☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Massachusetts
|
04-2272148
|
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
|
600 Riverpark Drive,
North Reading,
Massachusetts
|
01864
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
|||
Non-accelerated
filer
|
☐
|
Emerging growth company
|
☐
|
|||
Smaller reporting company
|
☐
|
|
|
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
|
|
|
Page No.
|
||||
|
PART I. FINANCIAL INFORMATION
|
|
||||
Item 1.
|
Financial Statements (Unaudited):
|
|
||||
|
1
|
|||||
|
2
|
|||||
|
3
|
|||||
|
4
|
|||||
|
5
|
|||||
|
6
|
|||||
Item 2.
|
36
|
|||||
Item 3.
|
50
|
|||||
Item 4.
|
51
|
|||||
|
PART II. OTHER INFORMATION
|
|
||||
Item 1.
|
52
|
|||||
Item 1A.
|
52
|
|||||
Item 2.
|
53
|
|||||
Item 4.
|
53
|
|||||
Item 6.
|
53
|
Item 1:
|
Financial Statements
|
|
June 30,
2019 |
December 31,
2018 |
||||||
|
(in thousands,
except per share amount)
|
|||||||
ASSETS
|
|
|
||||||
Current assets:
|
|
|
||||||
Cash and cash equivalents
|
$ |
495,107
|
$ |
926,752
|
||||
Marketable securities
|
400,227
|
190,096
|
||||||
Accounts receivable, less allowance for doubtful accounts of $1,736 and $1,673 at June 30, 2019 and December 31, 2018, respectively
|
372,199
|
291,267
|
||||||
Inventories, net
|
164,461
|
153,541
|
||||||
Prepayments and other current assets
|
184,832
|
170,826
|
||||||
Total current assets
|
1,616,826
|
1,732,482
|
||||||
Property, plant and equipment, net
|
295,895
|
279,821
|
||||||
Operating lease
right-of-use
assets, net
|
56,315
|
—
|
||||||
Marketable securities
|
99,001
|
87,731
|
||||||
Deferred tax assets
|
67,886
|
70,848
|
||||||
Other assets
|
25,712
|
11,509
|
||||||
Retirement plans
assets
|
16,449
|
16,883
|
||||||
Acquired intangible assets, net
|
109,494
|
125,482
|
||||||
Goodwill
|
383,936
|
381,850
|
||||||
Total assets
|
$ |
2,671,514
|
$ |
2,706,606
|
||||
LIABILITIES
|
|
|
||||||
Current liabilities:
|
|
|
||||||
Accounts payable
|
$ |
103,449
|
$ |
100,688
|
||||
Accrued employees’ compensation and withholdings
|
121,940
|
148,566
|
||||||
Deferred revenue and customer advances
|
89,837
|
77,711
|
||||||
Other accrued liabilities
|
77,053
|
78,272
|
||||||
Current operating lease liabilities
|
18,041
|
—
|
||||||
Contingent consideration
|
11,753
|
34,865
|
||||||
Income taxes payable
|
44,927
|
36,185
|
||||||
Total current liabilities
|
467,000
|
476,287
|
||||||
Retirement plans liabilities
|
122,596
|
117,456
|
||||||
Long-term deferred revenue and customer advances
|
37,365
|
32,750
|
||||||
Deferred tax liabilities
|
17,800
|
20,662
|
||||||
Long-term other accrued liabilities
|
9,660
|
37,547
|
||||||
Long-term contingent consideration
|
15,094
|
35,678
|
||||||
Long-term operating lease liabilities
|
46,460
|
—
|
||||||
Long-term incomes taxes payable
|
88,884
|
83,891
|
||||||
Debt
|
387,243
|
379,981
|
||||||
Total liabilities
|
1,192,102
|
1,184,252
|
||||||
Commitments and contingencies (See Note S)
|
|
|
|
|
|
|
||
SHAREHOLDERS’ EQUITY
|
|
|
||||||
Common stock, $0.125 par value, 1,000,000 shares authorized; 170,436 and 175,522 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
21,305
|
21,940
|
||||||
Additional
paid-in
capital
|
1,688,211
|
1,671,645
|
||||||
Accumulated other comprehensive loss
|
(7,591
|
) |
(13,040
|
) | ||||
Accumulated deficit
|
(222,513
|
) |
(158,191
|
) | ||||
Total shareholders’ equity
|
1,479,412
|
1,522,354
|
||||||
Total liabilities and shareholders’ equity
|
$ |
2,671,514
|
$ |
2,706,606
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019 |
July 1,
2018 |
June 30,
2019 |
July 1,
2018
|
||||||||||||
|
(in thousands, except per share amount)
|
|||||||||||||||
Revenues:
|
|
|
|
|
||||||||||||
Products
|
$ |
457,511
|
$ |
434,051
|
$ |
850,953
|
$ |
837,976
|
||||||||
Services
|
106,667
|
92,878
|
207,324
|
176,420
|
||||||||||||
Total revenues
|
564,178
|
526,929
|
1,058,277
|
1,014,396
|
||||||||||||
Cost of revenues:
|
|
|
|
|
||||||||||||
Cost of products
|
193,299
|
180,777
|
358,667
|
361,735
|
||||||||||||
Cost of services
|
46,961
|
38,818
|
88,057
|
75,495
|
||||||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)
|
240,260
|
219,595
|
446,724
|
437,230
|
||||||||||||
Gross profit
|
323,918
|
307,334
|
611,553
|
577,166
|
||||||||||||
Operating expenses:
|
|
|
|
|
||||||||||||
Selling and administrative
|
108,811
|
99,410
|
210,824
|
189,916
|
||||||||||||
Engineering and development
|
81,434
|
75,342
|
158,225
|
149,750
|
||||||||||||
Acquired intangible assets amortization
|
10,083
|
9,793
|
20,717
|
17,491
|
||||||||||||
Restructuring and other
|
(10,404
|
) |
2,389
|
(5,292
|
) |
2,076
|
||||||||||
Total operating expenses
|
189,924
|
186,934
|
384,474
|
359,233
|
||||||||||||
Income from operations
|
133,994
|
120,400
|
227,079
|
217,933
|
||||||||||||
Non-operating
(income) expense:
|
|
|
|
|
||||||||||||
Interest income
|
(5,430
|
) |
(5,427
|
) |
(13,482
|
) |
(11,407
|
) | ||||||||
Interest expense
|
5,800
|
5,639
|
11,513
|
12,530
|
||||||||||||
Other (income) expense, net
|
2,447
|
176
|
3,892
|
979
|
||||||||||||
Income before income taxes
|
131,177
|
120,012
|
225,156
|
215,831
|
||||||||||||
Income tax provision
|
33,780
|
18,975
|
18,621
|
27,821
|
||||||||||||
Net income
|
$ |
97,397
|
$ |
101,037
|
$ |
206,535
|
$ |
188,010
|
||||||||
Net income per common share:
|
|
|
|
|
||||||||||||
Basic
|
$ |
0.57
|
$ |
0.53
|
$ |
1.20
|
$ |
0.97
|
||||||||
Diluted
|
$ |
0.55
|
$ |
0.52
|
$ |
1.16
|
$ |
0.94
|
||||||||
Weighted average common shares—basic
|
171,241
|
190,730
|
172,387
|
192,992
|
||||||||||||
Weighted average common shares—diluted
|
178,590
|
194,909
|
177,781
|
199,197
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June
30,
2019 |
July
1,
2018 |
June
30,
2019 |
July
1,
2018 |
||||||||||||
|
(in thousands)
|
|||||||||||||||
Net income
|
$
|
97,397
|
$
|
101,037
|
$
|
206,535
|
$
|
188,010
|
||||||||
Other comprehensive income, net of tax:
|
|
|
|
|
||||||||||||
Foreign currency translation adjustment, net of tax of $0
|
5,642
|
(29,323
|
)
|
983
|
(18,781
|
)
|
||||||||||
Available-for-sale
marketable securities:
|
|
|
|
|
||||||||||||
Unrealized gains (losses) on marketable securities arising during period, net of tax of $678, $(25), $1,256, $(744), respectively
|
2,537
|
198
|
4,637
|
(2,489
|
)
|
|||||||||||
Less: Reclassification adjustment for (gains) losses included in net income, net of tax of $(6), $(68), $(26), $11, respectively
|
(27
|
)
|
(199
|
)
|
(97
|
)
|
1,469
|
|||||||||
|
2,510
|
(1
|
)
|
4,540
|
(1,020
|
)
|
||||||||||
Defined benefit pension and post-retirement plans:
|
|
|
|
|
||||||||||||
Amortization of prior service benefit included in net periodic pension and post-retirement benefit, net of tax of $(11), $(18), $(21), $(35), respectively
|
(37
|
)
|
(61
|
)
|
(74
|
)
|
(123
|
)
|
||||||||
Other comprehensive income (loss)
|
|
|
8,115
|
|
|
|
(29,385
|
)
|
|
|
5,449
|
|
|
|
(19,924
|
)
|
Comprehensive income
|
$ |
105,512
|
$
|
71,652
|
$
|
211,984
|
$
|
168,086
|
||||||||
|
Common Stock
Shares Issued |
Common Stock
Par Value |
Additional
Paid-in Capital |
Accumulated
Other Comprehensive Income (Loss) |
Accumulated
Deficit |
Total
Shareholders’ Equity |
||||||||||||||||||
For the Three Months Ended June 30, 2019
|
(in thousands)
|
|||||||||||||||||||||||
Balance, March 31, 2019
|
172,353
|
$ |
21,544
|
$ |
1,679,997
|
$ |
(15,706
|
) | $ |
(215,607
|
) | $ |
1,470,228
|
|||||||||||
Net issuance of common stock under stock-based plans
|
99
|
13
|
679
|
|
|
692
|
||||||||||||||||||
Stock-based compensation expense
|
|
|
7,535
|
|
|
7,535
|
||||||||||||||||||
Repurchase of common stock
|
(2,016
|
) |
(252
|
) |
|
|
(88,902
|
) |
(89,154
|
) | ||||||||||||||
Cash dividends ($0.09 per share)
|
|
|
|
|
(15,401
|
) |
(15,401
|
) | ||||||||||||||||
Net income
|
|
|
|
|
97,397
|
97,397
|
||||||||||||||||||
Other comprehensive income
|
|
|
|
8,115
|
|
8,115
|
||||||||||||||||||
Balance, June 30, 2019
|
170,436
|
$ |
21,305
|
$ |
1,688,211
|
$ |
(7,591
|
) | $ |
(222,513
|
) | $ |
1,479,412
|
|||||||||||
For the Three Months Ended July 1, 2018
|
|
|||||||||||||||||||||||
Balance, April 1, 2018
|
193,808
|
$ |
24,226
|
$ |
1,638,756
|
$ |
25,881
|
$ |
216,120
|
$ |
1,904,983
|
|||||||||||||
Net issuance of common stock under stock-based plans
|
54
|
7
|
(114
|
) |
|
|
(107
|
) | ||||||||||||||||
Stock-based compensation expense
|
|
|
7,037
|
|
|
7,037
|
||||||||||||||||||
Repurchase of common stock
|
(5,900
|
) |
(738
|
) |
|
|
(225,782
|
) |
(226,520
|
) | ||||||||||||||
Cash dividends ($0.09 per share)
|
|
|
|
|
(17,105
|
) |
(17,105
|
) | ||||||||||||||||
Net income
|
|
|
|
|
101,037
|
101,037
|
||||||||||||||||||
Other comprehensive loss
|
|
|
|
(29,385
|
) |
|
(29,385
|
) | ||||||||||||||||
Balance, July 1, 2018
|
187,962
|
$ |
23,495
|
$ |
1,645,679
|
$ |
(3,504
|
) | $ |
74,270
|
$ |
1,739,940
|
||||||||||||
For the Six Months Ended June 30, 2019
|
|
|||||||||||||||||||||||
Balance, December 31, 2018
|
175,522
|
$ |
21,940
|
$ |
1,671,645
|
$ |
(13,040
|
) | $ |
(158,191
|
) | $ |
1,522,354
|
|||||||||||
Net issuance of common stock under stock-based plans
|
1,385
|
174
|
469
|
|
|
643
|
||||||||||||||||||
Stock-based compensation expense
|
|
|
16,097
|
|
|
16,097
|
||||||||||||||||||
Repurchase of common stock
|
(6,471
|
) |
(809
|
) |
|
|
(239,815
|
) |
(240,624
|
) | ||||||||||||||
Cash dividends ($0.09 per share)
|
|
|
|
|
(31,042
|
) |
(31,042
|
) | ||||||||||||||||
Net income
|
|
|
|
|
206,535
|
206,535
|
||||||||||||||||||
Other comprehensive income
|
|
|
|
5,449
|
|
5,449
|
||||||||||||||||||
Balance, June 30, 2019
|
170,436
|
$ |
21,305
|
$ |
1,688,211
|
$ |
(7,591
|
) | $ |
(222,513
|
) | $ |
1,479,412
|
|||||||||||
For the Six Months Ended July 1, 2018
|
|
|||||||||||||||||||||||
Balance, December 31, 2017
|
195,548
|
$ |
24,444
|
$ |
1,638,413
|
$ |
18,776
|
$ |
272,013
|
$ |
1,953,646
|
|||||||||||||
Net issuance of common stock under stock-based plans
|
1,253
|
157
|
(8,243
|
) |
|
|
(8,086
|
) | ||||||||||||||||
Stock-based compensation expense
|
|
|
15,509
|
|
|
15,509
|
||||||||||||||||||
Repurchase of common stock
|
(8,839
|
) |
(1,106
|
) |
|
|
(366,085
|
) |
(367,191
|
) | ||||||||||||||
Cash dividends ($0.09 per share)
|
|
|
|
|
(34,703
|
) |
(34,703
|
) | ||||||||||||||||
Net income
|
|
|
|
|
188,010
|
188,010
|
||||||||||||||||||
Other comprehensive loss
|
|
|
|
(19,924
|
) |
|
(19,924
|
) | ||||||||||||||||
Reclassification of unrealized gains on equity securities
|
|
|
|
(3,125
|
) |
3,125
|
—
|
|||||||||||||||||
Reclassification of tax effects resulting from the Tax Reform Act
|
|
|
|
769
|
(769
|
) |
—
|
|||||||||||||||||
Cumulative effect of changes in accounting principle related to revenue recognition
|
|
|
|
|
12,679
|
12,679
|
||||||||||||||||||
Balance, July 1, 2018
|
187,962
|
$ |
23,495
|
$ |
1,645,679
|
$ |
(3,504
|
) | $ |
74,270
|
$ |
1,739,940
|
||||||||||||
|
|
For the Six Months
Ended |
|
|||||
|
|
June 30,
2019 |
|
|
July 1,
2018
|
|
||
|
|
(in thousands)
|
|
|||||
Cash flows from operating activities:
|
|
|
||||||
Net income
|
$ |
206,535
|
$ |
188,010
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||||
Depreciation
|
33,882
|
33,156
|
||||||
Amortization
|
24,976
|
20,177
|
||||||
Stock-based compensation
|
18,109
|
17,625
|
||||||
Deferred taxes
|
515
|
17,312
|
||||||
Provision for excess and obsolete inventory
|
5,799
|
6,175
|
||||||
Contingent consideration fair value adjustment
|
(8,701
|
) |
(8,468
|
) | ||||
(Gains) losses on
marketable securities
|
(3,741
|
) |
762
|
|||||
Retirement plan actuarial losses (gains)
|
448
|
(71
|
) | |||||
Other
|
429
|
406
|
||||||
Changes in operating assets and liabilities, net of businesses acquired:
|
|
|
||||||
Accounts receivable
|
(79,478
|
) |
(179,403
|
) | ||||
Inventories
|
(2,447
|
) |
(21,283
|
) | ||||
Prepayments and other assets
|
(17,067
|
) |
1,641
|
|||||
Accounts payable and other liabilities
|
(14,424
|
) |
(8,155
|
) | ||||
Deferred revenue and customer advances
|
15,826
|
10,518
|
||||||
Retirement plans contributions
|
(2,414
|
) |
(2,173
|
) | ||||
Income taxes
|
(14,973
|
) |
(26,308
|
) | ||||
Net cash provided by operating activities
|
163,274
|
49,921
|
||||||
Cash flows from investing activities:
|
|
|
||||||
Purchases of property, plant and equipment
|
(58,956
|
) |
(62,663
|
) | ||||
Purchases of marketable securities
|
(484,181
|
) |
(647,071
|
) | ||||
Proceeds from sales of marketable securities
|
42,454
|
829,053
|
||||||
Proceeds from maturities of marketable securities
|
233,193
|
469,862
|
||||||
Proceeds from life insurance
|
273
|
—
|
||||||
Purchase of investments and acquisition
of businesses, net of cash acquired
|
(21,970
|
) |
(170,632
|
) | ||||
Net cash (used for) provided by investing activities
|
(289,187
|
) |
418,549
|
|||||
Cash flows from financing activities:
|
|
|
||||||
Issuance of common stock under stock purchase and stock option plans
|
15,089
|
10,681
|
||||||
Repurchase of common stock
|
(247,222
|
) |
(360,795
|
) | ||||
Dividend payments
|
(31,019
|
) |
(34,682
|
) | ||||
Payments related to net settlement of employee stock compensation awards
|
(14,446
|
) |
(19,751
|
) | ||||
Payments of contingent consideration
|
(27,615
|
) |
(13,571
|
) | ||||
Net cash used for financing activities
|
(305,213
|
) |
(418,118
|
) | ||||
Effects of exchange rate changes on cash and cash equivalents
|
(519
|
) |
189
|
|||||
(Decrease) increase in cash and cash equivalents
|
(431,645
|
) |
50,541
|
|||||
Cash and cash equivalents at beginning of period
|
926,752
|
429,843
|
||||||
Cash and cash equivalents at end of period
|
$ |
495,107
|
$ |
480,384
|
||||
• | semiconductor test (“Semiconductor Test”) systems; |
• | industrial automation (“Industrial Automation”) products; |
• | defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”); and |
• | wireless test (“Wireless Test”) systems. |
|
Purchase Price
Allocation
|
|||
|
(in thousands)
|
|||
Goodwill
|
$ |
135,976
|
||
Intangible assets
|
80,670
|
|||
Tangible assets acquired and liabilities assumed:
|
|
|||
Current assets
|
6,039
|
|||
Non-current
assets
|
1,336
|
|||
Accounts payable and current liabilities
|
(7,336
|
) | ||
Long-term deferred tax liabilities
|
(18,007
|
) | ||
Other long-term liabilities
|
(900
|
) | ||
Total purchase price
|
$ |
197,778
|
||
|
Fair Value
|
Estimated Useful
Life
|
||||||
|
(in thousands)
|
(in years)
|
||||||
Developed technology
|
$ |
58,900
|
7.0
|
|||||
Trademarks and tradenames
|
13,240
|
11.0
|
||||||
Customer relationships
|
8,500
|
2.5
|
||||||
Backlog
|
30
|
0.2
|
||||||
Total intangible assets
|
$ |
80,670
|
7.2
|
|||||
|
For the Three Months
Ended |
For the Six Months
Ended
|
||||||
|
July 1,
2018
|
July 1,
2018
|
||||||
|
(in thousands)
|
|||||||
Revenue
|
$ |
528,238
|
$ |
1,021,194
|
||||
Net income
|
101,780
|
186,787
|
||||||
Net income per common share:
|
|
|
||||||
Basic
|
$ |
0.53
|
$ |
0.97
|
||||
Diluted
|
$ |
0.52
|
$ |
0.94
|
||||
|
|
For the Three Months Ended June 30, 2019
|
|
||||||||||||||||||||||||||||||||||||||||||
|
|
Semiconductor Test
|
|
|
System Test
|
|
|
Industrial Automation
|
|
|
Wireless
Test |
|
|
Corporate
and Other |
|
|
Consolidated
|
|
|
||||||||||||||||||||||||||
|
|
System
on a chip (“SOC”) |
|
|
Memory
|
|
|
Defense/
Aerospace
|
|
|
Storage
Test |
|
|
Production
Board Test |
|
|
Universal
Robots |
|
|
Mobile
Industrial Robots |
|
|
Energid
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(in thousands)
|
|
||||||||||||||||||||||||||||||||||||||||||
Americas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Point in time
|
|
$
|
7,426
|
|
|
$
|
8,059
|
|
|
$
|
17,225
|
|
|
$
|
3,703
|
|
|
$
|
1,341
|
|
|
$
|
16,938
|
|
|
$
|
2,783
|
|
|
$
|
—
|
|
|
$
|
5,250
|
|
|
$
|
(89
|
)
|
|
$
|
62,636
|
|
|
Over time
|
|
|
8,175
|
|
|
|
724
|
|
|
|
6,850
|
|
|
|
—
|
|
|
|
792
|
|
|
|
255
|
|
|
|
—
|
|
|
|
787
|
|
|
|
676
|
|
|
|
—
|
|
|
|
18,259
|
|
|
Europe, Middle East and Africa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Point in time
|
|
|
9,819
|
|
|
|
2,016
|
|
|
|
211
|
|
|
|
—
|
|
|
|
2,974
|
|
|
|
26,545
|
|
|
|
5,041
|
|
|
|
—
|
|
|
|
620
|
|
|
|
—
|
|
|
|
47,226
|
|
|
Over time
|
|
|
5,212
|
|
|
|
284
|
|
|
|
505
|
|
|
|
—
|
|
|
|
1,615
|
|
|
|
399
|
|
|
|
—
|
|
|
|
477
|
|
|
|
48
|
|
|
|
—
|
|
|
|
8,540
|
|
|
Asia Pacific
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Point in time
|
|
|
247,885
|
|
|
|
43,909
|
|
|
|
163
|
|
|
|
27,672
|
|
|
|
6,848
|
|
|
|
18,532
|
|
|
|
2,681
|
|
|
|
—
|
|
|
|
33,366
|
|
|
|
—
|
|
|
|
381,056
|
|
|
Over time
|
|
|
36,566
|
|
|
|
3,293
|
|
|
|
329
|
|
|
|
2,310
|
|
|
|
775
|
|
|
|
279
|
|
|
|
—
|
|
|
|
9
|
|
|
|
1,242
|
|
|
|
—
|
|
|
|
44,803
|
|
|
Lease Revenue
|
|
|
1,530
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
94
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
34
|
|
|
|
—
|
|
|
|
1,658
|
|
|
Total
|
|
$
|
316,613
|
|
|
$
|
58,285
|
|
|
$
|
25,283
|
|
|
$
|
33,685
|
|
|
$
|
14,439
|
|
|
$
|
62,948
|
|
|
$
|
10,505
|
|
|
$
|
1,273
|
|
|
$
|
41,236
|
|
|
$
|
(89
|
)
|
|
$
|
564,178
|
|
|
|
For the Three Months Ended July 1, 2018
|
|
||||||||||||||||||||||||||||||||||||||||||
|
|
Semiconductor
Test
|
|
|
System Test
|
|
|
Industrial Automation
|
|
|
Wireless
Test |
|
|
Corporate
and Other |
|
|
Consolidated
|
|
|
||||||||||||||||||||||||||
|
|
SOC
|
|
|
Memory
|
|
|
Defense/
Aerospace
|
|
|
Storage
Test |
|
|
Production
Board Test |
|
|
Universal
Robots |
|
|
Mobile
Industrial Robots |
|
|
Energid
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(in thousands)
|
|
||||||||||||||||||||||||||||||||||||||||||
Americas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Point in time
|
|
$
|
12,111
|
|
|
$
|
2,827
|
|
|
$
|
15,256
|
|
|
$
|
5
|
|
|
$
|
1,429
|
|
|
$
|
16,053
|
|
|
$
|
1,199
|
|
|
$
|
—
|
|
|
$
|
4,716
|
|
|
$
|
(110
|
)
|
|
$
|
53,486
|
|
|
Over time
|
|
|
8,934
|
|
|
|
710
|
|
|
|
6,237
|
|
|
|
—
|
|
|
|
795
|
|
|
|
327
|
|
|
|
—
|
|
|
|
—
|
|
|
|
122
|
|
|
|
—
|
|
|
|
17,125
|
|
|
Europe, Middle East and Africa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Point in time
|
|
|
10,227
|
|
|
|
847
|
|
|
|
447
|
|
|
|
—
|
|
|
|
4,849
|
|
|
|
26,616
|
|
|
|
2,000
|
|
|
|
—
|
|
|
|
26
|
|
|
|
—
|
|
|
|
45,012
|
|
|
Over time
|
|
|
5,689
|
|
|
|
254
|
|
|
|
539
|
|
|
|
—
|
|
|
|
1,713
|
|
|
|
526
|
|
|
|
—
|
|
|
|
—
|
|
|
|
257
|
|
|
|
—
|
|
|
|
8,978
|
|
|
Asia Pacific
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Point in time
|
|
|
218,352
|
|
|
|
59,633
|
|
|
|
385
|
|
|
|
31,824
|
|
|
|
3,741
|
|
|
|
13,895
|
|
|
|
1,310
|
|
|
|
—
|
|
|
|
27,663
|
|
|
|
—
|
|
|
|
356,803
|
|
|
Over time
|
|
|
34,951
|
|
|
|
2,285
|
|
|
|
258
|
|
|
|
1,428
|
|
|
|
744
|
|
|
|
131
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,103
|
|
|
|
—
|
|
|
|
41,900
|
|
|
Lease Revenue
|
|
|
3,268
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
325
|
|
|
|
—
|
|
|
|
3,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
293,532
|
|
|
$
|
66,556
|
|
|
$
|
23,122
|
|
|
$
|
33,257
|
|
|
$
|
13,303
|
|
|
$
|
57,548
|
|
|
$
|
4,509
|
|
|
$
|
—
|
|
|
$
|
35,212
|
|
|
$
|
(110
|
)
|
|
$
|
526,929
|
|
|
|
|
For the Six Months Ended June 30, 2019
|
|
||||||||||||||||||||||||||||||||||||||||||
|
|
Semiconductor
Test
|
|
|
System Test
|
|
|
Industrial Automation
|
|
|
Wireless
Test |
|
|
Corporate
and Other |
|
|
Consolidated
|
|
|
||||||||||||||||||||||||||
|
|
SOC
|
|
|
Memory
|
|
|
Defense/
Aerospace
|
|
|
Storage
Test |
|
|
Production
Board Test |
|
|
Universal
Robots |
|
|
Mobile
Industrial Robots |
|
|
Energid
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(in thousands)
|
|
||||||||||||||||||||||||||||||||||||||||||
Americas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Point in time
|
|
$
|
15,403
|
|
|
$
|
16,110
|
|
|
$
|
32,007
|
|
|
$
|
5,295
|
|
|
$
|
4,595
|
|
|
$
|
32,235
|
|
|
$
|
6,322
|
|
|
$
|
—
|
|
|
$
|
7,340
|
|
|
$
|
(240
|
)
|
|
$
|
119,067
|
|
|
Over time
|
|
|
16,365
|
|
|
|
1,436
|
|
|
|
13,300
|
|
|
|
—
|
|
|
|
1,521
|
|
|
|
501
|
|
|
|
—
|
|
|
|
1,047
|
|
|
|
827
|
|
|
|
—
|
|
|
|
34,997
|
|
|
Europe, Middle East and Africa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Point in time
|
|
|
20,851
|
|
|
|
2,168
|
|
|
|
250
|
|
|
|
—
|
|
|
|
8,038
|
|
|
|
52,448
|
|
|
|
8,883
|
|
|
|
—
|
|
|
|
1,356
|
|
|
|
—
|
|
|
|
93,994
|
|
|
Over time
|
|
|
10,493
|
|
|
|
563
|
|
|
|
974
|
|
|
|
—
|
|
|
|
3,169
|
|
|
|
815
|
|
|
|
—
|
|
|
|
766
|
|
|
|
93
|
|
|
|
—
|
|
|
|
16,873
|
|
|
Asia Pacific
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Point in time
|
|
|
467,698
|
|
|
|
79,415
|
|
|
|
426
|
|
|
|
44,279
|
|
|
|
10,483
|
|
|
|
32,709
|
|
|
|
4,408
|
|
|
|
—
|
|
|
|
57,995
|
|
|
|
—
|
|
|
|
697,413
|
|
|
Over time
|
|
|
75,479
|
|
|
|
6,573
|
|
|
|
1,093
|
|
|
|
4,364
|
|
|
|
1,696
|
|
|
|
507
|
|
|
|
—
|
|
|
|
221
|
|
|
|
2,601
|
|
|
|
—
|
|
|
|
92,534
|
|
|
Lease Revenue
|
|
|
3,197
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
137
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
65
|
|
|
|
—
|
|
|
|
3,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
609,486
|
|
|
$
|
106,265
|
|
|
$
|
48,050
|
|
|
$
|
53,938
|
|
|
$
|
29,639
|
|
|
$
|
121,249
|
|
|
$
|
19,613
|
|
|
$
|
2,034
|
|
|
$
|
70,277
|
|
|
$
|
(240
|
)
|
|
$
|
1,058,277
|
|
|
|
|
For the Six Months Ended July 1, 2018
|
|
||||||||||||||||||||||||||||||||||||||||||
|
|
Semiconductor
Test
|
|
|
System Test
|
|
|
Industrial Automation
|
|
|
Wireless
Test |
|
|
Corporate
and Other |
|
|
Consolidated
|
|
|
||||||||||||||||||||||||||
|
|
SOC
|
|
|
Memory
|
|
|
Defense/
Aerospace
|
|
|
Storage
Test |
|
|
Production
Board Test |
|
|
Universal
Robots |
|
|
Mobile
Industrial Robots |
|
|
Energid
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
(in thousands)
|
|
||||||||||||||||||||||||||||||||||||||||||
Americas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Point in time
|
|
$
|
21,711
|
|
|
$
|
5,691
|
|
|
$
|
26,853
|
|
|
$
|
284
|
|
|
$
|
3,189
|
|
|
$
|
30,190
|
|
|
$
|
1,199
|
|
|
$
|
—
|
|
|
$
|
9,695
|
|
|
$
|
(332
|
)
|
|
$
|
98,480
|
|
|
Over time
|
|
|
17,517
|
|
|
|
1,406
|
|
|
|
12,425
|
|
|
|
—
|
|
|
|
1,552
|
|
|
|
652
|
|
|
|
—
|
|
|
|
—
|
|
|
|
233
|
|
|
|
—
|
|
|
|
33,785
|
|
|
Europe, Middle East and Africa
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Point in time
|
|
|
22,352
|
|
|
|
986
|
|
|
|
1,943
|
|
|
|
—
|
|
|
|
8,886
|
|
|
|
49,190
|
|
|
|
2,000
|
|
|
|
—
|
|
|
|
1,066
|
|
|
|
—
|
|
|
|
86,423
|
|
|
Over time
|
|
|
10,888
|
|
|
|
523
|
|
|
|
1,090
|
|
|
|
—
|
|
|
|
3,272
|
|
|
|
668
|
|
|
|
—
|
|
|
|
—
|
|
|
|
484
|
|
|
|
—
|
|
|
|
16,925
|
|
|
Asia Pacific
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Point in time
|
|
|
446,543
|
|
|
|
125,904
|
|
|
|
487
|
|
|
|
41,946
|
|
|
|
5,603
|
|
|
|
25,478
|
|
|
|
1,310
|
|
|
|
—
|
|
|
|
41,329
|
|
|
|
—
|
|
|
|
688,600
|
|
|
Over time
|
|
|
68,173
|
|
|
|
4,607
|
|
|
|
466
|
|
|
|
2,961
|
|
|
|
1,479
|
|
|
|
204
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,399
|
|
|
|
—
|
|
|
|
82,289
|
|
|
Lease Revenue
|
|
|
7,115
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
266
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
513
|
|
|
|
—
|
|
|
|
7,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
594,299
|
|
|
$
|
139,117
|
|
|
$
|
43,264
|
|
|
$
|
45,191
|
|
|
$
|
24,247
|
|
|
$
|
106,382
|
|
|
$
|
4,509
|
|
|
$
|
—
|
|
|
$
|
57,719
|
|
|
$
|
(332
|
)
|
|
$
|
1,014,396
|
|
|
|
June 30,
2019 |
December 31,
2018 |
||||||
|
(in thousands)
|
|||||||
Raw material
|
$ |
96,824
|
$ |
89,365
|
||||
Work-in-process
|
31,676
|
31,014
|
||||||
Finished goods
|
35,961
|
33,162
|
||||||
|
$ |
164,461
|
$ |
153,541
|
||||
|
June 30, 2019
|
|||||||||||||||
|
Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Assets
|
|
|
|
|
||||||||||||
Cash
|
$ |
235,370
|
$ |
—
|
$ |
—
|
$ |
235,370
|
||||||||
Cash equivalents
|
223,150
|
36,587
|
—
|
259,737
|
||||||||||||
Available-for-sale
securities:
|
|
|
|
|
||||||||||||
U.S. Treasury securities
|
—
|
190,322
|
—
|
190,322
|
||||||||||||
Commercial paper
|
—
|
154,910
|
—
|
154,910
|
||||||||||||
Corporate debt securities
|
—
|
94,431
|
—
|
94,431
|
||||||||||||
Certificates of deposit and time deposits
|
—
|
19,723
|
—
|
19,723
|
||||||||||||
U.S. government agency securities
|
—
|
9,838
|
—
|
9,838
|
||||||||||||
Debt mutual funds
|
3,299
|
—
|
—
|
3,299
|
||||||||||||
Non-U.S.
government securities
|
—
|
388
|
—
|
388
|
||||||||||||
Equity securities:
|
|
|
|
|
||||||||||||
Mutual funds
|
26,317
|
—
|
—
|
26,317
|
||||||||||||
|
$ |
488,136
|
$ |
506,199
|
$ |
—
|
$ |
994,335
|
||||||||
Derivative assets
|
—
|
34
|
—
|
34
|
||||||||||||
Total
|
$ |
488,136
|
$ |
506,233
|
$ |
—
|
$ |
994,369
|
||||||||
Liabilities
|
|
|
|
|
||||||||||||
Contingent consideration
|
$ |
—
|
$ |
—
|
$ |
26,847
|
$ |
26,847
|
||||||||
Derivative liabilities
|
—
|
324
|
—
|
324
|
||||||||||||
Total
|
$ |
—
|
$ |
324
|
$ |
26,847
|
$ |
27,171
|
||||||||
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Assets
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$ |
458,520
|
$ |
36,587
|
$ |
—
|
$ |
495,107
|
||||||||
Marketable securities
|
—
|
400,227
|
—
|
400,227
|
||||||||||||
Long-term marketable securities
|
29,616
|
69,385
|
—
|
99,001
|
||||||||||||
Prepayments
|
—
|
34
|
—
|
34
|
||||||||||||
Total
|
|
$
|
488,136
|
|
|
$
|
506,233
|
|
|
$
|
—
|
|
|
$
|
994,369
|
|
Liabilities
|
|
. |
|
|
|
|||||||||||
Other current liabilities
|
$ |
—
|
$ |
324
|
$ |
—
|
$ |
324
|
||||||||
Contingent consideration
|
—
|
—
|
11,753
|
11,753
|
||||||||||||
Long-term contingent consideration
|
—
|
—
|
15,094
|
15,094
|
||||||||||||
Total
|
$ |
—
|
$ |
324
|
$ |
26,847
|
$ |
27,171
|
||||||||
|
December 31, 2018
|
|||||||||||||||
|
Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Total
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Assets
|
|
|
|
|
||||||||||||
Cash
|
$ |
312,512
|
$ |
—
|
$ |
—
|
$ |
312,512
|
||||||||
Cash equivalents
|
253,525
|
360,715
|
—
|
614,240
|
||||||||||||
Available-for-sale
securities:
|
|
|
|
|
||||||||||||
U.S. Treasury securities
|
—
|
109,721
|
—
|
109,721
|
||||||||||||
Commercial paper
|
—
|
86,117
|
—
|
86,117
|
||||||||||||
Corporate debt securities
|
—
|
40,020
|
—
|
40,020
|
||||||||||||
U.S. government agency securities
|
—
|
9,611
|
—
|
9,611
|
||||||||||||
Certificates of deposit and time deposits
|
—
|
7,604
|
—
|
7,604
|
||||||||||||
Debt mutual funds
|
3,187
|
—
|
—
|
3,187
|
||||||||||||
Non-U.S.
government securities
|
—
|
376
|
—
|
376
|
||||||||||||
Equity securities:
|
|
|
|
|
||||||||||||
Mutual funds
|
21,191
|
—
|
—
|
21,191
|
||||||||||||
|
$ |
590,415
|
$ |
614,164
|
$ |
—
|
$ |
1,204,579
|
||||||||
Derivative assets
|
—
|
79
|
—
|
79
|
||||||||||||
Total
|
$ |
590,415
|
$ |
614,243
|
$ |
—
|
$ |
1,204,658
|
||||||||
Liabilities
|
|
|
|
|
||||||||||||
Contingent consideration
|
$ |
—
|
$ |
—
|
$ |
70,543
|
$ |
70,543
|
||||||||
Derivative liabilities
|
—
|
514
|
—
|
514
|
||||||||||||
Total
|
$ |
—
|
$ |
514
|
$ |
70,543
|
$ |
71,057
|
||||||||
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Assets
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$ |
566,037
|
$ |
360,715
|
$ |
—
|
$ |
926,752
|
||||||||
Marketable securities
|
—
|
190,096
|
—
|
190,096
|
||||||||||||
Long-term marketable securities
|
24,378
|
63,353
|
—
|
87,731
|
||||||||||||
Prepayments
|
—
|
79
|
—
|
79
|
||||||||||||
Total
|
$ |
590,415
|
$ |
614,243
|
$ |
—
|
$ |
1,204,658
|
||||||||
Liabilities
|
|
|
|
|
||||||||||||
Other accrued liabilities
|
$ |
—
|
$ |
514
|
$ |
—
|
$ |
514
|
||||||||
Contingent consideration
|
—
|
—
|
34,865
|
34,865
|
||||||||||||
Long-term contingent consideration
|
—
|
—
|
35,678
|
35,678
|
||||||||||||
Total
|
$ |
—
|
$ |
514
|
$ |
70,543
|
$ |
71,057
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019 |
July 1,
2018 |
June 30,
2019 |
July 1,
2018 |
||||||||||||
|
(in thousands)
|
|||||||||||||||
Balance at beginning of period
|
$ |
38,313
|
$ |
15,581
|
$ |
70,543
|
$ |
45,102
|
||||||||
Fair value adjustment (a)
|
(11,672
|
) |
(3,500
|
) |
(8,701
|
) |
(8,468
|
) | ||||||||
Foreign currency impact
|
206
|
(2,566
|
) |
(405
|
) |
(2,566
|
) | |||||||||
Payments (b)
|
—
|
—
|
(34,590
|
) |
(24,553
|
) | ||||||||||
Acquisition of MiR
|
—
|
51,399
|
—
|
51,399
|
||||||||||||
Balance at end of period
|
$ |
26,847
|
$ |
60,914
|
$ |
26,847
|
$ |
60,914
|
||||||||
(a) |
In the three and six months ended June 30, 2019, the fair value of contingent consideration for the earn-out in connection with the acquisition of MiR was decreased by $11.7 million and $8.7 million, respectively, primarily due to a decrease in the forecasted revenue. In the three and six months ended July 1, 2018, the fair value of contingent consideration for the earn-out in connection with the acquisition of Universal Robots A/S (“Universal Robots”) was decreased by $
3.5
million and $8.5 million, respectively, primarily due to a decrease in forecasted revenue.
|
(b) | In the six months ended June 30, 2019, Teradyne paid $30.8 million and $3.8 million of contingent consideration for the earn-outs in connection with the acquisition of MiR and Universal Robots, respectively. In the six months ended July 1, 2018, Teradyne paid $24.6 million of contingent consideration for the earn-out in connection with the acquisition of Universal Robots. |
Liability
|
June 30, 2019
Fair Value |
Valuation
Technique
|
Unobservable Inputs
|
Weighted
Average
|
|||||||||||
|
(in thousands)
|
|
|
|
|||||||||||
Contingent consideration
(MiR)
|
$ |
26,847
|
Monte Carlo
Simulation
|
Revenue volatility
|
19.0
%
|
||||||||||
|
|
|
Discount rate
|
0.2%
|
|
June 30, 2019
|
December 31, 2018
|
||||||||||||||
|
Carrying Value
|
Fair Value
|
Carrying Value
|
Fair Value
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Assets
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$ |
495,107
|
$ |
495,107
|
$ |
926,752
|
$ |
926,752
|
||||||||
Marketable securities
|
499,228
|
499,228
|
277,827
|
277,827
|
||||||||||||
Derivative assets
|
34
|
34
|
79
|
79
|
||||||||||||
Liabilities
|
|
|
|
|
||||||||||||
Contingent consideration
|
26,847
|
26,847
|
70,543
|
70,543
|
||||||||||||
Derivative liabilities
|
324
|
324
|
514
|
514
|
||||||||||||
Convertible debt (1)
|
387,243
|
747,213
|
379,981
|
547,113
|
(1) | The carrying value represents the bifurcated debt component only, while the fair value is based on quoted market prices for the convertible note, which includes the equity conversion features. |
|
June 30, 2019
|
||||||||||||||||||||
|
Available-for-Sale
|
Fair Market
|
|||||||||||||||||||
|
Cost
|
Unrealized
Gain
|
Unrealized
(Loss)
|
Fair
Market
Value
|
Value of
Investments
with Unrealized
Losses
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||
U.S. Treasury securities
|
$ |
189,927
|
$ |
668
|
$ |
(273
|
) | $ |
190,322
|
$ |
18,195
|
||||||||||
Commercial paper
|
154,903
|
9
|
(2
|
) |
154,910
|
10,322
|
|||||||||||||||
Corporate debt securities
|
91,553
|
3,035
|
(157
|
) |
94,431
|
4,581
|
|||||||||||||||
Certificates of deposit and time deposits
|
19,717
|
6
|
—
|
19,723
|
2,232
|
||||||||||||||||
U.S. government agency securities
|
9,829
|
15
|
(6
|
) |
9,838
|
2,947
|
|||||||||||||||
Debt mutual funds
|
3,187
|
112
|
—
|
3,299
|
—
|
||||||||||||||||
Non-U.S.
government securities
|
388
|
—
|
—
|
388
|
—
|
||||||||||||||||
|
$ |
469,504
|
$ |
3,845
|
$ |
(438
|
) | $ |
472,911
|
$ |
38,277
|
||||||||||
|
Cost
|
Unrealized
Gain
|
Unrealized
(Loss)
|
Fair Market
Value
|
Fair Market
Value of
Investments
with Unrealized
Losses
|
|||||||||||||||
|
(in thousands)
|
|||||||||||||||||||
Marketable securities
|
$ |
399,852
|
$ |
391
|
$ |
(16
|
) | $ |
400,227
|
$ |
21,708
|
|||||||||
Long-term marketable securities
|
69,652
|
3,454
|
(422
|
) |
72,684
|
16,569
|
||||||||||||||
|
$ |
469,504
|
$ |
3,845
|
$ |
(438
|
) | $ |
472,911
|
$ |
38,277
|
|||||||||
|
December 31, 2018
|
||||||||||||||||||||
|
Available-for-Sale
|
|
|||||||||||||||||||
|
Cost
|
Unrealized
Gain
|
Unrealized
(Loss)
|
Fair
Market
Value
|
Fair Market
Value of
Investments
with Unrealized
Losses
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||
U.S. Treasury securities
|
$ |
110,969
|
$ |
112
|
$ |
(1,360
|
) | $ |
109,721
|
$ |
75,040
|
||||||||||
Commercial paper
|
86,130
|
13
|
(26
|
) |
86,117
|
85,094
|
|||||||||||||||
Corporate debt securities
|
41,133
|
432
|
(1,545
|
) |
40,020
|
24,767
|
|||||||||||||||
U.S. government agency securities
|
9,646
|
1
|
(36
|
) |
9,611
|
7,077
|
|||||||||||||||
Certificates of deposit and time deposits
|
7,604
|
—
|
—
|
7,604
|
—
|
||||||||||||||||
Debt mutual funds
|
3,153
|
34
|
—
|
3,187
|
—
|
||||||||||||||||
Non-U.S.
government securities
|
376
|
—
|
—
|
376
|
—
|
||||||||||||||||
|
$ |
259,011
|
$ |
592
|
$ |
(2,967
|
) | $ |
256,636
|
$ |
191,978
|
||||||||||
|
Cost
|
Unrealized
Gain
|
Unrealized
(Loss)
|
Fair
Market
Value
|
Fair Market
Value of
Investments
with Unrealized
Losses
|
|||||||||||||||
|
(in thousands)
|
|||||||||||||||||||
Marketable securities
|
$ |
190,100
|
$ |
88
|
$ |
(92
|
) | $ |
190,096
|
$ |
140,262
|
|||||||||
Long-term marketable securities
|
68,911
|
504
|
(2,875
|
) |
66,540
|
51,716
|
||||||||||||||
|
$ |
259,011
|
$ |
592
|
$ |
(2,967
|
) | $ |
256,636
|
$ |
191,978
|
|||||||||
|
June 30, 2019
|
|||||||
|
Cost
|
Fair Market
Value
|
||||||
|
(in thousands)
|
|||||||
Due within one year
|
$ |
399,852
|
$ |
400,227
|
||||
Due after 1 year through 5 years
|
12,304
|
12,411
|
||||||
Due after 5 years through 10 years
|
14,101
|
14,156
|
||||||
Due after 10 years
|
40,060
|
42,818
|
||||||
Total
|
$ |
466,317
|
$ |
469,612
|
||||
|
Balance Sheet
Location
|
June 30,
2019 |
December 31,
2018 |
|||||||||
|
|
(in thousands)
|
||||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|||||||||
Foreign exchange contracts – derivative assets
|
Prepayments
|
$ |
34
|
$ |
79
|
|||||||
Foreign exchange contracts –
derivative liabilities
|
Other current liabilities
|
(324
|
) |
(514
|
) | |||||||
Total derivatives
|
|
$ |
(290
|
) | $ |
(435
|
) | |||||
(1) | The table does not reflect the corresponding gains and losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies. |
(2) |
For the three months ended June 30, 2019, net losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $1.3 million. For the six months ended June 30, 2019, net gains from the remeasurement of monetary assets and liabilities denominated in
foreign currencies were $1.9 million. |
(3) | For the three and six months ended July 1, 2018, net gains from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $1.9 million and $2.5 million, respectively. |
|
For the Three Months
Ended |
For the Six Months
Ended |
||||||
|
June 30, 2019
|
June 30, 2019
|
||||||
|
(in thousands)
|
|||||||
Cash paid for amounts included in the measurement of lease liabilities included in operating cash flows:
|
$ |
4,993
|
$ |
10,052
|
||||
Right-of-use
assets obtained in exchange for new lease obligations
|
9,675
|
15,412
|
|
Operating Lease
|
|||
|
(in thousands)
|
|||
2019
|
$ |
10,725
|
||
2020
|
19,177
|
|||
2021
|
16,510
|
|||
2022
|
12,226
|
|||
2023
|
5,849
|
|||
Thereafter
|
12,583
|
|||
Total lease payments
|
77,070
|
|||
Less imputed interest
|
(12,569
|
) | ||
Total lease liabilities
|
$ |
64,501
|
||
|
Operating Lease
|
|||
|
(in thousands)
|
|||
2019
|
$ |
19,570
|
||
2020
|
18,293
|
|||
2021
|
13,578
|
|||
2022
|
9,693
|
|||
2023
|
5,449
|
|||
Thereafter
|
9,472
|
|||
Total lease payments
|
$ |
76,055
|
||
|
June 30,
2019 |
December 31,
2018 |
||||||
|
(in thousands)
|
|||||||
Debt Principal
|
$ |
460,000
|
$ |
460,000
|
||||
Unamortized discount
|
72,757
|
80,019
|
||||||
Net Carrying amount of convertible debt
|
$ |
387,243
|
$ |
379,981
|
||||
|
For the Three Months
Ended |
For the Six Months
Ended |
||||||||||||||
|
June 30,
2019 |
July 1,
2018 |
June 30,
2019 |
July 1,
2018 |
||||||||||||
|
(in thousands)
|
|||||||||||||||
Contractual interest expense on the coupon
|
$ |
1,438
|
$ |
1,438
|
$ |
2,875
|
$ |
2,875
|
||||||||
Amortization of the discount component recognized as interest expense
|
3,653
|
3,477
|
7,262
|
6,911
|
||||||||||||
Total interest expense on the convertible debt
|
$ |
5,091
|
$ |
4,915
|
$ |
10,137
|
$ |
9,786
|
||||||||
|
June 30,
2019
|
December 31,
2018
|
||||||
|
(in thousands)
|
|||||||
Contract manufacturer and supplier prepayments
|
$ |
139,232
|
$ |
131,642
|
||||
Prepaid taxes
|
10,810
|
9,646
|
||||||
Prepaid maintenance and other services
|
9,935
|
8,487
|
||||||
Other prepayments
|
16,086
|
12,744
|
||||||
Total prepayments
|
$ |
176,063
|
$ |
162,519
|
||||
|
June 30,
2019
|
December 31,
2018 |
||||||
|
(in thousands)
|
|||||||
Maintenance and training
|
$ |
60,331
|
$ |
58,362
|
||||
Extended warranty
|
28,716
|
27,422
|
||||||
Customer advances, undelivered performance obligations and other
|
38,155
|
24,677
|
||||||
Total deferred revenue and customer advances
|
$ |
127,202
|
$ |
110,461
|
||||
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Balance at beginning of period
|
$ |
7,752
|
$ |
7,548
|
$ |
7,909
|
$ |
8,200
|
||||||||
Acquisition
|
—
|
41
|
14
|
41
|
||||||||||||
Accruals for warranties issued during the period
|
2,295
|
3,348
|
5,360
|
6,411
|
||||||||||||
Accruals related to
pre-existing
warranties
|
694
|
(34
|
) |
2,024
|
(173
|
) | ||||||||||
Settlements made during the period
|
(2,608
|
) |
(3,767
|
) |
(7,174
|
) |
(7,343
|
) | ||||||||
Balance at end of period
|
$ |
8,133
|
$ |
7,136
|
$ |
8,133
|
$ |
7,136
|
||||||||
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Balance at beginning of period
|
$ |
27,242
|
$ |
24,590
|
$ |
27,422
|
$ |
24,438
|
||||||||
Deferral of new extended warranty revenue
|
5,476
|
6,701
|
11,296
|
11,839
|
||||||||||||
Recognition of extended warranty deferred revenue
|
(4,002
|
) |
(5,320
|
) |
(10,002
|
) |
(10,306
|
) | ||||||||
Balance at end of period
|
$ |
28,716
|
$ |
25,971
|
$ |
28,716
|
$ |
25,971
|
||||||||
|
For the Six Months
Ended
|
|||||||
|
June 30,
2019
|
July 1,
2018
|
||||||
Risk-free interest rate
|
2.6
|
% |
2.2
|
% | ||||
Teradyne volatility-historical
|
31.9
|
% |
26.8
|
% | ||||
NYSE Composite Index volatility-historical
|
11.9
|
% |
12.4
|
% | ||||
Dividend yield
|
1.0
|
% |
0.8
|
% |
|
For the Six Months
Ended
|
|||||||
|
June 30,
2019
|
July 1,
2018
|
||||||
Expected life (years)
|
5.0
|
5.0
|
||||||
Risk-free interest rate
|
2.5
|
% |
2.4
|
% | ||||
Volatility-historical
|
30.1
|
% |
26.4
|
% | ||||
Dividend yield
|
1.0
|
% |
0.8
|
% |
|
Foreign
Currency
Translation
Adjustment
|
Unrealized
Gains
(Losses) on
Marketable
Securities
|
Retirement
Plans Prior
Service
Credit
|
Total
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Six Months Ended June 30, 2019
|
|
|
|
|
||||||||||||
Balance at December 31, 2018, net of tax of $0, $(521), $(1,081), respectively
|
$ |
(12,523
|
) | $ |
(1,845
|
) | $ |
1,328
|
$ |
(13,040
|
) | |||||
Other comprehensive income before reclassifications, net of tax of $0, $1,256, $0, respectively
|
983
|
4,637
|
—
|
5,620
|
||||||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(26), $(21), respectively
|
—
|
(97
|
) |
(74
|
) |
(171
|
) | |||||||||
Net current period other comprehensive income (loss), net of tax of $0, $1,230, $(21), respectively
|
983
|
4,540
|
(74
|
) |
5,449
|
|||||||||||
Balance at June 30, 2019, net of tax of $0, $709, $(1,102), respectively
|
$ |
(11,540
|
) | $ |
2,695
|
$ |
1,254
|
$ |
(7,591
|
) | ||||||
|
Foreign
Currency
Translation
Adjustments
|
Unrealized
Gains
(Losses) on
Marketable
Securities
|
Retirement
Plans Prior
Service
Credit
|
Total
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Six Months Ended July 1, 2018
|
|
|
|
|
||||||||||||
Balance at December 31, 2017, net of tax of $0, $1,815, $(932), respectively
|
$ |
15,919
|
$ |
1,362
|
$ |
1,495
|
$ |
18,776
|
||||||||
Other comprehensive income (loss) before reclassifications, net of tax of $0, $(774), $0, respectively
|
(18,781
|
) |
(2,489
|
) |
—
|
(21,270
|
) | |||||||||
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $11, $(35), respectively
|
—
|
1,469
|
(123
|
) |
1,346
|
|||||||||||
Net current period other comprehensive income (loss), net of tax of $0, $(733), $(35), respectively
|
(18,781
|
) |
(1,020
|
) |
(123
|
) |
(19,924
|
) | ||||||||
Reclassification of income tax effects from the Tax Reform Act, net of tax of $0, $(691), $(78), respectively (a)
|
—
|
691
|
78
|
769
|
||||||||||||
Reclassification of unrealized gains on equity securities, net of tax of $0, $(902), $0, respectively (b)
|
—
|
(3,125
|
) |
—
|
(3,125
|
) | ||||||||||
Balance as July 1, 2018, net of tax of $0, $(511), $(1,045), respectively
|
$ |
(2,862
|
) | $ |
(2,092
|
) | $ |
1,450
|
$ |
(3,504
|
) | |||||
(a) |
In the six months ended July 1, 2018, Teradyne early adopted the ASU
2018-02,
“Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.”
|
(b) |
In the six months ended July 1, 2018, Teradyne adopted the ASU
2016-01,
“
Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.”
|
Details about Accumulated Other Comprehensive Income
Components
|
For the Three Months
Ended
|
For the Six Months
Ended
|
Affected Line Item
in the Statements
of Operations
|
||||||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
|
||||||||||||||||
|
(in thousands)
|
|
|||||||||||||||||||
Available-for-sale
marketable securities:
|
|
|
|
|
|
||||||||||||||||
Unrealized gains (losses), net of tax of $6, $68, $26, $(11),
respectively |
$ |
27
|
$ |
199
|
$ |
97
|
$ |
(1,469
|
) |
Interest income
(expense) |
|||||||||||
Defined benefit pension and postretirement plans:
|
|
|
|
|
|
||||||||||||||||
Amortization of prior service benefit, net of tax of $11, $18,
$21, $35 respectively |
37
|
61
|
74
|
123
|
(a)
|
||||||||||||||||
Total reclassifications, net of tax of $17, $86, $47, $24, respectively
|
$ |
64
|
$ |
260
|
$ |
171
|
$ |
(1,346
|
) |
Net income
|
|||||||||||
(a) | The amortization of prior service benefit is included in the computation of net periodic pension cost and postretirement benefit. See Note R: “Retirement Plans.” |
|
Industrial
Automation
|
System
Test
|
Wireless
Test
|
Semiconductor
Test
|
Total
|
|||||||||||||||
|
(in thousands)
|
|||||||||||||||||||
Balance at December 31, 2018
|
|
|
|
|
|
|||||||||||||||
Goodwill
|
$ |
363,358
|
$ |
158,699
|
$ |
361,819
|
$ |
260,540
|
$ |
1,144,416
|
||||||||||
Accumulated impairment losses
|
—
|
(148,183
|
) |
(353,843
|
) |
(260,540
|
) |
(762,566
|
) | |||||||||||
|
363,358
|
10,516
|
7,976
|
—
|
381,850
|
|||||||||||||||
Lemsys acquisition
|
—
|
—
|
—
|
1,428
|
1,428
|
|||||||||||||||
Foreign currency translation adjustment
|
626
|
—
|
—
|
32
|
658
|
|||||||||||||||
Balance at June 30, 2019
|
|
|
|
|
|
|||||||||||||||
Goodwill
|
363,984
|
158,699
|
361,819
|
262,000
|
1,146,502
|
|||||||||||||||
Accumulated impairment losses
|
—
|
(148,183
|
) |
(353,843
|
) |
(260,540
|
) |
(762,566
|
) | |||||||||||
|
$ |
363,984
|
$ |
10,516
|
$ |
7,976
|
$ |
1,460
|
$ |
383,936
|
||||||||||
|
June 30, 2019
|
|||||||||||||||
|
Gross
Carrying
Amount (1)(2)
|
Accumulated
Amortization (2)
|
Foreign
Currency Translation
Adjustment
|
Net
Carrying
Amount
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Developed technology
|
$ |
337,198
|
$ |
(265,951
|
) | $ |
(4,035
|
) | $ |
67,212
|
||||||
Customer relationships
|
100,313
|
(87,496
|
) |
(285
|
) |
12,532
|
||||||||||
Tradenames and trademarks
|
64,670
|
(34,131
|
) |
(789
|
) |
29,750
|
||||||||||
Total intangible assets
|
$ |
502,181
|
$ |
(387,578
|
) | $ |
(5,109
|
) | $ |
109,494
|
||||||
|
December 31, 2018
|
|||||||||||||||
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Foreign
Currency Translation Adjustment |
Net
Carrying
Amount
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Developed technology
|
$ |
336,308
|
$ |
(252,080
|
) | $ |
(4,079
|
) | $ |
80,149
|
||||||
Customer relationships
|
97,153
|
(83,448
|
) |
(340
|
) |
13,365
|
||||||||||
Tradenames and trademarks
|
64,420
|
(31,653
|
) |
(799
|
) |
31,968
|
||||||||||
Non-compete
agreement
|
320
|
(320
|
) |
—
|
—
|
|||||||||||
Backlog
|
30
|
(30
|
) |
—
|
—
|
|||||||||||
Total intangible assets
|
$ |
498,231
|
$ |
(367,531
|
) | $ |
(5,218
|
) | $ |
125,482
|
||||||
(1) | Includes $4.6 million of intangible assets from Lemsys acquisition. |
(2)
|
$0.7 million of amortizable intangible assets became fully amortized and have been eliminated from the gross carrying amount and accumulated amortization.
|
Year
|
Amortization Expense
|
|||
|
(in thousands)
|
|||
2019 (remainder)
|
18,745
|
|||
2020
|
25,037
|
|||
2021
|
14,778
|
|||
2022
|
13,885
|
|||
2023
|
13,410
|
|||
Thereafter
|
23,639
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
||||||||||||
|
(in thousands, except per share amounts)
|
|||||||||||||||
Net income for basic and diluted net income per share
|
$ |
97,397
|
$ |
101,037
|
$ |
206,535
|
$ |
188,010
|
||||||||
Weighted average common shares-basic
|
171,241
|
190,730
|
172,387
|
192,992
|
||||||||||||
Effect of dilutive potential common shares:
|
|
|
|
|
||||||||||||
Incremental shares from assumed conversion of convertible notes (1)
|
4,364
|
2,643
|
3,275
|
3,520
|
||||||||||||
Convertible note hedge warrant shares (2)
|
1,778
|
—
|
889
|
915
|
||||||||||||
Restricted stock units
|
1,002
|
1,219
|
1,012
|
1,444
|
||||||||||||
Stock options
|
183
|
274
|
202
|
298
|
||||||||||||
Employee stock purchase plan
|
22
|
43
|
16
|
28
|
||||||||||||
Dilutive potential common shares
|
7,349
|
4,179
|
5,394
|
6,205
|
||||||||||||
Weighted average common shares-diluted
|
178,590
|
194,909
|
177,781
|
199,197
|
||||||||||||
Net income per common share-basic
|
$ |
0.57
|
$ |
0.53
|
$ |
1.20
|
$ |
0.97
|
||||||||
Net income per common share-diluted
|
$ |
0.55
|
$ |
0.52
|
$ |
1.16
|
$ |
0.94
|
||||||||
(1) |
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 of $
31.70
, multiplied by 14.5 million 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.
|
(2) | Convertible note hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price of $39.78, multiplied by 14.5 million 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. |
|
For the Three Months Ended
|
|||||||||||||||
|
June 30, 2019
|
July 1, 2018
|
||||||||||||||
|
United
States
|
Foreign
|
United
States
|
Foreign
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Service cost
|
$ |
399
|
$ |
192
|
$ |
545
|
$ |
200
|
||||||||
Interest cost
|
1,799
|
176
|
2,430
|
175
|
||||||||||||
Expected return on plan assets
|
(1,510
|
) |
(7
|
) |
(2,550
|
) |
(5
|
) | ||||||||
Amortization of prior service cost
|
—
|
—
|
14
|
—
|
||||||||||||
Net actuarial loss (gain)
|
252
|
—
|
(189
|
) |
—
|
|||||||||||
Settlement loss
|
—
|
—
|
78
|
—
|
||||||||||||
Total net periodic pension cost
|
$ |
940
|
$ |
361
|
$ |
328
|
$ |
370
|
||||||||
|
For the Six Months Ended
|
|||||||||||||||
|
June 30, 2019
|
July 1, 2018
|
||||||||||||||
|
United
States
|
Foreign
|
United
States
|
Foreign
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Service cost
|
$ |
804
|
$ |
381
|
$ |
1,116
|
$ |
426
|
||||||||
Interest cost
|
3,595
|
349
|
5,427
|
372
|
||||||||||||
Expected return on plan assets
|
(3,021
|
) |
(14
|
) |
(5,919
|
) |
(10
|
) | ||||||||
Amortization of prior service cost
|
—
|
—
|
29
|
—
|
||||||||||||
Net actuarial loss (gain)
|
252
|
—
|
(189
|
) |
—
|
|||||||||||
Settlement loss
|
—
|
—
|
78
|
—
|
||||||||||||
Total net periodic pension cost
|
$ |
1,630
|
$ |
716
|
$ |
542
|
$ |
788
|
||||||||
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Service cost
|
$ |
11
|
$ |
10
|
$ |
20
|
$ |
19
|
||||||||
Interest cost
|
88
|
48
|
173
|
98
|
||||||||||||
Amortization of prior service credit
|
(48
|
) |
(93
|
) |
(95
|
) |
(187
|
) | ||||||||
Net actuarial loss
|
196
|
40
|
196
|
40
|
||||||||||||
Special termination benefits
|
—
|
1,192
|
—
|
2,818
|
||||||||||||
Total net periodic postretirement benefit cost
|
$ |
247
|
$ |
1,197
|
$ |
294
|
$ |
2,788
|
||||||||
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019 |
July 1,
2018 |
June 30,
2019 |
July 1,
2018 |
||||||||||||
US statutory federal tax rate
|
21.0
|
% |
21.0
|
% |
21.0
|
% |
21.0
|
% | ||||||||
Discrete expense related to U.S. transition tax
|
11.2
|
% |
0.0
|
% |
6.5
|
% |
0.0
|
% | ||||||||
International provisions of the U.S. Tax Cuts and Jobs Act of 2017
|
0.8
|
% |
(1.4
|
%) |
0.8
|
% |
(1.4
|
%) | ||||||||
Discrete benefit related to equity compensation
|
(0.5
|
%) |
(0.1
|
%) |
(2.0
|
%) |
(3.5
|
%) | ||||||||
Foreign taxes
|
(4.9
|
%) |
(3.4
|
%) |
(4.9
|
%) |
(3.4
|
%) | ||||||||
Tax credits
|
(2.5
|
%) |
(2.1
|
%) |
(2.5
|
%) |
(2.1
|
%) | ||||||||
Discrete benefit related to release of reserves for uncertain tax positions
|
(0.1
|
%) |
0.0
|
% |
(12.9
|
%) |
0.0
|
% | ||||||||
Other, net
|
0.8
|
% |
1.8
|
% |
2.3
|
% |
2.3
|
% | ||||||||
Effective tax rate
|
25.8
|
% |
15.8
|
% |
8.3
|
% |
12.9
|
% |
|
Semiconductor
Test
|
Industrial
Automation
|
System
Test
|
Wireless
Test
|
Corporate
and
Other
|
Consolidated
|
||||||||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||
Three Months Ended June 30, 2019
|
|
|
|
|
|
|
||||||||||||||||||
Revenues
|
$ |
374,898
|
$ |
74,726
|
$ |
73,407
|
$ |
41,236
|
$ |
(89
|
) | $ |
564,178
|
|||||||||||
Income (loss) before income taxes (1)(2)
|
91,355
|
(3,730
|
) |
23,535
|
10,930
|
9,087
|
131,177
|
|||||||||||||||||
Total assets (3)
|
745,073
|
601,676
|
123,460
|
93,232
|
1,108,073
|
2,671,514
|
||||||||||||||||||
Three Months Ended July 1, 2018
|
|
|
|
|
|
|
||||||||||||||||||
Revenues
|
$ |
360,088
|
$ |
62,057
|
$ |
69,682
|
$ |
35,212
|
$ |
(110
|
) | $ |
526,929
|
|||||||||||
Income (loss) before income taxes (1)(2)
|
91,159
|
(2,922
|
) |
20,352
|
10,308
|
1,115
|
120,012
|
|||||||||||||||||
Total assets (3)
|
765,484
|
597,293
|
107,199
|
77,638
|
1,384,106
|
2,931,720
|
||||||||||||||||||
Six Months Ended June 30, 2019
|
|
|
|
|
|
|
||||||||||||||||||
Revenues
|
$ |
715,751
|
$ |
140,862
|
$ |
131,627
|
$ |
70,277
|
$ |
(240
|
) | $ |
1,058,277
|
|||||||||||
Income (loss) before income taxes (1)(2)
|
174,404
|
(9,025
|
) |
38,875
|
14,558
|
6,344
|
225,156
|
|||||||||||||||||
Total assets (3)
|
745,073
|
601,676
|
123,460
|
93,232
|
1,108,073
|
2,671,514
|
||||||||||||||||||
Six Months Ended July 1, 2018
|
|
|
|
|
|
|
||||||||||||||||||
Revenues
|
$ |
733,416
|
$ |
110,891
|
$ |
112,702
|
$ |
57,719
|
$ |
(332
|
) | $ |
1,014,396
|
|||||||||||
Income (loss) before income taxes (1)(2)
|
179,238
|
(2,138
|
) |
26,240
|
10,772
|
1,719
|
215,831
|
|||||||||||||||||
Total assets (3)
|
765,484
|
597,293
|
107,199
|
77,638
|
1,384,106
|
2,931,720
|
(1) | Included in Corporate and Other are: contingent consideration adjustments, severance charges, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, acquisition related charges, and pension and postretirement plans actuarial losses. |
(2) | Included in the income (loss) before income taxes for each of the segments are charges and credits related to restructuring and other and inventory charges. |
(3) | Total business assets are directly attributable to each business. Corporate assets consist of cash and cash equivalents, marketable securities and certain other assets. |
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Cost of revenues—inventory charge
|
$ |
2,278
|
$ |
1,613
|
$ |
3,452
|
$ |
3,779
|
||||||||
Restructuring and other—employee severance
|
357
|
2,179
|
924
|
5,940
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Restructuring and other—acquisition related expenses and compensation
|
$ |
434
|
$ |
—
|
$ |
1,695
|
$ |
—
|
||||||||
Restructuring and other—employee severance
|
202
|
218
|
297
|
338
|
||||||||||||
|
—
|
—
|
416
|
—
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Cost of revenues—inventory charge
|
$ |
295
|
$ |
256
|
$ |
763
|
$ |
576
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Cost of revenues—inventory charge
|
$ |
829
|
$ |
627
|
$ |
1,168
|
$ |
1,463
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019
|
July 1,
2018
|
June 30,
2019
|
July 1,
2018
|
||||||||||||
|
(in thousands)
|
|||||||||||||||
Restructuring and other—MiR contingent consideration adjustment
|
$ |
(11,671
|
) | $ |
—
|
$ |
(8,668
|
) | $ |
—
|
||||||
Restructuring and other—Universal Robots contingent consideration adjustment
|
—
|
(3,500
|
) |
—
|
(8,468
|
) | ||||||||||
Restructuring and other—acquisition related expenses and compensation
|
—
|
2,544
|
—
|
3,318
|
Item 2:
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
• | semiconductor test (“Semiconductor Test”) systems; |
• | industrial automation (“Industrial Automation”) products; |
• | defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”); and |
• | wireless test (“Wireless Test”) systems. |
|
For the Three Months
Ended
|
For the Six Months
Ended
|
||||||||||||||
|
June 30,
2019 |
July 1,
2018 |
June 30,
2019 |
July 1,
2018 |
||||||||||||
Percentage of revenues:
|
|
|
|
|
||||||||||||
Revenues:
|
|
|
|
|
||||||||||||
Products
|
81
|
% |
82
|
% |
80
|
% |
83
|
% | ||||||||
Services
|
19
|
18
|
20
|
17
|
||||||||||||
Total revenues
|
100
|
100
|
100
|
100
|
||||||||||||
Cost of revenues:
|
|
|
|
|
||||||||||||
Cost of products
|
34
|
34
|
34
|
36
|
||||||||||||
Cost of services
|
8
|
7
|
8
|
7
|
||||||||||||
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)
|
43
|
42
|
42
|
43
|
||||||||||||
Gross profit
|
57
|
58
|
58
|
57
|
||||||||||||
Operating expenses:
|
|
|
|
|
||||||||||||
Selling and administrative
|
19
|
19
|
20
|
19
|
||||||||||||
Engineering and development
|
14
|
14
|
15
|
15
|
||||||||||||
Acquired intangible assets amortization
|
2
|
2
|
2
|
2
|
||||||||||||
Restructuring and other
|
(2
|
) |
—
|
(1
|
) |
—
|
||||||||||
Total operating expenses
|
34
|
35
|
36
|
35
|
||||||||||||
Income from operations
|
24
|
23
|
21
|
21
|
||||||||||||
Non-operating
(income) expense:
|
|
|
|
|
||||||||||||
Interest income
|
(1
|
) |
(1
|
) |
(1
|
) |
(1
|
) | ||||||||
Interest expense
|
1
|
1
|
1
|
1
|
||||||||||||
Other (income) expense, net
|
—
|
—
|
—
|
—
|
||||||||||||
Income before income taxes
|
23
|
23
|
21
|
21
|
||||||||||||
Income tax provision
|
6
|
4
|
2
|
3
|
||||||||||||
Net income
|
17
|
% |
19
|
% |
20
|
% |
19
|
% | ||||||||
|
For the Three Months
Ended
|
|
||||||||||
|
June 30,
2019 |
July 1,
2018 |
Dollar
Change |
|||||||||
|
(in millions)
|
|||||||||||
Semiconductor Test
|
$ |
374.9
|
$ |
360.1
|
$ |
14.8
|
||||||
Industrial Automation
|
74.7
|
62.1
|
12.6
|
|||||||||
System Test
|
73.4
|
69.7
|
3.7
|
|||||||||
Wireless Test
|
41.2
|
35.2
|
6.0
|
|||||||||
|
$ |
564.2
|
$ |
526.9
|
$ |
37.3
|
||||||
(1) | Revenues attributable to a country are based on location of customer site. |
|
For the Three Months
Ended
|
Dollar/
Point Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Gross profit
|
$ |
323.9
|
$ |
307.3
|
$ |
16.6
|
||||||
Percent of total revenues
|
57.4
|
% |
58.3
|
% |
(0.9
|
) |
|
For the Three Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Selling and administrative
|
$ |
108.8
|
$ |
99.4
|
$ |
9.4
|
||||||
Percent of total revenues
|
19.3
|
% |
18.9
|
% |
|
|
For the Three Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Engineering and development
|
$ |
81.4
|
$ |
75.3
|
$ |
6.1
|
||||||
Percent of total revenues
|
14.4
|
% |
14.3
|
% |
|
|
For the Three Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Acquired intangible assets amortization
|
$ |
10.1
|
$ |
9.8
|
$ |
0.3
|
||||||
Percent of total revenues
|
1.8
|
% |
1.9
|
% |
|
|
For the Three Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Interest income
|
$ |
(5.4
|
) | $ |
(5.4
|
) | $ |
—
|
||||
Interest expense
|
5.8
|
5.6
|
0.2
|
|||||||||
Other (income) expense, net
|
2.4
|
0.2
|
2.2
|
|
For the Three Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Semiconductor Test
|
$ |
91.4
|
$ |
91.2
|
$ |
0.2
|
||||||
System Test
|
23.5
|
20.4
|
3.1
|
|||||||||
Wireless Test
|
10.9
|
10.3
|
0.6
|
|||||||||
Industrial Automation
|
(3.7
|
) |
(2.9
|
) |
(0.8
|
) | ||||||
Corporate and Other (1)
|
9.1
|
1.1
|
8.0
|
|||||||||
|
$ |
131.2
|
$ |
120.0
|
$ |
11.2
|
||||||
(1) | Included in Corporate and Other are: contingent consideration adjustments, employee severance, interest income, interest expense, net foreign exchange gains and losses, intercompany eliminations, and acquisition related expenses. |
|
For the Six Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Semiconductor Test
|
$ |
715.8
|
$ |
733.4
|
$ |
(17.6
|
) | |||||
Industrial Automation
|
140.9
|
110.9
|
30.0
|
|||||||||
System Test
|
131.6
|
112.7
|
18.9
|
|||||||||
Wireless Test
|
70.3
|
57.7
|
12.6
|
|||||||||
Corporate and Other
|
(0.2
|
) |
(0.3
|
) |
0.1
|
|||||||
|
$ |
1,058.3
|
$ |
1,014.4
|
$ |
43.9
|
||||||
(1) | Revenues attributable to a country are based on location of customer site. |
|
For the Six Months
Ended
|
Dollar/Point
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Gross profit
|
$ |
611.6
|
$ |
577.2
|
$ |
34.4
|
||||||
Percent of total revenues
|
57.8
|
% |
56.9
|
% |
0.9
|
|
For the Six Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Selling and administrative
|
$ |
210.8
|
$ |
189.9
|
$ |
20.9
|
||||||
Percent of total revenues
|
19.9
|
% |
18.7
|
% |
|
|
For the Six Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Engineering and development
|
$ |
158.2
|
$ |
149.8
|
$ |
8.4
|
||||||
Percent of total revenues
|
15.0
|
% |
14.8
|
% |
|
|
For the Six Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Acquired intangible assets amortization
|
$ |
20.7
|
$ |
17.5
|
$ |
3.2
|
||||||
Percent of total revenues
|
2.0
|
% |
1.7
|
% |
|
|
For the Six Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Interest income
|
$ |
(13.5
|
) | $ |
(11.4
|
) | $ |
(2.1
|
) | |||
Interest expense
|
11.5
|
12.5
|
(1.0
|
) | ||||||||
Other (income) expense, net
|
3.9
|
1.0
|
2.9
|
|
For the Six Months
Ended
|
Dollar
Change |
||||||||||
|
June 30,
2019 |
July 1,
2018 |
||||||||||
|
(in millions)
|
|||||||||||
Semiconductor Test
|
$ |
174.4
|
$ |
179.2
|
$ |
(4.8
|
) | |||||
System Test
|
38.9
|
26.2
|
12.7
|
|||||||||
Wireless Test
|
14.6
|
10.8
|
3.8
|
|||||||||
Industrial Automation
|
(9.0
|
) |
(2.1
|
) |
(6.9
|
) | ||||||
Corporate and Other (1)
|
6.3
|
1.7
|
4.6
|
|||||||||
|
$ |
225.2
|
$ |
215.8
|
$ |
9.4
|
||||||
(1) | Included in Corporate and Other are: contingent consideration adjustments, employee severance, interest income, interest expense, net foreign exchange gains and losses, intercompany eliminations, and acquisition related expenses. |
|
Payments Due by Period
|
|||||||||||||||||||||||
|
Total
|
Less than
1 year
|
1-3
years
|
3-5
years
|
More than
5 years
|
Other
|
||||||||||||||||||
|
(in thousands)
|
|||||||||||||||||||||||
Convertible debt
|
$ |
460,000
|
$ |
—
|
$ |
—
|
$ |
460,000
|
$ |
—
|
$ |
—
|
||||||||||||
Purchase obligations
|
306,949
|
300,663
|
6,286
|
—
|
—
|
—
|
||||||||||||||||||
Retirement plans contributions
|
127,435
|
9,406
|
20,382
|
25,188
|
72,459
|
—
|
||||||||||||||||||
Transition tax payable (1)
|
98,414
|
9,530
|
16,930
|
24,337
|
47,617
|
—
|
||||||||||||||||||
Operating lease obligations
|
78,700
|
21,018
|
32,845
|
14,398
|
10,439
|
—
|
||||||||||||||||||
Fair value of contingent consideration
|
26,847
|
11,753
|
15,094
|
—
|
—
|
—
|
||||||||||||||||||
Interest on long-term debt
|
25,875
|
5,750
|
11,500
|
8,625
|
—
|
—
|
||||||||||||||||||
Other long-term liabilities reflected on the balance sheet under GAAP (2)
|
64,825
|
—
|
30,093
|
7,272
|
—
|
27,460
|
||||||||||||||||||
Total
|
$ |
1,189,045
|
$ |
358,120
|
$ |
133,130
|
$ |
539,820
|
$ |
130,515
|
$ |
27,460
|
||||||||||||
(1) | Represents the transition tax liability associated with our accumulated foreign earnings as a result of the enactment of the Tax Reform Act on December 22, 2017. |
(2) | Included in other long-term liabilities are liabilities for customer advances, extended warranty, uncertain tax positions, deferred tax liabilities and other obligations. For certain long-term obligations, we are unable to provide a reasonably reliable estimate of the timing of future payments relating to these obligations and therefore we included these amounts in the column marked “Other.” |
Item 3:
|
Quantitative and Qualitative Disclosures about Market Risks
|
Hypothetical Change in Teradyne Stock Price
|
Fair Value
|
Estimated change
in fair value |
Hypothetical percentage
increase (decrease) in fair value |
|||||||||
10% Increase
|
$ |
807,728
|
$ |
60,515
|
8.1
|
% | ||||||
No Change
|
747,213
|
—
|
—
|
|||||||||
10% Decrease
|
688,885
|
(58,328
|
) |
(7.8
|
) |
Item 4:
|
Controls and Procedures
|
Item 1:
|
Legal Proceedings
|
Item 1A:
|
Risk Factors
|
Item 2:
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
(a) Total
Number of
Shares
(or Units)
Purchased
|
|
(b) Average
Price Paid per
Share (or Unit)
|
|
(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
|
(d) Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that may Yet Be
Purchased Under the
Plans or Programs
|
||||||||||||||||||
April 1, 2019 – April 28, 2019
|
829
|
|
$ |
43.53
|
|
828
|
$ |
483,987
|
||||||||||||||||
April 29, 2019 – May 26, 2019
|
596
|
|
$ |
47.66
|
|
595
|
$ |
455,641
|
||||||||||||||||
May 27, 2019 – June 30, 2019
|
593
|
|
$ |
44.47
|
|
592
|
$ |
429,297
|
||||||||||||||||
|
2,018
|
(1)
|
$ |
45.03
|
(1)
|
2,015
|
|
|||||||||||||||||
(1) | Includes approximately three thousand shares at an average price of $44.36 withheld from employees for the payment of taxes. |
Item 4:
|
Mine Safety Disclosures
|
Item 6:
|
Exhibits
|
Exhibit
Number
|
Description
|
|||
10.1
|
||||
31.1
|
||||
31.2
|
||||
32.1
|
||||
32.2
|
Exhibit
Number
|
Description
|
|||
101.INS
|
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
|
|||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
* | Management Contract or Compensatory Plan |
TERADYNE, INC.
|
Registrant
|
/s/
Sanjay Mehta
|
Sanjay Mehta
Vice President,
Chief Financial Officer and Treasurer
(Duly Authorized Officer
and Principal Financial Officer)
|
August 9, 2019
|
Exhibit 10.1
EXECUTIVE OFFICER RETIREMENT AGREEMENT
EXECUTIVE OFFICER RETIREMENT AGREEMENT entered into this 17th day of July 2019, by and between Teradyne, Inc., a Massachusetts corporation (Teradyne or the Company), and the undersigned executive officer of Teradyne (Executive).
WITNESSETH:
WHEREAS, the Executive is retiring from the Company effective July 17, 2019 (the Retirement Date).
WHEREAS, Teradyne recognizes the contributions the Executive has made to the success of the Company and wishes to ensure the Executive does not engage in any business competitive with the Company following his retirement for the period from the Retirement Date through January 31, 2023 (the Non-Competition Period).
WHEREAS, Teradyne and Executive desire to set forth certain terms and conditions relating to the Executives retirement from Teradyne.
NOW THEREFORE, in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. Consideration.
In consideration for the signing of the Release attached as Schedule B as well as the promises and covenants including the Non-Competition and Non-Solicitation provision set forth herein, the Company agrees to the following treatment of the portions of the Executives outstanding equity grants which remain unvested as of the Retirement Date; provided that such treatment shall be subject to Section 2 hereof and full compliance by the Executive with Section 4 hereof:
a) |
Any unvested, time-based restricted stock units granted before 2019 shall continue to vest during the Non-Competition Period; |
b) |
Any unvested, time-based restricted stock units granted in 2019 prior to the Retirement Date shall continue to vest during the Non-Competition Period in a pro-rated amount based on the number of days that the Executive was employed during 2019; |
c) |
Any unvested stock options granted before 2019 shall continue to vest and become exercisable during the Non-Competition Period; |
d) |
Any unvested stock options granted in 2019 prior to the Retirement Date shall continue to vest and become exercisable during the Non-Competition Period in a pro-rated amount based on the number of days that the Executive was employed during 2019; |
e) |
Any vested stock options as of the Retirement Date or stock options that become vested during the Non-Competition Period may be exercised for the remainder of the generally applicable term of such option, which in all cases is no later than seven (7) years from the respective dates of grant; |
f) |
Any unvested, performance-based restricted stock units awarded more than 365 days prior to the Retirement Date shall vest on the date the amount of shares underlying the performance-based restricted stock units are determined at the end of the three-year performance period at the performance level determined by the Board as set forth in the applicable performance-based restricted stock unit agreement; and |
g) |
Any unvested, performance-based restricted stock units awarded less than 365 days prior to the Retirement Date shall vest on the date the amount of shares underlying the performance-based restricted stock units are determined at the end of the performance period (i) in a pro-rated amount of shares based on the number of days that the Executive was employed during the 365 calendar day period following the grant date, and (ii) at the performance level determined by the Board as set forth in the applicable performance-based restricted stock unit agreement. |
Schedule A attached hereto and incorporated herein is a complete list of the Executives outstanding equity grants from the Company as of the Retirement Date. The parties agree that, except as otherwise provided herein, the terms of the Executives existing equity award agreements shall continue in effect and that any portion of the Executives outstanding equity grants which are not vested by reason of the application of Section 1(a), (b), (c), (d), (f) and (g) shall be forfeited as of the last day of the Non-Competition Period or on such earlier date pursuant to Section 2 or Section 4. Notwithstanding anything to the contrary herein, the settlement date for equity grants that become vested by reason of the application of Section 1(a), (b), (f) and (g) shall occur no later than December 31 of the year in which such vesting occurs.
Executive acknowledges that he is not and would not be entitled to the consideration described in this Section 1 absent his execution and non-revocation of this Agreement and the release. The consideration described in this Section 1 is in addition to other retirement and/or pension benefits to which the Executive may be entitled associated with the Executives retirement. The parties acknowledge that Executive shall not be entitled to any severance or separation payment or benefit associated with his retirement, other than all accrued wages and unused vacation time as of the Retirement Date. The Executive acknowledges and agrees that his termination of employment with the Company shall not be considered a retirement for purposes of his unvested equity grants which are outstanding as of the Retirement Date and that the settlement or exercise of rights under such grants shall not be accelerated.
2. Conditions to Consideration.
The consideration and entitlements set forth above in Section 2 shall be conditioned on Executives signing, and not revoking, a Release, in the form attached as Schedule B, within twenty-one (21) days following the Retirement Date, plus any legally required revocation period.
3. Compensation in connection with Retirement.
Executive shall receive the following compensation in connection with his retirement:
a) |
Variable compensation payment for 2019 pro-rated to the Retirement Date paid in accordance with and at the time consistent with the Companys standard practice; |
b) |
Profit sharing payments, if any, for 2019 made in accordance with the Companys standard practice; and |
c) |
All other compensation and benefits to which the executive is currently entitled in connection with his employment or his retirement. |
4. Non-Competition and Non-Solicitation.
During the Non-Competition Period, Executive shall not directly or indirectly:
a) |
Engage in any business or enterprise (whether as an owner, partner, officer, Executive, director, investor, lender, consultant, independent contractor or otherwise, except as the holder of not more than 1% of the combined voting power of the outstanding stock of a publicly held company) that is competitive with Teradyne (including but not limited to, any business or enterprise that develops, designs, produces, markets, sells or renders any product or service competitive with any product or service developed, produced, marketed, sold or rendered by Teradyne while Executive was employed by Teradyne); |
b) |
Either alone or in association with others, recruit, solicit, hire or engage as an independent contractor, any person who was employed by Teradyne at any time during the period of Executives employment with Teradyne, except for an individual whose employment with Teradyne has been terminated for a period of six months or longer; or |
c) |
Either alone or in association with others, solicit, divert or take away, or attempt to divert or to take away, the business or patronage of any client or customer or entity that was a prospective client or customer of Teradyne during the Executives employment. |
If any restriction set forth in this Section 4 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable.
Executive acknowledges that the restrictions contained in this Section 5 are necessary for the protection of the business and goodwill of Teradyne and are considered by Executive to be reasonable for such purpose. Executive agrees that any breach of this Section 5 will cause Teradyne irreparable harm and therefore, in the event of any such breach, in addition to such other remedies that may be available, Teradyne shall have the right to seek equitable and/or injunctive relief.
The geographic scope of this Section 4 shall extend to anywhere Teradyne or any of its subsidiaries is doing business, has done business or has plans to do business.
Executive agrees that during the Non-Competition Period, he will make reasonable good faith efforts to give verbal notice to Teradyne of each new business activity he plans to undertake, at least (5) business days prior to beginning any such activity.
If Executive violates the provisions of this Section 4, Teradyne shall be entitled to discontinue any continued vesting per Section 1 and all equity grants subject to this Agreement which are unvested as of the date of the violation shall be forfeited. Executive shall nevertheless continue to be bound by the restrictions set forth in this Section 4 for an additional period of time equal to the duration of the violation, such additional period not to exceed 24 months from the end of the Non-Competition Period.
5. Deferred Compensation/Section 409A.
Notwithstanding any other provision of this Agreement, if the Executive is a specified employee at the time of the Executives separation from service as such terms are defined in Section 409A of the Code, all payments, benefits, or removal of restrictions on the transfer of equity under this Agreement with respect to the Executives separation from service that constitute compensation deferred under a nonqualified deferred compensation plan as defined in Section 409A of the Code and regulations thereunder for which an exemption does not apply and to which such the Executive as a specified employee would otherwise be entitled during the first six months following the date of separation from service shall be made on the first day of the seventh month after the date of separation from service (or, if earlier, the date of death of the Executive).
For purposes of this Agreement, each amount to be paid or benefit to be provided shall be construed as a separate identified payment for purposes of Section 409A, and any payments that are due within the short term deferral period as defined in Section 409A and regulations thereunder or payments that are made under separation pay plans as described in Treasury Regulation Section 1.409A-1(b)(9)(ii), (iii) or (iv), shall not be treated as deferred compensation unless applicable law requires otherwise. Neither Teradyne nor the Executive shall have the right to accelerate or defer the delivery of any payments or benefits under this Agreement except to the extent specifically permitted or required by Section 409A.
This Agreement is intended to comply with the provisions of Section 409A and regulations thereunder and the Agreement shall, to the extent practicable, be construed and administered in accordance therewith. Terms defined in the Agreement shall have the meanings given such terms under Section 409A if and to the extent required to comply with Section 409A. In any event, Teradyne makes no representations or warranty and shall have no liability to the Executive or any other person if any provisions of or payments under this Agreement are determined to constitute deferred compensation subject to Code Section 409A but not to satisfy the conditions of that section.
6. Governing Law and Dispute Resolution.
This Agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, other than its choice of law rules, and this Agreement shall be deemed to be performable in Massachusetts. The Executive and the Company agree that any dispute, controversy or claim arising between the parties relating to this Agreement shall be resolved by final and binding arbitration before a single arbitrator, except that the parties may seek equitable relief in court to preserve the status quo pending final resolution in arbitration. The arbitrator shall be selected in accordance with the Employment Dispute Resolution rules of the American Arbitration Association (AAA) pertaining at the time the dispute arises. The parties agree that such arbitration shall take place at the offices of the AAA in Boston, Massachusetts. In such arbitration proceedings, the arbitrator shall have the discretion, to be exercised in accordance with applicable law, to award any damages permitted by law, and to allocate among the parties the arbitrators fees, tribunal and other administrative and litigation costs and, to the prevailing party, reasonable attorneys fees. The award of the arbitrator may be confirmed before and entered as a judgment of any court having jurisdiction of the parties.
7. Severability.
In case any one or more of the provisions contained in this Agreement for any reason shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement and this Agreement shall be construed to the maximum extent permitted by law.
8. Waivers and Modifications.
This Agreement may be modified, and the rights, remedies and obligations contained in any provision hereof may be waived, only in accordance with this Section 8. No waiver by either party of any breach by the other or any provision hereof shall be deemed to be a waiver of any later or other breach thereof or as a waiver of any other provision of this Agreement. This Agreement may not be waived, changed, discharged or terminated orally or by any course of dealing between the parties, but only by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.
9. Assignment.
This Agreement, and Executives and Teradynes rights and obligations hereunder, may not be assigned by Executive or Teradyne; any purported assignment by Executive or Teradyne in violation hereof shall be null and void.
10. Entire Agreement.
This Agreement, including Schedule A and Schedule B, constitutes the entire understanding of the parties relating to the subject matter hereof and supersedes all agreements, written or oral, made prior to the date hereof between Executive and Teradyne relating to the subject matter hereof, except for the attached Release once executed, and the equity award agreements, as modified hereby, between Teradyne and Executive.
11. Notices.
All notices hereunder shall be in writing and shall be delivered in person or mailed by certified or registered mail, return receipt requested, addressed as follows:
If to Teradyne, to: |
Teradyne, Inc. | |
600 Riverpark Drive North Reading, MA 01864 |
||
Attention: General Counsel |
If to Executive, at Executives address in his employment file on record with the Human Resources Department.
12. Cooperation.
Executive agrees to cooperate fully with the Company in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Company. The Executives full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with Company counsel to prepare for trial or discovery or an administrative hearing or alternative dispute resolution and to act as a witness when requested by the Company at reasonable times designated by the Company.
13. Return of Property.
No later than the Retirement Date, Executive shall return to the Company all Company property in his possession or control, including all electronic documents
14. Non-Disparagement.
The Executive understands and agrees that in consideration for the covenants, terms and conditions herein, he shall not make any false, disparaging or derogatory statements to any third person or entity, including any media outlet, in public or private regarding the Companys directors, officers, executives, agents, or representatives or the Companys business affairs and financial condition. The Company understands and agrees that in consideration for the covenants, terms and conditions herein, it shall cause its directors and executive officers to not make any false, disparaging or derogatory statements to any third party or entity, including any media outlet, in public or private, regarding the Executive.
15. Confidential Information
The Executive acknowledges that the information, observations and data (including trade secrets) obtained by him while employed by the Company concerning the Company or any affiliate are the property of the Company. The Executive agrees that he will not use, publish or disclose, at any time after the Retirement Date, any secret or confidential information or data concerning any discovery, invention, opportunity, product, design, formula, algorithm or process, or any secret or confidential production, sales or other business information, relating to the Company or any client, subsidiary or affiliate of the Company which he may acquire or have acquired during any period of employment with the Company or any affiliate. The term confidential information shall not include information that is in the public domain at the time of the disclosure. The Executive further agrees to turn over at or prior to the expiration of his employment all tangible forms of such information in his possession or under his control, including drawings, specifications, models, customer lists and other documents and records as well as all copies and reproductions thereof. Prior to or concurrent with any cessation of services hereunder, the Executive shall reduce to writing and deliver to the Company such information as the Company may reasonably request to the extent that such information pertains to the business and operations of the Company and its subsidiaries and affiliates and any product or service offered by the Company or its affiliates.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
TERADYNE, INC. | EXECUTIVE | |||||
By: |
/s/ Michael Callahan |
/s/ Gregory Beecher |
||||
Name: | Michael Callahan | Name: Gregory Beecher | ||||
Title: | Vice President and Corporate Controller |
SCHEDULE B
Release
In consideration of the payments and benefits described in the Executive Officer Retirement Agreement dated July 17, 2019 between me and Teradyne, Inc. (the Company), all of which I acknowledge I would not otherwise be entitled to receive, I hereby fully, forever, irrevocably and unconditionally release, remise and discharge the Company, its successors and assigns and their respective officers, directors, stockholders, corporate affiliates, subsidiaries, parent companies, agents and Executives (each in their individual and corporate capacities) (hereinafter, the Released Parties) from any and all claims, charges, complaints, demands, actions, causes of action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts, agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and expenses (including attorneys fees and costs), of every kind and nature which I ever had or now have against the Released Parties arising out of my employment with and/or termination or separation from the Company or relating to my relationship as an officer or in any other capacity for the Company, including, but not limited to, all employment discrimination claims under Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Family and Medical Leave Act; the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq.; the Americans With Disabilities Act of 1990, as amended; the Worker Adjustment and Retraining Notification Act; the Civil Rights Act of 1991; the National Labor Relations Act, as amended; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; the Older Workers Benefit Protection Act; the Occupational Safety and Health Act, as amended; the Civil Rights Act of 1866, 29 U.S.C. § 1981, et seq; the Rehabilitation Act of 1973, 29 U.S.C. § 701, et seq.; the Immigration Reform and Control Act; the Fair Credit Reporting Act; the Equal Pay Act; the Massachusetts Law Against Discrimination, G.L. c. 151B; the Massachusetts Privacy Statute, G.L. c. 214, § 1B; the Massachusetts Civil Rights Act, G.L. c. 12, § 11H and 11I; the Massachusetts Equal Rights Act, G.L. c. 93, § 102; the Massachusetts Labor and Industries Act, G.L. c. 149, § 1 et seq.; the Massachusetts Parental Leave Act, G.L. c. 149, § 105D; the Massachusetts Sexual Harassment Statute, G.L. c. 214 § 1C; the Massachusetts Wage Payment Statute, G.L. c. 149, §§ 148, 148A, 148B, 148C, 149, 150, 150A-150C, 151, 152, 152A, et seq.; the Massachusetts Wage and Hour laws, G.L. c. 151§1A et seq.; The Massachusetts Leave Law for Victims and Family Members of Abusive Behavior, G.L. c.149, § 52E; et seq.; The Massachusetts Earned Sick Time Law, G.L. c.149, § 148C), all as amended; all common law claims including, but not limited to, actions in tort, defamation and breach of contract; all claims to any non-vested ownership interest in the Company, contractual or otherwise, including but not limited to claims to stock or stock options; and any claim or damage arising out of my employment with, termination or separation from the Company (including a claim for retaliation) under any common law theory or any federal, state or local statute or ordinance not expressly referenced above; provided, however, that notwithstanding the foregoing, the Company agrees and hereby acknowledges that this Release Agreement is not intended to and does not (i) apply to any claims I may bring to enforce the terms of the Executive Officer Agreement, (ii) release the Company of any obligation it may have pursuant to a written agreement, the Companys articles of organization or bylaws, or as mandated by statute to indemnify me as an officer of the Company; and (iii) release the Company of any obligation to provide and/or pay benefits to me or my estate, conservator or designated beneficiary(ies) under and in accordance with the terms of any applicable Company benefit plan and/or program; provided further, that nothing in this Release Agreement prevents me from filing, cooperating with, or participating in any proceeding before the EEOC or a state Fair Employment Practices Agency (except that I acknowledge that I may not be able to recover any monetary benefits in connection with any such claim, charge or proceeding).
Waiver of Rights and Claims Under the Age Discrimination in Employment Act of 1967: Because I am 40 years of age or older, I have been informed that I have or may have specific rights and/or claims under the Age Discrimination in Employment Act of 1967 (ADEA) and I agree that:
In consideration for the payments and benefits described in the Executive Officer Agreement, which I am not otherwise entitled to receive, I specifically and voluntarily waive such rights and/or claims under the ADEA I might have against the Released Parties to the extent such rights and/or claims arose prior to the date this Release Agreement was executed;
I understand that rights or claims under the ADEA which may arise after the date this Release Agreement is executed are not waived by me;
I was advised that I have at least 21 days within which to consider the terms of this Release Agreement and to consult with or seek advice from an attorney of my choice or any other person of your choosing prior to executing this Release Agreement;
I have carefully read and fully understand all of the provisions of this Release Agreement, and I knowingly and voluntarily agree to all of the terms set forth in this Release Agreement; and
In entering into this Release Agreement I am not relying on any representation, promise or inducement made by the Company or its attorneys with the exception of those promises described in this document.
Period for Review and Consideration of Agreement:
I acknowledge that I was informed and understand that I have twenty-one (21) days to review this Release Agreement and consider its terms before signing it. The 21-day review period will not be affected or extended by any revisions, whether material or immaterial, that might be made to this Agreement.
Accord and Satisfaction: The amounts set forth in the Executive Officer Agreement shall be complete and unconditional payment, settlement, accord and/or satisfaction with respect to all obligations and liabilities of the Released Parties to me, including, without limitation, all claims for back wages, salary, vacation pay, draws, incentive pay, bonuses, cash awards, equity awards, commissions, severance pay, reimbursement of expenses, any and all other forms of compensation or benefits, attorneys fees, or other costs or sums.
Revocation Period: I may revoke this Release Agreement at any time during the seven-day period immediately following my execution hereof. As a result, this Release Agreement shall not become effective or enforceable and the Company shall have no obligation to make any payments or provide any benefits described herein until the seven-day revocation period has expired.
/s/ Gregory Beecher |
July 17, 2019 |
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Name: Gregory Beecher | Date | |||
/s/ Nancy Perez |
July 17, 2019 |
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Witness | Date |
IF YOU DO NOT WISH TO USE THE 21-DAY PERIOD,
PLEASE CAREFULLY REVIEW AND SIGN THIS DOCUMENT
I, Gregory Beecher, acknowledge that I was informed and understand that I have 21 days within which to consider the attached Release Agreement, have been advised of my right to consult with an attorney regarding such Release Agreement and have considered carefully every provision of the Release Agreement, and that after having engaged in those actions, I prefer to and have requested that I enter into the Release Agreement prior to the expiration of the 21-day period.
Dated: |
July 17, 2019 |
/s/ Gregory Beecher |
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Name: Gregory Beecher | ||||||
Dated: |
July 17, 2019 |
/s/ Nancy Perez |
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Witness |
Exhibit 31.1
CERTIFICATIONS
I, Mark E. Jagiela, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 9, 2019
By: |
/S/ MARK E. JAGIELA |
|
Mark E. Jagiela | ||
Chief Executive Officer |
Exhibit 31.2
CERTIFICATIONS
I, Sanjay Mehta, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 9, 2019
By: |
/S/ SANJAY MEHTA |
|
Sanjay Mehta | ||
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Teradyne, Inc. (the Company) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Mark E. Jagiela, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C (S) 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
/S/ MARK E. JAGIELA |
Mark E. Jagiela |
Chief Executive Officer |
August 9, 2019 |
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Teradyne, Inc. (the Company) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Sanjay Mehta, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C (S) 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
/S/ SANJAY MEHTA |
Sanjay Mehta |
Chief Financial Officer |
August 9, 2019 |