GlobeNewswire Inc | Oct 20, 2020 05:02PM EDT

October 20, 2020

-- Revenue of $819 million in Q320 grew41% from Q319 -- Q320 GAAP earnings per share grew 61% and Non-GAAP earnings per share grew 53% from Q319 -- Test revenue grew 46% from Q319 on Memory, Storage, and System on a Chip (SOC) Test strength -- Industrial Automation revenuewas up sequentially and flat with Q319 on improving global manufacturing conditions and new products -- Q420 Revenue guidance at mid-point represents 8% growth from Q419

Q3'20 Q3'19 Q2'20 9 Mos?20 9 Mos?19Revenue (mil) $819 $582 $839 $2,363 $1,640GAAP EPS $1.21 $ 0.75 $1.05 $3.23 $1.92Non-GAAP EPS $1.18 $ 0.77 $1.33 $3.52 $1.97

NORTH READING, Mass., Oct. 20, 2020 (GLOBE NEWSWIRE) -- Teradyne, Inc. (NASDAQ: TER) reported revenue of $819 million for the third quarter of 2020 of which $592 million was in Semiconductor Test, $118 million in System Test, $41 million in Wireless Test and $69 million in Industrial Automation. GAAP net income for the third quarter was $222.7 million or $1.21 per diluted share. On a non-GAAP basis, Teradynes net income in the third quarter was $205.4 million, or $1.18 per diluted share, which excluded restructuring and other charges, acquired intangible asset amortization, non-cash convertible debt interest, discrete tax adjustments and included the related tax impact on non-GAAP adjustments.

We delivered quarterly sales above plan and generated a dollar per share or more in non-GAAP earnings for the third consecutive quarter, said CEO and President Mark Jagiela. The results were driven by record memory and storage test shipments along with strong System on a Chip (SOC) test demand for mobility and compute devices. In Industrial Automation, sales grew 17% from Q220 on the combination of improving conditions in the manufacturing sector and new products.

Entering Q4, market conditions in our test businesses are stronger than expected and weve positioned our production capacity to respond to potential short lead time demands as we move through the quarter. For the full year 2020, at the mid-point of our guidance, we expect our year-over-year sales to grow more than 33% to over $3.0 billion and GAAP earning per share to grow 58% to $4.12 and non-GAAP earnings per share to grow 57% to $4.50.

Guidance for the fourth quarter of 2020 is revenue of $680 million to $740 million, with GAAP net income of $0.81 to $0.96 per diluted share and non-GAAP net income of $0.90 to $1.06 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 third quarter results, along with management's business outlook, will follow at 8:30 a.m. ET, Wednesday, October 21. Interested investors should access the webcast at investors.teradyne.com/events-presentations 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 Teradynes Investor Relations site at investors.teradyne.com.

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, 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 www.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 2019,Teradynehad revenue of$2.3 billionand today employs 5,500 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 outbreak, 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. 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 outbreak, or the impact of U.S. 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 program 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 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. Compliance with the current Entity List restrictions has not significantly impacted Teradynes sales.

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 would become 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. The new regulations also restrict Teradynes sales to Huawei, HiSilicon and their suppliers. Because the impact of these new regulations on Huaweis business is both fluid and uncertain, at this time, Teradyne does not know the potential extent of the impact of the new regulations on its business with Huawei entities including HiSilicon and their suppliers. Teradyne is taking appropriate actions, including filing for licenses with the Department of Commerce and working with the U.S. regulators to understand the intended scope of the restrictions. However, Teradyne cannot be certain that the actions it takes will mitigate all of the risks associated with the new export controls that may impact its business. It is possible that these new regulations and any other additional regulations that may be implemented by the U.S. Department of Commerce or other government agency could have a material impact on Teradynes business and financial results.

On April 28, 2020, the 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. 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 will continue 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 Department of Commerce, to minimize any disruption. However, Teradyne cannot be certain that the actions it takes will mitigate all of the risks associated with the new export controls that may impact its business.

The global outbreak of the recent 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. At this time, the Company cannot accurately estimate the amount of the impact for Teradynes 2020 financial results and to its future financial results. There is considerable uncertainty regarding the impact on Teradynes business from the measures in place and potential future measures, and restrictions on Teradynes access to its manufacturing facilities or on its support operations or workforce, or similar limitations for its contractor manufacturers and suppliers, and restrictions or disruptions of transportation, such as reduced availability of transportation and increased border controls or closures, could limit Teradynes capacity to meet customer demand and have a material adverse effect on its financial condition and results of operations. The COVID-19 outbreak has significantly increased economic and demand uncertainty in Teradynes markets. This uncertainty could result in a significant decrease in demand for Teradynes products 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. Due to the uncertainty regarding the length, severity and potential business impact of the COVID-19 pandemic, Teradyne suspended its stock repurchase program announced in January 2020. At this time, Teradyne does not know whether or when it will authorize future stock repurchase programs. 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 spread of the outbreak, its severity, the actions to contain the virus or treat its impact, 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 impact of the COVID-19 outbreak and related government responses on the market and demand for Teradynes products, on its contract manufacturers and supply chain, and on its workforce; 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, 2019 and Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2020. 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.

For more information, contact:Andrew BlanchardInvestor RelationsTel978.370.2425investorrelations@teradyne.com

TERADYNE, INC.REPORT FOR THIRD FISCAL QUARTER OF2020 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts) Quarter Ended Nine Months Ended September 27, June 28, September 29, September 27, September 29, 2020 2020 2019 2020 2019 Net revenues $ 819,484 $ 838,661 $ 582,038 $ 2,362,500 $ 1,640,315 Cost of revenues (exclusive of acquired intangible 360,556 367,188 237,000 1,026,549 683,724 assets amortization shown separately below) (1) Gross profit 458,928 471,473 345,038 1,335,951 956,591 Operating expenses: Selling and administrative 115,840 113,259 109,166 340,488 319,990 (2) Engineering and 94,909 94,102 77,804 274,170 236,030 development Acquired intangible 6,219 8,941 9,647 25,052 30,363 assets amortization Restructuring (27,701 ) 37,222 (6,500 ) 1,915 (11,792 ) and other (3) Operating 189,267 253,524 190,117 641,625 574,591 expenses Income from 269,661 217,949 154,921 694,326 382,000 operations Interest and other expense 5,930 658 3,188 16,237 5,111 (4) Income before income 263,731 217,291 151,733 678,089 376,889 taxes Income tax 41,013 28,383 15,873 90,274 34,494 provisionNet income $ 222,718 $ 188,908 $ 135,860 $ 587,815 $ 342,395 Net income per common share:Basic $ 1.34 $ 1.14 $ 0.80 $ 3.54 $ 2.00 Diluted $ 1.21 $ 1.05 $ 0.75 $ 3.23 $ 1.92 Weighted averagecommon shares - 166,014 165,789 169,641 166,131 171,471 basic Weighted averagecommon shares - 184,338 180,257 180,494 181,777 178,685 diluted (5) Cash dividenddeclared per common $ 0.10 $ 0.10 $ 0.09 $ 0.30 $ 0.27 share Cost of(1 ) revenues Quarter Ended Nine Months Ended includes: September 27, June 28, September 29, September 27, September 29, 2020 2020 2019 2020 2019 Provision for excess and $ 3,479 $ 5,580 $ 3,049 $ 13,116 $ 8,848 obsolete inventory Sale of previously (310 ) (337 ) (821 ) (1,722 ) (1,962 ) written down inventory Inventory 121 121 - 360 383 step-up $ 3,290 $ 5,364 $ 2,228 $ 11,754 $ 7,269 For the quarter and nine months ended September 29, 2019, selling and administrative expenses include an equity charge of $2,109 for the modification(2 ) of Teradyne's retired CFO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement. Restructuring(3 ) and other Quarter Ended Nine Months Ended consists of: September 27, June 28, September 29, September 27, September 29, 2020 2020 2019 2020 2019 Contingent consideration $ (27,206 ) $ 29,259 $ (7,759 ) $ (7,967 ) $ (16,460 ) fair value adjustment Acquisition related (1,086 ) 3,145 451 3,418 2,258 expenses and compensation Employee 456 36 808 1,220 2,410 severance Contract termination - 4,000 - 4,000 - settlement fee Other 135 782 - 1,244 - $ (27,701 ) $ 37,222 $ (6,500 ) $ 1,915 $ (11,792 ) Interest and(4 ) other Quarter Ended Nine Months Ended includes: September 27, June 28, September 29, September 27, September 29, 2020 2020 2019 2020 2019 Non-cash convertible $ 3,629 $ 3,584 $ 3,453 $ 10,752 $ 10,231 debt interest Pension actuarial 2,688 (99 ) - 2,589 448 losses (gains) $ 6,317 $ 3,485 $ 3,453 $ 13,341 $ 10,679 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 September 27, 2020, June 28, 2020 and September 29, 2019, 9.2 million, 7.6 million and 5.8 million shares, respectively, have been included in diluted shares. For the nine months ended(5 ) September 27, 2020 and September 29, 2019, 8.0 million and 4.1 million shares, respectively, have been included in diluted shares. For the quarters ended September 27, 2020, June 28, 2020 and September 29, 2019, diluted shares also included 7.8 million, 5.8 million and 3.6 million shares, respectively from the convertible note hedge transaction. For the nine months ended September 27, 2020 and September 29, 2019, diluted shares also included 6.4 million and 1.8 million shares, respectively, from the convertible note hedge transaction. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

September 27, December 31, 2020 2019Assets Cash and cash $ 945,180 $ 773,924 equivalents Marketable 287,789 137,303 securities Accounts receivable, 587,243 362,368 net Inventories, 191,317 196,691 net Prepayments and other 232,103 188,598 current assets Total current 2,243,632 1,658,884 assets Property, plant and 386,170 320,216 equipment, net Operating lease 54,724 57,539 right-of-use assets, net Marketable 108,254 104,490 securities Deferred tax 78,243 75,185 assets Retirement 14,915 18,457 plans assets Other assets 11,650 10,332 Acquired intangible 103,672 125,480 assets, net Goodwill 435,252 416,431 Total assets $ 3,436,512 $ 2,787,014 Liabilities Accounts $ 150,427 $ 126,617 payable Accrued employees' compensation 175,286 163,883 and withholdings Deferred revenue and 129,438 104,876 customer advances Other accrued 117,108 70,871 liabilities Operating lease 20,311 19,476 liabilities Contingent - 9,106 consideration Income taxes 79,270 44,200 payable Total current 671,840 539,029 liabilities Retirement plans 134,650 134,471 liabilities Long-term deferred revenue and 59,099 45,974 customer advances Long-term contingent 22,531 30,599 consideration Long-term other accrued 20,141 19,535 liabilities Deferred tax 11,462 14,070 liabilities Long-term operating 42,137 45,849 lease liabilities Long-term income taxes 74,930 82,642 payable Debt 406,178 394,687 Total 1,442,968 1,306,856 liabilities Shareholders' equity 1,993,544 1,480,158 Total liabilities and $ 3,436,512 $ 2,787,014 shareholders' equity CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Quarter Ended Nine Months Ended September 27, September 29, September 27, September 29, 2020 2019 2020 2019Cash flows fromoperating activities: Net income $ 222,718 $ 135,860 $ 587,815 $ 342,395 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 19,806 17,626 58,111 51,508 Amortization 10,343 11,873 36,577 36,849 Stock-based 11,661 10,713 33,028 28,822 compensation Provision for excess and 3,479 3,049 13,116 8,848 obsolete inventory Retirement plan actuarial 2,688 - 2,589 448 losses Contingent consideration (27,206 ) (7,759 ) (7,967 ) (16,460 ) fair value adjustment Gains on (3,046 ) (417 ) (3,515 ) (4,158 ) investments Deferred taxes 2,616 (3,492 ) (4,547 ) (2,977 ) Other 225 181 750 610 Changes in operating assets and liabilities, net of businesses acquired: Accounts 109,025 12,689 (222,015 ) (66,789 ) receivable Inventories 20,726 (11,696 ) 16,998 (14,143 ) Prepayments and other 8,728 949 (40,751 ) (16,118 ) assets Accounts payable and (32,020 ) 35,231 81,557 20,807 other liabilities Deferred revenue and 7,934 11,953 36,589 27,779 customer advances Retirement plans (1,383 ) (1,361 ) (3,884 ) (3,775 ) contributions Income taxes (13,782 ) (16,251 ) 24,060 (31,224 ) Net cash provided by 342,512 199,148 608,511 362,422 operating activities Cash flows frominvesting activities: Purchases of property, (62,858 ) (37,092 ) (146,872 ) (96,048 ) plant and equipment Purchases of marketable (188,880 ) (121,358 ) (488,428 ) (605,539 ) securities Proceeds from maturities of 126,423 160,279 309,407 393,472 marketable securities Proceeds from sales of 5,950 17,820 32,611 60,274 marketable securities Proceeds from - 2,639 546 2,912 life insurance Purchase of investments and acquisition of - - 149 (21,970 ) businesses, net of cash acquiredNet cash (used for)provided by (119,365 ) 22,288 (292,587 ) (266,899 ) investing activities Cash flows fromfinancing activities: Issuance of common stock under stock 13,771 14,191 26,528 29,280 purchase and stock option plans Dividend (16,604 ) (15,250 ) (49,870 ) (46,269 ) payments Payments related to net settlement of (216 ) (104 ) (22,735 ) (14,550 ) employee stock compensation awards Repurchase of - (121,560 ) (88,465 ) (368,782 ) common stock Payments of contingent - - (8,852 ) (27,615 ) considerationNet cash used for (3,049 ) (122,723 ) (143,394 ) (427,936 ) financing activities Effects of exchangerate changes on cash (349 ) 119 (1,274 ) (400 ) and cash equivalentsIncrease (decrease)in cash and cash 219,749 98,832 171,256 (332,813 ) equivalentsCash and cashequivalents at 725,431 495,107 773,924 926,752 beginning of periodCash and cashequivalents at end $ 945,180 $ 593,939 $ 945,180 $ 593,939 of period



GAAP to Non-GAAP Earnings Reconciliation (In millions, except per share amounts) Quarter Ended September 27, % of Net June 28, % of Net September % of Net 2020 Revenues 2020 Revenues 29, Revenues 2019 Net revenues $ 819.5 $ 838.7 $ 582.0 Gross profit GAAP $ 458.9 56.0 % $ 471.5 56.2 % $ 345.0 59.3 % Inventory 0.1 0.0 % 0.1 0.0 % - - step-upGross profit $ 459.0 56.0 % $ 471.6 56.2 % $ 345.0 59.3 % non-GAAP Income from $ 269.7 32.9 % $ 217.9 26.0 % $ 154.9 26.6 % operations - GAAP Restructuring (27.7 ) -3.4 % 37.2 4.4 % (6.5 ) -1.1 % and other (1) Acquired intangible 6.2 0.8 % 8.9 1.1 % 9.6 1.6 % assets amortization Inventory 0.1 0.0 % 0.1 0.0 % - - step-up Equity modification - - - - 2.1 0.4 % charge (2)Income fromoperations - $ 248.3 30.3 % $ 264.1 31.5 % $ 160.1 27.5 % non-GAAP Net Income Net Income Net Income per Common Share per Common Share per Common Share September 27, % of Net June 28, % of Net September % of Net 2020 Revenues Basic Diluted 2020 Revenues Basic Diluted 29, Revenues Basic Diluted 2019Net income - GAAP $ 222.7 27.2 % $ 1.34 $ 1.21 $ 188.9 22.5 % $ 1.14 $ 1.05 $ 135.9 23.4 % $ 0.80 $ 0.75 Restructuring (27.7 ) -3.4 % (0.17 ) (0.15 ) 37.2 4.4 % 0.22 0.21 (6.5 ) -1.1 % (0.04 ) (0.04 ) and other (1) Acquired intangible 6.2 0.8 % 0.04 0.03 8.9 1.1 % 0.05 0.05 9.6 1.6 % 0.06 0.05 assets amortization Interest and 3.6 0.4 % 0.02 0.02 3.6 0.4 % 0.02 0.02 3.5 0.6 % 0.02 0.02 other (3) Pension mark-to-market 2.7 0.3 % 0.02 0.01 (0.1 ) -0.0 % (0.00 ) (0.00 ) - - - - adjustment (3) Inventory 0.1 0.0 % 0.00 0.00 0.1 0.0 % 0.00 0.00 - - - - step-up Equity modification - - - - - - - - 2.1 0.4 % 0.01 0.01 charge (2) Exclude discrete tax (4.4 ) -0.5 % (0.03 ) (0.02 ) (1.1 ) -0.1 % (0.01 ) (0.01 ) (7.7 ) -1.3 % (0.05 ) (0.04 ) adjustments (4) Non-GAAP tax 2.2 0.3 % 0.01 0.01 (8.3 ) -1.0 % (0.05 ) (0.05 ) (3.5 ) -0.6 % (0.02 ) (0.02 ) adjustments Convertible share - - - 0.06 - - - 0.06 - - - 0.02 adjustment (5)Net income - $ 205.4 25.1 % $ 1.24 $ 1.18 $ 229.2 27.3 % $ 1.38 $ 1.33 $ 133.4 22.9 % $ 0.79 $ 0.77 non-GAAP GAAP and non-GAAPweighted average 166.0 165.8 169.6 common shares -basicGAAP weightedaverage common 184.3 180.3 180.5 shares - diluted Exclude dilutive shares related (9.2 ) (7.6 ) (5.8 ) to convertible note transactionNon-GAAP weightedaverage common 175.2 172.7 174.7 shares - diluted Restructuring(1 ) and other consists of: Quarter Ended September 27, June 28, September 2020 2020 29, 2019 Contingent consideration $ (27.2 ) $ 29.3 $ (7.8 ) fair value adjustment Acquisition related (1.1 ) 3.1 0.5 expenses and compensation Employee 0.5 - 0.8 severance Contract termination - 4.0 - settlement fee Other 0.1 0.8 - $ (27.7 ) $ 37.2 $ (6.5 ) For the quarter ended September 29, 2019, selling and administrative expenses(2 ) include an equity charge for the modification of Teradyne's retired CFO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement. For the quarters ended September 27, 2020, June 28, 2020, and September 29, 2019, adjustment to exclude non-cash convertible debt interest expense. For the(3 ) quarters ended September 27, 2020 and June 28, 2020, adjustment to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. (4 ) For the quarters ended September 27, 2020, June 28, 2020, and September 29, 2019, adjustment to exclude discrete income tax items. For the quarters ended September 27, 2020 and June 28, 2020, the non-GAAP diluted EPS calculation adds back $1.3 million of convertible debt interest(5 ) expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 7.8 million and 5.8 million shares, respectively, related to the convertible debt hedge transaction. Nine Months Ended September 27, % of Net September 29, % of Net 2020 Revenues 2019 Revenues Net revenues $ 2,362.5 $ 1,640.3 Gross profit GAAP $ 1,336.0 56.6 % $ 956.6 58.3 % Inventory 0.4 0.0 % 0.4 0.0 % step-upGross profit $ 1,336.4 56.6 % $ 957.0 58.3 % non-GAAP Income from $ 694.3 29.4 % $ 382.0 23.3 % operations - GAAP Acquired intangible 25.1 1.1 % 30.4 1.9 % assets amortization Restructuring 1.9 0.1 % (11.8 ) -0.7 % and other (1) Inventory 0.4 0.0 % 0.4 0.0 % step-up Equity modification - - 2.1 0.1 % charge (2)Income fromoperations - $ 721.7 30.5 % $ 403.1 24.6 % non-GAAP Net Income Net Income per Common Share per Common Share September 27, % of Net Basic Diluted September 29, % of Net Basic Diluted 2020 Revenues 2019 RevenuesNet income - GAAP $ 587.8 24.9 % $ 3.54 $ 3.23 $ 342.4 20.9 % $ 2.00 $ 1.92 Acquired intangible 25.1 1.1 % 0.15 0.14 30.4 1.9 % 0.18 0.17 assets amortization Interest and 10.8 0.5 % 0.07 0.06 10.2 0.6 % 0.06 0.06 other (3) Pension mark-to-market 2.6 0.1 % 0.02 0.01 0.4 0.0 % 0.00 0.00 adjustments (3) Restructuring 1.9 0.1 % 0.01 0.01 (11.8 ) -0.7 % (0.07 ) (0.07 ) and other (1) Inventory 0.4 0.0 % 0.00 0.00 0.4 0.0 % 0.00 0.00 step-up Equity modification - - - - 2.1 0.1 % 0.01 0.01 charge (2) Exclude discrete tax (13.1 ) -0.6 % (0.08 ) (0.07 ) (23.9 ) -1.5 % (0.14 ) (0.13 ) adjustments (4) Non-GAAP tax (8.0 ) -0.3 % (0.05 ) (0.04 ) (9.0 ) -0.5 % (0.05 ) (0.05 ) adjustments Convertible share - - - 0.16 - - - 0.06 adjustment (5)Net income - $ 607.5 25.7 % $ 3.66 $ 3.52 $ 341.2 20.8 % $ 1.99 $ 1.97 non-GAAP GAAP and non-GAAPweighted average 166.1 171.5 common shares -basicGAAP weightedaverage common 181.8 178.7 shares - diluted Exclude dilutive shares from (8.0 ) (5.9 ) convertible noteNon-GAAP weightedaverage common 173.8 172.8 shares - diluted Restructuring(1 ) and other consists of: Nine Months Ended September 27, September 29, 2020 2019 Contingent consideration $ (8.0 ) $ (16.5 ) fair value adjustment Contract termination 4.0 - settlement fee Acquisition related 3.4 2.3 expenses and compensation Employee 1.2 2.4 severance Other 1.2 - $ 1.9 $ (11.8 ) For the nine months ended September 29, 2019, selling and administrative(2 ) expenses include an equity charge for the modification of Teradyne's retired CFO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his July 17, 2019 retirement. For the nine months ended September 27, 2020 and September 29, 2019, Interest and other included non-cash convertible debt interest expense. For the nine(3 ) months ended September 27, 2020 and September 29, 2019, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. For the nine months ended September 27, 2020 and September 29, 2019, adjustment to exclude discrete income tax items. For the nine months ended September 29,(4 ) 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. For the nine months ended September 27, 2020, the non-GAAP diluted EPS(5 ) calculation adds back $3.9 million of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 6.4 million shares related to the convertible debt hedge transaction. GAAP to Non-GAAP Reconciliation of Fourth Quarter 2020 guidance: GAAP and non-GAAP $680 $740fourth quarter million to million revenue guidance:GAAP net income per $ 0.81 $ 0.96 diluted share Exclude acquired intangible 0.03 0.03 assets amortization Exclude non-cash 0.02 0.02 convertible debt interest Tax effect of non-GAAP (0.01 ) (0.01 ) adjustments Convertible share 0.06 0.06 adjustmentNon-GAAP net income $ 0.90 $ 1.06 per diluted share 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