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

|GlobeNewswire|About: TER
  • Full year 2017 sales up 22% from 2016
  • Universal Robots 2017 sales up 72% from 2016
  • Quarterly dividend increased 29% to $0.09 beginning Q1’18
  • Expect to repurchase $750 million in shares in 2018 as part of a new $1.5 billion share repurchase program
           
        Q4'17       Q4'16       Q3'17       FY 2017       FY 2016
Orders (mil)       $560       $628       $410       $2,026       $1,867
Revenue (mil)       $479       $380       $503       $2,137       $1,753
GAAP EPS       ($0.54)       $0.33       $0.52       $1.28       ($0.21)
Non-GAAP EPS       $0.46       $0.32       $0.54       $2.34       $1.51
                                         

==========================================

NORTH READING, Mass., Jan. 24, 2018 (GLOBE NEWSWIRE) -- Teradyne, Inc. (TER) (NYSE:TER) reported revenue of $479 million for the fourth quarter of 2017 of which $317 million was in Semiconductor Test, $80 million in System Test, $54 million in Industrial Automation, and $28 million in Wireless Test. GAAP net loss for the fourth quarter was ($105.9) million or ($0.54) per share.  GAAP results include a $184 million discrete tax charge related to the impact of U.S. tax policy changes1.  On a non-GAAP basis, Teradyne’s net income in the fourth quarter was $91.4 million, or $0.46 per diluted share, which excluded acquired intangible asset amortization, pension actuarial gains, restructuring and other charges, non-cash convertible debt interest, discrete income tax adjustments, and included the related tax impact on non-GAAP adjustments.

Orders in the fourth quarter of 2017 were $560 million of which $410 million were in Semiconductor Test, $69 million in System Test, $56 million in Industrial Automation, and $24 million in Wireless Test.

"The fourth quarter capped off a great 2017 at Teradyne.  In Q4, Semi Test sales were up 17% compared to Q4 of 2016 and up 22% for the full year,” said CEO and President Mark Jagiela.  “Universal Robots Q4 sales grew 61% from Q4’16 and 72% for the full year driven by increased awareness of the economic advantages of our cobots for an expanded range of applications.  Overall, the total company grew 22% in sales and 55% in non-GAAP EPS in 2017."

"Turning to 2018, at the mid-point of the Q1 revenue guidance, we see 4% growth over Q1 of 2017. Our view of the 2018 SemiTest market outlook has also strengthened slightly since our October estimate. On the capital allocation front, the combination of a strong business outlook and U.S. tax reform support our plan to raise our quarterly dividend by 29% to $0.09 cents per share and initiate a $1.5 billion share repurchase program with expected repurchases of $750 million in 2018."

Teradyne’s Board of Directors approved the share repurchase program authorizing the Company to repurchase up to $1.5 billion of its common stock through open market purchases or private transactions.  The $1.5 billion authorization replaces the Company’s existing $500 million repurchase authorization announced in December 2016.

Teradyne’s Board of Directors declared a quarterly cash dividend of $0.09 per share, payable on March 23, 2018 to shareholders of record as of the close of business on February 23, 2018. 

Guidance for the first quarter of 2018 is revenue of $460 million to $490 million, with GAAP net income of $0.32 to $0.39 per diluted share and non-GAAP net income of $0.38 to $0.45 per diluted share.  Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest, restructuring and other charges and includes the related tax impact on non-GAAP adjustments.

______________________

1 Amount represents the estimated impact of the Tax Cuts and Jobs Act, which may change as additional guidance and information become available.

Webcast
A conference call to discuss the fourth quarter results, along with management's business outlook, will follow at 10 a.m. ET, Thursday, January 25. 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 starting at 10 a.m. ET.  A replay will be available on the Teradyne website at www.teradyne.com/investors.

Non-GAAP Results
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 acquired intangible assets amortization, non-cash convertible debt interest, pension actuarial gains and losses, discrete income tax adjustments, goodwill impairment, acquired intangible assets impairment, and restructuring and other. 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 performance 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 performance 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 actuarial gains and losses. GAAP requires that these items be included in determining gross margin. Non-GAAP gross margin dollar amount and percentage are non-GAAP performance 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. Management believes each of these non-GAAP performance 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 website at www.teradyne.com by clicking on “Investors” and then selecting the “GAAP to Non-GAAP Reconciliation” link. The non-GAAP performance 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.

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 2017, Teradyne had revenue of $2.14 billion and currently employs approximately 4,500 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 Teradyne’s future business prospects, 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, use of proceeds and potential dilution from the senior convertible notes offering, potential borrowings under a senior secured credit facility, and the impact of the U.S. tax reform law. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance, events, earnings per share, use of cash, payment of dividends, repurchases of common stock, payment of the senior convertible notes, availability of, or borrowing under, the credit facility, or the impact of the U.S. tax reform law. 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, use of cash, dividend payments, repurchases of common stock, payment of the senior convertible notes 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 from one or more significant customers; development, delivery and 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; unexpected cash needs; insufficient cash flow to make required payments and pay the principal amount on the senior convertible notes; the business judgment of the board of directors that a declaration of a dividend, the repurchase of common stock or borrowing under the credit facility is not in the company’s best interests; additional U.S. tax regulations or IRS guidance; 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, 2016 and the Quarterly Report on Form 10-Q for the period ended October 1, 2017. 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 FOURTH FISCAL QUARTER OF 2017                    
                       
CONDENSED  CONSOLIDATED  STATEMENTS OF OPERATIONS      
(In thousands, except per share amounts)                
                       
      Quarter Ended   Twelve Months Ended
      December 31, 2017   October 1, 2017   December 31, 2016   December 31, 2017   December 31, 2016
                       
Net revenues
  $ 479,415     $ 503,378     $ 379,989     $ 2,136,606     $ 1,753,250  
  Cost of revenues (exclusive of acquired intangible assets amortization
shown separately below) (1) (2)
    206,480       208,592       160,983       912,734       793,683  
                       
Gross profit      272,935       294,786       219,006       1,223,872       959,567  
                       
Operating expenses:                    
  Selling and administrative (1)     88,006       86,244       76,289       348,287       315,682  
  Engineering and development (1)     70,564       77,190       70,052       305,665       291,025  
  Acquired intangible assets amortization     7,384       7,028       7,923       30,530       52,648  
  Restructuring and other (3)     8,970       (4,407 )     5,570       9,362       21,942  
  Goodwill impairment (4)     -       -       -       -       254,946  
  Acquired intangible assets impairment (4)     -       -       -       -       83,339  
  Operating expenses     174,924       166,055       159,834       693,844       1,019,582  
                       
Income (loss) from operations     98,011       128,731       59,172       530,028       (60,015 )
                       
  Interest and other (5)     73       (1,294 )     (288 )     (5,616 )     4,955  
                       
Income (loss) before income taxes     98,084       127,437       58,884       524,412       (55,060 )
  Income tax provision (benefit) (6)     204,007       24,017       (7,461 )     266,720       (11,639 )
Net (loss) income   $ (105,923 )   $ 103,420     $ 66,345     $ 257,692     $ (43,421 )
                       
Net (loss) income per common share:                    
Basic   $ (0.54 )   $ 0.52     $ 0.33     $ 1.30     $ (0.21 )
Diluted   $ (0.54 )   $ 0.52     $ 0.33     $ 1.28     $ (0.21 )
                       
Weighted average common shares - basic     196,010       197,485       200,810       198,069       202,578  
                       
Weighted average common shares - diluted (7)     196,010       200,775       202,947       201,641       202,578  
                       
                       
Cash dividend declared per common share   $ 0.07     $ 0.07     $ 0.06     $ 0.28     $ 0.24  
                       
                       
Net orders    $ 559,869     $ 410,229     $ 628,284     $ 2,026,436     $ 1,867,146  
                       
                       
(1 ) Pension actuarial (gains) losses included in our operating results were as follows:                    
      Quarter Ended   Twelve Months Ended
      December 31, 2017   October 1, 2017   December 31, 2016   December 31, 2017   December 31, 2016
  Cost of revenues   $ (2,088 )   $ -     $ (774 )   $ (2,752 )   $ (1,025 )
  Engineering and development     (1,710 )     -       (725 )     (2,456 )     (1,234 )
  Selling and administrative     12       -       (502 )     (1,082 )     (944 )
      $ (3,786 )   $ -     $ (2,001 )   $ (6,290 )   $ (3,203 )
                       
                       
(2 ) Cost of revenues includes:   Quarter Ended   Twelve Months Ended
      December 31, 2017   October 1, 2017   December 31, 2016   December 31, 2017   December 31, 2016
  Provision for excess and obsolete inventory   $ 1,690     $ 1,859     $ 2,345     $ 8,844     $ 17,493  
  Sale of previously written down inventory     (1,048 )     (3,121 )     (1,924 )     (7,451 )     (10,037 )
      $ 642     $ (1,262 )   $ 421     $ 1,393     $ 7,456  
                       
                       
(3 ) Restructuring and other consists of:   Quarter Ended   Twelve Months Ended
      December 31, 2017   October 1, 2017   December 31, 2016   December 31, 2017   December 31, 2016
  Contingent consideration fair value adjustment   $ 5,973     $ (286 )   $ 5,445     $ 7,820     $ 15,896  
  Employee severance     1,801       581       125       3,754       6,046  
  Impairment of fixed assets     1,124       -       -       1,124       -  
  Facility related     72       (393 )     -       973       -  
  Property insurance recovery     -       (5,064 )     -       (5,064 )     (5,363 )
  Expenses and impairment of fixed assets related to Japan earthquake     -       755       -       755       5,363  
      $ 8,970     $ (4,407 )   $ 5,570     $ 9,362     $ 21,942  
                       
                       
(4 ) Goodwill and acquired intangible assets impairment related to Teradyne's Wireless Test business segment.                  
                       
(5 ) Interest and other includes:   Quarter Ended   Twelve Months Ended
      December 31, 2017   October 1, 2017   December 31, 2016   December 31, 2017   December 31, 2016
  Non-cash convertible debt interest expense   $ 3,166     $ 3,127     $ 642     $ 12,431     $ 642  
                       
(6 ) For the quarter and twelve months ended December 31, 2017, income tax provision includes an expense of $184 million related to the estimated impact of U.S. tax policy changes.
                       
(7 ) Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarter ended October 1, 2017 and the twelve months ended December 31, 2017, 1.1 million and 1.3 million shares, respectively, have been included in diluted shares.
                       
                       
CONDENSED  CONSOLIDATED  BALANCE  SHEETS  (In thousands)                    
                       
      December 31, 2017   December 31, 2016            
                       
Assets                    
  Cash and cash equivalents   $ 429,843     $ 307,884              
  Marketable securities     1,347,979       871,024              
  Accounts receivable, net     272,783       192,444              
  Inventories, net     107,525       135,958              
  Prepayments and other current assets     112,151       116,493              
  Total current assets     2,270,281       1,623,803              
                       
  Property, plant and equipment, net     268,447       253,821              
  Marketable securities     125,926       433,843              
  Deferred tax assets     84,026       107,405              
  Retirement plans assets     17,491       7,712              
  Other assets     12,275       12,165              
  Acquired intangible assets, net     79,088       100,401              
  Goodwill     252,011       223,343              
  Total assets   $ 3,109,545     $ 2,762,493              
                       
Liabilities                    
  Accounts payable   $ 86,393     $ 95,362              
  Accrued employees' compensation and withholdings     141,694       109,944              
  Deferred revenue and customer advances     83,614       84,478              
  Other accrued liabilities     59,083       51,382              
  Contingent consideration     24,497       1,050              
  Income taxes payable     59,055       30,480              
  Total current liabilities     454,336       372,696              
                       
  Retirement plans liabilities     119,776       106,938              
  Long-term deferred revenue and customer advances     30,127       23,463              
  Long-term contingent consideration     20,605       37,282              
  Deferred tax liabilities     6,720       12,144              
  Long-term other accrued liabilities     10,273       28,642              
  Long-term income taxes payable     148,075       -              
  Long-term debt     365,987       352,669              
  Total liabilities     1,155,899       933,834              
                       
Shareholders' equity     1,953,646       1,828,659              
                       
  Total liabilities and shareholders' equity   $ 3,109,545     $ 2,762,493              
                       
                       
CONDENSED  CONSOLIDATED  STATEMENTS OF CASH FLOWS (In thousands)     
                       
      Quarter Ended   Twelve Months Ended    
      December 31, 2017   December 31, 2016   December 31, 2017   December 31, 2016    
Cash flows from operating activities:                    
  Net (loss) income   $ (105,923 )   $ 66,345     $ 257,692     $ (43,421 )    
  Adjustments to reconcile net (loss) income to net cash provided by operating activities:                    
  Depreciation     16,879       16,345       66,122       64,782      
  Amortization     9,640       8,952       41,953       55,227      
  Stock-based compensation     8,477       7,738       34,097       30,750      
  Contingent consideration fair value adjustment     5,973       5,445       7,820       15,896      
  Provision for excess and obsolete inventory     1,690       2,345       8,844       17,493      
  Retirement plans actuarial gains     (3,786 )     (2,001 )     (6,290 )     (3,203 )    
  Deferred taxes     37,784       (20,368 )     37,105       (62,936 )    
  Property insurance recovery     -       -       (4,309 )     -      
  Tax benefit related to employee stock compensation awards     -       (2,799 )     -       (6,198 )    
  Goodwill impairment     -       -       -       254,946      
  Acquired intangible assets impairment     -       -       -       83,339      
  Other     (165 )     (597 )     266       (448 )    
  Changes in operating assets and liabilities:                    
  Accounts receivable     (4,961 )     (27,955 )     (80,584 )     18,325      
  Inventories     21,190       (14,338 )     44,960       34,263      
  Prepayments and other assets     (5,108 )     (5,924 )     2,254       (19,194 )    
  Accounts payable and accrued expenses     42,350       46,404       47,648       6,820      
  Deferred revenue and customer advances     (29,551 )     (57,014 )     4,984       (3,634 )    
  Retirement plans contributions     (1,044 )     (173 )     (5,902 )     (6,044 )    
  Income taxes     154,027       14,207       169,835       18,434      
Net cash provided by operating activities     147,472       36,612       626,495       455,197      
                       
Cash flows from investing activities:                    
  Purchases of property, plant and equipment     (32,128 )     (19,020 )     (105,375 )     (85,272 )    
  Purchases of available-for-sale marketable securities     (355,394 )     (780,430 )     (1,391,917 )     (1,656,267 )    
  Proceeds from sales of available-for-sale marketable securities     84,577       386,050       527,746       852,794      
  Proceeds from maturities of available-for-sale marketable securities     228,426       41,070       701,681       243,232      
  Proceeds from property insurance     -       -       5,064       5,051      
Net cash used for investing activities     (74,519 )     (372,330 )     (262,801 )     (640,462 )    
                       
Cash flows from financing activities:                    
  Issuance of common stock under stock purchase and stock option plans     31       388       24,493       20,473      
  Repurchase of common stock     (48,482 )     (61,239 )     (200,304 )     (146,331 )    
  Dividend payments     (13,717 )     (12,071 )     (55,447 )     (48,619 )    
  Payments related to net settlement of employee stock compensation awards     (297 )     (169 )     (12,881 )     (9,398 )    
  Proceeds from long-term debt, net     -       417,818       -       417,818      
  Tax benefit related to employee stock compensation awards     -       2,799       -       6,198      
  Payments of contingent consideration     -       -       (1,050 )     (11,697 )    
Net cash (used for) provided by financing activities     (62,465 )     347,526       (245,189 )     228,444      
                       
Effects of exchange rate changes on cash and cash equivalents     678       (1,861 )     3,454       -      
                       
Increase in cash and cash equivalents     11,166       9,947       121,959       43,179      
Cash and cash equivalents at beginning of period     418,677       297,937       307,884       264,705      
Cash and cash equivalents at end of period   $ 429,843     $ 307,884     $ 429,843     $ 307,884      
                       


                                               
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                                      
                                                 

For press releases and other information of interest to investors, please visit Teradyne's homepage at http://www.teradyne.com.

Contact: Teradyne, Inc.
Andy Blanchard 978-370-2425
Vice President of Corporate Relations

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Source: Teradyne, Inc. 2018 GlobeNewswire, Inc.