Teradyne Reports Fourth Quarter and Fiscal Year 2015 Results

About Teradyne
Teradyne (NYSE: TER) is a leading supplier of automation equipment for test and industrial applications. Teradyne Automatic Test Equipment (ATE) is used to test semiconductors, wireless products, data storage and complex electronic systems, which serve consumer, communications, industrial and government customers. Our Industrial Automation products include Collaborative Robots used by global manufacturing and light industrial customers to improve quality and increase manufacturing efficiency. In 2015, Teradyne had revenue of $1.64 billion and currently employs approximately 4,100 people worldwide. For more information, visit www.teradyne.com. Teradyne (R) is a registered trademark of Teradyne, Inc. in the U.S. and other countries.

Safe Harbor Statement
This release contains forward-looking statements regarding future business prospects, Teradyne’s results of operations, market conditions, 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 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, 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 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, 2014 and the Quarterly Report on Form 10-Q for the period ended October 4, 2015. 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.

                     
CONDENSED CONSOLIDATED OPERATING STATEMENTS          
(In thousands, except per share amounts)                    
 
Quarter Ended Twelve Months Ended

December 31,
2015

October 4,
2015

December 31,
2014

December 31,
2015

December 31,
2014

 
Net revenues $ 318,444 $ 465,994 $ 323,236 $ 1,639,578 $ 1,647,824
 
Cost of revenues (exclusive of acquired intangible assets amortization shown separately below) (1) (2)   152,418     207,368     163,010     723,935     769,016  
 
Gross profit 166,026 258,626 160,226 915,643 878,808
 
Operating expenses:
Engineering and development (1) 70,941 74,027 79,188 292,250 291,639
Selling and administrative (1) (3) 79,718 77,481 91,157 306,313 319,713
Acquired intangible assets amortization 19,911 20,053 15,957 69,031 70,771

Goodwill impairment

- - 98,897 - 98,897
Restructuring and other (4)   5,204     261     1,198     5,080     1,365  
Operating expenses 175,774 171,822 286,397 672,674 782,385
 
(Loss) income from operations (9,748 ) 86,804 (126,171 ) 242,969 96,423
 
Interest and other (5)   891     604     1,358     10,155     (1,047 )
 
(Loss) income before income taxes (8,857 ) 87,408 (124,813 ) 253,124 95,376
Income tax (benefit) provision   (8,216 )   15,955     (21,002 )   46,647     14,104  
Net (loss) income $ (641 ) $ 71,453   $ (103,811 ) $ 206,477   $ 81,272  
 
Net (loss) income per common share:
Basic $ (0.00 ) $ 0.34   $ (0.48 ) $ 0.98   $ 0.40  
Diluted $ (0.00 ) $ 0.34   $ (0.48 ) $ 0.97   $ 0.37  
 
Weighted average common shares - basic   205,113     210,032     216,532     211,544     202,908  
 
Weighted average common shares - diluted (6)   205,113     211,736     216,532     213,321     222,550  
 
 
Cash dividend declared per common share $ 0.06   $ 0.06   $ 0.06   $ 0.24   $ 0.18  
 
 
Net orders $ 522,240   $ 314,222   $ 331,993   $ 1,855,515   $ 1,681,950  
 
 
 
(1)Pension actuarial losses included in our operating results were as follows: Quarter Ended Twelve Months Ended

December 31,
2015

October 4,
2015

December 31,
2014

December 31,
2015

December 31,
2014

Cost of revenues $ 8,271 $ - $ 12,713 $ 8,271 $ 12,713
Engineering and development 4,658 - 12,223 $ 4,658 12,223
Selling and administrative   4,826     -     21,628   $ 4,826     21,628  
$ 17,755   $ -   $ 46,564   $ 17,755   $ 46,564  
 
 
(2)Cost of revenues includes: Quarter Ended Twelve Months Ended

December 31,
2015

October 4,
2015

December 31,
2014

December 31,
2015

December 31,
2014

Provision for excess and obsolete inventory $ 2,393 $ 3,058 $ 688 $ 21,332 $ 22,193
Sale of previously written down inventory (1,196 ) (1,983 ) (3,332 ) (7,855 ) (13,058 )
Inventory step-up   -     972     -     1,567     -  
$ 1,197   $ 2,047   $ (2,644 ) $ 15,044   $ 9,135  
 
 
(3)For the twelve months ended December 31, 2014, selling and administrative expenses include an equity charge of $6,598 for the modification of Teradyne's retired CEO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his January 31, 2014 retirement.
 
(4)Restructuring and other consists of: Quarter Ended Twelve Months Ended

December 31,
2015

October 4,
2015

December 31,
2014

December 31,
2015

December 31,
2014

Employee severance $ 115 $ 1,117 $ 826 $ 1,487 $ 1,623
Acquisition costs (a) - 144 372 1,104 372
Contingent consideration fair value adjustment   5,089     (1,000 )   -     2,489     (630 )
$ 5,204   $ 261   $ 1,198     5,080   $ 1,365  
 
(a)Costs related to Universal Robots acquisition. The results of Universal Robots are included in Teradyne’s results starting June 12, 2015.
 
(5)Interest and other includes: Quarter Ended Twelve Months Ended

December 31,
2015

October 4,
2015

December 31,
2014

December 31,
2015

December 31,
2014

Gain from the sale of an equity investment $ - $ - $ - $ (5,406 ) $ -
Non-cash convertible debt interest expense   -     -     -     -     4,290  
$ -   $ -   $ -   $ (5,406 ) $ 4,290  
 

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