Teradyne Reports Third Quarter 2016 Results

Safe Harbor Statement
This release contains forward-looking statements regarding future business prospects, Teradyne’s results of operations, market conditions, earnings per share, the payment of a quarterly dividend, the repurchase of Teradyne common stock pursuant to a share repurchase program and a senior secured credit facility. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, future events, future earnings per share, future payment of dividends, future repurchases of common stock or future availability of, or borrowing under, a credit facility. There can be no assurance that management’s estimates of Teradyne’s future results or other forward-looking statements will be achieved. Additionally, the current dividend and share repurchase programs may be modified, suspended or discontinued at any time. Important factors that could cause actual results, earnings per share, dividend payments, repurchases of common stock or borrowings under the credit facility to differ materially from those presently expected include: conditions affecting the markets in which Teradyne operates; decreased or delayed product demand; market acceptance of new products; the ability to grow Universal Robots’ business; increased research and development spending; deterioration of Teradyne’s financial condition; the consummation and success of any mergers or acquisitions; the business judgment of the board of directors that a declaration of a dividend, the repurchase of common stock or debt under the credit facility is not in the company’s best interests; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” section of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and the Quarterly Report on Form 10-Q for the period ended July 3, 2016. The forward-looking statements provided by Teradyne in this press release represent management’s views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause management's views to change. However, while Teradyne may elect to update these forward-looking statements at some point in the future, Teradyne specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Teradyne's views as of any date subsequent to the date of this release.

TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2016            
                                         
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)                                  
         

 

Quarter Ended Nine Months Ended
October 2, 2016 July 3, 2016 October 4, 2015 October 2, 2016 October 4, 2015
 
Net revenues $ 410,475 $ 531,792 $ 465,994 $ 1,373,261 $ 1,321,133
 
Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) (2)   183,116     248,922     207,368     632,700     571,517  
 
Gross profit 227,359 282,870 258,626 740,561 749,616
 
Operating expenses:
Engineering and development (1) 71,400 76,109 74,027 220,973 221,309
Selling and administrative (1) 78,794 81,425 77,481 239,393 226,595
Acquired intangible assets amortization 8,487 16,244 20,053 44,725 49,119
Acquired intangible assets impairment (3) - 83,339 - 83,339 -
Goodwill impairment (3) - 254,946 - 254,946 -
Restructuring and other (4)   12,177     2,608     261     16,372     (124 )
Operating expenses 170,858 514,671 171,822 859,748 496,899
 
Income (loss) from operations 56,501 (231,801 ) 86,804 (119,187 ) 252,717
 
Interest and other (5)   3,180     984     604     5,242     9,264  
 
Income (loss) before income taxes 59,681 (230,817 ) 87,408 (113,945 ) 261,981
Income tax (benefit) provision   (4,113 )   (7,271 )   15,955     (4,178 )   54,863  
Net income (loss) $ 63,794   $ (223,546 ) $ 71,453   $ (109,767 ) $ 207,118  
 

Net income (loss) per common share:

Basic $ 0.32   $ (1.10 ) $ 0.34   $ (0.54 ) $ 0.97  
Diluted $ 0.31   $ (1.10 ) $ 0.34   $ (0.54 ) $ 0.96  
 
Weighted average common shares - basic   202,211     203,018     210,032     203,167     213,688  

 

Weighted average common shares - diluted   203,929     203,018     211,736     203,167     215,348  
 
 
Cash dividend declared per common share $ 0.06   $ 0.06   $ 0.06   $ 0.18   $ 0.18  
 
 
Net orders $ 378,461   $ 471,026   $ 314,222   $ 1,238,904   $ 1,333,272  
 
 
(1 ) Pension actuarial losses (gains) included in our operating results were as follows:
Quarter Ended Nine Months Ended
October 2, 2016 July 3, 2016 October 4, 2015 October 2, 2016 October 4, 2015
Cost of revenues $ 364 $ (221 ) $ - $ (250 ) $ -
Engineering and development 106 (221 ) - (509 ) -
Selling and administrative   192     (227 )   -     (441 )   -  
$ 662   $ (669 ) $ -   $ (1,200 ) $ -  
 
 
(2 ) Cost of revenues includes: Quarter Ended Nine Months Ended
October 2, 2016 July 3, 2016 October 4, 2015 October 2, 2016 October 4, 2015
Provision for excess and obsolete inventory $ 3,033 $ 7,742 $ 3,058 $ 15,148 $ 18,939
Sale of previously written down inventory (1,794 ) (5,151 ) (1,983 ) (8,113 ) (6,659 )
Inventory step-up   -     -     972     -     1,567  
$ 1,239   $ 2,591   $ 2,047   $ 7,035   $ 13,847  
 
 
(3 ) Goodwill and acquired intangible assets impairment related to Teradyne's Wireless Test business segment.
 
(4 ) Restructuring and other consists of: Quarter Ended   Nine Months Ended
October 2, 2016 July 3, 2016 October 4, 2015 October 2, 2016 October 4, 2015
Contingent consideration fair value adjustment $ 7,974 $ 1,305 $ (1,000 ) $ 10,452 $ (2,600 )
Employee severance 4,203 1,303 1,117 5,920 1,372
Impairment of fixed assets and expenses related to Japan earthquake 312 5,051 - 5,363 -
Property insurance recovery (312 ) (5,051 ) - (5,363 ) -
Acquisition costs   -     -     144     -     1,104  
$ 12,177   $ 2,608   $ 261   $ 16,372   $ (124 )
 
 
(5 ) Interest and other includes: Quarter Ended Nine Months Ended
October 2, 2016 July 3, 2016 October 4, 2015 October 2, 2016 October 4, 2015
Gain from the sale of an equity investment $ - $ - $ - $ - $ (5,406 )
 

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