☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Massachusetts | 04-2272148 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
600 Riverpark Drive, North Reading, Massachusetts | 01864 | |
(Address of Principal Executive Offices) | (Zip Code) |
(232.405 Non-accelerated filer ☐ IfSecurities registered pursuant to Section 12(b) of the Act:Title of each classTrading Symbol(s)Name of each exchange on whichregisteredCommon Stock, par value $0.125 per shareTERNasdaq Stock Market LLCMay 6,November 4, 2019 was 171,395,402167,577,669 shares.
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Item 2. | 33 | ||||||
Item 3. | 44 | ||||||
Item 4. | 44 | ||||||
Item | 45 | ||||||
Item 1A. | 45 | ||||||
Item 2. | 45 | ||||||
Item 4. | 46 | ||||||
Item 6. | 46 |
Item 1: | Financial Statements |
March 31, 2019 | December 31, 2018 | |||||||
(in thousands, except per share amount) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 483,728 | $ | 926,752 | ||||
Marketable securities | 421,088 | 190,096 | ||||||
Accounts receivable, less allowance for doubtful accounts of $1,675 and $1,673 at March 31, 2019 and December 31, 2018, respectively | 333,840 | 291,267 | ||||||
Inventories, net | 161,342 | 153,541 | ||||||
Prepayments and other current assets | 194,044 | 170,826 | ||||||
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Total current assets | 1,594,042 | 1,732,482 | ||||||
Property, plant and equipment, net | 283,300 | 279,821 | ||||||
Operating leaseright-of-use assets, net | 50,733 | — | ||||||
Marketable securities | 91,926 | 87,731 | ||||||
Deferred tax assets | 69,687 | 70,848 | ||||||
Retirement plans assets | 16,791 | 16,883 | ||||||
Other assets | 11,279 | 11,509 | ||||||
Acquired intangible assets, net | 119,372 | 125,482 | ||||||
Goodwill | 379,513 | 381,850 | ||||||
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Total assets | $ | 2,616,643 | $ | 2,706,606 | ||||
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LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 118,816 | $ | 100,688 | ||||
Accrued employees’ compensation and withholdings | 89,089 | 148,566 | ||||||
Deferred revenue and customer advances | 84,764 | 77,711 | ||||||
Other accrued liabilities | 67,422 | 78,272 | ||||||
Contingent consideration | 22,803 | 34,865 | ||||||
Operating lease liabilities | 17,176 | — | ||||||
Income taxes payable | 41,898 | 36,185 | ||||||
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Total current liabilities | 441,968 | 476,287 | ||||||
Retirement plans liabilities | 121,205 | 117,456 | ||||||
Long-term deferred revenue and customer advances | 32,843 | 32,750 | ||||||
Deferred tax liabilities | 19,614 | 20,662 | ||||||
Long-term other accrued liabilities | 9,732 | 37,547 | ||||||
Long-term contingent consideration | 15,510 | 35,678 | ||||||
Long-term operating lease liabilities | 38,062 | — | ||||||
Long-term incomes taxes payable | 83,891 | 83,891 | ||||||
Debt | 383,590 | 379,981 | ||||||
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Total liabilities | 1,146,415 | 1,184,252 | ||||||
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Commitments and contingencies (See Note S) | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, $0.125 par value, 1,000,000 shares authorized; 172,353 and 175,522 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively | 21,544 | 21,940 | ||||||
Additionalpaid-in capital | 1,679,997 | 1,671,645 | ||||||
Accumulated other comprehensive loss | (15,706 | ) | (13,040 | ) | ||||
Accumulated deficit | (215,607 | ) | (158,191 | ) | ||||
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Total shareholders’ equity | 1,470,228 | 1,522,354 | ||||||
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Total liabilities and shareholders’ equity | $ | 2,616,643 | $ | 2,706,606 | ||||
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September 29, 2019 | December 31, 2018 | |||||||
(in thousands, except per share amount) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 593,939 | $ | 926,752 | ||||
Marketable securities | 342,538 | 190,096 | ||||||
Accounts receivable, less allowance for doubtful accounts of $1,770 and $1,673 at September 29, 2019 and December 31, 2018, respectively | 357,886 | 291,267 | ||||||
Inventories, net | 178,203 | 153,541 | ||||||
Prepayments and other current assets | 182,013 | 170,826 | ||||||
Total current assets | 1,654,579 | 1,732,482 | ||||||
Property, plant and equipment, net | 307,567 | 279,821 | ||||||
Operating lease right-of-use assets, net | 57,595 | — | ||||||
Marketable securities | 103,558 | 87,731 | ||||||
Deferred tax assets | 69,120 | 70,848 | ||||||
Other assets | 22,724 | 11,509 | ||||||
Retirement plans assets | 16,358 | 16,883 | ||||||
Acquired intangible assets, net | 96,573 | 125,482 | ||||||
Goodwill | 370,717 | 381,850 | ||||||
Total assets | $ | 2,698,791 | $ | 2,706,606 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 117,936 | $ | 100,688 | ||||
Accrued employees’ compensation and withholdings | 127,912 | 148,566 | ||||||
Deferred revenue and customer advances | 95,936 | 77,711 | ||||||
Other accrued liabilities | 93,736 | 78,272 | ||||||
Operating lease liabilities | 18,386 | — | ||||||
Contingent consideration | 6,297 | 34,865 | ||||||
Income taxes payable | 33,508 | 36,185 | ||||||
Total current liabilities | 493,711 | 476,287 | ||||||
Retirement plans liabilities | 121,340 | 117,456 | ||||||
Long-term deferred revenue and customer advances | 42,592 | 32,750 | ||||||
Deferred tax liabilities | 15,390 | 20,662 | ||||||
Long-term other accrued liabilities | 9,803 | 37,547 | ||||||
Long-term contingent consideration | 11,783 | 35,678 | ||||||
Long-term operating lease liabilities | 46,813 | — | ||||||
Long-term income taxes payable | 83,782 | 83,891 | ||||||
Debt | 390,942 | 379,981 | ||||||
Total liabilities | 1,216,156 | 1,184,252 | ||||||
Commitments and contingencies (See Note S) | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, $0.125 par value, 1,000,000 shares authorized; 168,490 and 175,522 shares issued and outstanding at September 29, 2019 and December 31, 2018, respectively | 21,061 | 21,940 | ||||||
Additional paid-in capital | 1,712,185 | 1,671,645 | ||||||
Accumulated other comprehensive loss | (24,221 | ) | (13,040 | ) | ||||
Accumulated deficit | (226,390 | ) | (158,191 | ) | ||||
Total shareholders’ equity | 1,482,635 | 1,522,354 | ||||||
Total liabilities and shareholders’ equity | $ | 2,698,791 | $ | 2,706,606 | ||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(in thousands, except per share amount) | ||||||||||||||||
Revenues: | ||||||||||||||||
Products | $ | 488,170 | $ | 470,994 | $ | 1,339,123 | $ | 1,308,969 | ||||||||
Services | 93,868 | 95,854 | 301,192 | 272,275 | ||||||||||||
Total revenues | 582,038 | 566,848 | 1,640,315 | 1,581,244 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of products | 197,196 | 195,339 | 555,863 | 557,074 | ||||||||||||
Cost of services | 39,804 | 37,816 | 127,861 | 113,311 | ||||||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 237,000 | 233,155 | 683,724 | 670,385 | ||||||||||||
Gross profit | 345,038 | 333,693 | 956,591 | 910,859 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and administrative | 109,166 | 100,199 | 319,990 | 290,115 | ||||||||||||
Engineering and development | 77,804 | 77,049 | 236,030 | 226,799 | ||||||||||||
Acquired intangible assets amortization | 9,647 | 11,142 | 30,363 | 28,633 | ||||||||||||
Restructuring and other | (6,500 | ) | 1,710 | (11,792 | ) | 3,785 | ||||||||||
Total operating expenses | 190,117 | 190,100 | 574,591 | 549,332 | ||||||||||||
Income from operations | 154,921 | 143,593 | 382,000 | 361,527 | ||||||||||||
Non-operating (income) expense: | ||||||||||||||||
Interest income | (5,159 | ) | (6,213 | ) | (18,641 | ) | (17,620 | ) | ||||||||
Interest expense | 5,682 | 5,557 | 17,195 | 18,087 | ||||||||||||
Other (income) expense, net | 2,665 | 3,405 | 6,557 | 4,385 | ||||||||||||
Income before income taxes | 151,733 | 140,844 | 376,889 | 356,675 | ||||||||||||
Income tax provision | 15,873 | 20,863 | 34,494 | 48,684 | ||||||||||||
Net income | $ | 135,860 | $ | 119,981 | $ | 342,395 | $ | 307,991 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.80 | $ | 0.65 | $ | 2.00 | $ | 1.62 | ||||||||
Diluted | $ | 0.75 | $ | 0.63 | $ | 1.92 | $ | 1.57 | ||||||||
Weighted average common shares—basic | 169,641 | 185,744 | 171,471 | 190,576 | ||||||||||||
Weighted average common shares—diluted | 180,494 | 190,505 | 178,685 | 196,300 | ||||||||||||
consolidated financial statements.
COMPREHENSIVE INCOME
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands, except per share amount) | ||||||||
Revenues: | ||||||||
Products | $ | 393,442 | $ | 403,925 | ||||
Services | 100,657 | 83,542 | ||||||
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Total revenues | 494,099 | 487,467 | ||||||
Cost of revenues: | ||||||||
Cost of products | 165,368 | 180,958 | ||||||
Cost of services | 41,096 | 36,677 | ||||||
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Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 206,464 | 217,635 | ||||||
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Gross profit | 287,635 | 269,832 | ||||||
Operating expenses: | ||||||||
Selling and administrative | 102,013 | 90,505 | ||||||
Engineering and development | 76,791 | 74,408 | ||||||
Acquired intangible assets amortization | 10,634 | 7,698 | ||||||
Restructuring and other | 5,112 | (313 | ) | |||||
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Total operating expenses | 194,550 | 172,298 | ||||||
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Income from operations | 93,085 | 97,534 | ||||||
Non-operating (income) expense: | ||||||||
Interest income | (8,052 | ) | (5,981 | ) | ||||
Interest expense | 5,713 | 6,890 | ||||||
Other (income) expense, net | 1,445 | 805 | ||||||
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Income before income taxes | 93,979 | 95,820 | ||||||
Income tax (benefit) provision | (15,159 | ) | 8,846 | |||||
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Net income | $ | 109,138 | $ | 86,974 | ||||
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Net income per common share: | ||||||||
Basic | $ | 0.63 | $ | 0.45 | ||||
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Diluted | $ | 0.62 | $ | 0.43 | ||||
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Weighted average common shares—basic | 173,532 | 195,255 | ||||||
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Weighted average common shares—diluted | 176,972 | 203,484 | ||||||
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For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Net income | $ | 135,860 | $ | 119,981 | $ | 342,395 | $ | 307,991 | ||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Foreign currency translation adjustment, net of tax of $0 | (18,002 | ) | 7,213 | (17,019 | ) | (11,568 | ) | |||||||||
Available-for-sale marketable securities: | ||||||||||||||||
Unrealized gains (losses) on marketable securities arising during period, net of tax of $507, $(62), $1,762, $(806), respectively | 1,754 | (66 | ) | 6,391 | (2,555 | ) | ||||||||||
Less: Reclassification adjustment for (gains) losses included in net income, net of tax of $(99), $(17), $(125), $(6), respectively | (345 | ) | (57 | ) | (442 | ) | 1,411 | |||||||||
1,409 | (123 | ) | 5,949 | (1,144 | ) | |||||||||||
Defined benefit pension and post-retirement plans: | ||||||||||||||||
Amortization of prior service benefit included in net periodic pension and post-retirement benefit, net of tax of $(11), $(18), $(32), $(53), respectively | (37 | ) | (61 | ) | (111 | ) | (184 | ) | ||||||||
Other comprehensive (loss) income | (16,630 | ) | 7,029 | (11,181 | ) | (12,896 | ) | |||||||||
Comprehensive income | $ | 119,230 | $ | 127,010 | $ | 331,214 | $ | 295,095 | ||||||||
SHAREHOLDERS’ EQUITY
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Net income | $ | 109,138 | $ | 86,974 | ||||
Other comprehensive income, net of tax: | ||||||||
Foreign currency translation adjustment, net of tax of $0, $0, respectively | (4,659 | ) | 10,541 | |||||
Available-for-sale marketable securities: | ||||||||
Unrealized gains (losses) on marketable securities arising during period, net of tax of $577, $(718), respectively | 2,100 | (2,687 | ) | |||||
Less: Reclassification adjustment for (gains) losses included in net income, net of tax of $(20), $78, respectively | (70 | ) | 1,668 | |||||
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2,030 | (1,019 | ) | ||||||
Defined benefit pension and post-retirement plans: | ||||||||
Amortization of prior service benefit included in net periodic pension and post-retirement benefit, net of tax of $(11), $(18), respectively | (37 | ) | (61 | ) | ||||
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Other comprehensive (loss) income | (2,666 | ) | 9,461 | |||||
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Comprehensive income | $ | 106,472 | $ | 96,435 | ||||
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| Common Stock Shares Issued | Common Stock Value | Additional Paid-in Capital | Accumulated Other Comprehensive ( Loss) Income | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
For the Three Months Ended September 29, 2019 | ||||||||||||||||||||||||
Balance, June 30, 2019 | 170,436 | $ | 21,305 | $ | 1,688,211 | $ | (7,591 | ) | $ | (222,513 | ) | $ | 1,479,412 | |||||||||||
Net issuance of common stock under stock-based plans | 377 | 46 | 14,041 | — | — | 14,087 | ||||||||||||||||||
Stock-based compensation expense | — | — | 9,933 | — | — | 9,933 | ||||||||||||||||||
Repurchase of common stock | (2,323 | ) | (290 | ) | — | — | (124,473 | ) | (124,763 | ) | ||||||||||||||
Cash dividends ($0.09 per share) | — | — | — | — | (15,264 | ) | (15,264 | ) | ||||||||||||||||
Net income | — | — | — | — | 135,860 | 135,860 | ||||||||||||||||||
Other comprehensive loss | — | — | — | (16,630 | ) | — | (16,630 | ) | ||||||||||||||||
Balance, September 29 , 2019 | 168,490 | $ | 21,061 | $ | 1,712,185 | $ | (24,221 | ) | $ | (226,390 | ) | $ | 1,482,635 | |||||||||||
For the Three Months Ended September 30, 2018 | ||||||||||||||||||||||||
Balance, July 1, 2018 | 187,962 | $ | 23,495 | $ | 1,645,679 | $ | (3,504 | ) | $ | 74,270 | $ | 1,739,940 | ||||||||||||
Net issuance of common stock under stock-based plans | 332 | 42 | 10,056 | — | — | 10,098 | ||||||||||||||||||
Stock-based compensation expense | — | — | 8,833 | — | — | 8,833 | ||||||||||||||||||
Repurchase of common stock | (5,005 | ) | (626 | ) | — | — | (200,846 | ) | (201,472 | ) | ||||||||||||||
Cash dividends ($0.09 per share) | — | — | — | — | (16,648 | ) | (16,648 | ) | ||||||||||||||||
Net income | — | — | — | — | 119,981 | 119,981 | ||||||||||||||||||
Other comprehensive income | — | — | — | 7,028 | — | 7,028 | ||||||||||||||||||
Balance, September 30, 2018 | 183,289 | $ | 22,911 | $ | 1,664,568 | $ | 3,524 | $ | (23,243 | ) | $ | 1,667,760 | ||||||||||||
For the Nine Months Ended September 29, 2019 | ||||||||||||||||||||||||
Balance, 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 | 1,762 | 220 | 14,511 | — | — | 14,731 | ||||||||||||||||||
Stock-based compensation expense | — | — | 26,029 | — | — | 26,029 | ||||||||||||||||||
Repurchase of common stock | (8,794 | ) | (1,099 | ) | — | — | (364,287 | ) | (365,386 | ) | ||||||||||||||
Cash dividends ($0.09 per share) | — | — | — | — | (46,307 | ) | (46,307 | ) | ||||||||||||||||
Net income | — | — | — | — | 342,395 | 342,395 | ||||||||||||||||||
Other comprehensive loss | — | — | — | (11,181 | ) | — | (11,181 | ) | ||||||||||||||||
Balance, September 29 , 2019 | 168,490 | $ | 21,061 | $ | 1,712,185 | $ | (24,221 | ) | $ | (226,390 | ) | $ | 1,482,635 | |||||||||||
For the Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||
Balance, 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 | 1,584 | 197 | 1,813 | — | — | 2,010 | ||||||||||||||||||
Stock-based compensation expense | — | — | 24,342 | — | — | 24,342 | ||||||||||||||||||
Repurchase of common stock | (13,843 | ) | (1,730 | ) | — | — | (566,930 | ) | (568,660 | ) | ||||||||||||||
Cash dividends ($0.09 per share) | — | — | — | — | (51,352 | ) | (51,352 | ) | ||||||||||||||||
Net income | — | — | — | — | 307,991 | 307,991 | ||||||||||||||||||
Other comprehensive loss | — | — | — | (12,896 | ) | — | (12,896 | ) | ||||||||||||||||
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 recognition | — | — | — | — | 12,679 | 12,679 | ||||||||||||||||||
Balance, September 30, 2018 | 183,289 | $ | 22,911 | $ | 1,664,568 | $ | 3,524 | $ | (23,243 | ) | $ | 1,667,760 | ||||||||||||
Annual Report on Form
consolidated financial statements.
For the Nine Months Ended | ||||||||
September 29, 2019 | September 30, 2018 | |||||||
(in thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 342,395 | $ | 307,991 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 51,508 | 49,930 | ||||||
Amortization | 36,849 | 32,909 | ||||||
Stock-based compensation | 28,822 | 25,327 | ||||||
Deferred taxes | (2,977 | ) | 24,442 | |||||
Provision for excess and obsolete inventory | 8,848 | 9,522 | ||||||
Contingent consideration fair value adjustment | (16,460 | ) | (9,236 | ) | ||||
Gains on marketable securities | (4,158 | ) | (420 | ) | ||||
Retirement plan s actuarial losses | 448 | 196 | ||||||
Other | 610 | 936 | ||||||
Changes in operating assets and liabilities, net of businesses acquired: | ||||||||
Accounts receivable | (66,789 | ) | (77,807 | ) | ||||
Inventories | (14,143 | ) | (34,117 | ) | ||||
Prepayments and other assets | (16,118 | ) | (28,719 | ) | ||||
Accounts payable and other liabilities | 20,807 | 16,124 | ||||||
Deferred revenue and customer advances | 27,779 | 9,823 | ||||||
Retirement plans contributions | (3,775 | ) | (3,244 | ) | ||||
Income taxes | (31,224 | ) | (33,152 | ) | ||||
Net cash provided by operating activities | 362,422 | 290,505 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (96,048 | ) | (88,269 | ) | ||||
Proceeds from government subsidy for property, plant and equipment | — | 7,920 | ||||||
Purchases of marketable securities | (605,539 | ) | (809,521 | ) | ||||
Proceeds from sales of marketable securities | 60,274 | 843,164 | ||||||
Proceeds from maturities of marketable securities | 393,472 | 934,100 | ||||||
Proceeds from life insurance | 2,912 | 1,126 | ||||||
Purchase of investment and acquisition of businesses, net of cash acquired | (21,970 | ) | (169,474 | ) | ||||
Net cash (used for) provided by investing activities | (266,899 | ) | 719,046 | |||||
Cash flows from financing activities: | ||||||||
Issuance of common stock under stock purchase and stock option plans | 29,280 | 20,959 | ||||||
Repurchase of common stock | (368,782 | ) | (562,263 | ) | ||||
Dividend payments | (46,269 | ) | (51,320 | ) | ||||
Payments related to net settlement of employee stock compensation awards | (14,550 | ) | (19,841 | ) | ||||
Payments of contingent consideration | (27,615 | ) | (13,571 | ) | ||||
Net cash used for financing activities | (427,936 | ) | (626,036 | ) | ||||
Effects of exchange rate changes on cash and cash equivalents | (400 | ) | 661 | |||||
(Decrease) increase in cash and cash equivalents | (332,813 | ) | 384,176 | |||||
Cash and cash equivalents at beginning of period | 926,752 | 429,843 | ||||||
Cash and cash equivalents at end of period | $ | 593,939 | $ | 814,019 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
For the Three Months Ended March 31, 2019 | ||||||||||||||||||||||||
Common Stock Shares Issued | Common Stock Par Value | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total Shareholders’ Equity | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Balance, December 31, 2018 | 175,522 | $ | 21,940 | $ | 1,671,645 | $ | (13,040 | ) | $ | (158,191 | ) | $ | 1,522,354 | |||||||||||
Issuance of common stock to employees under benefit plans, net of shares withheld for payroll tax of $14,318 | 1,287 | 161 | (210 | ) | (49 | ) | ||||||||||||||||||
Stock-based compensation expense | 8,562 | 8,562 | ||||||||||||||||||||||
Repurchase of common stock | (4,456 | ) | (557 | ) | (150,913 | ) | (151,470 | ) | ||||||||||||||||
Cash dividends ($0.09 per share) | (15,641 | ) | (15,641 | ) | ||||||||||||||||||||
Net income | 109,138 | 109,138 | ||||||||||||||||||||||
Foreign currency translation adjustment | (4,659 | ) | (4,659 | ) | ||||||||||||||||||||
Unrealized gains on marketable securities: | ||||||||||||||||||||||||
Unrealized gains on marketable securities, net of tax of $577 | 2,100 | 2,100 | ||||||||||||||||||||||
Less: reclassification adjustment for gains included in net income, net of tax $(20) | (70 | ) | (70 | ) | ||||||||||||||||||||
Amortization of prior service benefit, net of tax of $(11) | (37 | ) | (37 | ) | ||||||||||||||||||||
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| |||||||||||||
Balance, March 31, 2019 | 172,353 | $ | 21,544 | $ | 1,679,997 | $ | (15,706 | ) | $ | (215,607 | ) | $ | 1,470,228 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
For the Three Months Ended April 1, 2018 | ||||||||||||||||||||||||
Common Stock Shares Issued | Common Stock Par Value | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Retained Earnings | Total Shareholders’ Equity | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Balance, December 31, 2017 | 195,548 | $ | 24,444 | $ | 1,638,413 | $ | 18,776 | $ | 272,013 | $ | 1,953,646 | |||||||||||||
Issuance of common stock to employees under benefit plans, net of shares withheld for payroll tax of $19,629 | 1,199 | 150 | (8,129 | ) | (7,979 | ) | ||||||||||||||||||
Stock-based compensation expense | 8,472 | 8,472 | ||||||||||||||||||||||
Repurchase of common stock | (2,939 | ) | (368 | ) | (140,304 | ) | (140,672 | ) | ||||||||||||||||
Cash dividends ($0.09 per share) | (17,598 | ) | (17,598 | ) | ||||||||||||||||||||
Net income | 86,974 | 86,974 | ||||||||||||||||||||||
Foreign currency translation adjustment | 10,541 | 10,541 | ||||||||||||||||||||||
Unrealized gains (losses) on marketable securities: | ||||||||||||||||||||||||
Unrealized losses on marketable securities, net of tax of $(718) | (2,687 | ) | (2,687 | ) | ||||||||||||||||||||
Less: reclassification adjustment for losses included in net income, net of tax $78 | 1,668 | 1,668 | ||||||||||||||||||||||
Reclassification of unrealized gains on equity securities, net of tax of $(902) | (3,125 | ) | 3,125 | — | ||||||||||||||||||||
Amortization of prior service benefit, net of tax of $(18) | (61 | ) | (61 | ) | ||||||||||||||||||||
Reclassification of tax effects resulting from the Tax Reform Act, net of tax of $769 | 769 | (769 | ) | — | ||||||||||||||||||||
Cumulative effect of changes in accounting principle related to revenue recognition | 12,679 | 12,679 | ||||||||||||||||||||||
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| |||||||||||||
Balance, April 1, 2018 | 193,808 | $ | 24,226 | $ | 1,638,756 | $ | 25,881 | $ | 216,120 | $ | 1,904,983 | |||||||||||||
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The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s
Annual Report on Form10-K for the year ended December 31, 2018, are an integral part of the condensed
consolidated financial statements.
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 109,138 | $ | 86,974 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 16,651 | 16,336 | ||||||
Amortization | 12,942 | 9,204 | ||||||
Stock-based compensation | 9,474 | 9,544 | ||||||
Deferred taxes | 1,206 | 8,696 | ||||||
Provision for excess and obsolete inventory | 2,397 | 3,522 | ||||||
Contingent consideration fair value adjustment | 2,970 | (4,968 | ) | |||||
(Gains) losses on investments | (2,828 | ) | 1,241 | |||||
Other | 219 | 152 | ||||||
Changes in operating assets and liabilities, net of businesses acquired: | ||||||||
Accounts receivable | (41,706 | ) | (140,747 | ) | ||||
Inventories | (2,917 | ) | (21,017 | ) | ||||
Prepayments and other assets | (18,648 | ) | (679 | ) | ||||
Accounts payable and other liabilities | (53,323 | ) | (46,706 | ) | ||||
Deferred revenue and customer advances | 6,455 | 9,644 | ||||||
Retirement plans contributions | (1,210 | ) | (1,020 | ) | ||||
Income taxes | (22,804 | ) | (12,106 | ) | ||||
|
|
|
| |||||
Net cash provided by (used for) operating activities | 18,016 | (81,930 | ) | |||||
|
|
|
| |||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (25,711 | ) | (34,797 | ) | ||||
Purchases of marketable securities | (375,184 | ) | (490,324 | ) | ||||
Proceeds from sales of marketable securities | 5,440 | 800,671 | ||||||
Proceeds from maturities of marketable securities | 141,201 | 212,698 | ||||||
Proceeds from life insurance | 273 | — | ||||||
Acquisition of businesses, net of cash acquired | (6,970 | ) | (25,356 | ) | ||||
|
|
|
| |||||
Net cash (used for) provided by investing activities | (260,951 | ) | 462,892 | |||||
|
|
|
| |||||
Cash flows from financing activities: | ||||||||
Issuance of common stock under stock purchase and stock option plans | 14,268 | 10,654 | ||||||
Repurchase of common stock | (156,468 | ) | (134,276 | ) | ||||
Dividend payments | (15,627 | ) | (17,588 | ) | ||||
Payments related to net settlement of employee stock compensation awards | (14,318 | ) | (19,629 | ) | ||||
Payments of contingent consideration | (27,615 | ) | (13,571 | ) | ||||
|
|
|
| |||||
Net cash used for financing activities | (199,760 | ) | (174,410 | ) | ||||
|
|
|
| |||||
Effects of exchange rate changes on cash and cash equivalents | (329 | ) | 1,478 | |||||
|
|
|
| |||||
(Decrease) increase in cash and cash equivalents | (443,024 | ) | 208,030 | |||||
Cash and cash equivalents at beginning of period | 926,752 | 429,843 | ||||||
|
|
|
| |||||
Cash and cash equivalents at end of period | $ | 483,728 | $ | 637,873 | ||||
|
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|
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s
Annual Report on Form10-K for the year ended December 31, 2018, are an integral part of the condensed
consolidated financial statements.
AND INVESTMENT IN OTHER COMPANY
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 | ||
|
|
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 | |||||
|
|
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 Three Months Ended | ||||
April 1, 2018 | ||||
(in thousands) | ||||
Revenue | $ | 493,017 | ||
Net income | 85,151 | |||
Net income per common share: | ||||
Basic | $ | 0.44 | ||
|
| |||
Diluted | $ | 0.42 | ||
|
|
For the Nine Months Ended | ||||
September 30, 2018 | ||||
(in thousands) | ||||
Revenue | $ | 1,588,042 | ||
Net income | 306,768 | |||
Net income per common share: | ||||
Basic | $ | 1.61 | ||
Diluted | $ | 1.56 | ||
costs, and $0.4 million of
Revenue
For the three and nine months ended March 31,September 29, 2019, and April 1, 2018, Teradyne also recognized $1.7$1.5 million and $4.3$4.9 million, respectively, of revenues from leases of Teradyne systems, which are accounted for outside of ASC 606.
For the three and nine months ended September 30, 2018, revenues recognized in accordance with ASC 606: “
For the Three Months Ended March 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test | System Test | Industrial Automation | Wireless Test | Corporate and Other | Consolidated | |||||||||||||||||||||||||||||||||||||||
System on a Chip | Memory | Defense/ Aerospace | Storage Test | Production Board Test | Universal Robots | Mobile Industrial Robots | Energid | |||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | $ | 7,977 | $ | 8,051 | $ | 14,783 | $ | 1,593 | $ | 3,254 | $ | 15,297 | $ | 3,539 | $ | — | $ | 2,090 | $ | (151 | ) | $ | 56,433 | |||||||||||||||||||||
Over time | 8,190 | 712 | 6,450 | — | 729 | 246 | — | 260 | 151 | — | 16,738 | |||||||||||||||||||||||||||||||||
Europe, Middle East and Africa | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 11,032 | 153 | 39 | — | 5,064 | 25,904 | 3,840 | — | 736 | — | 46,768 | |||||||||||||||||||||||||||||||||
Over time | 5,281 | 280 | 469 | — | 1,554 | 416 | — | 289 | 45 | — | 8,334 | |||||||||||||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 219,746 | 35,571 | 263 | 16,605 | 3,636 | 14,178 | 1,727 | — | 24,628 | — | 316,354 | |||||||||||||||||||||||||||||||||
Over time | 38,913 | 3,280 | 764 | 2,054 | 920 | 228 | — | 212 | 1,359 | — | 47,730 | |||||||||||||||||||||||||||||||||
Lease Revenue | 1,667 | — | — | — | 43 | — | — | — | 32 | — | 1,742 | |||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||
Total | $ | 292,806 | $ | 48,047 | $ | 22,768 | $ | 20,252 | $ | 15,200 | $ | 56,269 | $ | 9,106 | $ | 761 | $ | 29,041 | $ | (151 | ) | $ | 494,099 | |||||||||||||||||||||
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For the Three Months Ended April 1, 2018 | ||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test | System Test | Industrial Automation | Wireless Test | Corporate and Other | Consolidated | |||||||||||||||||||||||||||||||||||||||
System on a Chip | Memory | Defense/ Aerospace | Storage Test | Production Board Test | Universal Robots | Mobile Industrial Robots | Energid | |||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | $ | 9,600 | $ | 2,862 | $ | 11,597 | $ | 279 | $ | 1,760 | $ | 14,373 | $ | — | $ | — | $ | 4,979 | $ | (221 | ) | $ | 45,229 | |||||||||||||||||||||
Over time | 8,791 | 696 | 6,188 | — | 757 | 89 | — | — | 112 | — | 16,633 | |||||||||||||||||||||||||||||||||
Europe, Middle East and Africa | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 12,125 | 139 | 1,497 | — | 4,037 | 22,573 | — | — | 1,041 | — | 41,412 | |||||||||||||||||||||||||||||||||
Over time | 5,214 | 269 | 551 | — | 1,559 | 143 | — | — | 227 | — | 7,963 | |||||||||||||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 224,851 | 66,273 | 101 | 10,122 | 1,861 | 11,583 | — | — | 13,664 | — | 328,455 | |||||||||||||||||||||||||||||||||
Over time | 36,338 | 2,323 | 208 | 1,533 | 735 | 73 | — | — | 2,296 | — | 43,506 | |||||||||||||||||||||||||||||||||
Lease Revenue | 3,847 | — | — | — | 234 | — | — | — | 188 | — | 4,269 | |||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||
Total | $ | 300,766 | $ | 72,562 | $ | 20,142 | $ | 11,934 | $ | 10,943 | $ | 48,834 | $ | — | $ | — | $ | 22,507 | $ | (221 | ) | $ | 487,467 | |||||||||||||||||||||
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For the Three Months Ended September 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test | System Test | Industrial Automation | Wireless Test | Corporate and Other | Consolidated | |||||||||||||||||||||||||||||||||||||||
System a chip (“SOC”) | Memory | Defense/ Aerospace | Storage Test | Production Board Test | Universal Robots | M iR | Energid | |||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | $ | 6,307 | $ | 3,464 | $ | 22,861 | $ | 2,232 | $ | 2,165 | $ | 16,294 | $ | 2,820 | $ | — | $ | 5,621 | $ | (160 | ) | $ | 61,604 | |||||||||||||||||||||
Over time | 8,497 | 621 | 5,814 | — | 796 | 293 | — | 188 | 723 | — | 16,932 | |||||||||||||||||||||||||||||||||
Europe, Middle East | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 6,894 | 274 | 742 | — | 4,354 | 25,557 | 5,011 | — | 1,220 | — | 44,052 | |||||||||||||||||||||||||||||||||
Over time | 5,189 | 255 | 469 | — | 1,613 | 459 | — | 615 | 48 | — | 8,648 | |||||||||||||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 259,909 | 63,483 | 99 | 22,696 | 6,751 | 15,575 | 1,800 | — | 33,032 | — | 403,345 | |||||||||||||||||||||||||||||||||
Over time | 37,680 | 3,874 | 299 | 1,496 | 830 | 280 | — | — | 1,545 | — | 46,004 | |||||||||||||||||||||||||||||||||
Lease Revenue | 1,290 | — | — | — | 88 | — | — | — | 75 | — | 1,453 | |||||||||||||||||||||||||||||||||
Total | $ | 325,766 | $ | 71,971 | $ | 30,284 | $ | 26,424 | $ | 16,597 | $ | 58,458 | $ | 9,631 | $ | 803 | $ | 42,264 | $ | (160 | ) | $ | 582,038 | |||||||||||||||||||||
For the Three Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test | System Test | Industrial Automation | Wireless Test | Corporate and Other | Consolidated | |||||||||||||||||||||||||||||||||||||||
SOC | Memory | Defense/ Aerospace | Storage Test | Production Board Test | Universal Robots | M iR | Energid | |||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | $ | 8,866 | $ | 4,600 | $ | 15,423 | $ | — | $ | 2,625 | $ | 17,834 | $ | 1,810 | $ | 104 | $ | 3,820 | $ | (272 | ) | $ | 54,810 | |||||||||||||||||||||
Over time | 8,810 | 686 | 6,037 | — | 789 | 190 | — | 167 | 146 | — | 16,825 | |||||||||||||||||||||||||||||||||
Europe, Middle East | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 9,728 | 2,080 | 161 | — | 3,223 | 26,445 | 2,647 | — | 1,504 | — | 45,788 | |||||||||||||||||||||||||||||||||
Over time | 5,336 | 301 | 505 | — | 1,510 | 282 | — | 457 | 318 | — | 8,709 | |||||||||||||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 258,898 | 76,429 | 931 | 9,916 | 5,201 | 13,656 | 2,087 | 10 | 26,851 | — | 393,979 | |||||||||||||||||||||||||||||||||
Over time | 36,722 | 2,794 | 212 | 2,116 | 885 | 145 | — | 79 | 1,494 | — | 44,447 | |||||||||||||||||||||||||||||||||
Lease Revenue | 2,047 | — | — | — | 72 | — | — | — | 171 | — | 2,290 | |||||||||||||||||||||||||||||||||
Total | $ | 330,407 | $ | 86,890 | $ | 23,269 | $ | 12,032 | $ | 14,305 | $ | 58,552 | $ | 6,544 | $ | 817 | $ | 34,304 | $ | (272 | ) | $ | 566,848 | |||||||||||||||||||||
For the Nine Months Ended September 29, 2019 | ||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test | System Test | Industrial Automation | Wireless Test | Corporate and Other | Consolidated | |||||||||||||||||||||||||||||||||||||||
SOC | Memory | Defense/ Aerospace | Storage Test | Production Board Test | Universal Robots | M iR | Energid | |||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | $ | 21,830 | $ | 19,574 | $ | 54,870 | $ | 7,528 | $ | 6,760 | $ | 48,529 | $ | 9,152 | $ | — | $ | 12,961 | $ | (402 | ) | $ | 180,802 | |||||||||||||||||||||
Over time | 24,862 | 2,056 | 19,116 | — | 2,317 | 793 | — | 1,235 | 1,550 | — | 51,929 | |||||||||||||||||||||||||||||||||
Europe, Middle East | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 27,934 | 2,443 | 992 | — | 12,391 | 78,007 | 13,883 | — | 2,575 | — | 138,225 | |||||||||||||||||||||||||||||||||
Over time | 15,681 | 819 | 1,442 | — | 4,782 | 1,274 | — | 1,381 | 140 | — | 25,519 | |||||||||||||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 727,035 | 143,163 | 525 | 66,974 | 17,235 | 48,284 | 6,208 | — | 91,029 | — | 1,100,453 | |||||||||||||||||||||||||||||||||
Over time | 113,158 | 10,447 | 1,391 | 5,860 | 2,526 | 786 | — | 221 | 4,146 | — | 138,535 | |||||||||||||||||||||||||||||||||
Lease Revenue | 4,487 | — | — | — | 225 | — | — | — | 140 | — | 4,852 | |||||||||||||||||||||||||||||||||
Total | $ | 934,987 | $ | 178,502 | $ | 78,336 | $ | 80,362 | $ | 46,236 | $ | 177,673 | $ | 29,243 | $ | 2,837 | $ | 112,541 | $ | (402 | ) | $ | 1,640,315 | |||||||||||||||||||||
For the Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||
Semiconductor Test | System Test | Industrial Automation | Wireless Test | Corporate and Other | Consolidated | |||||||||||||||||||||||||||||||||||||||
SOC | Memory | Defense/ Aerospace | Storage Test | Production Board Test | Universal Robots | M iR | Energid | |||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
Americas | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | $ | 30,577 | $ | 10,291 | $ | 42,276 | $ | 284 | $ | 5,814 | $ | 48,025 | $ | 3,009 | $ | 104 | $ | 13,515 | $ | (602 | ) | $ | 153,293 | |||||||||||||||||||||
Over time | 26,536 | 2,092 | 18,462 | — | 2,342 | 431 | — | 578 | 379 | — | 50,820 | |||||||||||||||||||||||||||||||||
Europe, Middle East | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 32,079 | 3,066 | 2,104 | — | 12,109 | 75,631 | 4,647 | — | 2,570 | — | 132,206 | |||||||||||||||||||||||||||||||||
Over time | 16,240 | 824 | 1,596 | — | 4,781 | 675 | — | 732 | 802 | — | 25,650 | |||||||||||||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||||||||||||||||||||
Point in time | 702,097 | 202,336 | 1,417 | 51,863 | 10,804 | 39,135 | 3,397 | 10 | 68,180 | — | 1,079,239 | |||||||||||||||||||||||||||||||||
Over time | 108,011 | 7,401 | 678 | 5,077 | 2,364 | 350 | — | 79 | 5,893 | — | 129,853 | |||||||||||||||||||||||||||||||||
Lease Revenue | 9,162 | — | — | — | 337 | — | — | — | 684 | — | 10,183 | |||||||||||||||||||||||||||||||||
Total | $ | 924,702 | $ | 226,010 | $ | 66,533 | $ | 57,224 | $ | 38,551 | $ | 164,247 | $ | 11,053 | $ | 1,503 | $ | 92,023 | $ | (602 | ) | $ | 1,581,244 | |||||||||||||||||||||
The amount of revenue recognized during
March 31, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Raw material | $ | 94,862 | $ | 89,365 | ||||
Work-in-process | 29,725 | 31,014 | ||||||
Finished goods | 36,755 | 33,162 | ||||||
|
|
|
| |||||
$ | 161,342 | $ | 153,541 | |||||
|
|
|
|
September 29, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Raw material | $ | 114,162 | $ | 89,365 | ||||
Work-in-process | 28,460 | 31,014 | ||||||
Finished goods | 35,581 | 33,162 | ||||||
$ | 178,203 | $ | 153,541 | |||||
three and nine months ended September 30, 2018 were $1.0 million and $1.4 million, respectively. Unrealized gains on equity securities are included in interest income and unrealized losses are included in interest expense.
balance sheet.
March 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 | $ | 222,714 | $ | — | $ | — | $ | 222,714 | ||||||||
Cash equivalents | 186,520 | 74,494 | — | 261,014 | ||||||||||||
Available-for-sale securities: | ||||||||||||||||
U.S. Treasury securities | — | 191,043 | — | 191,043 | ||||||||||||
Commercial paper | — | 180,604 | — | 180,604 | ||||||||||||
Corporate debt securities | — | 91,244 | — | 91,244 | ||||||||||||
Certificates of deposit and time deposits | — | 11,496 | — | 11,496 | ||||||||||||
U.S. government agency securities | — | 9,629 | — | 9,629 | ||||||||||||
Debt mutual funds | 3,331 | — | — | 3,331 | ||||||||||||
Non-U.S. government securities | — | 378 | — | 378 | ||||||||||||
Equity securities: | ||||||||||||||||
Mutual funds | 25,289 | — | — | 25,289 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 437,854 | $ | 558,888 | $ | — | $ | 996,742 | |||||||||
Derivative assets | — | 17 | — | 17 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 437,854 | $ | 558,905 | $ | — | $ | 996,759 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 38,313 | $ | 38,313 | ||||||||
Derivative liabilities | — | 291 | — | 291 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | — | $ | 291 | $ | 38,313 | $ | 38,604 | ||||||||
|
|
|
|
|
|
|
|
September 29, 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 | $ | 257,235 | $ | — | $ | — | $ | 257,235 | ||||||||
Cash equivalents | 198,519 | 138,185 | — | 336,704 | ||||||||||||
Available-for-sale securities: | ||||||||||||||||
U.S. Treasury securities | — | 185,025 | — | 185,025 | ||||||||||||
Commercial paper | — | 117,714 | — | 117,714 | ||||||||||||
Corporate debt securities | — | 90,898 | — | 90,898 | ||||||||||||
Certificates of deposit and time deposits | — | 14,086 | — | 14,086 | ||||||||||||
U.S. government agency securities | — | 8,024 | — | 8,024 | ||||||||||||
Debt mutual funds | 3,968 | — | — | 3,968 | ||||||||||||
Non-U.S. government securities | — | 380 | — | 380 | ||||||||||||
Equity securities: | ||||||||||||||||
Mutual funds | 26,001 | — | — | 26,001 | ||||||||||||
$ | 485,723 | $ | 554,312 | $ | — | $ | 1,040,035 | |||||||||
Derivative assets | — | 119 | — | 119 | ||||||||||||
Total | $ | 485,723 | $ | 554,431 | $ | — | $ | 1,040,154 | ||||||||
Liabilities | ||||||||||||||||
Contingent consideration | $ | — | $ | — | $ | 18,080 | $ | 18,080 | ||||||||
Derivative liabilities | — | 489 | — | 489 | ||||||||||||
Total | $ | — | $ | 489 | $ | 18,080 | $ | 18,569 | ||||||||
(Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 409,234 | $ | 74,494 | $ | — | $ | 483,728 | ||||||||
Marketable securities | — | 421,088 | — | 421,088 | ||||||||||||
Long-term marketable securities | 28,620 | 63,306 | — | 91,926 | ||||||||||||
Prepayments | — | 17 | — | 17 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 437,854 | $ | 558,905 | $ | — | $ | 996,759 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | . | |||||||||||||||
Other current liabilities | $ | — | $ | 291 | $ | — | $ | 291 | ||||||||
Contingent consideration | — | — | 22,803 | 22,803 | ||||||||||||
Long-term contingent consideration | — | — | 15,510 | 15,510 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | — | $ | 291 | $ | 38,313 | $ | 38,604 | ||||||||
|
|
|
|
|
|
|
|
(Level 1) | (Level 2) | (Level 3) | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 455,754 | $ | 138,185 | $ | — | $ | 593,939 | ||||||||
Marketable securities | — | 342,538 | — | 342,538 | ||||||||||||
Long-term marketable securities | 29,969 | 73,589 | — | 103,558 | ||||||||||||
Prepayments | — | 119 | — | 119 | ||||||||||||
Total | $ | 485,723 | $ | 554,431 | $ | — | $ | 1,040,154 | ||||||||
Liabilities | ||||||||||||||||
Other current liabilities | $ | — | $ | 489 | $ | — | $ | 489 | ||||||||
Contingent consideration | — | — | 6,297 | 6,297 | ||||||||||||
Long-term contingent consideration | — | — | 11,783 | 11,783 | ||||||||||||
Total | $ | — | $ | 489 | $ | 18,080 | $ | 18,569 | ||||||||
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. government securities | — | 376 | — | 376 | ||||||||||||
Equity securities: | ||||||||||||||||
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 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2018 | ||||||||||||||||
Quoted 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. government securities | — | 376 | — | 376 | ||||||||||||
Equity securities: | — | |||||||||||||||
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 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 590,415 | $ | 614,243 | $ | — | $ | 1,204,658 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Other accrued liabilities | $ | — | $ | 514 | $ | — | $ | 514 | ||||||||
Contingent consideration | — | — | 34,865 | 34,865 | ||||||||||||
Long-term contingent consideration | — | — | 35,678 | 35,678 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | — | $ | 514 | $ | 70,543 | $ | 71,057 | ||||||||
|
|
|
|
|
|
|
|
) | 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 | ||||||||||||
Total | $ | 590,415 | $ | 614,243 | $ | — | $ | 1,204,658 | ||||||||
Liabilities | ||||||||||||||||
Other accrued liabilities | $ | — | $ | 514 | $ | — | $ | 514 | ||||||||
Contingent consideration | — | — | 34,865 | 34,865 | ||||||||||||
Long-term contingent consideration | — | — | 35,678 | 35,678 | ||||||||||||
Total | $ | — | $ | 514 | $ | 70,543 | $ | 71,057 | ||||||||
For the Three Months Ended | ||||||||
March 31, | April 1, | |||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Balance at beginning of period | $ | 70,543 | $ | 45,102 | ||||
Foreign currency impact | (610 | ) | — | |||||
Payments (a) | (34,590 | ) | (24,553 | ) | ||||
Fair value adjustment (b) | 2,970 | (4,968 | ) | |||||
|
|
|
| |||||
Balance at end of period | $ | 38,313 | $ | 15,581 | ||||
|
|
|
|
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 26,847 | $ | 60,914 | $ | 70,543 | $ | 45,102 | ||||||||
Fair value adjustment (a) | (7,759 | ) | (768 | ) | (16,460 | ) | (9,236 | ) | ||||||||
Foreign currency impact | (1,008 | ) | 796 | (1,413 | ) | (1,770 | ) | |||||||||
Payments (b) | — | — | (34,590 | ) | (24,553 | ) | ||||||||||
Acquisition of MiR | — | — | — | 51,399 | ||||||||||||
Balance at end of period | $ | 18,080 | $ | 60,942 | $ | 18,080 | $ | 60,942 | ||||||||
(a) | In the three and nine months ended September 29, 2019, the fair value of contingent consideration for the earn-out in connection with the acquisition of MiR was decreased by $7.8 million and $16.5 million, respectively, primarily due to a decrease in the forecasted revenue, partially offset by impact from the modification, in the three months ended . In the three and nine months ended September 30, 2018, the fair value of contingent consideration for theearn-out in connection with the acquisition of Universal Robots A/S (“Universal Robots”) was decreased by $0.8 million and $9.2 million, respectively, primarily due to a decrease in forecasted revenue. |
(b) | In the nine months ended September 29, 2019, Teradyne paid $30.8 million and $3.8 million of contingent consideration for the earn-outs in connection with the acquisition of MiR and Universal Robots, earn-out in connection with the acquisition of Universal Robots. |
|
Liability | March 31, 2019 Fair Value | Valuation Technique | Unobservable Inputs | Weighted Average | ||||
(in thousands) | ||||||||
Contingent consideration (MiR) | $38,313 | Monte Carlo Simulation | Revenue volatility | 17.0% | ||||
Discount Rate | 0.4% |
Liability | September 29, 2019 Fair Value | Valuation Technique | | Unobservable Inputs | Weighted Average | |||||||
(in thousands) | ||||||||||||
Contingent consideration (MiR) | $ | 18,080 | Monte Carl o s imulation | Revenue volatility | 15.0 | % | ||||||
Discount r ate | 0.1 | % |
March 31, 2019 | December 31, 2018 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 483,728 | $ | 483,728 | $ | 926,752 | $ | 926,752 | ||||||||
Marketable securities | 513,014 | 513,014 | 277,827 | 277,827 | ||||||||||||
Derivative assets | 17 | 17 | 79 | 79 | ||||||||||||
Liabilities | ||||||||||||||||
Contingent consideration | 38,313 | 38,313 | 70,543 | 70,543 | ||||||||||||
Derivative liabilities | 291 | 291 | 514 | 514 | ||||||||||||
Convertible debt (1) | 383,590 | 644,575 | 379,981 | 547,113 |
September 29, 2019 | December 31, 2018 | |||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||
(in thousands) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 593,939 | $ | 593,939 | $ | 926,752 | $ | 926,752 | ||||||||
Marketable securities | 446,096 | 446,096 | 277,827 | 277,827 | ||||||||||||
Derivative assets | 119 | 119 | 79 | 79 | ||||||||||||
Liabilities | ||||||||||||||||
Contingent consideration | 18,080 | 18,080 | 70,543 | 70,543 | ||||||||||||
Derivative liabilities | 489 | 489 | 514 | 514 | ||||||||||||
Convertible debt (1) | 390,942 | 867,388 | 379,981 | 547,113 |
(1) | The carrying value represents the bifurcated debt component only, while the fair value is based on quoted market prices for the convertible note, which includes the equity conversion features. |
March 31, 2019 | ||||||||||||||||||||
Available-for-Sale | Fair Market Value of Investments with Unrealized Losses | |||||||||||||||||||
Cost | Unrealized Gain | Unrealized (Loss) | Fair Market Value | |||||||||||||||||
(in thousands) | ||||||||||||||||||||
U.S. Treasury securities | $ | 191,715 | $ | 144 | $ | (816 | ) | $ | 191,043 | $ | 82,132 | |||||||||
Commercial paper | 180,610 | 1 | (7 | ) | 180,604 | 11,237 | ||||||||||||||
Corporate debt securities | 90,402 | 1,343 | (501 | ) | 91,244 | 18,150 | ||||||||||||||
Certificates of deposit and time deposits | 11,497 | 1 | (2 | ) | 11,496 | 4,419 | ||||||||||||||
U.S. government agency securities | 9,646 | 4 | (21 | ) | 9,629 | 4,101 | ||||||||||||||
Debt mutual funds | 3,255 | 76 | — | 3,331 | — | |||||||||||||||
Non-U.S. government securities | 378 | — | — | 378 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 487,503 | $ | 1,569 | $ | (1,347 | ) | $ | 487,725 | $ | 120,039 | ||||||||||
|
|
|
|
|
|
|
|
|
|
September 29, 2019 | ||||||||||||||||||||
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 | $ | 184,229 | $ | 847 | $ | (51 | ) | $ | 185,025 | $ | 25,814 | |||||||||
Commercial paper | 117,618 | 99 | (3 | ) | 117,714 | 30,704 | ||||||||||||||
Corporate debt securities | 86,718 | 4,229 | (49 | ) | 90,898 | 3,079 | ||||||||||||||
Certificates of deposit and time deposits | 14,083 | 3 | — | 14,086 | — | |||||||||||||||
U.S. government agency securities | 8,009 | 17 | (2 | ) | 8,024 | 1,150 | ||||||||||||||
Debt mutual funds | 3,820 | 148 | — | 3,968 | — | |||||||||||||||
Non-U.S. government securities | 380 | — | — | 380 | — | |||||||||||||||
$ | 414,857 | $ | 5,343 | $ | (105 | ) | $ | 420,095 | $ | 60,747 | ||||||||||
Cost | Unrealized Gain | Unrealized (Loss) | Fair Market Value | Fair Market Value of Investments with Unrealized Losses | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Marketable securities | $ | 421,024 | $ | 126 | $ | (62 | ) | $ | 421,088 | $ | 91,100 | |||||||||
Long-term marketable securities | 66,479 | 1,443 | (1,285 | ) | 66,637 | 28,939 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 487,503 | $ | 1,569 | $ | (1,347 | ) | $ | 487,725 | $ | 120,039 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Cost | Unrealized Gain | Unrealized (Loss) | Fair Market Value | Fair Market Value of Investments with Unrealized Losses | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Marketable securities | $ | 342,234 | $ | 313 | $ | (9 | ) | $ | 342,538 | $ | 46,115 | |||||||||
Long-term marketable securities | 72,623 | 5,030 | (96 | ) | 77,557 | 14,632 | ||||||||||||||
$ | 414,857 | $ | 5,343 | $ | (105 | ) | $ | 420,095 | $ | 60,747 | ||||||||||
December 31, 2018 | ||||||||||||||||||||
Available-for-Sale | Fair Market Value of Investments with Unrealized Losses | |||||||||||||||||||
Cost | Unrealized Gain | Unrealized (Loss) | Fair Market Value | |||||||||||||||||
(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 | ||||||||||
|
|
|
|
|
|
|
|
|
|
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 | $ | 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 | ||||||||||
March 31, 2019 | ||||||||
Cost | Fair Market Value | |||||||
(in thousands) | ||||||||
Due within one year | $ | 421,024 | $ | 421,088 | ||||
Due after 1 year through 5 years | 9,325 | 9,343 | ||||||
Due after 5 years through 10 years | 14,026 | 13,659 | ||||||
Due after 10 years | 39,873 | 40,304 | ||||||
|
|
|
| |||||
Total | $ | 484,248 | $ | 484,394 | ||||
|
|
|
|
September 29, 2019 | ||||||||
Cost | Fair Market Value | |||||||
(in thousands) | ||||||||
Due within one year | $ | 342,234 | $ | 342,538 | ||||
Due after 1 year through 5 years | 16,609 | 16,718 | ||||||
Due after 5 years through 10 years | 15,002 | 15,297 | ||||||
Due after 10 years | 37,192 | 41,574 | ||||||
Total | $ | 411,037 | $ | 416,127 | ||||
Balance Sheet Location | March 31, 2019 | December 31, 2018 | ||||||||||
(in thousands) | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||
Foreign exchange contracts | Prepayments | $ | 17 | $ | 79 | |||||||
Foreign exchange contracts | Other current liabilities | (291 | ) | (514 | ) | |||||||
|
|
|
| |||||||||
Total derivatives | $ | (274 | ) | $ | (435 | ) | ||||||
|
|
|
|
Balance Sheet Location | September 29, 2019 | December 31, 2018 | ||||||||||
(in thousands) | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||
Foreign exchange contracts - derivative assets | Prepayments | $ | 119 | $ | 79 | |||||||
Foreign exchange contracts - derivative liabilities | Other current liabilities | (489 | ) | (514 | ) | |||||||
Total derivatives | $ | (370 | ) | $ | (435 | ) | ||||||
Location of Losses (Gains) Recognized in Statement of Operations | For the Three Months Ended | |||||||||
March 31, 2019 | April 1, 2018 | |||||||||
(in thousands) | ||||||||||
Derivatives not designated as hedging instruments: | ||||||||||
Foreign exchange contracts | Other (income) expense, net | $ | 3,934 | $ | 1,575 |
Location of Losses (Gains) Recognized in Statement of Operations | | For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||||
(in thousands) | ||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||
Foreign exchange contracts | Other (income) expense, net | $ | 3,699 | $ | (899 | ) | $ | 7,872 | $ | 2,502 |
(1) | The table does not reflect the corresponding gains and losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies. |
(2) | For the three months ended |
(3) | For the three and nine months ended September 30, 2018, net losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $3.7 million and |
Total lease expense for the nine months ended September 29, 2019 was $26.6 million and included $8.3 million of variable lease costs and $2.2 million of costs related to short-term leases which are not recorded on the consolidated balance sheets.
For the Three Months Ended | ||||
March 31, 2019 | ||||
(in thousands) | ||||
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows | $ | 5,059 | ||
Right-of-use assets obtained in exchange for new lease obligations | 5,737 |
For the Three Months Ended | For the Nine Months Ended | |||||||
September 29, 2019 | September 29, 2019 | |||||||
(in thousands) | ||||||||
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows: | $ | 4,946 | $ | 14,998 | ||||
Right-of-use assets obtained in exchange for new lease obligations | 8,315 | 23,727 |
Operating Leases | ||||
(in thousands) | ||||
2019 | $ | 15,375 | ||
2020 | 18,967 | |||
2021 | 14,514 | |||
2022 | 10,262 | |||
2023 | 5,719 | |||
Thereafter | 11,484 | |||
|
| |||
Total lease payments | 76,321 | |||
Less imputed interest | (21,083 | ) | ||
|
| |||
Total lease liabilities | $ | 55,238 | ||
|
|
Operating Lease | ||||
(in thousands) | ||||
2019 | $ | 5,520 | ||
2020 | 20,368 | |||
2021 | 16,045 | |||
2022 | 11,603 | |||
2023 | 6,135 | |||
Thereafter | 13,285 | |||
Total lease payments | 72,956 | |||
Less imputed interest | (7,757 | ) | ||
Total lease liabilities | $ | 65,199 | ||
Operating Leases | ||||
(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) | ||||
2019 | $ | 19,570 | ||
2020 | 18,293 | |||
2021 | 13,578 | |||
2022 | 9,693 | |||
2023 | 5,449 | |||
Thereafter | 9,472 | |||
Total lease payments | $ | 76,055 | ||
semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2017. The Notes will be convertible at the option of the noteholders at any time prior to the close of business on the business day immediately preceding September 15, 2023, only under the following circumstances: (1) during any calendar quarter beginning after March 31, 2017 (and only during such calendar quarter), if the closing sale price of Teradyne’s common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (2) during the five5 business day period after any five5 consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the closing sale price of the Teradyne’s common stock and the conversion rate on each such trading day; and (3) upon the occurrence of specified corporate events. On or after September 15, 2023 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. Teradyne may satisfy its conversion obligation by paying or delivering cash, shares of its common stock or a combination of cash and shares of its common stock, at Teradyne’s election. As of December 31, 2018,September 29, 2019, the conversion price was approximately $31.70 per share of Teradyne’s common stock. The conversion rate is subject to adjustment under certain circumstances.
considered indexed to Teradyne’s common stock as the terms of the Note Hedge Transactions do not contain an exercise contingency and the settlement amount equals the difference between the fair value of a fixed number of Teradyne’s shares and a fixed strike price. Because the only variable that can affect the settlement amount is Teradyne’s stock price, which is an input to the fair value of a
March 31, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Debt Principal | $ | 460,000 | $ | 460,000 | ||||
Unamortized discount | 76,410 | 80,019 | ||||||
|
|
|
| |||||
Net Carrying amount of convertible debt | $ | 383,590 | $ | 379,981 | ||||
|
|
|
|
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Contractual interest expense on the coupon | $ | 1,438 | $ | 1,438 | ||||
Amortization of the discount component recognized as interest expense | 3,608 | 3,434 | ||||||
|
|
|
| |||||
Total interest expense on the convertible debt | $ | 5,046 | $ | 4,872 | ||||
|
|
|
|
September 29, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Debt Principal | $ | 460,000 | $ | 460,000 | ||||
Unamortized discount | 69,058 | 80,019 | ||||||
Net Carrying amount of convertible debt | $ | 390,942 | $ | 379,981 | ||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Contractual interest expense on the coupon | $ | 1,438 | $ | 1,438 | $ | 4,313 | $ | 4,313 | ||||||||
Amortization of the discount component recognized as interest expense | 3,699 | 3,520 | 10,961 | 10,431 | ||||||||||||
Total interest expense on the convertible debt | $ | 5,137 | $ | 4,958 | $ | 15,274 | $ | 14,744 | ||||||||
Proceeds from the Credit Facility may be used for general corporate purposes and working capital. Teradyne incurred $2.3 million in costs related to the revolving credit facility. These costs are being amortized over the five-year term of the revolving credit facility and are included in interest expense in the statements of operations. As of May 10, 2019, Teradyne has not borrowed any funds under the Credit Facility.
The interest rates applicable to loans under the Credit Facility are, at Teradyne’s option, equal to either a base rate plus a margin ranging from 0.00% to 1.00% per annum or LIBOR plus a margin ranging from 1.00% to 2.00% per annum, based on the Consolidated Leverage Ratio of Teradyne and its Restricted Subsidiaries. In addition, Teradyne will pay a commitment fee on the unused portion of the commitments under the Credit Facility ranging from 0.125% to 0.350% per annum, based on the then applicable Consolidated Leverage Ratio.
Teradyne is not required to repay any loans under the Credit Facility prior to maturity, subject to certain customary exceptions. Teradyne is permitted to prepay all or any portion of the loans under the Credit Facility prior to maturity without premium or penalty, other than customary LIBOR breakage costs.
The Credit Agreement contains customary events of default, representations, warranties and affirmative and negative covenants that, among other things, limit Teradyne’s and its Restricted Subsidiaries’ ability to sell assets, grant liens on assets, incur other secured indebtedness and make certain investments and restricted payments, all subject to exceptions set forth in the Credit Agreement. The Credit Agreement also requires Teradyne to satisfy two financial ratios measured as of the end of each fiscal quarter: a consolidated leverage ratio and an interest coverage ratio. As of May 10, 2019, Teradyne was in compliance with all covenants.
The Credit Facility is guaranteed by certain of Teradyne’s domestic subsidiaries and collateralized by assets of Teradyne and such subsidiaries, including a pledge of 65% of the capital stock of certain foreign subsidiaries.
March 31, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Contract manufacturer and supplier prepayments | $ | 147,015 | $ | 131,642 | ||||
Prepaid taxes | 13,404 | 9,646 | ||||||
Prepaid maintenance and other services | 7,703 | 8,487 | ||||||
Other prepayments | 16,111 | 12,744 | ||||||
|
|
|
| |||||
Total prepayments | $ | 184,233 | $ | 162,519 | ||||
|
|
|
|
September 29, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Contract manufacturer and supplier prepayments | $ | 136,470 | $ | 131,642 | ||||
Prepaid taxes | 9,754 | 9,646 | ||||||
Prepaid maintenance and other services | 8,310 | 8,487 | ||||||
Other prepayments | 17,180 | 12,744 | ||||||
Total prepayments | $ | 171,714 | $ | 162,519 | ||||
March 31, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Maintenance and training | $ | 58,394 | $ | 58,362 | ||||
Extended warranty | 27,242 | 27,422 | ||||||
Customer advances, undelivered performance obligations and other | 31,971 | 24,677 | ||||||
|
|
|
| |||||
Total deferred revenue and customer advances | $ | 117,607 | $ | 110,461 | ||||
|
|
|
|
September 29, 2019 | December 31, 2018 | |||||||
(in thousands) | ||||||||
Maintenance and training | $ | 61,048 | $ | 58,362 | ||||
Extended warranty | 29,937 | 27,422 | ||||||
Customer advances, undelivered performance obligations and other | 47,543 | 24,677 | ||||||
Total deferred revenue and customer advances | $ | 138,528 | $ | 110,461 | ||||
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Balance at beginning of period | $ | 7,909 | $ | 8,200 | ||||
Acquisition | 14 | — | ||||||
Accruals for warranties issued during the period | 3,066 | 3,063 | ||||||
Accruals related topre-existing warranties | 1,330 | (139 | ) | |||||
Settlements made during the period | (4,567 | ) | (3,576 | ) | ||||
|
|
|
| |||||
Balance at end of period | $ | 7,752 | $ | 7,548 | ||||
|
|
|
|
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, | September 30, | September 29, | September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 8,133 | $ | 7,136 | $ | 7,909 | $ | 8,200 | ||||||||
Acquisition | — | — | 14 | 41 | ||||||||||||
Accruals for warranties issued during the period | 3,508 | 2,760 | 10,008 | 9,171 | ||||||||||||
Accruals related to pre-existing warranties | 1,132 | 282 | 3,156 | 109 | ||||||||||||
Settlements made during the period | (4,265 | ) | (2,675 | ) | (12,579 | ) | (10,018 | ) | ||||||||
Balance at end of period | $ | 8,508 | $ | 7,503 | $ | 8,508 | $ | 7,503 | ||||||||
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Balance at beginning of period | $ | 27,422 | $ | 24,438 | ||||
Deferral of new extended warranty revenue | 5,820 | 5,139 | ||||||
Recognition of extended warranty deferred revenue | (6,000 | ) | (4,987 | ) | ||||
|
|
|
| |||||
Balance at end of period | $ | 27,242 | $ | 24,590 | ||||
|
|
|
|
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Balance at beginning of period | $ | 28,716 | $ | 25,971 | $ | 27,422 | $ | 24,438 | ||||||||
Deferral of new extended warranty revenue | 5,666 | 7,232 | 16,962 | 19,072 | ||||||||||||
Recognition of extended warranty deferred revenue | (4,445 | ) | (5,586 | ) | (14,447 | ) | (15,893 | ) | ||||||||
Balance at end of period | $ | 29,937 | $ | 27,617 | $ | 29,937 | $ | 27,617 | ||||||||
Time-based restricted stock unit awards granted to employees vest in equal annual installments over four years. Restricted stock unit awards granted toone yearone-year period, with 100% of the award vesting on the earlier of (a) the first anniversary of the grant date or (b) the date of the following year’s Annual Meeting of Shareholders. Teradyne expenses the cost of the restricted stock unit awards subject to time-based vesting, which is determined to be the fair market value of the shares at the date of grant, ratably over the period during which the restrictions lapse.
Teradyne grants performance-based
In January
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
Risk-free interest rate | 2.6 | % | 2.2 | % | ||||
Teradyne volatility-historical | 31.8 | % | 26.8 | % | ||||
NYSE Composite Index volatility-historical | 12.0 | % | 12.4 | % | ||||
Dividend yield | 1.0 | % | 0.8 | % |
For the Nine Months Ended | ||||||||
September 29, 2019 | September 30, 2018 | |||||||
Risk-free interest rate | 2.6 | % | 2.2 | % | ||||
Teradyne volatility-historical | 31.9 | % | 26.8 | % | ||||
NYSE Composite Index volatility-historical | 11.9 | % | 12.4 | % | ||||
Dividend yield | 1.0 | % | 0.8 | % |
grant
During the three months ended April 1, 2018, Teradyne granted 0.5 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of $46.58 and 0.1 million of service-based stock options to executive officers at a weighted average grant date fair value of $12.17.
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
Expected life (years) | 5.0 | 5.0 | ||||||
Risk-free interest rate | 2.6 | % | 2.4 | % | ||||
Volatility-historical | 30.1 | % | 26.4 | % | ||||
Dividend yield | 1.0 | % | 0.8 | % |
For the Nine Months Ended | ||||||||
September 29, 2019 | September 30, 2018 | |||||||
Expected life (years) | 5.0 | 5.0 | ||||||
Risk-free interest rate | 2.5 | % | 2.4 | % | ||||
Volatility-historical | 30.1 | % | 26.4 | % | ||||
Dividend yield | 1.0 | % | 0.8 | % |
Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Marketable Securities | Retirement Plans Prior Service Credit | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended March 31, 2019 | ||||||||||||||||
Balance at December 31, 2018, net of tax of $0, $(521), $(1,081), respectively | $ | (12,523 | ) | $ | (1,845 | ) | $ | 1,328 | $ | (13,040 | ) | |||||
Other comprehensive income before reclassifications, net of tax of $0, $577, $0, respectively | (4,659 | ) | 2,100 | — | (2,559 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(20), $(11), respectively | — | (70 | ) | (37 | ) | (107 | ) | |||||||||
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|
|
|
|
|
|
| |||||||||
Net current period other comprehensive income (loss), net of tax of $0, $557, $(11), respectively | (4,659 | ) | 2,030 | (37 | ) | (2,666 | ) | |||||||||
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|
|
|
|
|
| |||||||||
Balance at March 31, 2019, net of tax of $0, $36, $(1,092), respectively | $ | (17,182 | ) | $ | 185 | $ | 1,291 | $ | (15,706 | ) | ||||||
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|
|
Foreign Currency Translation Adjustments | Unrealized Gains (Losses) on Marketable Securities | Retirement Plans Prior Service Credit | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended April 1, 2018 | ||||||||||||||||
Balance at December 31, 2017, net of tax of $0, $1,815, $(932), respectively | $ | 15,919 | $ | 1,362 | $ | 1,495 | $ | 18,776 | ||||||||
Other comprehensive income (loss) before reclassifications, net of tax of $0, $(718), $0, respectively | 10,541 | (2,687 | ) | — | 7,854 | |||||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $78, $(18), respectively | — | 1,668 | (61 | ) | 1,607 | |||||||||||
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|
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|
|
|
|
| |||||||||
Net current period other comprehensive income (loss), net of tax of $0, $(640), $(18), respectively | 10,541 | (1,019 | ) | (61 | ) | 9,461 | ||||||||||
Reclassification of income tax effects from 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 | ) | ||||||||||
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|
|
|
|
|
|
| |||||||||
Balance as April 1, 2018, net of tax of $0, $(418), $(1,028), respectively | $ | 26,460 | $ | (2,091 | ) | $ | 1,512 | $ | 25,881 | |||||||
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|
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|
|
|
Foreign Currency Translation Adjustment | Unrealized Gains (Losses) on Marketable Securities | Retirement Plans Prior Service Credit | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Nine Months Ended September 29, 2019 | ||||||||||||||||
Balance at December 31, 2018, net of tax of $0, $(521), $(1,081), | $ | (12,523 | ) | $ | (1,845 | ) | $ | 1,328 | $ | (13,040 | ) | |||||
Other comprehensive loss before reclassifications, net of tax of $0, $1,762, $0, respectively | (17,019 | ) | 6,391 | — | (10,628 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $( 125 ), $(32), respectively | — | (442 | ) | (111 | ) | (553 | ) | |||||||||
Net current period other comprehensive income (loss), net of tax of $0, $1,637, $(32), respectively | (17,019 | ) | 5,949 | (111 | ) | (11,181 | ) | |||||||||
Balance at September 29, 2019, net of tax of $0, $1,116, $(1,113), | $ | (29,542 | ) | $ | 4,104 | $ | 1,217 | $ | (24,221 | ) | ||||||
Foreign Currency Translation Adjustments | Unrealized Gains (Losses) on Marketable Securities | Retirement Plans Prior Service Credit | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Nine Months Ended September 30, 2018 | ||||||||||||||||
Balance at December 31, 2017, net of tax of $0, $1,815, $(932), respectively | $ | 15,919 | $ | 1,362 | $ | 1,495 | $ | 18,776 | ||||||||
Other comprehensive income (loss) before reclassifications, net of tax of $0, $(806), $0, respectively | (11,568 | ) | (2,555 | ) | — | (14,123 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(6), $(53), respectively | — | 1,411 | (184 | ) | 1,227 | |||||||||||
Net current period other comprehensive income (loss), net of tax of $0, $(812), $(53), respectively | (11,568 | ) | (1,144 | ) | (184 | ) | (12,896 | ) | ||||||||
Reclassification of income tax effects from the Tax Reform Act, net of tax of $0, $(691), $(78), respectively | — | 691 | 78 | 769 | ||||||||||||
Reclassification of unrealized gains on equity securities, net of tax of $0, $(902), $0, respectively | — | (3,125 | ) | — | (3,125 | ) | ||||||||||
Balance a t September 30, 2018, net of tax of $0, $(590), $(1,063), respectively | $ | 4,351 | $ | (2,216 | ) | $ | 1,389 | $ | 3,524 | |||||||
Details about Accumulated Other Comprehensive Income Components | For the Three Months Ended | Affected Line Item in the Statements of Operations | ||||||||
March 31, 2019 | April 1, 2018 | |||||||||
(in thousands) | ||||||||||
Available-for-sale marketable securities: | ||||||||||
Unrealized gains (losses), net of tax of $20, $(78), respectively | $ | 70 | $ | (1,668 | ) | Interest (expense) income | ||||
Defined benefit pension and postretirement plans: | ||||||||||
Amortization of prior service benefit, net of tax of $11, $18, respectively | 37 | 61 | (a) | |||||||
|
|
|
| |||||||
Total reclassifications, net of tax of $31, $(60), respectively | $ | 107 | $ | (1,607 | ) | Net income | ||||
|
|
|
|
For the Three Months Ended | For the Nine Months Ended | Affected Line Item in the Statements of Operations | |||||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | ||||||||||||||||
Details about Accumulated Other Comprehensive Income | (in thousands) | ||||||||||||||||||
Available-for-sale marketable securities: | |||||||||||||||||||
Unrealized gains (losses), net of tax of $99, $17, $125, $6, respectively | $ | 345 | $ | 57 | $ | 442 | $ | (1,411 | ) | Interest income (expense) | |||||||||
Defined benefit pension and postretirement plans: | |||||||||||||||||||
Amortization of prior service benefit, net of tax of $11, $18, $32, $53 respectively | 37 | 61 | 111 | 184 | (a) | ||||||||||||||
Total reclassifications, net of tax of $110, $35, $157, $59, respectively | $ | 382 | $ | 118 | $ | 553 | $ | (1,227 | ) | Net income | |||||||||
(a) | The amortization of prior service benefit is included in the computation of net periodic pension cost and postretirement benefit. See Note R: “Retirement Plans.” |
Industrial Automation | System Test | Wireless Test | Semiconductor Test | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance at December 31, 2018 | ||||||||||||||||||||
Goodwill | $ | 363,358 | $ | 158,699 | $ | 361,819 | $ | 260,540 | $ | 1,144,416 | ||||||||||
Accumulated impairment losses | — | (148,183 | ) | (353,843 | ) | (260,540 | ) | (762,566 | ) | |||||||||||
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| |||||||||||
363,358 | 10,516 | 7,976 | — | 381,850 | ||||||||||||||||
Lemsys acquisition | — | — | — | 1,145 | 1,145 | |||||||||||||||
Foreign currency translation adjustment | (3,494 | ) | — | — | 12 | (3,482 | ) | |||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||
Balance at March 31, 2019 | ||||||||||||||||||||
Goodwill | 359,864 | 158,699 | 361,819 | 261,697 | 1,142,079 | |||||||||||||||
Accumulated impairment losses | — | (148,183 | ) | (353,843 | ) | (260,540 | ) | (762,566 | ) | |||||||||||
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| |||||||||||
$ | 359,864 | $ | 10,516 | $ | 7,976 | $ | 1,157 | $ | 379,513 | |||||||||||
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|
|
|
|
|
|
|
Industrial Automation | System Test | Wireless Test | Semiconductor Test | Total | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Balance at December 31, 2018 | ||||||||||||||||||||
Goodwill | $ | 363,358 | $ | 158,699 | $ | 361,819 | $ | 260,540 | $ | 1,144,416 | ||||||||||
Accumulated impairment losses | — | (148,183 | ) | (353,843 | ) | (260,540 | ) | (762,566 | ) | |||||||||||
363,358 | 10,516 | 7,976 | — | 381,850 | ||||||||||||||||
Lemsys acquisition | — | — | — | 1,428 | 1,428 | |||||||||||||||
Foreign currency translation adjustment | (12,572 | ) | — | — | 11 | (12,561 | ) | |||||||||||||
Balance at September 29, 2019 | ||||||||||||||||||||
Goodwill | 350,786 | 158,699 | 361,819 | 261,979 | 1,133,283 | |||||||||||||||
Accumulated impairment losses | — | (148,183 | ) | (353,843 | ) | (260,540 | ) | (762,566 | ) | |||||||||||
$ | 350,786 | $ | 10,516 | $ | 7,976 | $ | 1,439 | $ | 370,717 | |||||||||||
March 31, 2019 | ||||||||||||||||
Gross Carrying Amount (1) | Accumulated Amortization | Foreign Currency Translation Adjustment | Net Carrying Amount | |||||||||||||
(in thousands) | ||||||||||||||||
Developed technology | $ | 337,218 | $ | (259,129 | ) | $ | (4,812 | ) | $ | 73,277 | ||||||
Customer relationships | 100,743 | (85,469 | ) | (408 | ) | 14,866 | ||||||||||
Tradenames and trademarks | 64,670 | (32,897 | ) | (973 | ) | 30,800 | ||||||||||
Non-compete agreement | 320 | (320 | ) | — | — | |||||||||||
Backlog | 780 | (349 | ) | (2 | ) | 429 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total intangible assets | $ | 503,731 | $ | (378,164 | ) | $ | (6,195 | ) | $ | 119,372 | ||||||
|
|
|
|
|
|
|
|
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 | ||||||
|
|
|
|
|
|
|
|
September 29, 2019 | ||||||||||||||||
Gross Carrying Amount (1) (2) | Accumulated Amortization (2) | Foreign Currency Translation Adjustment | Net Carrying Amount | |||||||||||||
(in thousands) | ||||||||||||||||
Developed technology | $ | 337,198 | $ | (272,317 | ) | $ | (6,461 | ) | $ | 58,420 | ||||||
Customer relationships | 100,313 | (89,540 | ) | (562 | ) | 10,211 | ||||||||||
Tradenames and trademarks | 64,670 | (35,368 | ) | (1,360 | ) | 27,942 | ||||||||||
Total intangible assets | $ | 502,181 | $ | (397,225 | ) | $ | (8,383 | ) | $ | 96,573 | ||||||
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 | ||||||
(1) |
have been added in January 2019 . |
(2) | $0.7 million of amortizable intangible assets became fully amortized and have been removed from the gross carrying amount and accumulated amortization. |
$11.1 million and $28.6 million, respectively, for the three and nine months ended September 30, 2018.
Year | Amortization Expense | |||
(in thousands) | ||||
2019 (remainder) | 29,184 | |||
2020 | 24,852 | |||
2021 | 14,707 | |||
2022 | 13,815 | |||
2023 | 13,339 | |||
Thereafter | 23,475 |
Amortization Expense | ||||
Year | (in thousands) | |||
2019 (remainder) | 8,694 | |||
2020 | 24,232 | |||
2021 | 14,340 | |||
2022 | 13,447 | |||
2023 | 12,976 | |||
Thereafter | 22,884 |
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands, except per share amounts) | ||||||||
Net income for basic and diluted net income per share | $ | 109,138 | $ | 86,974 | ||||
|
|
|
| |||||
Weighted average common shares-basic | 173,532 | 195,255 | ||||||
Effect of dilutive potential common shares: | ||||||||
Incremental shares from assumed conversion of convertible notes (1) | 2,186 | 4,398 | ||||||
Convertible note hedge warrant shares (2) | — | 1,830 | ||||||
Restricted stock units | 1,021 | 1,666 | ||||||
Stock options | 222 | 321 | ||||||
Employee stock purchase plan | 11 | 14 | ||||||
|
|
|
| |||||
Dilutive potential common shares | 3,440 | 8,229 | ||||||
|
|
|
| |||||
Weighted average common shares-diluted | 176,972 | 203,484 | ||||||
|
|
|
| |||||
Net income per common share-basic | $ | 0.63 | $ | 0.45 | ||||
|
|
|
| |||||
Net income per common share-diluted | $ | 0.62 | $ | 0.43 | ||||
|
|
|
|
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
Net income for basic and diluted net income per share | $ | 135,860 | $ | 119,981 | $ | 342,395 | $ | 307,991 | ||||||||
Weighted average common shares-basic | 169,641 | 185,744 | 171,471 | 190,576 | ||||||||||||
Effect of dilutive potential common shares: | ||||||||||||||||
Incremental shares from assumed conversion of convertible notes (1) | 5,800 | 3,025 | 4,117 | 3,356 | ||||||||||||
Convertible note hedge warrant shares (2) | 3,580 | 108 | 1,786 | 646 | ||||||||||||
Restricted stock units | 1,313 | 1,331 | 1,112 | 1,406 | ||||||||||||
Stock options | 155 | 275 | 186 | 290 | ||||||||||||
Employee stock purchase plan | 5 | 22 | 13 | 26 | ||||||||||||
Dilutive potential common shares | 10,853 | 4,761 | 7,214 | 5,724 | ||||||||||||
Weighted average common shares-diluted | 180,494 | 190,505 | 178,685 | 196,300 | ||||||||||||
Net income per common share-basic | $ | 0.80 | $ | 0.65 | $ | 2.00 | $ | 1.62 | ||||||||
Net income per common share-diluted | $ | 0.75 | $ | 0.63 | $ | 1.92 | $ | 1.57 | ||||||||
(1) | Incremental shares from assumed conversion of the convertible notes |
(2) | Convertible |
Wireless Test
and expenses
For the Three Months Ended | ||||||||||||||||
March 31, 2019 | April 1, 2018 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in thousands) | ||||||||||||||||
Service cost | $ | 405 | $ | 188 | $ | 571 | $ | 213 | ||||||||
Interest cost | 1,795 | 173 | 2,997 | 186 | ||||||||||||
Expected return on plan assets | (1,511 | ) | (7 | ) | (3,369 | ) | (5 | ) | ||||||||
Amortization of prior service cost | — | — | 14 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total net periodic pension cost | $ | 689 | $ | 354 | $ | 213 | $ | 394 | ||||||||
|
|
|
|
|
|
|
|
For the Three Months Ended | ||||||||||||||||
September | September 30, 2018 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in thousands) | ||||||||||||||||
Service cost | $ | 402 | $ | 183 | $ | 538 | $ | 203 | ||||||||
Interest cost | 1,797 | 168 | 1,750 | 177 | ||||||||||||
Expected return on plan assets | (1,510 | ) | (7 | ) | (1,551 | ) | (5 | ) | ||||||||
Amortization of prior service cost | — | — | 14 | — | ||||||||||||
Settlement loss | — | — | 267 | — | ||||||||||||
Total net periodic pension cost | $ | 689 | $ | 344 | $ | 1,018 | $ | 375 | ||||||||
For the Nine Months Ended | ||||||||||||||||
September 29, 2019 | September 30, 2018 | |||||||||||||||
United States | Foreign | United States | Foreign | |||||||||||||
(in thousands) | ||||||||||||||||
Service cost | $ | 1,206 | $ | 550 | $ | 1,657 | $ | 609 | ||||||||
Interest cost | 5,392 | 505 | 7,188 | 532 | ||||||||||||
Expected return on plan assets | (4,531 | ) | (21 | ) | (7,484 | ) | (15 | ) | ||||||||
Amortization of prior service cost | — | — | 43 | — | ||||||||||||
Net actuarial loss (gain) | 252 | — | (189 | ) | — | |||||||||||
Settlement loss | — | — | 345 | — | ||||||||||||
Total net periodic pension cost | $ | 2,319 | $ | 1,034 | $ | 1,560 | $ | 1,126 | ||||||||
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Service cost | $ | 9 | $ | 9 | ||||
Interest cost | 85 | 50 | ||||||
Amortization of prior service credit | (48 | ) | (93 | ) | ||||
Special termination benefits | — | 1,626 | ||||||
|
|
|
| |||||
Total net periodic postretirement benefit cost | $ | 46 | $ | 1,592 | ||||
|
|
|
|
For the Three Months | For the Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Service cost | $ | 10 | $ | 10 | $ | 31 | $ | 29 | ||||||||
Interest cost | 87 | 49 | 260 | 147 | ||||||||||||
Amortization of prior service credit | (48 | ) | (93 | ) | (143 | ) | (280 | ) | ||||||||
Net actuarial loss | — | — | 196 | 40 | ||||||||||||
Special termination benefits | — | 601 | — | 3,419 | ||||||||||||
Total net periodic postretirement benefit cost | $ | 49 | $ | 567 | $ | 344 | $ | 3,355 | ||||||||
The
The decrease in the effective tax rate from the three months ended April 1, 2018 to the three months ended March 31, 2019 resulted from discrete tax benefits from the release of reserves for uncertain tax positions, increases in benefits related to the U.S. foreign derived intangible income deduction and U.S. research and development tax credits, a decrease in expense related to the uncertain tax positions for transfer pricing and a reduction in discrete tax expense associated with remeasurement of deferred tax assets as a result of reductions in tax rates. These reductions were partially offset by a projected shift in the geographic distribution of income, which increases the income subject to taxation in higher tax rate jurisdictions relative to lower tax rate jurisdictions, an increase in the U.S. global intangiblelow-taxed income inclusion and a reduction in the discrete benefit from stock based compensation.
The effective tax rate for the three months ended March 31, 2019 and April 1, 2018 was lower than the expected federal statutory rate because of the favorable effect of statutory rates applicable to income earned outside the United States, the benefit from U.S. research and development tax credits, the benefit from stock based compensation deductions, and the benefit of the U.S. foreign derived intangible income deduction partially offset by the U.S. global intangiblelow-taxed income inclusion. The effective tax rate for the three months ended March 31, 2019 was also reduced by discrete tax benefits from the release of reserves for uncertain tax positions. The effective rate for the three months ended April 1, 2018 was also increased by additions to the uncertain tax positions for transfer pricing.
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, 2019 | September 30, 2018 | September 29, 2019 | September 30, 2018 | |||||||||||||
US statutory federal tax rate | 21.0 | % | 21.0 | % | 21.0 | % | 21.0 | % | ||||||||
Discrete expense related to U.S. transition tax | — | — | 3.9 | 0.0 | ||||||||||||
Foreign taxes | (5.1 | ) | (4.4 | ) | (4.9 | ) | (3.7 | ) | ||||||||
International provisions of the U.S. Tax Cuts and Jobs | (2.8 | ) | (1.4 | ) | (0.6 | ) | (1.4 | ) | ||||||||
Tax credits | (1.8 | ) | (1.9 | ) | (2.2 | ) | (2.1 | ) | ||||||||
Discrete benefit related to equity compensation | (0.7 | ) | (0.1 | ) | (1.5 | ) | (2.2 | ) | ||||||||
Discrete benefit related to release of reserves for uncertain tax positions | — | (0.1 | ) | (6.9 | ) | — | ||||||||||
Other, net | (0.1 | ) | 1.7 | 0.4 | 2.0 | |||||||||||
Effective tax rate | 10.5 | % | 14.8 | % | 9.2 | % | 13.6 | % | ||||||||
Discrete tax items recorded in the three months ended March 31, 2019 amounted to $30.2 million of net benefit. The $30.2 million of discrete tax benefit consisted of $28.8 million of benefit resulting from the release of reserves for uncertain tax positions, $3.8 million of benefit from stock based compensation, $2.9 million of expense from an increase in U.S. state valuation allowances and $0.5 million of other discrete tax benefit. The release of reserves for uncertain tax positions and the increase in U.S. state valuation allowances were associated with the conclusion of the U.S. Federal income tax audit for the year ended December 31, 2015.
Discrete tax items recorded in the three months ended April 1, 2018 amounted to $6.0 million of net benefit. The $6.0 million of discrete tax benefit consisted of $7.6 million of benefit from stock based compensation, $1.7 million of expense from the write down of deferred tax assets as a result of reductions in tax rates, $0.7 million of other discrete tax benefits and $0.6 million of other discrete tax expenses.
reserves as of
manufacturing and marketing of collaborative robotic arms, autonomous mobile robots and advanced robotic control software. The Wireless Test segment includes operations related to the design, manufacturing and marketing of wireless test products and services.
2018, and Note B: “Accounting Policies” in this filing for any changes in the three and nine months ended September 29, 2019.
Semiconductor Test | Industrial Automation | System Test | Wireless Test | Corporate and Other | Consolidated | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Three Months Ended March 31, 2019 | ||||||||||||||||||||||||
Revenues | $ | 340,853 | $ | 66,136 | $ | 58,220 | $ | 29,041 | $ | (151 | ) | $ | 494,099 | |||||||||||
Income (loss) before income taxes (1)(2) | 83,049 | (5,295 | ) | 15,340 | 3,628 | (2,743 | ) | 93,979 | ||||||||||||||||
Total assets (3) | 770,967 | 596,899 | 98,916 | 73,066 | 1,076,795 | 2,616,643 | ||||||||||||||||||
Three Months Ended April 1, 2018 | ||||||||||||||||||||||||
Revenues | $ | 373,328 | $ | 48,834 | $ | 43,019 | $ | 22,507 | $ | (221 | ) | $ | 487,467 | |||||||||||
Income before income taxes (1)(2) | 88,079 | 784 | 5,888 | 464 | 605 | 95,820 | ||||||||||||||||||
Total assets (3) | 758,737 | 406,557 | 90,785 | 59,739 | 1,679,375 | 2,995,193 |
Semiconductor Test | Industrial Automation | System Test | Wireless Test | Corporate and Other | Consolidated | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Three Months Ended September 29, 2019 | ||||||||||||||||||||||||
Revenues | $ | 397,737 | $ | 68,892 | $ | 73,305 | $ | 42,264 | $ | (160 | ) | $ | 582,038 | |||||||||||
Income (loss) before income taxes (1)(2) | 116,633 | (1,645 | ) | 24,381 | 11,182 | 1,182 | 151,733 | |||||||||||||||||
Total assets (3) | 757,422 | 580,635 | 126,452 | 94,789 | 1,139,493 | 2,698,791 | ||||||||||||||||||
Three Months Ended September 30, 2018 | ||||||||||||||||||||||||
Revenues | $ | 417,297 | $ | 65,913 | $ | 49,606 | $ | 34,304 | $ | (272 | ) | $ | 566,848 | |||||||||||
Income (loss) before income taxes (1)(2) | 126,638 | 940 | 9,056 | 7,843 | (3,633 | ) | 140,844 | |||||||||||||||||
Total assets (3) | 709,616 | 617,741 | 83,160 | 79,986 | 1,391,984 | 2,882,487 | ||||||||||||||||||
Nine Months Ended September 29, 2019 | ||||||||||||||||||||||||
Revenues | $ | 1,113,489 | $ | 209,753 | $ | 204,934 | $ | 112,541 | $ | (402 | ) | $ | 1,640,315 | |||||||||||
Income (loss) before income taxes (1)(2) | 291,037 | (10,670 | ) | 63,254 | 25,740 | 7,528 | 376,889 | |||||||||||||||||
Total assets (3) | 757,422 | 580,635 | 126,452 | 94,789 | 1,139,493 | 2,698,791 | ||||||||||||||||||
Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||
Revenues | $ | 1,150,712 | $ | 176,803 | $ | 162,308 | $ | 92,023 | $ | (602 | ) | $ | 1,581,244 | |||||||||||
Income (loss) before income taxes (1)(2) | 305,876 | (1,198 | ) | 35,296 | 18,615 | (1,914 | ) | 356,675 | ||||||||||||||||
Total assets (3) | 709,616 | 617,741 | 83,160 | 79,986 | 1,391,984 | 2,882,487 |
(1) | Included in Corporate and Other are: contingent consideration adjustments, severance charges, interest income |
(2) | Included in the income (loss) before income taxes for each of the segments are charges and credits related to restructuring and other and inventory charges. |
(3) | Total business assets are directly attributable to each business. Corporate assets consist of cash and cash equivalents, marketable securities and certain other assets. |
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Cost of revenues—inventory charge | $ | 1,174 | $ | 2,166 | ||||
Restructuring and other—employee severance | 567 | 3,761 |
Included in the Industrial Automation segment are charges in the following line items in the statements of operations:
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Restructuring and other—acquisition related expenses and compensation | $ | 1,261 | $ | — | ||||
Cost of revenues—inventory charge | 416 | 200 |
Included in the System Test segment are charges in the following line item in the statements of operations:
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Cost of revenues—inventory charge | $ | 468 | $ | 320 |
Included in the Wireless Test segment are charges in the following line items in the statements of operations:
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Cost of revenues—inventory charge | $ | 339 | $ | 836 |
Included in Corporate and Other are charges and credits in the following line items in the statements of operations:
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
(in thousands) | ||||||||
Restructuring and other—MiR contingent consideration adjustment | $ | 3,003 | $ | — | ||||
Restructuring and other—Universal Robots contingent consideration adjustment | — | (4,968 | ) | |||||
Restructuring and other—acquisition related expenses | — | 774 |
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, | September 30, | September 29, | September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands) | ||||||||||||||||
Semiconductor Test: | ||||||||||||||||
Cost of revenues—inventory charge | $ | 1,867 | $ | 2,071 | $ | 5,319 | $ | 5,851 | ||||||||
Restructuring and other—employee severance | — | 1,716 | 1,009 | 7,657 | ||||||||||||
Industrial Automation: | ||||||||||||||||
Restructuring and other—acquisition related expenses | $ | — | $ | 811 | $ | 1,330 | $ | 811 | ||||||||
Restructuring and other—employee severance | — | — | 604 | — | ||||||||||||
Cost of revenues—inventory charge | — | — | 508 | 680 | ||||||||||||
System Test: | ||||||||||||||||
Cost of revenues—inventory charge | $ | — | $ | — | $ | 1,129 | $ | 812 | ||||||||
Wireless Test: | ||||||||||||||||
Cost of revenues—inventory charge | $ | 724 | $ | 716 | $ | 1,892 | $ | 2,179 | ||||||||
Corporate and Other: | ||||||||||||||||
Restructuring and other—MiR contingent consideration adjustment | $ | (7,759 | ) | $ | — | $ | (16,427 | ) | $ | — | ||||||
Selling and administrative – equity modification charge | 2,108 | — | 2,108 | — | ||||||||||||
Restructuring and other—acquisition related expenses and compensation | 816 | — | 928 | 3,318 | ||||||||||||
Restructuring and other—Universal Robots contingent consideration adjustment | — | (768 | ) | — | (9,236 | ) |
$39.18.
$15.3 million and $46.3 million, respectively.
$16.6 million and $51.3 million, respectively.
Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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. One customer drives 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.
The sales of our products and services are dependent, to a large degree, on these customers who are subject to cyclical trends in the demand for their products. These cyclical periods have had, and will continue to have, a significant effect on our business because our customers often delay or accelerate purchases in reaction to changes in their businesses and to demand fluctuations in the semiconductor, electronics and electronicsindustrial automation industries. Historically, these demand fluctuations have resulted in significant variations in our results of operations.
expenses.
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
Percentage of revenues: | ||||||||
Revenues: | ||||||||
Products | 80 | % | 83 | % | ||||
Services | 20 | 17 | ||||||
|
|
|
| |||||
Total revenues | 100 | 100 | ||||||
Cost of revenues: | ||||||||
Cost of products | 33 | 37 | ||||||
Cost of services | 8 | 8 | ||||||
|
|
|
| |||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 42 | 45 | ||||||
|
|
|
| |||||
Gross profit | 58 | 55 | ||||||
Operating expenses: | ||||||||
Selling and administrative | 21 | 19 | ||||||
Engineering and development | 16 | 15 | ||||||
Acquired intangible assets amortization | 2 | 2 | ||||||
Restructuring and other | 1 | — | ||||||
|
|
|
| |||||
Total operating expenses | 39 | 35 | ||||||
|
|
|
| |||||
Income from operations | 19 | 20 | ||||||
Non-operating (income) expense: | ||||||||
Interest income | (2 | ) | (1 | ) | ||||
Interest expense | 1 | 1 | ||||||
Other (income) expense, net | — | — | ||||||
|
|
|
| |||||
Income before income taxes | 19 | 20 | ||||||
Income tax provision | (3 | ) | 2 | |||||
|
|
|
| |||||
Net income | 22 | % | 18 | % | ||||
|
|
|
|
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
September 29, | September 30, | September 29, | September 30, | |||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Percentage of revenues: | ||||||||||||||||
Revenues: | ||||||||||||||||
Products | 84 | % | 83 | % | 82 | % | 83 | % | ||||||||
Services | 16 | 17 | 18 | 17 | ||||||||||||
Total revenues | 100 | 100 | 100 | 100 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of products | 34 | 34 | 34 | 35 | ||||||||||||
Cost of services | 7 | 7 | 8 | 7 | ||||||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 41 | 41 | 42 | 42 | ||||||||||||
Gross profit | 59 | 59 | 58 | 58 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and administrative | 19 | 18 | 20 | 18 | ||||||||||||
Engineering and development | 13 | 14 | 14 | 14 | ||||||||||||
Acquired intangible assets amortization | 2 | 2 | 2 | 2 | ||||||||||||
Restructuring and other | (1 | ) | — | (1 | ) | — | ||||||||||
Total operating expenses | 33 | 34 | 35 | 35 | ||||||||||||
Income from operations | 27 | 25 | 23 | 23 | ||||||||||||
Non-operating (income) expense: | ||||||||||||||||
Interest income | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||
Interest expense | 1 | 1 | 1 | 1 | ||||||||||||
Other (income) expense, net | — | 1 | — | — | ||||||||||||
Income before income taxes | 26 | 25 | 23 | 23 | ||||||||||||
Income tax provision | 3 | 4 | 2 | 3 | ||||||||||||
Net income | 23 | % | 21 | % | 21 | % | 19 | % | ||||||||
First
For the Three Months Ended | ||||||||||||
March 31, 2019 | April 1, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Semiconductor Test | $ | 340.9 | $ | 373.3 | $ | (32.4 | ) | |||||
Industrial Automation | 66.1 | 48.8 | 17.3 | |||||||||
System Test | 58.2 | 43.0 | 15.2 | |||||||||
Wireless Test | 29.0 | 22.5 | 6.5 | |||||||||
|
|
|
|
|
| |||||||
$ | 494.1 | $ | 487.5 | $ | 6.6 | |||||||
|
|
|
|
|
|
For the Three Months Ended | ||||||||||||
September 29, | September 30, | Dollar | ||||||||||
2019 | 2018 | Change | ||||||||||
(in millions) | ||||||||||||
Semiconductor Test | $ | 397.7 | $ | 417.3 | $ | (19.6 | ) | |||||
System Test | 73.3 | 49.6 | 23.7 | |||||||||
Industrial Automation | 68.9 | 65.9 | 3.0 | |||||||||
Wireless Test | 42.3 | 34.3 | 8.0 | |||||||||
Corporate and Other | (0.2 | ) | (0.3 | ) | 0.1 | |||||||
$ | 582.0 | $ | 566.8 | $ | 15.2 | |||||||
5G infrastructure. The increase in System Test revenues of $15.2$23.7 million, or 35.3%47.8%, was primarily due to higher sales in Storage Test of 3.5” hard disk drive and system level testers, higher sales in Defense/Aerospace test instrumentation and systems, and higher sales in Production Board Test.Test from higher 5G demand. The increase in Industrial Automation revenues of $3.0 million, or 4.6%, was due to higher demand for collaborative autonomous mobile robots. The increase in Wireless Test revenues of $6.5$8.0 million, or 28.9%23.3%, was primarily due to higher demand for millimeter wave test products driven by new wireless standards and cellular test products.
5G.
For the Three Months Ended | ||||||||
March 31, 2019 | April 1, 2018 | |||||||
Taiwan | 17 | % | 28 | % | ||||
China | 17 | 17 | ||||||
United States | 15 | 13 | ||||||
Japan | 12 | 5 | ||||||
Europe | 11 | 10 | ||||||
Korea | 10 | 11 | ||||||
Singapore | 6 | 3 | ||||||
Philippines | 4 | 6 | ||||||
Thailand | 4 | 2 | ||||||
Malaysia | 3 | 4 | ||||||
Rest of World | 1 | 1 | ||||||
|
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| |||||
100 | % | 100 | % | |||||
|
|
|
|
For the Three Months Ended | ||||||||
September 29, | September 30, | |||||||
2019 | 2018 | |||||||
China | 31 | % | 21 | % | ||||
Taiwan | 21 | 25 | ||||||
United States | 14 | 12 | ||||||
Korea | 10 | 6 | ||||||
Europe | 9 | 9 | ||||||
Japan | 4 | 7 | ||||||
Thailand | 4 | 2 | ||||||
Singapore | 3 | 7 | ||||||
Malaysia | 2 | 7 | ||||||
Philippines | 2 | 3 | ||||||
Rest of World | — | 1 | ||||||
100 | % | 100 | % | |||||
(1) | Revenues attributable to a country are based on location of customer site. |
Gross profit Percent of total revenues For the Three Months
Ended Dollar/
Point
Change March 31,
2019 April 1,
2018 (in millions) $ 287.6 $ 269.8 $ 17.8 58.2 % 55.4 % 2.8 $ $ $ % %
mix in Semiconductor Test and Storage Test.
For the Three Months Ended | ||||||||||||
March 31, 2019 | April 1, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Selling and administrative | $ | 102.0 | $ | 90.5 | $ | 11.5 | ||||||
Percent of total revenues | 20.6 | % | 18.6 | % |
For the Three Months Ended | ||||||||||||
September 29, | September 30, | Dollar | ||||||||||
2019 | 2018 | Change | ||||||||||
(in millions) | ||||||||||||
Selling and administrative | $ | 109.2 | $ | 100.2 | $ | 9.0 | ||||||
Percent of total revenues | 18.8 | % | 17.7 | % |
higher stock compensation expense from the modification of Teradyne’s former chief financial officer’s outstanding equity awards.
For the Three Months Ended | Dollar Change | |||||||||||
March 31, 2019 | April 1, 2018 | |||||||||||
(in millions) | ||||||||||||
Engineering and development | $ | 76.8 | $ | 74.4 | $ | 2.4 | ||||||
Percent of total revenues | 15.5 | % | 15.3 | % |
For the Three Months Ended | ||||||||||||
September 29, | September 30, | Dollar | ||||||||||
2019 | 2018 | Change | ||||||||||
(in millions) | ||||||||||||
Engineering and development | $ | 77.8 | $ | 77.0 | $ | 0.8 | ||||||
Percent of total revenues | 13.4 | % | 13.6 | % |
Acquired Intangible Assets Amortization
Acquired intangible assets amortization expense was as follows:
For the Three Months Ended | ||||||||||||
March 31, 2019 | April 1, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Acquired intangible assets amortization | $ | 10.6 | $ | 7.7 | $ | 2.9 | ||||||
Percent of total revenues | 2.2 | % | 1.6 | % |
Acquired intangible assets amortization expense increased primarily due to Industrial Automation acquisitions of MiR and Energid in 2018 and the Semiconductor Test acquisition of Lemsys in 2019.
liability.
For the Three Months Ended | ||||||||||||
March 31, 2019 | April 1, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Interest income | $ | (8.1 | ) | $ | (6.0 | ) | $ | (2.1 | ) | |||
Interest expense | 5.7 | 6.9 | (1.2 | ) | ||||||||
Other (income) expense, net | 1.4 | 0.8 | 0.6 |
For the Three Months Ended | ||||||||||||
September 29, 2019 | September 30, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Interest income | $ | (5.2 | ) | $ | (6.2 | ) | $ | 1.0 | ||||
Interest expense | 5.7 | 5.6 | 0.1 | |||||||||
Other (income) expense, net | 2.7 | 3.4 | (0.7 | ) |
foreign exchange losses.
For the Three Months Ended | ||||||||||||
March 31, 2019 | April 1, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Semiconductor Test | $ | 83.0 | $ | 88.1 | $ | (5.0 | ) | |||||
System Test | 15.3 | 5.9 | 9.5 | |||||||||
Wireless Test | 3.6 | 0.5 | 3.2 | |||||||||
Industrial Automation | (5.3 | ) | 0.8 | (6.1 | ) | |||||||
Corporate and Other (1) | (2.7 | ) | 0.6 | (3.3 | ) | |||||||
|
|
|
|
|
| |||||||
$ | 94.0 | $ | 95.8 | $ | (1.8 | ) | ||||||
|
|
|
|
|
|
For the Three Months Ended | ||||||||||||
September 29, 2019 | September 30, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Semiconductor Test | $ | 116.6 | $ | 126.6 | $ | (10.0 | ) | |||||
System Test | 24.4 | 9.1 | 15.3 | |||||||||
Wireless Test | 11.2 | 7.8 | 3.3 | |||||||||
Industrial Automation | (1.6 | ) | 0.9 | (2.6 | ) | |||||||
Corporate and Other (1) | 1.2 | (3.6 | ) | 4.8 | ||||||||
$ | 151.7 | $ | 140.8 | $ | 10.9 | |||||||
(1) | Included in Corporate and Other are: contingent consideration adjustments, employee severance, equity modification charge, interest income, interest expense, net foreign exchange gains and losses, intercompany eliminations, and acquisition related |
For the Nine Months Ended | ||||||||||||
September 29, 2019 | September 30, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Semiconductor Test | $ | 1,113.5 | $ | 1,150.7 | $ | (37.2 | ) | |||||
Industrial Automation | 209.8 | 176.8 | 33.0 | |||||||||
System Test | 204.9 | 162.3 | 42.6 | |||||||||
Wireless Test | 112.5 | 92.0 | 20.5 | |||||||||
Corporate and Other | (0.4 | ) | (0.6 | ) | 0.2 | |||||||
$ | 1,640.3 | $ | 1,581.2 | $ | 59.1 | |||||||
For the Nine Months Ended | ||||||||
September 29, 2019 | September 30, 2018 | |||||||
China | 23 | % | 18 | % | ||||
Taiwan | 22 | 26 | ||||||
United States | 14 | 13 | ||||||
Europe | 10 | 10 | ||||||
Korea | 10 | 8 | ||||||
Japan | 7 | 6 | ||||||
Singapore | 4 | 5 | ||||||
Thailand | 4 | 3 | ||||||
Malaysia | 3 | 6 | ||||||
Philippines | 3 | 4 | ||||||
Rest of World | — | 1 | ||||||
100 | % | 100 | % | |||||
(1) | Revenues attributable to a country are based on location of customer site. |
For the Nine Months Ended | ||||||||||||
September 29, 2019 | September 30, 2018 | Dollar/Point Change | ||||||||||
(in millions) | ||||||||||||
Gross profit | $ | 956.6 | $ | 910.9 | $ | 45.7 | ||||||
Percent of total revenues | 58.3 | % | 57.6 | % | 0.7 |
For the Nine Months Ended | ||||||||||||
September 29, 2019 | September 30, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Selling and administrative | $ | 320.0 | $ | 290.1 | $ | 29.9 | ||||||
Percent of total revenues | 19.5 | % | 18.3 | % |
For the Nine Months Ended | ||||||||||||
September 29, 2019 | September 30, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Engineering and development | $ | 236.0 | $ | 226.8 | $ | 9.2 | ||||||
Percent of total revenues | 14.4 | % | 14.3 | % |
For the Nine Months Ended | ||||||||||||
September 29, 2019 | September 30, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Interest income | $ | (18.6 | ) | $ | (17.6 | ) | $ | (1.0 | ) | |||
Interest expense | 17.2 | 18.1 | (0.9 | ) | ||||||||
Other (income) expense, net | 6.6 | 4.4 | 2.2 |
For the Nine Months Ended | ||||||||||||
September 29, 2019 | September 30, 2018 | Dollar Change | ||||||||||
(in millions) | ||||||||||||
Semiconductor Test | $ | 291.0 | $ | 305.9 | $ | (14.8 | ) | |||||
System Test | 63.3 | 35.3 | 28.0 | |||||||||
Wireless Test | 25.7 | 18.6 | 7.1 | |||||||||
Industrial Automation | (10.7 | ) | (1.2 | ) | (9.5 | ) | ||||||
Corporate and Other (1) | 7.5 | (1.9 | ) | 9.4 | ||||||||
$ | 376.9 | $ | 356.7 | $ | 20.2 | |||||||
(1) | Included in Corporate and Other are: contingent consideration adjustments, employee severance, equity modification charge, interest income, interest expense, net foreign exchange gains and losses, intercompany eliminations, and acquisition related expenses and compensation. |
Jobs Act of 2017.
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 | 262,970 | 255,335 | 7,635 | — | — | — | ||||||||||||||||||
Retirement plans contributions | 126,034 | 4,993 | 10,370 | 11,019 | 99,652 | — | ||||||||||||||||||
Transition tax payable (1) | 91,186 | 7,295 | 14,590 | 14,590 | 54,711 | — | ||||||||||||||||||
Operating lease obligations | 76,323 | 20,487 | 31,178 | 14,346 | 10,312 | — | ||||||||||||||||||
Fair value of contingent consideration | 38,313 | 22,803 | 15,510 | — | — | — | ||||||||||||||||||
Interest on long-term debt | 28,750 | 5,750 | 11,500 | 11,500 | — | — | ||||||||||||||||||
Other long-term liabilities reflected on the balance sheet under GAAP (2) | 62,189 | — | 25,571 | 7,272 | — | 29,346 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 1,145,765 | $ | 316,663 | $ | 116,354 | $ | 518,727 | $ | 164,675 | $ | 29,346 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
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 | 360,342 | 354,195 | 6,147 | — | — | — | ||||||||||||||||||
Retirement plans contributions | 126,147 | 9,494 | 20,594 | 26,485 | 69,574 | — | ||||||||||||||||||
Transition tax payable (1) | 91,139 | 7,358 | 15,958 | 22,940 | 44,883 | — | ||||||||||||||||||
Operating lease obligations | 73,253 | 21,342 | 29,923 | 12,508 | 9,480 | — | ||||||||||||||||||
Interest on long-term debt | 25,875 | 5,750 | 11,500 | 8,625 | — | — | ||||||||||||||||||
Fair value of contingent consideration | 18,080 | 6,297 | 11,783 | — | — | — | ||||||||||||||||||
Other long-term liabilities reflected on the balance sheet under GAAP (2) | 67,785 | — | 36,044 | 6,097 | 451 | 25,193 | ||||||||||||||||||
Total | $ | 1,222,621 | $ | 404,436 | $ | 131,949 | $ | 536,655 | $ | 124,388 | $ | 25,193 | ||||||||||||
(1) | Represents |
(2) | Included in other long-term liabilities are liabilities for customer advances, extended warranty, uncertain tax positions, deferred tax liabilities and other obligations. For certain long-term obligations, we are unable to provide a reasonably reliable estimate of the timing of future payments relating to these obligations and therefore we included these amounts in the column marked “Other.” |
$1.0 billion.
policies, partially offset by $809.5 million used for purchases of marketable securities, $169.5 million used for the acquisitions of MiR and Energid, and $88.3 million used for purchases of property, plant and equipment.
Operating activities during the three months ended April 1, 2018 used cash of $81.9 million. Changes in operating assets and liabilities used cash of $212.6 million. This was due to a $162.4 million increase in operating assets and a $50.2 million decrease in operating liabilities.
The increase in operating assets was primarily due to a $140.7 million increase in accounts receivable due to an increase in shipments during the last month of the quarter and the impact of the new revenue recognition standard, a $21.0 million increase in inventories, and a $0.7 million increase in prepayments and other assets.
The decrease in operating liabilities was due to a $56.3 million decrease in accrued employee compensation due primarily to first quarter payments related to variable compensation, a $12.1 million decrease in income taxes, a $7.5 million decrease in other accrued liabilities, and $1.0 million of retirement plan contributions, partially offset by a $17.1 million increase in accounts payable and a $9.6 million increase in deferred revenue and customer advance payments.
Investing activities during the three months ended April 1, 2018 provided cash of $462.9 million, due to $800.7 million and $212.7 million in proceeds from sales and maturities of marketable securities, respectively, partially offset by $490.3 million used for purchases of marketable securities, $34.8 million used for purchases of property, plant and equipment and $25.4 million used for the acquisition of Energid.
Financing activities during the three months ended April 1, 2018 used cash of $174.4 million, due to $134.3 million used for the repurchase of 2.9 million shares of common stock at an average price of $45.69 per share, $19.6$19.8 million used for payment related to net settlement of employee stock compensation awards, $17.6 million used for dividend payments, and $13.6 million used for a payment related to Universal Robots acquisition contingent consideration, partially offset by $10.7$21.0 million from the issuance of common stock under employee stock purchase and stock option plans.
$39.18.
Item 3: |
Teradyne issued $460 million aggregate principal amount of 1.25% convertible senior unsecured notes (the “Notes”) due December 15, 2023. As of March 31,September 29, 2019, the Notes had a fair value of $644.6$867.4 million. The table below provides a sensitivity analysis of hypothetical 10% changes of Teradyne’s stock price as of the end of the firstthird quarter of 2019 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, 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 discount 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. 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 | $ | 693,013 | $ | 48,438 | 7.5 | % | ||||||
No Change | 644,575 | — | — | |||||||||
10% Decrease | 598,497 | (46,078 | ) | (7.1 | ) |
Hypothetical Change in Teradyne Stock Price | Fair Value | Estimated change in fair value | Hypothetical percentage increase (decrease) in fair value | |||||||||
10% Increase | $ | 936,589 | $ | 69,201 | 8.0 | % | ||||||
No Change | 867,388 | — | — | |||||||||
10% Decrease | 793,228 | (74,160 | ) | (8.5 | ) |
Item 4: | Controls and Procedures |
Item 1: |
Item 1A: |
Item 2: |
$39.18.
Period | (a) Total Number of Shares (or Units) Purchased |
| (b) Average Price Paid per Share (or Unit) |
| (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||
January 1, 2019 – January 27, 2019 | 2,424 | $ | 31.59 | 2,424 | $ | 599,950 | ||||||||||||||||||
January 28, 2019 – February 24, 2019 | 1,240 | $ | 37.58 | 853 | $ | 567,513 | ||||||||||||||||||
February 25, 2019 – March 31, 2019 | 1,183 | $ | 40.24 | 1,180 | $ | 520,054 | ||||||||||||||||||
|
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| |||||||||||||||||||
4,847 | (1 | ) | $ | 35.24 | (1 | ) | 4,457 | |||||||||||||||||
|
|
|
|
|
|
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 | ||||||||||||
July 1, 2019 – July 28, 2019 | 806 | $ | 47.02 | 806 | $ | 391,430 | ||||||||||
July 29, 2019 – August 25, 2019 | 386 | $ | 53.36 | 385 | $ | 370,875 | ||||||||||
August 26, 2019 – September 29, 2019 | 1,133 | $ | 55.75 | 1,132 | $ | 307,737 | ||||||||||
2,325 | (1) | $ | 52.33 | (1) | 2,323 | |||||||||||
(1) | Includes |
Item 4: |
Item 6: |
Exhibit Number | ||||
| Description | |||
| ||||
| 31.1 | |||
| ||||
31.2 | ||||
| ||||
32.1 | ||||
| ||||
32.2 | ||||
101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||
101.SCH | XBRL Taxonomy Extension Schema Document | |||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||
104 | Cover Page Interactive Data File (formatted as Inline XBRL, and contained in Exhibit 101) |
|
TERADYNE, INC. |
Registrant |
/ s /Sanjay Mehta |
Sanjay Mehta Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer) |