Teradyne Reports Second Quarter 2019 Results

GAAP to Non-GAAP Earnings Reconciliation

(In millions, except per share amounts)
															Quarter Ended
		June 30, 2019			% of Net Revenues										March 31, 2019			% of Net Revenues								July 1, 2018			% of Net Revenues

Net revenues		$	564.2												$	494.1										$	526.9

Gross profit GAAP		$	323.9			57.4	%								$	287.6		58.2	%							$	307.3		58.3	%
	Inventory step-up		0.4			0.1	%									-		-									0.4		0.1	%
Gross profit non-GAAP		$	324.3			57.5	%								$	287.6		58.2	%							$	307.7		58.4	%

Income from operations - GAAP		$	134.0			23.8	%								$	93.1		18.8	%							$	120.4		22.9	%
	Acquired intangible assets amortization		10.1			1.8	%									10.6		2.1	%								9.8		1.9	%
	Restructuring and other (1)		(10.4	)		-1.8	%									5.1		1.0	%								2.4		0.5	%
	Inventory step-up		0.4			0.1	%									-		-									0.4		0.1	%
Income from operations - non-GAAP		$	134.1			23.8	%								$	108.8		22.0	%							$	133.0		25.2	%


									Net Income per Common Share											Net Income per Common Share											Net Income per Common Share
		June 30, 2019			% of Net Revenues				Basic			Diluted			March 31, 2019			% of Net Revenues		Basic			Diluted			July 1, 2018			% of Net Revenues		Basic			Diluted
Net income - GAAP		$	97.4			17.3	%		$	0.57		$	0.55		$	109.1		22.1	%	$	0.63		$	0.62		$	101.0		19.2	%	$	0.53		$	0.52
	Acquired intangible assets amortization		10.1			1.8	%			0.06			0.06			10.6		2.1	%		0.06			0.06			9.8		1.9	%		0.05			0.05
	Interest and other (2)		3.4			0.6	%			0.02			0.02			3.4		0.7	%		0.02			0.02			3.2		0.6	%		0.02			0.02
	Restructuring and other (1)		(10.4	)		-1.8	%			(0.06	)		(0.06	)		5.1		1.0	%		0.03			0.03			2.4		0.5	%		0.01			0.01
	Pension mark-to-market adjustment (2)		0.4			0.1	%			0.00			0.00			-		-			-			-			(0.1	)	0.0	%		(0.00	)		(0.00	)
	Inventory step-up		0.4			0.1	%			0.00			0.00			-		-			-			-			0.4		0.1	%		0.00			0.00
	Exclude discrete tax adjustments (3)		13.9			2.5	%			0.08			0.08			(30.1	)	-6.1	%		(0.17	)		(0.17	)		(0.5	)	-0.1	%		(0.00	)		(0.00	)
	Non-GAAP tax adjustments		(2.0	)		-0.4	%			(0.01	)		(0.01	)		(3.5	)	-0.7	%		(0.02	)		(0.02	)		(3.4	)	-0.6	%		(0.02	)		(0.02	)
	Convertible share adjustment		-			-				-			0.02			-		-			-			-			-		-			-			0.01
Net income - non-GAAP		$	113.2			20.1	%		$	0.66		$	0.66		$	94.6		19.1	%	$	0.55		$	0.54		$	112.8		21.4	%	$	0.59		$	0.59

GAAP and non-GAAP weighted average common shares - basic			171.2													173.5											190.7
GAAP weighted average common shares - diluted			178.6													177.0											194.9
	Exclude dilutive shares related to convertible note transaction		(6.2	)												(2.2	)										(2.6	)
Non-GAAP weighted average common shares - diluted			172.4													174.8											192.3


(1)	Restructuring and other consists of:
		Quarter Ended
		June 30, 2019													March 31, 2019											July 1, 2018
	Contingent consideration fair value adjustment	$	(11.7	)											$	3.0										$	(3.5	)
	Acquisition related expenses and compensation		0.5													1.3											2.5
	Employee severance		0.8													0.8											2.4
	Other		-													-											0.9
		$	(10.4	)											$	5.1										$	2.4

(2)	For the quarters ended June 30, 2019, March 31, 2019, and July 1, 2018, adjustment to exclude non-cash convertible debt interest expense. For the quarters ended June 30, 2019 and July 1, 2018, adjustment to exclude actuarial loss (gain) recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.

(3)	For the quarters ended June 30, 2019, March 31, 2019, and July 1, 2018, adjustment to exclude discrete income tax items. For the quarter ended June 30, 2019, income tax (benefit) provision includes a $15 million tax provision related to the finalization of our toll tax charge. For the quarter ended March 31, 2019, income tax (benefit) provision includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne's 2015 Federal tax return.


		Six Months Ended
		June 30, 2019			% of Net Revenues										July 1, 2018			% of Net Revenues

Net Revenues		$	1,058.3												$	1,014.4

Gross profit GAAP		$	611.6			57.8	%								$	577.2		56.9	%
	Inventory step-up		0.4			0.0	%									0.4		0.0	%
Gross profit non-GAAP		$	612.0			57.8	%								$	577.6		56.9	%

Income from operations - GAAP		$	227.1			21.5	%								$	217.9		21.5	%
	Acquired intangible assets amortization		20.7			2.0	%									17.5		1.7	%
	Restructuring and other (1)		(5.3	)		-0.5	%									2.1		0.2	%
	Inventory step-up		0.4			0.0	%									0.4		0.0	%
Income from operations - non-GAAP		$	242.9			23.0	%								$	237.9		23.5	%


									Net Income per Common Share											Net Income per Common Share
		June 30, 2019			% of Net Revenues				Basic			Diluted			July 1, 2018			% of Net Revenues		Basic			Diluted
Net income - GAAP		$	206.5			19.5	%		$	1.20		$	1.16		$	188.0		18.5	%	$	0.97		$	0.94
	Acquired intangible assets amortization		20.7			2.0	%			0.12			0.12			17.5		1.7	%		0.09			0.09
	Interest and other (2)		6.8			0.6	%			0.04			0.04			6.5		0.6	%		0.03			0.03
	Restructuring and other (1)		(5.3	)		-0.5	%			(0.03	)		(0.03	)		2.1		0.2	%		0.01			0.01
	Inventory step-up		0.4			0.0	%			0.00			0.00			0.4		0.0	%		0.00			0.00
	Pension mark-to-market adjustment (2)		0.4			0.0	%			0.00			0.00			(0.1	)	0.0	%		(0.00	)		(0.00	)
	Exclude discrete tax adjustments (3)		(16.2	)		-1.5	%			(0.09	)		(0.09	)		(6.8	)	-0.7	%		(0.04	)		(0.03	)
	Non-GAAP tax adjustments		(5.5	)		-0.5	%			(0.03	)		(0.03	)		(5.3	)	-0.5	%		(0.03	)		(0.03	)
	Convertible share adjustment		-			-				-			0.03			-		-			-			0.02
Net income - non-GAAP		$	207.8			19.6	%		$	1.21		$	1.20		$	202.3		19.9	%	$	1.05		$	1.04

GAAP and non-GAAP weighted average common shares - basic			172.4													193.0
GAAP weighted average common shares - diluted			177.8													199.2
	Exclude dilutive shares from convertible note		(4.2	)												(4.4	)
Non-GAAP weighted average common shares - diluted			173.6													194.8

(1)	Restructuring and other consists of:
		Six Months Ended
		June 30, 2019													July 1, 2018
	Contingent consideration fair value adjustment	$	(8.7	)											$	(8.5	)
	Acquisition related expenses and compensation		1.8													3.3
	Employee severance		1.6													6.3
	Other		-													0.9
		$	(5.3	)											$	2.1

(2)	For the six months ended June 30, 2019 and July 1, 2018, interest and other included non-cash convertible debt interest expense. For the six months ended June 30, 2019 and July 1, 2018, adjustments to exclude actuarial loss (gain) recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting.

(3)	For the six months ended June 30, 2019 and July 1, 2018, adjustment to exclude discrete income tax items. For the six months ended June 30, 2019, income tax (benefit) provision includes a $26 million tax benefit from the release of uncertain tax position reserves due to the IRS completion of its audit of Teradyne's 2015 Federal tax return and includes a $15 million tax provision related to the finalization of our toll tax charge.



GAAP to Non-GAAP Reconciliation of Third Quarter 2019 guidance:

GAAP and non-GAAP third quarter revenue guidance:					$540 million			to	$580 million
GAAP net income per diluted share					$	0.53			$	0.63
	Exclude acquired intangible assets amortization					0.06				0.06
	Exclude non-cash convertible debt interest					0.02				0.02
	Exclude restructuring and other					0.01				0.01
	Tax effect of non-GAAP adjustments					(0.01	)			(0.01	)
	Convertible share adjustment					0.02				0.02
Non-GAAP net income per diluted share					$	0.64			$	0.74

For press releases and other information of interest to investors, please visit teradyne.com.
	Contact: Teradyne, Inc.
	Andy Blanchard, 978-370-2425
	Vice President of Corporate Relations

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