Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Teradyne Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	448,752)	715,501)	1,014,589)	784,147)	467,468)
Depreciation	92,118)	90,763)	91,073)	80,119)	70,834)
Stock-based compensation	57,682)	48,228)	45,643)	44,906)	37,897)
Provision for excess and obsolete inventory	28,358)	31,452)	15,475)	17,534)	15,244)
Amortization	18,768)	19,912)	34,412)	46,624)	49,821)
Retirement plans actuarial (gains) losses	2,703)	(25,584)	(2,217)	10,284)	8,176)
Deferred taxes	(37,642)	(38,693)	(17,305)	(15,688)	(9,456)
(Gains) losses on investments	(14,915)	9,985)	(6,410)	(7,898)	(6,033)
Gains on sale of asset	—)	(3,410)	—)	—)	—)
Loss on convertible debt conversion	—)	—)	28,828)	—)	—)
Contingent consideration fair value adjustment	—)	—)	(7,227)	(23,271)	(19,257)
Investment impairment	—)	—)	—)	—)	15,000)
Other	(955)	2,353)	271)	1,557)	766)
Accounts receivable	70,977)	50,628)	(57,778)	(129,451)	(70,440)
Inventories	5,327)	(80,809)	6,495)	(8,438)	(27,408)
Prepayments and other assets	(43,101)	(140,713)	(175,846)	(64,418)	(23,784)
Accounts payable and other accrued expenses	46,782)	(60,507)	129,499)	73,167)	49,279)
Deferred revenue and customer advances	(57,210)	(6,233)	9,873)	39,974)	39,313)
Retirement plan contributions	(5,492)	(5,116)	(5,405)	(5,382)	(5,086)
Income taxes	(26,921)	(29,834)	(5,604)	25,169)	(13,584)
Changes in operating assets and liabilities, net of businesses acquired	(9,638)	(272,584)	(98,766)	(69,379)	(51,710)
Adjustments to reconcile net income from operations to net cash provided by operating activities	136,479)	(137,578)	83,777)	84,788)	111,282)
Net cash provided by operating activities	585,231)	577,923)	1,098,366)	868,935)	578,750)
Purchases of property, plant and equipment	(159,642)	(163,249)	(132,472)	(184,977)	(134,642)
Purchases of marketable securities	(161,906)	(287,409)	(661,781)	(900,196)	(662,701)
Proceeds from maturities of marketable securities	85,042)	222,941)	660,148)	479,678)	611,927)
Proceeds from sales of marketable securities	61,401)	268,058)	266,466)	35,006)	105,586)
Proceeds from insurance	460)	—)	—)	546)	2,912)
Issuance of convertible loan	(5,000)	—)	—)	—)	—)
Proceeds from sale of asset	—)	3,410)	—)	—)	—)
Purchase of investment and acquisition of business	—)	—)	(12,000)	149)	(79,742)
Net cash (used for) provided by investing activities	(179,645)	43,751)	120,361)	(569,794)	(156,660)
Repurchase of common stock	(397,241)	(752,082)	(600,000)	(88,465)	(500,000)
Dividend payments	(67,878)	(69,711)	(65,977)	(66,482)	(61,305)
Payments of convertible debt principal	(50,264)	(66,759)	(342,990)	—)	—)
Payments related to net settlement of employee stock compensation awards	(20,788)	(33,170)	(32,303)	(23,014)	(14,741)
Issuance of common stock under stock purchase and stock option plans	34,259)	28,733)	32,686)	28,527)	29,312)
Payments of contingent consideration	—)	—)	—)	(8,852)	(27,615)
Net cash used for financing activities	(501,912)	(892,989)	(1,008,584)	(158,286)	(574,349)
Effects of exchange rate changes on cash and cash equivalents	(876)	3,889)	(2,065)	(658)	(569)
Increase (decrease) in cash and cash equivalents	(97,202)	(267,426)	208,078)	140,197)	(152,828)
Cash and cash equivalents at beginning of year	854,773)	1,122,199)	914,121)	773,924)	926,752)
Cash and cash equivalents at end of year	757,571)	854,773)	1,122,199)	914,121)	773,924)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Net Income: Net income exhibited a strong upward trend from 2019 to 2021, rising from approximately $467 million to over $1 billion. However, it declined in subsequent years, dropping to $715 million in 2022 and further to $449 million in 2023. This indicates a peak profitability period followed by a notable contraction.
Depreciation and Amortization: Depreciation consistently increased year-over-year, reaching $92 million in 2023. Amortization expenses steadily declined from $50 million in 2019 to about $19 million in 2023, suggesting reduced intangible asset amortization or write-offs over time.
Stock-Based Compensation: Stock-based compensation costs increased gradually from $38 million in 2019 to nearly $58 million in 2023, indicating a growing expense related to employee equity incentives.
Inventory and Receivables: Changes in inventory showed volatility, with decreases and increases year-to-year, including a significant negative adjustment of $81 million in 2022. Accounts receivable fluctuated but ended with a positive change of approximately $71 million in 2023, indicating potential improvements in collections or sales terms.
Operating Activities: Net cash provided by operating activities increased substantially from $579 million in 2019 to over $1.09 billion in 2021, then declined sharply to around $585 million in 2023. Adjustments to reconcile net income to cash flow also reflected considerable volatility, with a notable negative adjustment in 2022.
Investing Activities: Net cash used in investing activities was large and negative in 2019 and 2020, reflecting significant purchases of property and marketable securities. However, in 2021 and 2022, there was positive cash flow from investing activities, likely driven by maturities and sales of securities, before turning negative again in 2023.
Financing Activities: Expenditures on financing activities predominantly reflect substantial repurchases of common stock, peaking at $752 million in 2022 and contracting to $397 million in 2023. Dividend payments remained relatively stable around $67-$69 million annually. Payments of convertible debt principal occurred notably in 2021 through 2023, corresponding to debt repayment phases. Issuances of common stock and payments related to stock compensation awards showed consistent activity.
Cash and Cash Equivalents: Cash and cash equivalents decreased overall from $927 million in 2019 to approximately $758 million in 2023, with peaks and valleys in between. The company experienced decreases in cash in 2019, 2022, and 2023, while cash increased notably in 2020 and 2021.
Other Observations: Several one-time or non-recurring items are evident: a loss on convertible debt conversion in 2021, gains on asset sales in 2022, and adjustments related to retirement plans and deferred taxes showing significant fluctuations. The provision for excess and obsolete inventory increased substantially in 2022, indicating potential inventory management challenges during that year.
Summary: The company's financial performance and cash flows show strong initial growth and operating cash flow generation through 2021, followed by declines in net income and operating cash flow in the subsequent years. Investment activities have been variable, influenced by acquisitions and marketable securities transactions. Financing activities reveal consistent capital return via stock repurchases and dividends, alongside manageable debt repayments. Overall, the data suggest a period of peak profitability succeeded by a moderation phase with some operational and investment adjustments impacting financial outcomes.

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Teradyne Inc. (NASDAQ:TER)

Cash Flow Statement