UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission File No.
(Exact name of registrant as specified in its charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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(Address of Principal Executive Offices) |
(Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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per share |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):
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Accelerated filer |
☐ |
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Non-accelerated filer |
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Emerging growth company |
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Smaller reporting company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
The number of shares outstanding of the registrant’s only class of Common Stock as of October 28, 2024, was
TERADYNE, INC.
INDEX
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Page No. |
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Item 1. |
1 |
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Condensed Consolidated Balance Sheets as of September 29, 2024, and December 31, 2023 |
1 |
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f |
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2 |
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3 |
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4 |
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d |
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6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
30 |
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Item 3. |
40 |
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Item 4. |
40 |
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Item 1. |
41 |
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Item 1A. |
41 |
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Item 2. |
42 |
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Item 4. |
42 |
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Item 5. |
43 |
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Item 6. |
44 |
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PART I
Item 1: Financial Statements
TERADYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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September 29,
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December 31,
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(in thousands,
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Accounts receivable, less allowance for credit losses of $
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Inventories, net |
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Prepayments |
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Other current assets |
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Current assets held for sale |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets, net |
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Marketable securities |
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Deferred tax assets |
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Retirement plans assets |
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Equity method investment |
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Other assets |
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Acquired intangible assets, net |
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Goodwill |
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Long-term assets held for sale |
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Total assets |
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$ |
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$ |
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LIABILITIES |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued employees’ compensation and withholdings |
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Deferred revenue and customer advances |
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Other accrued liabilities |
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Operating lease liabilities |
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Income taxes payable |
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Current liabilities held for sale |
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Total current liabilities |
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Retirement plans liabilities |
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Long-term deferred revenue and customer advances |
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Long-term other accrued liabilities |
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Deferred tax liabilities |
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Long-term operating lease liabilities |
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Long-term incomes taxes payable |
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Long-term liabilities held for sale |
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Total liabilities |
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SHAREHOLDERS’ EQUITY |
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Common stock, $
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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(
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(
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Retained earnings |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements.
1
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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For the Three Months
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For the Nine Months
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September 29,
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October 1,
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September 29,
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October 1,
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(in thousands, except per share amount) |
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(in thousands, except per share amount) |
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Revenues: |
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Products |
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$ |
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$ |
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$ |
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$ |
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Services |
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Total revenues |
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Cost of revenues: |
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Cost of products |
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Cost of services |
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Total cost of revenues (exclusive of acquired intangible
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Gross profit |
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Operating expenses: |
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Selling and administrative |
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Engineering and development |
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Acquired intangible assets amortization |
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Restructuring and other |
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Gain on sale of business |
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(
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Total operating expenses |
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Income from operations |
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Non-operating (income) expense: |
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Interest income |
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(
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(
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(
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Interest expense |
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Other (income) expense, net |
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(
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Income before income taxes and equity in net earnings of affiliate |
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Income tax provision |
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Income before equity in net earnings of affiliate |
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Equity in net earnings of affiliate |
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(
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— |
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(
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— |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Net income per common share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average common shares—basic |
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Weighted average common shares—diluted |
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The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements.
2
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
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For the Three Months
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For the Nine Months
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September 29,
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October 1,
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September 29,
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October 1,
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(in thousands) |
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(in thousands) |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Foreign currency translation adjustment, net of tax of $
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(
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(
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Available-for-sale marketable securities: |
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Unrealized (losses) gains on marketable securities arising during period, net of tax of $
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(
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(
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Less: Reclassification adjustment for (gains) losses included in net income, net of tax of $(
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(
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(
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(
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Cash flow hedges: |
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Unrealized (losses) gains arising during period, net of tax of $(
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(
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Less: Reclassification adjustment for (gains) losses included in net income, net of tax of $
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— |
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(
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(
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(
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(
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(
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(
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Defined benefit post-retirement plan: |
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Amortization of prior service credit, net of tax of $
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(
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(
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(
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(
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Other comprehensive income (loss) |
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(
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Comprehensive income |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements.
3
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
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Shareholders' Equity |
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Common
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Common
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Additional
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Accumulated
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Retained
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Total
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(in thousands) |
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For the Three Months Ended September 29, 2024 |
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Balance, June 30, 2024 |
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$ |
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$ |
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$ |
(
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$ |
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$ |
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Net issuance of common stock under stock-based plans |
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Stock-based compensation expense |
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Warrant exercises |
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(
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(
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Repurchase of common stock |
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(
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) |
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(
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(
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(
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Cash dividends ($
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(
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(
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Net income |
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Other comprehensive income (loss) |
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Balance, September 29, 2024 |
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$ |
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$ |
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$ |
(
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) |
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$ |
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$ |
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For the Three Months Ended October 1, 2023 |
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Balance, July 2, 2023 |
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$ |
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$ |
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$ |
(
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) |
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$ |
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$ |
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Net issuance of common stock under stock-based plans |
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Stock-based compensation expense |
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||||
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Repurchase of common stock |
|
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(
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) |
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(
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) |
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(
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) |
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(
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) |
||
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Cash dividends ($
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(
|
) |
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(
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) |
||||
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Settlements of convertible notes |
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(
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) |
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Exercise of convertible notes hedge call options |
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(
|
) |
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(
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) |
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Net income |
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Other comprehensive income (loss) |
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|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
(
|
) |
||||
|
Balance, October 1, 2023 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
|
|
Shareholders' Equity |
|
|||||||||||||||||||||
|
|
|
Common
|
|
|
Common
|
|
|
Additional
|
|
|
Accumulated
|
|
|
Retained
|
|
|
Total
|
|
||||||
|
|
|
(in thousands) |
|
|||||||||||||||||||||
|
For the Nine Months Ended September 29, 2024 |
|
|||||||||||||||||||||||
|
Balance, December 31, 2023 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
Net issuance of common stock under stock-based plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Warrant exercises |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
(
|
) |
||
|
Repurchase of common stock |
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
||
|
Cash dividends ($
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
||||
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Balance, September 29, 2024 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
For the Nine Months Ended October 1, 2023 |
|
|||||||||||||||||||||||
|
Balance, December 31, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
Net issuance of common stock under stock-based plans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Repurchase of common stock |
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
||
|
Cash dividends ($
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
||||
|
Settlements of convertible notes |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
— |
|
||
|
Exercise of convertible notes hedge call options |
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Balance, October 1, 2023 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements.
4
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
For the Nine Months
|
|
|||||
|
|
|
September 29,
|
|
|
October 1,
|
|
||
|
|
|
(in thousands) |
|
|||||
|
Cash flows from operating activities: |
|
|
|
|
|
|
||
|
Net income |
|
$ |
|
|
|
$ |
|
|
|
Adjustments to reconcile net income from operations to net cash provided by operating activities: |
|
|
|
|
|
|
||
|
Depreciation |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
|
|
|
|
|
|
|
Provision for excess and obsolete inventory |
|
|
|
|
|
|
|
|
|
Amortization |
|
|
|
|
|
|
|
|
|
Losses (gains) on investments |
|
|
|
|
|
|
(
|
) |
|
Equity in net earnings of affiliate |
|
|
|
|
|
|
— |
|
|
Gain on sale of business |
|
|
(
|
) |
|
|
|
|
|
Deferred taxes |
|
|
(
|
) |
|
|
(
|
) |
|
Retirement plan actuarial losses (gains) |
|
|
(
|
) |
|
|
|
|
|
Other |
|
|
(
|
) |
|
|
(
|
) |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
||
|
Accounts receivable |
|
|
(
|
) |
|
|
|
|
|
Inventories |
|
|
|
|
|
|
|
|
|
Prepayments and other assets |
|
|
|
|
|
|
(
|
) |
|
Accounts payable and other liabilities |
|
|
(
|
) |
|
|
|
|
|
Deferred revenue and customer advances |
|
|
|
|
|
|
(
|
) |
|
Retirement plans contributions |
|
|
(
|
) |
|
|
(
|
) |
|
Income taxes |
|
|
(
|
) |
|
|
(
|
) |
|
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
|
Purchases of property, plant and equipment |
|
|
(
|
) |
|
|
(
|
) |
|
Purchase of investment in a business |
|
|
(
|
) |
|
|
|
|
|
Purchases of marketable securities |
|
|
(
|
) |
|
|
(
|
) |
|
Issuance of convertible loan |
|
|
— |
|
|
|
(
|
) |
|
Proceeds from the sale of a business, net of cash and cash equivalents sold |
|
|
|
|
|
|
|
|
|
Proceeds from maturities of marketable securities |
|
|
|
|
|
|
|
|
|
Proceeds from sales of marketable securities |
|
|
|
|
|
|
|
|
|
Proceeds from insurance |
|
|
|
|
|
|
|
|
|
Net cash used for investing activities |
|
|
(
|
) |
|
|
(
|
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
||
|
Repayments of borrowings on revolving credit facility |
|
|
(
|
) |
|
|
|
|
|
Dividend payments |
|
|
(
|
) |
|
|
(
|
) |
|
Repurchase of common stock |
|
|
(
|
) |
|
|
(
|
) |
|
Payments related to net settlement of employee stock compensation awards |
|
|
(
|
) |
|
|
(
|
) |
|
Payments of convertible debt principal |
|
|
|
|
|
|
(
|
) |
|
Proceeds from borrowings on revolving credit facility |
|
|
|
|
|
|
|
|
|
Issuance of common stock under stock purchase and stock option plans |
|
|
|
|
|
|
|
|
|
Net cash used for financing activities |
|
|
(
|
) |
|
|
(
|
) |
|
Effects of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
|
|
|
|
Decrease in cash and cash equivalents |
|
|
(
|
) |
|
|
(
|
) |
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
|
|
|
$ |
|
|
|
Non-cash investing activities: |
|
|
|
|
|
|
||
|
Capital expenditures incurred but not yet paid: |
|
$ |
|
|
|
$ |
|
|
The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements.
5
TERADYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. THE COMPANY
Teradyne, Inc. (“Teradyne”) is a leading global supplier of automated test equipment and robotics solutions. Teradyne designs, develops, manufactures, and sells automated test systems and robotics products. Teradyne’s automated test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Teradyne’s robotics products include collaborative robotic arms, autonomous mobile robots, and advanced robotic control software used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency, and decrease manufacturing and logistics costs. Teradyne’s automated test equipment and robotics products and services include:
B. ACCOUNTING POLICIES
Basis of Presentation
The consolidated interim financial statements include the accounts of Teradyne and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These interim financial statements are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair statement of such interim financial statements. The December 31, 2023, condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by United States of America generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying financial information should be read in conjunction with the consolidated financial statements and notes thereto contained in Teradyne’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 22, 2024, for the year ended December 31, 2023 .
Preparation of Financial Statements and Use of Estimates
The preparation of consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, management evaluates its estimates, including those related to inventories, investments, goodwill, intangible and other long-lived assets, accounts receivable, income taxes, deferred tax assets and liabilities, pensions, warranties, contingent consideration liabilities, and loss contingencies. Management bases its estimates on historical experience and on appropriate and customary assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur, and additional information is obtained. Actual results may differ significantly from these estimates under different assumptions or conditions.
Equity Method Investments
Teradyne accounts for investments using the equity method of accounting when it has significant influence over the financial and operating policies, but not control, of the investee. The equity method investments are initially recorded at cost and included in ‘Equity method investment’ in the consolidated balance sheet. Teradyne records its share of investee's net income or loss and other comprehensive income, and the amortization of equity method basis difference, calculated as the difference between the investment and the amount of underlying equity in net assets acquired, on a 3-month lag, which is applied consistently from period to period. Teradyne's share of investee's net income and the amortization of equity method basis difference are reported in ‘Equity in net earnings of affiliate’ in the consolidated statement of operations. Teradyne includes its share of investee's other comprehensive income
6
and a cumulative translation adjustment in the consolidated statements of comprehensive income. Teradyne monitors on an ongoing basis its equity method investments for indicators of other-than-temporary declines in fair value below carrying value.
C. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" , which will require Teradyne to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, Teradyne will be required to disclose the title and position of the CODM. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU will have no impact on results of operations, cash flows or financial condition. Upon adoption, Teradyne will apply the amendments in this ASU retrospectively to all prior period disclosures presented in the financial statements.
In December 2023, FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” , which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. This ASU will have no impact on results of operations, cash flows or financial condition.
D. REVENUE
Disaggregation of Revenue
The following table provides information about disaggregated revenue by timing of revenue recognition, primary geographical market, and major product lines.
7
|
|
|
Semiconductor Test |
|
|
System Test |
|
|
Robotics |
|
|
Wireless Test |
|
|
|
|
|||||||||||||
|
|
|
System
|
|
|
Memory |
|
|
|
|
|
Universal
|
|
|
Mobile
|
|
|
|
|
|
Total |
|
|||||||
|
|
(in thousands) |
|
||||||||||||||||||||||||||
|
For the Three Months Ended September 29, 2024 (1) |
|
|||||||||||||||||||||||||||
|
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Point in Time |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Over Time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Geographical Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Asia Pacific |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the Three Months Ended October 1, 2023 (1) |
|
|||||||||||||||||||||||||||
|
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Point in Time |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Over Time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Geographical Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Asia Pacific |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the Nine Months Ended September 29, 2024 (2) |
|
|||||||||||||||||||||||||||
|
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Point in Time |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Over Time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Geographical Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Asia Pacific |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the Nine Months Ended October 1, 2023 (2) |
|
|||||||||||||||||||||||||||
|
Timing of Revenue Recognition |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Point in Time |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Over Time |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Geographical Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Asia Pacific |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Americas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe, Middle East and Africa |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Contract Balances
During the three and nine months ended September 29, 2024, Teradyne recognized $
8
Deferred revenue and customer advances consist of the following and are included in short and long-term deferred revenue and customer advances on the balance sheet:
|
|
|
September 29,
|
|
|
December 31,
|
|
||
|
|
|
(in thousands) |
|
|||||
|
Maintenance, service and training |
|
$ |
|
|
|
$ |
|
|
|
Customer advances, undelivered elements and other |
|
|
|
|
|
|
|
|
|
Extended warranty |
|
|
|
|
|
|
|
|
|
Total deferred revenue and customer advances |
|
$ |
|
|
|
$ |
|
|
Accounts Receivable
During the three and nine months ended September 29, 2024, and October 1, 2023, Teradyne sold certain trade accounts receivables on a non-recourse basis to third-party financial institutions pursuant to factoring agreements. During the three months ended September 29, 2024, and October 1, 2023, total trade accounts receivable sold under the factoring agreements were $
E. DISPOSITIONS
On May 27, 2024, Teradyne completed the sale of the Device Interface Solutions ("DIS") business, a component of the Semiconductor Test segment, to Technoprobe S.p.A. ("Technoprobe") for $
Assets and liabilities related to the DIS sale agreement met the criteria and were classified as held for sale in Teradyne’s consolidated balance sheet as of December 31, 2023, as follows:
|
|
|
December 31,
|
|
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
Inventories, net |
|
$ |
|
|
|
Prepayments |
|
|
|
|
|
Total current assets held for sale |
|
|
|
|
|
Property, plant and equipment, net |
|
|
|
|
|
Operating lease right-of-use assets, net |
|
|
|
|
|
Total assets held for sale |
|
$ |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
|
$ |
|
|
|
Other accrued liabilities |
|
|
|
|
|
Operating lease liabilities |
|
|
|
|
|
Total current liabilities held for sale |
|
|
|
|
|
Long-term operating lease liabilities |
|
|
|
|
|
Total liabilities held for sale |
|
$ |
|
|
|
Net assets held for sale |
|
$ |
|
|
F. EQUITY METHOD INVESTMENT
On May 27, 2024, Teradyne paid $
9
equity
method as a result of being able to exercise significant influence over the operating and financial decisions of Technoprobe. As of September 29, 2024, $
|
|
|
(in thousands) |
|
|
|
Balance at June 30, 2024 |
|
$ |
|
|
|
Other comprehensive income related to investment |
|
|
|
|
|
Equity in net earnings of affiliate |
|
|
(
|
) |
|
Balance at September 29, 2024 |
|
$ |
|
|
Based on the quoted closing price of Technoprobe stock as of September 29, 2024, the fair value of the publicly traded investment was $
Teradyne's equity method basis difference was calculated as the difference between the investment and the amount of underlying equity in net assets acquired. The equity method basis difference calculated at acquisition attributable to developed technology, customer relationships, trade name, property, plant and equipment, inventory, and deferred tax liability was $
Teradyne made an accounting policy election to report its share of Technoprobe's results on a 3-month lag, which is applied consistently from period to period. Teradyne records its share of Technoprobe's net income or loss and the amortization of equity method basis difference, as 'Equity in net earnings of affiliate' in the consolidated statements of operations. Teradyne includes its share of Technoprobe's other comprehensive income and a cumulative translation adjustment in the consolidated statements of comprehensive income .
G. INVENTORIES
Inventories, net consisted of the following at September 29, 2024, and December 31, 2023:
|
|
|
September 29,
|
|
|
December 31,
|
|
||
|
|
|
(in thousands) |
|
|||||
|
Raw material |
|
$ |
|
|
|
$ |
|
|
|
Work-in-process |
|
|
|
|
|
|
|
|
|
Finished goods |
|
|
|
|
|
|
|
|
|
Total inventories, net (1) |
|
$ |
|
|
|
$ |
|
|
H. FINANCIAL INSTRUMENTS
Cash Equivalents
Teradyne considers all highly liquid investments with original maturities of 90 days or less at the date of acquisition to be cash equivalents.
Marketable Securities
Teradyne’s equity and debt mutual funds are classified as Level 1 and available-for-sale debt securities are classified as Level 2. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.
During the three and nine months ended September 29, 2024, and October 1, 2023, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.
Realized gains recorded in the three and nine months ended September 29, 2024, were $
10
respectively. Realized losses recorded in the three and nine months ended September 29, 2024, were $
Unrealized gains on equity securities recorded in the three and nine months ended September 29, 2024, were $
Unrealized gains and losses on available-for-sale debt securities are included in 'Accumulated other comprehensive income (loss)' in the consolidated balance sheet.
The cost of securities sold is based on average cost.
The following tables set forth by fair value hierarchy Teradyne’s financial assets and liabilities that were measured at fair value on a recurring basis as of September 29, 2024, and December 31, 2023.
|
|
|
September 29, 2024 |
|
|||||||||||||
|
|
|
Quoted Prices
|
|
|
Significant
|
|
|
Significant
|
|
|
Total |
|
||||
|
|
|
(in thousands) |
|
|||||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of deposit and time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt mutual funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government agency securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S. government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Mutual funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Reported as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
Total |
|
||||
|
|
|
(in thousands) |
|
|||||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
11
|
|
|
December 31, 2023 |
|
|||||||||||||
|
|
|
Quoted Prices
|
|
|
Significant
|
|
|
Significant
|
|
|
Total |
|
||||
|
|
|
(in thousands) |
|
|||||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certificates of deposit and time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt mutual funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government agency securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S. government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Mutual Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Derivative assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Reported as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
Total |
|
||||
|
|
|
(in thousands) |
|
|||||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other current liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The carrying amounts and fair values of Teradyne’s financial instruments at September 29, 2024, and December 31, 2023, were as follows:
|
|
|
September 29, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
|
Carrying Value |
|
|
Fair Value |
|
|
Carrying Value |
|
|
Fair Value |
|
||||
|
|
|
(in thousands) |
|
|||||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair values of accounts receivable, net and accounts payable approximate the carrying value due to the short-term nature of these instruments.
12
The following table summarizes the composition of available-for-sale marketable securities at September 29, 2024:
|
|
|
September 29, 2024 |
|
|||||||||||||||||
|
|
|
Available-for-Sale |
|
|||||||||||||||||
|
|
|
Cost |
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Fair Market
|
|
|||||
|
|
|
(in thousands) |
|
|||||||||||||||||
|
U.S. Treasury securities |
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
Corporate debt securities |
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
Certificates of deposit and time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt mutual funds |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
U.S. government agency securities |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
Non-U.S. government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
Reported as follows:
|
|
|
Cost |
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Fair Market
|
|
|||||
|
|
|
(in thousands) |
|
|||||||||||||||||
|
Marketable securities |
|
$ |
|
|
|
|
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
Long-term marketable securities |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
The following table summarizes the composition of available-for-sale marketable securities at December 31, 2023:
|
|
|
December 31, 2023 |
|
|||||||||||||||||
|
|
|
Available-for-Sale |
|
|||||||||||||||||
|
|
|
Cost |
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Fair Market
|
|
|||||
|
|
|
(in thousands) |
|
|||||||||||||||||
|
Corporate debt securities |
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
U.S. Treasury securities |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
Certificates of deposit and time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt mutual funds |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
U.S. government agency securities |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
Commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S. government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
Reported as follows:
|
|
|
Cost |
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Fair
|
|
|
Fair Market
|
|
|||||
|
|
|
(in thousands) |
|
|||||||||||||||||
|
Marketable securities |
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
|
|
|
|
$ |
|
|
|
Long-term marketable securities |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
13
As of September 29, 2024, the fair market value of investments with unrealized losses less than one year and greater than one year totaled $
Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments at September 29, 2024, and December 31, 2023, were not other than temporary.
The contractual maturities of investments in available-for-sale securities held at September 29, 2024, were as follows:
|
|
|
September 29, 2024 |
|
|||||
|
|
|
Cost |
|
|
Fair Market
|
|
||
|
|
|
(in thousands) |
|
|||||
|
Due within one year |
|
$ |
|
|
|
$ |
|
|
|
Due after 1 year through 5 years |
|
|
|
|
|
|
|
|
|
Due after 5 years through 10 years |
|
|
|
|
|
|
|
|
|
Due after 10 years |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
Contractual maturities of investments in available-for-sale securities held at September 29, 2024, exclude debt mutual funds with a fair market value of $
Derivatives
Teradyne conducts business in various foreign countries, with certain transactions denominated in local currencies. As a result, Teradyne is exposed to risks relating to changes in foreign currency exchange rates. Teradyne’s foreign currency risk management objective is to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, and changes in its cash inflows attributable to the forecasted cash flows from certain foreign currency denominated revenues.
To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings and is used to offset the change in value of monetary assets and liabilities denominated in foreign currencies.
Teradyne also enters into foreign currency forward and option contracts designated as cash flow hedges to hedge the risk of changes in its cash inflows attributable to changes in foreign currency exchange rates. The cash flow hedges have maturities of less than six months and mature in the period of revenue recognition for certain products and services in backlog and forecasted to be recognized in a future period. Teradyne evaluates cash flow hedges for effectiveness at inception based on the critical terms match method. The hedges are not expected to incur any ineffectiveness however a quarterly qualitative assessment of effectiveness is done to determine if the critical terms match method remains appropriate to use. The change in fair value of the contracts is recorded in accumulated other comprehensive income (loss) and reclassified to earnings at maturity date.
Teradyne does not use derivative financial instruments for speculative purposes.
14
At September 29, 2024, and December 31, 2023, Teradyne had the following contracts to buy and sell non-U.S. currencies for U.S. dollars and other non-U.S. currencies with the following notional amounts:
|
|
|
Net Notional Value |
|
|||||
|
|
|
September 29,
|
|
|
December 31,
|
|
||
|
|
|
(in millions) |
|
|||||
|
Currency Hedged (Buy/Sell) |
|
|
|
|
|
|
||
|
U.S. dollar/Taiwan dollar |
|
|
|
|
|
|
|
|
|
U.S. dollar/Japanese yen |
|
|
|
|
|
|
|
|
|
U.S. dollar/Korean won |
|
|
|
|
|
|
|
|
|
U.S. dollar/British pound sterling |
|
|
|
|
|
|
|
|
|
U.S. dollar/Danish krone |
|
|
|
|
|
|
|
|
|
Danish krone/U.S. dollar |
|
|
|
|
|
|
|
|
|
Euro/U.S. dollar |
|
|
|
|
|
|
|
|
|
Singapore dollar/U.S. dollar |
|
|
|
|
|
|
|
|
|
Philippine peso/U.S. dollar |
|
|
|
|
|
|
|
|
|
Chinese yuan/U.S. dollar |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
The fair value of the outstanding contracts was a net loss of $
Unrealized gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities are included in 'Other (income) expense, net' in the consolidated statement of operations.
At September 29, 2024, and December 31, 2023, Teradyne had the following cash flow hedge contracts to buy and sell non-U.S. currencies for U.S. dollars with the following notional amounts:
|
|
|
Net Notional Value |
|
|||||
|
|
|
September 29,
|
|
|
December 31,
|
|
||
|
|
|
(in millions) |
|
|||||
|
Currency Hedged (Buy/Sell) |
|
|
|
|
|
|
||
|
U.S. dollar/Japanese yen |
|
$ |
|
|
|
$ |
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
The fair value of the outstanding cash flow hedge contracts was a loss
of $
Unrealized gains and losses on foreign currency cash flow hedge contracts are included in accumulated other comprehensive income (loss). At maturity, the gains or losses associated with cash flow hedge contracts are recorded to revenue.
On November 7, 2023, in connection with Teradyne's agreement to acquire
15
The following table summarizes the fair value of derivative instruments as of September 29, 2024, and December 31, 2023:
|
|
|
Balance Sheet Location |
|
September 29,
|
|
|
December 31,
|
|
||
|
|
|
|
|
(in thousands) |
|
|||||
|
Derivatives not designated as hedging instruments: |
|
|||||||||
|
Foreign exchange forward contracts |
|
Other current assets |
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts |
|
Other current liabilities |
|
|
(
|
) |
|
|
(
|
) |
|
Foreign exchange option contracts |
|
Other current assets |
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments: |
|
|||||||||
|
Foreign exchange forward contracts |
|
Other current assets |
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts |
|
Other current liabilities |
|
|
(
|
) |
|
|
|
|
|
Total derivatives |
|
|
|
$ |
(
|
) |
|
$ |
|
|
The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three and nine months ended September 29, 2024, and October 1, 2023:
|
|
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
||||||||||
|
|
|
Location of (Gains) Losses
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
||||
|
|
|
|
|
(in thousands) |
|
|
(in thousands) |
|
||||||||||
|
Derivatives not designated as hedging instruments: |
|
|||||||||||||||||
|
Foreign exchange forward contracts (1) |
|
Other (income) expense, net |
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
(
|
) |
|
Foreign exchange option contracts |
|
Other (income) expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|||||||||||
|
Foreign exchange forward and option contracts |
|
Revenue |
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Total Derivatives |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
(
|
) |
See Note I: “Debt” regarding derivatives related to the convertible senior notes.
I. DEBT
Convertible Senior Notes
On December 12, 2016, Teradyne completed a private offering of $
Concurrent with the offering of the Notes, Teradyne entered into convertible note hedge transactions (the “Note Hedge Transactions”) with the initial purchasers or their affiliates (the “Option Counterparties”). The Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the common stock that underlie the Notes. Separately and concurrent with the pricing of the Notes, Teradyne entered into warrant transactions with the Option Counterparties (the “Warrant Transactions”) in which it sold net-share-settled (or, at its election subject to certain conditions, cash-settled) warrants to the Option Counterparties. These transactions have been accounted for as an adjustment to Teradyne's shareholders’ equity. The Warrant Transactions, which began expiring
16
The Warrant Transactions resulted in additional shares of Teradyne’s common stock being issued to the extent that the market price per share of Teradyne’s common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants.
The interest expense on Teradyne's senior notes for three and nine months ended October 1, 2023, was as follows:
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
||||||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
||||
|
|
|
(in thousands) |
|
|
(in thousands) |
|
||||||||||
|
Contractual interest expense on the coupon |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Amortization of debt issuance fees recognized as interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense on the convertible debt |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Revolving Credit Facility
On May 1, 2020, Teradyne entered into a credit agreement (the “Credit Agreement”) with Truist Bank, as administrative agent and collateral agent, and the lenders party thereto. The Credit Agreement provided for a
On December 10, 2021, the Credit Agreement was amended to extend the maturity date of the Credit Facility to December 10, 2026. On October 5, 2022, the Credit Agreement was amended to increase the amount of the Credit Facility to $
The Credit Agreement provides that, subject to customary conditions, Teradyne may seek to obtain from existing or new lenders the available incremental amount under the Credit Facility, not to exceed the greater of $
Teradyne is not required to repay any loans under the Credit Facility prior to maturity, subject to certain customary exceptions. Teradyne is permitted to prepay all or any portion of the loans under the Credit Facility prior to maturity without premium or penalty, other than customary SOFR breakage costs.
The Credit Agreement contains customary events of default, representations, warranties, and affirmative and negative covenants that, among other things, limit Teradyne’s ability to sell assets, grant liens on assets, incur other secured indebtedness and make certain investments and restricted payments, all subject to exceptions set forth in the Credit Agreement. The Credit Agreement also requires Teradyne to satisfy two financial ratios measured at the end of each fiscal quarter: a consolidated leverage ratio and an interest coverage ratio.
The Credit Facility is guaranteed by certain of Teradyne’s domestic subsidiaries and collateralized by assets of Teradyne and such subsidiaries, including a pledge of
On May 16, 2024, Teradyne borrowed $
17
J. PREPAYMENTS
Prepayments consist of the following:
|
|
|
September 29,
|
|
|
December 31,
|
|
||
|
|
|
(in thousands) |
|
|||||
|
Contract manufacturer and supplier prepayments |
|
$ |
|
|
|
$ |
|
|
|
Prepaid taxes |
|
|
|
|
|
|
|
|
|
Prepaid maintenance and other services |
|
|
|
|
|
|
|
|
|
Other prepayments |
|
|
|
|
|
|
|
|
|
Total prepayments (1) |
|
$ |
|
|
|
$ |
|
|
K. PRODUCT WARRANTY
Teradyne generally provides a one-year warranty on its products, commencing upon installation, acceptance or shipment. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience.
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
||||||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
||||
|
|
|
(in thousands) |
|
|
(in thousands) |
|
||||||||||
|
Balance at beginning of period |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Accruals for warranties issued during the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accruals related to pre-existing warranties |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Settlements made during the period |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Balance at end of period |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
When Teradyne receives revenue for extended warranties beyond one year it is treated as a separate performance obligation and deferred and recognized on a straight-line basis over the contract period.
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
||||||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
||||
|
|
|
(in thousands) |
|
|
(in thousands) |
|
||||||||||
|
Balance at beginning of period |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Deferral of new extended warranty revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognition of extended warranty deferred revenue |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Balance at end of period |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
L. STOCK-BASED COMPENSATION
On February 1, 2023 (the “Retirement Date”), Mark E. Jagiela retired as Chief Executive Officer of Teradyne and a member of Teradyne’s Board of Directors, and Teradyne entered into an agreement (the “Retirement Agreement”) with Mr. Jagiela. Under the Retirement Agreement, Mr. Jagiela’s unvested time-based restricted stock units and stock options granted prior to his Retirement Date were modified to allow continued vesting; and any vested options or options that vest during that period may be exercised for the remainder of the applicable option term. During the nine months ended October 1, 2023
, Teradyne recorded a stock-based compensation expense of $
Under Teradyne’s stock compensation plans, Teradyne grants time-based restricted stock units, performance-based restricted stock units and stock options, and employees are eligible to purchase Teradyne’s common stock through its Employee Stock Purchase Plan (“ESPP”).
18
Service-based restricted stock unit awards granted to employees vest in equal annual installments over
Performance-based restricted stock units (“PRSUs”) granted to Teradyne’s executive officers may have a performance metric based on relative total shareholder return (“TSR”). Teradyne’s
PRSUs granted to Teradyne’s executive officers may also have a performance metric based on three-year cumulative non-GAAP profit before interest and tax (“PBIT”) as a percent of Teradyne’s revenue. Non-GAAP PBIT is a financial measure equal to GAAP income from operations less restructuring and other, net; amortization of acquired intangible assets; acquisition and divestiture related charges or credits; pension actuarial gains and losses; non-cash convertible debt interest expense; and other non-recurring gains and charges. The final number of PBIT PRSUs that vest will vary based upon the level of performance achieved from
If a PRSU recipient’s employment ends prior to the determination of the performance percentage due to (1) death or (2) after attaining both at least age sixty and at least
During the nine months ended September 29, 2024, and October 1, 2023, Teradyne granted
During the nine months ended September 29, 2024, and October 1, 2023, Teradyne granted
19
During the nine months ended September 29, 2024, and October 1, 2023, Teradyne granted
|
|
|
For the Nine Months
|
|
|||||
|
|
|
September 29,
|
|
|
October 1,
|
|
||
|
Risk-free interest rate |
|
|
|
% |
|
|
|
% |
|
Teradyne volatility-historical |
|
|
|
% |
|
|
|
% |
|
NYSE Composite Index volatility-historical |
|
|
|
% |
|
|
|
% |
|
Dividend yield |
|
|
|
% |
|
|
|
% |
Expected volatility was based on the historical volatility of Teradyne’s stock and the NYSE Composite Index over the most recent three-year period. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of the applicable grant. Dividend yield was based upon an estimated annual dividend amount of $
During the nine months ended September 29, 2024, and October 1, 2023, Teradyne granted
The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:
|
|
|
For the Nine Months
|
|
|||||
|
|
|
September 29,
|
|
|
October 1,
|
|
||
|
Expected life (years) |
|
|
|
|
|
|
|
|
|
Risk-free interest rate |
|
|
|
% |
|
|
|
% |
|
Volatility-historical |
|
|
|
% |
|
|
|
% |
|
Dividend yield |
|
|
|
% |
|
|
|
% |
Teradyne determined the stock options’ expected life based upon historical exercise data for executive officers, the age of the executive officers and the terms of the stock option grant. Volatility was determined using historical volatility for a period equal to the expected life. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of $
20
M. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss), which are presented net of tax, consist of the following:
|
|
|
Foreign
|
|
|
Unrealized
|
|
|
Unrealized (Losses) Gains on Cash Flow Hedges |
|
|
Retirement
|
|
|
Total |
|
|||||
|
|
|
(in thousands) |
|
|||||||||||||||||
|
Nine Months Ended September 29, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Balance at December 31, 2023, net of tax of $
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
Other comprehensive (loss) gain before reclassifications, net of tax of $
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Net current period other comprehensive (loss) gain, net of tax of $
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
Balance at September 29, 2024, net of tax of $
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Nine Months Ended October 1, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Balance at December 31, 2022, net of tax of $
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
(
|
) |
|
Other comprehensive (loss) gain before reclassifications, net of tax of $
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Net current period other comprehensive (loss) gain, net of tax of $
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
Balance at October 1, 2023, net of tax of $
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
Reclassifications out of accumulated other comprehensive income (loss) to the statement of operations for the three and nine months ended September 29, 2024, and October 1, 2023, were as follows:
|
Details about Accumulated Other Comprehensive Income (Loss) Components |
|
For the Three Months
|
|
|
For the Nine Months
|
|
|
Affected Line Item
|
||||||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
|
|
||||
|
|
|
(in thousands) |
|
|
(in thousands) |
|
|
|
||||||||||
|
Available-for-sale marketable securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Unrealized (losses) gains, net of tax of $
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
Other (income) expense, net |
|
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Unrealized (losses) gains, net of tax of $
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
Defined benefit pension and postretirement plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Amortization of prior service credit, net of tax of $
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Total reclassifications, net of tax of $
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Net income |
N. GOODWILL AND ACQUIRED INTANGIBLE ASSETS
Goodwill
Teradyne performs its annual goodwill impairment test as required under the provisions of ASC 350-10, “Intangibles—Goodwill and Other” on December 31 of each fiscal year unless interim indicators of impairment exist. In the nine months ended September 29, 2024, there were no interim indicators of impairment. Goodwill is considered impaired when the net book value of a reporting unit exceeds its estimated fair value.
21
The changes in the carrying amount of goodwill by reportable segments for the nine months ended September 29, 2024, were as follows:
|
|
|
Robotics |
|
|
Wireless
|
|
|
Semiconductor
|
|
|
System
|
|
|
Total |
|
|||||
|
|
|
(in thousands) |
|
|||||||||||||||||
|
Balance at December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Goodwill |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Accumulated impairment losses |
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Total Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
Balance at September 29, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Goodwill |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
Accumulated impairment losses |
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Total Goodwill |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Intangible Assets
Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheet:
|
|
|
Gross
|
|
|
Accumulated
|
|
|
Foreign
|
|
|
Net
|
|
||||
|
|
|
(in thousands) |
|
|||||||||||||
|
Balance at September 29, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Developed technology |
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
Customer relationships |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
Tradenames and trademarks |
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
Total intangible assets |
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
Balance at December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Developed technology |
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
|
Customer relationships |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
Tradenames and trademarks |
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
Total intangible assets |
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
|
|
Aggregate intangible asset amortization expense was
$
Estimated intangible asset amortization expense for each of the five succeeding fiscal years and thereafter is as follows:
|
Year |
|
Amortization
|
|
|
|
|
|
(in thousands) |
|
|
|
2024 |
|
$ |
|
|
|
2025 |
|
|
|
|
|
2026 |
|
|
|
|
|
2027 |
|
|
|
|
|
2028 |
|
|
|
|
|
Thereafter |
|
|
|
|
22
O. NET INCOME PER COMMON SHARE
The following table sets forth the computation of basic and diluted net income per common share:
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
||||||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
||||
|
|
|
(in thousands, except per share amounts) |
|
|
(in thousands, except per share amounts) |
|
||||||||||
|
Net income for basic and diluted net income per share |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Weighted average common shares-basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of dilutive potential common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible note hedge warrant shares (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock purchase plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental shares from assumed conversion of convertible notes (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive potential common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares-diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share-basic |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Net income per common share-diluted |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The computation of diluted net income per common share for the three and nine months ended September 29, 2024, excludes the effect of the potential vesting of
The computation of diluted net income per common share for the three and nine months ended October 1, 2023, excludes the effect of the potential vesting of
P. RESTRUCTURING AND OTHER
During the three months ended September 29, 2024
, Teradyne recorded restructuring and other charges primarily related to $1
During the three months ended October 1, 2023
, Teradyne recorded restructuring and other charges primarily related to $
During the nine months ended September 29, 2024
, Teradyne recorded restructuring and other charges primarily related to $
23
Q. RETIREMENT PLANS
ASC 715, “Compensation—Retirement Benefits,” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation at December 31. Teradyne uses a December 31 measurement date for all its plans.
Defined Benefit Pension Plans
Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to these plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of the U.S. qualified pension plan consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “IRC”), as well as unfunded qualified foreign plans.
During the three months ended September 29, 2024
, Teradyne purchased a group annuity contract for its retiree participants in the U.S. qualified pension plan. Under the group annuity, the accrued pension obligation for
In the nine months ended September 29, 2024, and October 1, 2023, Teradyne contributed $
For the three and nine months ended September 29, 2024, and October 1, 2023, Teradyne’s net periodic pension cost was comprised of the following:
|
|
|
For the Three Months Ended |
|
|||||||||||||
|
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||||||||||
|
|
|
United
|
|
|
Foreign |
|
|
United
|
|
|
Foreign |
|
||||
|
|
|
(in thousands) |
|
|||||||||||||
|
Service cost |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected return on plan assets |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Net actuarial loss (gain) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net periodic pension cost |
|
$ |
(
|
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
For the Nine Months Ended |
|
|||||||||||||
|
|
|
September 29, 2024 |
|
|
October 1, 2023 |
|
||||||||||
|
|
|
United
|
|
|
Foreign |
|
|
United
|
|
|
Foreign |
|
||||
|
|
|
(in thousands) |
|
|||||||||||||
|
Service cost |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected return on plan assets |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Net actuarial loss (gain) |
|
|
(
|
) |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
Settlement expense |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
Total net periodic pension cost |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Postretirement Benefit Plan
In addition to receiving pension benefits, Teradyne employees in the United States who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits and the existing benefit obligation relates predominantly to those
24
employees. During the nine months ended September 29, 2024, Teradyne recorded special termination benefit charges associated with a voluntary early retirement program.
For the three and nine months ended September 29, 2024, and October 1, 2023, Teradyne’s net periodic postretirement benefit cost was comprised of the following:
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
||||||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
||||
|
|
|
(in thousands) |
|
|
(in thousands) |
|
||||||||||
|
Service cost |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of prior service credit |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Special termination benefits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net actuarial loss (gain) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
Total net periodic postretirement benefit cost |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
R. COMMITMENTS AND CONTINGENCIES
Purchase Commitments
As of September 29, 2024
, Teradyne had entered into purchase commitments for certain components and materials. The purchase commitments covered by the agreements aggregate to approximately $
Legal Claims
Teradyne is subject to various legal proceedings and claims which have arisen in the ordinary course of business such as, but not limited to, patent, employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all pending claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions are unlikely to have a material adverse effect on its business, financial position or results of operations.
Guarantees and Indemnification Obligations
Teradyne provides indemnification, to the extent permitted by law, to its officers, directors, employees and agents for liabilities arising from certain events or occurrences, while the officer, director, employee, or agent, is or was serving, at Teradyne’s request in such capacity. Teradyne may enter into indemnification agreements with certain of its officers and directors. With respect to acquisitions, Teradyne provides indemnifications to or assumes indemnification obligations for the current and former directors, officers and employees of the acquired companies in accordance with the acquired companies’ by-laws and charter. As a matter of practice, Teradyne has maintained directors’ and officers’ liability insurance coverage including coverage for directors and officers of acquired companies.
Teradyne enters into agreements in the ordinary course of business with customers, resellers, distributors, integrators, and suppliers. Most of these agreements require Teradyne to defend and/or indemnify the other party against intellectual property infringement claims brought by a third party with respect to Teradyne’s products. From time to time, Teradyne also indemnifies customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal property damage, product liability, breach of confidentiality obligations and environmental claims relating to the use of Teradyne’s products and services or resulting from the acts or omissions of Teradyne, its employees, authorized agents or subcontractors. On occasion, Teradyne has also provided guarantees to customers regarding the delivery and performance of its products in addition to the warranty described below.
As a matter of ordinary course of business, Teradyne warrants that its products will substantially perform in accordance with its standard published specifications in effect at the time of delivery. Most warranties have a one-year duration commencing from installation. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based upon historical experience. When Teradyne receives revenue for extended warranties beyond the standard duration, the revenue is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. As of September 29, 2024, and December 31, 2023, Teradyne had a product warranty accrual of
$
25
accrued
liabilities and revenue deferrals related to extended warranties of
$
In addition, in the ordinary course of business, Teradyne provides minimum purchase guarantees to certain vendors to ensure continuity of supply against the market demand. Although some of these guarantees provide penalties for cancellations and/or modifications to the purchase commitments as the market demand decreases, most of the guarantees do not. Therefore, as the market demand decreases, Teradyne re-evaluates these guarantees and determines what charges, if any, should be recorded.
With respect to its agreements covering product, business or entity divestitures and acquisitions, Teradyne provides certain representations, warranties and covenants to purchasers and agrees to indemnify and hold such purchasers harmless against breaches of such representations, warranties, and covenants. Many of the indemnification claims have a definite expiration date while some remain in force indefinitely. With respect to its acquisitions, Teradyne may, from time to time, assume the liability for certain events or occurrences that took place prior to the date of acquisition.
As a matter of ordinary course of business, Teradyne occasionally guarantees certain indebtedness obligations of its subsidiary companies, limited to the borrowings from financial institutions, purchase commitments to certain vendors and lease commitments to landlords.
Based on historical experience and information known as of September 29, 2024, and December 31, 2023 , except for product warranty, Teradyne has not recorded any liabilities for these guarantees and obligations because the amount would be immaterial.
S. INCOME TAXES
A reconciliation of the United States federal statutory corporate tax rate to Teradyne’s effective tax rate was as follows:
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
||||||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
||||
|
U.S. statutory federal tax rate |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
Non-deductible officers' compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax credits |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Discrete expense (benefit) related to reserves for uncertain tax positions |
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
Foreign taxes |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
International provisions of the U.S. Tax Cuts and Jobs Act of 2017 |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Other, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
On a quarterly basis, Teradyne evaluates the realizability of the deferred tax assets by jurisdiction and assesses the need for a valuation allowance. As of September 29, 2024, Teradyne believes that it will ultimately realize the deferred tax assets recorded on the condensed consolidated balance sheet. However, should Teradyne believe that it is more-likely-than-not that the deferred tax assets would not be realized, the tax provision would increase in the period in which Teradyne determined that the realizability was not likely. Teradyne considers the probability of future taxable income and historical profitability, among other factors, in assessing the realizability of the deferred tax assets.
As of September 29, 2024, and December 31, 2023, Teradyne had $
As of September 29, 2024, Teradyne estimates that it is reasonably possible that the balance of unrecognized tax benefits may decrease approximately $
Teradyne recognizes interest and penalties related to income tax matters in income tax expense. As of September 29, 2024, and December 31, 2023, $
26
Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings due to the tax holiday for the nine months ended September 29, 2024, were $
In the nine months ended September 29, 2024
, Teradyne recognized a $
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA introduced a
On December 15, 2022, the European Union ("EU") Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of
T. SEGMENT INFORMATION
Teradyne has
The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test products and services. The System Test segment includes operations related to the design, manufacturing and marketing of products and services for storage and system level test, defense/aerospace instrumentation test, and circuit-board test. The Wireless Test segment includes operations related to the design, manufacturing and marketing of wireless test products and services. The Robotics segment includes operations related to the design, manufacturing and marketing of collaborative robotic arms, autonomous mobile robots, and advanced robotic control software. Each operating segment has a segment manager who is accountable to and maintains regular contract with Teradyne’s chief operating decision maker (Teradyne’s chief executive officer) to discuss operating activities, financial results, forecasts, and plans for the segment.
Teradyne evaluates performance based on several factors, of which the primary financial measure is business segment income (loss) before income taxes. The accounting policies of the business segments are the same as those described in Note B: “Accounting Policies” in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023.
27
Segment information for the three and nine months ended September 29, 2024, and October 1, 2023, is as follows:
|
|
|
Semiconductor
|
|
|
System
|
|
|
Robotics |
|
|
Wireless
|
|
|
Segment Total |
|
|
Corporate
|
|
|
Consolidated |
|
|||||||
|
|
|
(in thousands) |
|
|||||||||||||||||||||||||
|
Three Months Ended September 29, 2024 |
|
|||||||||||||||||||||||||||
|
Revenues |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Income (loss) before income taxes (1)(2) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Total assets (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Three Months Ended October 1, 2023 |
|
|||||||||||||||||||||||||||
|
Revenues |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Income (loss) before income taxes (1)(2) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
$ |
|
|
|
|
(
|
) |
|
$ |
|
|
|
Total assets (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Nine Months Ended September 29, 2024 |
|
|||||||||||||||||||||||||||
|
Revenues |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Income (loss) before income taxes (1)(2) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Total assets (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
Nine Months Ended October 1, 2023 |
|
|||||||||||||||||||||||||||
|
Revenues |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Income (loss) before income taxes (1)(2) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
$ |
|
|
|
|
(
|
) |
|
$ |
|
|
|
Total assets (3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
Included in each segment are charges and credits in the following line items in the statements of operations:
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
||||||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
||||
|
|
|
(in thousands) |
|
|
(in thousands) |
|
||||||||||
|
Semiconductor Test: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cost of revenues—inventory charge |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Restructuring and other—employee severance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
System Test: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cost of revenues—inventory charge |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Restructuring and other—employee severance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robotics: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cost of revenues—legal settlement |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Restructuring and other—employee severance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues—inventory charge |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cost of revenues—inventory charge |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Corporate and Eliminations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Restructuring and other—acquisition & divestiture related expenses |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Selling and administrative —equity modification |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other—employee severance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other—contract termination |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and other—other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U. SHAREHOLDERS’ EQUITY
Stock Repurchase Program
In January 2023, Teradyne’s Board of Directors cancelled its January 2021 repurchase program and approved a new repurchase program for up to $
28
repurchase its common stock in an amount necessary to offset dilution from equity compensation and our employee share purchase program.
During the nine months ended September 29, 2024, Teradyne repurchased
During the nine months ended October 1, 2023
, Teradyne repurchased
The total cost of shares acquired includes commissions and related excise tax and is recorded as a reduction to retained earnings.
Dividend
Holders of Teradyne’s common stock are entitled to receive dividends when they are declared by Teradyne’s Board of Directors.
In January 2024, May 2024, and August 2024
, Teradyne’s Board of Directors declared a quarterly cash dividend of $
In January 2023, May 2023, and August 2023
, Teradyne’s Board of Directors declared a quarterly cash dividend of $
29
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Statements in this Quarterly Report on Form 10-Q which are not historical facts, so called “forward-looking statements,” are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. See also Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.
Overview
We are a leading global supplier of automated test equipment and robotics products. We design, develop, manufacture, and sell automatic test systems and robotics products. Our automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our robotics products include collaborative robotic arms and autonomous mobile robots (“AMRs”) used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency, and decrease manufacturing and logistics costs. Our automatic test equipment and robotics products and services include:
The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our test products both through direct sales and sales to the customers’ supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.
In the third quarter of 2024, we saw strength in Semiconductor Test performance driven in System-on-a-chip by compute and in memory by DRAM and high bandwidth memory. We expect compute and memory to continue to drive meaningful demand in the fourth quarter of 2024, helping to offset weakness in the mobility test market. We anticipate an eventual upturn in mobility at some point in 2025.
Our Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms, and Mobile Industrial Robots A/S (“MiR”), a leading maker of AMRs for industrial automation. The market for our Robotics segment products is dependent on the adoption of new automation technologies by large manufacturers as well as small and medium enterprises (“SMEs”) throughout the world. Robotics results in the third quarter of 2024 were in line with our revenue forecast, putting us in position for full year growth due to new product offerings and expansion of our Original Equipment Manufacturer (“OEM”) and large account channels, along with increasing recurring revenue through new service and software offerings.
On November 7, 2023, we and Technoprobe S.p.A, (“Technoprobe”), a leader in the design and production of probe cards, announced the establishment of a strategic partnership that will seek to accelerate growth for both companies and enable higher performance semiconductor test interfaces for customers worldwide. As part of the partnership, on May 27, 2024, we made an investment of $524.1 million in exchange for 10% of the issued and outstanding shares of Technoprobe, and we sold our Device Interface Solutions ("DIS") business to Technoprobe in exchange for $85.0 million, net of cash and cash equivalents sold, and a customary working capital adjustment.
Our financial statements are denominated in U.S. dollars. While revenues in our test businesses are predominantly in U.S. dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar would negatively affect Robotics revenue growth in the fourth quarter of 2024.
30
Our corporate strategy continues to focus on profitably gaining market share in our test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our Robotics businesses. We have strategically increased engineering and go-to-market spending, primarily in Semiconductor Test and Integrated System Test, in order to support market share gains. We plan to execute on our strategy while balancing capital allocations between returning capital to our shareholders through stock repurchases and dividends and using capital for opportunistic accretive acquisitions.
Critical Accounting Policies and Estimates
We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the nine months ended September 29, 2024, to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, except as noted below.
Equity method investments
We account for investments using the equity method of accounting when we have significant influence over the financial and operating policies, but not control, of the investee. The equity method investments are initially recorded at cost and included in ‘Equity method investment’ in the consolidated balance sheet. We record our share of investee's net income or loss and the amortization of equity method basis difference, calculated as the difference between the investment and the amount of underlying equity in net assets acquired, on a 3-month lag, which is applied consistently from period to period. These results are reported in ‘Equity in net earnings of affiliate’ in the consolidated statement of operations. We record our share of investee's other comprehensive income and a cumulative translation adjustment in the consolidated statements of comprehensive income, also on a 3-month lag. We monitor on an ongoing basis our equity method investments for indicators of other-than-temporary declines in fair value below carrying value.
Critical accounting estimates are complex and may require significant judgment by management. Changes to the underlying assumptions may have a material impact on our financial condition and results of operations. These estimates may change, as new events occur, and additional information is obtained. Actual results could differ significantly from these estimates under different assumptions or conditions.
Preparation of Financial Statements and Use of Estimates
The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates under different assumptions or conditions.
31
SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
For the Three Months
|
|
|
For the Nine Months
|
|
||||||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
September 29,
|
|
|
October 1,
|
|
||||
|
Percentage of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Products |
|
|
83 |
% |
|
|
78 |
% |
|
|
81 |
% |
|
|
78 |
% |
|
Services |
|
|
17 |
|
|
|
22 |
|
|
|
19 |
|
|
|
22 |
|
|
Total revenues |
|
|
100 |
|
|
|
100 |
|
|
|
100 |
|
|
|
100 |
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cost of products |
|
|
34 |
|
|
|
34 |
|
|
|
34 |
|
|
|
33 |
|
|
Cost of services |
|
|
6 |
|
|
|
9 |
|
|
|
8 |
|
|
|
10 |
|
|
Total cost of revenues (exclusive of acquired intangible
|
|
|
41 |
|
|
|
43 |
|
|
|
42 |
|
|
|
42 |
|
|
Gross profit |
|
|
59 |
|
|
|
57 |
|
|
|
58 |
|
|
|
58 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Selling and administrative |
|
|
21 |
|
|
|
20 |
|
|
|
22 |
|
|
|
22 |
|
|
Engineering and development |
|
|
16 |
|
|
|
15 |
|
|
|
16 |
|
|
|
16 |
|
|
Acquired intangible assets amortization |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
Restructuring and other |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
Gain on sale of business |
|
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
— |
|
|
Total operating expenses |
|
|
39 |
|
|
|
36 |
|
|
|
37 |
|
|
|
39 |
|
|
Income from operations |
|
|
21 |
|
|
|
20 |
|
|
|
21 |
|
|
|
19 |
|
|
Non-operating (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest income |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
Interest expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other (income) expense, net |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
Income before income taxes and equity in net earnings of affiliate |
|
|
22 |
|
|
|
21 |
|
|
|
22 |
|
|
|
19 |
|
|
Income tax provision |
|
|
2 |
|
|
|
2 |
|
|
|
3 |
|
|
|
3 |
|
|
Income before equity in net earnings of affiliate |
|
|
20 |
|
|
|
18 |
|
|
|
19 |
|
|
|
17 |
|
|
Equity in net earnings of affiliate |
|
|
(0 |
) |
|
|
— |
|
|
|
(0 |
) |
|
|
— |
|
|
Net income |
|
|
20 |
% |
|
|
18 |
% |
|
|
19 |
% |
|
|
17 |
% |
32
Results of Operations
Third Quarter 2024 Compared to Third Quarter 2023
Revenues
Revenues by our reportable segments were as follows:
|
|
|
For the Three Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Semiconductor Test |
|
$ |
542.7 |
|
|
$ |
497.9 |
|
|
$ |
44.8 |
|
|
System Test |
|
|
73.3 |
|
|
|
83.2 |
|
|
|
(9.9 |
) |
|
Robotics |
|
|
88.7 |
|
|
|
85.7 |
|
|
|
3.0 |
|
|
Wireless Test |
|
|
32.6 |
|
|
|
37.0 |
|
|
|
(4.4 |
) |
|
|
|
$ |
737.3 |
|
|
$ |
703.7 |
|
|
$ |
33.6 |
|
The increase in Semiconductor Test revenues of $44.8 million, or 9.0%, was driven primarily by higher tester sales for computing and memory applications, partially offset by lower tester sales for mobility and legacy automotive applications. The decrease in System Test revenues of $9.9 million, or 11.9%, was due principally to lower sales in Integrated System Test of system level and hard disk drive testers. The increase in Robotics revenues of $3.0 million, or 3.5%, was driven predominantly by higher demand for UR’s collaborative robotic arms and MiR’s autonomous mobile robots. The decrease in Wireless Test revenues of $4.4 million, or 11.9% was primarily due to a decrease in ultra-wide band test products.
Revenues by country as a percentage of total revenues were as follows (1):
|
|
|
For the Three Months
|
|
|||||
|
|
|
September 29,
|
|
|
October 1,
|
|
||
|
Korea |
|
|
26 |
% |
|
|
15 |
% |
|
Taiwan |
|
|
26 |
|
|
|
14 |
|
|
China |
|
|
13 |
|
|
|
12 |
|
|
United States |
|
|
12 |
|
|
|
13 |
|
|
Europe |
|
|
8 |
|
|
|
9 |
|
|
Japan |
|
|
2 |
|
|
|
15 |
|
|
Singapore |
|
|
2 |
|
|
|
4 |
|
|
Thailand |
|
|
2 |
|
|
|
3 |
|
|
Malaysia |
|
|
2 |
|
|
|
3 |
|
|
Philippines |
|
|
2 |
|
|
|
8 |
|
|
Rest of World |
|
|
5 |
|
|
|
4 |
|
|
|
|
|
100 |
% |
|
|
100 |
% |
Gross Profit
Our gross profit was as follows:
|
|
|
For the Three Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar/Point
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Gross profit |
|
$ |
436.5 |
|
|
$ |
398.3 |
|
|
$ |
38.2 |
|
|
Percent of total revenues |
|
|
59.2 |
% |
|
|
56.6 |
% |
|
|
2.6 |
|
33
Gross profit as a percent of revenue increased by 2.6 points, primarily due to volume and product mix, partially offset by a $3.6 million charge for a legal settlement following a judgment against us for infringement of expired patents in our Robotics business.
Selling and Administrative
Selling and administrative expenses were as follows:
|
|
|
For the Three Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Selling and administrative |
|
$ |
157.6 |
|
|
$ |
138.3 |
|
|
$ |
19.3 |
|
|
Percent of total revenues |
|
|
21.4 |
% |
|
|
19.7 |
% |
|
|
|
|
The increase of $19.3 million in selling and administrative expenses was primarily due to higher spending in Semiconductor Test.
Engineering and Development
Engineering and development expenses were as follows:
|
|
|
For the Three Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Engineering and development |
|
$ |
117.5 |
|
|
$ |
104.4 |
|
|
$ |
13.1 |
|
|
Percent of total revenues |
|
|
15.9 |
% |
|
|
14.8 |
% |
|
|
|
|
The increase of $13.1 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test.
Restructuring and Other
During the three months ended September 29, 2024, we recorded restructuring and other charges primarily related to $1.3 million of severance charges related to headcount reductions principally in Robotics.
During the three months ended October 1, 2023, we recorded restructuring and other charges primarily related to $4.7 million of severance charges related to headcount reductions of 94 people, principally in Semiconductor Test and Robotics, which included charges related to a voluntary early retirement program for employees meeting certain conditions, and a $1.5 million contract termination charge.
Interest and Other
|
|
|
For the Three Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Interest income |
|
$ |
(5.1 |
) |
|
$ |
(6.9 |
) |
|
$ |
1.8 |
|
|
Interest expense |
|
|
0.8 |
|
|
|
1.0 |
|
|
$ |
(0.2 |
) |
|
Other (income) expense, net |
|
|
(2.7 |
) |
|
|
5.6 |
|
|
$ |
(8.3 |
) |
Other (income) expense reflects a net increase of $8.3 million primarily due to foreign exchange and actuarial gains.
34
Income (Loss) Before Income Taxes
|
|
|
For the Three Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Semiconductor Test |
|
$ |
163.8 |
|
|
$ |
136.5 |
|
|
$ |
27.3 |
|
|
System Test |
|
|
12.5 |
|
|
|
23.8 |
|
|
|
(11.3 |
) |
|
Wireless Test |
|
|
4.3 |
|
|
|
9.5 |
|
|
|
(5.2 |
) |
|
Robotics |
|
|
(24.2 |
) |
|
|
(21.8 |
) |
|
|
(2.4 |
) |
|
Corporate and Eliminations (1) |
|
|
2.6 |
|
|
|
(3.6 |
) |
|
|
6.2 |
|
|
|
|
$ |
159.0 |
|
|
$ |
144.3 |
|
|
$ |
14.7 |
|
The change in income before income taxes in Semiconductor Test, System Test, and Wireless Test were driven primarily by fluctuations in revenue within each of the businesses. In Robotics, the change in income before income taxes was driven primarily by increases to operating expenses.
Income Taxes
The effective tax rate for the three months ended September 29, 2024, and October 1, 2023, was 7.8% and 11.2%, respectively. The decrease in the effective tax rate from the three months ended October 1, 2023, to the three months ended September 29, 2024, primarily resulted from the benefit of a projected shift in the geographic distribution of income and an increase in benefit related to reserves for uncertain tax positions. These benefits were partially offset by decreases in benefits related to tax credits and the international provision of the U.S. Tax Cuts and Jobs Act of 2017.
Nine Months 2024 Compared to Nine Months 2023
Revenues
Revenues by our reportable segments were as follows:
|
|
|
For the Nine Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Semiconductor Test |
|
$ |
1,497.6 |
|
|
$ |
1,387.6 |
|
|
$ |
110.0 |
|
|
System Test |
|
|
209.4 |
|
|
|
252.1 |
|
|
|
(42.7 |
) |
|
Robotics |
|
|
266.6 |
|
|
|
246.5 |
|
|
|
20.1 |
|
|
Wireless Test |
|
|
93.5 |
|
|
|
119.5 |
|
|
|
(26.0 |
) |
|
|
|
$ |
2,067.0 |
|
|
$ |
2,005.7 |
|
|
$ |
61.3 |
|
The increase in Semiconductor Test revenues of $110.0 million, or 7.9%, was driven primarily by higher tester sales for computing, ADAS, and memory applications, partially offset by lower tester sales for mobility and legacy automotive applications. The decrease in System Test revenues of $42.7 million, or 16.9%, was due principally to lower sales in Integrated System Test of system level and hard disk drive testers. The increase in Robotics revenues of $20.1 million, or 8.2%, was predominantly from higher demand for UR’s collaborative robotic arms and MiR’s autonomous mobile robots. The decrease in Wireless Test revenues of $26.0 million, or 21.8%, was primarily due to a decrease in cellular and ultra-wide band test products.
35
Revenues by country as a percentage of total revenues were as follows (1):
|
|
|
For the Nine Months
|
|
|||||
|
|
|
September 29,
|
|
|
October 1,
|
|
||
|
Korea |
|
|
28 |
% |
|
|
14 |
% |
|
Taiwan |
|
|
20 |
|
|
|
15 |
|
|
United States |
|
|
13 |
|
|
|
16 |
|
|
China |
|
|
11 |
|
|
|
12 |
|
|
Europe |
|
|
9 |
|
|
|
10 |
|
|
Japan |
|
|
7 |
|
|
|
12 |
|
|
Philippines |
|
|
2 |
|
|
|
6 |
|
|
Singapore |
|
|
2 |
|
|
|
5 |
|
|
Malaysia |
|
|
2 |
|
|
|
4 |
|
|
Thailand |
|
|
2 |
|
|
|
3 |
|
|
Rest of World |
|
|
4 |
|
|
|
3 |
|
|
|
|
|
100 |
% |
|
|
100 |
% |
Gross Profit
Our gross profit was as follows:
|
|
|
For the Nine Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar/Point
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Gross profit |
|
$ |
1,201.6 |
|
|
$ |
1,157.2 |
|
|
$ |
44.4 |
|
|
Percent of total revenues |
|
|
58.1 |
% |
|
|
57.7 |
% |
|
|
0.4 |
|
Gross profit as a percent of revenue increased by 0.4 points, primarily due to product mix, partially offset by a $3.6 million charge for a legal settlement following a judgment against us for infringement of expired patents in our Robotics business.
Selling and Administrative
Selling and administrative expenses were as follows:
|
|
|
For the Nine Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Selling and administrative |
|
$ |
461.3 |
|
|
$ |
435.0 |
|
|
$ |
26.3 |
|
|
Percent of total revenues |
|
|
22.3 |
% |
|
|
21.7 |
% |
|
|
|
|
The increase of $26.3 million in selling and administrative expenses was primarily due to higher spending in Semiconductor Test.
Engineering and Development
Engineering and development expenses were as follows:
|
|
|
For the Nine Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Engineering and development |
|
$ |
332.5 |
|
|
$ |
315.9 |
|
|
$ |
16.6 |
|
|
Percent of total revenues |
|
|
16.1 |
% |
|
|
15.7 |
% |
|
|
|
|
36
The increase of $16.6 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test.
Restructuring and Other
During the nine months ended September 29, 2024, we recorded restructuring and other charges primarily related to $5.3 million of severance and other charges, related to headcount reductions of 87 people primarily in Robotics and Semiconductor Test, which included charges related to a voluntary early retirement program for employees meeting certain conditions, and $2.2 million of acquisition and divestiture expenses related to the Technoprobe transactions.
During the nine months ended October 1, 2023, we recorded restructuring and other charges primarily related to $11.8 million of severance charges related to headcount reductions of 197 people, primarily in Semiconductor Test and Robotics, which included which included charges related to a voluntary early retirement program for employees meeting certain conditions, a $1.5 million contract termination charge, and a charge of $1.1 million for an increase in environmental liability.
Gain on Sale of Business
During the nine months ended September 29, 2024, we recorded a gain of $57.5 million associated with the sale of DIS to Technoprobe.
Interest and Other
|
|
|
For the Nine Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Interest income |
|
$ |
(19.7 |
) |
|
$ |
(18.5 |
) |
|
$ |
(1.2 |
) |
|
Interest expense |
|
|
3.0 |
|
|
|
3.0 |
|
|
|
— |
|
|
Other (income) expense, net |
|
|
5.6 |
|
|
|
6.5 |
|
|
|
(0.9 |
) |
Other (income) expense reflects a net decrease of $0.9 million primarily due to the settlement of our call option purchased in connection with the investment in 10% of Technoprobe partially offset by actuarial gains.
Income (Loss) Before Income Taxes
|
|
|
For the Nine Months
|
|
|
|
|
||||||
|
|
|
September 29,
|
|
|
October 1,
|
|
|
Dollar
|
|
|||
|
|
|
(in millions) |
|
|||||||||
|
Semiconductor Test |
|
$ |
401.5 |
|
|
$ |
361.7 |
|
|
$ |
39.8 |
|
|
System Test |
|
|
36.1 |
|
|
|
67.6 |
|
|
|
(31.5 |
) |
|
Wireless Test |
|
|
13.4 |
|
|
|
30.8 |
|
|
|
(17.4 |
) |
|
Robotics |
|
|
(56.1 |
) |
|
|
(66.7 |
) |
|
|
10.6 |
|
|
Corporate and Eliminations (1) |
|
|
56.4 |
|
|
|
(7.7 |
) |
|
|
64.1 |
|
|
|
|
$ |
451.3 |
|
|
$ |
385.8 |
|
|
$ |
65.5 |
|
The change in income before income taxes in Semiconductor Test, System Test, Wireless Test, and Robotics were driven primarily by fluctuations in revenue within each of the businesses. The gain before income taxes in Corporate and Eliminations was primarily due to the sale of DIS to Technoprobe.
37
Income Taxes
The effective tax rate for the nine months ended September 29, 2024, and October 1, 2023, was 12.0% and 14.0%, respectively. The decrease in the effective tax rate from the nine months ended October 1, 2023, to the nine months ended September 29, 2024, primarily resulted from the benefit of a projected shift in the geographic distribution of income and an increase in benefit related to reserves for uncertain tax positions. These benefits were partially offset by decreases in benefits related to tax credits and the international provision of the U.S. Tax Cuts and Jobs Act of 2017.
Contractual Obligations
There have been no changes outside of the ordinary course of business to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Liquidity and Capital Resources
Our cash, cash equivalents and marketable securities balances decreased by $259.5 million in the nine months ended September 29, 2024, to $677.6 million.
Operating activities during the nine months ended September 29, 2024, provided cash of $389.6 million. Changes in operating assets and liabilities used cash of $75.8 million due to a $7.3 million decrease in operating assets and a $83.1 million decrease in operating liabilities.
The decrease in operating assets was primarily due to decreases in other assets and inventory of $61.4 million and $11.1 million, respectively, partially offset by a $65.3 million increase in accounts receivable, driven by higher sales in the third quarter.
The decrease in operating liabilities was due to a $32.3 million decrease in accrued employee compensation, $25.9 million decrease in accounts payable, $18.9 million decrease in income taxes, $4.2 million decrease in retirement plans, and $5.5 million decrease in accrued other, partially offset by a $3.6 million increase in deferred revenue and customer advances.
Investing activities during the nine months ended September 29, 2024, used cash of $554.9 million due to $527.1 million used for the purchases of investment, $140.7 million used for the purchase of property, plant and equipment, $35.1 million used for the purchase of marketable securities, partially offset by $90.3 million in proceeds from the sale of a business, $23.6 million and $33.2 million in proceeds from the sales and maturities and marketable securities, respectively, and $0.9 million in proceeds from life insurance.
Financing activities during the nine months ended September 29, 2024, used cash of $88.6 million due to $185.0 million used for proceeds from borrowings on revolving credit facility of which $185.0 million in payments were paid back in full during the quarter, $56.9 million used for dividend payment, $55.1 million used for the repurchase of 0.5 million shares of common stock at an average price of $111.32 per share and $13.8 million used for payment related to net settlements of employee stock compensation awards, partially offset by $37.3 million from the issuance of common stock under employee stock purchase and stock option plans.
Operating activities during the nine months ended October 1, 2023, provided cash of $336.5 million. Changes in operating assets and liabilities used cash of $119.3 million due to a $27.4 million increase in operating assets and $91.9 million decrease in operating liabilities.
The increase in operating assets was primarily due to a $64.0 million increase in prepayments and other assets due to prepayments to our contract manufacturers, partially offset by a $30.2 million decrease in accounts receivable and a $6.4 million decrease in inventories.
The decrease in operating liabilities was due to a $56.6 million decrease in accrued employee compensation, a $49.5 million decrease in deferred revenue and customer advance payments, a $42.7 million decrease in income taxes, and $3.7 million of retirement plan contributions, partially offset by $36.0 million increase in accounts payable and an $24.5 million increase in other accrued liabilities.
Investing activities during the nine months ended October 1, 2023, used cash of $149.2 million due to $137.8 million used for purchases of marketable securities and $115.3 million used for purchases of property, plant and equipment, and $5.0 million used for issuance of convertible loan, partially offset by $37.0 million and $71.4 million in proceeds from sales and maturities of marketable securities, respectively, and $0.5 million in proceeds from the cancellation of Teradyne owned life insurance policies related to the cash surrender value.
38
Financing activities during the nine months ended October 1, 2023, used cash of $410.8 million due to $346.5 million used for the repurchase of 3.4 million shares of common stock at an average price of $103.89 per share, $51.1 million used for dividend payments, and $26.7 million used for payments of convertible debt principal, and $20.6 million used for payment related to net settlements of employee stock compensation awards, partially offset by $34.1 million from the issuance of common stock under employee stock purchase and stock option plans .
In January 2024, May 2024, and August 2024, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Dividend payments for the three and nine months ended September 29, 2024, were $19.6 million and $57.0 million, respectively.
In January 2023, May 2023, and August 2023, our Board of Directors declared a quarterly cash dividend of $0.11 per share. Dividend payments for the three and nine months ended October 1, 2023, were $16.9 million and $51.1 million, respectively.
In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock.
During the nine months ended September 29, 2024, we repurchased 0.5 million shares of common stock for $55.1 million, which excludes related excise tax, at an average price of $111.32 per share. In 2024, Teradyne intends, based on market conditions, to repurchase its common stock in an amount necessary to offset dilution from equity compensation and our employee share purchase program. The cumulative repurchases under the 2023 repurchase program as of September 29, 2024, were 4.4 million shares of common stock for $455.6 million, which excludes related excise tax, at an average price per share of $103.46. During the nine months ended October 1, 2023, we repurchased 3.4 million shares of common stock for $346.5 million, which excludes related excise tax, at an average price of $103.89 per share.
While we have previously declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. Cash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.
On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400.0 million. On December 10, 2021, the credit agreement was amended to extend the senior secured revolving credit facility to December 10, 2026. On October 5, 2022, the credit agreement was amended to increase the amount of the credit facility to $750.0 million from $400.0 million. On November 7, 2023, the Credit Agreement was amended to allow for the purchase of the shares of Technoprobe. On May 16, 2024, we borrowed $185.0 million under the credit agreement to fund the acquisition of 10% of the issued and outstanding shares of Technoprobe. We fully repaid our borrowings on the revolving credit facility prior to September 29, 2024. As of November 1, 2024, there are no outstanding borrowings under the credit facility.
We believe our cash, cash equivalents, marketable securities and senior secured revolving credit facility will be sufficient to pay our quarterly dividend and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings.
Equity Compensation Plans
In addition to our 1996 Employee Stock Purchase Program as discussed in Note Q: “Stock-Based Compensation” in our 2023 Annual Report on Form 10-K, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”).
The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers and directors. Both plans were approved by our shareholders.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" , which will require us to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, we will be required to disclose the title and position of the CODM. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU will have no impact on our results of operations, cash flows or financial condition.
39
Upon adoption, we will apply the amendments in this ASU retrospectively to all prior period disclosures presented in the financial statements.
In December 2023, FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” , which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. This ASU will have no impact on results of operations, cash flows or financial condition.
Item 3: Quantitative and Qualitative Disclosures about Market Risks
For “Quantitative and Qualitative Disclosures about Market Risk” affecting Teradyne, see Part 2 Item 7A, “Quantitative and Qualitative Disclosures about Market Risks,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 22, 2024. There were no material changes in our exposure to market risk from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Item 4: Controls and Procedures
As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) or Rule 15d-15(f) promulgated under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended September 29, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
40
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
We are subject to various legal proceedings and claims which have arisen in the ordinary course of business such as, but not limited to, patent, employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all pending claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions are unlikely to have a material adverse effect on its business, financial position or results of operations.
Item 1A: Risk Factors
In addition to other information set forth in this Form 10-Q, including the risk discussed below, you should carefully consider the factors discussed in Part I, “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, remain applicable to our business.
The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
41
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
In January 2023, Teradyne’s Board of Directors cancelled our 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. During the nine months ended September 29, 2024, we repurchased 0.5 million shares of common stock for a total cost of $55.1 million at an average price of $111.32 per share. We record share repurchases at cost, which includes broker commissions and related excise taxes. During the nine months ended October 1, 2023, we repurchased 3.4 million shares of common stock for $349.3 million at an average price of $103.89 per share.
The following table includes information with respect to repurchases we made of our common stock during the three months ended September 29, 2024, (in thousands except per share price):
|
Period |
|
Total
|
|
|
|
Average
|
|
|
|
Total Number of
|
|
|
Maximum Number
|
|
||||
|
July 1, 2024 - July 28, 2024 |
|
|
3 |
|
|
|
$ |
132.08 |
|
|
|
|
2 |
|
|
$ |
1,568,943 |
|
|
July 29, 2024 - August 25, 2024 |
|
|
80 |
|
|
|
$ |
120.83 |
|
|
|
|
79 |
|
|
$ |
1,559,411 |
|
|
August 26, 2024 - September 29, 2024 |
|
|
116 |
|
|
|
$ |
130.29 |
|
|
|
|
115 |
|
|
$ |
1,544,379 |
|
|
|
|
|
199 |
|
(1) |
|
|
126.49 |
|
(1) |
|
|
196 |
|
|
|
|
|
We satisfy U.S. federal and state minimum withholding tax obligations due upon the vesting and the conversion of restricted stock units into shares of our common stock, by automatically withholding from the shares being issued, a number of shares with an aggregate fair market value on the date of such vesting and conversion that would satisfy the minimum withholding amount due.
Item 4: Mine Safety Disclosures
Not Applicable
42
Item 5: Other Information
10b 5-1 Trading Plans
Our officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Section 16 Officers”) and directors from time to time enter into contracts, instructions or written plans for the purchase or sale of our securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information. We refer to these contracts, instructions, and written plans as “Rule 10b5-1 trading plans” and each one as a “Rule 10b5-1 trading plan.” During our fiscal quarter ended September 29, 2024, the following Section 16 Officers or directors adopted, modified or terminated Rule 10b5-1 trading plans:
Ryan Driscoll, Vice President, General Counsel, and Secretary
43
Item 6: Exhibits
|
Exhibit Number |
|
Description |
|
|
|
|
|
10.1 |
|
|
|
|
|
|
|
10.2 |
|
|
|
|
|
|
|
31.1 |
|
|
|
|
|
|
|
31.2 |
|
|
|
|
|
|
|
32.1 |
|
|
|
|
|
|
|
32.2 |
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document |
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL, and contained in Exhibit 101) |
|
|
|
|
|
* |
|
Management Contract or Compensatory Plan |
44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
TERADYNE, INC. |
|
|
Registrant |
|
|
|
|
|
/s/ S ANJAY M EHTA |
|
|
Sanjay Mehta Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer) November 1, 2024 |
45