Exhibit 99.1
Teradyne Reports Third Quarter 2010 Results
| - | Q3’10 revenue of $502 million, up 10% from Q2’10 and up 92% from Q3’09 |
| - | Q3’10 diluted non-GAAP income of $0.82 per share, up from $0.69 per share in Q2’10 and $0.14 per share in Q3’09; Q3’10 diluted GAAP income of $0.66 per share |
| - | Q4’10 guidance: Revenue of $300 million to $325 million: Diluted non-GAAP income of $0.21 to $0.28 per share; Diluted GAAP income of $0.14 to $0.20 per share |
NORTH READING, Mass. – October 27, 2010 –Teradyne, Inc. (NYSE: TER) reported revenue of $502 million for the third quarter of 2010 of which $448 million was in Semiconductor Test and $54 million in Systems Test Group. On a non-GAAP basis, Teradyne’s net income in the third quarter was $156.4 million, or $0.82 per diluted share, which excluded acquired intangible asset amortization, non-cash convertible debt interest and restructuring and other charges. GAAP net income for the third quarter was $147.3 million, or $0.66 per diluted share.
Bookings in the third quarter of 2010 were $350 million of which $259 million were in Semiconductor Test and $91 million in the Systems Test Group.
Guidance for the fourth quarter of 2010 is revenue of $300 million to $325 million, with non-GAAP net income per diluted share of $0.21 to $0.28 and GAAP net income per diluted share of $0.14 to $0.20. Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest and restructuring and other charges.
“In the third quarter, we recorded the highest operating profit rate in Teradyne’s history driven by very strong System-on-Chip (SOC) test revenues,” said Mike Bradley, Teradyne president and CEO. “Our memory test business was stable and we saw order growth in all segments of our Systems Test Group, led by Hard Disk Drive. After five quarters of sequential growth, SOC orders fell sharply as our customers digest the investments made over the last year. Regardless of the duration of this downturn in SOC orders, we’re confident our growing market share, lean operating model and strict cost discipline will deliver strong financial performance across the cycle.”
Webcast
A webcast to discuss third quarter results, along with management’s business outlook will be held at 10 a.m. EDT, Thursday, October 28, 2010. Interested investors should access the webcast at www.teradyne.com and click on “Investors” at least five minutes before the call begins. The webcast replay will be available on www.teradyne.com. In addition, a conference call replay will be available approximately two hours after the call. The replay number in the U.S. & Canada is 800-642-1687. The replay number outside the U.S. & Canada is 706-645-9291. The pass code for both numbers is 89233317. The replay will be available via phone and web site through November 14, 2010.
Non-GAAP Results
In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain income items and charges. These results are provided
Teradyne Reports Third Quarter 2010 Results
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as a complement to results provided in accordance with GAAP. Non-GAAP income/(loss) from operations and non-GAAP net income/(loss) exclude goodwill impairment, in-process research and development, non- cash convertible debt interest, write-off of credit line debt issue costs, restructuring and other, net, fair value inventory step-up related to Nextest and Eagle Test, (losses)/gains on marketable securities and acquired intangible asset amortization, as well as applicable adjustments to profit sharing (prior to January 1, 2010) and income taxes due to these exclusions. GAAP requires that these items be included in determining income/(loss) from operations and net income/(loss). Non-GAAP income/(loss) from operations, non-GAAP net income/(loss), non-GAAP income/(loss) from operations and non-GAAP net income/(loss) as a percentage of revenue, and non-GAAP net income/(loss) per share are non-GAAP measures presented to provide meaningful supplemental information regarding Teradyne’s baseline performance before gains, losses or other charges that may not be indicative of Teradyne’s current core business or future outlook. These non-GAAP measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradyne’s business plan, historical operating results and the operating results of Teradyne’s competitors. Non-GAAP gross margin excludes charges related to the fair value inventory step-up recorded as part of acquisition purchase accounting. GAAP requires that this item be included in determining gross margin. Non-GAAP gross margin dollar amount and percentage are non-GAAP measures that management believes provide useful supplemental information for management and the investor. Management uses non-GAAP gross margin as a performance measure for Teradyne’s current core business and future outlook and for comparison with Teradyne’s business plan, historical gross margin results and the gross margin results of Teradyne’s competitors. Non-GAAP diluted shares include the impact of Teradyne’s call option on its shares. Management believes each of these non-GAAP measures provides useful supplemental information for investors, allowing greater transparency to the information used by management in its operational decision making and in the review of Teradyne’s financial and operational performance, as well as facilitating meaningful comparisons of Teradyne’s results in the current period compared with those in prior and future periods. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the attached exhibits and on the Teradyne website at www.teradyne.com by clicking on “Investors” and then selecting the “GAAP to Non-GAAP Reconciliation” link. The presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP.
About Teradyne
Teradyne (NYSE:TER) the leading supplier of Automatic Test Equipment used to test complex electronics used in the consumer electronics, automotive, computing, telecommunications, and aerospace and defense industries. In 2009, Teradyne had sales of $819 million and currently employs about 3,000 people worldwide. For more information, visit www.teradyne.com. Teradyne(R) is a registered trademark of Teradyne, Inc. in the U.S. and other countries. All product names are trademarks of Teradyne, Inc. (including its subsidiaries) or their respective owners.
Safe Harbor Statement
This release contains forward-looking statements regarding future business prospects, Teradyne’s results of operations and market conditions. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance.
Teradyne Reports Third Quarter 2010 Results
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You can identify these forward-looking statements based on the context of the statements and by the fact that they use words such as “will,” “anticipate,” “expect,” “project,” “intend,” “plan,” “believe,” “target” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. There can be no assurance that management’s estimates of Teradyne’s future results or other forward looking statements will be achieved. Important factors that could cause actual results to differ materially from those presently expected include: conditions affecting the markets in which Teradyne operates; decreased or delayed product demand; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” section of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and Quarterly Report on Form 10-Q for the period ended July 4, 2010. The forward-looking statements provided by Teradyne in this press release represent management’s views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause management’s views to change. However, while Teradyne may elect to update these forward-looking statements at some point in the future, Teradyne specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Teradyne’s views as of any date subsequent to the date of this release.
TERADYNE, INC. REPORT FOR THE THIRD QUARTER OF 2010
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | |
| | Quarter Ended | | | Nine Months Ended | |
| | October 3, 2010 | | | July 4, 2010 | | | October 4, 2009 | | | October 3, 2010 | | | October 4, 2009 | |
Net Revenues | | $ | 502,086 | | | $ | 454,776 | | | $ | 262,162 | | | $ | 1,286,485 | | | $ | 552,350 | |
Cost of Revenues (1) | | | 226,311 | | | | 200,473 | | | | 155,407 | | | | 582,863 | | | | 365,106 | |
| | | | | | | | | | | | | | | | | | | | |
Gross Profit | | | 275,775 | | | | 254,303 | | | | 106,755 | | | | 703,622 | | | | 187,244 | |
| | | | | |
Operating Expenses: | | | | | | | | | | | | | | | | | | | | |
Engineering and Development | | | 50,122 | | | | 50,393 | | | | 38,266 | | | | 149,567 | | | | 123,915 | |
Selling and Administrative | | | 61,109 | | | | 58,343 | | | | 46,314 | | | | 175,323 | | | | 148,944 | |
Acquired Intangible Asset Amortization | | | 7,291 | | | | 7,313 | | | | 8,214 | | | | 21,960 | | | | 24,667 | |
Restructuring and Other, net (2) | | | (859 | ) | | | 1,700 | | | | 5,189 | | | | 2,105 | | | | 36,424 | |
| | | | | | | | | | | | | | | | | | | | |
Operating Expenses | | | 117,663 | | | | 117,749 | | | | 97,983 | | | | 348,955 | | | | 333,950 | |
| | | | | |
Income/(Loss) from Operations | | | 158,112 | | | | 136,554 | | | | 8,772 | | | | 354,667 | | | | (146,706 | ) |
| | | | | |
Interest & Other (3) | | | (4,096 | ) | | | (4,862 | ) | | | (3,597 | ) | | | (14,029 | ) | | | (15,555 | ) |
| | | | | | | | | | | | | | | | | | | | |
Income/(Loss) Before Income Taxes | | | 154,016 | | | | 131,692 | | | | 5,175 | | | | 340,638 | | | | (162,261 | ) |
Income Tax Provision/(Benefit) | | | 6,676 | | | | 9,543 | | | | (1,500 | ) | | | 21,049 | | | | (11,500 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net Income/(Loss) | | $ | 147,340 | | | $ | 122,149 | | | $ | 6,675 | | | $ | 319,589 | | | $ | (150,761 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net Income/(Loss) per Common Share: | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.81 | | | $ | 0.68 | | | $ | 0.04 | | | $ | 1.78 | | | $ | (0.87 | ) |
| | | | | | | | | | | | | | | | | | | | |
Diluted | | $ | 0.66 | | | $ | 0.55 | | | $ | 0.04 | | | $ | 1.45 | | | $ | (0.87 | ) |
| | | | | | | | | | | | | | | | | | | | |
Weighted Average Common Shares–Basic | | | 181,239 | | | | 179,990 | | | | 174,495 | | | | 179,365 | | | | 173,216 | |
| | | | | | | | | | | | | | | | | | | | |
Weighted Average Common Shares–Diluted (4) | | | 229,389 | | | | 231,541 | | | | 180,792 | | | | 229,069 | | | | 173,216 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net Orders | | $ | 350,169 | | | $ | 511,923 | | | $ | 288,048 | | | $ | 1,396,492 | | | $ | 651,725 | |
| | | | | | | | | | | | | | | | | | | | |
| | |
(1) Cost of Revenues includes: | | Quarter Ended | | | Nine Months Ended | |
| | October 3, 2010 | | | July 4, 2010 | | | October 4, 2009 | | | October 3, 2010 | | | October 4, 2009 | |
Sale of Previously Written Down Inventory | | $ | (1,312 | ) | | $ | (5,232 | ) | | $ | (588 | ) | | $ | (6,544 | ) | | $ | (588 | ) |
Provision for Excess and Obsolete Inventory | | | 3,738 | | | | 301 | | | | 5,976 | | | | 5,403 | | | | 27,003 | |
Cost for Purchase Accounting Inventory Step-up | | | — | | | | — | | | | 5,700 | | | | — | | | | 10,863 | |
Insurance Recovery Gain | | | — | | | | — | | | | — | | | | — | | | | (1,000 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | $ | 2,426 | | | $ | (4,931 | ) | | $ | 11,088 | | | $ | (1,141 | ) | | $ | 36,278 | |
| | | | | | | | | | | | | | | | | | | | |
| | |
(2) Restructuring and other, net consists of: | | Quarter Ended | | | Nine Months Ended | |
| | October 3, 2010 | | | July 4, 2010 | | | October 4, 2009 | | | October 3, 2010 | | | October 4, 2009 | |
Employee Severance | | $ | 1,928 | | | $ | 745 | | | $ | 1,237 | | | $ | 3,937 | | | $ | 32,891 | |
Facility Related | | | (2,787 | ) | | | 955 | | | | 4,419 | | | | (1,832 | ) | | | 4,419 | |
Long-Lived Asset Impairment | | | — | | | | — | | | | — | | | | — | | | | 1,068 | |
Eagle Test Purchase Accounting Adjustment | | | — | | | | — | | | | (467 | ) | | | — | | | | (1,954 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | $ | (859 | ) | | $ | 1,700 | | | $ | 5,189 | | | $ | 2,105 | | | $ | 36,424 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
(3) Interest and Other includes: | | Quarter Ended | | | Nine Months Ended | |
| | October 3, 2010 | | | July 4, 2010 | | | October 4, 2009 | | | October 3, 2010 | | | October 4, 2009 | |
Non-cash Convertible Debt Interest | | $ | 2,669 | | | $ | 2,580 | | | $ | 2,329 | | | $ | 7,743 | | | $ | 4,580 | |
Expense for Deferred Debt Financing Costs as a Result of Repayment and Termination of the Revolving Line of Credit | | | — | | | | — | | | | — | | | | — | | | | 2,488 | |
Other-Than-Temporary Impairment and Realized (Gains)/Losses on Marketable Securities | | | — | | | | — | | | | (572 | ) | | | — | | | | 2,000 | |
| | | | | | | | | | | | | | | | | | | | |
| | $ | 2,669 | | | $ | 2,580 | | | $ | 1,757 | | | $ | 7,743 | | | $ | 9,068 | |
| | | | | | | | | | | | | | | | | | | | |
(4) | Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarters ended October 3, 2010 and July 4, 2010, 34.7 million shares have been included in diluted shares and net interest expense of approximately $4.4 million has been added back to net income for the diluted earnings per share calculation. For the nine months ended October 3, 2010, 34.7 million shares have been included in diluted shares and net interest expense of approximately $13.2 million has been added back to net income for the diluted earnings per share calculation. |
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
| | | | | | | | |
| | October 3, 2010 | | | December 31, 2009 | |
Assets | | | | | | | | |
Cash and Cash Equivalents | | $ | 433,915 | | | $ | 416,737 | |
Marketable Securities | | | 263,881 | | | | 46,933 | |
Accounts Receivable | | | 306,522 | | | | 125,236 | |
Inventories | | | 102,848 | | | | 90,836 | |
Deferred Tax Assets | | | 20,017 | | | | 18,944 | |
Prepayments and Other Current Assets | | | 60,920 | | | | 63,606 | |
| | | | | | | | |
Total Current Assets | | | 1,188,103 | | | | 762,292 | |
| | |
Net Property, Plant and Equipment | | | 232,348 | | | | 246,362 | |
Long-Term Marketable Securities | | | 201,486 | | | | 55,130 | |
Retirement Plan Assets | | | 23,405 | | | | — | |
Intangible Assets | | | 130,231 | | | | 152,192 | |
Other Assets | | | 16,038 | | | | 19,361 | |
| | | | | | | | |
Total Assets | | $ | 1,791,611 | | | $ | 1,235,337 | |
| | | | | | | | |
| | |
Liabilities | | | | | | | | |
Accounts Payable | | $ | 133,330 | | | $ | 66,765 | |
Accrued Employees’ Compensation and Withholdings | | | 91,780 | | | | 55,356 | |
Deferred Revenue and Customer Advances | | | 101,584 | | | | 104,439 | |
Other Accrued Liabilities | | | 57,566 | | | | 54,640 | |
Accrued Income Taxes | | | 14,625 | | | | — | |
Current Debt | | | 2,397 | | | | 2,157 | |
| | | | | | | | |
Total Current Liabilities | | | 401,282 | | | | 283,357 | |
| | |
Long-Term Deferred Revenue and Customer Advances | | | 80,818 | | | | 2,318 | |
Retirement Plans Liabilities | | | 68,663 | | | | 115,101 | |
Deferred Tax Liabilities | | | 10,271 | | | | 8,041 | |
Other Long-Term Liabilities | | | 15,954 | | | | 20,841 | |
Long-Term Debt | | | 147,287 | | | | 141,100 | |
| | | | | | | | |
Total Liabilities | | | 724,275 | | | | 570,758 | |
| | |
Shareholders’ Equity | | | 1,067,336 | | | | 664,579 | |
| | | | | | | | |
Total Liabilities and Shareholders’ Equity | | $ | 1,791,611 | | | $ | 1,235,337 | |
| | | | | | | | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
| | | | | | | | | | | | | | | | |
| | Quarter Ended | | | Nine Months Ended | |
| | October 3, 2010 | | | October 4, 2009 | | | October 3, 2010 | | | October 4, 2009 | |
Cash flows from operating activities: | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 147,340 | | | $ | 6,675 | | | $ | 319,589 | | | $ | (150,761 | ) |
| | | | |
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | | | | | | | | | | | | | | | | |
Depreciation | | | 13,115 | | | | 15,466 | | | | 40,055 | | | | 45,717 | |
Amortization | | | 11,549 | | | | 11,906 | | | | 34,740 | | | | 33,249 | |
Stock-based compensation | | | 7,813 | | | | 6,160 | | | | 23,365 | | | | 18,268 | |
Provision for excess and obsolete inventory | | | 3,738 | | | | 5,976 | | | | 5,403 | | | | 23,681 | |
(Gain) loss on sale and impairment of marketable securities, net | | | — | | | | (572 | ) | | | 398 | | | | 2,000 | |
Non-cash charge for sale of inventories revalued at the date of acquisition | | | — | | | | 5,700 | | | | — | | | | 10,863 | |
Revolving credit facility issue costs | | | — | | | | — | | | | — | | | | 2,488 | |
Deferred taxes | | | (447 | ) | | | (406 | ) | | | (460 | ) | | | (6,258 | ) |
Other | | | 196 | | | | 782 | | | | 1,643 | | | | 1,696 | |
Changes in operating assets and liabilities, net of businesses acquired: | | | | | | | | | | | | | | | | |
Accounts receivable | | | (58,504 | ) | | | (65,780 | ) | | | (181,286 | ) | | | (30,022 | ) |
Inventories | | | (14,285 | ) | | | 16,949 | | | | 10,794 | | | | 45,911 | |
Other assets | | | (14,464 | ) | | | (7,077 | ) | | | 896 | | | | (4,685 | ) |
Deferred revenue and customer advances | | | 138,139 | | | | 77,280 | | | | 75,645 | | | | 67,921 | |
Accounts payable and accrued expenses | | | 43,895 | | | | 31,605 | | | | 95,460 | | | | 1,810 | |
Retirement plan contributions | | | (26,172 | ) | | | (1,746 | ) | | | (50,849 | ) | | | (5,718 | ) |
Accrued income taxes | | | 3,279 | | | | — | | | | 14,625 | | | | — | |
| | | | | | | | | | | | | | | | |
Net cash provided by operating activities | | | 255,192 | | | | 102,918 | | | | 390,018 | | | | 56,160 | |
| | | | |
Cash flows from investing activities: | | | | | | | | | | | | | | | | |
Purchases of property, plant and equipment | | | (18,253 | ) | | | (9,155 | ) | | | (53,959 | ) | | | (26,583 | ) |
Purchases of available-for-sale marketable securities | | | (254,440 | ) | | | (31,470 | ) | | | (478,260 | ) | | | (31,470 | ) |
Proceeds from sales of available-for-sale marketable securities | | | 47,580 | | | | 11,138 | | | | 94,846 | | | | 23,085 | |
Proceeds from sales of trading marketable securities | | | 50 | | | | — | | | | 23,750 | | | | — | |
Proceeds from life insurance | | | — | | | | — | | | | 1,091 | | | | 1,076 | |
Acquisition of businesses, net of cash acquired | | | — | | | | — | | | | — | | | | (3,741 | ) |
| | | | | | | | | | | | | | | | |
Net cash used for investing activities | | | (225,063 | ) | | | (29,487 | ) | | | (412,532 | ) | | | (37,633 | ) |
| | | | |
Cash flows from financing activities: | | | | | | | | | | | | | | | | |
Issuance of common stock | | | 353 | | | | 983 | | | | 42,225 | | | | 15,256 | |
Payments of long-term debt | | | (1,182 | ) | | | (1,069 | ) | | | (2,305 | ) | | | (1,069 | ) |
Proceeds from long-term debt | | | — | | | | — | | | | — | | | | 172,914 | |
Repayment of revolving credit facility principal | | | — | | | | — | | | | — | | | | (122,500 | ) |
| | | | | | | | | | | | | | | | |
Net cash (used for) provided by financing activities | | | (829 | ) | | | (86 | ) | | | 39,920 | | | | 64,601 | |
| | | | |
Effect of exchange rate changes on cash and cash equivalents | | | 619 | | | | (685 | ) | | | (228 | ) | | | 908 | |
| | | | | | | | | | | | | | | | |
Increase in cash and cash equivalents | | | 29,919 | | | | 72,660 | | | | 17,178 | | | | 84,036 | |
Cash and cash equivalents at beginning of period | | | 403,996 | | | | 334,081 | | | | 416,737 | | | | 322,705 | |
| | | | | | | | | | | | | | | | |
Cash and cash equivalents at end of period | | $ | 433,915 | | | $ | 406,741 | | | $ | 433,915 | | | $ | 406,741 | |
| | | | | | | | | | | | | | | | |
GAAP to Non-GAAP Earnings Reconciliation
(In millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter Ended | |
| | October 3, 2010 | | | % of Net Revenues | | | | | | | | | July 4, 2010 | | | % of Net Revenues | | | | | | | | | October 4, 2009 | | | % of Net Revenues | | | | | | | |
Net Revenues | | $ | 502.1 | | | | | | | | | | | | | | | $ | 454.8 | | | | | | | | | | | | | | | $ | 262.2 | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Gross Margin—GAAP | | $ | 275.8 | | | | 54.9 | % | | | | | | | | | | $ | 254.3 | | | | 55.9 | % | | | | | | | | | | $ | 106.8 | | | | 40.7 | % | | | | | | | | |
Inventory step-up reversal (1) | | | — | | | | — | | | | | | | | | | | | — | | | | — | | | | | | | | | | | | 5.7 | | | | 2.2 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross Margin—non-GAAP | | $ | 275.8 | | | | 54.9 | % | | | | | | | | | | $ | 254.3 | | | | 55.9 | % | | | | | | | | | | $ | 112.5 | | | | 42.9 | % | | | | | | | | |
| | | | | | | | | | | | |
Income from Operations—GAAP | | $ | 158.1 | | | | 31.5 | % | | | | | | | | | | $ | 136.6 | | | | 30.0 | % | | | | | | | | | | $ | 8.8 | | | | 3.4 | % | | | | | | | | |
Acquired intangible asset amortization | | | 7.3 | | | | 1.5 | % | | | | | | | | | | | 7.3 | | | | 1.6 | % | | | | | | | | | | | 8.2 | | | | 3.1 | % | | | | | | | | |
Restructuring and other, net (2) | | | (0.9 | ) | | | -0.2 | % | | | | | | | | | | | 1.7 | | | | 0.4 | % | | | | | | | | | | | 5.2 | | | | 2.0 | % | | | | | | | | |
Inventory step-up reversal (1) | | | — | | | | — | | | | | | | | | | | | — | | | | — | | | | | | | | | | | | 5.7 | | | | 2.2 | % | | | | | | | | |
Profit sharing adjustment (3) | | | — | | | | — | | | | | | | | | | | | — | | | | — | | | | | | | | | | | | (2.2 | ) | | | -0.8 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income from Operations—non-GAAP | | $ | 164.5 | | | | 32.8 | % | | | | | | | | | | $ | 145.6 | | | | 32.0 | % | | | | | | | | | | $ | 25.7 | | | | 9.8 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | Net Income per Common Share | | | | | | | | | Net Income per Common Share | | | | | | | | | Net Income per Common Share | |
| | October 3, 2010 | | | % of Net Revenues | | | Basic | | | Diluted | | | July 4, 2010 | | | % of Net Revenues | | | Basic | | | Diluted | | | October 4, 2009 | | | % of Net Revenues | | | Basic | | | Diluted | |
Net Income—GAAP | | $ | 147.3 | | | | 29.3 | % | | $ | 0.81 | | | $ | 0.66 | | | $ | 122.1 | | | | 26.8 | % | | $ | 0.68 | | | $ | 0.55 | | | $ | 6.7 | | | | 2.6 | % | | $ | 0.04 | | | $ | 0.04 | |
Acquired intangible asset amortization | | | 7.3 | | | | 1.5 | % | | | 0.04 | | | | 0.04 | | | | 7.3 | | | | 1.6 | % | | | 0.04 | | | | 0.04 | | | | 8.2 | | | | 3.1 | % | | | 0.05 | | | | 0.05 | |
Interest and other (4) | | | 2.7 | | | | 0.5 | % | | | 0.01 | | | | 0.01 | | | | 2.6 | | | | 0.6 | % | | | 0.01 | | | | 0.01 | | | | 1.8 | | | | 0.7 | % | | | 0.01 | | | | 0.01 | |
Restructuring and other, net (2) | | | (0.9 | ) | | | -0.2 | % | | | — | | | | — | | | | 1.7 | | | | 0.4 | % | | | 0.01 | | | | 0.01 | | | | 5.2 | | | | 2.0 | % | | | 0.03 | | | | 0.03 | |
Convertible share adjustment (5) | | | — | | | | — | | | | — | | | | 0.11 | | | | — | | | | — | | | | — | | | | 0.08 | | | | — | | | | — | | | | — | | | | — | |
Inventory step-up reversal (1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5.7 | | | | 2.2 | % | | | 0.03 | | | | 0.03 | |
Profit sharing adjustment (3) | | | — | | | | — | | | | — | �� | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2.2 | ) | | | -0.8 | % | | | (0.01 | ) | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income—non-GAAP | | $ | 156.4 | | | | 31.1 | % | | $ | 0.86 | | | $ | 0.82 | | | $ | 133.7 | | | | 29.4 | % | | $ | 0.74 | | | $ | 0.69 | | | $ | 25.4 | | | | 9.7 | % | | $ | 0.14 | | | $ | 0.14 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
GAAP and Non-GAAP Weighted Average Common Shares—Basic | | | 181.2 | | | | | | | | | | | | | | | | 180.0 | | | | | | | | | | | | | | | | 174.5 | | | | | | | | | | | | | |
| | | | | | | | | | | | |
GAAP Weighted Average Common Shares—Diluted | | | 229.4 | | | | | | | | | | | | | | | | 231.5 | | | | | | | | | | | | | | | | 180.8 | | | | | | | | | | | | | |
Exclude dilutive shares from convertible note | | | (34.7 | ) | | | | | | | | | | | | | | | (34.7 | ) | | | | | | | | | | | | | | | — | | | | | | | | | | | | | |
Exclude dilutive shares from convertible note hedge warrant | | | — | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | (1.8 | ) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP Weighted Average Common Shares—Diluted (5) | | | 194.7 | | | | | | | | | | | | | | | | 196.8 | | | | | | | | | | | | | | | | 179.0 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
(1) Reversal of Eagle Test purchase accounting inventory step-up. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
(2) Restructuring and other, net consists of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quarter Ended | |
| | October 3, 2010 | | | | | | | | | | | | July 4, 2010 | | | | | | | | | | | | October 4, 2009 | | | | | | | | | | |
Employee Severance | | $ | 1.9 | | | | | | | | | | | | | | | $ | 0.7 | | | | | | | | | | | | | | | $ | 1.2 | | | | | | | | | | | | | |
Facility Related | | | (2.8 | ) | | | | | | | | | | | | | | | 1.0 | | | | | | | | | | | | | | | | 4.4 | | | | | | | | | | | | | |
Eagle Test Purchase Accounting Adjustment | | | — | | | | | | | | | | | | | | | | — | | | | | | | | | | | | | | | | (0.4 | ) | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | (0.9 | ) | | | | | | | | | | | | | | $ | 1.7 | | | | | | | | | | | | | | | $ | 5.2 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(3) | Profit sharing adjustment for non-GAAP items. Commencing January 1, 2010, this adjustment is no longer made. |
(4) | For the quarters ended October 3, 2010, July 4, 2010 and October 4, 2009, Interest and Other included non-cash convertible debt interest. |
(5) | For the quarters ended October 3, 2010 and July 4, 2010, the calculation of non-GAAP diluted earnings per share gives benefit to the Company's call option on its stock for 34.7 million shares at $5.48. As a result, 8.5 million and 11.2 million shares, respectively, have been included in non-GAAP diluted shares and net interest expense of approximately $2.3 million has been added back to non-GAAP net income for the non-GAAP diluted earnings per share calculation. |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended | |
| | October 3, 2010 | | | % of Net Revenues | | | | | | | | | October 4, 2009 | | | % of Net Revenues | | | | | | | |
Net Revenues | | $ | 1,286.5 | | | | | | | | | | | | | | | $ | 552.4 | | | | | | | | | | | | | |
| | | | | | | | |
Gross Margin—GAAP | | $ | 703.6 | | | | 54.7 | % | | | | | | | | | | $ | 187.2 | | | | 33.9 | % | | | | | | | | |
Inventory step-up reversal (1) | | | — | | | | — | | | | | | | | | | | | 10.9 | | | | 2.0 | % | | | | | | | | |
Insurance recovery | | | — | | | | — | | | | | | | | | | | | (1.0 | ) | | | -0.2 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Gross Margin—non-GAAP | | $ | 703.6 | | | | 54.7 | % | | | | | | | | | | $ | 197.1 | | | | 35.7 | % | | | | | | | | |
| | | | | | | | |
Income/(Loss) from Operations—GAAP | | $ | 354.7 | | | | 27.6 | % | | | | | | | | | | $ | (146.7 | ) | | | -26.6 | % | | | | | | | | |
Acquired intangible asset amortization | | | 22.0 | | | | 1.7 | % | | | | | | | | | | | 24.7 | | | | 4.5 | % | | | | | | | | |
Restructuring and other, net (2) | | | 2.1 | | | | 0.2 | % | | | | | | | | | | | 36.4 | | | | 6.6 | % | | | | | | | | |
Inventory step-up reversal (1) | | | — | | | | — | | | | | | | | | | | | 10.9 | | | | 2.0 | % | | | | | | | | |
Insurance recovery | | | — | | | | — | | | | | | | | | | | | (1.0 | ) | | | -0.2 | % | | | | | | | | |
Profit sharing adjustment (3) | | | — | | | | — | | | | | | | | | | | | (2.2 | ) | | | -0.4 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Income/(Loss) from Operations—non-GAAP | | $ | 378.8 | | | | 29.4 | % | | | | | | | | | | $ | (77.9 | ) | | | -14.1 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | | | | | Net Income per Common Share | | | | | | | | | Net Income/ (Loss) per Common Share | |
| | October 3, 2010 | | | % of Net Revenues | | | Basic | | | Diluted | | | October 4, 2009 | | | % of Net Revenues | | | Basic | | | Diluted | |
Net Income/(Loss)—GAAP | | $ | 319.6 | | | | 24.8 | % | | $ | 1.78 | | | $ | 1.45 | | | $ | (150.8 | ) | | | -27.3 | % | | $ | (0.87 | ) | | $ | (0.87 | ) |
Acquired intangible asset amortization | | | 22.0 | | | | 1.7 | % | | | 0.12 | | | | 0.11 | | | | 24.7 | | | | 4.5 | % | | | 0.14 | | | | 0.14 | |
Interest and other (4) | | | 7.7 | | | | 0.6 | % | | | 0.04 | | | | 0.04 | | | | 9.1 | | | | 1.6 | % | | | 0.05 | | | | 0.05 | |
Restructuring and other, net (2) | | | 2.1 | | | | 0.2 | % | | | 0.01 | | | | 0.01 | | | | 36.4 | | | | 6.6 | % | | | 0.21 | | | | 0.21 | |
Convertible share adjustment (5) | | | — | | | | — | | | | — | | | | 0.23 | | | | — | | | | — | | | | — | | | | — | |
Inventory step-up reversal (1) | | | — | | | | — | | | | — | | | | — | | | | 10.9 | | | | 2.0 | % | | | 0.06 | | | | 0.06 | |
Insurance recovery | | | — | | | | — | | | | — | | | | — | | | | (1.0 | ) | | | -0.2 | % | | | (0.01 | ) | | | (0.01 | ) |
Profit sharing adjustment (3) | | | — | | | | — | | | | — | | | | — | | | | (2.2 | ) | | | -0.4 | % | | | (0.01 | ) | | | (0.01 | ) |
Income tax adjustment (6) | | | — | | | | — | | | | — | | | | — | | | | (2.9 | ) | | | -0.5 | % | | | (0.02 | ) | | | (0.02 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income/(Loss)—non-GAAP | | $ | 351.4 | | | | 27.3 | % | | $ | 1.96 | | | $ | 1.84 | | | $ | (75.8 | ) | | | -13.7 | % | | $ | (0.44 | ) | | $ | (0.44 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
GAAP and Non-GAAP Weighted Average Common Shares—Basic | | | 179.4 | | | | | | | | | | | | | | | | 173.2 | | | | | | | | | | | | | |
| | | | | | | | |
GAAP Weighted Average Common Shares—Diluted | | | 229.1 | | | | | | | | | | | | | | | | 173.2 | | | | | | | | | | | | | |
Exclude dilutive shares from convertible note | | | (34.7 | ) | | | | | | | | | | | | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-GAAP Weighted Average Common Shares—Diluted (5) | | | 194.4 | | | | | | | | | | | | | | | | 173.2 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
(1)Reversal of Eagle Test purchase accounting inventory step-up. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
(2)Restructuring and other, net consists of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended | |
| | October 3, 2010 | | | | | | | | | | | | October 4, 2009 | | | | | | | | | | |
Employee Severance | | $ | 3.9 | | | | | | | | | | | | | | | $ | 32.9 | | | | | | | | | | | | | |
Facility Related | | | (1.8 | ) | | | | | | | | | | | | | | | 4.4 | | | | | | | | | | | | | |
Eagle Test Purchase Accounting Adjustment | | | — | | | | | | | | | | | | | | | | (2.0 | ) | | | | | | | | | | | | |
Long-Lived Asset Impairment | | | — | | | | | | | | | | | | | | | | 1.1 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | $ | 2.1 | | | | | | | | | | | | | | | $ | 36.4 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(3) | Profit sharing adjustment for non-GAAP items. Commencing January 1, 2010, this adjustment is no longer made. |
(4) | For the nine months ended October 3, 2010, Interest and Other included non-cash convertible debt interest. For the nine months ended October 4, 2009, Interest and Other included a charge to expense deferred debt financing costs as a result of the repayment and termination of Teradyne's revolving line of credit, non-cash convertible debt interest, and a charge for other-than-temporary impairment and realized losses on marketable securities. |
(5) | For the nine months ended October 3, 2010, the calculation of non-GAAP diluted earnings per share gives benefit to the Company's call option on its stock for 34.7 million shares at $5.48. As a result, 9.6 million shares have been included in non-GAAP diluted shares and net interest expense of approximately $7.1 million has been added back to non-GAAP net income for the non-GAAP diluted earnings per share calculation. |
(6) | Income tax adjustment related to a discrete foreign exchange item. |
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GAAP to Non-GAAP Reconciliation of fourth quarter 2010 guidance:
| | | | | | | | | | | | |
GAAP and Non-GAAP fourth quarter revenue guidance: | | $ | 300 million | | | | to | | | $ | 325 million | |
GAAP net income per diluted share | | $ | 0.14 | | | | | | | $ | 0.20 | |
Exclude acquired intangible asset amortization | | $ | 0.04 | | | | | | | $ | 0.04 | |
Exclude non-cash convertible debt interest | | $ | 0.01 | | | | | | | $ | 0.01 | |
Exclude dilutive shares from convertible note | | $ | 0.02 | | | | | | | $ | 0.03 | |
| | | | | | | | | | | | |
Non-GAAP net income per diluted share | | $ | 0.21 | | | | | | | $ | 0.28 | |
For press releases and other information of interest to investors, please visit Teradyne's homepage at http://www.teradyne.com.
Contact: Teradyne, Inc.
Andy Blanchard 978-370-2425
Vice President of Corporate Relations
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