Teradyne (TER) 10-K risk factor changes: FY2018 vs FY2017

For the fiscal year ended December 31, [removed: 2017][added: 2018]

| Common Stock, par value $0.125 per share | | [removed: New York] [added: Nasdaq] Stock [removed: Exchange] [added: Market LLC] |

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate web site, if any,] every Interactive Data File [removed: required] to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June [removed: 30, 2017] [added: 29, 2018] was approximately [removed: $5.9] [added: $6.4] billion based upon the closing price of the registrant’s Common Stock on the New York Stock Exchange on that date.

The number of shares outstanding of the registrant’s only class of Common Stock as of February [removed: 23, 2018] [added: 25, 2019] was [removed: 195,422,673] [added: 173,629,283] shares.

Portions of the registrant’s proxy statement in connection with its [removed: 2018] [added: 2019] annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K.

| Item 1. | | [removed: [Business](#toc504255_2)] [added: [Business](#toc652525_2)] | | | 1 | |

| Item 1A. | | [Risk [removed: Factors](#toc504255_3)] [added: Factors](#toc652525_3)] | | | 10 | |

| Item 1B. | | [Unresolved Staff [removed: Comments](#toc504255_4)] [added: Comments](#toc652525_4)] | | | 20 | |

| Item 2. | | [removed: [Properties](#toc504255_5)] [added: [Properties](#toc652525_5)] | | | [removed: 20] [added: 21] | |

| Item 3. | | [Legal [removed: Proceedings](#toc504255_6)] [added: Proceedings](#toc652525_6)] | | | 21 | |

| Item 4. | | [Mine Safety [removed: Disclosure](#toc504255_7)] [added: Disclosure](#toc652525_7)] | | | 21 | |

| [PART [removed: II.](#toc504255_8)] [added: II.](#toc652525_8)] | | | | | | [removed: [](#toc504255_8)] [added: [](#toc652525_8)] |

| Item 5. | | [Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity [removed: Securities](#toc504255_9)] [added: Securities](#toc652525_9)] | | | 22 | |

| Item 6. | | [Selected Financial [removed: Data](#toc504255_10)] [added: Data](#toc652525_10)] | | | [removed: 23] [added: 22] | |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operation](#toc504255_11)] [added: Operation](#toc652525_11)] | | | [removed: 24] [added: 23] | |

| Item 7A. | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#toc504255_12)] [added: Risk](#toc652525_12)] | | | [removed: 43] [added: 42] | |

| Item 8. | | [Financial Statements and Supplementary [removed: Data](#toc504255_13)] [added: Data](#toc652525_13)] | | | [removed: 45] [added: 44] | |

| Item 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#toc504255_14)] [added: Disclosure](#toc652525_14)] | | | 106 | |

| Item 9A. | | [Controls and [removed: Procedures](#toc504255_15)] [added: Procedures](#toc652525_15)] | | | 106 | |

| Item 9B. | | [Other [removed: Information](#toc504255_16)] [added: Information](#toc652525_16)] | | | 107 | |

| [PART [removed: III.](#toc504255_17)] [added: III.](#toc652525_17)] | | | | | | [removed: [](#toc504255_17)] [added: [](#toc652525_17)] |

| Item 10. | | [Directors, Executive Officers and Corporate [removed: Governance](#toc504255_18)] [added: Governance](#toc652525_18)] | | | 108 | |

| Item 11. | | [Executive [removed: Compensation](#toc504255_19)] [added: Compensation](#toc652525_19)] | | | 108 | |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#toc504255_20)] [added: Matters](#toc652525_20)] | | | 108 | |

| Item 13. | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#toc504255_21)] [added: Independence](#toc652525_21)] | | | 108 | |

| Item 14. | | [Principal Accountant Fees and [removed: Services](#toc504255_22)] [added: Services](#toc652525_22)] | | | 108 | |

| [PART [removed: IV.](#toc504255_23)] [added: IV.](#toc652525_23)] | | | | | | [removed: [](#toc504255_23)] [added: [](#toc652525_23)] |

| Item 15. | | [Exhibits and Financial Statement [removed: Schedule](#toc504255_24)] [added: Schedule](#toc652525_24)] | | | 109 | |

| Item 16. | | [Form 10-K [removed: Summary](#toc504255_25)] [added: Summary](#toc652525_25)] | | | 110 | |

| | | [removed: [Signatures](#toc504255_26)] [added: [Signatures](#toc652525_26)] | | | 116 | |

Our industrial automation products include collaborative [added: robotic arms, autonomous mobile] robots [added: and advanced robotic control software] used by global manufacturing and light industrial customers to improve quality, increase manufacturing [added: and material handling] efficiency and decrease manufacturing costs.

We have a customer base which includes integrated device manufacturers (“IDMs”), outsourced semiconductor assembly and test providers (“OSATs”), original equipment manufacturers (“OEMs”), wafer foundries, fabless companies that design, but contract with others for the manufacture of integrated circuits (“ICs”), developers of wireless devices and consumer electronics, manufacturers of circuit boards, automotive suppliers, wireless product manufacturers, storage device manufacturers, aerospace and military contractors, and distributors that sell collaborative [removed: robots.][added: robots, autonomous mobile robots and wireless test systems.]

The acquisition of Universal Robots provides a growth engine to our [removed: business and complements our existing System Test and Wireless Test segments.][added: business.]

Contingent consideration for the period from July 2015 to December 2017 was [removed: $24.5] [added: $24.6] million and [removed: is expected to be] [added: was] paid in March 2018.

[removed: The remaining] [added: At December 31, 2018, the] maximum [added: amount of] contingent consideration that could be paid is [removed: $25] [added: $115] million.

[removed: In addition, the] [added: The] SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file documents electronically.

The FLEX Test Platform has an installed base of more than [removed: 6,000] [added: 6,400] systems.

[removed: We] extended the J750 platform technology to create the IP750 Image Sensor™ test system.

The J750 platform has an installed base of over [removed: 5,400] [added: 5,600] systems.

10-K 1 d652525d10k.htm FORM 10-K

| [PART I.](#toc652525_1) | | | | | | [](#toc652525_1) |

The sales of our products and services are dependent, to a large degree, on customers who are subject to cyclical trends in demand for their products.

During the first quarter of 2018, demand outlook for mobile device test capacity in 2018 declined sharply for our Semiconductor Test business.

Demand in other segments of the Semiconductor Test business, including memory test, increased in 2018.

Contingent consideration for the period from July 2015 to December 2018 was $3.9 million and is expected to be paid in March 2019.

On February 26, 2018, we acquired Energid Technologies Corporation (“Energid”) for a total purchase price of approximately $27.6 million.

Energid’s technology enables and simplifies the programming of complex robotic motions used in a wide variety of end markets, ranging from heavy industry to healthcare, utilizing both traditional robots and collaborative robots.

On April 25, 2018, we acquired Mobile Industrial Robots ApS (“MiR”), a Danish limited liability company.

MiR is the leading maker of collaborative autonomous mobile robots for industrial applications.

The total purchase price was approximately $198 million, which included cash paid of approximately $145 million and $53 million in fair value of contingent consideration payable upon achievement of certain thresholds and targets for revenue and earnings before interest and taxes through 2020.

Universal Robots, MiR and Energid are included in our Industrial Automation segment.

We

In 2019, we plan to introduce a high-speed DRAM test version of our Magnum platform giving us full product coverage of the memory test market.

Our Industrial Automation segment is comprised of three business units: Universal Robots, Mobile Industrial Robots and Energid.

In 2018, Universal Robots introduced its e-series collaborative robots which include technology advances that enable faster development of applications, greater precision and improved safety.

_Mobile Industrial Robots_

Collaborative autonomous mobile robots are designed to move material from point to point via autonomous navigation rather than the need for traditional mobile robot guidance infrastructure such as painted or magnetic strips, and are designed to navigate safely around obstacles and people.

MiR offers three collaborative autonomous mobile robot models, the MiR100, MiR200, MiR500, each with different payload carrying capacity.

All models are easily integrated into existing production environments.

MiR’s products are differentiated by their:

| | • | | easy programming using a graphical interface which allows users to program the collaborative robot in a few hours; |

| | • | | ease of use, speed of deployment and flexibility in allowing customers to change the task as their demands dictate; |

| | • | | reliable autonomous navigation over large manufacturing and warehouse areas; and |

| | • | | short payback period, on average less than 12 months. |

Cumulatively, MiR has sold over 1,800 collaborative autonomous mobile robots in diverse production and warehouse environments and applications.

_Energid_

Energid, which was acquired in February 2018, is a leading supplier of real-time advanced robot motion control software, which automation suppliers use to coordinate the control of multiple automation axes for performing tasks.

Motion control software performs the complex mathematics and functions needed to enable robot motion for tasks such as grasping and moving an object.

Energid offers developer and run time licenses of its Actin software.

Actin is integrated by customers into the customers’ robot and automation solutions.

Actin products are differentiated by their:

| | • | | highly flexible, adaptive, robot motion control; and |

| | • | | task optimized robotic path planning. |

Cumulatively, Energid has sold over 500 Actin developer and run time licenses deployed in diverse automation applications.

The IQgig family provides test solution at the intermediary and millimeter wave frequencies for 5G and 802.11ad.

In 2018, no single customer accounted for more than 10% of our consolidated revenues.

| | | $ | 568.7 | | | $ | 626.4 | |

We estimate consolidated revenues driven by a single OEM customer, combining direct sales to that customer with sales to the customer’s OSATs (which include Taiwan Semiconductor Manufacturing Company Ltd. and its leasing company, JA Mitsui Leasing, Ltd.), accounted for approximately 13%, 22%, and 26% of our consolidated revenues in 2018, 2017, and 2016, respectively.

_The implementation of tariffs and export controls on our products may have a material impact on our business._

10-K 1 d504255d10k.htm 10-K

| --- | --- | --- |

| [PART I.](#toc504255_1) | | | | | | [](#toc504255_1) |

Universal Robots is a separate operating and reportable segment, Industrial Automation.

Such reports, proxy statements and other information may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, N.E., Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330.

Our acquisition of Avionics Interface Technologies, LLC (“AIT”) in 2014 complements our line of bus test instrumentation for commercial and defense avionics systems.

AIT is a supplier of equipment for testing state-of-the-art data communication buses.

design verification of RF power amplifier and smart device RF front end modules.

_Summary of Revenues by Reportable Segment_

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 100 | % | | | 100 | % | | | 100 | % |

Sales to customers by country outside of the United States that accounted for 10% or more of our consolidated revenues in any of the previous three years were as follows:

| | | $ | 626.4 | | | $ | 731.9 | |

The above table does not include any adjustments for adoption of the new revenue standard, that was adopted January, 1, 2018.

If the Wireless test backlog were calculated based upon the new revenue standard, the 2017 backlog balance would be $21.3 million with approximately 68% expected to be delivered in 2018.

The highly technical nature of our products requires a large and continuing engineering and development effort.

These expenditures accounted for approximately 14.3%, 16.6%, and 17.8%, of our consolidated revenues in 2017, 2016, and 2015, respectively.

We accrue for all known environmental liabilities when it

material adverse effect on our business, results of operations and financial condition.

In the second quarter of 2016, we performed an interim goodwill impairment test and recorded a goodwill impairment loss of $254.9 million and $83.3 million intangible asset impairment in our Wireless Test segment as a result of a sharp decline in projected demand attributable to an estimated smaller future wireless test market.

The decrease in projected demand was due to lower forecasted buying from our largest Wireless Test segment customer (who has contributed between 51% and 73% of annual Wireless Test sales since the LitePoint acquisition in 2011 through 2015) as a result of the customer’s numerous operational efficiencies; slower smartphone growth rates; and a slowdown of new wireless technology adoption.

No impairment was identified in 2017.

An assertion of patent infringement against us, if successful, could

_We may need to adjust estimates resulting from the U.S. Tax Cuts and Jobs Act of 2017._

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”) making significant changes to the Internal Revenue Code.

Among other changes, the Tax Reform Act permanently reduces the U.S. corporate tax rate from 35% to 21% effective for tax years beginning after

December 31, 2017, shifts the U.S. tax regime from a worldwide system to a modified territorial tax system, and requires companies to pay a transition tax on earnings of certain foreign subsidiaries that were previously tax deferred.

U.S. Generally Accepted Accounting Principles (“GAAP”) requires that the impact of tax legislation be recognized in the period in which the law was enacted.

The provisional amount represents our best estimate of the impact of the Tax Reform Act in accordance with our understanding of the Tax Reform Act and available guidance as of the date of this filing and may change as additional guidance is provided by tax authorities or as changes are made in accounting standards for income taxes or related interpretations in response to the Tax Reform Act.

Any subsequent adjustment to these amounts will be recorded in 2018.

Adjustments may impact our financial results in a given reporting period.

Our December 2016 stock repurchase program was terminated.

If we are unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments on the

A failure in or a breach of our operational or security systems or

| | | | | | | | | | 618,500 | |

| | | | | | | | | | 868,000 | |

The following table shows the market range for our common stock based on reported sales price on the New York Stock Exchange and the dividends declared per share during such periods:

| Period | | High | | | | Low | | | | Dividends | | |

| 2016 | | | | | | | | | | | | |