Teradyne Reports Fourth Quarter and Fiscal Year 2017 Results,

Teradyne Reports Fourth Quarter and Fiscal Year 2017 Results, Increases Capital Return Program


GAAP to Non-GAAP Earnings Reconciliation
(In millions, except per share amounts)
																Quarter Ended
			December 31, 2017			% of Net Revenues										October 1, 2017			% of Net Revenues								December 31, 2016			% of Net Revenues

Net revenues			$	479.4												$	503.4										$	380.0

Gross profit - GAAP			$	272.9			56.9	%								$	294.8		58.6	%							$	219.0		57.6	%
		Pension mark-to-market adjustment (1)		(2.1	)		-0.4	%									-		-									(0.8	)	-0.2	%
Gross profit - non-GAAP			$	270.8			56.5	%								$	294.8		58.6	%							$	218.2		57.4	%

Income from operations - GAAP			$	98.0			20.4	%								$	128.7		25.6	%							$	59.2		15.6	%
		Acquired intangible assets amortization		7.4			1.5	%									7.0		1.4	%								7.9		2.1	%
		Restructuring and other (2)		9.0			1.9	%									(4.4	)	-0.9	%								5.6		1.5	%
		Pension mark-to-market adjustment (1)		(3.8	)		-0.8	%									-		-									(2.0	)	-0.5	%
Income from operations - non-GAAP			$	110.6			23.1	%								$	131.3		26.1	%							$	70.7		18.6	%


										Net (Loss) Income per Common Share											Net Income per Common Share											Net Income per Common Share
			December 31, 2017			% of Net Revenues				Basic			Diluted			October 1, 2017			% of Net Revenues		Basic			Diluted			December 31, 2016			% of Net Revenues		Basic			Diluted
Net (loss) income- GAAP			$	(105.9	)		-22.1	%		$	(0.54	)	$	(0.54	)	$	103.4		20.5	%	$	0.52		$	0.52		$	66.3		17.4	%	$	0.33		$	0.33
		Acquired intangible assets amortization		7.4			1.5	%			0.04			0.04			7.0		1.4	%		0.04			0.04			7.9		2.1	%		0.04			0.04
		Interest and other (3)		3.2			0.7	%			0.02			0.02			3.1		0.6	%		0.02			0.02			0.6		0.2	%		0.00			0.00
		Restructuring and other (2)		9.0			1.9	%			0.05			0.05			(4.4	)	-0.9	%		(0.02	)		(0.02	)		5.6		1.5	%		0.03			0.03
		Pension mark-to-market adjustment (1)		(3.8	)		-0.8	%			(0.02	)		(0.02	)		-		-			-			-			(2.0	)	-0.5	%		(0.01	)		(0.01	)
		Exclude discrete tax adjustments (4)		184.4			38.5	%			0.94			0.93			0.3		0.1	%		0.00			0.00			(16.2	)	-4.3	%		(0.08	)		(0.08	)
		Non-GAAP tax adjustments (5)		(2.9	)		-0.6	%			(0.01	)		(0.01	)		(1.7	)	-0.3	%		(0.01	)		(0.01	)		2.4		0.6	%		0.01			0.01
Net income - non-GAAP			$	91.4			19.1	%		$	0.47		$	0.46		$	107.7		21.4	%	$	0.55		$	0.54		$	64.6		17.0	%	$	0.32		$	0.32

GAAP and non-GAAP weighted average common shares - basic				196.0													197.5											200.8
GAAP weighted average common shares - diluted				196.0													200.8											202.9
		Include dilutive shares		3.0													-											-
		Exclude dilutive shares from convertible note		-													(1.1	)										-
Non-GAAP weighted average common shares - diluted				199.0													199.7											202.9


(1	)	Actuarial gains recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.

(2	)	Restructuring and other consists of:
			Quarter Ended
			December 31, 2017													October 1, 2017											December 31, 2016
		Contingent consideration fair value adjustment	$	6.0												$	(0.3	)									$	5.4
		Employee severance		1.8													0.6											0.1
		Impairment of fixed assets		1.1													-											-
		Facility related		0.1													(0.4	)										-
		Property insurance recovery		-													(5.1	)										-
		Expenses and Impairment of fixed assets related to Japan earthquake		-													0.8											-
			$	9.0												$	(4.4	)									$	5.6

(3	)	For the quarters ended December 31, 2017, October 1, 2017 and December 31, 2016, interest and other included non-cash convertible debt interest expense.

(4	)	For the quarters ended December 31, 2017, October 1, 2017 and December 31, 2016, adjustment to exclude discrete income tax items. For the quarter December 31, 2017, adjustment to treat the $184 million expense related to the estimated impact of U.S. tax policy changes as a discrete item. For the quarter ended December 31, 2016, adjustment to treat Wireless Test business segment goodwill and intangible assets impairments as discrete tax items.

(5	)	For periods after December 31, 2016, the non-GAAP annual effective tax rate is based on a with and without calculation with respect to non-GAAP reconciling items.


			Twelve Months Ended
			December 31, 2017			% of Net Revenues										December 31, 2016			% of Net Revenues

Net Revenues			$	2,136.6												$	1,753.3

Gross profit - GAAP			$	1,223.9			57.3	%								$	959.6		54.7	%
		Pension mark-to-market adjustment (1)		(2.8	)		-0.1	%									(1.0	)	-0.1	%
Gross profit - non-GAAP			$	1,221.1			57.2	%								$	958.6		54.7	%

Income (loss) from operations - GAAP			$	530.0			24.8	%								$	(60.0	)	-3.4	%
		Acquired intangible assets amortization		30.5			1.4	%									52.6		3.0	%
		Restructuring and other (2)		9.4			0.4	%									21.9		1.2	%
		Pension mark-to-market adjustment (1)		(6.3	)		-0.3	%									(3.2	)	-0.2	%
		Goodwill impairment (3)		-			-										254.9		14.5	%
		Acquired intangible assets impairment (3)		-			-										83.3		4.8	%
Income from operations - non-GAAP			$	563.6			26.4	%								$	349.5		19.9	%

										Net Income per Common Share											Net (Loss) Income per Common Share
			December 31, 2017			% of Net Revenues				Basic			Diluted			December 31, 2016			% of Net Revenues		Basic			Diluted
Net income (loss) - GAAP			$	257.7			12.1	%		$	1.30		$	1.28		$	(43.4	)	-2.5	%	$	(0.21	)	$	(0.21	)
		Acquired intangible assets amortization		30.5			1.4	%			0.15			0.15			52.6		3.0	%		0.26			0.26
		Interest and other (4)		12.4			0.6	%			0.06			0.06			0.6		0.0	%		0.00			0.00
		Restructuring and other (2)		9.4			0.4	%			0.05			0.05			21.9		1.2	%		0.11			0.11
		Pension mark-to-market adjustment (1)		(6.3	)		-0.3	%			(0.03	)		(0.03	)		(3.2	)	-0.2	%		(0.02	)		(0.02	)
		Goodwill impairment (3)		-			-				-			-			254.9		14.5	%		1.26			1.25
		Acquired intangible assets impairment (3)		-			-				-			-			83.3		4.8	%		0.41			0.41
		Exclude discrete tax adjustments (5)		178.3			8.3	%			0.90			0.89			(4.5	)	-0.3	%		(0.02	)		(0.02	)
		Non-GAAP tax adjustments (6)		(12.8	)		-0.6	%			(0.06	)		(0.06	)		(53.3	)	-3.0	%		(0.26	)		(0.26	)
Net income - non-GAAP			$	469.2			22.0	%		$	2.37		$	2.34		$	308.9		17.6	%	$	1.52		$	1.51

GAAP and non-GAAP weighted average common shares - basic				198.1													202.6
GAAP weighted average common shares - diluted				201.6													202.6
		Exclude dilutive shares from convertible note		(1.3	)												-
		Include dilutive shares		-													1.8
Non-GAAP weighted average common shares - diluted				200.3													204.4

(1	)	Actuarial gains recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.

(2	)	Restructuring and other consists of:
			Twelve Months Ended
			December 31, 2017													December 31, 2016
		Contingent consideration fair value adjustment	$	7.8												$	15.9
		Employee severance		3.8													6.0
		Impairment of fixed assets		1.1													-
		Facility related		1.0													-
		Expenses and impairment of fixed assets related to Japan earthquake		0.8													5.4
		Property insurance recovery		(5.1	)												(5.4	)
			$	9.4												$	21.9

(3	)	Goodwill and acquired intangible assets impairment related to Teradyne's Wireless Test business segment.

(4	)	For the twelve months ended December 31, 2017 and December 31, 2016, interest and other included non-cash convertible debt interest expense.

(5	)	For the twelve months ended December 31, 2017 and December 31, 2016, adjustment to exclude discrete income tax items. For the twelve months ended December 31, 2017, adjustment to treat the $184 million expense related to the estimated impact of U.S. tax policy changes as a discrete item. For the twelve months ended December 31, 2016, adjustment to treat Wireless Test business segment goodwill and intangible assets impairments as discrete tax items.

(6	)	For periods after December 31, 2016, the non-GAAP annual effective tax rate is based on a with and without calculation with respect to non-GAAP reconciling items.



GAAP to Non-GAAP Reconciliation of First Quarter 2018 guidance:

GAAP and non-GAAP first quarter revenue guidance:						$460 million			to	$490 million
GAAP net income per diluted share						$	0.32			$	0.39
		Exclude acquired intangible assets amortization					0.04				0.04
		Exclude non-cash convertible debt interest					0.02				0.02
		Exclude restructuring and other charges					0.02				0.02
		Non-GAAP tax adjustment					(0.01	)			(0.01	)
Non-GAAP net income per diluted share						$	0.38			$	0.45

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