Orders in the fourth quarter of 2014 were $332 million of which $226 million were in Semiconductor Test, $67 million in System Test and $39 million in Wireless Test.
For the fiscal year, Teradyne reported revenue of $1,648 million of which $1,301 million was in Semiconductor Test, $185 million in Wireless Test, and $162 million in System Test. On a non-GAAP basis, Teradyne’s net income for 2014 was $265.6 million, or $1.23 per diluted share which excluded the charges noted above, a first quarter 2014 CEO retirement equity charge, and non-cash convertible debt interest. GAAP net income for the year was $81.3 million or $0.37 per share and GAAP operating profit declined 49%. Cash provided by operating activities for 2014 was $493 million and purchases of property, plant and equipment were $170 million.
“The fourth quarter wraps up a very strong year for Teradyne from both a market share and cash flow perspective,” said CEO and President Mark Jagiela. “Revenues grew 15% driven by strong System-on-a-Chip (SOC) demand, our operating profit grew 26%, and we generated over $300 million in free cash flow. Despite an expected softening of SOC test demand in 2015, our cycle hardened operating model, combined with our long term outlook for the markets we serve, provides us the confidence to substantially increase our capital return plans for 2015.”
Teradyne announced that its Board of Directors has approved a share repurchase program authorizing the Company to repurchase up to $500 million of its common stock through open market or private transactions. The $500 million authorization replaces the Company’s existing repurchase program announced in 2010.
The Board of Directors has also declared a quarterly cash dividend of $0.06 per share, payable on March 24, 2015 to shareholders of record as of the close of business on February 27, 2015.
“We intend to execute $300 million of the repurchase authorization this year,” Jagiela continued. “Our strong balance sheet and expectations for future cash generation provide Teradyne the flexibility to return capital to shareholders through a significant share repurchase program and a quarterly cash dividend while continuing to invest in future growth and strategic business development opportunities.”
Guidance for the first quarter of 2015 is revenue of $320 million to $345 million, with non-GAAP net income of $0.09 to $0.14 per diluted share and GAAP net income of $0.07 to $0.11 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, gain on the sale of an equity investment, and the related tax impact on non-GAAP adjustments.
A conference call to discuss the fourth quarter 2014 results, along with management's business outlook, will follow at 10 a.m. ET, Thursday, January 29. Interested investors should access the webcast at www.teradyne.com and click on "Investors" at least five minutes before the call begins. Presentation materials will be available at www.teradyne.com/investors at 10 a.m. ET. A replay of the call will also be available on the Teradyne website.
In addition to disclosing results that are determined in accordance with
GAAP, Teradyne also discloses non-GAAP results of operations that
exclude certain income items and charges. These results are provided as
a complement to results provided in accordance with GAAP. Non-GAAP
income from operations and non-GAAP net income exclude goodwill
impairment charge, acquired intangible asset amortization, retired CEO
equity charge, non-cash convertible debt interest, discrete income tax
adjustments, pension and post retirement actuarial gains and losses,
restructuring and other, and a gain from the sale of an equity
investment, and, prior to January 1, 2014, included income taxes on a
cash basis [cash taxes reflected the usage of prior year favorable tax
attributes (e.g. NOLs and credits) against current year tax liability].
GAAP requires that these items be included in determining income from
operations and net income. Non-GAAP income from operations, non-GAAP net
income, non-GAAP income from operations and non-GAAP net income as a
percentage of revenue, and non-GAAP net income per share are non-GAAP
measures presented to provide meaningful supplemental information
regarding Teradyne's baseline performance before gains, losses or other
charges that may not be indicative of Teradyne’s current core business
or future outlook. These non-GAAP measures are used to make operational
decisions, to determine employee compensation, to forecast future
operational results, and for comparison with Teradyne’s business plan,
historical operating results and the operating results of Teradyne’s
competitors. Non-GAAP gross margin excludes pension and post retirement
actuarial gains and losses. GAAP requires that this item be included in
determining gross margin. Non-GAAP gross margin dollar amount and
percentage are non-GAAP measures that management believes provide useful
supplemental information for management and the investor. Management
uses non-GAAP gross margin as a performance measure for Teradyne’s
current core business and future outlook and for comparison with
Teradyne’s business plan, historical gross margin results and the gross
margin results of Teradyne’s competitors. Prior to September 29, 2014,
non-GAAP diluted shares included the impact of Teradyne’s call option
and warrant on its shares. Management believes each of these non-GAAP
measures provides useful supplemental information for investors,
allowing greater transparency to the information used by management in
its operational decision making and in the review of Teradyne’s
financial and operational performance, as well as facilitating
meaningful comparisons of Teradyne’s results in the current period
compared with those in prior and future periods. A reconciliation of
each available GAAP to non-GAAP financial measure discussed in this
press release is contained in the attached exhibits and on the Teradyne
by clicking on "Investors" and then selecting the "GAAP to Non-GAAP
Reconciliation" link. The non-GAAP financial measures discussed in this
press release may not be comparable to similarly titled measures used by
other companies. The presentation of non-GAAP measures is not meant to
be considered in isolation, as a substitute for, or superior to,
financial measures or information provided in accordance with GAAP.