GlobeNewswire Inc | Jul 21, 2020 05:02PM EDT

July 21, 2020

-- Revenue of $839 million in Q220 grew 49% from Q219 -- Q220 GAAP earnings per share grew 91% and Non-GAAP earnings per share grew 102% from Q219 -- Test revenue grew 59% from Q219 on Semiconductor Test strength -- Industrial Automation revenue declined 21% from Q219 on global manufacturing weakness -- Q320 Revenue guidance at mid-point represents 33% growth from Q319

Q2'20 Q2'19 Q1'20 1H?20 1H?19Revenue (mil) $ 839 $ 564 $ 704 $ 1,543 $ 1,058GAAP EPS $ 1.05 $ 0.55 $ 0.97 $ 2.02 $ 1.16Non-GAAP EPS $ 1.33 $ 0.66 $ 1.00 $ 2.34 $ 1.20

NORTH READING, Mass., July 21, 2020 (GLOBE NEWSWIRE) -- Teradyne, Inc. (NASDAQ: TER) reported revenue of $839 million for the second quarter of 2020 of which $659 million was in Semiconductor Test, $72 million in System Test, $49 million in Wireless Test and $59 million in Industrial Automation (IA). GAAP net income for the second quarter was $188.9 million or $1.05 per diluted share. On a non-GAAP basis, Teradynes net income in the second quarter was $229.2 million, or $1.33 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.

Stronger than expected System on a Chip (SOC) test shipments driven by accelerated demand for mobility-related test capacity, combined with success in navigating supply constraints, led to revenue and profits above the high end of our guidance range in the second quarter, said CEO and President Mark Jagiela. Industrial Automation sales, while down from the year ago period due to the global slowdown in business activity, improved monthly through the quarter.

Guidance for the third quarter reflects increased memory and storage test shipments along with production ramps of new product design wins in SOC test.

Guidance for the third quarter of 2020 is revenue of $745 million to $805 million, with GAAP net income of $0.91 to $1.06 per diluted share and non-GAAP net income of $1.01 to $1.17 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 22. 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 May 15, 2020, the U.S. Department of Commerce published new regulations expanding the scope of the U.S. EAR to include additional products that would become subject to the Entity List restrictions relating to Huawei and the designated Huawei entities including HiSilicon. The comment period for the new regulations ended on July 14, 2020. These new regulations restrict the sale to Huawei and the designated Huawei entities of items, such as semiconductor devices, manufactured by Huaweis contract manufacturers under specific, detailed conditions set forth in the new regulations. While the new regulations do not impose any new restrictions on Teradyne directly, the new regulations may impact Teradynes sales to third party contract manufacturers used by Huawei and HiSilicon to manufacture and test semiconductor and other electronic devices. 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, HiSilicon and their contract manufacturers. However, 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 and civilian end users in China. 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 has suspended its stock repurchase program announced in January 2020. At this time, Teradyne does not know whether or when it will continue its 2020 repurchase plan or 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 March 29, 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.



TERADYNE, INC. REPORT FOR SECOND FISCAL QUARTER OF 2020 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts) Quarter Ended Six Months Ended June 28, 2020 March 29, 2020 June 30, 2019 June 28, 2020 June 30, 2019 Net revenues $ 838,661 $ 704,355 $ 564,178 $ 1,543,016 $ 1,058,277 Cost of revenues (exclusive of acquired intangible 367,188 298,805 240,260 665,993 446,724 assets amortization shown separately below) (1) Gross profit 471,473 405,550 323,918 877,023 611,553 Operating expenses: Selling and 113,259 111,388 108,811 224,647 210,824 administrative Engineering and 94,102 85,159 81,434 179,261 158,225 development Acquired intangible 8,941 9,891 10,083 18,832 20,717 assets amortization Restructuring and 37,222 (7,606 ) (10,404 ) 29,616 (5,292 ) other (2) Operating 253,524 198,832 189,924 452,356 384,474 expenses Income from operations 217,949 206,718 133,994 424,667 227,079 Interest and other 658 9,649 2,817 10,308 1,923 expense (3) Income before income 217,291 197,069 131,177 414,359 225,156 taxes Income tax provision 28,383 20,878 33,780 49,261 18,621 Net income $ 188,908 $ 176,191 $ 97,397 $ 365,098 $ 206,535 Net income per common share:Basic $ 1.14 $ 1.06 $ 0.57 $ 2.20 $ 1.20 Diluted $ 1.05 $ 0.97 $ 0.55 $ 2.02 $ 1.16 Weighted average common 165,789 166,589 171,241 166,189 172,387 shares - basic Weighted average common 180,257 180,736 178,590 180,497 177,781 shares - diluted (4) Cash dividend declared $ 0.10 $ 0.10 $ 0.09 $ 0.20 $ 0.18 per common share (1 ) Cost of revenues Quarter Ended Six Months Ended includes: June 28, 2020 March 29, 2020 June 30, 2019 June 28, 2020 June 30, 2019 Provision for excess and $ 5,580 $ 4,057 $ 3,402 $ 9,637 $ 5,799 obsolete inventory Sale of previously (337 ) (1,077 ) (363 ) (1,414 ) (1,141 ) written down inventory Inventory 121 118 383 239 383 step-up $ 5,364 $ 3,098 $ 3,422 $ 8,462 $ 5,041 (2 ) Restructuring and Quarter Ended Six Months Ended other consists of: June 28, 2020 March 29, 2020 June 30, 2019 June 28, 2020 June 30, 2019 Contingent consideration $ 29,259 $ (10,020 ) $ (11,671 ) $ 19,239 $ (8,701 ) fair value adjustment Contract termination 4,000 - - 4,000 - settlement fee Acquisition related 3,145 1,358 464 4,503 1,807 expenses and compensation Employee 36 728 803 764 1,602 severance Other 782 328 - 1,110 - $ 37,222 $ (7,606 ) $ (10,404 ) $ 29,616 $ (5,292 ) (3 ) Interest and other Quarter Ended Six Months Ended includes: June 28, 2020 March 29, 2020 June 30, 2019 June 28, 2020 June 30, 2019 Non-cash convertible $ 3,584 $ 3,540 $ 3,410 $ 7,124 $ 6,778 debt interest Pension actuarial (99 ) - 448 (99 ) 448 (gains) losses $ 3,485 $ 3,540 $ 3,858 $ 7,025 $ 7,226 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 June 28, 2020, March 29, 2020 and June 30, 2019, 7.6 million, 7.3 million and 4.4 million shares, respectively, have been included in diluted shares. For the six months ended June 28, 2020(4 ) and June 30, 2019, 7.5 million and 3.3 million shares, respectively, have been included in diluted shares. For the quarters ended June 28, 2020, March 29, 2020 and June 30, 2019, diluted shares also included 5.8 million, 5.5 million and 1.8 million shares, respectively from the convertible note hedge transaction. For the six months ended June 28, 2020 and June 30, 2019, diluted shares also included 5.7 million and 0.9 million shares, respectively, from the convertible note hedge transaction. CONDENSED CONSOLIDATEDBALANCE SHEETS (In thousands) June 28, 2020 December 31, 2019 Assets Cash and cash $ 728,306 $ 773,924 equivalents Marketable 229,791 137,303 securities Accounts receivable, 694,521 362,368 net Inventories, net 206,088 196,691 Prepayments and 238,176 188,598 other current assets Total current 2,096,882 1,658,884 assets Property, plant and 353,595 320,216 equipment, net Operating lease right-of-use assets, 56,172 57,539 net Marketable 106,968 104,490 securities Deferred tax assets 79,210 75,185 Retirement plans 17,817 18,457 assets Other assets 11,854 10,332 Acquired intangible 107,563 125,480 assets, net Goodwill 422,003 416,431 Total assets $ 3,252,064 $ 2,787,014 Liabilities Accounts payable $ 184,163 $ 126,617 Accrued employees' compensation and 175,589 163,883 withholdings Deferred revenue and 124,224 104,876 customer advances Other accrued 122,607 70,871 liabilities Operating lease 20,000 19,476 liabilities Contingent 16,789 9,106 consideration Income taxes payable 89,216 44,200 Total current 732,588 539,029 liabilities Retirement plans 130,826 134,471 liabilities Long-term deferred revenue and customer 55,634 45,974 advances Long-term contingent 32,948 30,599 consideration Long-term other 22,703 19,535 accrued liabilities Deferred tax 11,997 14,070 liabilities Long-term operating 43,582 45,849 lease liabilities Long-term income 74,930 82,642 taxes payable Debt 402,305 394,687 Total 1,507,513 1,306,856 liabilities Shareholders' equity 1,744,551 1,480,158 Total liabilities and $ 3,252,064 $ 2,787,014 shareholders' equity CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Quarter Ended Six Months Ended June 28, 2020 June 30, 2019 June 28, 2020 June 30, 2019 Cash flows from operating activities: Net income $ 188,908 $ 97,397 $ 365,098 $ 206,535 Adjustments to reconcile net income to net cash provided by operating activities: Contingent consideration 29,259 (11,671 ) 19,239 (8,701 ) fair value adjustment Depreciation 19,816 17,231 38,305 33,882 Amortization 12,843 12,034 26,234 24,976 Stock-based 10,907 8,635 21,367 18,109 compensation Provision for excess and 5,580 3,402 9,637 5,799 obsolete inventory Gains on (5,126 ) (913 ) (469 ) (3,741 ) investments Deferred taxes (5,338 ) (691 ) (7,163 ) 515 Retirement plan actuarial (gains) (99 ) 448 (99 ) 448 losses Other 19 210 523 429 Changes in operating assets and liabilities, net of businesses acquired: Accounts (204,261 ) (37,772 ) (331,040 ) (79,478 ) receivable Inventories (19,546 ) 470 (3,728 ) (2,447 ) Prepayments and other (9,859 ) 1,581 (49,479 ) (17,067 ) assets Accounts payable and 151,776 38,887 116,453 (14,424 ) other liabilities Deferred revenue and 29,568 9,371 28,655 15,826 customer advances Retirement plans (1,239 ) (1,204 ) (2,501 ) (2,414 ) contributions Income taxes 22,564 7,831 37,842 (14,973 ) Net cash provided by 225,772 145,246 268,874 163,274 operating activities Cash flows from investing activities: Purchases of property, plant and (47,314 ) (33,245 ) (84,014 ) (58,956 ) equipment Purchases of marketable (112,429 ) (108,997 ) (299,548 ) (484,181 ) securities Proceeds from maturities of 84,527 91,992 182,984 233,193 marketable securities Proceeds from sales of marketable 11,656 37,014 26,661 42,454 securities Proceeds from life 546 - 546 273 insurance Purchase of investments and acquisition of - (15,000 ) 149 (21,970 ) businesses, net of cash acquiredNet cash used for (63,014 ) (28,236 ) (173,222 ) (289,187 ) investing activities Cash flows from financing activities: Issuance of common stock under stock 5 833 12,757 15,089 purchase and stock option plans Repurchase of common (9,426 ) (90,754 ) (88,465 ) (247,222 ) stock Dividend payments (16,580 ) (15,392 ) (33,266 ) (31,019 ) Payments related to net settlement of employee stock (449 ) (128 ) (22,519 ) (14,446 ) compensation awards Payments of contingent - - (8,852 ) (27,615 ) considerationNet cash used for (26,450 ) (105,441 ) (140,345 ) (305,213 ) financing activities Effects of exchange ratechanges on cash and cash (1,496 ) (190 ) (925 ) (519 ) equivalentsIncrease (decrease) in - 134,812 11,379 (45,618 ) (431,645 ) cash and cash equivalentsCash and cash equivalents 593,494 483,728 773,924 926,752 at beginning of periodCash and cash equivalents $ 728,306 $ 495,107 $ 728,306 $ 495,107 at end of period

GAAP to Non-GAAP Earnings Reconciliation (In millions, except per share amounts) Quarter Ended June 28, 2020 % of Net March 29, % of Net June 30, % of Net Revenues 2020 Revenues 2019 Revenues Net revenues $ 838.7 $ 704.4 $ 564.2 Gross profit GAAP $ 471.5 56.2 % $ 405.6 57.6 % $ 323.9 57.4 % Inventory 0.1 0.0 % 0.1 0.0 % 0.4 0.1 % step-upGross profit non-GAAP $ 471.6 56.2 % $ 405.7 57.6 % $ 324.3 57.5 % Income from $ 217.9 26.0 % $ 206.7 29.3 % $ 134.0 23.8 % operations - GAAP Restructuring 37.2 4.4 % (7.6 ) -1.1 % (10.4 ) -1.8 % and other (1) Acquired intangible 8.9 1.1 % 9.9 1.4 % 10.1 1.8 % assets amortization Inventory 0.1 0.0 % 0.1 0.0 % 0.4 0.1 % step-upIncome from $ 264.1 31.5 % $ 209.1 29.7 % $ 134.1 23.8 % operations - non-GAAP Net Income per Net Income per Common Net Income per Common Common Share Share Share June 28, 2020 % of Net Basic Diluted March 29, % of Net Basic Diluted June 30, % of Net Basic Diluted Revenues 2020 Revenues 2019 RevenuesNet income - GAAP $ 188.9 22.5 % $ 1.14 $ 1.05 $ 176.2 25.0 % $ 1.06 $ 0.97 $ 97.4 17.3 % $ 0.57 $ 0.55 Restructuring 37.2 4.4 % 0.22 0.21 (7.6 ) -1.1 % (0.05 ) (0.04 ) (10.4 ) -1.8 % (0.06 ) (0.06 ) and other (1) Acquired intangible 8.9 1.1 % 0.05 0.05 9.9 1.4 % 0.06 0.05 10.1 1.8 % 0.06 0.06 assets amortization Interest and 3.6 0.4 % 0.02 0.02 3.5 0.5 % 0.02 0.02 3.4 0.6 % 0.02 0.02 other (2) Inventory 0.1 0.0 % 0.00 0.00 0.1 0.0 % 0.00 0.00 0.4 0.1 % 0.00 0.00 step-up Pension mark-to-market (0.1 ) -0.0 % (0.00 ) (0.00 ) - - - - 0.4 0.1 % 0.00 0.00 adjustment (2) Exclude discrete tax adjustments (1.1 ) -0.1 % (0.01 ) (0.01 ) (7.7 ) -1.1 % (0.05 ) (0.04 ) 13.9 2.5 % 0.08 0.08 (3) Non-GAAP tax (8.3 ) -1.0 % (0.05 ) (0.05 ) (1.9 ) -0.3 % (0.01 ) (0.01 ) (2.0 ) -0.4 % (0.01 ) (0.01 ) adjustments Convertible share adjustment - - - 0.06 - - - 0.04 - - - 0.02 (4)Net income - non-GAAP $ 229.2 27.3 % $ 1.38 $ 1.33 $ 172.5 24.5 % $ 1.04 $ 1.00 $ 113.2 20.1 % $ 0.66 $ 0.66 GAAP and non-GAAPweighted average 165.8 166.6 171.2 common shares - basicGAAP weighted averagecommon shares - 180.3 180.7 178.6 diluted Exclude dilutive shares related to (7.6 ) (7.3 ) (6.2 ) convertible note transactionNon-GAAP weightedaverage common shares 172.7 173.4 172.4 - diluted (1 ) Restructuring and other consists of: Quarter Ended June 28, 2020 March 29, June 30, 2020 2019 Contingent consideration $ 29.3 $ (10.0 ) $ (11.7 ) fair value adjustment Contract termination 4.0 - - settlement fee Acquisition related 3.1 1.4 0.5 expenses and compensation Employee - 0.7 0.8 severance Other 0.8 0.3 - $ 37.2 $ (7.6 ) $ (10.4 ) For the quarters ended June 28, 2020, March 29, 2020, and June 30, 2019, adjustment to exclude non-cash convertible debt interest expense. For the(2 ) quarters ended June 28, 2020 and June 30, 2019, adjustment to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. For the quarters ended June 28, 2020, March 29, 2020, and June 30, 2019,(3 ) adjustment to exclude discrete income tax items. For the quarter ended June 30, 2019, income tax (benefit) provision includes a $15 million tax provision related to the finalization of our toll tax charge. For the quarters ended June 28, 2020 and March 29, 2020, the non-GAAP diluted EPS calculation adds back $1.3 million of convertible debt interest expense to(4 ) non-GAAP net income and non-GAAP weighted average diluted common shares include 5.8 million and 5.5 million shares, respectively, related to the convertible debt hedge transaction. Six Months Ended June 28, 2020 % of Net June 30, 2019 % of Net Revenues Revenues Net Revenues $ 1,543.0 $ 1,058.3 Gross profit GAAP $ 877.0 56.8 % $ 611.6 57.8 % Inventory 0.2 0.0 % 0.4 0.0 % step-upGross profit non-GAAP $ 877.2 56.9 % $ 612.0 57.8 % Income from $ 424.7 27.5 % $ 227.1 21.5 % operations - GAAP Restructuring 29.6 1.9 % (5.3 ) -0.5 % and other (1) Acquired intangible 18.8 1.2 % 20.7 2.0 % assets amortization Inventory 0.2 0.0 % 0.4 0.0 % step-upIncome from $ 473.3 30.7 % $ 242.9 23.0 % operations - non-GAAP Net Income per Common Share Net Income per Common Share June 28, 2020 % of Net Basic Diluted June 30, 2019 % of Net Basic Diluted Revenues RevenuesNet income - GAAP $ 365.1 23.7 % $ 2.20 $ 2.02 $ 206.5 19.5 % $ 1.20 $ 1.16 Restructuring 29.6 1.9 % 0.18 0.16 (5.3 ) -0.5 % (0.03 ) (0.03 ) and other (1) Acquired intangible 18.8 1.2 % 0.11 0.10 20.7 2.0 % 0.12 0.12 assets amortization Interest and 7.1 0.5 % 0.04 0.04 6.8 0.6 % 0.04 0.04 other (2) Inventory 0.2 0.0 % 0.00 0.00 0.4 0.0 % 0.00 0.00 step-up Pension mark-to-market (0.1 ) -0.0 % (0.00 ) (0.00 ) 0.4 0.0 % 0.00 0.00 adjustment (2) Exclude discrete tax adjustments (8.7 ) -0.6 % (0.05 ) (0.05 ) (16.2 ) -1.5 % (0.09 ) (0.09 ) (3) Non-GAAP tax (10.1 ) -0.7 % (0.06 ) (0.06 ) (5.5 ) -0.5 % (0.03 ) (0.03 ) adjustments Convertible share adjustment - - - 0.10 - - - 0.03 (4)Net income - non-GAAP $ 401.9 26.0 % $ 2.42 $ 2.34 $ 207.8 19.6 % $ 1.21 $ 1.20 GAAP and non-GAAPweighted average 166.2 172.4 common shares - basicGAAP weighted averagecommon shares - 180.5 177.8 diluted Exclude dilutive shares from (7.5 ) (4.2 ) convertible noteNon-GAAP weightedaverage common shares 173.0 173.6 - diluted (1 ) Restructuring and other consists of: Six Months Ended June 28, 2020 June 30, 2019 Contingent consideration $ 19.2 $ (8.7 ) fair value adjustment Acquisition related 4.5 1.8 expenses and compensation Contract termination 4.0 - settlement fee Employee 0.8 1.6 severance Other 1.1 - - $ 29.6 $ (5.3 ) For the six months ended June 28, 2020 and June 30, 2019, interest and other included non-cash convertible debt interest expense. For the six months ended(2 ) June 28, 2020 and June 30, 2019, adjustments to exclude actuarial (gain) loss recognized under GAAP in accordance with Teradyne's mark-to-market pension accounting. For the six months ended June 28, 2020 and June 30, 2019, adjustment to exclude discrete income tax items. For the six months ended June 30, 2019, income tax(3 ) (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 six months ended June 28, 2020, the non-GAAP diluted EPS calculation(4 ) adds back $2.6 million of convertible debt interest expense to non-GAAP net income and non-GAAP weighted average diluted common shares include 5.7 million shares related to the convertible debt hedge transaction. GAAP to Non-GAAP Reconciliation of Third Quarter 2020 guidance: GAAP and non-GAAP $745 $805third quarter revenue million to million guidance:GAAP net income per $ 0.91 $ 1.06 diluted share Exclude acquired intangible 0.03 0.03 assets amortization Exclude non-cash convertible debt 0.02 0.02 interest Tax effect of non-GAAP 0.01 0.01 adjustments Convertible 0.04 0.04 share adjustmentNon-GAAP net income $ 1.01 $ 1.17 per diluted share

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