d
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended July 2, 2023
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to
Commission File
TERADYNE, INC.
(Exact name of registrant as specified in its charter)
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) |
978-370-2700
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $0.125 per share | TER | Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant(232.405 (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated | ☐ | Emerging growth company | ☐ | |||
Smaller reporting company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
The number of shares outstanding of the registrant’s only class of Common Stock as of July 31, 2023,154,013,736156,111,885 shares.
TERADYNE, INC.
INDEX
Page No. | |||||||
Item 1. | 1 | ||||||
Condensed Consolidated Balance Sheets as of | 1 | ||||||
f | |||||||
2 | |||||||
3 | |||||||
4 | |||||||
d | |||||||
5 | |||||||
6 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 27 | |||||
Item 3. | 33 | ||||||
Item 4. | 33 | ||||||
Item 1. | 34 | ||||||
Item 1A. | 34 | ||||||
Item 2. | 35 | ||||||
Item 4. | 35 | ||||||
Item 5. | 36 | ||||||
Item 6. | 37 | ||||||
PART I
Item 1:Financial Statements
TERADYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
July 2, 2023 | December 31, 2022 | |||||||
(in thousands, except per share amount) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 613,208 | $ | 854,773 | ||||
Marketable securities | 95,199 | 39,612 | ||||||
Accounts receivable, less allowance for credit losses of $2,232 and $1,955 at July 2, 2023 and December 31, 2022, respectively | 493,234 | 491,145 | ||||||
Inventories, net | 347,295 | 325,019 | ||||||
Prepayments | 560,682 | 532,962 | ||||||
Other current assets | 14,222 | 14,404 | ||||||
Total current assets | 2,123,840 | 2,257,915 | ||||||
Property, plant and equipment, net | 437,077 | 418,683 | ||||||
Operating lease right-of-use | 75,889 | 73,734 | ||||||
Marketable securities | 104,685 | 110,777 | ||||||
Deferred tax assets | 152,471 | 142,784 | ||||||
Retirement plans assets | 11,514 | 11,761 | ||||||
Other assets | 32,699 | 28,925 | ||||||
Acquired intangible assets, net | 44,611 | 53,478 | ||||||
Goodwill | 412,110 | 403,195 | ||||||
Total assets | $ | 3,394,896 | $ | 3,501,252 | ||||
LIABILITIES | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 153,157 | $ | 139,722 | ||||
Accrued employees’ compensation and withholdings | 163,653 | 212,266 | ||||||
Deferred revenue and customer advances | 120,085 | 148,285 | ||||||
Other accrued liabilities | 114,435 | 112,271 | ||||||
Operating lease liabilities | 20,212 | 18,594 | ||||||
Income taxes payable | 65,437 | 65,010 | ||||||
Current debt | 32,806 | 50,115 | ||||||
Total current liabilities | 669,785 | 746,263 | ||||||
Retirement plans liabilities | 124,040 | 116,005 | ||||||
Long-term deferred revenue and customer advances | 38,999 | 45,131 | ||||||
Long-term other accrued liabilities | 16,475 | 15,981 | ||||||
Deferred tax liabilities | 1,304 | 3,267 | ||||||
Long-term operating lease liabilities | 65,079 | 64,176 | ||||||
Long-term incomes taxes payable | 44,331 | 59,135 | ||||||
Total liabilities | 960,013 | 1,049,958 | ||||||
Commitments and contingencies (Note P) | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock, $0.125 par value, 1,000,000 shares authorized; 154,148 and 155,759 shares issued and outstanding at July 2, 2023 and December 31, 2022, respectively | 19,269 | 19,470 | ||||||
Additional paid-in capital | 1,784,590 | 1,755,963 | ||||||
Accumulated other comprehensive loss | (30,472 | ) | (49,868 | ) | ||||
Retained earnings | 661,496 | 725,729 | ||||||
Total shareholders’ equity | 2,434,883 | 2,451,294 | ||||||
Total liabilities and shareholders’ equity | $ | 3,394,896 | $ | 3,501,252 | ||||
|
| March 31, |
|
| December 31, |
| ||
|
| (in thousands, |
| |||||
ASSETS |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 707,403 |
|
| $ | 757,571 |
|
Marketable securities |
|
| 41,300 |
|
|
| 62,154 |
|
Accounts receivable, less allowance for credit losses of $1,947 and $1,988 at March 31, 2024 |
|
| 426,333 |
|
|
| 422,124 |
|
Inventories, net |
|
| 314,232 |
|
|
| 309,974 |
|
Prepayments |
|
| 537,642 |
|
|
| 548,970 |
|
Other current assets |
|
| 16,057 |
|
|
| 37,992 |
|
Current assets held for sale |
|
| 22,426 |
|
|
| 23,250 |
|
Total current assets |
|
| 2,065,393 |
|
|
| 2,162,035 |
|
Property, plant and equipment, net |
|
| 457,248 |
|
|
| 445,492 |
|
Operating lease right-of-use assets, net |
|
| 74,625 |
|
|
| 73,417 |
|
Marketable securities |
|
| 121,905 |
|
|
| 117,434 |
|
Deferred tax assets |
|
| 185,734 |
|
|
| 175,775 |
|
Retirement plans assets |
|
| 11,449 |
|
|
| 11,504 |
|
Other assets |
|
| 45,098 |
|
|
| 38,580 |
|
Acquired intangible assets, net |
|
| 30,234 |
|
|
| 35,404 |
|
Goodwill |
|
| 407,576 |
|
|
| 415,652 |
|
Long-term assets held for sale |
|
| 11,458 |
|
|
| 11,531 |
|
Total assets |
| $ | 3,410,720 |
|
| $ | 3,486,824 |
|
LIABILITIES |
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
| ||
Accounts payable |
| $ | 153,873 |
|
| $ | 180,131 |
|
Accrued employees’ compensation and withholdings |
|
| 121,144 |
|
|
| 191,750 |
|
Deferred revenue and customer advances |
|
| 100,058 |
|
|
| 99,804 |
|
Other accrued liabilities |
|
| 101,275 |
|
|
| 114,712 |
|
Operating lease liabilities |
|
| 17,400 |
|
|
| 17,522 |
|
Income taxes payable |
|
| 55,922 |
|
|
| 48,653 |
|
Current liabilities held for sale |
|
| 4,687 |
|
|
| 7,379 |
|
Total current liabilities |
|
| 554,359 |
|
|
| 659,951 |
|
Retirement plans liabilities |
|
| 134,878 |
|
|
| 132,090 |
|
Long-term deferred revenue and customer advances |
|
| 35,044 |
|
|
| 37,282 |
|
Long-term other accrued liabilities |
|
| 16,653 |
|
|
| 19,998 |
|
Deferred tax liabilities |
|
| 134 |
|
|
| 183 |
|
Long-term operating lease liabilities |
|
| 65,554 |
|
|
| 65,092 |
|
Long-term incomes taxes payable |
|
| 44,331 |
|
|
| 44,331 |
|
Long-term liabilities held for sale |
|
| 1,938 |
|
|
| 2,000 |
|
Total liabilities |
|
| 852,891 |
|
|
| 960,927 |
|
Commitments and contingencies (Note Q) |
|
|
|
|
|
| ||
SHAREHOLDERS’ EQUITY |
|
|
|
|
|
| ||
Common stock, $0.125 par value, 1,000,000 shares authorized; 153,757 and 152,698 shares issued |
|
| 19,220 |
|
|
| 19,087 |
|
Additional paid-in capital |
|
| 1,848,088 |
|
|
| 1,827,274 |
|
Accumulated other comprehensive loss |
|
| (39,739 | ) |
|
| (26,978 | ) |
Retained earnings |
|
| 730,260 |
|
|
| 706,514 |
|
Total shareholders’ equity |
|
| 2,557,829 |
|
|
| 2,525,897 |
|
Total liabilities and shareholders’ equity |
| $ | 3,410,720 |
|
| $ | 3,486,824 |
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form2022,2023, are an integral part of the condensed consolidated financial statements.
1
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | |||||||||||||
(in thousands, except per share amount) | ||||||||||||||||
Revenues: | ||||||||||||||||
Products | $ | 540,375 | $ | 697,954 | $ | 1,013,793 | $ | 1,323,829 | ||||||||
Services | 144,062 | 142,812 | 288,173 | 272,307 | ||||||||||||
Total revenues | 684,437 | 840,766 | 1,301,966 | 1,596,136 | ||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of products | 217,011 | 274,674 | 415,675 | 517,690 | ||||||||||||
Cost of services | 64,934 | 59,703 | 127,379 | 117,124 | ||||||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) | 281,945 | 334,377 | 543,054 | 634,814 | ||||||||||||
Gross profit | 402,492 | 506,389 | 758,912 | 961,322 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and administrative | 145,695 | 139,533 | 296,650 | 279,718 | ||||||||||||
Engineering and development | 105,706 | 111,951 | 211,468 | 220,067 | ||||||||||||
Acquired intangible assets amortization | 4,825 | 4,871 | 9,627 | 9,934 | ||||||||||||
Restructuring and other | 6,358 | 2,044 | 8,395 | 17,758 | ||||||||||||
Total operating expenses | 262,584 | 258,399 | 526,140 | 527,477 | ||||||||||||
Income from operations | 139,908 | 247,990 | 232,772 | 433,845 | ||||||||||||
Non-operating (income) expense: | ||||||||||||||||
Interest income | (6,354 | ) | (951 | ) | (11,613 | ) | (1,653 | ) | ||||||||
Interest expense | 1,045 | 913 | 2,031 | 1,925 | ||||||||||||
Other (income) expense, net | 815 | 9,436 | 868 | 14,622 | ||||||||||||
Income before income taxes | 144,402 | 238,592 | 241,486 | 418,951 | ||||||||||||
Income tax provision | 24,352 | 40,805 | 37,905 | 59,236 | ||||||||||||
Net income | $ | 120,050 | $ | 197,787 | $ | 203,581 | $ | 359,715 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.78 | $ | 1.24 | $ | 1.31 | $ | 2.24 | ||||||||
Diluted | $ | 0.73 | $ | 1.16 | $ | 1.23 | $ | 2.07 | ||||||||
Weighted average common shares—basic | 154,760 | 159,563 | 155,332 | 160,805 | ||||||||||||
Weighted average common shares—diluted | 164,751 | 171,159 | 165,530 | 173,367 | ||||||||||||
|
| For the Three Months |
| |||||
|
| March 31, |
|
| April 2, |
| ||
|
| (in thousands, except per share amount) |
| |||||
Revenues: |
|
|
|
|
|
| ||
Products |
| $ | 458,433 |
|
| $ | 473,418 |
|
Services |
|
| 141,386 |
|
|
| 144,111 |
|
Total revenues |
|
| 599,819 |
|
|
| 617,529 |
|
Cost of revenues: |
|
|
|
|
|
| ||
Cost of products |
|
| 200,763 |
|
|
| 198,665 |
|
Cost of services |
|
| 59,774 |
|
|
| 62,444 |
|
Total cost of revenues (exclusive of acquired intangible |
|
| 260,537 |
|
|
| 261,109 |
|
Gross profit |
|
| 339,282 |
|
|
| 356,420 |
|
Operating expenses: |
|
|
|
|
|
| ||
Selling and administrative |
|
| 149,188 |
|
|
| 150,955 |
|
Engineering and development |
|
| 103,199 |
|
|
| 105,762 |
|
Acquired intangible assets amortization |
|
| 4,697 |
|
|
| 4,802 |
|
Restructuring and other |
|
| 4,427 |
|
|
| 2,037 |
|
Total operating expenses |
|
| 261,511 |
|
|
| 263,556 |
|
Income from operations |
|
| 77,771 |
|
|
| 92,864 |
|
Non-operating (income) expense: |
|
|
|
|
|
| ||
Interest income |
|
| (7,867 | ) |
|
| (5,258 | ) |
Interest expense |
|
| 661 |
|
|
| 987 |
|
Other (income) expense, net |
|
| 12,075 |
|
|
| 51 |
|
Income before income taxes |
|
| 72,902 |
|
|
| 97,084 |
|
Income tax provision |
|
| 8,705 |
|
|
| 13,553 |
|
Net income |
| $ | 64,197 |
|
| $ | 83,531 |
|
Net income per common share: |
|
|
|
|
|
| ||
Basic |
| $ | 0.42 |
|
| $ | 0.54 |
|
Diluted |
| $ | 0.40 |
|
| $ | 0.50 |
|
Weighted average common shares—basic |
|
| 153,047 |
|
|
| 155,904 |
|
Weighted average common shares—diluted |
|
| 162,348 |
|
|
| 166,308 |
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form2022,2023, are an integral part of the condensed consolidated financial statements.
2
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
July 2, 2023 | July 3, 2022 | July 2, 2023 | July 3, 2022 | |||||||||||||
(in thousands) | ||||||||||||||||
Net income | $ | 120,050 | $ | 197,787 | $ | 203,581 | $ | 359,715 | ||||||||
Other comprehensive income, net of tax: | ||||||||||||||||
Foreign currency translation adjustment, net of tax of $0, $0, $0, $0, respectively | 2,943 | (29,230 | ) | 12,250 | (37,307 | ) | ||||||||||
Available-for-sale | ||||||||||||||||
Unrealized (losses) gains on marketable securities arising during period, net of tax of $(180), $(1,240), $323, and $(2,573), respectively | (568 | ) | (4,522 | ) | 1,726 | (9,910 | ) | |||||||||
Less: Reclassification adjustment for losses included in net income, net of tax of $8, $77, $10, $59, respectively | 28 | 274 | 33 | 209 | ||||||||||||
| (540 | ) | (4,248 | ) | 1,759 | (9,701 | ) | ||||||||||
Cash flow hedges: | ||||||||||||||||
Unrealized gains arising during period, net of tax of $920, $0, $1,088, $0 respectively | 3,270 | — | 3,866 | — | ||||||||||||
Less: Reclassification adjustment for losses included in net income, net of tax of $91, $0, $428, $0 respectively | 323 | — | 1,524 | — | ||||||||||||
| 3,593 | — | 5,390 | — | |||||||||||||
Defined benefit post-retirement plan: | ||||||||||||||||
Amortization of prior service credit, net of tax of $0, $0, $(1), $(1), respectively | (2 | ) | (2 | ) | (3 | ) | (3 | ) | ||||||||
Other comprehensive income (loss) | 5,994 | (33,480 | ) | 19,396 | (47,011 | ) | ||||||||||
Comprehensive income | $ | 126,044 | $ | 164,307 | $ | 222,977 | $ | 312,704 | ||||||||
|
| For the Three Months |
| |||||
|
| March 31, |
|
| April 2, |
| ||
|
| (in thousands) |
| |||||
Net income |
| $ | 64,197 |
|
| $ | 83,531 |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
| ||
Foreign currency translation adjustment, net of tax of $0 and $0, respectively |
|
| (11,457 | ) |
|
| 9,309 |
|
Available-for-sale marketable securities: |
|
|
|
|
|
| ||
Unrealized (losses) gains on marketable securities arising during period, |
|
| (902 | ) |
|
| 2,294 |
|
Less: Reclassification adjustment for losses included in net income, |
|
| 106 |
|
|
| 5 |
|
|
| (796 | ) |
|
| 2,299 |
| |
Cash flow hedges: |
|
|
|
|
|
| ||
Unrealized gains arising during period, net of tax of $358 and $167, respectively |
|
| 1,274 |
|
|
| 596 |
|
Less: Reclassification adjustment for (gains) losses included in net income, |
|
| (1,780 | ) |
|
| 1,200 |
|
|
| (506 | ) |
|
| 1,796 |
| |
Defined benefit post-retirement plan: |
|
|
|
|
|
| ||
Amortization of prior service credit, net of tax of $0 and $0, respectively |
|
| (2 | ) |
|
| (2 | ) |
Other comprehensive income (loss) |
|
| (12,761 | ) |
|
| 13,402 |
|
Comprehensive income |
| $ | 51,436 |
|
| $ | 96,933 |
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form2022,2023, are an integral part of the condensed consolidated financial statements.
3
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE COMMON SHARES
(Unaudited)
Shareholders’ Equity | ||||||||||||||||||||||||||||
Convertible Common Shares Value | Common Stock Shares | Common Stock Par Value | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) Income | Retained Earnings | Total Shareholders’ Equity | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
For the Three Months Ended July 2, 2023 | ||||||||||||||||||||||||||||
Balance, April 2, 2023 | $ | — | 155,445 | $ | 19,431 | $ | 1,772,352 | $ | (36,466 | ) | $ | 694,145 | $ | 2,449,462 | ||||||||||||||
Net issuance of common stock under stock-based plans | 52 | 7 | 161 | 168 | ||||||||||||||||||||||||
Stock-based compensation expense | 12,077 | 12,077 | ||||||||||||||||||||||||||
Repurchase of common stock | (1,349 | ) | (169 | ) | (135,668 | ) | (135,837 | ) | ||||||||||||||||||||
Cash dividends ($0.11 per share) | (17,031 | ) | (17,031 | ) | ||||||||||||||||||||||||
Settlements of convertible notes | 50 | 6 | (6 | ) | — | |||||||||||||||||||||||
Exercise of convertible notes hedge call options | (50 | ) | (6 | ) | 6 | — | ||||||||||||||||||||||
Net income | 120,050 | 120,050 | ||||||||||||||||||||||||||
Other comprehensive income | 5,994 | 5,994 | ||||||||||||||||||||||||||
Balance, July 2, 2023 | $ | — | 154,148 | $ | 19,269 | $ | 1,784,590 | $ | (30,472 | ) | $ | 661,496 | $ | 2,434,883 | ||||||||||||||
For the Three Months Ended July 3, 2022 | ||||||||||||||||||||||||||||
Balance, April 3, 2022 | $ | — | 161,053 | $ | 20,132 | $ | 1,711,690 | $ | (19,479 | ) | $ | 762,189 | $ | 2,474,532 | ||||||||||||||
Net issuance of common stock under stock-based plans | 33 | 4 | (1,675 | ) | (1,671 | ) | ||||||||||||||||||||||
Stock-based compensation expense | 11,658 | 11,658 | ||||||||||||||||||||||||||
Repurchase of common stock | (3,206 | ) | (401 | ) | (333,933 | ) | (334,334 | ) | ||||||||||||||||||||
Cash dividends ($0.11 per share) | (17,561 | ) | (17,561 | ) | ||||||||||||||||||||||||
Settlements of convertible notes | 495 | 62 | (149 | ) | (87 | ) | ||||||||||||||||||||||
Exercise of convertible notes hedge call options | (495 | ) | (62 | ) | 62 | — | ||||||||||||||||||||||
Cumulative-effect of change in accounting principle related to convertible debt | 1,752 | 1,752 | ||||||||||||||||||||||||||
Net income | 197,787 | 197,787 | ||||||||||||||||||||||||||
Other comprehensive loss | (33,480 | ) | (33,480 | ) | ||||||||||||||||||||||||
Balance, July 3, 2022 | $ | — | 157,880 | $ | 19,735 | $ | 1,721,586 | $ | (52,959 | ) | $ | 610,234 | $ | 2,298,596 | ||||||||||||||
For the Six Months Ended July 2, 2023 | ||||||||||||||||||||||||||||
Balance, December 31, 2022 | $ | — | 155,759 | $ | 19,470 | $ | 1,755,963 | $ | (49,868 | ) | $ | 725,729 | $ | 2,451,294 | ||||||||||||||
Net issuance of common stock under stock-based plans | 631 | 79 | (3,782 | ) | (3,703 | ) | ||||||||||||||||||||||
Stock-based compensation expense | 32,409 | 32,409 | ||||||||||||||||||||||||||
Repurchase of common stock | (2,242 | ) | (280 | ) | (233,604 | ) | (233,884 | ) | ||||||||||||||||||||
Cash dividends ($0.22 per share) | (34,210 | ) | (34,210 | ) | ||||||||||||||||||||||||
Settlements of convertible notes | 375 | 47 | (47 | ) | — | |||||||||||||||||||||||
Exercise of convertible notes hedge call options | (375 | ) | (47 | ) | 47 | — | ||||||||||||||||||||||
Net income | 203,581 | 203,581 | ||||||||||||||||||||||||||
Other comprehensive income | 19,396 | 19,396 | ||||||||||||||||||||||||||
Balance, July 2, 2023 | $ | — | 154,148 | $ | 19,269 | $ | 1,784,590 | $ | (30,472 | ) | $ | 661,496 | $ | 2,434,883 | ||||||||||||||
For the Six Months Ended July 3, 2022 | ||||||||||||||||||||||||||||
Balance, December 31, 2021 | $ | 1,512 | 162,251 | $ | 20,281 | $ | 1,811,545 | $ | (5,948 | ) | $ | 736,566 | $ | 2,562,444 | ||||||||||||||
Net issuance of common stock under stock-based plans | 585 | 73 | (16,318 | ) | (16,245 | ) | ||||||||||||||||||||||
Stock-based compensation expense | 25,862 | 25,862 | ||||||||||||||||||||||||||
Repurchase of common stock | (4,956 | ) | (619 | ) | (545,179 | ) | (545,798 | ) | ||||||||||||||||||||
Cash dividends ($0.22 per share) | (35,470 | ) | (35,470 | ) | ||||||||||||||||||||||||
Settlements of convertible notes | 1,004 | 125 | (306 | ) | (181 | ) | ||||||||||||||||||||||
Exercise of convertible notes hedge call options | (1,004 | ) | (125 | ) | 125 | — | ||||||||||||||||||||||
Cumulative-effect of change in accounting principle related to convertible debt | (1,512 | ) | (99,322 | ) | 94,602 | (4,720 | ) | |||||||||||||||||||||
Net income | 359,715 | 359,715 | ||||||||||||||||||||||||||
Other comprehensive loss | (47,011 | ) | (47,011 | ) | ||||||||||||||||||||||||
Balance, July 3, 2022 | $ | — | 157,880 | $ | 19,735 | $ | 1,721,586 | $ | (52,959 | ) | $ | 610,234 | $ | 2,298,596 | ||||||||||||||
|
| Shareholders' Equity |
| |||||||||||||||||||||
|
| Common |
|
| Common |
|
| Additional |
|
| Accumulated |
|
| Retained |
|
| Total |
| ||||||
|
| (in thousands) |
| |||||||||||||||||||||
For the Three Months Ended March 31, 2024 |
| |||||||||||||||||||||||
Balance, December 31, 2023 |
|
| 152,698 |
|
| $ | 19,087 |
|
| $ | 1,827,274 |
|
| $ | (26,978 | ) |
| $ | 706,514 |
|
| $ | 2,525,897 |
|
Net issuance of common stock under stock-based plans |
|
| 466 |
|
|
| 58 |
|
|
| 3,758 |
|
|
|
|
|
|
|
|
| 3,816 |
| ||
Stock-based compensation expense |
|
|
|
|
|
|
|
| 17,158 |
|
|
|
|
|
|
|
|
| 17,158 |
| ||||
Warrant exercises |
| 813 |
|
| 102 |
|
|
| (102 | ) |
|
|
|
|
|
|
|
| — |
| ||||
Repurchase of common stock |
|
| (220 | ) |
|
| (27 | ) |
|
|
|
|
|
|
|
| (22,068 | ) |
|
| (22,095 | ) | ||
Cash dividends ($0.12 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (18,383 | ) |
|
| (18,383 | ) | ||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 64,197 |
|
|
| 64,197 |
| ||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
| (12,761 | ) |
|
|
|
|
| (12,761 | ) | ||||
Balance, March 31, 2024 |
|
| 153,757 |
|
| $ | 19,220 |
|
| $ | 1,848,088 |
|
| $ | (39,739 | ) |
| $ | 730,260 |
|
| $ | 2,557,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
For the Three Months Ended April 2, 2023 |
| |||||||||||||||||||||||
Balance, December 31, 2022 |
|
| 155,759 |
|
| $ | 19,470 |
|
| $ | 1,755,963 |
|
| $ | (49,868 | ) |
| $ | 725,729 |
|
| $ | 2,451,294 |
|
Net issuance of common stock under stock-based plans |
|
| 579 |
|
|
| 73 |
|
|
| (3,943 | ) |
|
|
|
|
|
|
|
| (3,870 | ) | ||
Stock-based compensation expense |
|
|
|
|
|
|
|
| 20,332 |
|
|
|
|
|
|
|
|
| 20,332 |
| ||||
Repurchase of common stock |
|
| (893 | ) |
|
| (112 | ) |
|
|
|
|
|
|
|
| (97,936 | ) |
|
| (98,048 | ) | ||
Cash dividends ($0.11 per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (17,179 | ) |
|
| (17,179 | ) | ||||
Settlements of convertible notes |
|
| 324 |
|
|
| 41 |
|
|
| (41 | ) |
|
|
|
|
|
|
|
| — |
| ||
Exercise of convertible notes hedge call options |
|
| (324 | ) |
|
| (41 | ) |
|
| 41 |
|
|
|
|
|
|
|
|
| — |
| ||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 83,531 |
|
|
| 83,531 |
| ||||
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
| 13,402 |
|
|
|
|
|
| 13,402 |
| ||||
Balance, April 2, 2023 |
|
| 155,445 |
|
| $ | 19,431 |
|
| $ | 1,772,352 |
|
| $ | (36,466 | ) |
| $ | 694,145 |
|
| $ | 2,449,462 |
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form2022,2023, are an integral part of the condensed consolidated financial statements.
4
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended | ||||||||
July 2, 2023 | July 3, 2022 | |||||||
(in thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 203,581 | $ | 359,715 | ||||
Adjustments to reconcile net income from operations to net cash provided by operating activities: | ||||||||
Depreciation | 45,231 | 44,460 | ||||||
Stock-based compensation | 32,449 | 25,122 | ||||||
Provision for excess and obsolete inventory | 11,341 | 6,695 | ||||||
Amortization | 9,580 | 10,095 | ||||||
Deferred taxes | (13,571 | ) | (23,597 | ) | ||||
(Gains) losses on investments | (4,745 | ) | 8,973 | |||||
Other | (92 | ) | 522 | |||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (2,693 | ) | (146,384 | ) | ||||
Inventories | (13,845 | ) | (46,682 | ) | ||||
Prepayments and other assets | (29,584 | ) | (94,751 | ) | ||||
Accounts payable and other liabilities | (24,514 | ) | (43,611 | ) | ||||
Deferred revenue and customer advances | (34,938 | ) | 14,163 | |||||
Retirement plans contributions | (2,482 | ) | (2,618 | ) | ||||
Income taxes | (13,614 | ) | 10,815 | |||||
Net cash provided by operating activities | 162,104 | 122,917 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (80,702 | ) | (89,743 | ) | ||||
Purchases of marketable securities | (99,018 | ) | (247,881 | ) | ||||
Proceeds from sales of marketable securities | 35,577 | 143,642 | ||||||
Proceeds from maturities of marketable securities | 21,997 | 139,652 | ||||||
Proceeds from life insurance | 460 | — | ||||||
Net cash used for investing activities | (121,686 | ) | (54,330 | ) | ||||
Cash flows from financing activities: | ||||||||
Repurchase of common stock | (227,845 | ) | (532,799 | ) | ||||
Dividend payments | (34,184 | ) | (35,442 | ) | ||||
Payments related to net settlement of employee stock compensation awards | (20,308 | ) | (32,780 | ) | ||||
Payments of convertible debt principal | (17,458 | ) | (42,292 | ) | ||||
Issuance of common stock under stock purchase and stock option plans | 16,599 | 16,536 | ||||||
Net cash used for financing activities | (283,196 | ) | (626,777 | ) | ||||
Effects of exchange rate changes on cash and cash equivalents | 1,213 | 8,014 | ||||||
Decrease in cash and cash equivalents | (241,565 | ) | (550,176 | ) | ||||
Cash and cash equivalents at beginning of period | 854,773 | 1,122,199 | ||||||
Cash and cash equivalents at end of period | $ | 613,208 | $ | 572,023 | ||||
Non-cash investing activities: | ||||||||
Capital expenditures incurred but not yet paid: | $ | 1,741 | $ | 1,855 | ||||
|
| For the Three Months |
| |||||
|
| March 31, |
|
| April 2, |
| ||
|
| (in thousands) |
| |||||
Cash flows from operating activities: |
|
|
|
|
|
| ||
Net income |
| $ | 64,197 |
|
| $ | 83,531 |
|
Adjustments to reconcile net income from operations to net cash provided by operating activities: |
|
|
|
|
|
| ||
Depreciation |
|
| 23,354 |
|
|
| 22,680 |
|
Stock-based compensation |
|
| 15,758 |
|
|
| 18,885 |
|
Provision for excess and obsolete inventory |
|
| 6,177 |
|
|
| 5,610 |
|
Amortization |
|
| 4,766 |
|
|
| 4,926 |
|
Deferred taxes |
|
| (9,669 | ) |
|
| (7,634 | ) |
Losses (gains) on investments |
|
| 10,466 |
|
|
| (2,238 | ) |
Other |
|
| 787 |
|
|
| 108 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
| ||
Accounts receivable |
|
| (8,055 | ) |
|
| 37,204 |
|
Inventories |
|
| (6,932 | ) |
|
| (23,697 | ) |
Prepayments and other assets |
|
| 11,089 |
|
|
| (15,380 | ) |
Accounts payable and other liabilities |
|
| (105,548 | ) |
|
| (83,208 | ) |
Deferred revenue and customer advances |
|
| (1,444 | ) |
|
| (32,705 | ) |
Retirement plans contributions |
|
| (1,421 | ) |
|
| (1,234 | ) |
Income taxes |
|
| 3,754 |
|
|
| 12,488 |
|
Net cash provided by operating activities |
|
| 7,279 |
|
|
| 19,336 |
|
Cash flows from investing activities: |
|
|
|
|
|
| ||
Purchases of property, plant and equipment |
|
| (44,023 | ) |
|
| (41,444 | ) |
Purchases of marketable securities |
|
| (16,042 | ) |
|
| (69,276 | ) |
Proceeds from maturities of marketable securities |
|
| 14,438 |
|
|
| 7,468 |
|
Proceeds from sales of marketable securities |
|
| 20,734 |
|
|
| 7,929 |
|
Proceeds from insurance |
|
| 873 |
|
|
| 460 |
|
Net cash used for investing activities |
|
| (24,020 | ) |
|
| (94,863 | ) |
Cash flows from financing activities: |
|
|
|
|
|
| ||
Repurchase of common stock |
|
| (22,117 | ) |
|
| (93,308 | ) |
Dividend payments |
|
| (18,370 | ) |
|
| (17,165 | ) |
Payments of convertible debt principal |
|
| — |
|
|
| (15,155 | ) |
Payments related to net settlement of employee stock compensation awards |
|
| (13,115 | ) |
|
| (19,870 | ) |
Issuance of common stock under stock purchase and stock option plans |
|
| 16,934 |
|
|
| 15,997 |
|
Net cash used for financing activities |
|
| (36,668 | ) |
|
| (129,501 | ) |
Effects of exchange rate changes on cash and cash equivalents |
|
| 3,241 |
|
|
| (537 | ) |
Decrease in cash and cash equivalents |
|
| (50,168 | ) |
|
| (205,565 | ) |
Cash and cash equivalents at beginning of period |
|
| 757,571 |
|
|
| 854,773 |
|
Cash and cash equivalents at end of period |
| $ | 707,403 |
|
| $ | 649,208 |
|
Non-cash investing activities: |
|
|
|
|
|
| ||
Capital expenditures incurred but not yet paid: |
| $ | 3,086 |
|
| $ | 3,823 |
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form2022,2023, are an integral part of the condensed consolidated financial statements.
5
TERADYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. THE COMPANY
Teradyne, Inc. (“Teradyne”) is a leading global supplier of automated test equipment and robotics solutions. Teradyne designs, develops, manufactures and sells automaticautomated test systems and robotics products. Teradyne’s automaticautomated test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Teradyne’s robotics products include collaborative robotic arms, and autonomous mobile robots, (“AMRs”)and advanced robotic control software used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Teradyne’s automaticautomated test equipment and robotics products and services include:
B. ACCOUNTING POLICIES
Basis of Presentation
The consolidated interim financial statements include the accounts of Teradyne and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These interim financial statements are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair statement of such interim financial statements. Certain prior year amounts may have been reclassified to conform to the current year presentation. The December 31, 20222023 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by United States of America generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying financial information should be read in conjunction with the consolidated financial statements and notes thereto contained in Teradyne’s Annual Report on Form2023,2024, for the year ended December 31, 2022.2023.
Preparation of Financial Statements and Use of Estimates
The preparation of consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosuresdisclosure of contingent liabilities. On anjudgementsjudgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Due to theCOVID-19pandemic, there has been uncertainty and disruption in the global economy and our markets. Management is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form
C. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In November 2023, the six months ended July 2,Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which will require Teradyne to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, Teradyne will be required to disclose the title and position of the CODM. The new standard is effective for fiscal years beginning after December 15, 2023, there wereand interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU will have no recently issued accounting pronouncements that had,impact on results of operations, cash flows or are expectedfinancial condition. Upon
6
adoption, Teradyne will apply the amendments in this ASU retrospectively to have, a material impact to Teradyne’s consolidatedall prior period disclosures presented in the financial statements.
In December 2023, FASB issued ASU 2023-09 –“Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. This ASU will have no impact on results of operations, cash flows or financial condition.
D. REVENUE
Disaggregation of Revenue
The following table provides information about disaggregated revenue by timing of revenue recognition, primary geographical market, and major product lines.
|
| Semiconductor Test |
|
| System Test |
|
| Robotics |
|
| Wireless Test |
|
|
|
| |||||||||||||
|
| System |
|
| Memory |
|
|
|
|
| Universal |
|
| Mobile |
|
|
|
|
| Total |
| |||||||
| (in thousands) |
| ||||||||||||||||||||||||||
For the Three Months Ended March 31, 2024 (1) |
| |||||||||||||||||||||||||||
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Point in Time |
| $ | 229,592 |
|
| $ | 102,436 |
|
| $ | 58,073 |
|
| $ | 65,893 |
|
| $ | 19,290 |
|
| $ | 20,914 |
|
| $ | 496,198 |
|
Over Time |
|
| 72,716 |
|
|
| 7,510 |
|
|
| 17,249 |
|
|
| 1,868 |
|
|
| 603 |
|
|
| 3,675 |
|
|
| 103,621 |
|
Total |
| $ | 302,308 |
|
| $ | 109,946 |
|
| $ | 75,322 |
|
| $ | 67,761 |
|
| $ | 19,893 |
|
| $ | 24,589 |
|
| $ | 599,819 |
|
Geographical Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Asia Pacific |
| $ | 270,567 |
|
| $ | 95,606 |
|
| $ | 25,781 |
|
| $ | 11,625 |
|
| $ | 2,954 |
|
| $ | 17,141 |
|
| $ | 423,674 |
|
Americas |
|
| 22,551 |
|
|
| 9,052 |
|
|
| 36,594 |
|
|
| 20,005 |
|
|
| 14,625 |
|
|
| 5,824 |
|
|
| 108,651 |
|
Europe, Middle East and Africa |
|
| 9,190 |
|
|
| 5,288 |
|
|
| 12,947 |
|
|
| 36,131 |
|
|
| 2,314 |
|
|
| 1,624 |
|
|
| 67,494 |
|
Total |
| $ | 302,308 |
|
| $ | 109,946 |
|
| $ | 75,322 |
|
| $ | 67,761 |
|
| $ | 19,893 |
|
| $ | 24,589 |
|
| $ | 599,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
For the Three Months Ended April 2, 2023 (1) |
| |||||||||||||||||||||||||||
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Point in Time |
| $ | 273,275 |
|
| $ | 61,258 |
|
| $ | 56,857 |
|
| $ | 70,029 |
|
| $ | 15,959 |
|
| $ | 35,363 |
|
| $ | 512,741 |
|
Over Time |
|
| 73,559 |
|
|
| 6,917 |
|
|
| 17,774 |
|
|
| 2,008 |
|
|
| 1,218 |
|
|
| 3,312 |
|
|
| 104,788 |
|
Total |
| $ | 346,834 |
|
| $ | 68,175 |
|
| $ | 74,631 |
|
| $ | 72,037 |
|
| $ | 17,177 |
|
| $ | 38,675 |
|
| $ | 617,529 |
|
Geographical Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Asia Pacific |
| $ | 283,259 |
|
| $ | 63,695 |
|
| $ | 39,590 |
|
| $ | 13,217 |
|
| $ | 1,502 |
|
| $ | 23,231 |
|
| $ | 424,494 |
|
Americas |
|
| 41,568 |
|
|
| 2,944 |
|
|
| 28,980 |
|
|
| 20,447 |
|
|
| 11,806 |
|
|
| 12,846 |
|
|
| 118,591 |
|
Europe, Middle East and Africa |
|
| 22,007 |
|
|
| 1,536 |
|
|
| 6,061 |
|
|
| 38,373 |
|
|
| 3,869 |
|
|
| 2,598 |
|
|
| 74,444 |
|
Total |
| $ | 346,834 |
|
| $ | 68,175 |
|
| $ | 74,631 |
|
| $ | 72,037 |
|
| $ | 17,177 |
|
| $ | 38,675 |
|
| $ | 617,529 |
|
Semiconductor Test | Robotics | |||||||||||||||||||||||||||||||
System on-a-Chip | Memory | System Test | Universal Robots | Mobile Industrial Robots | Wireless Test | Corporate and Eliminations | Total | |||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||
For the Three Months Ended July 2, 2023 (1) | ||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||
Point in Time | $ | 282,080 | $ | 112,547 | $ | 76,801 | $ | 55,737 | $ | 12,770 | $ | 40,261 | $ | — | $ | 580,196 | ||||||||||||||||
Over Time | 72,614 | 7,467 | 17,471 | 2,116 | 1,011 | 3,562 | — | 104,241 | ||||||||||||||||||||||||
Total | $ | 354,694 | $ | 120,014 | $ | 94,272 | $ | 57,853 | $ | 13,781 | $ | 43,823 | $ | — | $ | 684,437 | ||||||||||||||||
Geographical Market | ||||||||||||||||||||||||||||||||
Asia Pacific | $ | 303,062 | $ | 115,250 | $ | 41,644 | $ | 14,883 | $ | 2,291 | $ | 22,362 | $ | — | $ | 499,492 | ||||||||||||||||
Americas | 32,191 | 4,286 | 40,163 | 22,832 | 6,086 | 19,491 | — | 125,049 | ||||||||||||||||||||||||
Europe, Middle East and Africa | 19,441 | 478 | 12,465 | 20,138 | 5,404 | 1,970 | — | 59,896 | ||||||||||||||||||||||||
Total | $ | 354,694 | $ | 120,014 | $ | 94,272 | $ | 57,853 | $ | 13,781 | $ | 43,823 | $ | — | $ | 684,437 | ||||||||||||||||
For the Three Months Ended July 3, 2022 (1) | ||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||
Point in Time | $ | 395,211 | $ | 74,790 | $ | 118,692 | $ | 80,409 | $ | 17,801 | $ | 60,765 | $ | (193 | ) | $ | 747,475 | |||||||||||||||
Over Time | 64,253 | 7,094 | 16,010 | 2,104 | 741 | 3,089 | — | 93,291 | ||||||||||||||||||||||||
Total | $ | 459,464 | $ | 81,884 | $ | 134,702 | $ | 82,513 | $ | 18,542 | $ | 63,854 | $ | (193 | ) | $ | 840,766 | |||||||||||||||
Geographical Market | ||||||||||||||||||||||||||||||||
Asia Pacific | $ | 413,537 | $ | 78,996 | $ | 95,584 | $ | 17,357 | $ | 5,317 | $ | 44,106 | $ | — | $ | 654,897 | ||||||||||||||||
Americas | 28,714 | 2,552 | 33,409 | 27,732 | 7,229 | 17,460 | (193 | ) | 116,903 | |||||||||||||||||||||||
Europe, Middle East and Africa | 17,213 | 336 | 5,709 | 37,424 | 5,996 | 2,288 | — | 68,966 | ||||||||||||||||||||||||
Total | $ | 459,464 | $ | 81,884 | $ | 134,702 | $ | 82,513 | $ | 18,542 | $ | 63,854 | $ | (193 | ) | $ | 840,766 | |||||||||||||||
For the Six Months Ended July 2, 2023 (2) | ||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||
Point in Time | $ | 555,354 | $ | 173,805 | $ | 133,658 | $ | 125,760 | $ | 28,735 | $ | 75,624 | $ | — | $ | 1,092,937 | ||||||||||||||||
Over Time | 146,173 | 14,384 | 35,245 | 4,124 | 2,229 | 6,874 | — | 209,029 | ||||||||||||||||||||||||
Total | $ | 701,528 | $ | 188,189 | $ | 168,903 | $ | 129,884 | $ | 30,964 | $ | 82,498 | $ | — | $ | 1,301,966 | ||||||||||||||||
Geographical Market | ||||||||||||||||||||||||||||||||
Asia Pacific | $ | 586,321 | $ | 178,945 | $ | 81,234 | $ | 28,100 | $ | 3,793 | $ | 45,593 | $ | — | $ | 923,986 | ||||||||||||||||
Americas | 73,759 | 7,230 | 69,143 | 43,273 | 17,898 | 32,337 | — | 243,640 | ||||||||||||||||||||||||
Europe, Middle East and Africa | 41,448 | 2,014 | 18,526 | 58,511 | 9,273 | 4,568 | — | 134,340 | ||||||||||||||||||||||||
Total | $ | 701,528 | $ | 188,189 | $ | 168,903 | $ | 129,884 | $ | 30,964 | $ | 82,498 | $ | — | $ | 1,301,966 | ||||||||||||||||
For the Six Months Ended July 3, 2022 (2) | ||||||||||||||||||||||||||||||||
Timing of Revenue Recognition | ||||||||||||||||||||||||||||||||
Point in Time | $ | 718,666 | $ | 163,513 | $ | 223,981 | $ | 163,591 | $ | 34,545 | $ | 109,194 | $ | (539 | ) | $ | 1,412,951 | |||||||||||||||
Over Time | 127,382 | 14,127 | 29,390 | 4,206 | 1,902 | 6,178 | — | 183,185 | ||||||||||||||||||||||||
Total | $ | 846,048 | $ | 177,640 | $ | 253,371 | $ | 167,797 | $ | 36,447 | $ | 115,372 | $ | (539 | ) | $ | 1,596,136 | |||||||||||||||
Geographical Market | ||||||||||||||||||||||||||||||||
Asia Pacific | $ | 754,277 | $ | 172,147 | $ | 169,369 | $ | 35,978 | $ | 7,909 | $ | 79,052 | $ | — | $ | 1,218,732 | ||||||||||||||||
Americas | 58,428 | 4,598 | 70,017 | 55,880 | 15,793 | 27,147 | (539 | ) | 231,324 | |||||||||||||||||||||||
Europe, Middle East and Africa | 33,343 | 895 | 13,985 | 75,939 | 12,745 | 9,173 | — | 146,080 | ||||||||||||||||||||||||
Total | $ | 846,048 | $ | 177,640 | $ | 253,371 | $ | 167,797 | $ | 36,447 | $ | 115,372 | $ | (539 | ) | $ | 1,596,136 | |||||||||||||||
Contract Balances
During the three 7 Deferred revenue and customer advances consist of the following and are included in short and long-term deferred revenue and customer advances on the balance sheet: March 31, December 31, (in thousands) Maintenance, service and training $ 61,404 $ 66,458 Customer advances, undelivered elements and other 39,189 35,731 Extended warranty 34,509 34,897 Total deferred revenue and customer advances $ 135,102 $ 137,086 Accounts Receivable During the three E. On November 7, 2023, Teradyne entered into a definitive agreement to sell Teradyne’s Device Interface Solutions ("DIS") business, a component of the Semiconductor Test segment, to Technoprobe S.p.A. ("Technoprobe") for $85.0 million in cash. As a result, the related assets and liabilities met the criteria and were classified as held-for-sale in Teradyne’s consolidated balance sheet as of December 31, 2023. The transaction, which does not qualify as a strategic shift required for discontinued operations treatment, is expected to close in the second quarter of 2024, subject to regulatory approval. Assets held-for-sale is comprised of the following as of March 31, 2024 and December 31, 2023: March 31, December 31, (in thousands) Current assets: Inventories, net $ 19,276 $ 17,952 Prepayments 3,150 5,298 Total current assets held for sale 22,426 23,250 Property, plant and equipment, net 8,994 8,986 Operating lease right-of-use assets, net 2,464 2,545 Total assets held for sale $ 33,884 $ 34,781 Current liabilities: Accounts payable $ 3,954 $ 6,356 Other accrued liabilities 323 552 Operating lease liabilities 410 471 Total current liabilities held for sale 4,687 7,379 Long-term operating lease liabilities 1,938 2,000 Total liabilities held for sale $ 6,625 $ 9,379 Net assets held for sale $ 27,259 $ 25,402 8 F. INVENTORIES Inventories, net consisted of the following at March 31, December 31, (in thousands) Raw material $ 243,871 $ 258,422 Work-in-process 39,870 26,851 Finished goods 30,491 24,701 Total inventories, net (1) $ 314,232 $ 309,974 Inventory reserves at G. FINANCIAL INSTRUMENTS Cash Equivalents Teradyne considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents. Marketable Securities Teradyne’s equity and debt mutual funds are classified as Level 1 and During the three Realized gains recorded in the three Unrealized gains on equity securities recorded in the three Unrealized gains and losses on The cost of securities sold is based on average cost. 9 The following table sets forth by fair value hierarchy Teradyne’s financial assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2024 Quoted Prices Significant Significant Total (in thousands) Assets Cash $ 278,229 $ — $ — $ 278,229 Cash equivalents 428,675 499 — 429,174 Available-for-sale securities: U.S. Treasury securities — 40,068 — 40,068 Corporate debt securities — 35,845 — 35,845 Certificates of deposit and time deposits — 21,706 — 21,706 Debt mutual funds 10,007 — — 10,007 U.S. government agency securities — 3,863 — 3,863 Commercial paper — 1,689 — 1,689 Non-U.S. government securities — 798 — 798 Equity securities: Mutual funds 49,229 — — 49,229 $ 766,140 $ 104,468 $ — $ 870,608 Derivative assets — 4,251 — 4,251 Total $ 766,140 $ 108,719 $ — $ 874,859 Liabilities Derivative liabilities — 936 — $ 936 Total $ — $ 936 $ — $ 936 Reported as follows: (Level 1) (Level 2) (Level 3) Total (in thousands) Assets Cash and cash equivalents $ 706,904 $ 499 $ — $ 707,403 Marketable securities — 41,300 — 41,300 Long-term marketable securities 59,236 62,669 — 121,905 Prepayments — 4,251 — 4,251 Total $ 766,140 $ 108,719 $ — $ 874,859 Liabilities Other current liabilities $ — $ 936 $ — $ 936 Total $ — $ 936 $ — $ 936 10 December 31, 2023 Quoted Prices Significant Significant Total (in thousands) Assets Cash $ 298,156 $ — $ — $ 298,156 Cash equivalents 453,298 6,117 — 459,415 Available-for-sale securities: Corporate debt securities — 52,734 — 52,734 U.S. Treasury securities — 41,808 — 41,808 Certificates of deposit and time deposits — 21,772 — 21,772 Debt mutual funds 8,773 — — 8,773 U.S. government agency securities — 4,892 — 4,892 Commercial paper — 1,667 — 1,667 Non-U.S. government securities — 810 — 810 Equity securities: Mutual Funds 47,132 — — 47,132 $ 807,359 $ 129,800 $ — $ 937,159 Derivative assets — 18,746 — 18,746 Total $ 807,359 $ 148,546 $ — $ 955,905 Liabilities Derivative liabilities — 2,545 — 2,545 Total $ — $ 2,545 $ — $ 2,545 Reported as follows: (Level 1) (Level 2) (Level 3) Total (in thousands) Assets Cash and cash equivalents $ 751,454 $ 6,117 $ — $ 757,571 Marketable securities — 62,154 — 62,154 Long-term marketable securities 55,905 61,529 — 117,434 Prepayments — 18,746 — 18,746 Total $ 807,359 $ 148,546 $ — $ 955,905 Liabilities Other current liabilities $ — $ 2,545 $ — $ 2,545 Total $ — $ 2,545 $ — $ 2,545 The carrying amounts and fair values of Teradyne’s financial instruments at March 31, 2024 December 31, 2023 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Assets Cash and cash equivalents $ 707,403 $ 707,403 $ 757,571 $ 757,571 Marketable securities 163,205 163,205 179,588 179,588 Derivative assets 4,251 4,251 18,746 18,746 Liabilities Derivative liabilities 936 936 2,545 2,545 The fair values of accounts receivable, net and accounts payable approximate the carrying value due to the short-term nature of these instruments. 11 The following table summarizes the composition of March 31, 2024 Available-for-Sale Cost Unrealized Unrealized Fair Fair Market (in thousands) Corporate debt securities $ 39,946 $ 89 $ (4,190 ) $ 35,845 $ 31,461 U.S. Treasury securities 44,519 1 (4,452 ) 40,068 38,914 Certificates of deposit and time deposits 21,706 — — 21,706 — Debt mutual funds 10,363 — (356 ) 10,007 3,303 U.S. government agency securities 3,883 — (20 ) 3,863 3,863 Commercial paper 1,670 19 — 1,689 — Non-U.S. government securities 798 — — 798 — $ 122,885 $ 109 $ (9,018 ) $ 113,976 $ 77,541 Reported as follows: Cost Unrealized Unrealized Fair Fair Market (in thousands) Marketable securities $ 41,308 $ 19 $ (27 ) $ 41,300 $ 17,657 Long-term marketable securities 81,577 90 (8,991 ) 72,676 59,884 $ 122,885 $ 109 $ (9,018 ) $ 113,976 $ 77,541 The following table summarizes the composition of December 31, 2023 Available-for-Sale Cost Unrealized Unrealized Fair Fair Market (in thousands) Corporate debt securities $ 56,458 $ 201 $ (3,925 ) $ 52,734 $ 44,263 U.S. Treasury securities 45,725 14 (3,931 ) 41,808 35,080 Certificates of deposit and time deposits 21,772 — — 21,772 — Debt mutual funds 9,081 — (308 ) 8,773 3,303 U.S. government agency securities 4,898 — (6 ) 4,892 4,892 Commercial paper 1,633 34 — 1,667 — Non-U.S. government securities 810 — — 810 — $ 140,377 $ 249 $ (8,170 ) $ 132,456 $ 87,538 Reported as follows: Cost Unrealized Unrealized Fair Fair Market (in thousands) Marketable securities $ 62,385 $ 36 $ (267 ) 62,154 $ 34,844 Long-term marketable securities 77,992 213 (7,903 ) 70,302 52,694 $ 140,377 $ 249 $ (8,170 ) $ 132,456 $ 87,538 12 As of Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments at The contractual maturities of investments in March 31, 2024 Cost Fair Market (in thousands) Due within one year $ 41,308 $ 41,300 Due after 1 year through 5 years 26,360 25,819 Due after 5 years through 10 years 7,760 7,405 Due after 10 years 37,094 29,445 Total $ 112,522 $ 103,969 Contractual maturities of investments in Derivatives Teradyne conducts business in various foreign countries, with certain transactions denominated in local currencies. As a result, Teradyne is exposed to risks relating to changes in foreign currency exchange rates. Teradyne’s foreign currency risk management objective is to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, and changes in its cash inflows attributable to the forecasted cash flows from certain foreign currency denominated revenues. To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings and is used to offset the change in value of monetary assets and liabilities denominated in foreign currencies. Teradyne also enters into foreign currency forward and option contracts designated as cash flow hedges to hedge the risk of changes in its cash inflows attributable to changes in foreign currency exchange rates. The cash flow hedges have maturities of less than six months and mature in the period of revenue recognition for certain products and services in backlog and forecasted to be recognized in a future period. Teradyne evaluates cash flow hedges for effectiveness at inception based on the critical terms match method. The hedges are not expected to incur any ineffectiveness however a quarterly qualitative assessment of effectiveness is done to determine if the critical terms match method remains appropriate to use. The change in fair value of the contracts is recorded in accumulated other comprehensive income (loss) and reclassified to earnings at maturity date. Teradyne does not use derivative financial instruments for speculative purposes. 13 At Net Notional Value March 31, December 31, (in millions) Currency Hedged (Buy/Sell) U.S. dollar/Japanese yen $ 57.5 $ 11.0 U.S. dollar/Danish krone 28.4 36.0 U.S. dollar/Taiwan dollar 20.1 42.7 U.S. dollar/Korean won 6.6 7.2 U.S. dollar/British pound sterling 1.0 1.5 Euro/U.S. dollar 25.8 25.3 Singapore dollar/U.S. dollar 17.6 16.6 Philippine peso/U.S. dollar 9.9 10.1 Chinese yuan/U.S. dollar 0.6 1.0 Danish krone/U.S. dollar 0.6 0.7 Total $ 168.1 $ 152.1 The fair value of the outstanding contracts was a Unrealized gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities are included in other (income) expense, net. At Net Notional Value March 31, December 31, (in millions) Currency Hedged (Buy/Sell) U.S. dollar/Japanese yen $ — $ 35.5 Total $ — $ 35.5 There were no outstanding cash flow hedge contracts at March 31, 2024. The fair value of the outstanding cash flow hedge contracts was a gain of Unrealized gains and losses on foreign currency cash flow hedge contracts are included in accumulated other comprehensive income (loss). At maturity, the gains or losses associated with cash flow hedge contracts are recorded to revenue. On November 7, 2023, in connection with our agreement to acquire 10% investment in Technoprobe S.p.A we purchased a call option to buy 481.0 million Euros. The expiration date of the option is April 26, 2024. On April 12, 2024, Teradyne entered into a forward to buy 481.0 million Euros expiring on May 23, 2024. At March 31, 2024 and December 31, 2023, the fair value of the outstanding contract was $3.4 million and $17.4 million, respectively. For the three months ended March 31, 2024, an unrealized loss of $13.9 million was recorded in other (income) expense, net. 14 The following table summarizes the fair value of derivative instruments as of Balance Sheet Location March 31, December 31, (in thousands) Derivatives not designated as hedging instruments: Foreign exchange forward contracts Other current assets $ 805 $ 733 Foreign exchange option contracts Other current assets 3,446 17,364 Foreign exchange forward contracts Other current liabilities (936 ) (2,545 ) Derivatives designated as hedging instruments: Foreign exchange forward contracts Other current assets — 648 Total derivatives $ 3,315 $ 16,200 The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three For the Three Months Location of (Gains) Losses March 31, April 2, (in thousands) Derivatives not designated as hedging instruments: Foreign exchange forward contracts (1) Other (income) expense, net $ (1,699 ) $ 1,259 Foreign exchange option contracts Other (income) expense, net 13,918 — Derivatives designated as hedging instruments: Foreign exchange forward and option contracts Revenue (2,280 ) 1,538 Total Derivatives $ 9,939 $ 2,797 See Note H. DEBT Convertible Senior Notes On December 12, 2016, Teradyne completed a private offering of Concurrent with the offering of the Notes, Teradyne entered into convertible note hedge transactions (the “Note Hedge Transactions”) with the initial purchasers or their affiliates (the “Option Counterparties”). The Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the common stock that underlie the 15 The interest expense on For the Three Months March 31, April 2, (in thousands) Contractual interest expense on the coupon $ — $ 138 Amortization of debt issuance fees recognized as interest expense — 113 Total interest expense on the convertible debt $ — $ 251 Revolving Credit Facility On May 1, 2020, Teradyne entered into a credit agreement (the “Credit Agreement”) with Truist Bank, as administrative agent and collateral agent, and the lenders party thereto. The Credit Agreement provided for a three-year, senior secured revolving credit facility of On December 10, 2021, the Credit Agreement was amended to extend the maturity date of the Credit Facility to December 10, 2026. On October 5, 2022, the Credit Agreement was amended to increase the amount of the Credit Facility to The Credit Agreement provides that, subject to customary conditions, Teradyne may seek to obtain from existing or new lenders the available incremental amount under the Credit Facility, not to exceed the greater of 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 SOFR breakage costs. The Credit Agreement contains customary events of default, representations, warranties and affirmative and negative covenants that, among other things, limit Teradyne’s 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. 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 As of I. PREPAYMENTS Prepayments consist of the following: March 31, December 31, (in thousands) Contract manufacturer and supplier prepayments $ 491,512 $ 502,257 Prepaid maintenance and other services 21,894 17,592 Prepaid taxes 14,335 16,083 Other prepayments 9,901 13,038 Total prepayments (1) $ 537,642 $ 548,970 16 J. PRODUCT WARRANTY Teradyne generally provides a For the Three Months March 31, April 2, (in thousands) Balance at beginning of period $ 15,698 $ 14,181 Accruals for warranties issued during the period 3,259 4,117 Accruals related to pre-existing warranties (683 ) (405 ) Settlements made during the period (2,950 ) (4,992 ) Balance at end of period $ 15,324 $ 12,901 When Teradyne receives revenue for extended warranties, beyond one year, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. The balance below is included in short and long-term deferred revenue and customer advances. For the Three Months March 31, April 2, (in thousands) Balance at beginning of period $ 34,897 $ 56,180 Deferral of new extended warranty revenue 6,914 4,413 Recognition of extended warranty deferred revenue (7,302 ) (11,250 ) Balance at end of period $ 34,509 $ 49,343 K. STOCK-BASED COMPENSATION On February 1, 2023 Under Teradyne’s stock compensation plans, Teradyne grants time-based restricted stock units, performance-based restricted stock units and stock options, and employees are eligible to purchase Teradyne’s common stock through its Employee Stock Purchase Plan (“ESPP”). Service-based restricted stock unit awards granted to employees vest in equal annual installments over four Performance-based restricted stock units (“PRSUs”) granted to Teradyne’s executive officers may have a performance metric based on relative total shareholder return (“TSR”). Teradyne’s three-year TSR performance is measured against the New York Stock Exchange (“NYSE”) Composite Index. The final number of TSR PRSUs that vest will vary based upon the level of performance achieved from 17 during the year following the grant. Compensation expense is recognized regardless of the eventual number of units that are earned based upon the market condition, provided the executive officer remains an employee at the end of the three-year period. Compensation expense is reversed if at any time during the three-year service period the executive officer is no longer an employee, subject to the retirement and termination eligibility provisions noted below. PRSUs granted to Teradyne’s executive officers may also have a performance metric based on three-year cumulative If a PRSU recipient’s employment ends prior to the determination of the performance percentage due to (1) permanent disability or death or (2) retirement or termination other than for cause, after attaining both at least age sixty and at least ten years of service, then all or a portion of the recipient’s PRSUs (based on the actual performance percentage achieved on the determination date) will On January 22, 2024, the Board enacted the Executive Retirement Policy for Restricted Stock Unit and Option Vesting (the "Retirement Policy"). Under the Retirement Policy, an executive officer that is over the age of 65 and has 10 or more years of service as of the effective date of his or her retirement will be eligible for continued vesting of his or her unvested time-based restricted stock units and stock options granted prior to his or her retirement date. During the During the During the For the Three Months March 31, April 2, Risk-free interest rate 3.9 % 3.9 % Teradyne volatility-historical 42.4 % 50.2 % NYSE Composite Index volatility-historical 15.6 % 24.8 % Dividend yield 0.5 % 0.4 % Expected volatility was based on the historical volatility of Teradyne’s stock and the NYSE Composite Index over the most recent three-year period. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of During the 18 The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions: For the Three Months March 31, April 2, Expected life (years) 4.0 4.0 Risk-free interest rate 4.0 % 3.7 % Volatility-historical 46.3 % 46.7 % Dividend yield 0.5 % 0.4 % Teradyne determined the stock options’ expected life based upon historical exercise data for executive officers, the age of the executive officers and the terms of the stock option grant. Volatility was determined using historical volatility for a period equal to the expected life. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of L. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Changes in Foreign Unrealized Unrealized (Losses) Gains on Cash Flow Hedges Retirement Total (in thousands) Three Months Ended March 31, 2024 Balance at December 31, 2023, net of tax of $0, $(1,728), $ (22,442 ) $ (6,194 ) $ 506 $ 1,152 $ (26,978 ) Other comprehensive (loss) gain before reclassifications, (11,457 ) (902 ) 1,274 — (11,085 ) Amounts reclassified from accumulated other comprehensive — 106 (1,780 ) (2 ) (1,676 ) Net current period other comprehensive loss, net of tax (11,457 ) (796 ) (506 ) (2 ) (12,761 ) Balance at March 31, 2024, net of tax of $0, $(1,919), $ (33,899 ) $ (6,990 ) $ — $ 1,150 $ (39,739 ) Three Months Ended April 2, 2023 Balance at December 31, 2022, net of tax of $0, $(2,308), $ (39,849 ) $ (8,661 ) $ (2,517 ) $ 1,159 $ (49,868 ) Other comprehensive gain before reclassifications, 9,309 2,294 596 — 12,199 Amounts reclassified from accumulated other comprehensive — 5 1,200 (2 ) 1,203 Net current period other comprehensive gain (loss), net of tax 9,309 2,299 1,796 (2 ) 13,402 Balance at April 2, 2023, net of tax of $0, $(1,803), $ (30,540 ) $ (6,362 ) $ (721 ) $ 1,157 $ (36,466 ) 19 Reclassifications out of accumulated other comprehensive income (loss) to the statement of operations for the three Details about Accumulated Other Comprehensive Income (Loss) Components For the Three Months Affected Line Item March 31, April 2, (in thousands) Available-for-sale marketable securities: Unrealized losses, net of tax of $(30), $(2), respectively $ (106 ) $ (5 ) Other (income) expense, net Cash flow hedges: Unrealized (losses) gains, net of tax of $500, $(338), respectively 1,780 (1,200 ) Revenue Defined benefit pension and postretirement plans: Amortization of prior service credit, net of tax of $0, $0, 2 2 (a) Total reclassifications, net of tax of $470, $(340), respectively $ 1,676 $ (1,203 ) Net income M. GOODWILL AND ACQUIRED INTANGIBLE ASSETS Goodwill Teradyne performs its annual goodwill impairment test as required under the provisions of ASC The changes in the carrying amount of goodwill by reportable segments for the Robotics Wireless Semiconductor System Total (in thousands) Balance at December 31, 2023 Goodwill $ 395,463 $ 361,819 $ 262,237 $ 158,699 $ 1,178,218 Accumulated impairment losses — (353,843 ) (260,540 ) (148,183 ) (762,566 ) Total Goodwill 395,463 7,976 1,697 10,516 415,652 Foreign currency translation adjustment (7,962 ) — (114 ) — (8,076 ) Balance at March 31, 2024 Goodwill $ 387,502 $ 361,819 $ 262,123 $ 158,699 1,170,142 Accumulated impairment losses — (353,843 ) (260,540 ) (148,183 ) (762,566 ) Total Goodwill $ 387,502 $ 7,976 $ 1,583 $ 10,516 $ 407,576 20 Intangible Assets Teradyne reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheet: Gross Accumulated Foreign Net (in thousands) Balance at March 31, 2024 Developed technology $ 267,706 $ (246,266 ) $ (5,635 ) $ 15,805 Customer relationships 52,109 (48,278 ) 203 4,034 Tradenames and trademarks 59,007 (47,231 ) (1,381 ) 10,395 Total intangible assets $ 378,822 $ (341,775 ) $ (6,813 ) $ 30,234 Balance at December 31, 2023 Developed technology $ 267,706 $ (243,191 ) $ (5,343 ) $ 19,172 Customer relationships 52,109 (47,850 ) 232 4,491 Tradenames and trademarks 59,007 (46,021 ) (1,245 ) 11,741 Total intangible assets $ 378,822 $ (337,062 ) $ (6,356 ) $ 35,404 Aggregate intangible asset amortization expense was Estimated intangible asset amortization expense for each of the five succeeding fiscal years and thereafter is as follows: Year Amortization (in thousands) 2024 $ 14,010 2025 11,290 2026 2,364 2027 1,148 2028 1,066 Thereafter 356 N. NET INCOME PER COMMON SHARE The following table sets forth the computation of basic and diluted net income per common share: For the Three Months March 31, April 2, (in thousands, except per share amounts) Net income for basic and diluted net income per share $ 64,197 $ 83,531 Weighted average common shares-basic 153,047 155,904 Effect of dilutive potential common shares: Convertible note hedge warrant shares (1) 8,862 8,983 Incremental shares from assumed conversion of convertible notes (2) — 914 Restricted stock units 419 453 Stock options 16 48 Employee stock purchase plan 4 6 Dilutive potential common shares 9,301 10,404 Weighted average common shares-diluted 162,348 166,308 Net income per common share-basic $ 0.42 $ 0.54 Net income per common share-diluted $ 0.40 $ 0.50 21 The computation of diluted net income per common share for the three O. RESTRUCTURING AND OTHER During the three months ended During the three months ended P. RETIREMENT PLANS ASC 715, “Compensation—Retirement Benefits,” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation at December 31. Teradyne uses a December 31 measurement date for all its plans. Defined Benefit Pension Plans Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain In the For the three For the Three Months Ended March 31, 2024 April 2, 2023 United Foreign United Foreign (in thousands) Service cost $ 231 $ 117 $ 272 $ 109 Interest cost 1,647 246 1,711 262 Expected return on plan assets (1,268 ) (16 ) (1,285 ) (9 ) Total net periodic pension cost $ 610 $ 347 $ 698 $ 362 22 Postretirement Benefit Plan In addition to receiving pension benefits, Teradyne employees in the United States who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits and the existing benefit obligation relates primarily to those employees. For the three For the Three Months March 31, April 2, (in thousands) Service cost $ 10 $ 9 Interest cost 73 61 Amortization of prior service credit (2 ) (2 ) Special termination benefits 292 — Total net periodic postretirement benefit cost $ 373 $ 68 Q. COMMITMENTS AND CONTINGENCIES Purchase Commitments As of Legal Claims Teradyne is subject to various legal proceedings and claims which have arisen in the ordinary course of business such as, but not limited to, patent, employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all pending claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions are unlikely to have a material adverse effect on its business, financial position or results of operations. Guarantees and Indemnification Obligations Teradyne provides indemnification, to the extent permitted by law, to its officers, directors, employees and agents for liabilities arising from certain events or occurrences, while the officer, director, employee, or agent, is or was serving, at Teradyne’s request in Teradyne enters into agreements in the ordinary course of business with customers, resellers, distributors, integrators and suppliers. Most of these agreements require Teradyne to defend and/or indemnify the other party against intellectual property infringement claims brought by a third party with respect to Teradyne’s products. From time to time, Teradyne also indemnifies customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal property damage, product liability, breach of confidentiality obligations and environmental claims relating to the use of Teradyne’s products and services or resulting from the acts or omissions of Teradyne, its employees, authorized agents or subcontractors. On occasion, Teradyne has also provided guarantees to customers regarding the delivery and performance of its products in addition to the warranty described below. As a matter of ordinary course of business, Teradyne warrants that its products will substantially perform in accordance with its standard published specifications in effect at the time of delivery. Most warranties have a 23 installation. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based upon historical experience. When Teradyne receives revenue for extended warranties beyond the standard duration, the revenue is deferred In addition, in the ordinary course of business, Teradyne provides minimum purchase guarantees to certain vendors to ensure continuity of supply against the market demand. Although some of these guarantees provide penalties for cancellations and/or modifications to the purchase commitments as the market demand decreases, most of the guarantees do not. Therefore, as the market demand decreases, Teradyne With respect to its agreements covering product, business or entity divestitures and acquisitions, Teradyne provides certain representations, warranties and covenants to purchasers and agrees to indemnify and hold such purchasers harmless against breaches of such representations, warranties and covenants. Many of the indemnification claims have a definite expiration date while some remain in force indefinitely. With respect to its acquisitions, Teradyne may, from time to time, assume the liability for certain events or occurrences that took place prior to the date of acquisition. As a matter of ordinary course of business, Teradyne occasionally guarantees certain indebtedness obligations of its subsidiary companies, limited to the borrowings from financial institutions, purchase commitments to certain vendors and lease commitments to landlords. Based on historical experience and information known as of R. INCOME TAXES A reconciliation of the United States federal statutory corporate tax rate to Teradyne’s effective tax rate was as follows: For the Three Months March 31, April 2, U.S. statutory federal tax rate 21.0 % 21.0 % Tax credits (3.1 ) (2.5 ) Discrete benefit related to reserves for uncertain tax positions (3.1 ) — International provisions of the U.S. Tax Cuts and Jobs Act of 2017 (2.2 ) (3.2 ) Foreign taxes (2.1 ) (0.6 ) Discrete benefit related to equity compensation (0.9 ) (3.3 ) Other, net 2.3 2.6 Effective tax rate 11.9 % 14.0 % On a quarterly basis, Teradyne evaluates the realizability of the deferred tax assets by jurisdiction and assesses the need for a valuation allowance. As of As of As of Teradyne recognizes interest and penalties related to income tax matters in income tax expense. As of 24 Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings due to the tax holiday for the On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA introduced a On December 15, 2022, the European Union ("EU") Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework. The EU’s Pillar Two Directive effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. On July 17, 2023, the OECD published Administrative Guidance proposing certain safe harbor rules that effectively extend certain effective dates to January 1, 2027. Certain EU Member States where Teradyne has a legal presence have recently enacted the directive and administrative guidance into their local tax legislation. Additionally, countries outside the EU where Teradyne has a legal presence have enacted similar language as the EU Members States in their local tax legislation. Teradyne is closely monitoring these developments and evaluating the potential financial impact on income tax expense. As of March 31, 2024, Teradyne anticipates it will meet the safe harbors in most jurisdictions, and any remaining tax under the rules should be immaterial for the year ending December 31, 2024. S. SEGMENT INFORMATION Teradyne has four reportable segments (Semiconductor Test, System Test, Wireless Test and Robotics). Each of the reportable segments represents an individual operating segment. The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test products and services. The System Test segment includes operations related to the design, manufacturing and marketing of products and services for Teradyne evaluates performance based on several factors, of which the primary financial measure is business segment income (loss) before income taxes. The accounting policies of the business segments are the same as those described in Note B: “Accounting Policies” in Teradyne’s Annual Report on Form Segment information for the three Semiconductor System Robotics Wireless Segment Total Corporate Consolidated (in thousands) Three Months Ended March 31, 2024 Revenues $ 412,254 $ 75,322 $ 87,654 $ 24,589 $ 599,819 $ — $ 599,819 Income (loss) before income taxes (1)(2) 79,414 18,391 (14,047 ) (893 ) $ 82,865 (9,963 ) $ 72,902 Total assets (3) 1,348,829 181,803 721,318 69,519 $ 2,321,469 1,089,251 $ 3,410,720 Three Months Ended April 2, 2023 Revenues $ 415,009 $ 74,631 $ 89,214 $ 38,675 $ 617,529 $ — $ 617,529 Income (loss) before income taxes (1)(2) 96,185 15,275 (18,490 ) 9,352 $ 102,322 (5,238 ) $ 97,084 Total assets (3) 1,386,851 173,669 676,092 87,875 $ 2,324,487 1,058,920 $ 3,383,407 25 Included in each segment are charges and credits in the following line items in the statements of operations: For the Three Months March 31, April 2, (in thousands) Semiconductor Test: Cost of revenues—inventory charge $ 4,956 $ 3,768 Restructuring and other—employee severance 983 794 System Test: Cost of revenues—inventory charge $ — $ 675 Robotics: Cost of revenues—inventory charge $ — $ 782 Corporate and Eliminations: Restructuring and other—acquisition & divestiture related expenses 2,214 — Selling and administrative —equity modification 1,469 5,889 Restructuring and other—employee severance $ — $ 659 T. SHAREHOLDERS’ EQUITY Stock Repurchase Program In January 2023, Teradyne’s Board of Directors cancelled its January 2021 repurchase program and approved a new repurchase program for up to During the During the three months ended April 2, 2023, Teradyne repurchased 0.9 million shares of common stock for $93.7 million at an average price of $104.88 per share. The total cost of shares acquired includes commissions and Dividend Holders of Teradyne’s common stock are entitled to receive dividends when they are declared by Teradyne’s Board of Directors. In January 26 Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations Statements in this Quarterly Report on Form Overview We are a leading global supplier of automated test equipment and robotics The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our test products both through direct sales and sales to the customers’ supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future. In the first quarter of 2024, artificial intelligence applications (“AI”) drove Semiconductor Test performance above our plan, particularly in Memory. We expect AI to continue to drive meaningful demand into the second quarter of Our Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms, and Mobile Industrial Robots A/S (“MiR”), a leading maker of AMRs for industrial automation. The market for our Robotics segment products is dependent on the adoption of new automation technologies by large manufacturers as well as small and medium enterprises (“SMEs”) throughout the world. On November 7, 2023, Teradyne and Technoprobe S.p.A, (“Technoprobe”), a leader in the design and production of probe cards, announced the establishment of a strategic partnership that will seek to accelerate growth for both companies and enable higher performance semiconductor test interfaces for customers worldwide. As part of the partnership, Teradyne agreed to make an investment of 481.0 million Euros in exchange for a 10% equity investment in Technoprobe, and Technoprobe agreed to acquire 100% of Teradyne’s Device Interface Solutions ("DIS") business in exchange for $85.0 million. The transaction is expected to close during the second quarter of Our financial statements are denominated in U.S. dollars. While the majority of our revenues are in U.S. dollars, historically approximately 70 percent of our Robotics revenue is denominated in foreign currencies. 27 Our corporate strategy continues to focus on profitably gaining market share in our test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our Robotics businesses. We plan to execute on our strategy while balancing capital allocations between returning capital to our shareholders through stock repurchases and dividends and using capital for opportunistic accretive acquisitions. Critical Accounting Policies and Estimates We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the Critical accounting estimates are complex and may require significant judgment by management. Changes to the underlying assumptions may have a material impact on our financial condition and results of operations. These estimates may change, as new events occur and additional information is obtained. Actual results could differ significantly from these estimates under different assumptions or conditions. Preparation of Financial Statements and Use of Estimates The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates under different assumptions or conditions. SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months March 31, April 2, Percentage of revenues: Revenues: Products 76 % 77 % Services 24 23 Total revenues 100 100 Cost of revenues: Cost of products 33 32 Cost of services 10 10 Total cost of revenues (exclusive of acquired intangible 43 42 Gross profit 57 58 Operating expenses: Selling and administrative 25 24 Engineering and development 17 17 Acquired intangible assets amortization 1 1 Restructuring and other 1 — Total operating expenses 44 43 Income from operations 13 15 Non-operating (income) expense: Interest income (1 ) (1 ) Interest expense — — Other (income) expense, net 2 — Income before income taxes 12 16 Income tax provision 1 2 Net income 11 % 14 % 28 Results of Operations First Quarter Revenues Revenues by our reportable segments were as follows: For the Three Months March 31, April 2, Dollar (in millions) Semiconductor Test $ 412.3 $ 415.0 $ (2.7 ) System Test 75.3 74.6 0.7 Robotics 87.7 89.2 (1.5 ) Wireless Test 24.6 38.7 (14.1 ) $ 599.8 $ 617.5 $ (17.7 ) The decrease in Semiconductor Test revenues of Revenues by country as a percentage of total revenues were as follows (1): For the Three Months March 31, April 2, Korea 28 % 12 % United States 17 18 Taiwan 12 18 Japan 11 9 Europe 11 12 China 7 10 Singapore 3 8 Malaysia 3 3 Philippines 2 5 Thailand 2 3 Rest of World 4 2 100 % 100 % Gross Profit Our gross profit was as follows: For the Three Months March 31, April 2, Dollar/Point (in millions) Gross profit $ 339.3 $ 356.4 $ (17.1 ) Percent of total revenues 56.6 % 57.7 % (1.2 ) Gross profit as a percent of revenue decreased by 29 Selling and Administrative Selling and administrative expenses were as follows: For the Three Months March 31, April 2, Dollar (in millions) Selling and administrative $ 149.2 $ 151.0 $ (1.8 ) Percent of total revenues 24.9 % 24.4 % The Engineering and Development Engineering and development expenses were as follows: For the Three Months March 31, April 2, Dollar (in millions) Engineering and development $ 103.2 $ 105.8 $ (2.6 ) Percent of total revenues 17.2 % 17.1 % The decrease of Restructuring and Other During the three months ended During the three months ended Interest and Other For the Three Months March 31, April 2, Dollar (in millions) Interest income $ (7.9 ) $ (5.3 ) $ (2.6 ) Interest expense 0.7 1.0 $ (0.3 ) Other (income) expense, net 12.1 0.1 $ 12.0 Other (income) expense, net increased 30 Income (Loss) Before Income Taxes For the Three Months March 31, April 2, Dollar (in millions) Semiconductor Test $ 79.4 $ 96.2 $ (16.8 ) System Test 18.4 15.3 3.1 Wireless Test (0.9 ) 9.4 (10.3 ) Robotics (14.0 ) (18.5 ) 4.5 Corporate and Eliminations (1) (10.0 ) (5.2 ) (4.8 ) $ 72.9 $ 97.1 $ (24.2 ) The decrease in income before income taxes in Semiconductor Test was driven primarily by lower Income Taxes The effective tax rate for the three months ended Contractual Obligations There have been no changes outside of the ordinary course of business to our contractual obligations as disclosed in our Annual Report on Liquidity and Capital Resources Our cash, cash equivalents and marketable securities balances decreased by Operating activities during the The increase in operating assets was primarily due to The decrease in operating liabilities was due to a Investing activities during the 31 Financing activities during the Operating activities during the three months ended April 2, 2023, provided cash of $19.3 million. Changes in operating assets and liabilities used cash of $106.5 million due to a $1.9 million increase in operating assets and $104.7 million decrease in operating liabilities. The increase in operating assets was due to a $23.7 million increase in inventories, a $15.4 million increase in prepayments and other assets due to prepayments to our contract manufactures, partially offset by a $37.2 million decrease in accounts receivable. The decrease in operating liabilities was due to a $93.1 million decrease in accrued employee compensation, a $32.7 million decrease in deferred revenue and customer advance payments, and $1.2 million of retirement plan contributions, partially offset by a $12.5 million increase in income taxes, a $9.6 million increase in accrued other liabilities, and a $0.3 million increase in accounts payable. In January In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. During the While we have previously declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400 million. On December 10, 2021, the credit agreement was amended to extend the senior secured revolving credit facility to December 10, 2026. On October 5, 2022, the credit agreement was amended to increase the amount of the credit facility to $750.0 million from $400.0 million. As of We believe our cash, cash equivalents, marketable securities and senior secured revolving credit facility will be sufficient Equity Compensation Plans In addition to our 1996 Employee Stock Purchase Program as discussed in Note Q: “Stock-Based Compensation” in our The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers and directors. Both plans were approved by our shareholders. Recently Issued Accounting Pronouncements In November 2023, the 32 significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, we will be required to disclose the title and position of the CODM. The new standard is effective for fiscal years beginning after December 15, 2023, In December 2023, FASB issued Item 3: Quantitative and Qualitative Disclosures about Market Risks For “Quantitative and Qualitative Disclosures about Market Risk” affecting Teradyne, see Part 2 Item 7A, “Quantitative and Qualitative Disclosures about Market Risks,” in our Annual Report on Form Item 4: Controls and As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule There have been no changes in our internal control over financial reporting (as defined in Rules 33 PART II. OTHER INFORMATION Item 1: Legal Proceedings We are subject to various legal proceedings and claims which have arisen in the ordinary course of business such as, but not limited to, patent, employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all pending claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions are unlikely to have a material adverse effect on its business, financial position or results of operations. Item 1A: Risk Factors In addition to other information set forth in this Form The risks described in our Annual Report on Form 34 Item 2: Unregistered Sales of In January 2023, Teradyne’s Board of Directors cancelled our 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. During the The following table includes information with respect to repurchases we made of our common stock during the three Period Total Average Total Number of Maximum Number January 1, 2024 - January 28, 2024 22 $ 110.59 — $ 1,599,497 January 29, 2024 - February 25, 2024 229 $ 101.92 130 $ 1,586,608 February 26, 2024 - March 31, 2024 92 $ 102.51 90 $ 1,577,380 343 (1) 102.65 (1) 220 We satisfy U.S. federal and state minimum withholding tax obligations due upon the vesting and the conversion of restricted stock units into shares of our common stock, by automatically withholding from the shares being issued, a number of shares with an aggregate fair market value on the date of such vesting and conversion that would satisfy the minimum withholding amount due. Item 4: Mine Safety Disclosures Not Applicable 35 Item 5: Other Information 10b 5-1 Trading Plans Our officers (as defined in Rule Richard Burns, President, Semiconductor Test Richard Burns, our Mercedes Johnson, Director Mercedes Johnson, a member of our Board of Directors, entered into a new Rule 10b5-1 trading plan on February 2, 2024. The Rule 10b5-1 trading plan provides that Ms. Johnson, acting through a broker, may sell up to an aggregate of 7,500 shares. Subject to price limits, the first trade under Ms. Johnson’s Rule 10b5-1 trading plan is scheduled for June 3, 2024. Ms. Johnson’s plan is scheduled to terminate on April 30, 2025, subject to earlier termination upon the sale of all shares subject to the plan, upon termination by Ms. Johnson or the broker, or as otherwise provided in the plan. 36 Item 6: Exhibits Exhibit Number Description 10.1 10.2 31.1 31.2 32.1 32.2 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema 104 Cover Page Interactive Data File (formatted as Inline XBRL, and contained in Exhibit 101) 37 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TERADYNE, INC. Registrant /s/ SANJAY MEHTA Sanjay Mehta Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer) May 3, 2024 38and six months ended JulyMarch 31, 2024 and April 2, 2023, Teradyne recognized $27.3$28.2 million and $68.4 million, respectively, that was included within the deferred revenue and customer advances balances at the beginning of the period. During the three and six months ended July 3, 2022, Teradyne recognized $25.1 million and $60.2 July 2, 2023,March 31, 2024, Teradyne1,271.6in1-3years.
2024
2023 $ 68,282 $ 78,089 Customer advances, undelivered elements and other 46,380 59,147 Extended warranty 44,422 56,180 $ 159,084 $ 193,416 and six months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, Teradyne sold certain trade accounts receivables on aJulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, total trade accounts receivable sold under the factoring agreements were $59.3$23.4 million and $37.6$34.2 million, respectively. During the six months ended July 2, 2023 and July 3, 2022, total trade accountsreceivable sold under the factoring agreements were $93.5 million and $57.1 million, respectively. Factoring fees for the sales of receivables were recorded in interest expense and were not material. Teradyne accounted for these transactions as sales of receivables and presented cash proceeds as cash provided by operating activities in the consolidated statements of cash flows.INVENTORIESASSETS HELD FOR SALE
2024
2023July 2, 2023March 31, 2024 and December 31, 2022:
2024
2023 $ 250,422 $ 256,065 43,685 37,982 53,188 30,972 $ 347,295 $ 325,019 July 2, 2023March 31, 2024 and December 31, 20222023 were $140.3$136.0 million and $136.8$136.0 million, respectively.F. Contingent consideration is classified as Level 3. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.and six months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.8and six months ended JulyMarch 31, 2024 and April 2, 2023,,0.10.4 million, respectively. Realized gains recorded in the three and six months ended July 3, 2022,were $0.1 million and $0.5and six months ended JulyMarch 31, 2024 and April 2, 2023,, million. Realized losses recorded in the three and six months ended July 3, 2022,were $0.40.6and six months ended JulyMarch 31, 2024 and April 2, 2023,$2.6$2.6 million and $4.6 million, respectively. No unrealized gains on equity securities were recorded in the three and six months ended July 3, 2022. No unrealized losses on equity securities were recorded in the three and six months ended July 2, 2023. Unrealized losses on equity securities recorded in the three and six months ended July 3, 2022,were $6.6 million and $8.8$2.0 million, respectively. Unrealized gains and losses on equity securities are included in other (income) expense, net.July 2, 2023March 31, 2024 and December 31, 2022.
in Active
Markets for
Identical
Instruments
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)9
in Active
Markets for
Identical
Instruments
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Prices $ 311,803 $ — $ — $ 311,803 290,548 10,857 — 301,405 — 52,238 — 52,238 — 51,608 — 51,608 — 30,882 — 30,882 7,739 — — 7,739 — 6,699 — 6,699 — 6,475 — 6,475 — 544 — 544 43,699 — — 43,699 $ 653,789 $ 159,303 $ — $ 813,092 — 5,819 — 5,819 $ 653,789 $ 165,122 $ — $ 818,911 $ — $ 994 $ — $ 994 $ — $ 994 $ — $ 994 Reported as follows: $ 602,351 $ 10,857 $ — $ 613,208 — 95,199 — 95,199 51,438 53,247 — 104,685 — 5,819 — 5,819 $ 653,789 $ 165,122 $ — $ 818,911 . $ — $ 994 $ — $ 994 $ — $ 994 $ — $ 994 10 $ 632,417 $ — $ — $ 632,417 161,767 60,589 — 222,356 — — 50,856 — 50,856 — 39,649 — 39,649 — 7,159 — 7,159 6,580 — — 6,580 — 6,352 — 6,352 — 1,740 — 1,740 — 535 — 535 37,518 — — 37,518 $ 838,282 $ 166,880 $ — $ 1,005,162 — 86 — 86 $ 838,282 $ 166,966 $ — $ 1,005,248 — 4,215 — 4,215 $ — $ 4,215 $ — $ 4,215 Reported as follows: $ 794,184 $ 60,589 $ — $ 854,773 — 39,612 — 39,612 44,098 66,679 — 110,777 — 86 — 86 $ 838,282 $ 166,966 $ — $ 1,005,248 $ — $ 4,215 $ — $ 4,215 $ — $ 4,215 $ — $ 4,215 July 2, 2023March 31, 2024 and December 31, 2022, $ 613,208 $ 613,208 $ 854,773 $ 854,773 199,884 199,884 150,389 150,389 5,819 5,819 86 86 994 994 4,215 4,215 32,806 115,778 50,115 139,007 11July 2, 2023:
Market $ 56,107 $ 2 $ (3,871 ) $ 52,238 $ 42,716 56,680 12 (5,084 ) 51,608 50,455 30,311 581 (10 ) 30,882 19,840 8,104 — (365 ) 7,739 3,161 6,699 — — 6,699 — 6,520 — (45 ) 6,475 6,475 544 — — 544 — $ 164,965 $ 595 $ (9,375 ) $ 156,185 $ 122,647
Gain
(Loss)
Market
Value
Value of
Investments
with Unrealized
Losses
Gain
(Loss)
Market
Value
Value of
Investments
with Unrealized
Losses $ 95,482 $ 581 $ (864 ) $ 95,199 $ 68,121 69,483 14 (8,511 ) 60,986 54,526 $ 164,965 $ 595 $ (9,375 ) $ 156,185 $ 122,647 2022:
Market $ 57,006 $ 3 $ (6,153 ) $ 50,856 $ 50,667 44,030 — (4,381 ) 39,649 39,649 7,089 70 — 7,159 — 6,997 — (417 ) 6,580 3,095 6,442 — (90 ) 6,352 6,352 1,740 — — 1,740 — 535 — — 535 — $ 123,839 $ 73 $ (11,041 ) $ 112,871 $ 99,763 12
Gain
(Loss)
Market
Value
Value of
Investments
with Unrealized
Losses
Gain
(Loss)
Market
Value
Value of
Investments
with Unrealized
Losses
Market $ 39,950 $ 70 $ (408 ) $ 39,612 $ 30,713 83,889 3 (10,633 ) 73,259 69,050 $ 123,839 $ 73 $ (11,041 ) $ 112,871 $ 99,763 July 2, 2023,March 31, 2024, the fair market value of investments with unrealized losses less than one year and greater than one year totaled $63.8$36.2 million and $58.8$41.4 million, respectively. As of December 31, 2022,2023, the fair market value of investments with unrealized losses for less than one year and greater than one year totaled $66.3$22.3 million and $33.4$65.2 million, respectively.July 2, 2023March 31, 2024 and December 31, 20222023 were not other than temporary.July 2, 2023,
Value $ 95,482 $ 95,199 17,131 16,467 6,012 5,559 38,236 31,221 Total $ 156,861 $ 148,446 July 2, 2023,March 31, 2024, exclude debt mutual funds with a fair market$7.7$10.0 million as they do not have a contractual maturity date.July 2, 2023March 31, 2024 and December 31, 2022,2023, Teradyne had the following contracts to buy and sell
2024
2023 U.S. dollar/Japanese yen $ 66.3 $ 37.1 U.S. dollar/Taiwan dollar 22.3 29.2 U.S. dollar/Korean won 8.1 6.4 U.S. dollar/British pound sterling 0.9 1.2 Euro/U.S. dollar 24.5 38.4 Singapore dollar/U.S. dollar 22.0 34 Philippine peso/U.S. dollar 2.5 2.7 Chinese yuan/U.S. dollar 1.8 2.2 Danish krone/U.S. dollar 0.6 — Total $ 149.0 $ 150.7 gain$1.1$0.1 million and0.91.8 million respectively, at July 2, 2023March 31, 2024 and December 31, 2022.July 2, 2023March 31, 2024 and December 31, 2022,2023, Teradyne had the following cash flow hedge contracts to buy and sell
2024
2023 Japanese yen/U.S. dollar $ 52.8 $ 23.4 Taiwan dollar/U.S. dollar — 5.5 U.S. dollar/Japanese yen — 61.2 U.S. dollar/Taiwan dollar — 10.9 Total $ 52.8 $ 101.0 $3.7 million and a loss of $3.2$0.6 million at July 2, 2023 and December 31, 2022, respectively.July 2, 2023March 31, 2024 and December 31, 2022:2023:
2024
2023 Prepayments $ 2,138 $ 86 Other current liabilities (994 ) (990 ) Prepayments 3,681 — Other current liabilities — (3,225 ) $ 4,825 $ (4,129 ) 14and six months ended JulyMarch 31, 2024 and April 2, 2023 and July 3, 2022:
Ended
Recognized in Statement
of Operations
2024
2023
Ended
Operations
2023
2022
2023
2022 $ (4,040 ) $ (1,703 ) $ (2,781 ) $ (3,455 ) 414 — 1,952 — $ (3,626 ) $ (1,703 ) $ (829 ) $ (3,455 ) and six months ended JulyMarch 31, 2024 and April 2, 2023, net losses from remeasurement of monetary assets and liabilities denominated in foreign currencies were $6.7$2.7 million and $7.0$0.4 million, respectively. For the three and six months ended July 3, 2022, net losses from remeasurement of monetary assets and liabilities denominated in foreign currencies were $3.7 million and $8.0 million, respectively.G:H: “Debt” regarding derivatives related to the convertible senior notes.G.$460.0$460.0 million aggregate principal amount of 1.25%1.25% convertible senior unsecured notes (the “Notes”) due December 15, 2023 and received net proceeds, after issuance costs, of approximately $450.8$450.8 million, $33.0$33.0 million of which was used to pay the net cost of the convertible note hedge transactions and $50.1$50.1 million of which was used to repurchase 2.0 million shares of Teradyne’s common stock under its existing stock repurchase program from purchasers of the Notes in privately negotiated transactions effected through one of the initial purchasers or its affiliates conducted concurrently with the pricing of the Note offering. The Notes will mature on December 15, 2023, unless earlier repurchased or converted. The Notes bearbore interest at a rate of 1.25%1.25% per year payable semiannually in arrears on June 15 and December 15 of each year.year. The Notes will be convertible at the option of the noteholders at any time prior to the close of businessmatured on the business day immediately preceding SeptemberDecember 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 five business day period after any five 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 future conversion obligation by paying cash for the principal amount of the Notes and paying or delivering cash, shares of its common stock or a combination of cash and shares of its common stock, at Teradyne’s election for the amount in excess of principal. On November 4, 2021, Teradyne made an irrevocable election under the Indenture to require the principal portion of the remaining Notes to be settled in cash. As of July 2, 2023, the conversion price was approximately $31.43 per share of Teradyne’s common stock. The conversion rate is subject to adjustment under certain circumstances. As of August 4, 2023, one hundred and thirty-four debt holders had exercised the option to convert $436.1 million worth of notes.Notes, with a strike price equal to the conversion price of the Notes of $31.43.(or, (or, at its election subject to certain conditions, cash-settled) warrants to the Option Counterparties. These transactions have been accounted for as an adjustment to our shareholders’ equity. The Warrant Transactions, which began expiring March 18, 2024 and will continue to expire through July 10, 2024, currently cover, subject to customary anti-dilution adjustments, approximately 14.613.8 million shares of common stock. During the three months ended March 31, 2024, 0.8 million warrants expired. As of July 2,2023,March 31, 2024, the strike price of the warrants was approximately $39.44$39.37 per share. The strike price is subject to adjustment under certain circumstances. The Warrant Transactions could have a dilutive effect toresult in additional shares of Teradyne’s common stock being issued to the extent that the market price per share of Teradyne’s common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants.The Note Hedge Transactions are expected to reduce the potential dilution to Teradyne’s common stock upon any conversion of the Notes. However, the Warrant Transactions could separately have a dilutive effect to the extent that the market value per share of Teradyne’s common stock exceeds the applicable strike price of the warrant. The net cost of the Note Hedge Transactions, after being partially offset by the proceeds from the sale of the warrants, was approximately$33.0 million.In connection with establishing their initial hedge of these convertible note hedge and warrant transactions, the Option Counterparties have entered into various derivative transactions with respect to Teradyne’s common stock and/or purchased shares of Teradyne’s common stock or other securities, including the Notes, concurrent with, or shortly after, the pricing of the Notes. In addition, the Option Counterparties may modify their hedge positions by entering into or unwinding various derivative transactions with respect to Teradyne’s common stock or by selling Teradyne’s common stock or other securities, including the Notes, in secondary market transactions (and may do so during any observation period related to the conversion of the Notes). These activities could adversely affect the value of Teradyne’s common stock and the Notes.Originally, Teradyne allocated $100.8 million of the $460.0 million principal amount of the Notes to the equity component, which represented a discount to the debt and was amortized to interest expense using the effective interest method through December 2023. Effective January 1, 2022, Teradyne adopted ASC2020-06using the modified retrospective method of transition and accounts for the debt as a single liability measured at its amortized cost. As a result of the adoption, Teradyne recorded an increase of $1.4 million to current debt for unsettled shares, an increase of $1.8 million to deferred tax assets, an increase of $6.6 million to long-term debt for unamortized debt discount, and an increase to retained earnings of $94.6 million for the reclassification of the equity component. Mezzanine equity representing unsettled shares value was reduced to zero and additionalpaid-incapital was reduced by $100.8 million.Debt issuance fees at July 2, 2023, have been fully amortized to interest expense using the effective interest method over the seven-year term of the Notes.The tables below represent the key components of Teradyne’s convertible senior notes:
2022 $ 32,806 $ 50,228 — 113 $ 32,806 $ 50,115 Teradyne’s convertible senior notes were reported as current debt at July 2, 2023 and December 31, 2022.Teradyne’s convertibleTeradyne's senior notes for the three and six months ended JulyApril 2, 2023 and July 3, 2022 was as follows:
Ended
2024
2023
Ended
2022 $ 100 $ 121 $ 238 $ 432 — 64 113 130 $ 100 $ 185 $ 351 $ 562 As of July 2, 2023, the conversion price was approximately $31.43 per share and the if converted value of the notes was $116.2 million.Additional conversions of approximately $8.9 million of debt principal will occur in the third quarter of 2023. Teradyne expects to make principal interest payments of $0.2 million in the next12months.16$400.0$400.0 million (the “Credit Facility”).$750.0$750.0 million from $400.0$400.0 million.$200.0$200.0 million or 15%15% of consolidated EBIDTA. The interest rate 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%0.00% to 0.75%0.75% per annum or SOFR plus a margin ranging from 1.10%1.10% to 1.85%1.85% per annum, based on the consolidated leverage ratio of Teradyne. In addition, Teradyne will pay a commitment fee on the unused portion of the commitments under the Credit Facility ranging from 0.15%0.15% to 0.25%0.25% per annum, based on the then applicable consolidated leverage ratio.65%65% of the capital stock of certain foreign subsidiaries.August 4, 2023,May 3, 2024, the Credit Agreement was undrawn and Teradyne was in compliance with all covenants under the Credit Agreement.H. PREPAYMENTS
2024
2023
2023
2022 $ 515,350 $ 491,105 Prepaid maintenance and other services 15,557 14,545 Prepaid taxes 15,437 18,625 14,338 8,687 $ 560,682 $ 532,962 I.
Ended
2024
2023 $ 12,901 $ 20,105 $ 14,181 $ 24,577 3,261 6,429 7,378 10,530 (352 ) (1,611 ) (757 ) (4,370 ) (3,267 ) (8,887 ) (8,259 ) (14,701 ) $ 12,543 $ 16,036 $ 12,543 $ 16,036 17
Ended
2024
2023 $ 49,343 $ 65,726 $ 56,180 $ 64,168 4,467 9,788 8,881 21,563 (9,388 ) (9,723 ) (20,639 ) (19,940 ) $ 44,422 $ 65,791 $ 44,422 $ 65,791 J.(the”Retirement(the “Retirement Date”), Mark E. Jagiela retired as Chief Executive Officer of Teradyne and a member of Teradyne’s Board of Directors, and Teradyne entered into an agreement (the “Retirement Agreement”) with Mr. Jagiela. Under the Retirement Agreement, Mr. Jagiela’s unvested time-based restricted stock units and stock options granted prior to his Retirement Date were modified to allow continued vesting; and any vested options or options that vest during that period may be exercised for the remainder of the applicable option term. During the sixthree months endedJuly April 2, 2023, Teradyne recorded a stock-based compensation expense of $years.years. Restricted stock unit awards granted to100%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.0%0% to 200%200% of the target shares. The TSR PRSUs will vest upon the three-year anniversary of the grant date. The TSR PRSUs are valued using a Monte Carlo simulation model. The number of units expected to be earned, based upon the achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation. Compensation expense is recognized on a straight-line basis over the shorter of the three-year service period or the period from the grant to the date described in the retirement provisions below. Compensation expense for executive officers meeting the retirement provisions prior to the grant date is recognized0%0% to 200%200% of the target shares. The PBIT PRSUs will vest upon the three-year anniversary of the grant date. Compensation expense is recognized on a straight-line basis over the shorter of the three-year service period or the period from the grant date to the date described in the retirement provisions below. Compensation expense for executive officers meeting the retirement provisions prior to the grant date is recognized during the year following the grant. Compensation expense is recognized based on the number of units that are earned based upon the three-year Teradyne PBIT as a percent of Teradyne’s revenue, provided the executive officer remains an employee at the end of the three-year period subject to the retirement and termination eligibility provisions noted below.18100%100% of the fair market value on the grant date vest in equal annual installments over four years from the grant date and have a maximum term of seven yearssixthree months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, Teradyne granted 0.5 million and 0.40.5 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of $102.30$94.28 and $111.21, respectively, and $0.1 million of service-based restricted stock unit awards tonon-employeedirectors at a weighted average grant date fair value of $90.50 and $106.91,$102.36, respectively.sixthree months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, Teradyne granted 0.1 million and 0.1 million of PBIT PRSUs with a grant date fair value of $102.23$94.01 and $110.84,$102.23, respectively.sixthree months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, Teradyne granted 0.1 million and 0.1 million of TSR PRSUs, with a grant date fair value of $137.64$100.87 and $101.06,$137.64, respectively. The fair value was estimated using the Monte Carlo simulation model with the following assumptions:
Ended
2024
2023 3.9 % 1.4 % 50.2 % 47.1 % 24.8 % 22.7 % 0.4 % 0.4 % $0.44$0.48 per share divided by Teradyne’s stock price on the grant date of $103.44$95.14 for the 20232024 grant, and an estimated annual dividend amount of $0.44$0.44 per share divided by Teradyne’s stock price on the grant date of $112.12$103.44 for the 20222023 grant.sixthree months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, Teradyne granted 0.1 million and 0.1 million of service-based stock options to executive officers at a weighted average grant date fair value of $40.90$37.50 and $39.01,$40.90, respectively.
Ended
2024
2023 4.0 4.0 3.7 % 1.6 % 46.7 % 43.7 % 0.4 % 0.4 % $0.44$0.48 per share divided by Teradyne’s stock price on the grant date of $103.44$95.14 for the 20232024 grant and an estimated annual dividend amount of $0.44$0.44 per share divided by Teradyne’s stock price on the grant date of $112.12$103.44 for the 20222023 grant.19K.accumulated accumulated other comprehensive income (loss), which are presented net of tax, consist of the following:
Currency
Translation
Adjustment
(Losses) Gains on
Marketable
Securities
Plans Prior
Service
Credit
$142, $(1,132), respectively
net of tax of $0, $(221), $358, $0, respectively
income (loss), net of tax of $0, $30, $(500), $0, respectively
of $0, $(191), $(142), $0, respectively
$0, $(1,132), respectively
($708), $(1,130), respectively
net of tax of $0, $503, $167, $0, respectively
income (loss), net of tax of $0, $2, $338, $0, respectively
of $0, $505, $505, $0, respectively
$(203), $(1,130), respectively
Gains on
(Losses)
Gains on
Cash Flow
Hedges
Prior $ (39,849 ) $ (8,661 ) $ (2,517 ) $ 1,159 $ (49,868 ) 12,250 1,726 3,866 — 17,842 — 33 1,524 (3 ) 1,554 12,250 1,759 5,390 (3 ) 19,396 $ (27,599 ) $ (6,902 ) $ 2,873 $ 1,156 $ (30,472 ) $ (10,818 ) $ 3,704 $ — $ 1,166 $ (5,948 ) (37,307 ) (9,910 ) — — (47,217 ) — 209 — (3 ) 206 (37,307 ) (9,701 ) — (3 ) (47,011 ) $ (48,125 ) $ (5,997 ) $ — $ 1,163 $ (52,959 ) Reclassificationsand six months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, were as follows:
Ended
in the Statements
of Operations
2024
2023
respectively
Ended
Ended $ (28 ) $ (274 ) $ (33 ) $ (209 ) Other (income) expense, net (323 ) — (1,524 ) — Revenue 2 2 3 3 $ (349 ) $ (272 ) $ (1,554 ) $ (206 ) (a)The amortization of prior service credit is included in the computation of net periodic postretirement benefit cost. See Note O:The amortization of prior service credit is included in the computation of net periodic postretirement benefit cost. See Note P: “Retirement Plans.”20L.sixthree months ended July 2, 2023,March 31, 2024, there were no interim indicators of impairment. Goodwill is considered impaired when the net book value of a reporting unit exceeds its estimated fair value.sixthree months ended July 2, 2023,March 31, 2024, were as follows:
Test
Test
Test
Test
Test $ 383,166 $ 361,819 $ 262,077 $ 158,699 $ 1,165,761 — (353,843 ) (260,540 ) (148,183 ) (762,566 ) 383,166 7,976 1,537 10,516 403,195 8,857 — 58 — 8,915 392,023 361,819 262,135 158,699 1,174,676 — (353,843 ) (260,540 ) (148,183 ) (762,566 ) $ 392,023 $ 7,976 $ 1,595 $ 10,516 $ 412,110
Carrying
Amount
Amortization
Currency
Translation
Adjustment
Carrying
Amount
Currency
Translation
Adjustment $ 267,708 $ (237,078 ) $ (5,444 ) $ 25,186 52,109 (46,699 ) 200 5,610 59,007 (43,904 ) (1,288 ) 13,815 $ 378,824 $ (327,681 ) $ (6,532 ) $ 44,611 $ 270,967 $ (234,208 ) $ (5,935 ) $ 30,824 57,739 (51,186 ) 172 6,725 59,387 (41,930 ) (1,528 ) 15,929 $ 388,093 $ (327,324 ) $ (7,291 ) $ 53,478 (1)In 2023, $9.3 million of amortizable intangible assets became fully amortized and have been eliminated from the gross carrying amount and accumulated amortization.$4.8$4.7 million and $9.6$4.8 million, respectively, for the three and six months ended JulyMarch 31, 2024 and April 2, 20232023.,and $4.9 million and $9.9 million, respectively,for the three and six months ended July 3, 2022.21
Expense $ 9,443 18,834 11,352 2,379 1,162 1,441 M.
Ended
2024
2023 $ 120,050 $ 197,787 $ 203,581 $ 359,715 154,760 159,563 155,332 160,805 8,876 9,029 8,929 9,528 742 1,900 828 2,220 323 581 389 730 43 54 45 61 7 32 7 23 9,991 11,596 10,198 12,562 164,751 171,159 165,530 173,367 $ 0.78 $ 1.24 $ 1.31 $ 2.24 $ 0.73 $ 1.16 $ 1.23 $ 2.07 (1)Convertible notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price, multiplied by the number of warrant shares. The result of this calculation, representing the total intrinsic value of the warrant, was divided by the average Teradyne stock price for the period.(2)Incremental shares from assumed conversion of the convertible notes were calculated using the difference between the average Teradyne stock price for the period and the conversion price, multiplied by the number of convertible notes shares. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period.and six months ended JulyMarch 31, 2024 and April 2, 2023,,The computation of diluted net income per common share for the three and six months ended July 3, 2022,excludes the effect of the potential vesting of 0.1 million and 0.2 million, respectively, of restricted stock units because the effect would have been anti-dilutive.N.July 2, 2023,March 31, 2024, Teradyne recorded $5.1$2.2 million of acquisition and divestiture expenses related to the Technoprobe transaction, and $2.0 million of severance charges related to headcount reductions of 112 people primarily in Robotics and Semiconductor Test, and Roboticsconditions and a charge of $1.1 million for an increase in environmental liability.July 3, 2022,April 2, 2023, Teradyne recorded a charge of $1.5 million for an increase in environmental and legal liabilities.22During the six months ended July 2, 2023, Teradyne recorded $7.2of 179 people primarily in Semiconductor Test, Robotics, and Robotics which included charges related to a voluntary early retirement program for employees meeting certain conditionsand a charge of $1.1 million for an increase in environmental liability.During the six months ended July 3, 2022, Teradyne recorded a charge of $14.7 million related to the arbitration claim filed against Teradyne and AutoGuide related to anearn-outdispute, which was settled on March 25, 2022 for $26.7 million, and a charge of $2.0 million for an increase in environmental and legal liabilities.O.qualifiedqualified pension plan consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive defined benefitdefined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “IRC”), as well as unfunded qualified foreign plans.sixthree months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, Teradyne contributed $1.5$0.8 million and $1.6$0.8 million, respectively, to the U.S. supplemental executive defined benefit pension plan, and $0.6$0.3 million and $0.5$0.2 million, respectively, to certain qualified pension plans for non-U.S. subsidiaries.non-U.S.subsidiaries.and six months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, Teradyne’s net periodic pension cost was comprised of the following:
States
States $ 272 $ 110 $ 397 $ 180 1,714 263 1,221 120 (1,286 ) (9 ) (732 ) (18 ) 24 — (45 ) — $ 724 $ 364 $ 841 $ 282 $ 543 $ 220 $ 794 $ 386 3,425 526 2,443 238 (2,571 ) (18 ) (1,463 ) (38 ) 24 — (45 ) — $ 1,421 $ 728 $ 1,729 $ 586 and six months ended July 2, 2023,March 31, 2024, Teradyne recorded special termination benefit charges associated with a voluntary early retirement program.23and six months ended JulyMarch 31, 2024 and April 2, 2023, and July 3, 2022, Teradyne’s net periodic postretirement benefit cost was comprised of the following:
Ended
2024
2023
2023
2022
2023
2022 $ 8 $ 15 $ 17 $ 32 60 45 121 88 (2 ) (2 ) (4 ) (4 ) 369 — 369 — 30 54 30 54 $ 465 $ 112 $ 533 $ 170 P.July 2, 2023,March 31, 2024, Teradyne had entered into purchase commitments for certain components and materials. The purchase commitments covered by the agreements aggregate to approximately $554.5$428.8 million, of which $482.4$404.7 million is for less than one year.On March 8, 2021, Industrial Automation LLC, sellers of AutoGuide, submitted a demand for arbitration against Teradyne and AutoGuide in Wilmington, Delaware alleging that Teradyne and AutoGuide breached certain provisions of the Membership Interests Purchase Agreement (the “Purchase Agreement”), dated as of October 18, 2019, among Industrial Automation LLC, Teradyne and AutoGuide. The arbitration demand sought full acceleration of the maximumearn-outamount payable under the Purchase Agreement, or $106.9 million, for the alleged breach of theearn-outprovisions of the Purchase Agreement. On March 25, 2022, the arbitration claim was settled for $26.7 million. As a result, Teradyne has no remainingearn-outobligations.24July 2, 2023March 31, 2024 and December 31, 2022,2023, Teradyne had a product warranty accrual of $12.5$15.3 million and $14.2$15.7 million, respectively, included in other accrued liabilities and revenue deferrals related to extended warranties of $44.4$34.5 million and $56.2$34.9 million, respectively, included in short and long-term deferred revenue and customer advances.July 2, 2023March 31, 2024 and December 31, 2022,2023, except for product warranty, Teradyne has not recorded any liabilities for these guarantees and obligations because the amount would be immaterial.Q.
Ended
2024
2023
2023
2022
2023
2022 21.0 % 21.0 % 21.0 % 21.0 % Discrete expense related to foreign currency gain/loss 1.2 0.6 0.7 0.6 1.0 1.4 1.0 1.3 (2.5 ) (1.0 ) (2.8 ) (1.2 ) (2.4 ) (2.0 ) (2.4 ) (1.8 ) (0.1 ) (0.2 ) (1.4 ) (2.9 ) (1.0 ) (3.2 ) (0.8 ) (3.3 ) (0.3 ) 0.5 0.4 0.4 16.9 % 17.1 % 15.7 % 14.1 % July 2, 2023,March 31, 2024, Teradyne believes that it will ultimately realize the deferred tax assets recorded on the condensed consolidated balance sheet. However, should Teradyne believe that it isJuly 2, 2023March 31, 2024 and December 31, 2022,2023, Teradyne had $15.9$15.9 million and $15.6$18.6 million, respectively, of reserves for uncertain tax positions. The $0.3$2.7 million net increasedecrease in reserves for uncertain tax positions is related to U.S. federal research and development credits generated in the current year.July 2, 2023,March 31, 2024, Teradyne estimates that it is reasonably possible that the balance of unrecognized tax benefits may decrease approximately $0.1$0.8 million in the next twelve months because of a lapse of statutes of limitation. The estimated decrease relates to U.S. federal and state research and development credits.July 2, 2023March 31, 2024 and December 31, 2022, $0.52023, $0.7 million and $0.4$1.3 million, respectively, of interest and penalties were accrued for uncertain tax positions. For the sixthree months ended JulyMarch 31, 2024 and April 2, 2023, benefit of $0.6 million and July 3, 2022, an expense of $0.1 million and $0.1$0.1 million, respectively, was recorded for interest and penalties related to income tax items.25sixthree months ended July 2, 2023,March 31, 2024, was1.0sixthree months ended July 3, 2022,8.30.0515%15% alternative minimum tax based on the financial statement income of certain large corporations (“CAMT”), effective January 1, 2023. Teradyne currently does not expect the CAMT to have a material impact on its financial results.R.defense/aerospace instrumentation test, storage and system level test, defense/aerospace instrumentation test, and circuit-board test. The Wireless Test segment includes operations related to the design, manufacturing and marketing of wireless test products and services. The Robotics segment includes operations related to the design, manufacturing and marketing of collaborative robotic arms, autonomous mobile robots and advanced robotic control software. Each operating segment has a segment manager who is accountable to and maintains regular contactcontract with Teradyne’s chief operating decision maker (Teradyne’s chief executive officer) to discuss operating activities, financial results, forecasts, and plans for the segment.2022.and six months ended JulyMarch 31, 2024 and April 2, 2023 and July 3, 2022 is as follows:
Test
Test
Test
and
Eliminations $ 474,708 $ 94,272 $ 71,634 $ 43,823 $ — $ 684,437 129,040 28,599 (26,401 ) 12,020 1,144 144,402 1,416,109 191,002 685,132 88,869 1,013,784 3,394,896 $ 541,348 $ 134,702 $ 101,055 $ 63,854 $ (193 ) $ 840,766 177,782 54,042 (6,406 ) 25,393 (12,219 ) 238,592 1,449,878 229,359 644,099 118,445 1,046,645 3,488,426 $ 889,717 $ 168,903 $ 160,848 $ 82,498 $ — $ 1,301,966 225,225 43,874 (44,891 ) 21,372 (4,094 ) 241,486 1,416,109 191,002 685,132 88,869 1,013,784 3,394,896 $ 1,023,688 $ 253,371 $ 204,244 $ 115,372 $ (539 ) $ 1,596,136 327,487 95,365 (11,504 ) 44,012 (36,409 ) 418,951 1,449,878 229,359 644,099 118,445 1,046,645 3,488,426 (1) legal and environmental fees, severance charges, pension, acquisition and divestiture related fees, and an expense for the modification of Teradyne’s former chief executive officer’s outstanding equity awards.(2)Included in income (loss) before taxes are charges related to restructuring and other, and inventory charges.(3)Total assets are attributable to each segment. Corporate assets consist of cash and cash equivalents, marketable securities, and certain other assets.26(3)
Ended
2024
2023
2023
2022
2023
2022 $ 4,184 $ 2,071 $ 7,952 $ 2,315 2,485 — 3,279 $ — $ — $ 1,113 $ — — — 642 — $ 1,638 $ — $ 2,071 $ — 769 831 1,551 1,197 $ — $ 2,099 $ 725 $ 2,976 $ 1,100 1,500 1,100 2,000 — — 1,124 — — — 5,889 — — — — 14,700 S.$2.0$2.0 billion of common stock. Teradyne intends to repurchase up to $500.0 million of its common stock in 2023 based on market conditions.During the six months ended July 2, 2023, Teradyne repurchased 2.2 million shares of common stock for a total cost of $229.5 million at an average price of $102.35 per share. As of January 1, 2023, share repurchases in excess of issuances are subject to a 1%1% excise tax, which is includedsixthree months ended July 3, 2022,March 31, 2024, Teradyne repurchased 5.00.2 million shares of common stock for $532.8a total cost of $22.1 million at an average price of $107.50$100.31 per share. starting in 2023, related excise tax, and is recorded as a reduction to retained earnings.20232024 and MayJanuary 2023, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.11$0.12 per share.share and $0.11 per share, respectively. Dividend payments for the three and six months ended JulyMarch 31, 2024 and April 2, 2023,,$17.0$18.4 million and $34.2$17.2 million, respectively.In January 2022 and May 2022, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.11 per share. Dividend payments for the three and six months ended July 3, 2022,were $17.5 million and $35.4 million, respectively.27Item 2:Management’s Discussion and Analysis of Financial Condition and Results of Operations2022.2023. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.solutions.products. We design, develop, manufacture and sell automatic test systems and robotics products. Our automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our robotics products include collaborative robotic arms and autonomous mobile robots (“AMRs”) used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Our automatic test equipment and robotics products and services include:2023, the2024, helping to offset weak demand in our Semiconductor Test business continued to be impacted by a correction cycle driven by excess semiconductor inventory, primarilythe smartphone mobility test market. We anticipate an upturn in the mobility, segment of the market. The depth of this slowdown and the timing of the recovery are uncertain, however, strong automotive demand and in Memory test, the growth of DDR5 and High Bandwidth Memory (“HBM”) devices for data center applications are partially offsetting these declines. Over the midterm we expect the ramp of 3 nanometer and gate-all-around process technology, increasing multichip packaging, additional device complexity and unit growth will drive additional demand for test.InRobotics results in the first quarter of 2024 were in line with our forecast, putting us in position for full year growth due to new product offerings, expansion of our Original Equipment Manufacturer (“OEM”) and large account channels, along with increasing recurring revenue via service and software offerings.2023, Robotics demand has softened significantly due2024, subject to slowing global industrial activity and macro-economic headwinds.In the second quarter of 2023, we met customer demand, in part, through faster than expected recoveries from supply chain constraints, while inflation had minimal effects on our results. Both our test and robotics businesses may still be influenced by supply constraints during the remainder of 2023, which could impact our revenue and costs. For example, our third quarter 2023 forecast excludes approximately $35 million of revenue, primarily in our test businesses, due to these continued supply chain constraints.In 2022, the strengthening of the U.S. dollar was a factor in lower than forecasted revenues in our Robotics segment. Strengthening of the U.S. dollar would negatively affect Robotics revenue growth in 2023.28Impact of theCOVID-19Pandemic on our BusinessThe novel coronavirus(COVID-19)pandemic resulted in government authorities implementing numerous measures in an effort to contain the spread of the virus, such as travel bans and restrictions, limitations on gatherings or social distancing requirements, quarantines,shelter-in-placeorders, vaccination and testing mandates, and business limitations and shutdowns. These measures impacted ourday-to-dayoperations and disrupted our business, workforce and operations, as well as the operations of our customers, contract manufacturers and suppliers. In the second quarter of 2023 theCOVID-19pandemic had significantly less impact on our business than in prior quarters since the start of the pandemic in 2020. However, we are unable to accurately predict the future impact ofCOVID-19,which will depend on future developments that are highly uncertain and cannot be predicted with accuracy, including, but not limited to, any new surges or new strains or variants of the virus in areas where we do business.Due to theCOVID-19pandemic, there has been uncertainty and disruption in the global economy and our markets. We are not aware of any specific event or circumstance that would require an update to our estimates or judgments or a revision of the carrying value of our assets or liabilities as of August 4, 2023, the date of issuance of this Quarterly Report on Form10-Q.We believe theCOVID-19pandemic and the numerous measures implemented by authorities in response, adversely impacted our results of operations, including by increasing costs, but we cannot accurately estimate the amount of the impact to our financial results. In addition, the pandemic disrupted our contract manufacturers and suppliers, and resulted in supply constraints and in short-term cost increases to meet customer demand.Supply Chain Constraints and Inflationary PressuresThe global supply shortage of electrical components, including semiconductor chips, continued to impact our supply chain in the second quarter of 2023. We are seeing improvements related to supply constraints however, we experienced, and expect to continue to experience through the remainder of 2023, increases in our lead times and costs for certain components for certain of our products. In addition, while not material, inflationary pressures contributed to increased costs for product components and wage inflation, impacting our cost of products, gross margin and profit for the quarter. Our supply chain team, and our suppliers, continue to manage numerous supply, production, and logistics obstacles. While not material through the second quarter of 2023, in an effort to mitigate these risks, in some cases, we have incurred higher costs due to investment in supply chain resiliency and to secure available inventory or have extended or placednon-cancellablepurchase commitments with semiconductor suppliers, which introduces inventory risk if our forecasts and assumptions prove inaccurate. We have also sourced components from additional suppliers and multi-sourced andpre-orderedcomponents and finished goods inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced. There is no assurance that these efforts will be successful. Our third quarter 2023 forecast excludes approximately $35 million of revenue, primarily in our test businesses, due to these continued supply chain constraints.See Part II—Item 1A, “Risk Factors,” included in our Annual Report on Form10-Kfor the fiscal year ended December 31, 2022 for our risk factors regarding risks associated with both theCOVID-19pandemic and international conflicts.sixthree months ended July 2, 2023,March 31, 2024, to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form2022,2023, except as noted below.29
Ended
2024
2023
assets amortization shown separately below) 79 % 83 % 78 % 83 % 21 17 22 17 100 100 100 100 32 33 32 32 9 7 10 7 41 40 42 40 59 60 58 60 21 17 23 18 15 13 16 14 1 — 1 1 1 — 1 1 38 31 40 33 20 29 18 27 (1 ) — (1 ) — — — — — — 1 — 1 21 28 19 26 4 5 3 4 18 % 24 % 16 % 23 % Second20232024 Compared to SecondFirst Quarter 2022 $ 474.7 $ 541.3 $ (66.6 ) 94.3 134.7 (40.4 ) 71.6 101.1 (29.5 ) 43.8 63.9 (20.1 ) — (0.2 ) 0.2 $ 684.4 $ 840.8 $ (156.4 )
Ended
2024
2023
Change$66.6$2.7 million, or 12.3%0.7%, was driven primarily by lower tester sales for Mobilityautomotive applications, partially offset by higher Memory testTest sales in Flash Final Test.DRAM wafer sort. The decreaseincrease in System Test revenues of $40.4$0.7 million, or 30.0%0.9%, was primarily due to higher sales in Defense/Aerospace, partially offset by lower sales in Storage Test of system level and hard disk drive testers, partially offset by higher sales in Defense/Aerospace. The decrease in Robotics revenues of $29.5 million, or 29.2%, was driven primarily by softening demand due to slowing global industrial activity and macro-economic headwinds and the impact of the transformation of Universal Robots distribution channel.testers. The decrease in Wireless Test revenues of $20.1$14.1 million, or 31.5%,36.4% was primarily due to a decrease in connectivity and ultra wide band test products.30
Ended
2024
2023 17 % 14 % 15 17 15 25 13 13 13 5 9 8 5 5 4 6 4 3 3 2 2 2 100 % 100 % (1)Revenues attributable to a country are based on location of customer site. $ 402.5 $ 506.4 $ (103.9 ) 58.8 % 60.2 % (1.4 )
Ended
2024
2023
Change1.41.2 points, primarily due to product mix and lower volume. $ 145.7 $ 139.5 $ 6.2 21.3 % 16.6 %
Ended
2024
2023
Changeincreasedecrease of $6.2$1.8 million in selling and administrative expenses was primarily due to lower spending in Robotics, partially offset by higher variable compensation.31 $ 105.7 $ 112.0 $ (6.3 ) 15.4 % 13.3 %
Ended
2024
2023
Change$6.3$2.6 million in engineering and development expenses was primarily due to lower spending in Semiconductor Test, partially offset by higher spending in Robotics.July 2, 2023,March 31, 2024, we recorded $5.1$2.2 million of acquisition and divestiture related costs and $2.0 million of severance charges related to headcount reductions of 112 people primarily in Semiconductor Test and Robotics which included charges related to a voluntary early retirement program for employees meeting certain conditions and a charge of $1.1 million for an increase in environmental liability.July 3, 2022,April 2, 2023, we recorded a charge$2.0 million of $1.5 million for an increaseseverance charges related to headcount reduction primarily in environmentalSemiconductor Test, Robotics and legal liabilities. $ (6.4 ) $ (1.0 ) $ (5.4 ) 1.0 0.9 $ 0.1 0.8 9.4 $ (8.6 ) Interest income
Ended
2024
2023
Changeby $5.4$12.0 million primarily due to higher interest ratesthe change in 2023. Other (income) expense, net decreased by $8.6 million primarily due to changesvalue of our call option purchased in unrealized gains/losses on equity securities, from a $6.6 million loss in 2022 to a $2.6 million gain in 2023.connection with the anticipated acquisition of Technoprobe.
Ended
2024
2023
Change $ 129.0 $ 177.8 $ (48.8 ) 28.6 54.0 (25.4 ) 12.0 25.4 (13.4 ) (26.4 ) (6.4 ) (20.0 ) 1.1 (12.2 ) 13.3 $ 144.4 $ 238.6 $ (94.2 ) (1)Included in Corporate and Eliminations are interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, legal and environmental fees, and severance charges.tester sales for Mobility applications, partially offset by higher Memory test sales in Flash Final Test. The decrease in income before income taxes in System Test was primarilymargins due to lowerproduct mix as well as higher operating expenses on similar sales in Storage Test of system level and hard disk drive testers.levels. The decrease in income before income taxes in Wireless Test was driven primarily bydue to a decrease in sales of connectivity and ultra wide band test products. The decreaseincrease in income before income taxes in Robotics was driven primarily by softening demand due to slowing global industrial activity and macro-economic headwinds and the impact of the transformation of Universal Robots distribution channel.lower operating expenses on similar sales. The incomeloss before income taxes in Corporate and Eliminations was primarily due to changes in unrealized gains/losses on equity securities.32JulyMarch 31, 2024 and April 2, 2023, was 11.9% and July 3, 2022, was 16.9% and 17.1%14.0%, respectively. The decrease in the effective tax rate from the three months ended July 3, 2022,April 2, 2023, to the three months ended July 2, 2023,March 31, 2024, primarily resulted from an increase inthe benefit from the international provisions of the U.S. Tax Cuts and Jobs Act of 2017, a reduction innon-deductibleofficers’ compensation uncertain tax positions and an increase inthe benefit related to tax credits. These reductions in expense were partially offset byof 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 and an increase in discrete expense related to foreign currency gain or loss.Six Months 2023 Compared to Six Months 2022RevenuesRevenues by our reportable segmentsincome. These benefits were as follows: $ 889.7 $ 1,023.7 $ (134.0 ) 168.9 253.4 (84.5 ) 160.8 204.2 (43.4 ) 82.5 115.4 (32.9 ) — (0.5 ) 0.5 $ 1,302.0 $ 1,596.1 $ (294.1 ) The decrease in Semiconductor Test revenues of $134.0 million, or 13.1%, was driven primarily by lower tester sales for Mobility and Compute applications, partially offset by higher Memory test sales in Flash Final Test. The decrease in System Test revenues of $84.5 million, or 33.3%, was primarily due to lower sales in Storage Test of system level and hard disk drive testers. The decrease in Robotics revenues of $43.4 million, or 21.3%, was driven primarily by softening demand due to slowing global industrial activity and macro-economic headwinds and the impact of the transformation of Universal Robots distribution channel. The decrease in Wireless Test revenues of $32.9 million, or 28.5%, was primarily due to a decrease in sales of connectivity test products.Revenues by country as a percentage of total revenues were as follows (1): 17 % 15 % 16 22 14 15 12 16 11 5 10 9 5 3 5 3 4 5 3 5 3 2 100 % 100 % (1)Revenues attributable to a country are based on location of customer site.33Gross ProfitOur gross profit was as follows: $ 758.9 $ 961.3 $ (202.4 ) 58.3 % 60.2 % (1.9 ) Gross profit as a percent of revenue decreased by 1.9 points, primarily due to a lower volume.Selling and AdministrativeSelling and administrative expenses were as follows: $ 296.7 $ 279.7 $ 17.0 22.8 % 17.5 % The increase of $17.0 million in selling and administrative expenses was primarily due to the charge of $5.9 million recorded in the six months ended July 2, 2023, related to the modification of Teradyne’s chief executive officer’s outstanding equity awards in connection with his retirement and higher spending in System Test, Semiconductor Test and Robotics.Engineering and DevelopmentEngineering and development expenses were as follows: $ 211.5 $ 220.1 $ (8.6 ) 16.2 % 13.8 % The decrease of $8.6 million in engineering and development expenses was due to lower variable compensation and lower spending in Semiconductor Test, partially offset by higher spending in Robotics.Restructuring and OtherDuring the six months ended July 2, 2023, we recorded $7.2 million of severance charges related to headcount reductions of 179 people primarily in Semiconductor Test and Robotics which included charges related to a voluntary early retirement program for employees meeting certain conditions and a charge of $1.1 million for an increase in environmental liability.During the six months ended July 3, 2022, we recorded a charge of $14.7 million related to the arbitration claim filed against Teradyne and AutoGuide related to anearn-outdispute, which was settled on March 25, 2022 for $26.7 million, and a charge of $2.0 million for an increase in environmental and legal liabilities.34Interest and Other $ (11.6 ) $ (1.7 ) $ (9.9 ) 2.0 1.9 0.1 0.9 14.6 (13.7 ) Interest income increased by $9.9 million primarily due to higher interest rates in 2023. Other (income) expense, net decreased by $13.7 million primarily due to changes in unrealized gains/losses on equity securities, from an $8.8 million loss in 2022 to a $4.6 million gain in 2023.Income (Loss) Before Income Taxes $ 225.2 $ 327.5 $ (102.3 ) 43.9 95.4 (51.5 ) 21.4 44.0 (22.6 ) (44.9 ) (11.5 ) (33.4 ) (4.1 ) (36.4 ) 32.3 $ 241.5 $ 419.0 $ (177.5 ) (1)Included in Corporate and Eliminations are interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, legal and environmental fees, severance charges, pension, and an expense for the modification of Teradyne’s former chief executive officer’s outstanding equity awards.The decrease in income before income taxes in Semiconductor Test was driven primarily by lower tester sales for Mobility and Compute applications, partially offset by higher Memory test sales in Flash Final Test. The decrease in income before income taxes in System Test was primarily due to lower sales in Storage Test of system level and hard disk drive testers. The decrease in income before income taxes in Wireless Test was driven primarily by a decrease in sales of connectivity test products. The decrease in income before income taxes in Robotics was driven primarily by softening demand due to slowing global industrial activity and macro-economic headwinds and the impact of the transformation of Universal Robots distribution channel. The decrease in loss before income taxes in Corporate and Eliminations was primarily due to legal settlement charges in 2022benefit related to litigation for theearn-outdispute in connection with the AutoGuide acquisition, changes in unrealized gains/losses on equity securities and higher interest income.Income TaxesThe effective tax rate for the six months ended July 2, 2023 and July 3, 2022, was 15.7% and 14.1%, respectively. The increase in the effective tax rate from the six months ended July 3, 2022, to the six months ended July 2, 2023, was primarily attributable to 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 and a reduction in discrete benefit from equity compensation. These increases were partially offset by an increase in benefit from the international provisions of the U.S. Tax Cuts and Jobs Act of 2017.2022.35$192.1$66.6 million in the sixthree months ended July 2, 2023,March 31, 2024, to $813.1$870.6 million.sixthree months ended July 2, 2023,March 31, 2024, provided cash of $162.1$7.3 million. Changes in operating assets and liabilities used cash of $121.7$108.6 million due to a $46.1$3.9 million increase in operating assets and a $75.5$104.7 million decrease in operating liabilities.a $29.6an $8.1 million increase in prepayments and other assets due to prepayments to our contract manufacturers, a $13.8 million increase in inventories and a $2.7$6.9 million increase in accounts receivable.$48.9$70.2 million decrease in accrued employee compensation a $34.9$28.4 million decrease in accounts payable, $7.0 million decrease in accrued other, $1.4 million decrease in deferred revenue and customer advance payments, a $13.6 million decrease in income taxes, and $2.5$1.4 million of retirement plan contributions, partially offset by a $13.0$3.8 million increase in accounts payable, and an $11.4 million increase in other accrued liabilities.sixthree months ended July 2, 2023,March 31, 2024, used cash of $121.7$24.0 million due to $99.0$44.0 million used for purchases of marketable securities, and $80.7 million used forthe purchases of property, plant and equipment, $16.0 million used for the purchase of marketable securities, partially offset by $35.6$20.7 million and $22.0 million in proceeds from sales and maturities of marketable securities, respectively, and $0.5$14.4 million in proceeds from the cancellationsale of Teradyne ownedmaturities and marketable securities, respectively, and $0.9 million in proceeds from life insurance policies related to the cash surrender value.insurance.sixthree months ended July 2, 2023,March 31, 2024, used cash of $283.2$36.7 million due to $227.8$22.1 million used for the repurchase of 2.20.2 million shares of common stock at an average price of $102.35$100.31 per share, $20.3 million used for payment related to net settlements of employee stock compensation awards, $34.2$18.4 million used for dividend payments and $17.5 million used for payments of convertible debt principal, partially offset by $16.6 million from the issuance of common stock under employee stock purchase and stock option plans.Operating activities during the six months ended July 3, 2022, provided cash of $122.9 million. Changes in operating assets and liabilities used cash of $309.1 million. This was due to a $287.8 million increase in operating assets and a $21.3 million decrease in operating liabilities.The increase in operating assets was due to a $146.4 million increase in accounts receivable, a $94.8 million prepayments and other assets due to prepayments to our contract manufacturers, and a $46.7 million increase in inventories.The decrease in operating liabilities was due to a $61.7 million decrease in accrued employee compensation, a $6.9 million decrease in other accrued liabilities, and $2.6 million of retirement plan contributions, partially offset by a $25.0 million increase in accounts payable, a $14.2 million increase in deferred revenue and customer advance payments, and a $10.8 million increase in income taxes.Investing activities during the six months ended July 3, 2022, used cash of $54.3 million due to $247.9 million used for purchases of marketable securities, and $89.7 million used for purchases of property, plant and equipment, partially offset by $139.7 million and $143.6 million in proceeds from maturities and sales of marketable securities, respectively.Financing activities during the six months ended July 3, 2022, used cash of $626.8 million due to $532.8 million used for the repurchase of 5.0 million shares of common stock at an average price of $107.5 per share, $42.3 million used for payments of convertible debt principal, $35.4 million used for dividend payments, and $32.8$13.1 million used for payment related to net settlements of employee stock compensation awards, partially offset by $16.5$16.9 million from the issuance of common stock under employee stock purchase and stock option plans.20232024 and MayJanuary 2023, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.12 per share and $0.11 per share.share, respectively. Dividend payments for the three and six months ended JulyMarch 31, 2024 and April 2, 2023, were $17.0$18.4 million and $34.2$17.2 million, respectively.In January 2022 and May 2022, Teradyne’s Board of Directors declared a quarterly cash dividend to $0.11 per share. Dividend payments for the three and six months ended July 3, 2022, were $17.5 million and $35.4 million, respectively. We intend to repurchase up to $500.0 million of common stock in 2023 subject to market conditions.36sixthree months ended July 2, 2023,March 31, 2024, we repurchased 2.20.2 million shares of common stock for $227.8$22.1 million, which excludes related excise tax, at an average price of $102.35$100.31 per share. DuringWe intend to repurchase up to $90.0 million of common stock in 2024 subject to market conditions. The cumulative repurchases under the six months ended July 3, 2022, we repurchased 5.02023 repurchase program as of March 31, 2024 were 4.1 million shares of common stock for $532.8$419.4 million, which excludes related excise tax, at an average price per share of $102.35. During the three months ended April 2, 2023 , we repurchased 0.9 million shares of common stock for $93.3 million, which excludes related excise tax, at an average price of $107.50$104.88 per share.Future cashCash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.August 4, 2023,May 3, 2024, we have not borrowed any funds under the credit facility. At this time, theCOVID-19pandemic has not had an impact on our liquidity, but there is no assurance that continued impacts resulting from the pandemic will not have an adverse effect in the future.20222023 Annual Report on FormForsix months ended July 2,Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which will require us to disclosethere wereand interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU will have no recentlyimpact on our results of operations, cash flows or financial condition. Upon adoption, we will apply the amendments in this ASU retrospectively to all prior period disclosures presented in the financial statements.accounting pronouncements that had,ASU 2023-09 –“Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. This ASU will have no impact on results of operations, cash flows or are expected to have, a material impact to our consolidated financial statements.Item 3:Quantitative and Qualitative Disclosures about Market Risks2023.2024. There were no material changes in our exposure to market risk from those set forth in our Annual Report on Form2022.In addition to market risks described in our Annual Report on Form10-K,we have an equity price risk related to the fair value of our convertible senior unsecured notes issued in December 2016. In December 2016, Teradyne issued $460 million aggregate principal amount of 1.25% convertible senior unsecured notes (the “Notes”) due December 15, 2023. As of July 2, 2023, $32.8 million of principal remained outstandingthe Notes had a fair value of $115.8 million. The table below provides a sensitivity analysis of hypothetical 10% changes of Teradyne’s stock price as of the end of the second quarter of 2023 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 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.37
in fair value
percentage
increase (decrease)
in fair value $ 127,385 $ 11,607 10.0 % 115,778 — — 104,171 (11,607 ) (10.0 ) Item 4:Controls and ProceduresJuly 2, 2023,March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Item 1:Legal ProceedingsOn March 8, 2021, Industrial Automation LLC submitted a demand for arbitration against Teradyne and AutoGuide in Wilmington, Delaware alleging that Teradyne and AutoGuide breached certain provisions of the Membership Interests Purchase Agreement (the “Purchase Agreement”), dated as of October 18, 2019, among Industrial Automation LLC, Teradyne and AutoGuide. The arbitration demand sought full acceleration of the maximumearn-outamount payable under the Purchase Agreement, or $106.9 million, for the alleged breach of theearn-outprovisions of the Purchase Agreement. On March 25, 2022, the arbitration claim was settled for $26.7 million. As a result, Teradyne has no remainingearn-outobligations.Item 1A:Risk Factors2022,2023, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Formbusiness and many of these risks could be further increased due to theCOVID-19pandemic.Adverse developments affecting the financial services industry, including events or risks involving liquidity, defaults ornon-performanceby financial institutions, could have a material adverse effect on our business, financial condition or resultsoperations.On March 10, 2023,Silicon Valley Bank(SVB), who is a lender in our revolving credit facilityEquity Securities and where we maintain certain accounts and cash deposits, was placed into receivership with the Federal Deposit Insurance Corporation (FDIC), which resulted in all funds held at SVB being temporarily inaccessible by SVB’s customers. AsUse of March 13, 2023, access to our cash and cash equivalents at SVB was fully restored. Although our cash balances at SVB are insignificant and we do not expect further developments at SVB to have a material impact on our cash and cash equivalents, we do hold cash balances in several large financial institutions significantly in excess of FDIC and global insurance limits. If other banks and financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose, some or all of our existing cash, cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC.38Item 2:Unregistered Sales of Equity Securities and Use of Proceedssixthree months ended July 2, 2023,March 31, 2024, we repurchased 2.20.2 million shares of common stock for a total cost of $229.5$22.1 million at an average price of $102.35$100.31 per share. We record share repurchases at cost, which includes broker commissions and related excise taxes. During the sixthree months ended July 3, 2022,April 2, 2023, we repurchased 5.00.9 million shares of common stock for $532.8$93.7 million at an average price of $107.5$104.88 per share.and six months ended July 2, 2023,March 31, 2024, (in thousands except per share price):
Number of
Shares
(or Units)
Purchased
Price Paid per
Share (or Unit)
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
(or Approximate Dollar
Value) of Shares (or
Units) that may Yet Be
Purchased Under the
Plans or Programs (2) 410 $ 100.73 409 $ 1,865,063 469 $ 92.88 467 $ 1,821,664 474 $ 108.31 473 $ 1,770,455 1,354 (1) $ 100.66 (1) 1,349 (1)Includes approximately four thousand shares at an average price of $97.95 withheld from employees for the payment of taxes.(2)As of January 1, 2023, share repurchases net of share issuances are subject to a 1% excise tax under the Inflation Reduction Act. Excise tax incurred is included as part of the cost basis of shares repurchased in the Condensed Consolidated Statements of Convertible Common Shares and Stockholders’ Equity.Item 4:Mine Safety DisclosuresItem 5:Other Information10b5-1July 2, 2023, March 31, 2024, the following Section 16 Officers andor directors adopted, modified or terminated RuleSanjay Mehta, Chief Financial Officer and TreasurerSanjay Mehta,Chief Financial Officer and Treasurer,President, Semiconductor Test, entered into a new RuleMay 12, 2023.February 15, 2024. The RuleMehta,Burns, acting through a broker, may sell up to an aggregate of (i) 19,494 shares of our common stock, (ii) 100%50% of the (net) shares resulting from the vesting of 16,60310,759 (gross) restricted stock units (net shares are net of tax withholding), and (iii)100%(ii) 100% of the (net) shares resulting from the exercise of up to 8,8278,700 stock options (net shares are net of the stock option exercise prices). Subject to price limits, the first trade under theMr. Burns’s RuleAugust 14, 2023. TheMay 20, 2024. Mr. Burns’s plan is scheduled to terminate on May 3, 2024,February 28, 2025, subject to earlier termination upon the sale of all shares subject to the plan, upon termination by Mr. MehtaBurns or the broker, or as otherwise provided in the plan.plan.39Item 6:ExhibitsExhibitNumberDescription31.1DocumentWith Embedded Linkbase Documents101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document101.LABInline XBRL Taxonomy Extension Label Linkbase Document101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document10440TERADYNE, INC.Registrant/s/ SANJAYMEHTAAugust 4, 202341