Good morning. My name is Brandy and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradyne Fourth Quarter 2015 Earnings Review Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. Mr. Blanchard you may begin your conference. Andrew Blanchard - Vice President-Corporate Relations & IR Contact: Good morning, everyone, and welcome to our discussion of Teradyne's most recent financial results. I'm joined this morning by our CEO, Mark Jagiela and our Chief Financial Officer, Greg Beecher. Following our opening remarks, we'll provide details of our performance for the fourth quarter and full year 2015 as well as our outlook for the first quarter of this year. The press release containing our fourth quarter results was issued last evening and we're providing slides on the Investor page of the website that may be helpful to you in following today's discussion. Those slides can be downloaded now or you can follow along live. Replays of this call will be available via the same page after the call ends. The matters that we discuss today will include forward-looking statements that involve risk factors that could cause Teradyne's results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release, as well as our most recent SEC filings. Additionally, those forward-looking statements are made as of today and we take no obligation to update them as a result of developments occurring after this call. During today's call, we'll make reference to non-GAAP financial measures. We've posted additional information concerning those non-GAAP financial measures, including reconciliation to the most comparable GAAP financial measure were available on the Investor…

Our first question comes from the line of Mehdi Hosseini with SIG.

Thanks for taking my question. It seems like over the past several calls we come back to the topic of what is really the true TAM for the advanced packaging and I ask that because you had a very strong booking in your Semi Test and I think some of this has to do with the necessary build-out for advanced packaging that requires more wafer level test. And I do understand that there is increased test time, but again, it's very important for us to understand to what extent this build-out for advanced packaging could sustain. So to the extent that you can provide some color, either quantitatively or qualitatively, would be great? And I have a follow-up. Mark E. Jagiela - President, Chief Executive Officer & Director: Okay. Well, the build-out for advanced packaging at one level has been going on for several years. Now, this coming year will be a particularly larger shift to that kind of technology. But our view is whether it's an advanced package or cingulated die packaging, the incremental tester demand is somewhat invariant. Now an advanced package is going to require a little bit more test time because of the complexity and the premium on wafer yields, but incrementally as the world shifts more and more to advanced package, we'll see incremental tester demand ride that incremental package. Now, if you look at advanced package part today, it might be 10% longer test time because of the nature of that technology, but over time if we look at 2017, 2018 and 2019, that ratio of test time will increase beyond 10%. As more and more die get put on the package, the premium for good yields will continue to rise. So I think advanced package in and of itself isn't necessarily a tooling exercise, it's incremental capacity that goes in that requires incrementally longer test times beyond what a cingulated die would require.

Sure. But how does – so if this is done at a foundry level, then some of the OSAT guys will be doing less tests. That context, how should we think about the trade-off between one type of customer doing less and there's a new customer that is doing more of advanced packaging? Mark E. Jagiela - President, Chief Executive Officer & Director: Yes. I think that right. That's true of all technology shifts. So the package type that's been handled in a certain OSAT, as that volume declines and shifts to advanced packaging it just happens to occur at a different site. And you know, but overall, that new site and that new package is going to have a longer test time. It could occur – the OSATs themselves are developing their own versions of advanced package, and so it could very well be that they'll be competing packaging technologies as there are today around advanced packaging and that both sides will grow in this new era of multi-die on a silicon substrate.

Got it. And just a one quick follow-up for Greg. Given the fact that your onshore cash has gone down and there's only $120 million left above the minimum, is there anything that you're thinking, or is there any discretion that you have to increase the cash onshore that could help boost the capital return program? Gregory R. Beecher - Chief Financial Officer, Treasurer & VP: Mehdi, absent frankly borrowing money, not really. We can't get the offshore cash back without some tax consequence. But we certainly could borrow, but we're trying to preserve the borrowing capacity for attractive M&A.

Borrowing is out of favor now. Okay. Thank you very much. Mark E. Jagiela - President, Chief Executive Officer & Director: Sure.

Our next question comes from the line of Atif Malik with Citigroup.

Hi. Thanks for taking my question and congratulations on a good quarter and a strong guide. Mark, I fully agree with you that the test buy rates have stabilized since mid-2004. The third-party data is showing it. But we haven't seen the multiple expansion in your stock because of that and I believe a part of that has to do with this odd, even effect of the years. But with test buy rates stabilizing and you guys benefiting from the secular growth in advanced mobility packaging and auto and industrial kind of outperforming the broader semiconductor market, what can break this odd/even pattern moving forward? Mark E. Jagiela - President, Chief Executive Officer & Director: So I do think the odd/even pattern is diminishing. You know, the thing that drove the odd/even pattern was a combination of two things: unit volume growth and complexity growth. So in even years, as you looked at unit volume growth across the past four years, it's been declining. So that particular lever will go down. The complexity issue that an even year will be more intense than an odd year will persist but begin to slow down as well. When we look back at last year, what I can see is the complexity advances in applications processors and LTE that went into the phones was higher than a typical odd year. So I do see -- I would project that over the next two or three years, we're going to find that little cycle dampen such that it's down below $100 million kind of number.

Okay. And then Greg, can you talk about the gross margin effect from the advanced mobility packaging testers moving forward? Gregory R. Beecher - Chief Financial Officer, Treasurer & VP: What I'll talk about is this year we expect gross margins for the full year to look like gross margins in 2014 and 2012, that being 54%. And with this large concentrated buying we tend to fall back to that number.

Great. Thanks.

Our next question comes from the line of Farhan Ahmad with Credit Suisse. Farhan Ahmad - Credit Suisse Securities (USA) LLC (Broker): Thanks for taking my question. My first question is regarding the fourth quarter bookings, the bookings came in very strong and you mentioned that it was primarily driven by smartphone related strength. I wanted to ask is the smartphone strength pretty broad-based across customers and how's the customer concentration in the orders that you have received? Was it pretty much like driven by like one or two customers or was there broad-based strength? Mark E. Jagiela - President, Chief Executive Officer & Director: Well, there's always been a concentration in that market. But I would say that it wasn't atypical in fourth quarter. Several providers of silicon or smartphones were strong in the fourth quarter. So it wasn't sort of one customer but a typical mix of I would say market increase going into the next year. Farhan Ahmad - Credit Suisse Securities (USA) LLC (Broker): Got it. And do you know like what's driving that because it seems kind of surprising that the fourth quarter is strong. Was it just like apps processor or was it RF apps processor and different applicationa that are going into smartphone and it's just that the build cycles for the smartphone that are a little bit earlier this year? Mark E. Jagiela - President, Chief Executive Officer & Director: Yeah, I think it's that, the build cycles are a little bit earlier. Certain manufacturers always have announcements of new phones in the late Q1, early Q2 period, so that has always been part of the beginning of a bookings growth in the fourth quarter. What's atypical is that some other manufacturers have moved I would say one to two months in…

Our next question comes from the line of Timothy Arcuri with Cowen & Company. Timothy Arcuri - Cowen & Co. LLC: Hi, thanks. I had a couple things. I guess first of all I'm just trying to understand the guidance a little bit. Greg, so you built $408 million in Semi Test and the revenue guidance is $425 million for the whole company for Q1. If I look at the coverage usually, it's just sort of a simple exercise but if I look at the bookings in Semi Test in one quarter and then I sort of look at what you do in revenue during the next quarter it seems like you ought to do more in revenue in March. Now maybe that's because some of those shipments are spread out into June. So I guess my first question is, is it seems a little conservative, particularly given that you just saw about $150 million more in Semi Test orders than we thought and that's pretty much the amount that the SOC market will grow this year, so I guess you could conclude that you've sort of already seen the bump from Info, so maybe you can talk about that? Gregory R. Beecher - Chief Financial Officer, Treasurer & VP: Tim, the way the bookings – obviously they've come in very strong, there are shipments that are scheduled to ship in April. So they're just going to – some of them are going to miss March. So we see Q4, Q1 should be very strong demand and those shipments are going to take place Q1, Q2. And we see mobility as very strong this year, stronger than last year. But it's just how some of these shipments are falling into particular months. Some are going to fall just outside of…

Our next question comes from the line of Tom Diffely with D.A. Davidson. Thomas Robert Diffely - D. A. Davidson & Co.: Yes, good morning. One more question on the Mobility demand. So is this demand solely driven by unit and test times going up or are there certain chips or functions that need a new tester to perform the test? Mark E. Jagiela - President, Chief Executive Officer & Director: There's very little new tester capability in this. It's really units and complexity that's driving it. Thomas Robert Diffely - D. A. Davidson & Co.: Okay. And then so when you look at your demand, how much of it is just having a new player versus the industry needs more capacity? Mark E. Jagiela - President, Chief Executive Officer & Director: I think overall what's going on, it's the industry that needs more capacity versus new player. And that capacity is not atypical from what we've seen before. And in our case, the one thing perhaps that's different when we look at the packaging change that's going on in conjunction with the complexity change of the silicon itself is there's a double effect here. So, typically we would see demand increase just because let's say apps processors or power management ICs or image sensors were increasing in complexity. That drives up test time. We've seen that in prior years. This year you have to multiply that by maybe 1.1 in order to get the effect of a little bit more fault coverage in the advanced package world. Thomas Robert Diffely - D. A. Davidson & Co.: Okay. All right. And then Greg, you talked about a minimum cash level of $400 million. Do you have a minimum on-shore cash level that you're targeting? Gregory R. Beecher - Chief Financial Officer, Treasurer & VP: Yes, that's $300 million, and $100 million is offshore, which makes the $400 million. Thomas Robert Diffely - D. A. Davidson & Co.: Great. Thank you. Mark E. Jagiela - President, Chief Executive Officer & Director: Sure.

Our next question comes from the line of C.J. Muse with Evercore.

Good morning. Thank you for taking my question. I guess first question, I guess a couple parts around the SOC side. Can you talk about what would get the overall run rate to the high end of the range? And as part of that conversation, can you speak to whether or not there are any leases this year? Thank you. Mark E. Jagiela - President, Chief Executive Officer & Director: So again, it's very difficult to look out. The things that could happen and get it at the high or above the high end of range first would be -- we're projecting a relatively weaker microcontroller and automotive market this year. Now, that's very hard for us to read, but this is based just on what we see occurring toward the end of the year and some of the conservatism in the customer base. Some of the M&A activity going on also slows down and gives a little bit of a visibility cloud there. So as that clears up, there could be a snapback of tooling needed to get the new entity back up and running full speed. So we're preparing ourselves for that. On Mobility, that looks strong. One of the things, though, that occurred if we look at fourth quarter is as we were in the November period of time, the forecast for 2016 capacity for Mobility was quite a bit more robust than it ended up toward the end of December, as the macroeconomic conditions in China and the stock market started to waiver, people became much more cautious. So it could very well be that all that passes by and we see mobility larger than we expect, automotive and MCUs larger than we expect. And that drives it up to the $2.5 billion number or higher.

That's helpful. And then I guess a question on the OpEx side. I know you really can't guide full year OpEx but maybe I can ask it this way. Right now in Q1 you're running about $6 million above your target model for UR investments. Can you share with us what the aggregate uplift in UR investments will be for the year, relative to your target model? And then as part of that question, when should we see revenues come in from that uptick in your investments in service and field ops? Gregory R. Beecher - Chief Financial Officer, Treasurer & VP: Okay, C.J. UR, we would expect the revenue to come in similar to how it has come in every year. Its falls back a bit in the first quarter and then increases each quarter thereafter and has a high concentration in the fourth quarter with end of year budget money or what have you. And we expect UR after about $60 million sales to be $90 million plus. So we are investing there, opening more offices, hiring people, sales, hunters, application people. So there is more spending and advertising going into that. UR was about a 15% profit rate for us in – well, for their calendar year they were 15% in 2015. In 2016, if we see higher growth we may invest a bit more to get the next round of growth and stay ahead. But in terms of let's just say our OpEx, I think the key thing to try to outline for you guys is taking out UR, we expect OpEx for the company at like sales to be flat and that includes we're funding the salary increases people get each year through productivity or workforce shaping or finding lower cost, so flat with emphasis. In UR, there will be more spending and if you say how much, it ranges. Depends what we see. So we can meter it, anywhere from say $7 million a quarter OpEx is now, maybe we go to $10 million, maybe we go to $11 million, it all depends what we see. But the higher we go the more you're going to see the sales and/or the sales right around the corner. So I hope that answered your question with that.

Yeah, that's great. Thank you.

Our next question comes from the line of Stephen Chin with UBS.

Hi, guys. Thanks for taking the question. Just following up on the pull-ins in the fourth quarter, just to clarify, it sounds like first quarter and maybe second quarter a little bit are benefiting from those pull-ins, but then should we think about modeling the rest of the year a little bit lower than historically? And then just for the full year, that nothing really changed, it's just sort of a more lumpy year than what we've seen typically? Mark E. Jagiela - President, Chief Executive Officer & Director: Yeah. That's really hard for us to see what's going to happen. The question really is what's going to happen out in third quarter. Typically second and third quarter are the peak quarters for the year. And this earlier tooling that's occurring means that the installations are starting a little bit earlier. The revenue will start a little bit earlier. But I would struggle to say what does that imply for the third quarter. First and second should absolutely – that's about as far as we have visibility, not even maybe beyond April at this point. But it could very well be the third quarter is strong as well.

Got it. Okay. That's helpful. And then just as my follow-up, just more of a high level on the SOC Test market returning to a growth CAGR. Have you seen any additional data points of this or either quantitatively or anecdotally that gives you more confidence that the market can actually return to secular growth? Mark E. Jagiela - President, Chief Executive Officer & Director: At the microcosm level, yes, absolutely. Part of the theory and thesis that it returns to growth is predicated on a slowing effect of Parallel Test and as we look at mobility devices, we've seen that slowing occur much faster than we expected over the past two years. So that is a early, early indicator to us that this is really inflecting back in a positive direction. Now, there's other segments of the market such as automotive, linear and microcontroller that still will be on a lag a little bit mobility in terms of its, has some towed around parallelism. But what we look at is over the course of 2002 until 2012, 2013, an increasing deployment of parallelism. 2014 and 2015 in these big, big mobility segments that has stalled and in some cases inflected back the other way.

Thanks, guys.

Our next question comes from the line of Krish Sankar with Bank of America Merrill Lynch.

Yeah, hi. Thanks for taking my questions and really congrats on such a strong results out there. Two quick questions. Not to beat this OpEx question to death but is it fair to assume the second half of the year OpEx for you guys should come down relative to the first half? Gregory R. Beecher - Chief Financial Officer, Treasurer & VP: Yes, the second half should come down relative to the first half and that decrease will be in all areas other than Universal Robots. I would expect Universal Robots to increase OpEx throughout the year. But the other NREs, temporary contractors racing to get some new products completed, that's lined up quite considerably in the first half of the year which is unusual to have this much going on in multiple divisions and it's all contributed at the same time in Q1 and linking into Q2. But again, I try to be clear that for the full year we expect OpEx to be flat except for UR at like sales levels. And again, that includes funding salary increases.

Got it. Got it. And then I think you guys did explain the gross margin. You do see some volume pricing discount. Is it the main reason for the gross margin being lower or is there also a headwind from the fact that the microcontroller order market might be weaker so that is actually being a little bit of head room on the gross margin side? Gregory R. Beecher - Chief Financial Officer, Treasurer & VP: It's ultimately mix. You can pick different things and get to the same place. So I could have looked at it that way but the biggest swing factor for us has been the concentrated buying in the even years, albeit last year was a good year but as you know we sold lease testers that were partially on in the field for a while. 54% is kind of a normal margin that you'd expect at this level of buying.

Fair enough. Thanks a lot. Just a quick follow-up if I could. Off your $2.3 billion roughly in SOC market size is there a way to quantify how much of that is Mobility? Mark E. Jagiela - President, Chief Executive Officer & Director: It's always a challenge to do that. Roughly $2.3 billion, somewhere – let me just look it up here. Somewhere close to $1 billion of that might be Mobility.

Got it. Thanks a lot. Thank you very much.

Our next question comes from the line of Jagadish Iyer with Redstone Technology.

Yes. Mark, two questions. I'm just trying to reconcile just as a follow-up to the prior question, I'm just trying to reconcile given all the commentary that we have heard from the smartphone makers, what gives you the optimism that the SOC market is going to be up year-over-year? Why can't it be flat or even down given what all we are seeing on the smartphone market? Is there something that we are missing? And then I have a follow-up. Mark E. Jagiela - President, Chief Executive Officer & Director: Yeah, is your question up or down in the test market or in the silicon market?

Semi Test, in the Semi Test. Mark E. Jagiela - President, Chief Executive Officer & Director: Semi Test, yeah. So the thing that gives me confidence is what I was describing earlier, looking at the test times and the diminishing parallelism. So the complexity of the devices we know at this point that are going to be launched this year so that's done. The relative time to test the devices we know pretty much. It's not completely baked but we've got a pretty good range on that. So the combination of time times time and complexity is a known quantity. So what is more speculative is units and for units various people are saying smartphone and mobility units could be flat, could be up 5%, could be up 7%. We kind of model it to be probably zero to 5%. So, if it's more than that, that's upside. So the known quantities that we see are time to test let's say the unit test time for silicon in a phone. And the thing we have to somewhat guess at is the growth rate of phones.

Okay. And then on the Wireless Test side I just see that the market seems to be coming down. Is there something that is kind of happening there or do we see further declines going out this year and going into next year? Are there any other offerings that you could make in terms of improving your participation in that market? Thank you. Mark E. Jagiela - President, Chief Executive Officer & Director: Yeah, that market as we mentioned in our opening comments was about $425 million in size last year. When we look at this year, there's no real major technology wave inflection coming that could drive that significantly higher. So we're looking at this year to be roughly flat with last year. The thing over the horizon that will come is the 802.11ad standard in the 60-gigahertz band. The interesting thing about that is up until now all the success of connectivity standards as you go from B to G to N to AC, that's been all integrated and incorporated into a single piece of silicon. And the test equipment to test those integrated devices has essentially been a LitePoint box that gets reused generation to generation. At 60-gigahertz, it's a whole new ballgame, it's a different piece of silicon, it's not integrated, it can't be integrated. It's just a very different beast and requires a different test insertion. So we look at the 802.11ad deployment starting in 2017 as the next connectivity wave. The other thing Greg mentioned is further out in the cellular side will be 5G technologies but that's beyond 2017. So what we're doing at LitePoint in addition to going after the AD is looking at other adjacent markets such as Protocol Testing. So testing not the electronic capability and calibrating the electronic capability of the chips and the devices but also at a user level, at user experience level testing the parts. So that's another example of a product we'll be introducing this year that will ramp next year in a new market.

Okay. Thank you.

Our next question comes from the line of David Duley with Steelhead.

Thanks for taking my question. A bunch of questions on the advanced packaging front thus far. And I guess simply put we're kind of trying to figure out how the test intensity changes. Maybe you could just give us an example, an application processor moves into a fan-out package, what's the increase in overall test time that you might see from that kind of an event? Mark E. Jagiela - President, Chief Executive Officer & Director: So the device simply moving into – if that was the only device moving into that advanced package there would be very little test time impact. But in conjunction with that move, other passive devices, for example, may move into that substrate. That increases the test time. So resisters, capacitors, other things you would typically find perhaps on a printed circuit board in a phone or a flex print board will move onto the substrate. Those things from a semiconductor test point of view were never in the mix for being tested. So that adds some complexity. But that's not the big trend. Over the horizon we'll be incorporating more and more other pieces of silicon into that package. So the AP alone gives what I was describing earlier maybe a 10% bump to test time but as you also put in power management ICs, RF transceivers, Wi-Fi chips onto that substrate, then that intensity increases beyond that 10% factor. So if you added up the test time of let's say the five or six chips, the key chips in a phone cingulated, then instead of cingulated manufacturing incorporate all the die in a single advanced packaged substrate, you're going to see everything else being equal, a test time that's 1.2 plus times longer than if they were cingulated. And that's – that still may be a year or two away – first step.

Okay. And could you talk a little bit about what you think the impact of the order pull-ins were in the fourth quarter, how much do you think did get pulled in from the first quarter or later this year? Mark E. Jagiela - President, Chief Executive Officer & Director: It's probably on the order of a couple hundred million. So when we look across Q4 and Q1, we expect that the combined two-quarter period will actually show bookings up pretty significantly over our prior Q4 and Q1 average. So as far as we can have visibility at this point, the net momentum in Q1, in other words, that $200 million order didn't come out of Q1, per se. Q1 still looks pretty strong in terms of orders. So yes, $200 million showed up in Q4 but it's not yet clear to us that that means we're going to be down $200 million across Q1 and Q2.

So you think that Q1 orders will still be robust and..? Mark E. Jagiela - President, Chief Executive Officer & Director: Yeah. In other words, I don't expect that they would be $200 million down simply because we received $200 million of advanced orders in Q4.

Okay. Final thing from me is you talked about improving Mobility demand. Did you see improvement from the Android food chain or is this more the iOS food chain? Mark E. Jagiela - President, Chief Executive Officer & Director: Yeah, I don't want to get into the specifics around that.

Okay. Thank you. Andrew Blanchard - Vice President-Corporate Relations & IR Contact: And operator, we have time for just one more call, please.

Certainly. Our final question comes from the line of Patrick Ho with Stifel Nicolaus. Patrick J. Ho - Stifel, Nicolaus & Co., Inc.: Thank you very much. I just have one question on the cobot market as a whole. Given your early entry into that market you see the opportunities for growth right now. How do you see the competitive environment shaping up, both for 2016 over the next couple of years and I guess the reference point that I'm trying to use is the Wireless Test market you've got it, you had some really early growth but then obviously the competition helped I guess crater that market, how do you see the cobot market shaping up both for 2016 and over the next few years? Mark E. Jagiela - President, Chief Executive Officer & Director: Great question. So first of all, just to go back to the wireless space it was a little bit different in wireless. LitePoint was a late comer to that market but it came with a disruptive (58:17) product for manufacturing. So it came in, disrupted the big players. Everybody grew like mad in 2012 in Wireless Test including LitePoint. And what's occurred since then as the markets contracted there's four or five big guys in a shrinking room. LitePoint is picking up share. It's gone from 20% share in that boom period to 40% share today. But they were a late comer so very different. On the collaborative robot side of life, here we're in a market where UR is clearly the leader and out ahead. 60%, 70% share. So everybody else is trying to catch up and that as Greg described is why we are spending our time and strategy and money around developing the ecosystem to support our product line, our protocols,…