GlobeNewswire Inc | Jul 27, 2021 05:02PM EDT

July 27, 2021

-- Revenue of $1,086 million in Q221 grew 29% from Q220 and 92% from Q219 -- GAAP Gross Margin 59.6% in Q221, up from 56.2% in Q220 and 57.4% in Q219 -- Q221 GAAP earnings per share grew 68% from Q220 and 220% from Q219 -- Q221 non-GAAP earnings per share grew 44% from Q220 and 189% from Q219 -- Test revenue grew 27% from Q220 and 103% from Q219 on Semiconductor Test strength -- Industrial Automation revenue grew 57% from Q220 and 23% from Q219 on global demand growth at Universal Robots -- Q321 Revenue guidance at mid-point represents 12% growth from Q320 and 58% from Q319

Q2'21 Q2'20 Q1'21 1H?21 1H?20Revenue (mil) $1,086 $839 $782 $1,867 $1,543GAAP EPS $1.76 $1.05 $1.09 $2.85 $2.02Non-GAAP EPS $1.91 $1.33 $1.11 $3.02 $2.34

NORTH READING, Mass., July 27, 2021 (GLOBE NEWSWIRE) -- Teradyne, Inc. (NASDAQ: TER) reported revenue of $1,086 million for the second quarter of 2021 of which $834 million was in Semiconductor Test, $105 million in System Test, $55 million in Wireless Test and $92 million in Industrial Automation (IA). GAAP net income for the second quarter was $328.3 million or $1.76 per diluted share. On a non-GAAP basis, Teradynes net income in the second quarter was $337.5 million, or $1.91 per diluted share, which excluded acquired intangible asset amortization, restructuring and other charges, non-cash convertible debt interest, and included the related tax impact on non-GAAP adjustments.

Test demand across all of our end markets remained high in the second quarter and the strong recovery in our Industrial Automation business broadened geographically, said Teradyne CEO and President Mark Jagiela. System on a chip (SOC) test shipments were exceptionally strong in the quarter growing nearly 30% from last years record level. In Industrial Automation, Universal Robots delivered growth in North America, Europe and China compared with both 2020 and 2019 as the improving global economy and expanding range of automation solutions we offer powered our highest quarterly group revenue on record.

As we look ahead, our Q3 outlook reflects continued strong demand from both our Test and Industrial Automation end markets and, at the mid-point of our guidance, puts us on track to grow sales 12% and GAAP and non-GAAP earnings per share 7% and 20%, respectively, from our Q320 levels.

Guidance for the third quarter of 2021 is revenue of $880 million to $960 million, with GAAP net income of $1.17 to $1.41 per diluted share and non-GAAP net income of $1.29 to $1.55 per diluted share. Non-GAAP guidance excludes acquired intangible asset amortization, non-cash convertible debt interest and includes the related tax impact on non-GAAP adjustments.

Webcast A conference call to discuss the second quarter results, along with management's business outlook, will follow at 8:30 a.m. ET, Wednesday, July 28. 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 8:30 a.m. ET. A replay will be available on the Teradyne website at https://investors.teradyne.com/events-presentations.

Non-GAAP ResultsIn 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, losses on convertible debt conversions, pension actuarial gains and losses, discrete income tax adjustments, fair value inventory step-up, and restructuring and other, and includes the related tax impact on non-GAAP adjustments. 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 as a percentage of revenue, 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 Teradynes baseline performance before gains, losses or other charges that may not be indicative of Teradynes 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 Teradynes business plan, historical operating results and the operating results of Teradynes competitors. Non-GAAP gross margin excludes fair value inventory step-up. GAAP requires that this item 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 Teradynes current core business and future outlook and for comparison with Teradynes business plan, historical gross margin results and the gross margin results of Teradynes competitors. Non-GAAP diluted shares include the impact of Teradynes call option on its shares. 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 Teradynes financial and operational performance, as well as facilitating meaningful comparisons of Teradynes 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 teradyne.com by clicking on Investor Relations and then selecting Financials and 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.

AboutTeradyneTeradyne(NASDAQ:TER) brings high-quality innovations such as smart devices, life-saving medical equipment and data storage systems to market, faster. Its advanced test solutions for semiconductors, electronic systems, wireless devices and more ensure that products perform as they were designed. Its Industrial Automation offerings include collaborative and mobile robots that help manufacturers of all sizes improve productivity and lower costs. In 2020,Teradynehad revenue of$3.1 billionand today employs 5,600 people worldwide. For more information, visitteradyne.com.Teradyneis a registered trademark ofTeradyne, Inc.in the U.S. and other countries.

Safe Harbor Statement This release contains forward-looking statements regarding Teradynes future business prospects, the impact of the COVID-19 pandemic, 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, and the impact of U.S. and Chinese export and tariff laws. Such statements are based on the current assumptions and expectations of Teradynes 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, the impact of the COVID-19 pandemic, or the impact of U.S. and Chinese export and tariff laws. There can be no assurance that managements estimates of Teradynes 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.

On May 16, 2019, Huawei and 68 of its affiliates, including HiSilicon, were added to the U.S. Department of Commerce Entity List under U.S. Export Administration Regulations (the EAR). This action by the U.S. Department of Commerce imposed new export licensing requirements on exports, re-exports, and in-country transfers of all U.S. - regulated products, software and technology to the designated Huawei entities. While most of Teradynes products are not subject to the EAR and therefore were not affected by the Entity List restrictions, some of its products are currently manufactured in the U.S. and thus subject to the Entity List restrictions.

On August 17, 2020, the U.S. Department of Commerce published final regulations expanding the scope of the U.S. EAR to include additional products that became subject to export restrictions relating to Huawei entities including HiSilicon. These new regulations restrict the sale to Huawei and the designated Huawei entities of certain non-U.S. made items, such as semiconductor devices, manufactured for or sold to Huawei entities including HiSilicon under specific, detailed conditions set forth in the new regulations. These new regulations have impacted our sales to Huawei, HiSilicon and their suppliers. Teradyne is taking appropriate actions, including filing for licenses with the U.S. Department of Commerce and working with the U.S. regulators to clarify the scope of the restrictions. However, Teradyne cannot be certain that the actions it takes will mitigate the risks associated with the new export controls that impact its business. It is uncertain the extent these new regulations and any other additional regulations that may be implemented by the U.S. Department of Commerce or other government agency may have on Teradynes business and financial results.

On April 28, 2020, the U.S. Department of Commerce published new export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China, Russia and Venezuela. The definition of military end user is broad. The regulations went into effect on June 29, 2020. In December 2020, the U.S. Department of Commerce issued a list of companies in China and other countries that it considered to be military end users. Teradyne does not expect that compliance with the new export controls will significantly impact its ability to sell products to its customers in China or to manufacture products in China. The new export controls, however, could disrupt the Companys supply chain, increase compliance costs and impact the demand for the Companys products in China and, thus, have a material adverse impact on Teradynes business, financial condition or results of operations. In addition, while the Company maintains an export compliance program, its compliance controls could be circumvented, exposing the Company to legal liabilities. Teradyne continues to assess the potential impact of the new export controls on its business and operations and take appropriate actions, including filing for licenses with the U.S. Department of Commerce, to minimize any disruption. However, Teradyne cannot be certain that the actions it takes will mitigate all the risks associated with the new export controls that may impact its business.

In response to the regulations issued by the U.S. Department of Commerce, the Chinese government has passed new laws that may impact Teradynes business activities in China. The Company is assessing the potential impact of these new Chinese laws and monitoring relevant laws and regulations issued by the Chinese government.

The global pandemic of the novel strain of the coronavirus (COVID-19) has resulted in authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders, and shutdowns. These measures have impacted and may further impact Teradynes workforce and operations, the operations of its customers, and those of its contract manufacturers and suppliers. The COVID-19 pandemic has adversely impacted the Companys results of operations, including increased costs company-wide and decreased sales in its industrial automation businesses. The Company cannot accurately estimate the amount of the impact on Teradynes 2021 financial results and to its future financial results. The COVID-19 outbreak has significantly increased economic and demand uncertainty in Teradynes markets. This uncertainty resulted in a significant decrease in demand for certain Teradyne products and could continue to impact demand for an uncertain period of time. The spread of COVID-19 has caused Teradyne to modify its business practices (including employee travel, employees working remotely, and cancellation of physical participation in meetings, events and conferences) and the Company may take further actions as may be required by government authorities or that it determines are in the best interests of its employees, customers, contract manufacturers and suppliers. There is uncertainty that such measures will be sufficient to mitigate the risks posed by the virus, and Teradynes ability to perform critical functions could be impacted. The degree to which COVID-19 impacts Teradynes results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and continued surge of the virus, its severity, the actions to contain the virus or the availability and impact of vaccines in countries where the Company does business, and how quickly and to what extent normal economic and operating conditions can resume.

Important factors that could cause actual results, earnings per share, use of cash, dividend payments, repurchases of common stock, or payment of the senior convertible notes 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 the Industrial Automation business; increased research and development spending; deterioration of Teradynes financial condition; the continued impact of the COVID-19 pandemic and related government responses on the market and demand for Teradynes products, on its contract manufacturers and supply chain, and on its workforce; the impact of the global semiconductor supply shortage on our supply chain and contract manufacturers; 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 or the repurchase of common stock is not in the companys best interests; additional U.S. tax regulations or IRS guidance; the impact of any tariffs or export controls imposed in the U.S. or China; compliance with trade protection measures or export restrictions; the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei and HiSilicon; and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the Risk Factors sections of Teradynes Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and Quarterly Report on Form 10-Q for the fiscal quarter ended April 4, 2021. The forward-looking statements provided by Teradyne in this press release represent managements views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause managements 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 Teradynes views as of any date subsequent to the date of this release.

TERADYNE, INC. REPORT FORSECOND FISCAL QUARTER OF 2021 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Quarter Ended Six Months Ended July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020 Net revenues $ 1,085,728 $ 781,606 $ 838,661 $ 1,867,334 $ 1,543,016 Cost of revenues (exclusive of acquired intangible assets 438,739 319,988 367,188 758,727 665,993 amortization shown separately below) (1) Gross profit 646,989 461,618 471,473 1,108,607 877,023 Operating expenses: Selling and 140,187 129,797 113,259 269,984 224,647 administrative Engineering and 110,021 100,402 94,102 210,423 179,261 development Acquired intangible 5,402 5,536 8,941 10,938 18,832 assets amortization Restructuring and 2,507 (7,130 ) 37,222 (4,623 ) 29,616 other (2) Operating 258,117 228,605 253,524 486,722 452,356 expenses Income from operations 388,872 233,013 217,949 621,885 424,667 Interest and other 4,846 9,020 658 13,866 10,308 expense (3) Income before income taxes 384,026 223,993 217,291 608,019 414,359 Income tax provision 55,707 18,481 28,383 74,188 49,261 Net income $ 328,319 $ 205,512 $ 188,908 $ 533,831 $ 365,098 Net income per common share: Basic $ 1.98 $ 1.23 $ 1.14 $ 3.21 $ 2.20 Diluted $ 1.76 $ 1.09 $ 1.05 $ 2.85 $ 2.02 Weighted average common 165,995 166,491 165,789 166,243 166,189 shares - basic Weighted average common 186,750 187,740 180,257 187,245 180,497 shares - diluted (4) Cash dividend declared per $ 0.10 $ 0.10 $ 0.10 $ 0.20 $ 0.20 common share (1 ) Cost of revenues Quarter Ended Six Months Ended includes: July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020 Provision for excess and $ 798 $ 2,827 $ 5,580 $ 3,625 $ 9,637 obsolete inventory Sale of previously (428 ) (790 ) (337 ) (1,218 ) (1,414 ) written down inventory Inventory - - 121 - 239 step-up $ 370 $ 2,037 $ 5,364 $ 2,407 $ 8,462 (2 ) Restructuring and Quarter Ended Six Months Ended other consists of: July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020 Employee $ 436 $ 188 $ 36 $ 624 $ 764 severance Acquisition related expenses 275 (237 ) 3,145 38 4,503 and compensation Contingent consideration - (7,227 ) 29,259 (7,227 ) 19,239 fair value adjustment Contract termination - - 4,000 - 4,000 settlement fee Other 1,796 146 782 1,942 1,110 $ 2,507 $ (7,130 ) $ 37,222 $ (4,623 ) $ 29,616 (3 ) Interest and other Quarter Ended Six Months Ended includes: July 4, April 4, June 28, July 4, June 28, 2021 2021 2020 2021 2020 Non-cash convertible debt $ 3,277 $ 3,581 $ 3,584 $ 6,858 $ 7,124 interest Loss on convertible debt 1,175 4,069 - 5,244 - conversions Pension (627 ) - (99 ) (627 ) (99 ) actuarial gains $ 3,825 $ 7,650 $ 3,485 $ 11,475 $ 7,025 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 quarters ended July 4, 2021, April 4, 2021 and June 28, 2020, 9.6 million, 10.3 million and 7.6 million shares, respectively, have been included in diluted shares. For the six months ended July 4, 2021 and(4 ) June 28, 2020, 9.9 million and 7.5 million shares, respectively have been included in diluted shares. For the quarters ended July 4, 2021, April 4, 2021, and June 28, 2020, diluted shares also included 10.1 million, 9.4 million and 5.8 million shares, respectively from the convertible note hedge transaction. For the six months ended July 4, 2021, and June 28, 2020, diluted shares included 9.8 million and 5.7 million shares, respectively from the convertible note hedge transaction.

CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) July 4, December 31, 2021 2020Assets Cash and cash equivalents $ 954,441 $ 914,121 Marketable securities 282,121 522,280 Accounts receivable, net 868,457 497,506 Inventories, net 226,138 222,189 Prepayments and other current assets 368,315 259,338 Total current assets 2,699,472 2,415,434 Property, plant and equipment, net 395,395 394,800 Operating lease right-of-use assets, net 61,849 54,569 Marketable securities 181,560 117,980 Deferred tax assets 94,438 87,913 Retirement plans assets 17,170 17,468 Other assets 21,320 9,384 Acquired intangible assets, net 88,121 100,939 Goodwill 441,597 453,859 Total assets $ 4,000,922 $ 3,652,346 Liabilities Accounts payable $ 156,103 $ 133,663 Accrued employees' compensation and 205,717 220,321 withholdings Deferred revenue and customer advances 148,882 134,662 Other accrued liabilities 146,484 77,581 Operating lease liabilities 20,539 20,573 Income taxes payable 93,876 80,728 Current debt 213,761 33,343 Total current liabilities 985,362 700,871 Retirement plans liabilities 154,311 151,140 Long-term deferred revenue and customer 58,534 58,359 advances Long-term contingent consideration - 7,227 Long-term other accrued liabilities 19,387 19,352 Deferred tax liabilities 8,961 10,821 Long-term operating lease liabilities 49,066 42,073 Long-term income taxes payable 67,041 74,930 Debt 143,618 376,768 Total liabilities 1,486,280 1,441,541 Mezzanine equity 21,386 3,787 Shareholders' equity 2,493,256 2,207,018 Total liabilities, convertible common shares and shareholders? $ 4,000,922 $ 3,652,346 equity

CONDENSED CONSOLIDATEDSTATEMENTS OF CASH FLOWS (In thousands) Quarter Ended Six Months Ended July 4, June 28, July 4, June 28, 2021 2020 2021 2020Cash flows from operating activities: Net income $ 328,319 $ 188,908 $ 533,831 $ 365,098 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 21,938 19,816 45,848 38,305 Stock-based 10,999 10,907 23,231 21,367 compensation Amortization 9,521 12,843 19,343 26,234 Loss on convertible debt 1,175 - 5,244 - conversions Provision for excess and 798 5,580 3,625 9,637 obsolete inventory Deferred taxes 257 (5,338 ) (800 ) (7,163 ) Gains on (2,159 ) (5,126 ) (4,650 ) (469 ) investments Retirement plans (627 ) (99 ) (627 ) (99 ) actuarial gains Contingent consideration - 29,259 (7,227 ) 19,239 fair value adjustment Other (1 ) 19 199 523 Changes in operating assets and liabilities, net of businesses acquired: Accounts (285,186 ) (204,261 ) (372,698 ) (331,040 ) receivable Inventories 56,320 (19,546 ) 19,908 (3,728 ) Prepayments and other (31,285 ) (9,859 ) (117,416 ) (49,479 ) assets Accounts payable and 97,361 148,901 86,790 113,578 other liabilities Deferred revenue and 7,237 29,568 15,189 28,655 customer advances Retirement plans (814 ) (1,239 ) (2,739 ) (2,501 ) contributions Income taxes (7,569 ) 22,564 (2,628 ) 37,842 Net cash provided by 206,284 222,897 244,423 265,999 operating activities Cash flows from investing activities: Purchases of property, plant and (34,707 ) (47,314 ) (73,957 ) (84,014 ) equipment Purchases of marketable (186,482 ) (112,429 ) (398,086 ) (299,548 ) securities Proceeds from maturities of 265,985 84,527 460,213 182,984 marketable securities Proceeds from sales of marketable 54,819 11,656 116,112 26,661 securities Purchase of investment and acquisition of (12,000 ) - (12,000 ) 149 businesses, net of cash acquired Proceeds from life - 546 - 546 insuranceNet cash provided by(used for) investing 87,615 (63,014 ) 92,282 (173,222 )activities Cash flows from financing activities: Issuance of common stock under stock 15,437 5 32,581 12,757 purchase and stock option plans Repurchase of (151,396 ) (9,426 ) (196,584 ) (88,465 ) common stock Dividend payments (16,604 ) (16,580 ) (33,271 ) (33,266 ) Payments of convertible debt (15,553 ) - (66,828 ) - principal Payments related to net settlement of (1,119 ) (449 ) (31,794 ) (22,519 ) employee stock compensation awards Payments of contingent - - - (8,852 ) considerationNet cash used for (169,235 ) (26,450 ) (295,896 ) (140,345 )financing activities Effects of exchangerate changes on cash (1,372 ) (1,496 ) (489 ) (925 )and cash equivalentsIncrease (decrease) incash and cash 123,292 131,937 40,320 (48,493 )equivalentsCash and cashequivalents at 831,149 593,494 914,121 773,924 beginning of periodCash and cashequivalents at end of $ 954,441 $ 725,431 $ 954,441 $ 725,431 period



GAAP to Non-GAAP Earnings Reconciliation (In millions, except per share amounts) Quarter Ended July 4, % of Net April 4, % of Net June 28, % of Net 2021 Revenues 2021 Revenues 2020 Revenues Net revenues $ 1,085.7 $ 781.6 $ 838.7 Gross profit GAAP $ 647.0 59.6 % $ 461.6 59.1 % $ 471.5 56.2 % Inventory step-up - - - - 0.1 0.0 % Gross profit non-GAAP $ 647.0 59.6 % $ 461.6 59.1 % $ 471.6 56.2 % Income from operations - $ 388.9 35.8 % $ 233.0 29.8 % $ 217.9 26.0 % GAAP Restructuring and 2.5 0.2 % (7.1 ) -0.9 % 37.2 4.4 % other (1) Acquired intangible 5.4 0.5 % 5.5 0.7 % 8.9 1.1 % assets amortization Inventory step-up - - - - 0.1 0.0 % Income from operations - $ 396.8 36.5 % $ 231.4 29.6 % $ 264.1 31.5 % non-GAAP Net Income Net Income Net Income per Common Share per Common Share per Common Share July 4, % of Net Basic Diluted April 4, % of Net Basic Diluted June 28, % of Net Basic Diluted 2021 Revenues 2021 Revenues 2020 RevenuesNet income - GAAP $ 328.3 30.2 % $ 1.98 $ 1.76 $ 205.5 26.3 % $ 1.23 $ 1.09 $ 188.9 22.5 % $ 1.14 $ 1.05 Restructuring and 2.5 0.2 % 0.02 0.01 (7.1 ) -0.9 % (0.04 ) (0.04 ) 37.2 4.4 % 0.22 0.21 other (1) Acquired intangible 5.4 0.5 % 0.03 0.03 5.5 0.7 % 0.03 0.03 8.9 1.1 % 0.05 0.05 assets amortization Loss on convertible 1.2 0.1 % 0.01 0.01 4.1 0.5 % 0.02 0.02 - - - - debt conversions (2) Interest and other (2) 3.3 0.3 % 0.02 0.02 3.6 0.5 % 0.02 0.02 3.6 0.4 % 0.02 0.02 Pension mark-to-market (0.6 ) -0.1 % (0.00 ) (0.00 ) - - - - (0.1 ) -0.0 % (0.00 ) (0.00 ) adjustment (2) Inventory step-up - - - - - - - - 0.1 0.0 % 0.00 0.00 Exclude discrete tax (1.1 ) -0.1 % (0.01 ) (0.01 ) (15.1 ) -1.9 % (0.09 ) (0.08 ) (1.1 ) -0.1 % (0.01 ) (0.01 ) adjustments Non-GAAP tax (1.5 ) -0.1 % (0.01 ) (0.01 ) (0.3 ) -0.0 % (0.00 ) (0.00 ) (8.3 ) -1.0 % (0.05 ) (0.05 ) adjustments Convertible share - - - 0.10 - - - 0.06 - - - 0.06 adjustment (3)Net income - non-GAAP $ 337.5 31.1 % $ 2.03 $ 1.91 $ 196.2 25.1 % $ 1.18 $ 1.11 $ 229.2 27.3 % $ 1.38 $ 1.33 GAAP and non-GAAP weightedaverage common shares - 166.0 166.5 165.8 basicGAAP weighted average 186.8 187.7 180.3 common shares - diluted Exclude dilutive shares related to (9.6 ) (10.3 ) (7.6 ) convertible note transactionNon-GAAP weighted average 177.2 177.4 172.7 common shares - diluted (1 ) Restructuring and other consists of: Quarter Ended July 4, April 4, June 28, 2021 2021 2020 Employee severance $ 0.4 $ 0.2 $ - Acquisition related expenses and 0.3 (0.2 ) 3.1 compensation Contingent consideration fair - (7.2 ) 29.3 value adjustment Contract termination - - 4.0 settlement fee Other 1.8 0.1 0.8 $ 2.5 $ (7.1 ) $ 37.2 For the quarters ended July 4, 2021, April 4, 2021, and June 28, 2020, Interest and other included non-cash convertible debt interest expense. For the quarters(2 ) ended July 4, 2021 and April 4, 2021, adjustment to exclude loss on convertible debt conversions. For the quarters ended July 4, 2021 and June 28, 2020, adjustments to exclude actuarial (gain) recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. For the quarters ended July 4, 2021, April 4, 2021, and June 28, 2020, the non-GAAP diluted EPS calculation adds back $0.9 million, $1.2 million, and $1.3(3 ) million of convertible debt interest expense to non-GAAP net income, and non-GAAP weighted average diluted common shares include 10.1 million, 9.4 million and 5.8 million shares, respectively, from the convertible note hedge transaction.



Six Months Ended July 4, % of Net June 28, % of Net 2021 Revenues 2020 Revenues Net Revenues $ 1,867.3 $ 1,543.0 Gross profit GAAP $ 1,108.6 59.4 % $ 877.0 56.8 % Inventory - - 0.2 0.0 % step-upGross profit non-GAAP $ 1,108.6 59.4 % $ 877.2 56.9 % Income from $ 621.9 33.3 % $ 424.7 27.5 % operations - GAAP Restructuring (4.6 ) -0.2 % 29.6 1.9 % and other (1) Acquired intangible 10.9 0.6 % 18.8 1.2 % assets amortization Inventory - - 0.2 0.0 % step-upIncome from $ 628.2 33.6 % $ 473.3 30.7 % operations - non-GAAP Net Income Net Income per Common Share per Common Share July 4, % of Net Basic Diluted June 28, % of Net Basic Diluted 2021 Revenues 2020 RevenuesNet income - GAAP $ 533.8 28.6 % $ 3.21 $ 2.85 $ 365.1 23.7 % $ 2.20 $ 2.02 Restructuring (4.6 ) -0.2 % (0.03 ) (0.02 ) 29.6 1.9 % 0.18 0.16 and other (1) Acquired intangible 10.9 0.6 % 0.07 0.06 18.8 1.2 % 0.11 0.10 assets amortization Loss on convertible debt 5.2 0.3 % 0.03 0.03 - - - - conversions (2) Interest and 6.9 0.4 % 0.04 0.04 7.1 0.5 % 0.04 0.04 other (2) Inventory - - - - 0.2 0.0 % 0.00 0.00 step-up Pension mark-to-market (0.6 ) -0.0 % (0.00 ) (0.00 ) (0.1 ) -0.0 % (0.00 ) (0.00 ) adjustment (2) Exclude discrete (16.3 ) -0.9 % (0.10 ) (0.09 ) (8.7 ) -0.6 % (0.05 ) (0.05 ) tax adjustments Non-GAAP tax (1.9 ) -0.1 % (0.01 ) (0.01 ) (10.1 ) -0.7 % (0.06 ) (0.06 ) adjustments Convertible share adjustment - - - 0.16 - - - 0.10 (3)Net income - non-GAAP $ 533.4 28.6 % $ 3.21 $ 3.02 $ 401.9 26.0 % $ 2.42 $ 2.34 GAAP and non-GAAPweighted average 166.2 166.2 common shares - basicGAAP weighted averagecommon shares - 187.2 180.5 diluted Exclude dilutive shares from (9.9 ) (7.5 ) convertible noteNon-GAAP weightedaverage common shares 177.3 173.0 - diluted Restructuring(1 ) and other consists of: Six Months Ended July 4, June 28, 2021 2020 Contingent consideration $ (7.2 ) $ 19.2 fair value adjustment Employee 0.6 0.8 severance Acquisition related - 4.5 expenses and compensation Contract termination - 4.0 settlement fee Other 1.9 1.1 $ (4.6 ) $ 29.6 For the six months ended July 4, 2021 and June 28, 2020, Interest and other included non-cash convertible debt interest expense. For the six months ended(2 ) July 4, 2021, adjustment to exclude loss on convertible debt conversions. For the six months ended July 4, 2021 and June 28, 2020, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. For the six months ended July 4, 2021 and June 28, 2020, the non-GAAP diluted EPS calculation adds back $2.1 million and $2.6 million, respectively of(3 ) convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 9.8 million and 5.7 million shares, respectively related to the convertible debt hedge transaction.

GAAP to Non-GAAP Reconciliation of Third Quarter 2021 guidance: GAAP and non-GAAP third $880 $960quarter revenue million to millionguidance:GAAP net income per $ 1.17 $ 1.41 diluted shareExclude acquiredintangible assets 0.03 0.03 amortizationExclude non-cashconvertible debt 0.02 0.02 interestTax effect of non-GAAP (0.01 ) (0.01 )adjustmentsConvertible share 0.08 0.09 adjustmentNon-GAAP net income per $ 1.29 $ 1.55 diluted share

For press releases and other information of interest to investors, pleasevisit Teradyne's homepage at http://www.teradyne.com. Contact: Teradyne, Inc. Andy Blanchard 978-370-2425 Vice President of Corporate Relations