2017 Q1 Form 10-K Financial Statement

#000119312517064638 Filed on March 01, 2017

View on sec.gov

Income Statement

Concept 2017 Q1 2015 Q4 2015 Q3
Revenue $466.0M $512.7M
YoY Change 44.17% 7.27%
Cost Of Revenue $207.4M $214.2M
YoY Change 27.21% -1.25%
Gross Profit $258.6M $298.6M
YoY Change 61.41% 14.34%
Gross Profit Margin 55.5% 58.23%
Selling, General & Admin $77.48M $77.07M
YoY Change -15.0% 5.49%
% of Gross Profit 29.96% 25.81%
Research & Development $74.03M $75.83M
YoY Change -6.52% 5.39%
% of Gross Profit 28.62% 25.4%
Depreciation & Amortization $37.10M $33.20M
YoY Change -1.59% -12.86%
% of Gross Profit 14.35% 11.12%
Operating Expenses $171.8M $167.8M
YoY Change -40.01% 3.01%
Operating Profit $86.80M $130.8M
YoY Change -168.8% 33.14%
Interest Expense $508.0K $444.0K
YoY Change 137.38% 208.33%
% of Operating Profit 0.59% 0.34%
Other Income/Expense, Net -$596.0K $116.0K
YoY Change 28.73% -82.26%
Pretax Income $87.41M $132.1M
YoY Change -170.03% 31.26%
Income Tax $15.96M $29.26M
% Of Pretax Income 18.25% 22.14%
Net Earnings $71.45M $102.9M
YoY Change -168.83% 24.03%
Net Earnings / Revenue 15.33% 20.06%
Basic Earnings Per Share $0.34 $0.48
Diluted Earnings Per Share $0.34 $0.48
COMMON SHARES
Basic Shares Outstanding 200.3M shares 210.0M shares 213.8M shares
Diluted Shares Outstanding 211.7M shares 215.5M shares

Balance Sheet

Concept 2017 Q1 2015 Q4 2015 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $819.6M $752.7M
YoY Change -1.01% -6.67%
Cash & Equivalents $264.7M $300.7M
Short-Term Investments $525.4M $452.0M
Other Short-Term Assets $6.194M $6.596M
YoY Change -5.89% -9.69%
Inventory $153.6M $121.8M
Prepaid Expenses $91.52M $80.25M
Receivables $211.3M $296.7M
Other Receivables $0.00 $0.00
Total Short-Term Assets $1.260B $1.316B
YoY Change 1.3% -6.04%
LONG-TERM ASSETS
Property, Plant & Equipment $273.4M $291.9M
YoY Change -16.91% -13.07%
Goodwill $488.4M $495.4M
YoY Change 78.62% 36.93%
Intangibles $239.8M $279.1M
YoY Change 25.83% 41.35%
Long-Term Investments $257.6M $275.9M
YoY Change -45.28% -26.39%
Other Assets $13.08M $13.36M
YoY Change 25.54% 35.63%
Total Long-Term Assets $1.289B $1.376B
YoY Change -0.46% 6.37%
TOTAL ASSETS
Total Short-Term Assets $1.260B $1.316B
Total Long-Term Assets $1.289B $1.376B
Total Assets $2.549B $2.693B
YoY Change 0.4% -0.08%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $92.36M $86.46M
YoY Change 93.37% 43.37%
Accrued Expenses $182.1M $180.0M
YoY Change 20.44% -4.71%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due
YoY Change
Total Short-Term Liabilities $372.9M $402.1M
YoY Change 27.89% 21.91%
LONG-TERM LIABILITIES
Long-Term Debt $0.00 $0.00
YoY Change
Other Long-Term Liabilities $185.0M $177.9M
YoY Change 27.85% 27.62%
Total Long-Term Liabilities $185.0M $177.9M
YoY Change 27.85% 27.62%
TOTAL LIABILITIES
Total Short-Term Liabilities $372.9M $402.1M
Total Long-Term Liabilities $185.0M $177.9M
Total Liabilities $582.9M $618.6M
YoY Change 26.84% 22.47%
SHAREHOLDERS EQUITY
Retained Earnings $467.8M $588.5M
YoY Change -23.32% -19.04%
Common Stock $1.506B $26.56M
YoY Change 2.86% -1.84%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $1.966B $2.074B
YoY Change
Total Liabilities & Shareholders Equity $2.549B $2.693B
YoY Change 0.4% -0.08%

Cashflow Statement

Concept 2017 Q1 2015 Q4 2015 Q3
OPERATING ACTIVITIES
Net Income $71.45M $102.9M
YoY Change -168.83% 24.03%
Depreciation, Depletion And Amortization $37.10M $33.20M
YoY Change -1.59% -12.86%
Cash From Operating Activities $179.1M $156.0M
YoY Change 2.34% 16.68%
INVESTING ACTIVITIES
Capital Expenditures -$20.60M -$25.00M
YoY Change -8.85% -54.55%
Acquisitions
YoY Change
Other Investing Activities -$56.40M $37.60M
YoY Change 0.89% -131.52%
Cash From Investing Activities -$77.10M $12.60M
YoY Change -1.78% -107.23%
FINANCING ACTIVITIES
Cash Dividend Paid $12.60M $12.80M
YoY Change 0.0%
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -108.5M -86.90M
YoY Change 675.0% 3678.26%
NET CHANGE
Cash From Operating Activities 179.1M 156.0M
Cash From Investing Activities -77.10M 12.60M
Cash From Financing Activities -108.5M -86.90M
Net Change In Cash -6.500M 81.70M
YoY Change -107.88% -290.44%
FREE CASH FLOW
Cash From Operating Activities $179.1M $156.0M
Capital Expenditures -$20.60M -$25.00M
Free Cash Flow $199.7M $181.0M
YoY Change 1.06% -4.08%

Facts In Submission

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CY2016Q4 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Outstanding Intrinsic Value
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CY2016Q4 us-gaap Treasury Stock Value
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CY2016Q4 ter Deferred Revenue And Customer Advances Maintenance And Training
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CY2016Q3 us-gaap Stock Issued During Period Shares Employee Stock Purchase Plans
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P4Y6M
CY2014 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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P4Y2M12D
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18.41
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0.148 pure
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31000 shares
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P4Y6M
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1578743000
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CY2014 us-gaap Income Tax Reconciliation Tax Holidays
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CY2014 us-gaap Foreign Currency Transaction Gain Loss Unrealized
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CY2014 us-gaap Reclassification From Aoci Current Period Tax
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CY2014 us-gaap Other Noncash Income Expense
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CY2014 us-gaap Other Comprehensive Income Loss Amortization Adjustment From Aoci Pension And Other Postretirement Benefit Plans For Net Prior Service Cost Credit Net Of Tax
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CY2014 us-gaap Other Comprehensive Income Loss Net Of Tax
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CY2014 us-gaap Income Loss From Continuing Operations Before Income Taxes Foreign
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2400000
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CY2014 us-gaap Advertising Expense
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535000
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CY2014 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Exercises In Period Total Intrinsic Value
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CY2014 us-gaap Goodwill Impairment Loss
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CY2014 ter Stock Issued During Period Value Share Based Compensation Net Of Shares Withheld For Taxes
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CY2014 ter Number Of Customer Accounted For Ten Percent Or Greater Revenue
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0 Customer
CY2014 ter Book Value Of Internally Manufactured Test Systems Sold
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9700000
CY2014 ter Increase Decrease In Prepaid Expense And Other Assets
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CY2014 ter Stock Issued During Period Shares Sale Of Stock And Exercise Of Stock Options
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CY2015 us-gaap Effective Income Tax Rate Reconciliation Tax Contingencies
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CY2015 us-gaap Finite Lived Intangible Asset Useful Life
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CY2015 us-gaap Income Tax Holiday Income Tax Benefits Per Share
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CY2015 us-gaap Net Cash Provided By Used In Operating Activities Continuing Operations
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CY2015 us-gaap Sharebased Compensation Arrangement By Sharebased Payment Award Options Outstanding Weighted Average Remaining Contractual Term2
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P4Y2M12D
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CY2015 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Forfeited In Period
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CY2015 us-gaap Effective Income Tax Rate Continuing Operations
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CY2015 us-gaap Extended Product Warranty Accrual Period Increase Decrease
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46500000
CY2015 us-gaap Incremental Common Shares Attributable To Equity Unit Purchase Agreements
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6900000
CY2015 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Vested In Period Weighted Average Grant Date Fair Value
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CY2015 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Options Grants In Period
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CY2015 us-gaap Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Grants In Period
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P4Y2M12D
CY2015 us-gaap Revenues
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CY2015 us-gaap Payments To Acquire Property Plant And Equipment
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CY2015 us-gaap Payments For Repurchase Of Common Stock
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CY2015 us-gaap Payments To Acquire Businesses Net Of Cash Acquired
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282741000
CY2015 us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Tax
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CY2015 us-gaap Other Comprehensive Income Loss Before Reclassifications Net Of Tax
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CY2015 us-gaap Gain Loss On Sale Of Equity Investments
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CY2015 us-gaap Excess Tax Benefit From Share Based Compensation Operating Activities
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4715000
CY2015 us-gaap Employee Service Share Based Compensation Tax Benefit From Compensation Expense
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CY2015 us-gaap Sales Revenue Goods Net
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CY2015 us-gaap Sales Revenue Services Net
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299012000
CY2015 us-gaap Product Warranty Accrual Additions From Business Acquisition
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CY2015 us-gaap Product Warranty Accrual Preexisting Increase Decrease
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CY2015 us-gaap Other Comprehensive Income Unrealized Holding Gain Loss On Securities Arising During Period Net Of Tax
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CY2015 us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Benefit Plan Improvement Tax Effect
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0
CY2015 us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci For Sale Of Securities Tax
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390000
CY2015 us-gaap Operating Income Loss
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CY2015 us-gaap Goodwill Foreign Currency Translation Gain Loss
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CY2015 us-gaap Extended Product Warranty Accrual Additions From Business Acquisition
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870000
CY2015 us-gaap Comprehensive Income Net Of Tax
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193644000
CY2015 us-gaap Adjustments To Additional Paid In Capital Sharebased Compensation Requisite Service Period Recognition Value
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30285000
CY2015 us-gaap Unrecognized Tax Benefits Increases Resulting From Current Period Tax Positions
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6626000
CY2015 us-gaap Repayments Of Long Term Lines Of Credit
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2253000
CY2015 us-gaap Payments To Acquire Available For Sale Securities
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1424002000
CY2015 us-gaap Payments Of Dividends
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CY2015 us-gaap Other Comprehensive Income Loss Available For Sale Securities Adjustment Net Of Tax
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CY2015 us-gaap Other Comprehensive Income Loss Foreign Currency Transaction And Translation Adjustment Net Of Tax
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CY2015 us-gaap Investment Income Interest
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CY2015 us-gaap Income Tax Reconciliation Tax Holidays
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CY2015 us-gaap Foreign Currency Transaction Gain Loss Unrealized
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2500000
CY2015 us-gaap Finite Lived Intangible Assets Foreign Currency Translation Gain Loss
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3330000
CY2015 us-gaap Extended Product Warranty Accrual Warranties Issued
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CY2015 us-gaap Defined Benefit Plan Amortization Of Gains Losses
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CY2015 us-gaap Unrecognized Tax Benefits Increases Resulting From Prior Period Tax Positions
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792000
CY2015 us-gaap Reclassification From Aoci Current Period Tax
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559000
CY2015 us-gaap Product Warranty Accrual Warranties Issued
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11539000
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CY2015 us-gaap Other Comprehensive Income Loss Amortization Adjustment From Aoci Pension And Other Postretirement Benefit Plans For Net Prior Service Cost Credit Net Of Tax
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-295000
CY2015 us-gaap Other Comprehensive Income Loss Net Of Tax
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CY2015 us-gaap Income Loss From Continuing Operations Before Income Taxes Foreign
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56270000
CY2015 us-gaap Income Loss From Continuing Operations Before Income Taxes Extraordinary Items Noncontrolling Interest
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253124000
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1700000
CY2015 us-gaap Adjustments To Additional Paid In Capital Tax Effect From Share Based Compensation
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4625000
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30451000
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400000
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CY2015 us-gaap Deferred Income Tax Expense Benefit
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CY2015 us-gaap Deferred State And Local Income Tax Expense Benefit
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1211000
CY2015 us-gaap Depreciation
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68181000
CY2015 us-gaap Depreciation Depletion And Amortization
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140773000
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50732000
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26220000
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46647000
CY2015 us-gaap Increase Decrease In Deferred Revenue And Customer Advances And Deposits
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17011000
CY2015 us-gaap Interest Expense
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1876000
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CY2015 us-gaap Other Comprehensive Income Loss Pension And Other Postretirement Benefit Plans Adjustment Net Of Tax
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295000
CY2015 us-gaap Proceeds From Issuance Of Shares Under Incentive And Share Based Compensation Plans Including Stock Options
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19530000
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1316131000
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30451000
CY2015 us-gaap Unrecognized Tax Benefits Decreases Resulting From Settlements With Taxing Authorities
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336000
CY2015 us-gaap Adjustment For Amortization
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72592000
CY2015 us-gaap Advertising Expense
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3300000
CY2015 us-gaap Allocated Share Based Compensation Expense Net Of Tax
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21923000
CY2015 us-gaap Current Federal Tax Expense Benefit
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16635000
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35707000
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53771000
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4715000
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200000
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21332000
CY2015 us-gaap Available For Sale Securities Continuous Unrealized Loss Position12 Months Or Longer Aggregate Losses
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500000
CY2015 us-gaap Impairment Of Intangible Assets Finitelived
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98200000
CY2015 us-gaap Increase Decrease In Income Taxes
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CY2015 us-gaap Net Cash Provided By Used In Financing Activities Continuing Operations
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CY2015 us-gaap Operating Leases Rent Expense Net
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15900000
CY2015 us-gaap Other Comprehensive Income Loss Amortization Adjustment From Aoci Pension And Other Postretirement Benefit Plans For Net Prior Service Cost Credit Tax
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-169000
CY2015 us-gaap Other Comprehensive Income Loss Reclassification Adjustment From Aoci For Sale Of Securities Net Of Tax
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704000
CY2015 us-gaap Other Comprehensive Income Unrealized Holding Gain Loss On Securities Arising During Period Tax
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CY2015 us-gaap Reclassification From Accumulated Other Comprehensive Income Current Period Net Of Tax
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999000
CY2015 us-gaap Research And Development Expense Excluding Acquired In Process Cost
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292250000
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<div> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 18px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>C.&#xA0;&#xA0;&#xA0;&#xA0;RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS</b></font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On January&#xA0;26, 2017, the Financial Accounting Standards Board (&#x201C;FASB&#x201D;) issued Accounting Standards Update (&#x201C;ASU&#x201D;) <font style="WHITE-SPACE: nowrap">2017-04,</font> <i>&#x201C;Intangibles&#x2014;Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment.&#x201D;</i> The new guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Goodwill impairment will now be the amount by which a reporting unit&#x2019;s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same <font style="WHITE-SPACE: nowrap">one-step</font> impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The revised guidance will be applied prospectively, and is effective in 2020. Early adoption is permitted for any impairment tests performed after January&#xA0;1, 2017. Teradyne is currently evaluating the impact of this ASU on its financial position, results of operations and statements of cash flows.</font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On October&#xA0;24, 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-16,</font> <i>&#x201C;Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory</i>.<i>&#x201D;</i> Under current Generally Accepted Accounting Principles (&#x201C;GAAP&#x201D;), the tax effects of intra-entity asset transfers are deferred until the transferred asset is sold to a third party or otherwise recovered through use. The new guidance requires recognition of the tax expense from the sale of the asset in the seller&#x2019;s tax jurisdiction when the transfer occurs, even though the <font style="WHITE-SPACE: nowrap">pre-tax</font> effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer&#x2019;s jurisdiction would also be recognized at the time of the transfer. The new guidance does not apply to intra-entity transfers of inventory. The income tax consequences from the sale of inventory from one member of a consolidated entity to another will continue to be deferred until the inventory is sold to a third party. The new guidance will be effective in fiscal years beginning after December&#xA0;15, 2017. Early adoption is permitted. The modified retrospective approach will be required for transition to the new guidance, with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. Teradyne does not expect this ASU to have a material impact on its financial position, results of operations and statements of cash flows.</font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On March&#xA0;31, 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-09,</font> <i>&#x201C;Compensation-Stock Compensation (Topic 718): Improvements to Employee</i> <i>Share-Based Payment Accounting.&#x201D;</i> This ASU changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statements of cash flows. This pronouncement is effective for annual periods beginning after December&#xA0;15, 2016. Early adoption is permitted. Adoption of the new guidance will require recognition of excess tax benefits and tax deficiencies in the consolidated statements of operations on a prospective basis, with a cumulative effect adjustment to retained earnings for any prior year excess tax benefits or tax deficiencies not previously recorded. Teradyne expects the cumulative effect adjustment to increase retained earnings and deferred tax assets by approximately $39&#xA0;million. In the years ended December&#xA0;31, 2016, 2015 and 2014, Teradyne recorded excess tax benefits of $6.1&#xA0;million, $4.6&#xA0;million, and $0.2&#xA0;million, respectively, as a component of additional <font style="WHITE-SPACE: nowrap">paid-in</font> capital.&#xA0;In accordance with this ASU, amounts for future periods related to the difference between the fair value of a restricted stock unit (&#x201C;RSU&#x201D;) on the grant date and the fair value on the vest date will be recorded as a discrete benefit or expense to the current income tax provision in the period in which the RSU vests. A majority of the future amounts will be recorded during the first quarter consistent with the vesting of a majority of Teradyne&#x2019;s RSU grants.</font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In February 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-02,</font> <i>&#x201C;Leases (Topic 842).&#x201D;</i> The guidance in this ASU supersedes the lease recognition requirements in Accounting Standards Codification (&#x201C;ASC&#x201D;) Topic 840, <i>&#x201C;Leases.&#x201D;</i> The new standard establishes a <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">right-of-use</font></font> (&#x201C;ROU&#x201D;) model that requires a lessee to record an ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the consolidated statements of operations. The new standard is effective for annual periods beginning after December&#xA0;15, 2018, including interim periods within those years, with early adoption permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Teradyne is currently evaluating the impact of this ASU on its financial position and results of operations.</font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In January 2016, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2016-01,</font> <i>&#x201C;Financial Instruments&#x2014;Overall (Subtopic <font style="WHITE-SPACE: nowrap">825-10):</font> Recognition and Measurement of Financial Assets and Financial Liabilities</i>.<i>&#x201D;</i> This ASU provides guidance for the recognition, measurement, presentation, and disclosure of financial instruments. The new pronouncement revises accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it amends the presentation and disclosure requirements of equity securities that do not result in consolidation and are not accounted for under the equity method. Changes in the fair value of these equity securities will be recognized directly in net income. This pronouncement is effective for fiscal years and interim periods within those years beginning after December&#xA0;15, 2017. Teradyne is currently evaluating the impact of this ASU on its financial position and results of operations.</font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In November 2015, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2015-17,</font> <i>&#x201C;Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes</i>.<i>&#x201D;</i> ASU <font style="WHITE-SPACE: nowrap">2015-17</font> simplifies the presentation of deferred income taxes by eliminating the separate classification of deferred income tax liabilities and assets into current and noncurrent amounts in the balance sheet. The new guidance requires that all deferred tax liabilities and assets be classified as noncurrent in the balance sheet. This ASU is effective for annual periods beginning after December&#xA0;15, 2016, and may be applied either prospectively or retrospectively to all periods presented. Early adoption is permitted. Teradyne early adopted this ASU prospectively in the first quarter of 2016.</font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In April, 2015, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2015-03,</font> &#x201C;<i>Simplifying the Presentation of Debt Issuance Costs,</i>&#x201D; which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation for debt discount. ASU <font style="WHITE-SPACE: nowrap">2015-03</font> does not specifically address requirements for the presentation or subsequent measurement of debt issuance costs related to <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">line-of-credit</font></font> arrangements. On August&#xA0;8, 2015, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2015-15,</font> &#x201C;<i>Interest&#x2014;Imputation of Interest (Subtopic <font style="WHITE-SPACE: nowrap">835-30)</font></i>&#x201D; clarifying that debt issuance costs related to <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">line-of-credit</font></font> arrangements could be presented as an asset and amortized over the term of the <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">line-of-credit</font></font> arrangement, regardless of whether there are any outstanding borrowings on the <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">line-of-credit</font></font> arrangement. Teradyne adopted this ASU in the first quarter of 2016. Adoption of this ASU did not have a material impact on Teradyne&#x2019;s financial position and results of operations.</font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In August 2014, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2014-15,</font> &#x201C;<i>Presentation of Financial Statements&#x2014;Going Concern (Subtopic <font style="WHITE-SPACE: nowrap">205-40).</font></i>&#x201D; ASU <font style="WHITE-SPACE: nowrap">2014-15</font> provides guidance on management&#x2019;s responsibility in evaluating whether there is substantial doubt about an entity&#x2019;s ability to continue as a going concern and to provide related footnote disclosures. This ASU is effective for annual periods ending after December&#xA0;15, 2016. Teradyne does not expect this ASU to have a material impact on its consolidated financial statements.</font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">In May 2014, the FASB issued ASU <font style="WHITE-SPACE: nowrap">2014-09,</font> &#x201C;<i>Revenue from Contracts with Customers (Topic 606),</i>&#x201D; which will replace numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenue to show the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled to in exchange for those goods or services. In August 2015, FASB issued ASU <font style="WHITE-SPACE: nowrap">2015-14,</font> which deferred the effective date of the new revenue standard by one year. For Teradyne, the standard will be effective in the first quarter of 2018. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. Teradyne has selected a modified retrospective transition method. Teradyne is currently evaluating the impact of this ASU on its financial position and results of operations.</font></p> </div>
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<div> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px"><font style="FONT-FAMILY: Times New Roman" size="2"><b>A.&#xA0;&#xA0;&#xA0;&#xA0;THE COMPANY</b></font></p> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 6px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">Teradyne, Inc. (&#x201C;Teradyne&#x201D;) is a leading global supplier of automation equipment for test and industrial applications. Teradyne designs, develops, manufactures and sells automatic test systems used to test semiconductors, wireless products, data storage and complex electronics systems in the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Teradyne&#x2019;s industrial automation products include collaborative robots used by global manufacturing and light industrial customers to improve quality, increase manufacturing efficiency and decrease manufacturing costs. Teradyne&#x2019;s automatic test equipment and industrial automation products and services include:</font></p> <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr style="PAGE-BREAK-INSIDE: avoid"> <td width="4%"><font size="1">&#xA0;</font></td> <td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2022;</font></td> <td valign="top" width="1%"><font size="1">&#xA0;</font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">semiconductor test (&#x201C;Semiconductor Test&#x201D;) systems;</font></p> </td> </tr> </table> <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr style="PAGE-BREAK-INSIDE: avoid"> <td width="4%"><font size="1">&#xA0;</font></td> <td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2022;</font></td> <td valign="top" width="1%"><font size="1">&#xA0;</font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">defense/aerospace (&#x201C;Defense/Aerospace&#x201D;) test instrumentation and systems, storage test (&#x201C;Storage Test&#x201D;) systems, and circuit-board test and inspection (&#x201C;Production Board Test&#x201D;) systems (collectively these products represent &#x201C;System Test&#x201D;);</font></p> </td> </tr> </table> <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr style="PAGE-BREAK-INSIDE: avoid"> <td width="4%"><font size="1">&#xA0;</font></td> <td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2022;</font></td> <td valign="top" width="1%"><font size="1">&#xA0;</font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">industrial automation (&#x201C;Industrial Automation&#x201D;) products; and</font></p> </td> </tr> </table> <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 6px; MARGIN-TOP: 0px"> &#xA0;</p> <table style="BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr style="PAGE-BREAK-INSIDE: avoid"> <td width="4%"><font size="1">&#xA0;</font></td> <td valign="top" width="3%" align="left"><font style="FONT-FAMILY: Times New Roman" size="2">&#x2022;</font></td> <td valign="top" width="1%"><font size="1">&#xA0;</font></td> <td valign="top" align="left"> <p align="left"><font style="FONT-FAMILY: Times New Roman" size="2">wireless test (&#x201C;Wireless Test&#x201D;) systems.</font></p> </td> </tr> </table> <p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 12px; TEXT-INDENT: 4%"> <font style="FONT-FAMILY: Times New Roman" size="2">On June&#xA0;11, 2015, Teradyne acquired Universal Robots A/S (&#x201C;Universal Robots&#x201D;) for approximately $284&#xA0;million of cash plus up to an additional $65&#xA0;million of cash if certain performance targets are met extending through 2018. Universal Robots is the leading supplier of collaborative robots which are <font style="WHITE-SPACE: nowrap">low-cost,</font> <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">easy-to-deploy</font></font> and <font style="WHITE-SPACE: nowrap"><font style="WHITE-SPACE: nowrap">simple-to-program</font></font> robots that work side by side with production workers. Universal Robots is a separate operating and reportable segment, Industrial Automation.</font></p> </div>
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