payments, a $24.8 million increase in accounts payable, a $15.3 million increase in accrued employee compensation and a $9.2 million increase in other accrued liabilities, partially offset by a $13.6 million decrease in income taxes, and $5.1 million of retirement plan contributions.
Investing activities during 2019 used2022 provided cash of $156.7$43.8 million, due to $662.7$268.1 million and $222.9 million in proceeds from sales and maturities of marketable securities, respectively, $3.4 million due to sale of an asset, partially offset by $287.4 million used for purchases of marketable securities, $134.6and $163.2 million used for purchases of property, plant and equipment, $57.8 million, net of cash acquired, used for the acquisition of AutoGuide, $15.0 million used for an investment in RealWear, and $7.0 million, net of cash acquired, used for the acquisition of Lemsys, partially offset by $611.9 million and $105.6 million in proceeds from maturities and sales of marketable securities, respectively, and proceeds from life insurance of $2.9 million related to the cash surrender value from the cancellation of Teradyne owned life insurance policies.
Financing activities during 20192022 used cash of $574.3$893.0 million, due to $500.0$752.1 million used for the repurchase of 10.97.3 million shares of common stock at an average price of $45.89$103.69 per share, $61.3$69.7 million used for dividend
Operating activities during 20182021 provided cash of $476.9$1,098.4 million. Changes in operating assets and liabilities used cash of $163.5$98.8 million. This was due to a $105.8$227.1 million increase in operating assets and a $57.7$128.4 million decreaseincrease in operating liabilities.
The increase in operating assets was due to a $58.4$175.8 million increase in prepayments and other assets due primarily to paymentsprepayments to our contract manufacturers, a $29.5 million increase in inventories, and a $17.9$57.8 million increase in accounts receivable due to highergreater sales, partially offset by a $6.5 million decrease in the fourth quarter of 2018.
The decreaseincrease in operating liabilities was due to a $80.4$63.5 million decrease in income taxes, primarily related to a decrease in our transitional tax liability associated with our accumulated foreign earnings under the U.S. Tax Reform Act, a $5.5 million decreaseincrease in other accrued liabilities, and $4.3 million of retirement plans contributions, partially offset by a $13.4$35.1 million increase in customer advance payments and deferred revenue,accrued employee compensation, a $12.9$22.9 million increase in accounts payable, and a $6.3$9.9 million increase in accrued employee compensation due primarily to variable compensation.deferred revenue and customer advance payments, partially offset by a $5.6 million decrease in income taxes, and $5.4 million of retirement plan contributions.
39
Investing activities during 20182021 provided cash of $923.0$120.4 million, due to $1,270.4$660.1 million and $846.1$266.5 million in proceeds from maturities and sales of marketable securities, respectively, proceeds from a government subsidy of $7.9 million for property, plant and equipment, and proceeds from life insurance of $1.1 million related to the cash surrender value from the cancellation of a Teradyne owned life insurance policy, partially offset by $918.7$661.8 million used for purchasepurchases of marketable securities, $169.5 million used for the acquisitions of MiR and Energid, and $114.4$132.5 million used for purchases of property, plant and equipment.
Financing activities during 20182021 used cash of $903.4$1,008.6 million, due to $823.5$600.0 million used for the repurchase of 21.64.8 million shares of common stock at an average price of $38.06$125.74 per share, $67.3$343.0 million used for the payments of convertible debt principal, $66.0 million used for dividend payments, $20.0and $32.3 million used for payments related to net settlement of employee stock compensation awards, and $13.6 million used for a payment related to Universal Robots acquisition contingent consideration, partially offset by $21.0$32.7 million from the issuance of common stock under employee stock purchase and stock option plans.
In January 2019,2022, May 2019,2022, August 20192022 and November 2019,2022, our Board of Directors declared a quarterly cash dividend of $0.09$0.11 per share. Total dividend payments in 20192022 were $61.3$69.7 million.
In January 2018,2021, May 2018,2021, August 20182021 and November 2018, our Board of Directors declared a quarterly cash dividend of $0.09 per share. Total dividend payments in 2018 were $67.3 million.
In January 2021, our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition.
In January 2020,2023, our Board of Directors cancelled the January 2018 stock2021 repurchase program and approved a new stock repurchase program for up to $1.0$2.0 billion of common stock. We intend to repurchase a minimumup to $500.0 million of $250.0 millioncommon stock in 2020.
While we declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. Future cash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.
On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400 million. On December 10, 2021, the credit agreement was amended to extend the senior secured revolving credit facility to December 10, 2026. On October 5, 2022, the credit agreement was amended to increase the amount of the credit facility to $750.0 million from $400.0 million. As of February 22, 2023, we have not borrowed any funds under the credit facility.
We expect operations to continue to be the primary source of cash to operate the business and meet material cash commitments, including any payments of convertible debt principal, our stock repurchase program, our quarterly dividends, our office lease obligations, contractual obligations related to inventory purchases and the construction of new facilities. We believe our cash, cash equivalents and marketable securities balance will be sufficient to pay our quarterly dividend execute our authorized share repurchase program and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings. At this time, the COVID-19 pandemic has not had an impact on our liquidity, but there is no assurance that continued impacts resulting from the pandemic will not have an adverse effect in the future.
At December 31, 2022, our future contractual obligations were related to debt, leases, retirement plan liabilities, deferred tax benefits, and purchase obligations. See Note J. “Debt”, Note I. “Leases”, Note P. “Retirement Plans”, and Note S. “Income Taxes” of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are incorporated by reference into this section. Our purchase obligations were approximately $654.8 million, with $570.3 million expected to be paid within twelve months.
40
Retirement Plans
ASC
For the year ended December 31, 2019,2022, our pension expense,income, which includes the U.S. Qualified Pension Plan (“U.S. Plan”), certain qualified plans for
In developing the expected return on U.S. Plan assets assumption, we evaluated input from our investment manager and pension consultants, including their forecast of asset class return expectations. We believe that 4.25%2.0% was an appropriate rate of return on assets to use for 2019.2022. The December 31, 20192022 asset allocation for our U.S. Plan was 94% invested in fixed income securities, 5% invested in equity securities, and 1% invested in other securities. Our investment manager regularly reviews the actual asset allocation and periodically rebalances the portfolio to ensure alignment with our target allocations.
We recognize net actuarial gains and losses and the change in the fair value of plansplan assets in our operating results in the year in which they occur or upon any interim remeasurement of the plans. We calculate the expected return on plan assets using the fair value of the plan assets. Actuarial gains and losses are generally measured annually as of December 31 and, accordingly, recorded during the fourth quarter of each year or upon any interim remeasurement of the plans.
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 3.10%4.95% at December 31, 2019, down2022, up from 4.15%2.65% at December 31, 2018.2021. We estimate that in 20202023, we will recognize approximately $0.9$0.4 million of pension expense for the U.S. Plan. The U.S. Plan pension expense estimate for 20202023 is based on a 3.1%4.95% discount rate and a 3.0%4.75% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.
As of December 31, 2019,2022, our pension plans had no unrecognized pension prior service cost.
The assets of the U.S. Plan consist substantially of fixed income securities. U.S. Plan assets have increaseddecreased from $144.3$149.6 million at December 31, 20182021 to $166.9$111.8 million at December 31, 20192022, while the U.S. Plan’s liability increaseddecreased from $127.4$134.5 million at December 31, 20182021 to $148.5$100.0 million at December 31, 2019.2022. In 2019,2022, the increasedecrease in plan assets and plan liability was due to a decreasean increase in interest rates. In 2018,2020, the accrued pension obligations for approximately 1,700115 retiree participants were transferred to an insurance company and resulted in a $151.3$24.4 million reduction in the pension benefit obligation and pension assets. We recorded $2.2 million of pension actuarial loss and a settlement loss of $0.3$0.5 million related to the retiree group annuity transaction.
Our funding policy is to make contributions to our pension plans in accordance with local laws and to the extent that such contributions are tax deductible. During 2019,2022, we made contributions of $2.8$3.2 million to the U.S. supplemental executive defined benefit pension plan, and $0.9 million to certain qualified plans for non-U.S.
41
subsidiaries. In 2020,2023, we expect to contribute approximately $2.8$3.1 million to the U.S. supplemental executive defined benefit pension plan. Contributions to be made in 20202023 to certain qualified plans for
Equity Compensation Plans
In addition to our 1996 Employee Stock Purchase Plan discussed in Note Q:
At our annual meeting of stockholders held May 21, 2013, our stockholders approved an amendment to the 2006 Equity Plan to increase the number of shares issuable thereunder by 10.0 million, for an aggregate of 32.0 million shares issuable thereunder, and our stockholders also approved an amendment to our 1996 Employee Stock Purchase Plan to increase the number of shares issuable thereunder by 5.0 million, for an aggregate of 30.4 million shares issuable thereunder. At our annual meeting of stockholders held May 12, 2015, our stockholders approved an amendment to the 2006 Equity Plan to extend its term until May 12, 2025.
The following table presents information about these plans as of December 31, 20192022 (share numbers in thousands):
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column one) | |||||||||
Equity plans approved by shareholders | 2,542 | (1) | $ | 34.52 | 8,543 | (2) | ||||||
Equity plans not approved by shareholders (3) | 47 | 2.89 | — | |||||||||
Total | 2,589 | 29.91 | 8,543 | |||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column one) | |||||||||
Equity plans approved by shareholders | 1,505 | (1) | $ | 55.90 | 8,954 | (2) | ||||||
| (1) | Includes |
| (2) | Consists of |
The purpose of the 2006 Equity Plan is to motivate employees, officers and directors by providing equity ownership and compensation opportunities in Teradyne. The aggregate number of shares available under the 2006 Equity Plan as of December 31, 20192022 was 6,719,9185,060,445 shares of our common stock. The 2006 Equity Plan authorizes the grant of stock-based awards in the form of (1)
As of December 31, 2019,2022, total unrecognized compensation expense related to
42
Performance Graph
The following graph compares the change in our cumulative total shareholder return in our common stock with (i) the NYSE CompositeStandard & Poor’s 500 Index and (ii) the Morningstar Global Semiconductor Equipment & Materials GR USD Industry Group (compiled by Morningstar, Inc.).Group. The comparison assumes $100.00 was invested on December 31, 20142017 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any. Historic stock price performance is not necessarily indicative of future price performance.
Recently Issued Accounting Pronouncements
For the FASByear ended December 31, 2022, there were no recently issued ASU
| Item 7A: | Quantitative and Qualitative Disclosures about Market Risks |
Concentration of Credit Risk
Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash equivalents, marketable securities, forward currency contracts and accounts receivable. Our cash equivalents consist primarily of money market funds invested in U.S. Treasuries and government agencies. Our fixed income
In addition to market risks described in our Annual Report on Form 10-K, we have an equity price risk related to the fair value of our convertible senior unsecured notes issued in December 2016. In December 2016, Teradyne issued $460 million aggregate principal amount of 1.25% convertible senior unsecured notes (the “Notes”) due December 15, 2023. As of December 31, 2019, 2022, $50.2 million of principal remained outstanding and
43
the Notes had a fair value of $1,010$139.0 million. The table below provides a sensitivity analysis of hypothetical 10% changes of Teradyne’s stock price as of the end of 2019the last quarter of 2022 and the estimated impact on the fair value of the Notes. The selected scenarios are not predictions of future events, but rather are intended to illustrate the effect such event may have on the fair value of the Notes. The fair value of the Notes is subject to equity price risk due to the convertible feature. The fair value of the Notes will generally increase as Teradyne’s common stock price increases and will generally decrease as the common stock price declines in value. The change in stock price affects the fair value of the convertible senior notes,Notes, but does not impact Teradyne’s financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Additionally, we carry the Notes at face value less unamortized discountdebt issuance costs on our balance sheet, and we present the fair value for required disclosure purposes only. In connection with the offering of the Notes we also sold warrants to the option counterparties. These transactions have been accounted for as an adjustment to our shareholders’ equity.warrants. The convertible note hedge transactions are expected to reduce the potential equity dilution upon conversion of the Notes. The warrants along with any shares issuable upon conversion of the Notes will have a dilutive effect on our earnings per share to the extent that the average market price of our common stock for a given reporting period exceeds the applicable strike price or conversion price of the warrants or Notes, respectively.
Hypothetical Change in Teradyne Stock Price | Fair Value | Estimated change in fair value | Hypothetical percentage increase (decrease) in fair value | |||||||||
10% Increase | $ | 1,103,496 | $ | 93,221 | 9.2 | % | ||||||
No Change | 1,010,275 | — | — | |||||||||
10% Decrease | 918,822 | (91,453 | ) | (9.1 | ) | |||||||
Hypothetical Change in Teradyne Stock Price | Fair Value | Estimated change in fair value | Hypothetical percentage increase (decrease) in fair value | |||||||||
10% Increase | $ | 152,962 | $ | 13,955 | 10.0 | % | ||||||
No Change | 139,007 | — | — | |||||||||
10% Decrease | 125,068 | (13,939 | ) | (10.0 | ) | |||||||
See Note J: “Debt” for further information.
Exchange Rate Risk Management
We regularly enter into foreign currency forward contracts to hedge the value of our monetary assets and liabilities in Japanese Yen, British Pound, Korean Won, Taiwan Dollar, Singapore Dollar, Euro, Philippine Peso, Chinese Yuan, and Chinese Yuan.Danish Krone. These foreign currency forward contracts have maturities of approximately one month. These contracts are used to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities. We do not engage in currency speculation.
We performed a sensitivity analysis assuming a hypothetical 10% fluctuation in foreign exchange rates to the hedging contracts and the underlying exposures described above. As of December 31, 2019, 2018,2022 and 2017,2021, the analysis indicated that these hypothetical market movements would not have a material effect on our consolidated financial position, results of operations or cash flows.
Interest Rate Risk Management
We are exposed to potential losses due to changes in interest rates. Our interest rate exposure is primarily related to short-term and long-term marketable securities.
In order to estimate the potential loss due to interest rate risk, a fluctuation in interest rates of 25 basis points was assumed. Market risk for the short and long-term marketable securities was estimated as the potential change in the fair value resulting from a hypothetical change in interest rates for securities contained in the investment portfolio. The potential change in the fair value from changes in interest rates is immaterial as of December 31, 20192022 and 2018.2021.
44
| Item 8: | Financial Statements and Supplementary Data |
2019 | 2018 | |||||||
(in thousands, except per share information) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 773,924 | $ | 926,752 | ||||
Marketable securities | 137,303 | 190,096 | ||||||
Accounts receivable, less allowance for doubtful accounts of $1,736 and $1,673 in 2019 and 2018, respectively | 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 | 75,185 | 70,848 | ||||||
Retirement plans assets | 18,457 | 16,883 | ||||||
Other assets | 10,332 | 11,509 | ||||||
Acquired intangible assets, net | 125,480 | 125,482 | ||||||
Goodwill | 416,431 | 381,850 | ||||||
Total assets | $ | 2,787,014 | $ | 2,706,606 | ||||
LIABILITIES | ||||||||
Current 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 | ||||||
Long-term contingent consideration | 30,599 | 35,678 | ||||||
Deferred tax liabilities | 14,070 | 20,662 | ||||||
Long-term other accrued liabilities | 19,535 | 37,547 | ||||||
Long-term operating lease liabilities | 45,849 | — | ||||||
Long-term income taxes payable | 82,642 | 83,891 | ||||||
Debt | 394,687 | 379,981 | ||||||
Total liabilities | 1,306,856 | 1,184,252 | ||||||
Commitments and contingencies (Note M) | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, $0.125 par value, 1,000,000 shares authorized, 166,410 and 175,522 shares issued and outstanding at December 31, 2019 and 2018, respectively | 20,801 | 21,940 | ||||||
Additional paid-in capital | 1,720,129 | 1,671,645 | ||||||
Accumulated other comprehensive los s | (18,854 | ) | (13,040 | ) | ||||
Accumulated deficit | (241,918 | ) | (158,191 | ) | ||||
Total shareholders’ equity | 1,480,158 | 1,522,354 | ||||||
Total liabilities and shareholders’ equity | $ | 2,787,014 | $ | 2,706,606 | ||||
December 31, | ||||||||
2022 | 2021 | |||||||
(in thousands, except per share amount) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 854,773 | $ | 1,122,199 | ||||
Marketable securities | 39,612 | 244,231 | ||||||
Accounts receivable, less allowance for credit losses of $1,955 and $2,012 in 2022 and 2021, respectively | 491,145 | 550,749 | ||||||
Inventories, net | 325,019 | 243,330 | ||||||
Prepayments | 532,962 | 406,266 | ||||||
Other current assets | 14,404 | 9,452 | ||||||
Total current assets | 2,257,915 | 2,576,227 | ||||||
Property, plant and equipment, net | 418,683 | 387,240 | ||||||
Operating lease right-of-use assets, net | 73,734 | 68,807 | ||||||
Marketable securities | 110,777 | 133,858 | ||||||
Deferred tax assets | 142,784 | 102,428 | ||||||
Retirement plans assets | 11,761 | 15,110 | ||||||
Other assets | 28,925 | 24,096 | ||||||
Acquired intangible assets, net | 53,478 | 75,635 | ||||||
Goodwill | 403,195 | 426,024 | ||||||
Total assets | $ | 3,501,252 | $ | 3,809,425 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 139,722 | $ | 153,133 | ||||
Accrued employees’ compensation and withholdings | 212,266 | 253,667 | ||||||
Deferred revenue and customer advances | 148,285 | 146,185 | ||||||
Other accrued liabilities | 112,271 | 124,187 | ||||||
Operating lease liabilities | 18,594 | 19,977 | ||||||
Income taxes payable | 65,010 | 88,789 | ||||||
Current debt | 50,115 | 19,182 | ||||||
Total current liabilities | 746,263 | 805,120 | ||||||
Retirement plans liabilities | 116,005 | 151,141 | ||||||
Long-term deferred revenue and customer advances | 45,131 | 54,921 | ||||||
Deferred tax liabilities | 3,267 | 6,327 | ||||||
Long-term other accrued liabilities | 15,981 | 15,497 | ||||||
Long-term operating lease liabilities | 64,176 | 56,178 | ||||||
Long-term income taxes payable | 59,135 | 67,041 | ||||||
Debt | — | 89,244 | ||||||
Total liabilities | 1,049,958 | 1,245,469 | ||||||
Commitments and contingencies (Note M) | ||||||||
Mezzanine equity: | ||||||||
Convertible common shares | — | 1,512 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, $0.125 par value, 1,000,000 shares authorized, 155,759 and 162,251 shares issued and outstanding at December 31, 2022 and 2021, respectively | 19,470 | 20,281 | ||||||
Additional paid-in capital | 1,755,963 | 1,811,545 | ||||||
Accumulated other comprehensive loss | (49,868 | ) | (5,948 | ) | ||||
Retained earnings | 725,729 | 736,566 | ||||||
Total shareholders’ equity | 2,451,294 | 2,562,444 | ||||||
Total liabilities, convertible common shares and shareholders’ equity | $ | 3,501,252 | $ | 3,809,425 | ||||
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Revenues: | ||||||||||||
Products | $ | 1,887,674 | $ | 1,729,621 | $ | 1,784,695 | ||||||
Services | 407,291 | 371,181 | 351,911 | |||||||||
Total revenues | 2,294,965 | 2,100,802 | 2,136,606 | |||||||||
Cost of revenues: | ||||||||||||
Cost of products | 782,047 | 727,138 | 760,967 | |||||||||
Cost of services | 173,089 | 153,270 | 154,186 | |||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 955,136 | 880,408 | 915,153 | |||||||||
Gross profit | 1,339,829 | 1,220,394 | 1,221,453 | |||||||||
Operating expenses: | ||||||||||||
Selling and administrative | 437,084 | 390,669 | 348,913 | |||||||||
Engineering and development | 322,824 | 301,505 | 307,305 | |||||||||
Acquired intangible assets amortization | 40,147 | 39,191 | 30,530 | |||||||||
Restructuring and other | (13,880 | ) | 15,232 | 9,362 | ||||||||
Total operating expenses | 786,175 | 746,597 | 696,110 | |||||||||
Income from operations | 553,654 | 473,797 | 525,343 | |||||||||
Non-operating (income) expenses: | ||||||||||||
Interest income | (24,785 | ) | (26,704 | ) | (17,805 | ) | ||||||
Interest expense | 23,145 | 31,269 | 21,663 | |||||||||
Other (income) expense, net | 29,522 | 1,431 | (2,927 | ) | ||||||||
Income before income taxes | 525,772 | 467,801 | 524,412 | |||||||||
Income tax provision | 58,304 | 16,022 | 266,720 | |||||||||
Net income | $ | 467,468 | $ | 451,779 | $ | 257,692 | ||||||
Net income per common share: | ||||||||||||
Basic | $ | 2.74 | $ | 2.41 | $ | 1.30 | ||||||
Diluted | $ | 2.60 | $ | 2.35 | $ | 1.28 | ||||||
Weighted average common shares—basic | 170,425 | 187,672 | 198,069 | |||||||||
Weighted average common shares—diluted | 179,459 | 192,605 | 201,641 | |||||||||
Cash dividend declared per common share | $ | 0.36 | $ | 0.36 | $ | 0.28 | ||||||
Years Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands, except per share amount) | ||||||||||||
Revenues: | ||||||||||||
Products | $ | 2,591,572 | $ | 3,196,575 | $ | 2,690,906 | ||||||
Services | 563,473 | 506,306 | 430,563 | |||||||||
Total revenues | 3,155,045 | 3,702,881 | 3,121,469 | |||||||||
Cost of revenues: | ||||||||||||
Cost of products | 1,042,555 | 1,300,106 | 1,157,476 | |||||||||
Cost of services | 245,339 | 196,119 | 178,252 | |||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 1,287,894 | 1,496,225 | 1,335,728 | |||||||||
Gross profit | 1,867,151 | 2,206,656 | 1,785,741 | |||||||||
Operating expenses: | ||||||||||||
Selling and administrative | 558,103 | 547,559 | 464,769 | |||||||||
Engineering and development | 440,591 | 427,609 | 374,964 | |||||||||
Acquired intangible assets amortization | 19,333 | 21,456 | 30,803 | |||||||||
Restructuring and other | 17,185 | 9,312 | (13,202 | ) | ||||||||
Total operating expenses | 1,035,212 | 1,005,936 | 857,334 | |||||||||
Income from operations | 831,939 | 1,200,720 | 928,407 | |||||||||
Non-operating (income) expenses: | ||||||||||||
Interest income | (6,379 | ) | (2,627 | ) | (5,982 | ) | ||||||
Interest expense | 3,719 | 17,820 | 24,182 | |||||||||
Other (income) expense, net | (5,786 | ) | 24,572 | 9,192 | ||||||||
Income before income taxes | 840,385 | 1,160,955 | 901,015 | |||||||||
Income tax provision | 124,884 | 146,366 | 116,868 | |||||||||
Net income | $ | 715,501 | $ | 1,014,589 | $ | 784,147 | ||||||
Net income per common share: | ||||||||||||
Basic | $ | 4.52 | $ | 6.15 | $ | 4.72 | ||||||
Diluted | $ | 4.22 | $ | 5.53 | $ | 4.28 | ||||||
Weighted average common shares—basic | 158,434 | 164,960 | 166,120 | |||||||||
Weighted average common shares—diluted | 169,734 | 183,625 | 183,042 | |||||||||
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Net income | $ | 467,468 | $ | 451,779 | $ | 257,692 | ||||||
Other comprehensive income, net of tax: | ||||||||||||
Foreign currency translation adjustment, net of tax of $0, $0, $0 | (10,991 | ) | (28,442 | ) | 37,840 | |||||||
Available-for-sale marketable securities: | ||||||||||||
Unrealized gains (losses) on deb securities arising during period, net of tax of $1,659, $(722), $1,903, respectivelyt | 6,015 | (2,110 | ) | 1,863 | ||||||||
Less: Reclassification adjustment for (gains) losses included in net income, net of tax of $(192), $(21), $(297), respectively | (690 | ) | 1,337 | (441 | ) | |||||||
5,325 | (773 | ) | 1,422 | |||||||||
Defined benefit pension and post-retirement plans: | ||||||||||||
Amortization of prior service benefit included in net periodic pension and post-retirementbenefit , net of tax $(43), $(71), $(154), respectively | (148 | ) | (245 | ) | (272 | ) | ||||||
Other comprehensive (loss) income | (5,814 | ) | (29,460 | ) | 38,990 | |||||||
Comprehensive income | $ | 461,654 | $ | 422,319 | $ | 296,682 | ||||||
Years Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Net income | $ | 715,501 | $ | 1,014,589 | $ | 784,147 | ||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||
Foreign currency translation adjustment, net of tax of $0, $0, $0, respectively | (29,031 | ) | (36,207 | ) | 48,903 | |||||||
Available-for-sale marketable securities: | ||||||||||||
Unrealized (losses) gains on marketable securities arising during period, net of tax of $( 3,388), 578$( ), $ 1,629, respectively | (12,666 | ) | (2,255 | ) | 5,839 | |||||||
Less: Reclassification adjustment for losses (gains) included in net income, net of tax of $25, $(277), $(665), respectively | 301 | (995 | ) | (2,365 | ) | |||||||
| (12,365 | ) | (3,250 | ) | 3,474 | ||||||||
Cash flow hedges: | ||||||||||||
Unrealized losses arising during period, net of tax of $(708), $0, $0, respectively | (2,517 | ) | — | — | ||||||||
Defined benefit post-retirement plan: | ||||||||||||
Amortization of prior service credit, net of tax $(2), $(2), $(2), respectively | (7 | ) | (7 | ) | (7 | ) | ||||||
Other comprehensive (loss) income | (43,920 | ) | (39,464 | ) | 52,370 | |||||||
Comprehensive income | $ | 671,581 | $ | 975,125 | $ | 836,517 | ||||||
Common Stock Shares | Common Stock Value | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings (Accumulated Deficit) | Total Shareholders’ Equity | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Year Ended December 31, 2016 | 199,177 | $ | 24,897 | $ | 1,593,684 | $ | (20,214 | ) | $ | 230,292 | $ | 1,828,659 | ||||||||||||
Net issuance of common stock under stock-based plans | 2,211 | 277 | 10,747 | 11,024 | ||||||||||||||||||||
Stock-based compensation expense | 33,982 | 33,982 | ||||||||||||||||||||||
Repurchase of common stock | (5,840 | ) | (730 | ) | (199,574 | ) | (200,304 | ) | ||||||||||||||||
Tax benefit related to stock options and restricted stock units | 39,081 | 39,081 | ||||||||||||||||||||||
Cash dividends ($0.07 per share) | (55,478 | ) | (55,478 | ) | ||||||||||||||||||||
Net income | 257,692 | 257,692 | ||||||||||||||||||||||
Other comprehensive income | 38,990 | 38,990 | ||||||||||||||||||||||
Year Ended December 31, 2017 | 195,548 | 24,444 | 1,638,413 | 18,776 | 272,013 | 1,953,646 | ||||||||||||||||||
Net issuance of common stock under stock-based plans | 1,613 | 201 | (72 | ) | 129 | |||||||||||||||||||
Stock-based compensation expense | 33,304 | 33,304 | ||||||||||||||||||||||
Repurchase of common stock | (21,639 | ) | (2,705 | ) | (829,651 | ) | (832,356 | ) | ||||||||||||||||
Cash dividends ($0.09 per share) | (67,367 | ) | (67,367 | ) | ||||||||||||||||||||
Net income | 451,779 | 451,779 | ||||||||||||||||||||||
Other comprehensive loss | (29,460 | ) | (29,460 | ) | ||||||||||||||||||||
Reclassification of unrealized gains on equity securities | (3,125 | ) | 3,125 | — | ||||||||||||||||||||
Reclassification of tax effects resulting from the Tax Reform Act | 769 | (769 | ) | — | ||||||||||||||||||||
Cumulative effect of changes in accounting principle related to revenue recognition | 12,679 | 12,679 | ||||||||||||||||||||||
Year Ended December 31, 2018 | 175,522 | 21,940 | 1,671,645 | (13,040 | ) | (158,191 | ) | 1,522,354 | ||||||||||||||||
Net issuance of common stock under stock-based plans | 1,784 | 223 | 10,399 | 10,622 | ||||||||||||||||||||
Stock-based compensation expense | 38,085 | 38,085 | ||||||||||||||||||||||
Repurchase of common stock | (10,896 | ) | (1,362 | ) | (489,840 | ) | (491,202 | ) | ||||||||||||||||
Cash dividends ($0.09 per share) | (61,355 | ) | (61,355 | ) | ||||||||||||||||||||
Net income | 467,468 | 467,468 | ||||||||||||||||||||||
Other comprehensive loss | (5,814 | ) | (5,814 | ) | ||||||||||||||||||||
Year Ended December 31, 2019 | 166,410 | $ | 20,801 | $ | 1,720,129 | $ | (18,854 | ) | $ | (241,918 | ) | $ | 1,480,158 | |||||||||||
Shareholders’ Equity | ||||||||||||||||||||||||||||
Convertible Common Shares Value | Common Stock Shares | Common Stock Par Value | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | (Accumulated Deficit) Retained Earnings | Total Shareholders’ Equity | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Year Ended December 31, 2019 | $ | — | 166,410 | $ | 20,801 | $ | 1,720,129 | $ | (18,854 | ) | $ | (241,918 | ) | $ | 1,480,158 | |||||||||||||
Net issuance of common stock under stock-based plans | 1,230 | 154 | 4,696 | 4,850 | ||||||||||||||||||||||||
Stock-based compensation expense | 44,285 | 44,285 | ||||||||||||||||||||||||||
Repurchase of common stock | (1,517 | ) | (190 | ) | (88,275 | ) | (88,465 | ) | ||||||||||||||||||||
Cash dividends ($0.40 per share) | (66,540 | ) | (66,540 | ) | ||||||||||||||||||||||||
Convertible common shares | 3,787 | (3,787 | ) | (3,787 | ) | |||||||||||||||||||||||
Net income | 784,147 | 784,147 | ||||||||||||||||||||||||||
Other comprehensive income | 52,370 | 52,370 | ||||||||||||||||||||||||||
Year Ended December 31, 2020 | 3,787 | 166,123 | 20,765 | 1,765,323 | 33,516 | 387,414 | 2,207,018 | |||||||||||||||||||||
Net issuance of common stock under stock-based plans | 899 | 113 | (225 | ) | (112 | ) | ||||||||||||||||||||||
Stock-based compensation expense | 45,632 | 45,632 | ||||||||||||||||||||||||||
Repurchase of common stock | (4,771 | ) | (597 | ) | (599,403 | ) | (600,000 | ) | ||||||||||||||||||||
Cash dividends ($0.40 per share) | (66,034 | ) | (66,034 | ) | ||||||||||||||||||||||||
Settlements of convertible notes | 8,148 | 1,018 | 984,622 | 985,640 | ||||||||||||||||||||||||
Exercise of convertible notes hedge call options | (8,148 | ) | (1,018 | ) | (986,082 | ) | (987,100 | ) | ||||||||||||||||||||
Convertible common shares | (2,275 | ) | 2,275 | 2,275 | ||||||||||||||||||||||||
Net income | 1,014,589 | 1,014,589 | ||||||||||||||||||||||||||
Other comprehensive loss | (39,464 | ) | (39,464 | ) | ||||||||||||||||||||||||
Year Ended December 31, 2021 | 1,512 | 162,251 | 20,281 | 1,811,545 | (5,948 | ) | 736,566 | 2,562,444 | ||||||||||||||||||||
Net issuance of common stock under stock-based plans | 761 | 96 | (4,471 | ) | (4,375 | ) | ||||||||||||||||||||||
Stock-based compensation expense | 48,466 | 48,466 | ||||||||||||||||||||||||||
Repurchase of common stock | (7,253 | ) | (907 | ) | (751,175 | ) | (752,082 | ) | ||||||||||||||||||||
Cash dividends ($0.44 per share) | (69,763 | ) | (69,763 | ) | ||||||||||||||||||||||||
Settlements of convertible notes | 1,495 | 187 | (442 | ) | (255 | ) | ||||||||||||||||||||||
Exercise of convertible notes hedge call options | (1,495 | ) | (187 | ) | 187 | — | ||||||||||||||||||||||
Convertible common shares | (1,512 | ) | 1,512 | 1,512 | ||||||||||||||||||||||||
Cumulative effect of change in accounting principle related to convertible debt | (100,834 | ) | 94,600 | (6,234 | ) | |||||||||||||||||||||||
Net income | 715,501 | 715,501 | ||||||||||||||||||||||||||
Other comprehensive loss | (43,920 | ) | (43,920 | ) | ||||||||||||||||||||||||
Year Ended December 31, 2022 | $ | — | 155,759 | $ | 19,470 | $ | 1,755,963 | $ | (49,868 | ) | $ | 725,729 | $ | 2,451,294 | ||||||||||||||
Years Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 467,468 | $ | 451,779 | $ | 257,692 | ||||||
Adjustments to reconcile net income from operations to net cash provided by operating activities: | ||||||||||||
Depreciation | 70,834 | 67,415 | 66,122 | |||||||||
Amortization | 49,821 | 45,809 | 41,953 | |||||||||
Stock-based compensation | 37,897 | 33,577 | 34,097 | |||||||||
Deferred taxes | (9,456 | ) | 28,340 | 37,105 | ||||||||
Provision for excess and obsolete inventory | 15,244 | 11,242 | 8,844 | |||||||||
Investment impairment | 15,000 | — | — | |||||||||
Contingent consideration fair value adjustment | (19,257 | ) | 987 | 7,820 | ||||||||
(Gains) losses on investments | (6,033 | ) | 3,494 | (878 | ) | |||||||
Retirement plans actuarial losses ( gains) | 8,176 | (3,316 | ) | (6,624 | ) | |||||||
Property insurance recovery, net | — | — | (4,309 | ) | ||||||||
Other | 766 | 1,083 | 1,585 | |||||||||
Changes in operating assets and liabilities, net of businesses acquired: | ||||||||||||
Accounts receivable | (70,440 | ) | (17,938 | ) | (80,584 | ) | ||||||
Inventories | (27,408 | ) | (29,498 | ) | 44,960 | |||||||
Prepayments and other assets | (23,784 | ) | (58,402 | ) | 2,254 | |||||||
Accounts payable and other liabilit ies | 49,279 | 13,693 | 43,574 | |||||||||
Deferred revenue and customer advances | 39,313 | 13,379 | 4,984 | |||||||||
Retirement plan contributions | (5,086 | ) | (4,334 | ) | (5,902 | ) | ||||||
Income taxes | (13,584 | ) | (80,429 | ) | 173,802 | |||||||
Net cash provided by operating activities | 578,750 | 476,881 | 626,495 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property, plant and equipment | (134,642 | ) | (114,379 | ) | (105,375 | ) | ||||||
Proceeds from government subsidy for property, plant and equipment | — | 7,920 | — | |||||||||
Purchases of marketable securities | (662,701 | ) | (918,744 | ) | (1,391,917 | ) | ||||||
Proceeds from maturities of marketable securities | 611,927 | 1,270,439 | 701,681 | |||||||||
Proceeds from sales of marketable securities | 105,586 | 846,122 | 527,746 | |||||||||
Proceeds from insurance | 2,912 | 1,126 | 5,064 | |||||||||
Purchase of investment and acquisition of businesses, net of cash acquired | (79,742 | ) | (169,474 | ) | — | |||||||
Net cash (used for) provided by investing activities | (156,660 | ) | 923,010 | (262,801 | ) | |||||||
Cash flows from financing activities: | ||||||||||||
Issuance of common stock under stock purchase and stock option plans | 29,312 | 20,973 | 24,493 | |||||||||
Repurchase of common stock | (500,000 | ) | (823,478 | ) | (200,304 | ) | ||||||
Dividend payments | (61,305 | ) | (67,322 | ) | (55,447 | ) | ||||||
Payments related to net settlement of employee stock compensation awards | (14,741 | ) | (20,023 | ) | (12,881 | ) | ||||||
Payments of contingent consideration | (27,615 | ) | (13,571 | ) | (1,050 | ) | ||||||
Net cash used for financing activities | (574,349 | ) | (903,421 | ) | (245,189 | ) | ||||||
Effects of exchange rate changes on cash and cash equivalents | (569 | ) | 439 | 3,454 | ||||||||
(Decrease) Increase in cash and cash equivalents | (152,828 | ) | 496,909 | 121,959 | ||||||||
Cash and cash equivalents at beginning of year | 926,752 | 429,843 | 307,884 | |||||||||
Cash and cash equivalents at end of year | $ | 773,924 | $ | 926,752 | $ | 429,843 | ||||||
Supplementary disclosure of cash flow information: | ||||||||||||
Cash paid for: | ||||||||||||
Interest | $ | 5,996 | $ | 6,205 | $ | 6,446 | ||||||
Income taxes | $ | 81,410 | $ | 72,811 | $ | 53,775 | ||||||
Years Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 715,501 | $ | 1,014,589 | $ | 784,147 | ||||||
Adjustments to reconcile net income from operations to net cash provided by operating activities: | ||||||||||||
Depreciation | 90,763 | 91,073 | 80,119 | |||||||||
Stock-based compensation | 48,228 | 45,643 | 44,906 | |||||||||
Provision for excess and obsolete inventory | 31,452 | 15,475 | 17,534 | |||||||||
Amortization | 19,912 | 34,412 | 46,624 | |||||||||
Deferred taxes | (38,693 | ) | (17,305 | ) | (15,688 | ) | ||||||
Retirement plans actuarial (gains) losses | (25,584 | ) | (2,217 | ) | 10,284 | |||||||
Losses (gains) on investments | 9,985 | (6,410 | ) | (7,898 | ) | |||||||
Gains on sale of asset | (3,410 | ) | — | — | ||||||||
Loss on convertible debt conversion | — | 28,828 | — | |||||||||
Contingent consideration fair value adjustment | — | (7,227 | ) | (23,271 | ) | |||||||
Other | 2,353 | 271 | 1,557 | |||||||||
Changes in operating assets and liabilities, net of businesses acquired: | ||||||||||||
Accounts receivable | 50,628 | (57,778 | ) | (129,451 | ) | |||||||
Inventories | (80,809 | ) | 6,495 | (8,438 | ) | |||||||
Prepayments and other assets | (140,713 | ) | (175,846 | ) | (64,418 | ) | ||||||
Accounts payable and other accrued expenses | (60,507 | ) | 129,499 | 73,167 | ||||||||
Deferred revenue and customer advances | (6,233 | ) | 9,873 | 39,974 | ||||||||
Retirement plan contributions | (5,116 | ) | (5,405 | ) | (5,382 | ) | ||||||
Income taxes | (29,834 | ) | (5,604 | ) | 25,169 | |||||||
Net cash provided by operating activities | 577,923 | 1,098,366 | 868,935 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property, plant and equipment | (163,249 | ) | (132,472 | ) | (184,977 | ) | ||||||
Purchases of marketable securities | (287,409 | ) | (661,781 | ) | (900,196 | ) | ||||||
Proceeds from maturities of marketable securities | 222,941 | 660,148 | 479,678 | |||||||||
Proceeds from sales of marketable securities | 268,058 | 266,466 | 35,006 | |||||||||
Proceeds from sale of asset | 3,410 | — | — | |||||||||
Purchase of investment and acquisition of business | — | (12,000 | ) | 149 | ||||||||
Proceeds from insurance | — | — | 546 | |||||||||
Net cash provided by (used for) investing activities | 43,751 | 120,361 | (569,794 | ) | ||||||||
Cash flows from financing activities: | ||||||||||||
Repurchase of common stock | (752,082 | ) | (600,000 | ) | (88,465 | ) | ||||||
Payments of convertible debt principal | (66,759 | ) | (342,990 | ) | — | |||||||
Dividend payments | (69,711 | ) | (65,977 | ) | (66,482 | ) | ||||||
Payments related to net settlement of employee stock compensation awards | (33,170 | ) | (32,303 | ) | (23,014 | ) | ||||||
Issuance of common stock under stock purchase and stock option plans | 28,733 | 32,686 | 28,527 | |||||||||
Payments of contingent consideration | — | — | (8,852 | ) | ||||||||
Net cash used for financing activities | (892,989 | ) | (1,008,584 | ) | (158,286 | ) | ||||||
Effects of exchange rate changes on cash and cash equivalents | 3,889 | (2,065 | ) | (658 | ) | |||||||
(Decrease) increase in cash and cash equivalents | (267,426 | ) | 208,078 | 140,197 | ||||||||
Cash and cash equivalents at beginning of year | 1,122,199 | 914,121 | 773,924 | |||||||||
Cash and cash equivalents at end of year | $ | 854,773 | $ | 1,122,199 | $ | 914,121 | ||||||
Supplementary disclosure of cash flow information: | ||||||||||||
Cash paid for: | ||||||||||||
Interest | $ | 1,498 | $ | 4,236 | $ | 6,435 | ||||||
Income taxes | $ | 193,246 | $ | 172,134 | $ | 106,577 | ||||||
Non-cash investing activities: | ||||||||||||
Capital expenditures incurred but not yet paid: | $ | 1,826 | $ | 1,973 | $ | 3,666 | ||||||
A. |
B. |
2019 | 2018 | |||||||
(in thousands) | ||||||||
Maintenance , service and training | $ | 63,815 | $ | 58,362 | ||||
Extended warranty | 30,677 | 27,422 | ||||||
Customer advances, undelivered elements and other | 56,358 | 24,677 | ||||||
Total deferred revenue and customer advances | $ | 150,850 | $ | 110,461 | ||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Maintenance, service and training | $ | 78,089 | $ | 81,826 | ||||
Customer advances, undelivered elements and other | 59,147 | 55,112 | ||||||
Extended warranty | 56,180 | 64,168 | ||||||
Total deferred revenue and customer advances | $ | 193,416 | $ | 201,106 | ||||
Amount | ||||
(in thousands) | ||||
Balance at December 31, 2016 | $ | 7,203 | ||
Accruals for warranties issued during the period | 14,223 | |||
Accruals related to pre-existing warranties | (379 | ) | ||
Settlements made during the period | (12,847 | ) | ||
Balance at December 31, 2017 | 8,200 | |||
Acquisition | 41 | |||
Accruals for warranties issued during the period | 13,045 | |||
Accruals related to pre-existing warranties | 921 | |||
Settlements made during the period | (14,298 | ) | ||
Balance at December 31, 2018 | 7,909 | |||
Acquisition | 14 | |||
Accruals for warranties issued during the period | 14,106 | |||
Accruals related to pre-existing warranties | 4,026 | |||
Settlements made during the period | (17,059 | ) | ||
Balance at December 31, 2019 | $ | 8,996 | ||
Amount | ||||
(in thousands) | ||||
Balance at December 31, 2019 | $ | 8,996 | ||
Accruals for warranties issued during the period | 28,490 | |||
Accruals related to pre-existing warranties | 821 | |||
Settlements made during the period | (21,674 | ) | ||
Balance at December 31, 2020 | 16,633 | |||
Accruals for warranties issued during the period | 35,727 | |||
Accruals related to pre-existing warranties | (6,846 | ) | ||
Settlements made during the period | (20,937 | ) | ||
Balance at December 31, 2021 | 24,577 | |||
Accruals for warranties issued during the period | 21,851 | |||
Accruals related to pre-existing warranties | (5,618 | ) | ||
Settlements made during the period | (26,629 | ) | ||
Balance at December 31, 2022 | $ | 14,181 | ||
Amount | ||||
(in thousands) | ||||
Balance at December 31, 2016 | $ | 28,200 | ||
Deferral of new extended warranty revenue | 20,513 | |||
Recognition of extended warranty deferred revenue | (24,275 | ) | ||
Balance at December 31, 2017 | 24,438 | |||
Deferral of new extended warranty revenue | 23,753 | |||
Recognition of extended warranty deferred revenue | (20,769 | ) | ||
Balance at December 31, 2018 | 27,422 | |||
Deferral of new extended warranty revenue | 23,271 | |||
Recognition of extended warranty deferred revenue | (20,016 | ) | ||
Balance at December 31, 2019 | $ | 30,677 | ||
Amount | ||||
(in thousands) | ||||
Balance at December 31, 2019 | $ | 30,677 | ||
Deferral of new extended warranty revenue | 41,694 | |||
Recognition of extended warranty deferred revenue | (20,442 | ) | ||
Balance at December 31, 2020 | 51,929 | |||
Deferral of new extended warranty revenue | 43,597 | |||
Recognition of extended warranty deferred revenue | (31,358 | ) | ||
Balance at December 31, 2021 | 64,168 | |||
Deferral of new extended warranty revenue | 33,686 | |||
Recognition of extended warranty deferred revenue | (41,674 | ) | ||
Balance at December 31, 2022 | $ | 56,180 | ||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Contract manufacturer and supplier prepayments | $ | 143,392 | $ | 131,642 | ||||
Prepaid taxes | 8,046 | 9,646 | ||||||
Prepaid maintenance and other services | 8,503 | 8,487 | ||||||
Other prepayments | 16,753 | 12,744 | ||||||
Total prepayments | $ | 176,694 | $ | 162,519 | ||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Contract manufacturer and supplier prepayments | $ | 491,105 | $ | 364,478 | ||||
Prepaid taxes | 18,625 | 15,090 | ||||||
Prepaid maintenance and other services | 14,545 | 13,660 | ||||||
Other prepayments | 8,687 | 13,038 | ||||||
Total prepayments | $ | 532,962 | $ | 406,266 | ||||
Buildings | 40 years | |||
Building improvements | 5 to 10 years | |||
Leasehold improvements | Lesser of lease term or 10 years | |||
Furniture and fixtures | 10 years | |||
Test systems manufactured internally | 6 years | |||
Machinery, and software | 3 to 5 years |
C. |
Purchase Price Allocation | ||||
(in thousands) | ||||
Goodwill | $ | 41,372 | ||
Intangible assets | 37,660 | |||
Tangible assets acquired and liabilities assumed: | ||||
Other c | 3,661 | |||
Non-current assets | 1,227 | |||
Accounts payable and current liabilities | (1,223 | ) | ||
Long-term other liabilities | (949 | ) | ||
Total purchase price | $ | 81,748 | ||
Fair Value | Estimated Useful Life | |||||||
(in thousands) | (in years) | |||||||
Developed technology | $ | 24,590 | 6.0 | |||||
Customer relationships | 7,360 | 6.0 | ||||||
Trademarks and tradenames | 5,450 | 7.0 | ||||||
Backlog | 260 | 0.3 | ||||||
Total intangible assets | $ | 37,660 | 6.1 | |||||
Purchase Price Allocation | ||||
(in thousands) | ||||
Goodwill | $ | 135,976 | ||
Intangible assets | 80,670 | |||
Tangible assets acquired and liabilities assumed: | ||||
Current assets | 6,039 | |||
Non-current assets | 1,336 | |||
Accounts payable and current liabilities | (7,336 | ) | ||
Long-term deferred tax liabilities | (18,007 | ) | ||
Other long-term liabilities | (900 | ) | ||
Total purchase price | $ | 197,778 | ||
Fair Value | Estimated Useful Life | |||||||
(in thousands) | (in years) | |||||||
Developed technology | $ | 58,900 | 7.0 | |||||
Trademarks and tradenames | 13,240 | 11.0 | ||||||
Customer relationships | 8,500 | 2.5 | ||||||
Backlog | 30 | 0.2 | ||||||
Total intangible assets | $ | 80,670 | 7.2 | |||||
For the Year Ended | ||||||||
December 31, 2019 | December 31, 2018 | |||||||
(in thousands, except per share amounts) | ||||||||
Revenues | $ | 2,303,737 | $ | 2,111,373 | ||||
Net income | $ | 464,602 | $ | 442,082 | ||||
Net income per common share: | ||||||||
Basic | $ | 2.73 | $ | 2.36 | ||||
Diluted | $ | 2.59 | $ | 2.30 | ||||
D. | INVESTMENT IN OTHER COMPANY |
E. | REVENUE |
Semiconductor | Industrial Automation | System Test | Wireless Test | Corporate and Other | Total | |||||||||||||||||||||||||||||||||||
System on-a-chip | Memory | Universal Robots | Mobile Industrial Robots | AutoGuide | Energid | |||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2019 (1) | ||||||||||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||||||||||
Point in Time | $ | 1,070,375 | $ | 247,221 | $ | 244,515 | $ | 44,329 | $ | 1,144 | $ | — | $ | 237,686 | $ | 148,322 | $ | (515 | ) | $ | 1,993,077 | |||||||||||||||||||
Over Time | 216,065 | 18,910 | 3,952 | 74 | 234 | 3,891 | 49,769 | 8,993 | — | 301,888 | ||||||||||||||||||||||||||||||
Total | $ | 1,286,440 | $ | 266,131 | $ | 248,467 | $ | 44,403 | $ | 1,378 | $ | 3,891 | $ | 287,455 | $ | 157,315 | $ | (515 | ) | $ | 2,294,965 | |||||||||||||||||||
Geographical Market | ||||||||||||||||||||||||||||||||||||||||
Asia Pacific | $ | 1,152,881 | $ | 238,714 | $ | 67,806 | $ | 9,513 | $ | — | $ | 221 | $ | 132,826 | $ | 126,549 | $ | — | $ | 1,728,510 | ||||||||||||||||||||
Americas | 73,257 | 23,826 | 70,165 | 14,438 | 1,378 | 1,761 | 129,840 | 24,234 | (515 | ) | 338,384 | |||||||||||||||||||||||||||||
Europe, Middle East and Africa | 60,302 | 3,591 | 110,496 | 20,452 | — | 1,909 | 24,789 | 6,532 | — | 228,071 | ||||||||||||||||||||||||||||||
Total | $ | 1,286,440 | $ | 266,131 | $ | 248,467 | $ | 44,403 | $ | 1,378 | $ | 3,891 | $ | 287,455 | $ | 157,315 | $ | (515 | ) | $ | 2,294,965 | |||||||||||||||||||
For the Year Ended December 31, 2018 (1) | ||||||||||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||||||||||
Point in Time | $ | 1,010,493 | $ | 259,366 | $ | 231,895 | $ | 24,115 | $ | — | $ | 553 | $ | 167,418 | $ | 122,536 | $ | (1,205 | ) | $ | 1,815,171 | |||||||||||||||||||
Over Time | 208,456 | 14,102 | 2,200 | — | — | 2,689 | 48,714 | 9,470 | — | 285,631 | ||||||||||||||||||||||||||||||
Total | $ | 1,218,949 | $ | 273,468 | $ | 234,095 | $ | 24,115 | $ | — | $ | 3,242 | $ | 216,132 | $ | 132,006 | $ | (1,205 | ) | $ | 2,100,802 | |||||||||||||||||||
Geographical Market | ||||||||||||||||||||||||||||||||||||||||
Asia Pacific | $ | 1,067,879 | $ | 245,264 | $ | 58,381 | $ | 5,950 | $ | — | $ | 111 | $ | 90,989 | $ | 107,872 | $ | — | $ | 1,576,446 | ||||||||||||||||||||
Americas | 78,498 | 17,353 | 68,938 | 7,326 | — | 1,540 | 96,763 | 19,166 | (1,205 | ) | 288,379 | |||||||||||||||||||||||||||||
Europe, Middle East and Africa | 72,572 | 10,851 | 106,776 | 10,839 | — | 1,591 | 28,380 | 4,968 | — | 235,977 | ||||||||||||||||||||||||||||||
Total | $ | 1,218,949 | $ | 273,468 | $ | 234,095 | $ | 24,115 | $ | — | $ | 3,242 | $ | 216,132 | $ | 132,006 | $ | (1,205 | ) | $ | 2,100,802 | |||||||||||||||||||
Semiconductor Test | Robotics | |||||||||||||||||||||||||||||||
System-on- a-chip | Memory | System Test | Universal Robots | Mobile Industrial Robots | Wireless Test | Corporate and Eliminations | Total | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
For the Year Ended December 31, 2022 (1) | ||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||
Point in Time | $ | 1,445,238 | $ | 344,693 | $ | 402,074 | $ | 317,514 | $ | 73,812 | $ | 189,040 | $ | 251 | $ | 2,772,622 | ||||||||||||||||
Over Time | 261,646 | 29,013 | 67,272 | 8,218 | 3,594 | 12,680 | — | 382,423 | ||||||||||||||||||||||||
Total | $ | 1,706,884 | $ | 373,706 | $ | 469,346 | $ | 325,732 | $ | 77,406 | $ | 201,720 | $ | 251 | $ | 3,155,045 | ||||||||||||||||
Geographical Market | ||||||||||||||||||||||||||||||||
Asia Pacific | $ | 1,514,964 | $ | 360,176 | $ | 294,350 | $ | 73,930 | $ | 15,724 | $ | 140,767 | $ | — | $ | 2,399,911 | ||||||||||||||||
Americas | 122,575 | 11,987 | 146,040 | 112,203 | 35,213 | 47,350 | 251 | 475,619 | ||||||||||||||||||||||||
Europe, Middle East and Africa | 69,345 | 1,543 | 28,956 | 139,599 | 26,469 | 13,603 | — | 279,515 | ||||||||||||||||||||||||
Total | $ | 1,706,884 | $ | 373,706 | $ | 469,346 | $ | 325,732 | $ | 77,406 | $ | 201,720 | $ | 251 | $ | 3,155,045 | ||||||||||||||||
For the Year Ended December 31, 2021 (1) | ||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||
Point in Time | $ | 1,989,979 | $ | 365,441 | $ | 409,383 | $ | 305,512 | $ | 60,884 | $ | 204,247 | $ | — | $ | 3,335,446 | ||||||||||||||||
Over Time | 256,751 | 30,171 | 58,356 | 5,670 | 3,839 | 12,648 | — | 367,435 | ||||||||||||||||||||||||
Total | $ | 2,246,730 | $ | 395,612 | $ | 467,739 | $ | 311,182 | $ | 64,723 | $ | 216,895 | $ | — | $ | 3,702,881 | ||||||||||||||||
Geographical Market | ||||||||||||||||||||||||||||||||
Asia Pacific | $ | 2,076,647 | $ | 381,444 | $ | 306,812 | $ | 81,456 | $ | 12,919 | $ | 172,103 | $ | — | $ | 3,031,381 | ||||||||||||||||
Americas | 102,702 | 10,665 | 135,230 | 94,897 | 26,069 | 36,173 | — | 405,736 | ||||||||||||||||||||||||
Europe, Middle East and Africa | 67,381 | 3,503 | 25,697 | 134,829 | 25,735 | 8,619 | — | 265,764 | ||||||||||||||||||||||||
Total | $ | 2,246,730 | $ | 395,612 | $ | 467,739 | $ | 311,182 | $ | 64,723 | $ | 216,895 | $ | — | $ | 3,702,881 | ||||||||||||||||
For the Year Ended December 31, 2020 (1) | ||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||
Point in Time | $ | 1,659,414 | $ | 363,324 | $ | 348,454 | $ | 214,212 | $ | 55,533 | $ | 163,834 | $ | (604 | ) | $ | 2,804,167 | |||||||||||||||
Over Time | 217,975 | 18,884 | 61,275 | 7,269 | 2,717 | 9,182 | — | 317,302 | ||||||||||||||||||||||||
Total | $ | 1,877,389 | $ | 382,208 | $ | 409,729 | $ | 221,481 | $ | 58,250 | $ | 173,016 | $ | (604 | ) | $ | 3,121,469 | |||||||||||||||
Geographical Market | ||||||||||||||||||||||||||||||||
Asia Pacific | $ | 1,744,593 | $ | 364,000 | $ | 258,521 | $ | 60,277 | $ | 6,471 | $ | 143,969 | $ | — | $ | 2,577,831 | ||||||||||||||||
Americas | 77,671 | 12,999 | 128,482 | 64,164 | 30,186 | 22,544 | (604 | ) | 335,442 | |||||||||||||||||||||||
Europe, Middle East and Africa | 55,125 | 5,209 | 22,726 | 97,040 | 21,593 | 6,503 | — | 208,196 | ||||||||||||||||||||||||
Total | $ | 1,877,389 | $ | 382,208 | $ | 409,729 | $ | 221,481 | $ | 58,250 | $ | 173,016 | $ | (604 | ) | $ | 3,121,469 | |||||||||||||||
| (1) | Includes “Revenue from Contracts with Customers.” |
F. |
2019 | 2018 | |||||||
(in thousands) | ||||||||
Raw material | $ | 118,595 | $ | 89,365 | ||||
Work-in-process | 32,695 | 31,014 | ||||||
Finished g oods | 45,401 | 33,162 | ||||||
| $ | 196,691 | $ | 153,541 | |||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Raw material | $ | 256,065 | $ | 155,641 | ||||
Work-in-process | 37,982 | 37,740 | ||||||
Finished goods | 30,972 | 49,949 | ||||||
| $ | 325,019 | $ | 243,330 | |||||
G. |
2019 | 2018 | |||||||
(in thousands) | ||||||||
Land | $ | 16,561 | $ | 16,561 | ||||
Buildings | 107,282 | 105,935 | ||||||
Machinery , equipment and s oftware | 834,970 | 752,722 | ||||||
Furniture and fixtures | 29,157 | 27,432 | ||||||
Leasehold improvements | 59,378 | 52,536 | ||||||
Construction in progress | 2,537 | 6,276 | ||||||
1,049,885 | 961,462 | |||||||
Less: accumulated depreciation | 729,669 | 681,641 | ||||||
| $ | 320,216 | $ | 279,821 | |||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Land | $ | 18,481 | $ | 17,207 | ||||
Buildings | 128,991 | 126,468 | ||||||
Machinery, equipment and software | 1,059,880 | 994,828 | ||||||
Furniture and fixtures | 29,929 | 28,743 | ||||||
Leasehold improvements | 64,631 | 64,110 | ||||||
Construction in progress | 22,470 | 8,105 | ||||||
| 1,324,382 | 1,239,461 | |||||||
Less: accumulated depreciation | 905,699 | 852,221 | ||||||
| $ | 418,683 | $ | 387,240 | |||||
H. |
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 | $ | 311,975 | $ | — | $ | — | $ | 311,975 | ||||||||
Cash equivalents | 410,285 | 51,664 | — | 461,949 | ||||||||||||
Available for sale securities: | ||||||||||||||||
Corporate debt securities | — | 97,307 | — | 97,307 | ||||||||||||
Commercial paper | — | 54,149 | — | 54,149 | ||||||||||||
U.S. Treasury securities | — | 42,382 | — | 42,382 | ||||||||||||
U.S. government agency securities | — | 9,952 | — | 9,952 | ||||||||||||
Debt mutual funds | 6,888 | — | — | 6,888 | ||||||||||||
Certificates of deposit and time deposits | — | 4,751 | — | 4,751 | ||||||||||||
Non-U.S. government securities | — | 592 | — | 592 | ||||||||||||
Equity securities: | ||||||||||||||||
Equity mutual funds | 25,772 | — | — | 25,772 | ||||||||||||
Total | $ | 754,920 | $ | 260,797 | $ | — | $ | 1,015,717 | ||||||||
Derivative assets | — | 528 | — | 528 | ||||||||||||
Total | $ | 754,920 | $ | 261,325 | $ | — | $ | 1,016,245 | ||||||||
Liabilities | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 39,705 | $ | 39,705 | ||||||||
Derivative liabilities | — | 203 | — | 203 | ||||||||||||
Total | $ | — | $ | 203 | $ | 39,705 | $ | 39,908 | ||||||||
December 31, 2022 | ||||||||||||||||
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 | $ | 632,417 | $ | — | $ | — | $ | 632,417 | ||||||||
Cash equivalents | 161,767 | 60,589 | — | 222,356 | ||||||||||||
Available for sale securities: | ||||||||||||||||
Corporate debt securities | — | 50,856 | — | 50,856 | ||||||||||||
U.S. Treasury securities | — | 39,649 | — | 39,649 | ||||||||||||
Commercial paper | — | 7,159 | — | 7,159 | ||||||||||||
Debt mutual funds | 6,580 | — | — | 6,580 | ||||||||||||
U.S. government agency securities | — | 6,352 | — | 6,352 | ||||||||||||
Certificates of deposit and time deposits | — | 1,740 | — | 1,740 | ||||||||||||
Non-U.S. government securities | — | 535 | — | 535 | ||||||||||||
Equity securities: | ||||||||||||||||
Mutual funds | 37,518 | — | — | 37,518 | ||||||||||||
Total | $ | 838,282 | $ | 166,880 | $ | — | $ | 1,005,162 | ||||||||
Derivative assets | — | 86 | — | 86 | ||||||||||||
Total | $ | 838,282 | $ | 166,966 | $ | — | $ | 1,005,248 | ||||||||
Liabilities | ||||||||||||||||
Derivative liabilities | — | 4,215 | — | 4,215 | ||||||||||||
Total | $ | — | $ | 4,215 | $ | — | $ | 4,215 | ||||||||
Reported as follows: | ||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 794,184 | $ | 60,589 | $ | — | $ | 854,773 | ||||||||
Marketable securities | — | 39,612 | — | 39,612 | ||||||||||||
Long-term marketable securities | 44,098 | 66,679 | — | 110,777 | ||||||||||||
Prepayments | — | 86 | — | 86 | ||||||||||||
Total | $ | 838,282 | $ | 166,966 | $ | — | $ | 1,005,248 | ||||||||
Liabilities | ||||||||||||||||
Other current liabilities | $ | — | $ | 4,215 | $ | — | $ | 4,215 | ||||||||
Total | $ | — | $ | 4,215 | $ | — | $ | 4,215 | ||||||||
December 31, 2021 | ||||||||||||||||||||||||||||||||
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 | $ | 628,740 | $ | — | $ | — | $ | 628,740 | ||||||||||||||||||||||||
Cash equivalents | 412,212 | 81,247 | — | 493,459 | ||||||||||||||||||||||||||||
Available for sale securities: | ||||||||||||||||||||||||||||||||
Commercial paper | — | 189,620 | — | 189,620 | ||||||||||||||||||||||||||||
U.S. Treasury securities | — | 77,789 | — | 77,789 | ||||||||||||||||||||||||||||
Corporate debt securities | — | 56,901 | — | 56,901 | ||||||||||||||||||||||||||||
Debt mutual funds | 7,971 | — | — | 7,971 | ||||||||||||||||||||||||||||
U.S. government agency securities | — | 4,610 | — | 4,610 | ||||||||||||||||||||||||||||
Certificates of deposit and time deposits | — | 1,356 | — | 1,356 | ||||||||||||||||||||||||||||
Non-U.S. government securities | — | 589 | — | 589 | ||||||||||||||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
Mutual funds | 39,253 | — | — | 39,253 | ||||||||||||||||||||||||||||
Total | $ | 1,088,176 | $ | 412,112 | $ | — | $ | 1,500,288 | ||||||||||||||||||||||||
Derivative assets | — | 92 | — | 92 | ||||||||||||||||||||||||||||
Total | $ | 1,088,176 | $ | 412,204 | $ | — | $ | 1,500,380 | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Derivative liabilities | — | 118 | — | 118 | ||||||||||||||||||||||||||||
Total | $ | — | $ | 118 | $ | — | $ | 118 | ||||||||||||||||||||||||
Reported as follows: | ||||||||||||||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | (Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 722,260 | $ | 51,664 | $ | — | $ | 773,924 | $ | 1,040,952 | $ | 81,247 | $ | — | $ | 1,122,199 | ||||||||||||||||
Marketable securities | — | 137,303 | — | 137,303 | — | 244,231 | — | 244,231 | ||||||||||||||||||||||||
Long-term marketable securities | 32,660 | 71,830 | — | 104,490 | 47,224 | 86,634 | — | 133,858 | ||||||||||||||||||||||||
Prepayments | — | 528 | — | 528 | — | 92 | — | 92 | ||||||||||||||||||||||||
Total | $ | 754,920 | $ | 261,325 | $ | — | $ | 1,016,245 | $ | 1,088,176 | $ | 412,204 | $ | — | $ | 1,500,380 | ||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Other current liabilities | $ | — | $ | 203 | $ | — | $ | 203 | $ | — | $ | 118 | $ | — | $ | 118 | ||||||||||||||||
Contingent consideration | — | — | 9,106 | 9,106 | ||||||||||||||||||||||||||||
Long-term contingent consideration | — | — | 30,599 | 30,599 | ||||||||||||||||||||||||||||
Total | $ | — | $ | 203 | $ | 39,705 | $ | 39,908 | $ | — | $ | 118 | $ | — | $ | 118 | ||||||||||||||||
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 | $ | 312,512 | $ | — | $ | — | $ | 312,512 | ||||||||
Cash equivalents | 253,525 | 360,715 | — | 614,240 | ||||||||||||
Available for sale securities: | ||||||||||||||||
U.S. Treasury securities | — | 109,721 | — | 109,721 | ||||||||||||
Commercial paper | — | 86,117 | — | 86,117 | ||||||||||||
Corporate debt securities | — | 40,020 | — | 40,020 | ||||||||||||
U.S. government agency securities | — | 9,611 | — | 9,611 | ||||||||||||
Certificates of deposit and time deposits | — | 7,604 | — | 7,604 | ||||||||||||
Debt mutual funds | 3,187 | — | — | 3,187 | ||||||||||||
Non-U.S. | — | 376 | — | 376 | ||||||||||||
Equity securities: | ||||||||||||||||
Equity mutual funds | 21,191 | — | — | 21,191 | ||||||||||||
| $ | 590,415 | $ | 614,164 | $ | — | $ | 1,204,579 | |||||||||
Derivative assets | — | 79 | — | 79 | ||||||||||||
Total | $ | 590,415 | $ | 614,243 | $ | — | $ | 1,204,658 | ||||||||
Liabilities | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 70,543 | $ | 70,543 | ||||||||
Derivative liabilities | — | 514 | — | 514 | ||||||||||||
Total | $ | — | $ | 514 | $ | 70,543 | $ | 71,057 | ||||||||
(Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 566,037 | $ | 360,715 | $ | — | $ | 926,752 | ||||||||
Marketable securities | — | 190,096 | — | 190,096 | ||||||||||||
Long-term marketable securities | 24,378 | 63,353 | — | 87,731 | ||||||||||||
Prepayments | — | 79 | — | 79 | ||||||||||||
| $ | 590,415 | $ | 614,243 | $ | — | $ | 1,204,658 | |||||||||
Liabilities | ||||||||||||||||
Other current liabilities | $ | — | $ | 514 | $ | — | $ | 514 | ||||||||
Contingent consideration | — | — | 34,865 | 34,865 | ||||||||||||
Long-term contingent consideration | — | — | 35,678 | 35,678 | ||||||||||||
| $ | — | $ | 514 | $ | 70,543 | $ | 71,057 | |||||||||
Contingent Consideration | ||||
(in thousands) | ||||
Balance at December 31, 2020 | $ | 7,227 | ||
Fair value adjustment (1) | (7,227 | ) | ||
Balance at December 31, 2021 | — | |||
Fair value adjustment | — | |||
Balance at December 31, 2022 | $ | — | ||
| (1) |
During the year ended December 31, |
Liability | December 31, 2019 Fair Value | Valuation Technique | Unobservable Inputs | Weighted Average | ||||||||||||
(in thousands) | ||||||||||||||||
Contingent c onsideration(AutoGuide) | $ | 26,952 | Monte Carlo simulation | Revenue Volatility | 11.5 % | |||||||||||
Discount Rate | 2.6 % | |||||||||||||||
Contingent c onsideration(MiR) | $ | 12,753 (1) | Monte Carlo simulation | Revenue Volatility | 14.0 % | |||||||||||
Discount Rate | 0.2 % | |||||||||||||||
December 31, 2019 | December 31, 2018 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 773,924 | $ | 773,924 | $ | 926,752 | $ | 926,752 | ||||||||
Marketable securities | 241,793 | 241,793 | 277,827 | 277,827 | ||||||||||||
Derivative assets | 528 | 528 | 79 | 79 | ||||||||||||
Liabilities | ||||||||||||||||
Contingent consideration | 39,705 | 39,705 | 70,543 | 70,543 | ||||||||||||
Derivative liabilities | 203 | 203 | 514 | 514 | ||||||||||||
Convertible debt (1) | 394,687 | 1,010,275 | 379,981 | 547,113 | ||||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 854,773 | $ | 854,773 | $ | 1,122,199 | $ | 1,122,199 | ||||||||
Marketable securities | 150,389 | 150,389 | 378,089 | 378,089 | ||||||||||||
Derivative assets | 86 | 86 | 92 | 92 | ||||||||||||
Liabilities | ||||||||||||||||
Derivative liabilities | 4,215 | 4,215 | 118 | 118 | ||||||||||||
Convertible debt (1) | 50,115 | 139,007 | 108,426 | 604,648 | ||||||||||||
| (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. |
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 | $ | 93,267 | $ | 4,081 | $ | (41 | ) | $ | 97,307 | $ | 2,009 | |||||||||
Commercial paper | 54,124 | 26 | (1 | ) | 54,149 | 1,391 | ||||||||||||||
U.S. Treasury securities | 42,167 | 431 | (216 | ) | 42,382 | 17,556 | ||||||||||||||
U.S. government agency securities | 9,942 | 14 | (4 | ) | 9,952 | 3,043 | ||||||||||||||
Debt mutual funds | 6,753 | 135 | — | 6,888 | — | |||||||||||||||
Certificates of deposit and time deposits | 4,751 | — | — | 4,751 | — | |||||||||||||||
Non-U.S. government securities | 592 | — | — | 592 | — | |||||||||||||||
| $ | 211,596 | $ | 4,687 | $ | (262 | ) | $ | 216,021 | $ | 23,999 | ||||||||||
December 31, 2022 | ||||||||||||||||||||
Available-for-Sale | ||||||||||||||||||||
Cost | Unrealized Gain | Unrealized (Loss) | Fair Market Value | Fair Market Value of Investments with Unrealized Losses | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Corporate debt securities | $ | 57,006 | $ | 3 | $ | (6,153 | ) | $ | 50,856 | $ | 50,667 | |||||||||
U.S. Treasury securities | 44,030 | — | (4,381 | ) | 39,649 | 39,649 | ||||||||||||||
Commercial paper | 7,089 | 70 | — | 7,159 | — | |||||||||||||||
Debt mutual funds | 6,997 | — | (417 | ) | 6,580 | 3,095 | ||||||||||||||
U.S. government agency securities | 6,442 | — | (90 | ) | 6,352 | 6,352 | ||||||||||||||
Certificates of deposit and time deposits | 1,740 | — | — | 1,740 | — | |||||||||||||||
Non-U.S. government securities | 535 | — | — | 535 | — | |||||||||||||||
| $ | 123,839 | $ | 73 | $ | (11,041 | ) | $ | 112,871 | $ | 99,763 | ||||||||||
Cost | Unrealized Gain | Unrealized (Loss) | Fair Market Value | Fair Market Value of Investments with Unrealized Losses | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Marketable securities | $ | 137,144 | $ | 160 | $ | (1 | ) | $ | 137,303 | $ | 2,922 | |||||||||
Long-term marketable securities | 74,452 | 4,527 | (261 | ) | 78,718 | 21,077 | ||||||||||||||
| $ | 211,596 | $ | 4,687 | $ | (262 | ) | $ | 216,021 | $ | 23,999 | ||||||||||
Cost | Unrealized Gain | Unrealized (Loss) | Fair Market Value | Fair Market Value of Investments with Unrealized Losses | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Marketable securities | $ | 39,950 | $ | 70 | $ | (408 | ) | $ | 39,612 | $ | 30,713 | |||||||||
Long-term marketable securities | 83,889 | 3 | (10,633 | ) | 73,259 | 69,050 | ||||||||||||||
| $ | 123,839 | $ | 73 | $ | (11,041 | ) | $ | 112,871 | $ | 99,763 | ||||||||||
December 31, 2021 | ||||||||||||||||||||
Available-for-Sale | ||||||||||||||||||||
Cost | Unrealized Gain | Unrealized (Loss) | Fair Market Value | Fair Market Value of Investments with Unrealized Losses | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Commercial paper | $ | 189,614 | $ | 15 | $ | (9 | ) | $ | 189,620 | $ | 22,784 | |||||||||
U.S. Treasury securities | 77,707 | 551 | (470 | ) | 77,789 | 46,435 | ||||||||||||||
Corporate debt securities | 52,266 | 4,863 | (227 | ) | 56,901 | 19,422 | ||||||||||||||
Debt mutual funds | 7,928 | 43 | — | 7,971 | — | |||||||||||||||
U.S. government agency securities | 4,617 | 5 | (12 | ) | 4,610 | 3,296 | ||||||||||||||
Certificates of deposit and time deposits | 1,356 | — | — | 1,356 | — | |||||||||||||||
Non-U.S. government securities | 589 | — | — | 589 | — | |||||||||||||||
| $ | 334,077 | $ | 5,477 | $ | (718 | ) | $ | 338,836 | $ | 91,937 | ||||||||||
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 | $ | 110,969 | $ | 112 | $ | (1,360 | ) | $ | 109,721 | $ | 75,040 | |||||||||
Commercial paper | 86,130 | 13 | (26 | ) | 86,117 | 85,094 | ||||||||||||||
Corporate debt securities | 41,133 | 432 | (1,545 | ) | 40,020 | 24,767 | ||||||||||||||
U.S. government agency securities | 9,646 | 1 | (36 | ) | 9,611 | 7,077 | ||||||||||||||
Certificates of deposit and time deposits | 7,604 | — | — | 7,604 | — | |||||||||||||||
Debt mutual funds | 3,153 | 34 | — | 3,187 | — | |||||||||||||||
Non-U.S. government securities | 376 | — | — | 376 | — | |||||||||||||||
| $ | 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 | $ | 190,100 | $ | 88 | $ | (92 | ) | $ | 190,096 | $ | 140,262 | |||||||||
Long-term marketable securities | 68,911 | 504 | (2,875 | ) | 66,540 | 51,716 | ||||||||||||||
| $ | 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 | $ | 244,213 | $ | 64 | $ | (46 | ) | $ | 244,231 | $ | 54,798 | |||||||||
Long-term marketable securities | 89,864 | 5,413 | (672 | ) | 94,605 | 37,139 | ||||||||||||||
| $ | 334,077 | $ | 5,477 | $ | (718 | ) | $ | 338,836 | $ | 91,937 | ||||||||||
Cost | Fair Value | |||||||
(in thousands) | ||||||||
Due within one year | $ | 137,144 | $ | 137,303 | ||||
Due after 1 year through 5 years | 15,264 | 15,351 | ||||||
Due after 5 years through 10 years | 14,436 | 14,576 | ||||||
Due after 10 years | 37,999 | 41,903 | ||||||
Total | $ | 204,843 | $ | 209,133 | ||||
Cost | Fair Value | |||||||
(in thousands) | ||||||||
Due within one year | $ | 39,950 | $ | 39,612 | ||||
Due after 1 year through 5 years | 33,045 | 31,466 | ||||||
Due after 5 years through 10 years | 4,782 | 4,232 | ||||||
Due after 10 years | 39,065 | 30,981 | ||||||
Total | $ | 116,842 | $ | 106,291 | ||||
December 31, 2019 | December 31, 2018 | |||||||||||||||||||||||
Buy Position | Sell Position | Net Total | Buy Position | Sell Position | Net Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Japanese Yen | $ | (29.3 | ) | $ | — | $ | (29.3 | ) | $ | (35.0 | ) | $ | — | $ | (35.0 | ) | ||||||||
Taiwan Dollar | (18.4 | ) | — | (18.4 | ) | (11.2 | ) | — | (11.2 | ) | ||||||||||||||
Korean Won | (10.7 | ) | — | (10.7 | ) | (9.6 | ) | — | (9.6 | ) | ||||||||||||||
British Pound Sterling | (3.8 | ) | — | (3.8 | ) | (1.4 | ) | — | (1.4 | ) | ||||||||||||||
Euro | — | 47.8 | 47.8 | — | 82.2 | 82.2 | ||||||||||||||||||
Singapore Dollar | — | 25.3 | 25.3 | — | 15.7 | 15.7 | ||||||||||||||||||
Philippine Peso | — | 5.2 | 5.2 | — | 5.2 | 5.2 | ||||||||||||||||||
Chinese Yuan | — | 4.4 | 4.4 | — | 2.8 | 2.8 | ||||||||||||||||||
Total | $ | (62.2 | ) | $ | 82.7 | $ | 20.5 | $ | (57.2 | ) | $ | 105.9 | $ | 48.7 | ||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
Buy Position | Sell Position | Net Total | Buy Position | Sell Position | Net Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Japanese Yen | $ | (37.1 | ) | $ | — | $ | (37.1 | ) | $ | (31.4 | ) | $ | — | $ | (31.4 | ) | ||||||||
Taiwan Dollar | (29.2 | ) | — | (29.2 | ) | (35.1 | ) | — | (35.1 | ) | ||||||||||||||
Korean Won | (6.4 | ) | — | (6.4 | ) | (4.2 | ) | — | (4.2 | ) | ||||||||||||||
British Pound Sterling | (1.2 | ) | — | (1.2 | ) | (1.8 | ) | — | (1.8 | ) | ||||||||||||||
Euro | — | 38.4 | 38.4 | — | 44.9 | 44.9 | ||||||||||||||||||
Singapore Dollar | — | 33.5 | 33.5 | — | 61.9 | 61.9 | ||||||||||||||||||
Philippine Peso | — | 2.7 | 2.7 | — | 3.9 | 3.9 | ||||||||||||||||||
Chinese Yuan | — | 2.2 | 2.2 | — | 2.8 | 2.8 | ||||||||||||||||||
Total | $ | (73.9 | ) | $ | 76.8 | $ | 2.9 | $ | (72.5 | ) | $ | 113.5 | $ | 41.0 | ||||||||||
December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||
Buy Position | Sell Position | Net Total | Buy Position | Sell Position | Net Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Japanese Yen | $ | (23.4 | ) | $ | 61.2 | $ | 37.8 | $ | — | $ | — | $ | — | |||||||||||
Taiwan Dollar | (5.5 | ) | 10.9 | 5.4 | — | — | — | |||||||||||||||||
Total | $ | (28.9 | ) | $ | 72.1 | $ | 43.2 | $ | — | $ | — | $ | — | |||||||||||
December 31, 2019 | December 31, 2018 | |||||||||
(in thousands) | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||
Foreign exchange contracts | Prepayments | $ | 528 | $ | 79 | |||||
Foreign exchange contracts | Other current liabilities | (203 | ) | (514 | ) | |||||
Total | $ | 325 | $ | (435 | ) | |||||
Balance Sheet Location | December 31, 2022 | December 31, 2021 | ||||||||||
(in thousands) | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||
Foreign exchange forward contracts | Prepayments | $ | 86 | $ | 92 | |||||||
Foreign exchange forward contracts | Other current liabilities | (990 | ) | (118 | ) | |||||||
Derivatives designated as hedging instruments: | ||||||||||||
Foreign exchange option contracts | Other current liabilities | (3,225 | ) | — | ||||||||
Total derivatives | $ | (4,129 | ) | $ | (26 | ) | ||||||
Location of (Gains) Losses Recognized in Statement of Operations | December 31, 2019 | December 31, 2018 | December 31, 2017 | ||||||||||||
(in thousands) | |||||||||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||
Foreign exchange contracts | Other (income) expense, net | $ | 5,960 | $ | 7,386 | $ | (1,133 | ) | |||||||
Location of (Gains) Losses Recognized in Statement of Operations | December 31, 2022 | December 31, 2021 | December 31, 2020 | |||||||||||
(in thousands) | ||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||
Foreign exchange forward contracts | Other (income) expense, net | $ | (2,482 | ) | $ | 6,488 | $ | 3,515 | ||||||
Derivatives designated as hedging instruments: | ||||||||||||||
Foreign exchange option contracts | Revenue | (251 | ) | — | — | |||||||||
Total derivatives | $ | (2,733 | ) | $ | 6,488 | $ | 3,515 | |||||||
I. | LEASES |
For the Year Ended | ||||
December 31, 2019 | ||||
(in thousands) | ||||
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows | $ | 19,400 | ||
Right-of-use assets obtained in exchange for new lease obligations | 26,739 | |||
For the Years Ended | ||||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2020 | ||||||||||
(in thousands) | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows: | $ | 20,775 | $ | 24,593 | $ | 24,136 | ||||||
Right-of-use assets obtained in exchange for new lease obligations | 26,149 | 34,246 | 14,801 | |||||||||
Operating Lease | ||||
(in thousands) | ||||
2020 | $ | 21,874 | ||
2021 | 17,638 | |||
2022 | 12,944 | |||
2023 | 6,496 | |||
2024 | 5,106 | |||
Thereafter | 8,388 | |||
Total lease payments | 72,446 | |||
Less imputed interest | (7,121 | ) | ||
Total lease liabilities | $ | 65,325 | ||
Operating Lease | ||||
(in thousands) | ||||
2019 | $ | 19,570 | ||
2020 | 18,293 | |||
2021 | 13,578 | |||
2022 | 9,693 | |||
2023 | 5,449 | |||
Thereafter | 9,472 | |||
Total lease payments | $ | 76,055 | ||
Operating Lease | ||||
(in thousands) | ||||
2023 | $ | 20,120 | ||
2024 | 18,239 | |||
2025 | 15,308 | |||
2026 | 10,635 | |||
2027 | 8,117 | |||
Thereafter | 17,963 | |||
Total lease payments | 90,382 | |||
Less imputed interest | (7,612 | ) | ||
Total lease liabilities | $ | 82,770 | ||
J. | DEBT |
December 31, 2022 | December 31, 2021 | |||||||
(in thousands) | ||||||||
Debt principal | $ | 50,228 | $ | 116,980 | ||||
Unamortized debt issuance fees (1) | 113 | 8,554 | ||||||
Net carrying amount of convertible debt | $ | 50,115 | $ | 108,426 | ||||
December 31, 2022 | December 31, 2021 | |||||||
(in thousands) | ||||||||
Current debt | $ | 50,115 | $ | 19,182 | ||||
Long-term debt | — | 89,244 | ||||||
Net carrying amount of convertible debt | $ | 50,115 | $ | 108,426 | ||||
For the Years Ended | ||||||||
December 31, 2022 | December 31, 2021 | |||||||
(in thousands) | ||||||||
Contractual interest expense on the coupon | $ | 732 | $ | 3,009 | ||||
Amortization of the issuance fees recognized as interest expense (2) | 209 | 11,019 | ||||||
Total interest expense on the convertible debt | $ | 941 | $ | 14,028 | ||||
| (1) | Unamortized debt issuance fees as of December 31, 2021 include unamortized debt discount of $8.0 million, which was eliminated with the adoption of ASU 2020-06 on January 1, 2022. |
| (2) | For the year ended December 31, 2021 includes the amortization of debt discount component, which was eliminated with the adoption of ASU 2020-06 on January 1, 2022. |
December 31, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Debt p rincipal | $ | 460,000 | $ | 460,000 | ||||
Unamortized discount | 65,313 | 80,019 | ||||||
Net c arrying amount of convertible debt | $ | 394,687 | $ | 379,981 | ||||
For the year ended | ||||||||
December 31, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Contractual interest expense on the coupon | $ | 5,750 | $ | 5,750 | ||||
Amortization of the discount component and debt issue fees recognized as interest expense | 14,706 | 13,995 | ||||||
Total interest expense on the convertible debt | $ | 20,456 | $ | 19,745 | ||||
K. |
Foreign Currency Translation Adjustment | Unrealized Gain s (Losses) on Marketable Securities | Retirement Plans Prior Service Credit | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Balance at December 31, 2017, net of tax of $0, $1,815, $(932) | $ | 15,919 | $ | 1,362 | $ | 1,495 | $ | 18,776 | ||||||||
Other comprehensive loss before reclassifications, net of tax of $0, $(722), $0 | (28,442 | ) | (2,110 | ) | — | (30,552 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(21), $(71) | — | 1,337 | (245 | ) | 1,092 | |||||||||||
Net current period other comprehensive loss , net of tax of $0, $(743), $(71) | (28,442 | ) | (773 | ) | (245 | ) | (29,460 | ) | ||||||||
Reclassification of tax effects resulting f rom the Tax Reform Act,net of tax of $0, $(691), $(78), respectively (a) | — | 691 | 78 | 769 | ||||||||||||
Reclassification of unrealized gains on equity securities, net of tax of $0, $(902), $0, respectively, (b) | — | (3,125 | ) | — | (3,125 | ) | ||||||||||
Balance at December 31, 2018, net of tax of $0, $(521), $(1,081) | (12,523 | ) | (1,845 | ) | 1,328 | (13,040 | ) | |||||||||
Other comprehensive (loss) income before reclassifications, net of tax of $0, $1,659, $0 | (10,991 | ) | 6,015 | — | (4,976 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(192), $(43) | — | (690 | ) | (148 | ) | (838 | ) | |||||||||
Net current period other comprehensive (loss) income, net of tax of $0, $1,467, $(43) | (10,991 | ) | 5,325 | (148 | ) | (5,814 | ) | |||||||||
Balance at December 31, 2019, net of tax of $0, $946, $(1,124) | $ | (23,514 | ) | $ | 3,480 | $ | 1,180 | $ | (18,854 | ) | ||||||
Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Marketable Securities | Unrealized Losses on Cash Flow Hedges | Retirement Plans Prior Service Credit | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance at December 31, 2020, net of tax of $0, $1,910, $0, $(1,126), respectively | $ | 25,389 | $ | 6,954 | $ | — | $ | 1,173 | $ | 33,516 | ||||||||||
Other comprehensive loss before reclassifications, net of tax of $0, $(578), $0, $0, respectively | (36,207 | ) | (2,255 | ) | — | — | (38,462 | ) | ||||||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(277), $0, $(2), respectively | — | (995 | ) | — | (7 | ) | (1,002 | ) | ||||||||||||
Net current period other comprehensive loss, net of tax of $0, $(855), $0, $(2), respectively | (36,207 | ) | (3,250 | ) | — | (7 | ) | (39,464 | ) | |||||||||||
Balance at December 31, 2021, net of tax of $0, $1,055, $0, $(1,128), respectively | $ | (10,818 | ) | $ | 3,704 | $ | — | $ | 1,166 | $ | (5,948 | ) | ||||||||
Other comprehensive loss before reclassifications, net of tax of $0, $(3,388), $(708), $0, respectively | (29,031 | ) | (12,666 | ) | (2,517 | ) | — | (44,214 | ) | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $0, $25, $0, $(2), respectively | — | 301 | — | (7 | ) | 294 | ||||||||||||||
Net current period other comprehensive loss, net of tax of $0, $(3,363), $(708), $(2), respectively | (29,031 | ) | (12,365 | ) | (2,517 | ) | (7 | ) | (43,920 | ) | ||||||||||
Balance at December 31, 2022, net of tax of $0, $(2,308), $(708), $(1,130), respectively | $ | (39,849 | ) | $ | (8,661 | ) | $ | (2,517 | ) | $ | 1,159 | $ | (49,868 | ) | ||||||
Details about Accumulated Other Comprehensive Income Components | For the year ended | Affected Line Item in the Statements of Operations | ||||||||||||||
December 31, 2019 | December 31, 2018 | December 31, 2017 | ||||||||||||||
(in thousands) | ||||||||||||||||
Available-for-sale marketable securities | ||||||||||||||||
Unrealized gains (losses), net of tax of $192, $21, $297 | $ | 690 | $ | (1,337 | ) | $ | 441 | Interest income (expense) | ||||||||
Defined benefit pension and postretirement plans: | ||||||||||||||||
Amortization of prior service benefit, net of tax of $43, $71, $154 | 148 | 245 | 272 | (a) | ||||||||||||
Total reclassifications, net of tax of $235, $92, $451 | $ | 838 | $ | (1,092 | ) | $ | 713 | Net income | ||||||||
Details about Accumulated Other Comprehensive Income (Loss) Components | For the year s ended | Affected Line Item in the Statements of Operations | ||||||||||||||
December 31, 2022 | December 31, 2021 | December 31, 2020 | ||||||||||||||
(in thousands) | ||||||||||||||||
Available-for-sale marketable securities | ||||||||||||||||
Unrealized (losses) gains, net of tax of $(25), $277, $665, respectively | $ | (301 | ) | $ | 995 | $ | 2,365 | Other (income) expense, net | | |||||||
Defined benefit pension and postretirement plans: | ||||||||||||||||
Amortization of prior service benefit, net of tax of $2, $2, $2, respectively | 7 | 7 | 7 | (a | ) | |||||||||||
Total reclassifications, net of tax of $(23), $279, $667, respectively | $ | (294 | ) | $ | 1,002 | $ | 2,372 | Net income | ||||||||
| (a) | The amortization of prior service credit is included in the computation of net periodic pension cost and postretirement benefit; see Note P: “Retirement Plans.” |
L. |
Industrial Automation | Wireless Test | Semiconductor Test | System Test | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance at December 31, 2017: | ||||||||||||||||||||
Goodwill | $ | 233,519 | $ | 361,819 | $ | 260,540 | $ | 158,699 | $ | 1,014,577 | ||||||||||
Accumulated impairment losses | — | (353,843 | ) | (260,540 | ) | (148,183 | ) | (762,566 | ) | |||||||||||
233,519 | 7,976 | — | 10,516 | 252,011 | ||||||||||||||||
MiR acquisition | 135,976 | — | — | — | 135,976 | |||||||||||||||
Energid acquisition | 14,394 | — | — | — | 14,394 | |||||||||||||||
Foreign currency translation adjustment | (20,531 | ) | — | — | — | (20,531 | ) | |||||||||||||
Balance at December 31, 2018: | ||||||||||||||||||||
Goodwill | 363,358 | 361,819 | 260,540 | 158,699 | 1,144,416 | |||||||||||||||
Accumulated impairment losses | — | (353,843 | ) | (260,540 | ) | (148,183 | ) | (762,566 | ) | |||||||||||
363,358 | 7,976 | — | 10,516 | 381,850 | ||||||||||||||||
Lemsys acquisition | — | — | 1,428 | — | 1,428 | |||||||||||||||
Auto G uide acquisition | 41,372 | — | — | — | 41,372 | |||||||||||||||
Foreign currency translation adjustment | (8,247 | ) | — | 28 | — | (8,219 | ) | |||||||||||||
Balance at December 31, 2019: | ||||||||||||||||||||
Goodwill | 396,483 | 361,819 | 261,996 | 158,699 | 1,178,997 | |||||||||||||||
Accumulated impairment losses | — | (353,843 | ) | (260,540 | ) | (148,183 | ) | (762,566 | ) | |||||||||||
| $ | 396,483 | $ | 7,976 | $ | 1,456 | $ | 10,516 | $ | 416,431 | |||||||||||
Robotics | Wireless Test | Semiconductor Test | System Test | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance at December 31, 2020: | ||||||||||||||||||||
Goodwill | $ | 433,752 | $ | 361,819 | $ | 262,155 | $ | 158,699 | $ | 1,216,425 | ||||||||||
Accumulated impairment losses | — | (353,843 | ) | (260,540 | ) | (148,183 | ) | (762,566 | ) | |||||||||||
| 433,752 | 7,976 | 1,615 | 10,516 | 453,859 | ||||||||||||||||
Foreign currency translation adjustment | (27,781 | ) | — | (54 | ) | — | (27,835 | ) | ||||||||||||
Balance at December 31, 2021: | ||||||||||||||||||||
Goodwill | 405,971 | 361,819 | 262,101 | 158,699 | 1,188,590 | |||||||||||||||
Accumulated impairment losses | — | (353,843 | ) | (260,540 | ) | (148,183 | ) | (762,566 | ) | |||||||||||
| 405,971 | 7,976 | 1,561 | 10,516 | 426,024 | ||||||||||||||||
Foreign currency translation adjustment | (22,805 | ) | — | (24 | ) | — | (22,829 | ) | ||||||||||||
Balance at December 31, 2022: | ||||||||||||||||||||
Goodwill | 383,166 | 361,819 | 262,077 | 158,699 | 1,165,761 | |||||||||||||||
Accumulated impairment losses | — | (353,843 | ) | (260,540 | ) | (148,183 | ) | (762,566 | ) | |||||||||||
| $ | 383,166 | $ | 7,976 | $ | 1,537 | $ | 10,516 | $ | 403,195 | |||||||||||
December 31, 2019 | ||||||||||||||||
Gross Carrying Amount (1 ) (2) | Accumulated Amortization (2) | Foreign Currency Translation Adjustment | Net Carrying Amount | |||||||||||||
(in thousands) | ||||||||||||||||
Developed technology | $ | 361,787 | $ | (279,000 | ) | $ | (5,709 | ) | $ | 77,078 | ||||||
Customer relationships | 75,669 | (59,077 | ) | (455 | ) | 16,137 | ||||||||||
Tradenames and trademarks | 70,120 | (36,671 | ) | (1,184 | ) | 32,265 | ||||||||||
Backlog | 260 | (260 | ) | — | — | |||||||||||
Total intangible assets | $ | 507,836 | $ | (375,008 | ) | $ | (7,348 | ) | $ | 125,480 | ||||||
December 31, 2018 | ||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Foreign Currency Translation Adjustment | Net Carrying Amount | |||||||||||||
(in thousands) | ||||||||||||||||
Developed technology | $ | 336,308 | $ | (252,080 | ) | $ | (4,079 | ) | $ | 80,149 | ||||||
Customer relationships | 97,153 | (83,448 | ) | (340 | ) | 13,365 | ||||||||||
Tradenames and trademarks | 64,420 | (31,653 | ) | (799 | ) | 31,968 | ||||||||||
Non-compete agreement | 320 | (320 | ) | — | — | |||||||||||
Backlog | 30 | (30 | ) | — | — | |||||||||||
Total intangible assets | $ | 498,231 | $ | (367,531 | ) | $ | (5,218 | ) | $ | 125,482 | ||||||
December 31, 2022 | ||||||||||||||||
Gross Carrying Amount (1) | Accumulated Amortization (1) | Foreign Currency Translation Adjustment | Net Carrying Amount | |||||||||||||
(in thousands) | ||||||||||||||||
Developed technology | $ | 270,967 | $ | (234,208 | ) | $ | (5,935 | ) | $ | 30,824 | ||||||
Customer relationships | 57,739 | (51,186 | ) | 172 | 6,725 | |||||||||||
Tradenames and trademarks | 59,387 | (41,930 | ) | (1,528 | ) | 15,929 | ||||||||||
Total intangible assets | $ | 388,093 | $ | (327,324 | ) | $ | (7,291 | ) | $ | 53,478 | ||||||
December 31, 2021 | ||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Foreign Currency Translation Adjustment | Net Carrying Amount | |||||||||||||
(in thousands) | ||||||||||||||||
Developed technology | $ | 272,547 | $ | (223,413 | ) | $ | (4,093 | ) | $ | 45,041 | ||||||
Customer relationships | 57,739 | (48,921 | ) | 209 | 9,027 | |||||||||||
Tradenames and trademarks | 59,387 | (37,237 | ) | (583 | ) | 21,567 | ||||||||||
Total intangible assets | $ | 389,673 | $ | (309,571 | ) | $ | (4,467 | ) | $ | 75,635 | ||||||
| (1) |
| In |
Year | Amortization Expense | |||
(in thousands) | ||||
2020 | $ | 30,606 | ||
2021 | 20,593 | |||
2022 | 19,700 | |||
2023 | 19,226 | |||
2024 | 18,921 | |||
Thereafter | 16,434 | |||
Year | Amortization Expense | |||
(in thousands) | ||||
2023 | $ | 18,835 | ||
2024 | 18,527 | |||
2025 | 11,230 | |||
2026 | 2,350 | |||
2027 | 1,134 | |||
Thereafter | 1,402 | |||
M. | COMMITMENTS AND CONTINGENCIES |
N. |
2019 | 2018 | 2017 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Net income for basic and diluted net income per share | $ | 467,468 | $ | 451,779 | $ | 257,692 | ||||||
Weighted average common shares-basic | 170,425 | 187,672 | 198,069 | |||||||||
Effect of dilutive potential common shares: | ||||||||||||
Incremental shares from assumed conversion of convertible notes (1) | 4,909 | 2,749 | 1,298 | |||||||||
Convertible note hedge warrant shares (2) | 2,698 | 485 | 112 | |||||||||
Restricted stock units | 1,236 | 1,385 | 1,800 | |||||||||
Stock options | 178 | 278 | 335 | |||||||||
Employee stock purchase rights | 13 | 36 | 27 | |||||||||
Dilutive potential common shares | 9,034 | 4,933 | 3,572 | |||||||||
Weighted average common shares-diluted | 179,459 | 192,605 | 201,641 | |||||||||
Net income per common share-basic | $ | 2.74 | $ | 2.41 | $ | 1.30 | ||||||
Net income per common share-diluted | $ | 2.60 | $ | 2.35 | $ | 1.28 | ||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Net income for basic and diluted net income per share | $ | 715,501 | $ | 1,014,589 | $ | 784,147 | ||||||
Weighted average common shares-basic | 158,434 | 164,960 | 166,120 | |||||||||
Effect of dilutive potential common shares: | ||||||||||||
Convertible note hedge warrant shares (1) | 8,806 | 9,956 | 6,989 | |||||||||
Incremental shares from assumed conversion of convertible notes (2) | 1,763 | 7,435 | 8,528 | |||||||||
Restricted stock units | 657 | 1,180 | 1,264 | |||||||||
Stock options | 52 | 86 | 131 | |||||||||
Employee stock purchase rights | 22 | 8 | 10 | |||||||||
Dilutive potential common shares | 11,300 | 18,665 | 16,922 | |||||||||
Weighted average common shares-diluted | 169,734 | 183,625 | 183,042 | |||||||||
Net income per common share-basic | $ | 4.52 | $ | 6.15 | $ | 4.72 | ||||||
Net income per common share-diluted | $ | 4.22 | $ | 5.53 | $ | 4.28 | ||||||
| (1) | Convertible notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price, multiplied by the number of warrant shares. The result of this calculation, representing the total intrinsic value of the warrant, was divided by the average Teradyne stock price for the period. |
| (2) | Incremental shares from the assumed conversion of the convertible notes was calculated using the difference between the average Teradyne stock price for the period and the conversion price, |
O. | RESTRUCTURING AND OTHER |
P. |
2019 | 2018 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in thousands) | ||||||||||||||||
Assets and Obligations | ||||||||||||||||
Change in benefit obligation: | ||||||||||||||||
Projected benefit obligation: | ||||||||||||||||
Beginning of year | $ | 178,237 | $ | 39,146 | $ | 363,026 | $ | 39,353 | ||||||||
Service cost | 1,608 | 751 | 2,196 | 786 | ||||||||||||
Interest cost | 7,189 | 691 | 8,940 | 687 | ||||||||||||
Actuarial loss (gain) | 24,447 | 4,520 | (30,136 | ) | 773 | |||||||||||
Benefits paid | (7,690 | ) | (836 | ) | (14,793 | ) | (741 | ) | ||||||||
Retiree annuity purchase | — | — | (151,341 | ) | — | |||||||||||
Liability loss due to settlement | — | — | 345 | — | ||||||||||||
Non-U.S. currency movement | — | (320 | ) | — | (1,712 | ) | ||||||||||
End of year | 203,791 | 43,952 | 178,237 | 39,146 | ||||||||||||
Change in plan assets: | ||||||||||||||||
Fair value of plan assets: | ||||||||||||||||
Beginning of year | 144,301 | 1,400 | 324,506 | 1,307 | ||||||||||||
Company contributions | 2,805 | 923 | 2,587 | 822 | ||||||||||||
Actual return on plan assets | 27,516 | 64 | (16,658 | ) | 50 | |||||||||||
Benefits paid | (7,690 | ) | (836 | ) | (14,793 | ) | (741 | ) | ||||||||
Retiree annuity purchase | — | — | (151,341 | ) | — | |||||||||||
Non-U.S. currency movement | — | 35 | — | (38 | ) | |||||||||||
End of year | 166,932 | 1,586 | 144,301 | 1,400 | ||||||||||||
Funded status | $ | (36,859 | ) | $ | (42,366 | ) | $ | (33,936 | ) | $ | (37,746 | ) | ||||
2022 | 2021 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in thousands) | ||||||||||||||||
Assets and Obligations | ||||||||||||||||
Change in benefit obligation: | ||||||||||||||||
Projected benefit obligation: | ||||||||||||||||
Beginning of year | $ | 192,472 | $ | 45,774 | $ | 202,233 | $ | 50,988 | ||||||||
Service cost | 1,588 | 784 | 1,784 | 941 | ||||||||||||
Interest cost | 4,886 | 482 | 4,427 | 337 | ||||||||||||
Actuarial (gain) loss | (45,932 | ) | (13,181 | ) | (6,432 | ) | (2,257 | ) | ||||||||
Benefits paid | (9,200 | ) | (863 | ) | (9,337 | ) | (925 | ) | ||||||||
Liability (gain) loss due to settlement | — | — | (204 | ) | — | |||||||||||
Non-U.S. currency movement | — | (3,061 | ) | — | (3,310 | ) | ||||||||||
End of year | 143,814 | 29,935 | 192,472 | 45,774 | ||||||||||||
Change in plan assets: | ||||||||||||||||
Fair value of plan assets: | ||||||||||||||||
Beginning of year | 149,578 | 2,017 | 158,855 | 1,856 | ||||||||||||
Actual return on plan assets | (31,835 | ) | 153 | (3,217 | ) | 33 | ||||||||||
Company contributions | 3,217 | 949 | 3,276 | 1,022 | ||||||||||||
Benefits paid | (9,200 | ) | (863 | ) | (9,337 | ) | (925 | ) | ||||||||
Non-U.S. currency movement | — | (169 | ) | — | 31 | |||||||||||
End of year | 111,760 | 2,087 | 149,578 | 2,017 | ||||||||||||
Funded status | $ | (32,054 | ) | $ | (27,848 | ) | $ | (42,894 | ) | $ | (43,757 | ) | ||||
2019 | 2018 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in thousands) | ||||||||||||||||
Retirement plans assets | $ | 18,457 | $ | — | $ | 16,883 | $ | — | ||||||||
Accrued employees’ compensation and withholdings | (2,826 | ) | (922 | ) | (2,676 | ) | (852 | ) | ||||||||
Retirement plans liabilities | (52,490 | ) | (41,444 | ) | (48,143 | ) | (36,894 | ) | ||||||||
Funded status | $ | (36,859 | ) | $ | (42,366 | ) | $ | (33,936 | ) | $ | (37,746 | ) | ||||
2019 | 2018 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in thousands) | ||||||||||||||||
Deferred taxes related to prior service cost recognized in other comprehensive income | $ | 560 | $ | — | $ | 560 | $ | — | ||||||||
2022 | 2021 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in thousands) | ||||||||||||||||
Retirement plans assets | $ | 11,761 | $ | — | $ | 15,110 | $ | — | ||||||||
Accrued employees’ compensation and withholdings | (3,055 | ) | (1,191 | ) | (3,288 | ) | (936 | ) | ||||||||
Retirement plans liabilities | (40,760 | ) | (26,657 | ) | (54,716 | ) | (42,821 | ) | ||||||||
Funded status | $ | (32,054 | ) | $ | (27,848 | ) | $ | (42,894 | ) | $ | (43,757 | ) | ||||
2019 | 2018 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in millions) | ||||||||||||||||
Projected benefit obligation | $ | 55.3 | $ | 44.0 | $ | 50.8 | $ | 39.1 | ||||||||
Accumulated benefit obligation | 53.2 | 39.9 | 48.6 | 35.6 | ||||||||||||
Fair value of plan assets | — | 1.6 | — | 1.4 | ||||||||||||
2022 | 2021 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in millions) | ||||||||||||||||
Projected benefit obligation | $ | 43.8 | $ | 29.9 | $ | 58.0 | $ | 45.8 | ||||||||
Accumulated benefit obligation | 42.3 | 28.6 | 55.7 | 42.5 | ||||||||||||
Fair value of plan assets | — | 2.1 | — | 2.0 | ||||||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||
United States | Foreign | United States | Foreign | United States | Foreign | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Components of Net Periodic Pension Cost (Income): | ||||||||||||||||||||||||
Service cost | $ | 1,608 | $ | 751 | $ | 2,196 | $ | 786 | $ | 2,239 | $ | 818 | ||||||||||||
Interest cost | 7,189 | 691 | 8,940 | 687 | 13,151 | 852 | ||||||||||||||||||
Expected return on plan assets | (6,042 | ) | (29 | ) | (9,049 | ) | (19 | ) | (12,008 | ) | (165 | ) | ||||||||||||
Amortization of prior service cost | — | — | 58 | — | 70 | — | ||||||||||||||||||
Net actuarial loss (gain) | 2,973 | 4,485 | (4,429 | ) | 743 | (6,712 | ) | (310 | ) | |||||||||||||||
Settlement loss | — | — | 345 | — | — | — | ||||||||||||||||||
Total net periodic pension cost (income) | $ | 5,728 | $ | 5,898 | $ | (1,939 | ) | $ | 2,197 | $ | (3,260 | ) | $ | 1,195 | ||||||||||
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: | ||||||||||||||||||||||||
Reversal of amortization items: | ||||||||||||||||||||||||
Prior service cost | — | — | (58 | ) | — | (70 | ) | — | ||||||||||||||||
Total recognized in other comprehensive income | — | — | (58 | ) | — | (70 | ) | — | ||||||||||||||||
Total recognized in net periodic pension cost (income)and other comprehensive income | $ | 5,728 | $ | 5,898 | $ | (1,997 | ) | $ | 2,197 | $ | (3,330 | ) | $ | 1,195 | ||||||||||
2022 | 2021 | 2020 | ||||||||||||||||||||||
United States | Foreign | United States | Foreign | United States | Foreign | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Components of Net Periodic Pension (Income) Cost: | ||||||||||||||||||||||||
Service cost | $ | 1,588 | $ | 784 | $ | 1,784 | $ | 941 | $ | 1,773 | $ | 907 | ||||||||||||
Interest cost | 4,886 | 482 | 4,427 | 337 | 5,770 | 516 | ||||||||||||||||||
Expected return on plan assets | (2,927 | ) | (75 | ) | (3,858 | ) | (67 | ) | (4,840 | ) | (65 | ) | ||||||||||||
Net actuarial(gain) loss | (11,170 | ) | (13,259 | ) | 643 | (2,223 | ) | 6,463 | 2,949 | |||||||||||||||
Settlement (gain) loss | — | — | (204 | ) | — | 451 | — | |||||||||||||||||
Total net periodic pension (income) cost | $ | (7,623 | ) | $ | (12,068 | ) | $ | 2,792 | $ | (1,012 | ) | $ | 9,617 | $ | 4,307 | |||||||||
2019 | 2018 | 2017 | ||||||||||||||||||||||
United States | Foreign | United States | Foreign | United States | Foreign | |||||||||||||||||||
Discount rate | 4.1 | % | 1.8 | % | 3.4 | % | 1.8 | % | 3.9 | % | 1.8 | % | ||||||||||||
Expected return on plan assets | 4.3 | 2.0 | 4.3 | 1.5 | 4.0 | 2.0 | ||||||||||||||||||
Salary progression rate | 2.5 | 2.5 | 2.3 | 2.7 | 2.6 | 2.7 | ||||||||||||||||||
2022 | 2021 | 2020 | ||||||||||||||||||||||
United States | Foreign | United States | Foreign | United States | Foreign | |||||||||||||||||||
Discount rate | 2.5 | % | 1.1 | % | 2.2 | % | 0.7 | % | 2.8 | % | 1.1 | % | ||||||||||||
Expected return on plan assets | 2.0 | 4.0 | 2.4 | 3.5 | 3.0 | 3.8 | ||||||||||||||||||
Salary progression rate | 2.4 | 2.2 | 2.4 | 2.3 | 2.6 | 2.5 | ||||||||||||||||||
2019 | 2018 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
Discount rate | 3.0 | % | 1.1 | % | 4.1 | % | 1.8 | % | ||||||||
Salary progression rate | 2.6 | 2.5 | 2.5 | 2.6 | ||||||||||||
2022 | 2021 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
Discount rate | 4.9 | % | 3.5 | % | 2.6 | % | 1.1 | % | ||||||||
Salary progression rate | 2.5 | 2.1 | 2.4 | 2.2 | ||||||||||||
2019 | 2018 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
Fixed income securities | 94.0 | % | — | % | 94.0 | % | — | % | ||||||||
Equity securities | 5.0 | — | 5.0 | — | ||||||||||||
Other | 1.0 | 100.0 | 1.0 | 100.0 | ||||||||||||
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
2022 | 2021 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
Fixed income securities | 94.0 | % | — | % | 94.0 | % | — | % | ||||||||
Equity securities | 5.0 | — | 5.0 | — | ||||||||||||
Other | 1.0 | 100.0 | 1.0 | 100.0 | ||||||||||||
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
Asset Category: | Policy Index: | Target Allocation | ||||
U.S. corporate fixed income | Bloomberg Barclays U.S. Corporate A or Better Index | 75 | % | |||
U.S. government fixed income | Bloomberg Barclays U.S. Long Government Bond Index | 14 | ||||
| MSCI World Minimum Volatility Index | 5 | |||||
High yield fixed income | Bloomberg Barclays U.S. Corporate High Yield Index | 5 | ||||
Cash | Citigroup Three Month U.S. Treasury BillIndex | 1 | ||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
United States | Foreign | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||
Corporate debt securities | $ | — | $ | 133,792 | $ | — | $ | 133,792 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
U.S. government securities | — | 23,186 | — | 23,186 | — | — | — | — | ||||||||||||||||||||||||
Global equity | — | 8,344 | — | 8,344 | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | — | — | 1,586 | — | 1,586 | ||||||||||||||||||||||||
Cash and cash equivalents | 1,610 | — | — | 1,610 | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 1,610 | $ | 165,322 | $ | — | $ | 166,932 | $ | — | $ | 1,586 | $ | — | $ | 1,586 | ||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||
United States | Foreign | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||
Corporate debt securities | $ | — | $ | 89,403 | $ | — | $ | 89,403 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
U.S. government securities | — | 15,631 | — | 15,631 | — | — | — | — | ||||||||||||||||||||||||
Global equity | — | 5,579 | — | 5,579 | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | — | — | 2,087 | — | 2,087 | ||||||||||||||||||||||||
Cash and cash equivalents | 1,147 | — | — | 1,147 | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 1,147 | $ | 110,613 | $ | — | $ | 111,760 | $ | — | $ | 2,087 | $ | — | $ | 2,087 | ||||||||||||||||
December 31, 2018 | ||||||||||||||||||||||||||||||||
United States | Foreign | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||
Corporate debt securities | $ | — | $ | 115,424 | $ | — | $ | 115,424 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
U.S. government securities | — | 20,176 | — | 20,176 | — | — | — | — | ||||||||||||||||||||||||
Global equity | — | 7,252 | — | 7,252 | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | — | — | 1,400 | — | 1,400 | ||||||||||||||||||||||||
Cash and cash equivalents | 1,449 | — | — | 1,449 | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 1,449 | $ | 142,852 | $ | — | $ | 144,301 | $ | — | $ | 1,400 | $ | — | $ | 1,400 | ||||||||||||||||
Group Annuity Insurance Contracts | ||||
(in thousands) | ||||
Balance at December 31, 2017 | $ | 3,166 | ||
Transfer out of level 3 | (2,658 | ) | ||
Purchase etiree annuitys of rinsurance ontracts | (512 | ) | ||
Interest and market value adjustments | 59 | |||
Benefits paid | (40 | ) | ||
Other | (15 | ) | ||
Balance at December 31, 2018 | $ | — | ||
December 31, 2021 | ||||||||||||||||||||||||||||||||
United States | Foreign | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||
Corporate debt securities | $ | — | $ | 119,805 | $ | — | $ | 119,805 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
U.S. government securities | — | 20,847 | — | 20,847 | — | — | — | — | ||||||||||||||||||||||||
Global equity | — | 7,426 | — | 7,426 | — | — | — | — | ||||||||||||||||||||||||
Other | — | — | — | — | — | 2,017 | — | 2,017 | ||||||||||||||||||||||||
Cash and cash equivalents | 1,500 | — | — | 1,500 | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 1,500 | $ | 148,078 | $ | — | $ | 149,578 | $ | — | $ | 2,017 | $ | — | $ | 2,017 | ||||||||||||||||
United States | Foreign | |||||||
(in thousands) | ||||||||
2020 | $ | 8,027 | $ | 1,237 | ||||
2021 | 8,416 | 985 | ||||||
2022 | 9,163 | 982 | ||||||
2023 | 9,785 | 1,258 | ||||||
2024 | 10,558 | 1,098 | ||||||
2025-2029 | 59,665 | 6,129 | ||||||
United States | Foreign | |||||||
(in thousands) | ||||||||
2023 | $ | 10,323 | $ | 1,239 | ||||
2024 | 9,274 | 1,055 | ||||||
2025 | 9,912 | 1,014 | ||||||
2026 | 9,971 | 1,130 | ||||||
2027 | 10,742 | 1,239 | ||||||
2028-2031 | 52,877 | 8,216 | ||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Assets and Obligations | ||||||||
Change in benefit obligation: | ||||||||
Projected benefit obligation: | ||||||||
Beginning of year | $ | 9,256 | $ | 6,177 | ||||
Service cost | 41 | 39 | ||||||
Interest cost | 347 | 196 | ||||||
Actuarial loss | 717 | 25 | ||||||
| Benefits paid | (1,358 | ) | (889 | ) | ||||
Special termination benefits | — | 3,708 | ||||||
End of year | 9,003 | 9,256 | ||||||
Change in plan assets: | ||||||||
Fair value of plan assets: | ||||||||
Beginning of year | — | — | ||||||
Company contributions | 1,358 | 889 | ||||||
Benefits paid | (1,358 | ) | (889 | ) | ||||
End of year | — | — | ||||||
Funded status | $ | (9,003 | ) | $ | (9,256 | ) | ||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Assets and Obligations | ||||||||
Change in benefit obligation: | ||||||||
Projected benefit obligation: | ||||||||
Beginning of year | $ | 7,210 | $ | 8,515 | ||||
Service cost | 64 | 64 | ||||||
Interest cost | 177 | 170 | ||||||
Actuarial gain | (1,155 | ) | (433 | ) | ||||
Benefits paid | (950 | ) | (1,107 | ) | ||||
End of year | 5,345 | 7,210 | ||||||
Change in plan assets: | ||||||||
Fair value of plan assets: | ||||||||
Beginning of year | — | — | ||||||
Company contributions | 950 | 1,107 | ||||||
Benefits paid | (950 | ) | (1,107 | ) | ||||
End of year | — | — | ||||||
Funded status | $ | (5,345 | ) | $ | (7,210 | ) | ||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Accrued employees’ compensation and withholdings | $ | (1,231 | ) | $ | (1,310 | ) | ||
Retirement plans liability | (7,772 | ) | (7,946 | ) | ||||
Funded status | $ | (9,003 | ) | $ | (9,256 | ) | ||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Accrued employees’ compensation and withholdings | $ | (853 | ) | $ | (930 | ) | ||
Retirement plans liability | (4,492 | ) | (6,280 | ) | ||||
Funded status | $ | (5,345 | ) | $ | (7,210 | ) | ||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Prior service credit, before tax | $ | (58 | ) | $ | (249 | ) | ||
Deferred taxes | (1,684 | ) | (1,641 | ) | ||||
Total recognized in other comprehensive income, net of tax | $ | (1,742 | ) | $ | (1,890 | ) | ||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Prior service credit, before tax | $ | (31 | ) | $ | (40 | ) | ||
Deferred taxes | (1,689 | ) | (1,688 | ) | ||||
Total recognized in other comprehensive income (loss), net of tax | $ | (1,720 | ) | $ | (1,728 | ) | ||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Components of Net Periodic Postretirement Benefit Cost (income): | ||||||||||||
Service cost | $ | 41 | $ | 39 | $ | 34 | ||||||
Interest cost | 347 | 196 | 201 | |||||||||
Amortization of prior service credit | (191 | ) | (373 | ) | (496 | ) | ||||||
Net actuarial loss | 717 | 25 | 398 | |||||||||
Special termination benefits | — | 3,708 | 591 | |||||||||
Total net periodic postretirement benefit cost | 914 | 3,595 | 728 | |||||||||
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: | ||||||||||||
Prior service cost | — | — | — | |||||||||
Reversal of amortization items: | ||||||||||||
Prior service credit | 191 | 373 | 496 | |||||||||
Total recognized in other comprehensive income | 191 | 373 | 496 | |||||||||
Total recognized in net periodic postretirement cost and other comprehensive income | $ | 1,105 | $ | 3,968 | $ | 1,224 | ||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Components of Net Periodic Postretirement Benefit Income (cost ): | ||||||||||||
Service cost | $ | 64 | $ | 64 | $ | 57 | ||||||
Interest cost | 177 | 170 | 240 | |||||||||
Amortization of prior service credit | (9 | ) | (9 | ) | (9 | ) | ||||||
Net actuarial (gain) loss | (1,155 | ) | (433 | ) | 421 | |||||||
Total net periodic postretirement benefit (income) cost | (923 | ) | (208 | ) | 709 | |||||||
Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income: | ||||||||||||
Reversal of amortization items: | ||||||||||||
Prior service credit | 9 | 9 | 9 | |||||||||
Total recognized in other comprehensive income | 9 | 9 | 9 | |||||||||
Total recognized in net periodic postretirement (income) cost and other comprehensive income | $ | (914 | ) | $ | (199 | ) | $ | 718 | ||||
2019 | 2018 | 2017 | ||||||||||
Discount rate | 4.0 | % | 3.4 | % | 3.9 | % | ||||||
Initial health care cost trend rate | 7.5 | 7.9 | 7.3 | |||||||||
Ultimate health care cost trend rate | 4.5 | 4.5 | 5.0 | |||||||||
Year in which ultimate health care cost trend rate is reached | 2026 | 2026 | 2023 | |||||||||
2022 | 2021 | 2020 | ||||||||||
Discount rate | 2.6 | % | 2.2 | % | 3.0 | % | ||||||
Initial health care cost trend rate | 7.3 | 7.3 | 7.1 | |||||||||
Ultimate health care cost trend rate | 4.5 | 4.5 | 4.5 | |||||||||
Year in which ultimate health care cost trend rate is reached | 2029 | 2029 | 2026 | |||||||||
2019 | 2018 | 2017 | ||||||||||
Discount rate | 3.0 | % | 4.0 | % | 3.4 | % | ||||||
Initial medical trend | 7.1 | 7.5 | 7.9 | |||||||||
Ultimate health care trend | 4.5 | 4.5 | 4.5 | |||||||||
Medical cost trend rate decrease to ultimate rate in year | 2026 | 2026 | 2026 | |||||||||
2022 | 2021 | 2020 | ||||||||||
Discount rate | 5.0 | % | 2.6 | % | 2.2 | % | ||||||
Initial medical trend | 7.2 | 7.3 | 7.3 | |||||||||
Ultimate health care trend | 4.5 | 4.5 | 4.5 | |||||||||
Medical cost trend rate decrease to ultimate rate in year | 2032 | 2029 | 2029 | |||||||||
1 Percentage Point Increase | 1 Percentage Point Decrease | |||||||
(in thousands) | ||||||||
Effect on total service and interest cost components | $ | 6 | $ | (6 | ) | |||
Effect on postretirement benefit obligations | 139 | (133 | ) | |||||
Benefit Payments | ||||
(in thousands) | ||||
2020 | $ | 1,231 | ||
2021 | 1,171 | |||
2022 | 958 | |||
2023 | 789 | |||
2024 | 662 | |||
2025-2029 | 1,965 | |||
Benefit Payments | ||||
(in thousands) | ||||
2023 | $ | 853 | ||
2023 | 688 | |||
2024 | 573 | |||
2025 | 436 | |||
2027 | 386 | |||
2028-2031 | 1,291 | |||
Q. |
2019 | 2018 | 2017 | ||||||||||
Risk-free interest rate | 2.6 | % | 2.2 | % | 1.5 | % | ||||||
Teradyne volatility-historical | 31.9 | % | 26.8 | % | 26.6 | % | ||||||
NYSE Composite Index volatility-historical | 11.9 | % | 12.4 | % | 13.4 | % | ||||||
Dividend yield | 1.0 | % | 0.8 | % | 1.0 | % | ||||||
2022 | 2021 | 2020 | ||||||||||
Risk-free interest rate | 1.4 | % | 0.2 | % | 1.5 | % | ||||||
Teradyne volatility-historical | 47.1 | % | 43.9 | % | 34.9 | % | ||||||
NYSE Composite Index volatility-historical | 22.7 | % | 22.9 | % | 11.4 | % | ||||||
Dividend yield | 0.4 | % | 0.4 | % | 0.6 | % | ||||||
2019 | 2018 | 2017 | ||||||||||
Expected life (years) | 5.0 | 5.0 | 5.0 | |||||||||
Risk-free interest rate | 2.5 | % | 2.4 | % | 2.0 | % | ||||||
Volatility-historical | 30.1 | % | 26.4 | % | 27.8 | % | ||||||
Dividend yield | 1.00 | % | 0.80 | % | 1.00 | % | ||||||
2022 | 2021 | 2020 | ||||||||||
Expected life (years) | 4.0 | 5.0 | 5.0 | |||||||||
Risk-free interest rate | 1.6 | % | 0.4 | % | 1.5 | % | ||||||
Volatility-historical | 43.7 | % | 37.8 | % | 32.0 | % | ||||||
Dividend yield | 0.4 | % | 0.4 | % | 0.5 | % | ||||||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Restricted Stock Units: | ||||||||||||
Non-vested at January 1 | 2,454 | 3,174 | 3,778 | |||||||||
Awarded | 1,139 | 790 | 939 | |||||||||
Vested | (1,237 | ) | (1,382 | ) | (1,434 | ) | ||||||
Forfeited | (87 | ) | (128 | ) | (109 | ) | ||||||
Non-vested at December 31 | 2,269 | 2,454 | 3,174 | |||||||||
Stock Options: | ||||||||||||
Outstanding at January 1 | 506 | 531 | 926 | |||||||||
Granted | 102 | 69 | 111 | |||||||||
Exercised | (280 | ) | (94 | ) | (501 | ) | ||||||
Forfeited | (7 | ) | — | — | ||||||||
Expired | (2 | ) | — | (5 | ) | |||||||
Outstanding at December 31 | 319 | 506 | 531 | |||||||||
Vested and expected to vest at December 31 | 319 | 506 | 531 | |||||||||
Exercisable at December 31 | 85 | 256 | 233 | |||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Restricted Stock Units: | ||||||||||||
Non-vested at January 1 | 1,417 | 1,789 | 2,269 | |||||||||
Awarded | 660 | 447 | 616 | |||||||||
Vested | (709 | ) | (749 | ) | (1,028 | ) | ||||||
Forfeited | (51 | ) | (70 | ) | (68 | ) | ||||||
Non-vested at December 31 | 1,317 | 1,417 | 1,789 | |||||||||
Stock Options: | ||||||||||||
Outstanding at January 1 | 171 | 216 | 319 | |||||||||
Granted | 42 | 34 | 56 | |||||||||
Exercised | (25 | ) | (78 | ) | (159 | ) | ||||||
Forfeited | — | (1 | ) | — | ||||||||
Expired | — | — | — | |||||||||
Outstanding at December 31 | 188 | 171 | 216 | |||||||||
Vested and expected to vest at December 31 | 188 | 171 | 216 | |||||||||
Exercisable at December 31 | 69 | 30 | 27 | |||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Shares available: | ||||||||||||
Available for grant at January 1 | 5,713 | 6,123 | 6,727 | |||||||||
Options granted | (42 | ) | (34 | ) | (56 | ) | ||||||
Options forfeited | — | 1 | — | |||||||||
Restricted stock units awarded | (660 | ) | (447 | ) | (616 | ) | ||||||
Restricted stock units forfeited | 51 | 70 | 68 | |||||||||
Available for grant at December 31 | 5,062 | 5,713 | 6,123 | |||||||||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Shares available: | ||||||||||||
Available for grant at January 1 | 7,874 | 8,605 | 9,546 | |||||||||
Options granted | (102 | ) | (69 | ) | (111 | ) | ||||||
Options forfeited | 7 | — | — | |||||||||
Restricted stock units awarded | (1,139 | ) | (790 | ) | (939 | ) | ||||||
Restricted stock units forfeited | 87 | 128 | 109 | |||||||||
Available for grant at December 31 | 6,727 | 7,874 | 8,605 | |||||||||
2019 | 2018 | 2017 | ||||||||||
Non-vested at January 1 | $ | 29.22 | $ | 21.71 | $ | 18.27 | ||||||
Awarded | 39.08 | 45.99 | 28.91 | |||||||||
Vested | 23.59 | 20.20 | 17.90 | |||||||||
Forfeited | 35.60 | 24.67 | 20.35 | |||||||||
Non-vested at December 31 | $ | 35.58 | $ | 29.22 | $ | 21.71 | ||||||
2022 | 2021 | 2020 | ||||||||||
Non-vested at January 1 | $ | 67.97 | $ | 47.84 | $ | 35.58 | ||||||
Awarded | 108.74 | 115.51 | 72.76 | |||||||||
Vested | 54.27 | 43.99 | 31.53 | |||||||||
Forfeited | 85.71 | 65.52 | 45.36 | |||||||||
Non-vested at December 31 | $ | 88.71 | $ | 67.97 | $ | 47.84 | ||||||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Vested | $ | 46,110 | $ | 63,688 | $ | 40,649 | ||||||
Outstanding | 154,752 | 77,015 | 132,875 | |||||||||
Expected to vest | 152,374 | 77,187 | 130,594 | |||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Vested | $ | 95,408 | $ | 101,679 | $ | 71,582 | ||||||
Outstanding | 115,087 | 231,763 | 214,509 | |||||||||
Expected to vest | 108,666 | 231,246 | 210,301 | |||||||||
2019 | 2018 | 2017 | ||||||||||
Outstanding | 1.02 | 0.92 | 1.00 | |||||||||
Expected to vest | 1.02 | 0.91 | 0.99 | |||||||||
2022 | 2021 | 2020 | ||||||||||
Outstanding | 0.99 | 0.89 | 0.96 | |||||||||
Expected to vest | 0.99 | 0.89 | 0.96 | |||||||||
2019 | ||||
Outstanding at January 1 | $ | 19.06 | ||
Options granted | 37.95 | |||
Options exercised | 13.20 | |||
Options forfeited | 36.75 | |||
Options cancelled | 1.48 | |||
Outstanding at December 31 | 29.91 | |||
Exercisable at December 31 | 14.97 | |||
2022 | ||||
Outstanding at January 1 | $ | 62.13 | ||
Options granted | 112.12 | |||
Options exercised | 37.13 | |||
Options forfeited | — | |||
Options cancelled | — | |||
Outstanding at December 31 | 76.52 | |||
Exercisable at December 31 | 55.90 | |||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Exercised | $ | 9,232 | $ | 2,960 | $ | 8,035 | ||||||
Outstanding | 12,218 | 7,359 | 14,831 | |||||||||
Vested and expected to vest | 7,701 | 7,359 | 14,831 | |||||||||
Exercisable | 4,517 | 5,905 | 9,076 | |||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Exercised | $ | 2,030 | $ | 6,345 | $ | 9,682 | ||||||
Outstanding | 3,963 | 17,356 | 16,083 | |||||||||
E xpected to vest | 1,583 | 13,500 | 13,499 | |||||||||
Vested and exercisable | 2,380 | 3,856 | 2,584 | |||||||||
2019 | 2018 | 2017 | ||||||||||
Outstanding | 4.2 | 3.6 | 4.1 | |||||||||
Vested and expected to vest | 5.0 | 3.6 | 4.1 | |||||||||
Exercisable | 2.1 | 2.4 | 2.8 | |||||||||
2022 | 2021 | 2020 | ||||||||||
Outstanding | 4.2 | 4.4 | 4.6 | |||||||||
E xpected to vest | 4.8 | 4.8 | 4.9 | |||||||||
Vested and exercisable | 3.1 | 2.5 | 2.5 | |||||||||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Cost of revenues | $ | 3,480 | $ | 3,129 | $ | 3,212 | ||||||
Engineering and development | 9,913 | 9,181 | 9,370 | |||||||||
Selling and administrative | 24,504 | 21,267 | 21,515 | |||||||||
Stock-based compensation | 37,897 | 33,577 | 34,097 | |||||||||
Income tax benefit | (8,360 | ) | (12,036 | ) | (10,462 | ) | ||||||
Total stock-based compensation expense after income taxes | $ | 29,537 | $ | 21,541 | $ | 23,635 | ||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Cost of revenues | $ | 4,050 | $ | 4,196 | $ | 4,227 | ||||||
Engineering and development | 9,992 | 9,783 | 12,039 | |||||||||
Selling and administrative | 34,186 | 31,664 | 28,640 | |||||||||
Stock-based compensation | 48,228 | 45,643 | 44,906 | |||||||||
Income tax benefit | (11,493 | ) | (14,389 | ) | (13,060 | ) | ||||||
Total stock-based compensation expense after income taxes | $ | 36,735 | $ | 31,254 | $ | 31,846 | ||||||
R. |
S. |
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Income before income taxes | ||||||||||||
U.S. | $ | 192,442 | $ | 189,691 | $ | 76,699 | ||||||
Non-U.S. | 333,330 | 278,110 | 447,713 | |||||||||
| $ | 525,772 | $ | 467,801 | $ | 524,412 | |||||||
Provision (benefit) for income taxes | ||||||||||||
Current: | ||||||||||||
U.S. Federal | $ | 19,297 | $ | (59,122 | ) | $ | 162,679 | |||||
Non-U.S. | 52,810 | 45,083 | 64,313 | |||||||||
State | (4,347 | ) | 1,721 | 2,623 | ||||||||
67,760 | (12,318 | ) | 229,615 | |||||||||
Deferred: | ||||||||||||
U.S. Federal | (4,522 | ) | 29,252 | 43,687 | ||||||||
Non-U.S. | (8,007 | ) | (1,243 | ) | (6,476 | ) | ||||||
State | 3,073 | 331 | (106 | ) | ||||||||
(9,456 | ) | 28,340 | 37,105 | |||||||||
Total provision for income taxes | $ | 58,304 | $ | 16,022 | $ | 266,720 | ||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Income before income taxes: | ||||||||||||
U.S. | $ | 385,968 | $ | 403,451 | $ | 312,153 | ||||||
Non-U.S. | 454,417 | 757,504 | 588,862 | |||||||||
| $ | 840,385 | $ | 1,160,955 | $ | 901,015 | |||||||
Provision (benefit) for income taxes: | ||||||||||||
Current: | ||||||||||||
U.S. Federal | $ | 86,692 | $ | 58,218 | $ | 58,678 | ||||||
Non-U.S. | 74,204 | 105,153 | 75,193 | |||||||||
State | 2,681 | 300 | (1,315 | ) | ||||||||
| 163,577 | 163,671 | 132,556 | ||||||||||
Deferred: | ||||||||||||
U.S. Federal | (36,739 | ) | (15,106 | ) | (12,604 | ) | ||||||
Non-U.S. | 1,232 | (4,300 | ) | (5,127 | ) | |||||||
State | (3,186 | ) | 2,101 | 2,043 | ||||||||
| (38,693 | ) | (17,305 | ) | (15,688 | ) | |||||||
Total provision for income taxes: | $ | 124,884 | $ | 146,366 | $ | 116,868 | ||||||
2019 | 2018 | 2017 | ||||||||||
U.S. statutory federal tax rate | 21.0 | % | 21.0 | % | 35.0 | % | ||||||
U.S. global intangible low-taxed income | 6.2 | 0.3 | — | |||||||||
U.S. transition tax | 1.9 | (10.5 | ) | 28.7 | ||||||||
State income taxes, net of federal tax benefit | 0.5 | 0.1 | (0.4 | ) | ||||||||
Foreign tax credits | (5.9 | ) | (2.2 | ) | (2.2 | ) | ||||||
Uncertain tax positions | (4.3 | ) | 1.0 | 1.7 | ||||||||
Foreign taxes | (4.0 | ) | (2.0 | ) | (16.3 | ) | ||||||
U.S. foreign derived intangible income | (2.6 | ) | (1.8 | ) | — | |||||||
U.S. research and development credit | (1.8 | ) | (2.2 | ) | (1.6 | ) | ||||||
Equity compensation | (0.7 | ) | (1.2 | ) | (0.8 | ) | ||||||
Impact of rate change on deferred taxes | — | 0.3 | 6.9 | |||||||||
Domestic production activities deduction | — | — | (0.3 | ) | ||||||||
Other, net | 0.8 | 0.6 | 0.2 | |||||||||
| 11.1 | % | 3.4 | % | 50.9 | % | |||||||
2022 | 2021 | 2020 | ||||||||||
U.S. statutory federal tax rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||
Non-deductible officers’ compensation | 1.3 | 0.8 | 0.5 | |||||||||
U.S. global intangible low-taxed income | 1.2 | 0.6 | 2.1 | |||||||||
U.S. foreign derived intangible income | (3.1 | ) | (2.3 | ) | (2.2 | ) | ||||||
Foreign taxes | (1.9 | ) | (4.5 | ) | (5.6 | ) | ||||||
U.S. research and development credit | (1.8 | ) | (1.4 | ) | (1.3 | ) | ||||||
Equity compensation | (1.1 | ) | (1.0 | ) | (0.8 | ) | ||||||
Foreign tax credits | (1.0 | ) | (0.5 | ) | (1.2 | ) | ||||||
State income taxes, net of federal tax benefit | (0.1 | ) | 0.2 | 0.3 | ||||||||
Other, net | 0.4 | (0.3 | ) | 0.2 | ||||||||
| 14.9 | % | 12.6 | % | 13.0 | % | |||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Deferred tax assets | ||||||||
Tax credits | $ | 79,480 | $ | 69,091 | ||||
Accruals | 25,424 | 23,449 | ||||||
Pension liabilities | 24,459 | 20,826 | ||||||
Inventory valuations | 18,572 | 18,514 | ||||||
Deferred revenue | 7,622 | 9,130 | ||||||
Equity compensation | 7,042 | 7,190 | ||||||
Vacation accrual | 4,768 | 4,772 | ||||||
Investment impairment | 3,292 | — | ||||||
Net operating loss carryforwards | 2,705 | 3,658 | ||||||
Marketable s ecurities | — | 962 | ||||||
Other | 1,472 | 685 | ||||||
Gross deferred tax assets | 174,836 | 158,277 | ||||||
Less: valuation allowance | (77,177 | ) | (69,852 | ) | ||||
Total deferred tax assets | $ | 97,659 | $ | 88,425 | ||||
Deferred tax liabilities: | ||||||||
Depreciation | $ | (18,238 | ) | $ | (14,028 | ) | ||
Intangible assets | (16,705 | ) | (24,211 | ) | ||||
Marketable securities | (1,601 | ) | — | |||||
Total deferred tax liabilities | $ | (36,544 | ) | $ | (38,239 | ) | ||
Net deferred assets | $ | 61,115 | $ | 50,186 | ||||
2022 | 2021 | |||||||
(in thousands) | ||||||||
Deferred tax assets: | ||||||||
Tax credits | $ | 105,503 | $ | 98,378 | ||||
Research and development | 47,760 | — | ||||||
Accruals | 30,747 | 41,459 | ||||||
Inventory valuations | 22,554 | 20,991 | ||||||
Pension liabilities | 21,335 | 28,722 | ||||||
Lease liability | 18,679 | 16,484 | ||||||
Deferred revenue | 14,909 | 11,164 | ||||||
Equity compensation | 6,578 | 6,630 | ||||||
Vacation accrual | 5,856 | 6,050 | ||||||
Investment impairment | 3,292 | 3,292 | ||||||
Marketable securities | 2,283 | — | ||||||
Net operating loss carryforwards | 1,857 | 1,721 | ||||||
Intangible assets | 350 | — | ||||||
Other | 2,520 | 774 | ||||||
Gross deferred tax assets | 284,223 | 235,665 | ||||||
Less: valuation allowance | (103,807 | ) | (97,170 | ) | ||||
Total deferred tax assets | $ | 180,416 | $ | 138,495 | ||||
Deferred tax liabilities: | ||||||||
Depreciation | $ | (19,078 | ) | $ | (10,691 | ) | ||
Right-of-use assets | (16,607 | ) | (14,738 | ) | ||||
Contingent consideration | (5,214 | ) | (5,214 | ) | ||||
Intangible assets | — | (8,531 | ) | |||||
Marketable securities | — | (3,220 | ) | |||||
Total deferred tax liabilities | $ | (40,899 | ) | $ | (42,394 | ) | ||
Net deferred assets | $ | 139,517 | $ | 96,101 | ||||
State Operating Loss Carryforwards | Federal Operating Loss Carryforwards | Foreign Operating Loss Carryforwards | ||||||||||
( in )t housands | ||||||||||||
2020 | $ | 269 | $ | — | $ | — | ||||||
2021 | 2,141 | — | — | |||||||||
2022 | 4,934 | — | — | |||||||||
2023 | 4,342 | — | — | |||||||||
2024 | 1,498 | — | — | |||||||||
2025-2029 | 7,673 | — | — | |||||||||
2030-2034 | 4,329 | — | 15 | |||||||||
Beyond 2034 | 2,185 | 554 | 74 | |||||||||
Non-expiring | 1,357 | — | 4,207 | |||||||||
Total | $ | 28,728 | $ | 554 | $ | 4,296 | ||||||
State Operating Loss Carryforwards | Foreign Operating Loss Carryforwards | |||||||
(in thousands) | ||||||||
2023 | $ | 222 | $ | — | ||||
2024 | 6 | — | ||||||
2025 | 4 | — | ||||||
2026 | — | — | ||||||
2027 | — | — | ||||||
2028-2032 | 299 | 676 | ||||||
2033-2037 | 44 | 3 | ||||||
Beyond 2037 | 24 | — | ||||||
Non-expiring | 29 | 550 | ||||||
Total | $ | 628 | $ | 1,229 | ||||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Beginning balance, as of January 1 | $ | 43,395 | $ | 36,263 | $ | 38,958 | ||||||
Additions: | ||||||||||||
Tax positions for current year | 1,322 | 4,716 | 8,208 | |||||||||
Tax positions for prior years | 8,043 | 2,626 | 199 | |||||||||
Reductions: | ||||||||||||
Tax positions for prior years | (31,397 | ) | (153 | ) | (10,573 | ) | ||||||
Expiration of statutes | (183 | ) | (57 | ) | (325 | ) | ||||||
Settlements with tax authorities | — | — | (204 | ) | ||||||||
Ending balance as of December 31 | $ | 21,180 | $ | 43,395 | $ | 36,263 | ||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Beginning balance as of January 1 | $ | 14,465 | $ | 17,903 | $ | 21,180 | ||||||
Additions: | ||||||||||||
Tax positions for current year | 1,398 | 1,417 | 1,082 | |||||||||
Tax positions for prior years | 13 | 30 | 66 | |||||||||
Reductions: | ||||||||||||
Tax positions for prior years | (56 | ) | (1,639 | ) | (2,989 | ) | ||||||
Expiration of statutes | (212 | ) | (3,246 | ) | (1,436 | ) | ||||||
Ending balance as of December 31 | $ | 15,608 | $ | 14,465 | $ | 17,903 | ||||||
T. |
Semiconductor Test | Industrial Automation | System Test | Wireless Test | Corporate And Other | Consolidated | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
2019 | ||||||||||||||||||||||||
Revenues | $ | 1,552,571 | $ | 298,139 | $ | 287,455 | $ | 157,315 | $ | (515 | ) | $ | 2,294,965 | |||||||||||
Income (loss) before taxes (1)(2) | 416,973 | (5,916 | ) | 93,543 | 35,585 | (14,413 | ) | 525,772 | ||||||||||||||||
Total assets (3) | 784,808 | 671,559 | 131,428 | 97,299 | 1,101,920 | 2,787,014 | ||||||||||||||||||
Property additions | 112,145 | 9,076 | 3,059 | 10,362 | — | 134,642 | ||||||||||||||||||
Depreciation and amortization expense | 59,197 | 40,904 | 5,518 | 5,365 | 9,671 | 120,655 | ||||||||||||||||||
2018 | ||||||||||||||||||||||||
Revenues | $ | 1,492,417 | $ | 261,452 | $ | 216,132 | $ | 132,006 | $ | (1,205 | ) | $ | 2,100,802 | |||||||||||
Income (loss) before taxes (1)(2) | 397,645 | 7,670 | 48,857 | 29,052 | (15,423 | ) | 467,801 | |||||||||||||||||
Total assets (3) | 669,452 | 607,502 | 88,098 | 77,570 | 1,263,984 | 2,706,606 | ||||||||||||||||||
Property additions | 94,496 | 11,188 | 3,469 | 5,226 | — | 114,379 | ||||||||||||||||||
Depreciation and amortization expense | 58,095 | 36,755 | 6,430 | 5,328 | 6,616 | 113,224 | ||||||||||||||||||
2017 | ||||||||||||||||||||||||
Revenues | $ | 1,662,549 | $ | 170,056 | $ | 192,135 | $ | 111,866 | $ | — | $ | 2,136,606 | ||||||||||||
Income (loss) before taxes (1)(2) | 491,361 | 8,763 | 10,305 | 17,350 | (3,368 | ) | 524,411 | |||||||||||||||||
Total assets (3) | 597,480 | 368,037 | 97,018 | 59,912 | 1,987,098 | 3,109,545 | ||||||||||||||||||
Property additions | 87,920 | 7,044 | 5,976 | 4,435 | — | 105,375 | ||||||||||||||||||
Depreciation and amortization expense | 58,901 | 25,711 | 6,646 | 5,392 | 11,425 | 108,075 | ||||||||||||||||||
Semiconductor Test | System Test | Robotics | Wireless Test | Corporate and Eliminations | Consolidated | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
2022 | ||||||||||||||||||||||||
Revenues | $ | 2,080,590 | $ | 469,346 | $ | 403,138 | $ | 201,720 | $ | 251 | $ | 3,155,045 | ||||||||||||
Income (loss) before taxes (1)(2) | 634,488 | 166,879 | (16,244 | ) | 66,820 | (11,558 | ) | 840,385 | ||||||||||||||||
Total assets (3) | 1,382,623 | 165,925 | 665,638 | 94,298 | 1,192,768 | 3,501,252 | ||||||||||||||||||
Property additions | 126,898 | 7,275 | 25,712 | 3,364 | — | 163,249 | ||||||||||||||||||
Depreciation and amortization expense | 76,532 | 3,235 | 25,339 | 4,991 | 578 | 110,675 | ||||||||||||||||||
2021 | ||||||||||||||||||||||||
Revenues | $ | 2,642,342 | $ | 467,739 | $ | 375,905 | $ | 216,895 | $ | — | $ | 3,702,881 | ||||||||||||
Income (loss) before taxes (1)(2) | 976,988 | 163,064 | (8,167 | ) | 83,543 | (54,473 | ) | 1,160,955 | ||||||||||||||||
Total assets (3) | 1,245,596 | 170,954 | 701,196 | 107,513 | 1,584,166 | 3,809,425 | ||||||||||||||||||
Property additions | 115,618 | 3,905 | 9,821 | 3,128 | — | 132,472 | ||||||||||||||||||
Depreciation and amortization expense | 75,982 | 3,156 | 27,336 | 6,055 | 12,956 | 125,485 | ||||||||||||||||||
2020 | ||||||||||||||||||||||||
Revenues | $ | 2,259,597 | $ | 409,729 | $ | 279,731 | $ | 173,016 | $ | (604 | ) | $ | 3,121,469 | |||||||||||
Income (loss) before taxes (1)(2) | 739,695 | 152,092 | (24,019 | ) | 41,950 | (8,703 | ) | 901,015 | ||||||||||||||||
Total assets (3) | 1,070,378 | 138,295 | 712,936 | 106,273 | 1,624,464 | 3,652,346 | ||||||||||||||||||
Property additions | 168,055 | 3,092 | 8,899 | 4,931 | — | 184,977 | ||||||||||||||||||
Depreciation and amortization expense | 64,998 | 3,426 | 36,242 | 6,258 | 15,819 | 126,743 | ||||||||||||||||||
| (1) | Included in Corporate and |
| (2) | Included in income (loss) before taxes are charges and credits related to restructuring and other, inventory charges and |
| (3) | Total assets are attributable to each segment. Corporate assets consist of cash and cash equivalents, marketable securities and certain other assets. |
For the Year Ended December 31, | ||||||||||||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Semiconductor Test: | ||||||||||||
Cost of revenues—inventory charge | $ | 8,731 | $ | 6,822 | $ | 4,606 | ||||||
Restructuring and other—employee severance | 1,277 | 8,429 | 1,779 | |||||||||
Restructuring and other—impairment of fixed assets | — | — | 1,124 | |||||||||
Industrial Automation: | ||||||||||||
Restructuring and other—employee severance | $ | 796 | $ | — | $ | 1,414 | ||||||
Restructuring and other—acquisition related expenses and compensation | 741 | 1,163 | — | |||||||||
Cost of revenues—inventory charge | 508 | 680 | — | |||||||||
System Test: | ||||||||||||
Cost of revenues—inventory charge | $ | 2,000 | $ | 1,175 | $ | 1,918 | ||||||
Wireless: | ||||||||||||
Cost of revenues—inventory charge | $ | 4,005 | $ | 2,565 | $ | 2,190 | ||||||
Restructuring and other—lease impairment | — | — | 972 | |||||||||
Corporate and Other: | ||||||||||||
Restructuring and other—MiR contingent consideration adjustment | $ | (22,199 | ) | $ | 17,666 | $ | — | |||||
| Other (income) expense, net—investment impairment charge | 15,000 | — | — | |||||||||
| Restructuring and other—AutoGuide contingent consideration adjustment | 2,976 | — | — | |||||||||
Selling and administrative—equity modification charge | 2,108 | — | — | |||||||||
Restructuring and other—acquisition related expenses and compensation | 1,765 | 3,422 | — | |||||||||
Restructuring and other—Universal Robots contingent consideration adjustment | — | (16,679 | ) | 7,820 | ||||||||
Restructuring and other—property insurance recovery related to Japan earthquake | — | — | (5,064 | ) | ||||||||
For the Years Ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Semiconductor Test: | ||||||||||||
Cost of revenues—inventory charge | $ | 21,456 | $ | 6,661 | $ | 11,013 | ||||||
Contract termination settlement fee | — | — | 4,000 | |||||||||
System Test: | ||||||||||||
Cost of revenues—inventory charge | $ | 1,730 | $ | 641 | $ | 887 | ||||||
Robotics: | ||||||||||||
Cost of revenues—inventory charge | $ | 3,668 | $ | 6,403 | $ | 834 | ||||||
Restructuring and other—employee severance | 2,115 | 1,210 | 1,584 | |||||||||
Restructuring and other—acquisition related expenses and compensation | — | 1,000 | 985 | |||||||||
Wireless Test: | ||||||||||||
Cost of revenues—inventory charge | $ | 4,598 | $ | 1,770 | $ | 4,800 | ||||||
Corporate and Eliminations: | ||||||||||||
Restructuring and other—legal settlement charge | $ | 14,700 | $ | 12,000 | $ | — | ||||||
Restructuring and other— environmental and legal liabilities | 2,700 | 1,971 | — | |||||||||
Restructuring and other—gain on sale of asset | (3,410 | ) | — | — | ||||||||
Other (income) expense, net—loss on convertible debt conversion | — | 28,828 | — | |||||||||
Restructuring and other—AutoGuide contingent consideration adjustment | — | (7,227 | ) | (19,724 | ) | |||||||
Restructuring and other—MiR contingent consideration adjustment | — | — | (3,546 | ) | ||||||||
Restructuring and other—acquisition related expenses and compensation | — | (513 | ) | 1,728 | ||||||||
Selling and administrative—equity modification charge | — | — | 766 | |||||||||
2019 | 2018 | 2017 | ||||||||||
(in thousands) | ||||||||||||
Revenues from customers (1): | ||||||||||||
China | $ | 514,327 | $ | 348,942 | $ | 260,451 | ||||||
Taiwan | 485,681 | 516,322 | 687,031 | |||||||||
United States | 333,059 | 282,869 | 252,516 | |||||||||
Korea | 239,504 | 163,224 | 206,819 | |||||||||
Europe | 219,015 | 223,207 | 163,715 | |||||||||
Japan | 175,322 | 158,281 | 169,093 | |||||||||
Thailand | 87,503 | 59,184 | 29,566 | |||||||||
Singapore | 84,111 | 108,618 | 101,085 | |||||||||
Malaysia | 58,200 | 122,797 | 124,048 | |||||||||
Philippines | 54,560 | 77,996 | 105,850 | |||||||||
Rest of the World | 43,683 | 39,362 | 36,432 | |||||||||
| $ | 2,294,965 | $ | 2,100,802 | $ | 2,136,606 | |||||||
2022 | 2021 | 2020 | ||||||||||
(in thousands) | ||||||||||||
Revenues from customers (1): | ||||||||||||
Taiwan | $ | 626,424 | $ | 1,117,874 | $ | 1,178,068 | ||||||
Korea | 544,816 | 502,167 | 391,571 | |||||||||
China | 491,798 | 631,963 | 465,722 | |||||||||
United States | 469,948 | 392,626 | 321,674 | |||||||||
Europe | 268,384 | 259,954 | 205,587 | |||||||||
Japan | 162,920 | 166,231 | 143,983 | |||||||||
Malaysia | 142,203 | 136,774 | 56,096 | |||||||||
Thailand | 137,356 | 138,812 | 138,787 | |||||||||
Philippines | 124,107 | 166,838 | 68,887 | |||||||||
Singapore | 99,503 | 121,582 | 76,460 | |||||||||
Rest of the World | 87,586 | 68,060 | 74,634 | |||||||||
| $ | 3,155,045 | $ | 3,702,881 | $ | 3,121,469 | |||||||
| (1) | Revenues attributable to a country are based on location of customer site. |
United | Foreign(1) | Total | ||||||||||
(in thousands) | ||||||||||||
December 31, 2019 | $ | 252,812 | $ | 124,943 | $ | 377,755 | ||||||
December 31, 2018 | $ | 209,368 | $ | 70,453 | $ | 279,821 | ||||||
United States | Foreign | Total | ||||||||||
(in thousands) | ||||||||||||
December 31, 2022 | $ | 328,341 | $ | 164,076 | $ | 492,417 | ||||||
December 31, 2021 | $ | 308,438 | $ | 147,609 | $ | 456,047 | ||||||
U. | STOCK REPURCHASE PROGRAM |
V. | SUBSEQUENT EVENTS |
2019 | ||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
(1) | (2) | (3) | (4)(5) ( 6 ) | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Revenues: | ||||||||||||||||
Products | $ | 393,442 | $ | 457,511 | $ | 488,170 | $ | 548,552 | ||||||||
Services | 100,657 | 106,667 | 93,868 | 106,098 | ||||||||||||
Total revenues | 494,099 | 564,178 | 582,038 | 654,650 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of products | 165,368 | 193,299 | 197,196 | 226,184 | ||||||||||||
Cost of services | 41,096 | 46,961 | 39,804 | 45,228 | ||||||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 206,464 | 240,260 | 237,000 | 271,412 | ||||||||||||
Gross profit | 287,635 | 323,918 | 345,038 | 383,238 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and administrative | 102,013 | 108,811 | 109,166 | 117,092 | ||||||||||||
Engineering and development | 76,791 | 81,434 | 77,804 | 86,794 | ||||||||||||
Acquired intangible assets amortization | 10,634 | 10,083 | 9,647 | 9,784 | ||||||||||||
Restructuring and other | 5,112 | (10,404 | ) | (6,500 | ) | (2,088 | ) | |||||||||
Total operating expenses | 194,550 | 189,924 | 190,117 | 211,582 | ||||||||||||
Income from operations | 93,085 | 133,994 | 154,921 | 171,656 | ||||||||||||
Non-operating (income) expense: | ||||||||||||||||
Interest income | (8,052 | ) | (5,430 | ) | (5,159 | ) | (6,145 | ) | ||||||||
Interest expense | 5,713 | 5,800 | 5,682 | 5,950 | ||||||||||||
Other (income) expense, net | 1,445 | 2,447 | 2,665 | 22,965 | ||||||||||||
Income before income taxes | 93,979 | 131,177 | 151,733 | 148,886 | ||||||||||||
Income tax (benefit) provision | (15,159 | ) | 33,780 | 15,873 | 23,811 | |||||||||||
Net income | $ | 109,138 | $ | 97,397 | $ | 135,860 | $ | 125,075 | ||||||||
Net income per common share—basic | $ | 0.63 | $ | 0.57 | $ | 0.80 | $ | 0.75 | ||||||||
Net income per common share—diluted | $ | 0.62 | $ | 0.55 | $ | 0.75 | $ | 0.69 | ||||||||
Cash dividend declared per common share | $ | 0.09 | $ | 0.09 | $ | 0.09 | $ | 0.09 | ||||||||
2018 | ||||||||||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | |||||||||||||
(1) | (2) | (3) | (4)(5) | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Revenues: | ||||||||||||||||
Products | $ | 403,925 | $ | 434,051 | $ | 470,994 | $ | 420,652 | ||||||||
Services | 83,542 | 92,878 | 95,854 | 98,906 | ||||||||||||
Total revenues | 487,467 | 526,929 | 566,848 | 519,558 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of products | 180,958 | 180,777 | 195,339 | 170,064 | ||||||||||||
Cost of services | 36,677 | 38,818 | 37,816 | 39,959 | ||||||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 217,635 | 219,595 | 233,155 | 210,023 | ||||||||||||
Gross profit | 269,832 | 307,334 | 333,693 | 309,535 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and administrative | 90,505 | 99,410 | 100,202 | 100,552 | ||||||||||||
Engineering and development | 74,408 | 75,342 | 77,049 | 74,706 | ||||||||||||
Acquired intangible assets amortization | 7,698 | 9,793 | 11,142 | 10,558 | ||||||||||||
Restructuring and other | (313 | ) | 2,389 | 1,710 | 11,446 | |||||||||||
Total operating expenses | 172,298 | 186,934 | 190,103 | 197,262 | ||||||||||||
Income from operations | 97,534 | 120,400 | 143,590 | 112,273 | ||||||||||||
Non-operating (income) expense: | ||||||||||||||||
Interest income | (5,981 | ) | (5,427 | ) | (6,213 | ) | (9,083 | ) | ||||||||
Interest expense | 6,890 | 5,639 | 5,557 | 13,182 | ||||||||||||
Other (income) expense, net | 805 | 176 | 3,405 | (2,954 | ) | |||||||||||
Income before income taxes | 95,820 | 120,012 | 140,841 | 111,128 | ||||||||||||
Income tax provision (benefit) | 8,846 | 18,975 | 20,863 | (32,662 | ) | |||||||||||
Net income | $ | 86,974 | $ | 101,037 | $ | 119,978 | $ | 143,790 | ||||||||
Net income per common share—basic | $ | 0.45 | $ | 0.53 | $ | 0.65 | $ | 0.80 | ||||||||
Net income per common share—diluted | $ | 0.43 | $ | 0.52 | $ | 0.63 | $ | 0.79 | ||||||||
Cash dividend declared per common share | $ | 0.09 | $ | 0.09 | $ | 0.09 | $ | 0.09 | ||||||||
Item 9: | Changes in and disagreements with accountants on accounting and financial disclosure |
Item 9A: | Controls and procedures |
Item 9B: | Other Information |
Item 9C: | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
Item 10: | Directors, Executive Officers and Corporate Governance |
Item 11: | Executive Compensation |
Item 12: | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Item 13: | Certain Relationships and Related Transactions, and Director Independence |
Item 14: | Principal Accountant Fees and Services |
Item 15: | Exhibits and Financial Statement Schedule . |
Page | |||||
Column A | Column B | Column C | Column D | Column E | Column F | |||||||||||||||
Description | Balance at Beginning of Period | Additions Charged to Cost and Expenses | Other | Deductions | Balance at End of Period | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Valuation reserve deducted in the balance sheet from the asset to which it applies: | ||||||||||||||||||||
Accounts receivable: | ||||||||||||||||||||
2019 Allowance for doubtful account | $ | 1,673 | $ | 87 | $ | 28 | $ | 52 | $ | 1,736 | ||||||||||
2018 Allowance for doubtful account | $ | 2,219 | $ | — | $ | 20 | $ | 566 | $ | 1,673 | ||||||||||
2017 Allowance for doubtful accounts | $ | 2,356 | $ | 4 | $ | — | $ | 141 | $ | 2,219 | ||||||||||
Column A | Column B | Column C | Column D | Column E | Column F | |||||||||||||||
Description | Balance at Beginning of Period | Additions Charged to Cost and Expenses | Other | Deductions | Balance at End of Period | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Valuation reserve deducted in the balance sheet from the asset to which it applies: | ||||||||||||||||||||
Inventory: | ||||||||||||||||||||
2019 Inventory reserve | $ | 100,779 | $ | 15,244 | $ | (85 | ) | $ | 12,382 | $ | 103,556 | |||||||||
| �� | ||||||||||||||||||||
2018 Inventory reserve | $ | 102,896 | $ | 11,242 | $ | 368 | $ | 13,727 | $ | 100,779 | ||||||||||
2017 Inventory reserve | $ | 116,016 | $ | 8,844 | $ | (126 | ) | $ | 21,838 | $ | 102,896 | |||||||||
Column A | Column B | Column C | Column D | Column E | Column F | |||||||||||||||
Description | Balance at Beginning of Period | Additions Charged to Cost and Expenses | Other | Deductions | Balance at End of Period | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Valuation reserve deducted in the balance sheet from the asset to which it applies: | ||||||||||||||||||||
Deferred taxes: | ||||||||||||||||||||
2019 Valuation allowance | $ | 69,852 | $ | 7,325 | $ | — | $ | — | $ | 77,177 | ||||||||||
2018 Valuation allowance | $ | 63,919 | $ | 6,333 | $ | — | $ | 400 | $ | 69,852 | ||||||||||
2017 Valuation allowance | $ | 48,369 | $ | 15,571 | $ | — | $ | 21 | $ | 63,919 | ||||||||||
Column A | Column B | Column C | Column D | Column E | Column F | |||||||||||||||
Description | Balance at Beginning of Period | Additions Charged to Cost and Expenses | Other | Deductions | Balance at End of Period | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Valuation reserve deducted in the balance sheet from the asset to which it applies: | ||||||||||||||||||||
Accounts receivable: | ||||||||||||||||||||
2022 Allowance for doubtful account | $ | 2,012 | $ | 500 | $ | (6 | ) | $ | 551 | $ | 1,955 | |||||||||
2021 Allowance for doubtful account | $ | 2,034 | $ | 500 | $ | (27 | ) | $ | 495 | $ | 2,012 | |||||||||
2020 Allowance for doubtful account | $ | 1,736 | $ | 356 | $ | 32 | $ | 90 | $ | 2,034 | ||||||||||
Column A | Column B | Column C | Column D | Column E | Column F | |||||||||||||||
Description | Balance at Beginning of Period | Additions Charged to Cost and Expenses | Other | Deductions | Balance at End of Period | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Valuation reserve deducted in the balance sheet from the asset to which it applies: | ||||||||||||||||||||
Inventory: | ||||||||||||||||||||
2022 Inventory reserve | $ | 114,055 | $ | 31,452 | $ | 1,926 | $ | 10,595 | $ | 136,838 | ||||||||||
2021 Inventory reserve | $ | 110,587 | $ | 15,475 | $ | 1,335 | $ | 13,342 | $ | 114,055 | ||||||||||
2020 Inventory reserve | $ | 103,556 | $ | 17,534 | $ | (521 | ) | $ | 9,982 | $ | 110,587 | |||||||||
Column A | Column B | Column C | Column D | Column E | Column F | |||||||||||||||
Description | Balance at Beginning of Period | Additions Charged to Cost and Expenses | Other | Deductions | Balance at End of Period | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Valuation reserve deducted in the balance sheet from the asset to which it applies: | ||||||||||||||||||||
Deferred taxes: | ||||||||||||||||||||
2022 Valuation allowance | $ | 97,170 | $ | 7,652 | $ | 21 | $ | 1,036 | $ | 103,807 | ||||||||||
2021 Valuation allowance | $ | 84,962 | $ | 13,502 | $ | — | $ | 1,294 | $ | 97,170 | ||||||||||
2020 Valuation allowance | $ | 77,177 | $ | 7,785 | $ | — | $ | — | $ | 84,962 | ||||||||||
Item 16: | Form 10-K Summary |
EXHIBIT INDEX
The following designated exhibits are, as indicated below, either filed herewith or have heretofore been filed with the Securities and Exchange Commission and are referred to and incorporated by reference to such filings.
| Exhibit No. | Description | SEC Document Reference | ||||
| 3.1 | ||||||
Restated Articles of Organization. | ||||||
| 3.2 | Amended and Restated By-laws, as amended. | |||||
| 4.1 | ||||||
Indenture dated as of December 12, 2016, between Teradyne, Inc. and Wilmington Trust, National Association, as trustee. | ||||||
| 4.2 | First Supplemental Indenture dated as of November 4, 2021 between Teradyne, Inc. and Wilmington Trust, National Association, as trustee. | Exhibit 4.1 to Teradyne’s Quarterly Report on Form 10-Q for the quarter ended October 3, 2021. | ||||
| 4.3 | ||||||
Description of Teradyne, Inc. Securities Registered under Section 12 of the Exchange Act. | ||||||
| 10.1† | ||||||
Standard Manufacturing Agreement entered into as of November 24, 2003 by and between Teradyne and Solectron. | ||||||
| 10.2† | ||||||
Second Amendment to Standard Manufacturing Agreement, dated as of August 27, 2007, by and between Teradyne and Solectron. | ||||||
| 10.3† | ||||||
Sixth Amendment to Standard Manufacturing Agreement, dated as of July 27, 2009, by and between Teradyne and Flextronics Corporation. | ||||||
| 10.4 | ||||||
Addendum to Standard Manufacturing Agreement (Authorized Purchase Agreement)—Revised July 1, 2010. | ||||||
| 10.5 | ||||||
Eighth Amendment to Standard Manufacturing Agreement, dated as of April 13, 2012, by and between Teradyne and Flextronics Sales & Marketing North Asia (L) LTD. | ||||||
| 10.6† | ||||||
Ninth Amendment to Standard Manufacturing Agreement, dated as of September 17, 2012, by and between Teradyne and Flextronics Sales & Marketing North Asia (L) LTD. | ||||||
| 10.7 | ||||||
2006 Equity and Cash Compensation Incentive Plan, as amended.* | ||||||
| 10.8 | ||||||
Danish Sub-Plan to the 2006 Equity and Cash Compensation Incentive Plan. | ||||||
106
| Exhibit No. | Description | SEC Document Reference | ||||
| 10.9 | ||||||
Form of Performance-Based Restricted Stock Unit Agreement for Executive Officers under 2006 Equity and Cash Compensation Incentive Plan.* | ||||||
| 10.10 | ||||||
Form of Time-Based Restricted Stock Unit Agreement for Executive Officers under 2006 Equity and Cash Compensation Incentive Plan.* | ||||||
| 10.11 | Form of Executive Officer Stock Option Agreement under 2006 Equity and Cash Compensation Incentive Plan, as amended. * | Exhibit 10.11 to Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, | ||||
| 10.12 | ||||||
Form of Restricted Stock Unit Agreement for Directors under 2006 Equity and Cash Compensation Incentive Plan.* | ||||||
| 10.13 | ||||||
1996 Employee Stock Purchase Plan, as amended.* | ||||||
| 10.14 | Danish Sub-Plan to the 1996 Employee Stock Purchase Plan. | Exhibit 10.15 to Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, | ||||
| 10.15 | ||||||
Non-Employee Directors, as amended.* | ||||||
| 10.16 | ||||||
Supplemental Savings Plan, as amended and restated.* | ||||||
| 10.17 | ||||||
Supplemental Executive Retirement Plan, as restated.* | ||||||
| 10.18 | ||||||
Agreement Regarding Termination Benefits dated January | ||||||
| 10.19 | ||||||
Employment Agreement dated May 7, 2004 between Teradyne and Mark Jagiela.* | ||||||
| 10.20 | ||||||
Executive Officer Retirement Agreement dated July 17, 2019 between Teradyne and Gregory R. Beecher.* | ||||||
| 10.21 | ||||||
Executive Officer | ||||||
| 10.22 | ||||||
Amended and Restated Executive Officer Change in Control Agreement dated May 26, 2009 between Teradyne and Charles J. Gray, as amended.* | ||||||
| 10.23 | ||||||
Employment Agreement dated July 24, 2009 between Teradyne and Charles J. Gray.* | ||||||
107
| Exhibit No. | Description | SEC Document Reference | ||||
| 10.24 | ||||||
Amended and Restated Executive Officer Change in Control Agreement dated June 30, 2012 between Teradyne and Walter G. Vahey, as amended.* | ||||||
| 10.25 | ||||||
Employment Agreement dated February 6, 2013 between Teradyne and Walter G. Vahey.* | ||||||
| 10.26 | ||||||
Executive Officer Change in Control Agreement dated September 1, 2014 between Teradyne, Inc. and Bradford Robbins.* | ||||||
| 10.27 | ||||||
Employment Agreement dated September 1, 2014 between Teradyne, Inc. and Bradford Robbins.* | ||||||
| 10.28 | ||||||
Executive Change in Control Agreement dated February 8, 2016 between Teradyne, Inc. and | ||||||
| 10.29 | ||||||
Employment Agreement dated February 8, 2016 between Teradyne, Inc. and | ||||||
| 10.30 | ||||||
Teradyne Offer of Employment dated February 8, 2019 for Sanjay Mehta.* | ||||||
| 10.31 | ||||||
Executive Officer Change in Control Agreement dated April 25, 2019 between Teradyne, Inc. and Sanjay Mehta.* | ||||||
| 10.32 | ||||||
Employment Agreement dated April 25, 2019 between Teradyne, Inc. and Sanjay Mehta.* | ||||||
| 10.33 | ||||||
Agreement Regarding Termination Benefits dated April 25, 2019 between Teradyne, Inc. and Sanjay Mehta.* | ||||||
| 10.34 | Executive Officer Change in Control Agreement dated October 1, 2020 between Teradyne, Inc. and Richard Burns.* | Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2020. | ||||
| 10.35 | ||||||
| Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2020. | ||||||
| 10.36 | ||||||
Time-Based Restricted Stock Unit Agreement dated May 1, 2019 for Sanjay Mehta under 2006 Equity and Cash Compensation Plan.* | ||||||
| 10.37 | ||||||
Form of Indemnification Agreement.* | ||||||
| 10.38 | ||||||
LitePoint Corporation 2002 Stock Plan. | ||||||
108
| Exhibit No. | Description | SEC Document Reference | ||||
| 10.39 | ||||||
Letter Agreement, dated December 6, 2016, between Barclays Bank PLC and Teradyne, Inc., regarding the Base Warrants. | ||||||
| 10.40 | ||||||
Letter Agreement, dated December 6, 2016, between Bank of America, N.A., and Teradyne, Inc. regarding the Base Warrants. | ||||||
| 10.41 | ||||||
Letter Agreement, dated December 6, 2016, between Wells Fargo Bank, National Association and Teradyne, Inc. regarding the Base Warrants. | ||||||
| 10.42 | ||||||
Letter Agreement, dated December 6, 2016, between Barclays Bank PLC and Teradyne, Inc. regarding the Base Call Option Transaction. | ||||||
| 10.43 | ||||||
Letter Agreement, dated December 6, 2016, between Bank of America, N.A. and Teradyne, Inc. regarding the Base Call Option Transaction. | ||||||
| 10.44 | ||||||
Letter Agreement, dated December 6, 2016, between Wells Fargo Bank, National Association and Teradyne, Inc. regarding the Base Call Option Transaction. | ||||||
| 10.45 | ||||||
Letter Agreement, dated December 9, 2016, between Barclays Bank PLC and Teradyne, Inc., regarding the Additional Warrants | ||||||
| 10.46 | ||||||
Letter Agreement, dated December 9, 2016, between Bank of America, N.A., and Teradyne, Inc. regarding the Additional Warrants. | ||||||
| 10.47 | ||||||
Letter Agreement, dated December 9, 2016, between Wells Fargo Bank, National Association and Teradyne, Inc. regarding the Additional Warrants. | ||||||
| 10.48 | ||||||
Letter Agreement, dated December 9, 2016, between Barclays Bank PLC and Teradyne, Inc. regarding the Additional Call Option Transaction. | ||||||
| 10.49 | ||||||
Letter Agreement, dated December 9, 2016, between Bank of America, N.A. and Teradyne, Inc. regarding the Additional Call Option Transaction | ||||||
| 10.50 | ||||||
Letter Agreement, dated December 9, 2016, between Wells Fargo Bank, National Association and Teradyne, Inc. regarding the Additional Call Option Transaction. | ||||||
| 10.51 | Credit Agreement dated May 1, 2020 among Teradyne, Inc., Truist Bank, as the administrative agent, issuing bank and swingline lender, and other lenders party thereto. | Exhibit 10.1 to Teradyne’s Current Report on Form 8-K filed May 5, 2020. | ||||
109
| Exhibit No. | ||||||
Description | SEC Document Reference | |||||
| 10.52 | First Amendment to Credit Agreement dated December 10, 2021 among Teradyne, Inc., Truist Bank, as the administrative agent, issuing bank and swingline lender, and other lenders party thereto. | Exhibit 10.52 to Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. | ||||
| 10.53 | Second Amendment to Credit Agreement dated October 5, 2022 among Teradyne, Inc., Truist Bank, as the administrative agent, issuing bank and swingline lender, and other lenders party thereto. | Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-Q for the quarter ended October 2, 2022. | ||||
| 21.1 | Subsidiaries of Teradyne. | |||||
| 23.1 | ||||||
Consent of PricewaterhouseCoopers LLP. | ||||||
| 31.1 | ||||||
Rule 13a-14(a) Certification of Principal Executive Officer. | ||||||
| 31.2 | ||||||
Rule 13a-14(a) Certification of Principal Financial Officer. | ||||||
| 32.1 | ||||||
Section 1350 Certification of Principal Executive Officer. | ||||||
| 32.2 | ||||||
Section 1350 Certification of Principal Financial Officer. | ||||||
| 101 | ||||||
The following financial information from Teradyne, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, | ||||||
| 104 | ||||||
The cover page of the Annual Report on Form | ||||||
| † | -Confidential treatment granted. |
| * | -Management contract or compensatory plan. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 2nd22nd day of March, 2020.
| TERADYNE, INC. | ||
| By: | ||
/ SANJAY MEHTA | ||
Sanjay Mehta, | ||
Vice President, Chief Financial Officer and Treasurer | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature | Title | Date | ||
/S/ PAUL J. TUFANO Paul J. Tufano | ||||
Chair of the Board | ||||
/S/ GREGORY SMITH Gregory Smith | ||||
Chief Executive Officer (Principal Executive Officer) and Director | ||||
/S/ SANJAY MEHTA Sanjay Mehta | ||||
Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | ||||
/S/ EDWIN J. GILLIS Edwin J. Gillis | Director | February 22, 2023 | ||
/ Timothy E. Guertin | Director | |||
/S/ PETER HERWECK Peter Herweck | Director | February 22, 2023 | ||
/ Mercedes Johnson | Director | |||
/S/ ERNEST E. MADDOCK Ernest E. Maddock | Director | February 22, 2023 | ||
/ Marilyn Matz | Director | |||
/S/ Fouad Tamer Fouad Tamer | Director | |||
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