<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
_____________________________
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission File No. 1-6462
TERADYNE, INC.
(Exact name of registrant as specified in its charter)
Massachusetts 04-2272148
(State or Other Jurisdiction of (I.R.S.Employer
Incorporation or Organization) Identification No.)
321 Harrison Avenue, Boston, Massachusetts 02118
(Address of principal executive offices) (Zip Code)
617-482-2700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to the filing requirements for the past 90 days. Yes X No _
The number of shares outstanding of the registrant's only class of Common
Stock as of October 28, 1994 was 36,048,127 shares.
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TERADYNE, INC.
INDEX
Page No.
--------
Part I. Financial Information:
Condensed Consolidated Balance Sheets -
October 2, 1994 and December 31, 1993 .............................3
Condensed Consolidated Statements of Income -
Quarters and Nine Months Ended October 2, 1994 and October 3, 1993 .4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended October 2, 1994 and October 3, 1993 .............5
Notes to Condensed Consolidated Financial Statements .................6
Management's Discussion and Analysis of
Financial Condition and Results of Operations ....................7-8
Part II. Other Information:
Item 6(b). Reports on Form 8-K .......................................9
2
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<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION> October 2, 1994 December 31, 1993
--------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................. $ 144,542 $ 143,578
Marketable securities ...................................... 19,475
Accounts receivable - trade ................................ 128,250 101,669
Inventories:
Parts .................................................. 48,552 43,452
Assemblies in process .................................. 41,385 34,258
--------- ---------
89,937 77,710
Refundable income taxes .................................... 2,049
Deferred tax assets ........................................ 10,973 10,973
Prepayments and other current assets ....................... 9,945 4,596
--------- ---------
Total current assets ................................ 403,122 340,575
Property, at cost ............................................. 390,118 380,182
Less accumulated depreciation .............................. (207,466) (194,103)
--------- ---------
Net property ........................................ 182,652 186,079
Other assets .................................................. 23,248 17,789
--------- ---------
Total assets ........................................ $ 609,022 $ 544,443
========= =========
LIABILITIES
Current liabilities:
Notes payable - banks ...................................... $ 8,515 $ 7,574
Current portion of long-term debt .......................... 521
Accounts payable - trade ................................... 17,022 10,972
Accrued employees' compensation and withholdings ........... 32,920 34,856
Unearned service revenue and customer advances ............. 37,256 22,665
Other accrued liabilities .................................. 26,524 28,942
Income taxes payable ....................................... 7,282 1,024
--------- ---------
Total current liabilities ........................... 129,519 106,554
Deferred tax liabilities ...................................... 8,643 8,643
Long-term debt ................................................ 9,099 9,138
--------- ---------
Total liabilities .................................... 147,261 124,335
--------- ---------
SHAREHOLDERS' EQUITY
Common stock $.125 par value, authorized 75,000,000 shares,
issued and outstanding after deduction of reacquired shares
35,980,807 shares (35,687,256 in 1993) ...................... 4,498 4,461
Additional paid-in capital .................................... 240,984 247,843
Retained earnings ............................................. 216,279 167,804
--------- ---------
Total shareholders' equity .......................... 461,761 420,108
--------- ---------
Total liabilities and shareholders' equity .......... $ 609,022 $ 544,443
========= =========
<FN>
The accompanying notes, together with the Notes to Consolidated Financial Statements included in the
Company's Form 10-K for the year ended December 31, 1993 are an integral part of the condensed
consolidated financial statements.
</TABLE>
3
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<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
For the Quarters Ended For the Nine Months Ended
---------------------- ------------------------
Oct. 2, 1994 Oct. 3, 1993 Oct. 2, 1994 Oct. 3, 1993
------------ ------------ ------------ ------------
(Dollars in thousands except per share amounts)
<S> <C> <C> <C> <C>
Net sales ................................... $178,840 $140,279 $487,349 $407,394
Expenses:
Cost of sales ............................ 99,964 78,213 272,968 232,355
Engineering and development .............. 17,934 15,684 51,096 45,873
Selling and administrative ............... 32,148 32,073 95,783 95,771
-------- -------- -------- --------
150,046 125,970 419,847 373,999
-------- -------- -------- --------
Income from operations ...................... 28,794 14,309 67,502 33,395
Other income (expense):
Interest income .......................... 1,708 1,064 4,033 2,621
Interest expense ......................... (413) (937) (1,282) (2,947)
-------- -------- -------- --------
Income before income taxes .................. 30,089 14,436 70,253 33,069
Provision for income taxes .................. 9,729 4,331 21,778 9,921
-------- -------- -------- --------
Net income .................................. $ 20,360 $ 10,105 $ 48,475 $ 23,148
======== ======== ======== ========
Net income per common share ................. $0.55 $0.28 $1.31 $0.65
===== ===== ===== =====
Shares used in calculations of
net income per common share .............. 37,009,000 35,480,000 36,988,000 35,480,000
========== ========== ========== ==========
<FN>
The accompanying notes, together with the Notes to Consolidated Financial Statements included in the
Company's Form 10-K for the year ended December 31, 1993 are an integral part of the condensed consolidated
financial statements.
</TABLE>
4
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<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For the Nine Months Ended
------------------------
October 2, 1994 October 3, 1993
--------------- ---------------
(Dollars in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................ $ 48,475 $ 23,148
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation ........................................ 23,584 22,938
Amortization ........................................ 2,628 2,926
Deferred income taxes ............................... 6,613
Other non-cash items, net ........................... 1,615 2,090
Changes in operating assets and liabilities:
Accounts receivable .............................. (26,581) 11,682
Inventories ...................................... (12,227) (10,548)
Refundable income taxes .......................... 2,049 1,142
Other assets ..................................... (13,036) (1,424)
Accounts payable and accruals .................... 16,427 16,670
Income taxes payable ............................. 6,258 807
--------- ---------
Net cash provided by operating activities ...... 49,192 76,044
--------- ---------
Cash flows from investing activities:
Additions to property ................................. (16,158) (15,798)
Increase in equipment manufactured by the Company ..... (4,189) (11,814)
Purchase of marketable securities ..................... (19,475)
--------- ---------
Net cash used in investing activities .......... (39,822) (27,612)
--------- ---------
Cash flows from financing activities:
Payments of long-term debt ............................ (1,584) (570)
Issuance of common stock under employee stock
option and stock purchase plans ................... 13,230 21,992
Tax benefit from stock options ........................ 4,545
Acquisition of treasury stock ......................... (24,597) (2,277)
--------- ---------
Net cash flows provided by (used in)
financing activities ......................... (8,406) 19,145
--------- ---------
Increase in cash and cash equivalents .................... 964 67,577
Cash and cash equivalents at beginning of period ......... 143,578 67,383
--------- ---------
Cash and cash equivalents at end of period ............... $ 144,542 $ 134,960
========= =========
Supplementary disclosure of cash flow information:
Cash paid during the period for:
Interest ........................................... $ 1,266 $ 3,981
Income taxes ....................................... 8,926 1,359
<FN>
The accompanying notes, together with the Notes to Consolidated Financial Statements
included in the Company's Form 10-K for the year ended December 31, 1993 are an
integral part of the condensed consolidated financial statements.
</TABLE>
5
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TERADYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. Financial Information
---------------------
The accompanying condensed consolidated financial statements are
unaudited. However, in the opinion of management, all adjustments
(consisting only of normal recurring accrual entries) necessary for a
fair presentation of such information have been made. Certain amounts
contained in the accompanying condensed consolidated financial statements
for 1993 have been reclassified to conform with the 1994 presentation.
6
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Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations:
<TABLE>
SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
For the Quarters Ended For the Nine Months Ended
---------------------- ------------------------
Oct. 2, 1994 Oct. 3, 1993 Oct. 2, 1994 Oct. 3, 1993
------------ ------------ ------------ ------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net sales .................................... $ 178,840 $ 140,279 $ 487,349 $ 407,394
========= ========= ========= =========
Net income ................................... $ 20,360 $ 10,105 $ 48,475 $ 23,148
========= ========= ========= =========
Percentage of net sales:
Net sales ................................. 100% 100% 100% 100%
Expenses:
Cost of sales ........................... 56 56 56 57
Engineering and development ............. 10 11 10 11
Selling and administrative .............. 18 23 20 24
Interest, net ........................... (1) 0 0 0
--- --- --- ---
83 90 86 92
Income before income taxes ................ 17 10 14 8
Provision for income taxes ................ 5 3 4 2
--- --- --- ---
Net income ................................ 12% 7% 10% 6%
=== === === ===
Provision for income taxes as a percentage
of income before income taxes ............. 32% 30% 31% 30%
=== === === ===
</TABLE>
Sales increased 27% to $178.8 million in the third quarter of 1994 compared to
the third quarter of 1993. In the first nine months of 1994, sales increased
20% to $487.3 million compared to the first nine months of 1993. The growth in
sales in the third quarter occurred primarily in semiconductor test systems
and backplane connection systems and to a lesser extent in assembly test
systems and telecommunications systems. In the nine month periods, the sales
growth occurred in each of the groups except telecommunications systems,
where sales declined slightly. Sales of semiconductor test systems increased
as semiconductor manufacturers added capacity in response to rising demand for
their products. Sales of backplane connection systems increased in response
to the increasing demand for the high technology products of the Company's
customer base. As a result of the increase in sales, income before
taxes increased $15.7 million in the third quarter and $37.2 mill
nine months ending October 2, 1994 compared to the same periods in 1993.
Incoming orders were $180 million in the third quarter of 1994 compared to $198
million in the third quarter of 1993. In the third quarter of 1993, incoming
orders included a contract in the amount of $63 million to supply telephone-line
test equipment to Deutsche Bundepost Telekom in Germany. Backlog at the end
of the third quarter of 1994 was $324 million.
7
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Cost of sales was 56% of sales in both of the third quarters of 1994 and 1993.
In the first nine months of 1994, cost of sales decreased to 56% of sales from
57% in the same period in 1993. While the fixed and semi-variable components
of cost of sales have not increased at the same rate as the increase in sales,
changes in product mix have had an offsetting impact on the cost of
sales percentage.
Engineering and development expenses were 10% of sales in the third quarter
and the first nine months of 1994, compared to 11% in the third quarter and
first nine months of 1993. The dollar amount of these expenses has increased
at a lesser rate as sales have increased. The dollar amount increase was due
primarily to support new product development efforts in semiconductor test
systems.
Selling and administrative expenses decreased from 23% of sales to 18% of
sales in the third quarter of 1994 compared to the third quarter of 1993
and from 24% of sales to 20% in the first nine months of 1994 compared to the
first nine months of 1993. The dollar amount of these expenses has remained
constant while the Company's sales have increased.
In the first nine months of 1994, the Company had net interest income of $2.8
million compared to net interest expense of $.3 million in the first nine
months of 1993. This change was due to higher levels of invested cash and
higher interest rates in the first nine months of 1994 compared to the first
nine months of 1993, and lower interest expense as a result of the retirement
of the Company's convertible debentures in the fourth quarter of 1993 and
industrial revenue bonds in the second quarter of 1994.
During the third quarter of 1994, the Company's effective tax rate increased to
31% of pre-tax income on a year to date basis, creating a 32% effective tax rate
in the third quarter. The 1993 effective tax rate was 30%.
Changes in Financial Condition During the First Nine Months of 1994
- - -------------------------------------------------------------------
During the first nine months of 1994, cash and marketable securities
increased $20.4 million to a balance of $164.0 million. Cash flow provided
by operations was $49.2 million. The Company used cash of $24.6 million to
purchase stock from its shareholders on the open market and generated cash
of $17.8 million under the Company's employee stock option and stock
purchase plans, resulting in a net cash outflow of $6.8 million for stock
related activities. An additional $20.3 million was used to fund property
and equipment additions during the nine month period.
8
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Item 6(b). Reports on Form 8-K
- - -------------------------------
There have been no Form 8-K filings during the quarter ended October 2,
1994 as none were required.
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the
registrant has duly caused this
report to be signed on its behalf by
the undersigned thereunto duly
authorized.
TERADYNE, INC.
-------------------------------------
Registrant
OWEN W. ROBBINS
-------------------------------------
Owen W. Robbins
Executive Vice President
November 11, 1994
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> OCT-02-1994
<CASH> 144,542
<SECURITIES> 19,475
<RECEIVABLES> 129,977
<ALLOWANCES> 1,727
<INVENTORY> 89,937
<CURRENT-ASSETS> 403,122
<PP&E> 390,118
<DEPRECIATION> 207,466
<TOTAL-ASSETS> 609,022
<CURRENT-LIABILITIES> 129,519
<BONDS> 9,099
<COMMON> 4,498
0
0
<OTHER-SE> 457,263
<TOTAL-LIABILITY-AND-EQUITY> 609,022
<SALES> 487,349
<TOTAL-REVENUES> 487,349
<CGS> 272,968
<TOTAL-COSTS> 272,968
<OTHER-EXPENSES> 146,879
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,282
<INCOME-PRETAX> 70,253
<INCOME-TAX> 21,778
<INCOME-CONTINUING> 48,475
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 48,475
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 1.31
</TABLE>
