<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 July 3, 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 July 29, 1994 was 35,754,426 shares.
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TERADYNE, INC.
INDEX
Page No.
--------
Part I. Financial Information:
Condensed Consolidated Balance Sheets -
July 3, 1994 and December 31, 1993 ............................. 1
Condensed Consolidated Statements of Income -
Quarters and Six Months Ended July 3, 1994 and July 4, 1993 ..... 2
Condensed Consolidated Statements of Cash Flows -
Six Months Ended July 3, 1994 and July 4, 1993 ................. 3
Notes to Condensed Consolidated Financial Statements .............. 4
Management's Discussion and Analysis of
Financial Condition and Results of Operations ................. 5-6
Part II. Other Information:
Item 6(b). Reports on Form 8-K .................................... 7
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<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION> July 3, 1994 December 31, 1993
------------ -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .................................. $ 150,351 $ 143,578
Accounts receivable - trade ................................ 104,448 101,669
Inventories:
Parts .................................................. 47,007 43,452
Assemblies in process .................................. 38,260 34,258
--------- ---------
85,267 77,710
Refundable income taxes .................................... 249 2,049
Deferred tax assets ........................................ 10,973 10,973
Prepayments and other current assets ....................... 9,452 4,596
--------- ---------
Total current assets ................................ 360,740 340,575
Property, at cost ............................................. 385,497 380,182
Less accumulated depreciation .............................. (204,115) (194,103)
--------- ---------
Net property ........................................ 181,382 186,079
Other assets .................................................. 21,015 17,789
--------- ---------
Total assets ........................................ $ 563,137 $ 544,443
========= =========
LIABILITIES
Current liabilities:
Notes payable - banks ...................................... $ 8,520 $ 7,574
Current portion of long-term debt .......................... 521
Accounts payable - trade ................................... 14,366 10,972
Accrued employees' compensation and withholdings ........... 29,446 34,856
Unearned service revenue and customer advances ............. 24,244 22,665
Other accrued liabilities .................................. 25,821 28,942
Income taxes payable ....................................... 6,178 1,024
--------- ---------
Total current liabilities ........................... 108,575 106,554
Deferred tax liabilities ...................................... 8,643 8,643
Long-term debt ................................................ 9,100 9,138
--------- ---------
Total liabilities .................................... 126,318 124,335
--------- ---------
SHAREHOLDERS' EQUITY
Common stock $.125 par value, authorized 75,000,000 shares,
issued and outstanding after deduction of reacquired shares
35,723,984 shares (35,687,256 in 1993) ...................... 4,465 4,461
Additional paid-in capital .................................... 236,435 247,843
Retained earnings ............................................. 195,919 167,804
--------- ---------
Total shareholders' equity .......................... 436,819 420,108
--------- ---------
Total liabilities and shareholders' equity .......... $ 563,137 $ 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>
1
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<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<CAPTION>
For the Quarters Ended For the Six Months Ended
---------------------- ------------------------
July 3, 1994 July 4, 1993 July 3, 1994 July 4, 1993
------------ ------------ ------------ ------------
(Dollars in thousands except per share amounts)
<S> <C> <C> <C> <C>
Net sales ................................... $156,497 $139,336 $308,509 $267,115
Expenses:
Cost of sales ............................ 87,342 80,666 173,004 154,142
Engineering and development .............. 17,305 15,035 33,162 30,189
Selling and administrative ............... 31,764 32,557 63,635 63,698
-------- -------- -------- --------
136,411 128,258 269,801 248,029
-------- -------- -------- --------
Income from operations ...................... 20,086 11,078 38,708 19,086
Other income (expense):
Interest income .......................... 1,237 843 2,325 1,557
Interest expense ......................... (399) (982) (869) (2,010)
-------- -------- -------- --------
Income before income taxes .................. 20,924 10,939 40,164 18,633
Provision for income taxes .................. 6,277 3,282 12,049 5,590
-------- -------- -------- --------
Net income .................................. $ 14,647 $ 7,657 $ 28,115 $ 13,043
======== ======== ======== ========
Net income per common share ................. $0.40 $0.21 $0.76 $0.37
===== ===== ===== =====
Shares used in calculations of
net income per common share .............. 36,729,000 34,985,000 36,978,000 34,985,000
========== ========== ========== ==========
<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>
2
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<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For the Six Months Ended
------------------------
July 3, 1994 July 4, 1993
------------ ------------
(Dollars in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................ $ 28,115 $ 13,043
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation ........................................ 15,776 15,013
Amortization ........................................ 1,655 1,937
Deferred income taxes ............................... 1,274
Other non-cash items, net ........................... 1,450 1,881
Changes in operating assets and liabilities:
Accounts receivable .............................. (2,779) 16,265
Inventories ...................................... (7,557) (1,607)
Refundable income taxes .......................... 1,800 491
Other assets ..................................... (9,337) (2,851)
Accounts payable and accruals .................... (3,418) 7,623
Income taxes payable ............................. 5,154 (12)
--------- ---------
Net cash provided by operating activities ...... 30,859 53,057
--------- ---------
Cash flows from investing activities:
Additions to property ................................. (8,692) (11,071)
Increase in equipment manufactured by the Company ..... (2,406) (8,588)
--------- ---------
Net cash used in investing activities .......... (11,098) (19,659)
--------- ---------
Cash flows from financing activities:
Payments of long-term debt ............................ (1,584) (420)
Issuance of common stock under employee stock
option and stock purchase plans ................... 10,048 14,807
Tax benefit from stock options ........................ 3,145 3,108
Acquisition of treasury stock ......................... (24,597) (2,277)
--------- ---------
Net cash flows provided by (used in)
financing activities ......................... (12,988) 15,218
--------- ---------
Increase in cash and cash equivalents .................... 6,773 48,616
Cash and cash equivalents at beginning of period ......... 143,578 67,383
--------- ---------
Cash and cash equivalents at end of period ............... $ 150,351 $ 115,999
========= =========
Supplementary disclosure of cash flow information:
Cash paid during the period for:
Interest ........................................... $ 880 $ 2,613
Income taxes ....................................... 1,950 729
<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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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.
4
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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 Six Months Ended
---------------------- ------------------------
July 3, 1994 July 4, 1993 July 3, 1994 July 4, 1993
------------ ------------ ------------ ------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net sales .................................... $ 156,497 $ 139,336 $ 308,509 $ 267,115
========= ========= ========= =========
Net income ................................... $ 14,647 $ 7,657 $ 28,115 $ 13,043
========= ========= ========= =========
Percentage of net sales:
Net sales ................................. 100% 100% 100% 100%
Expenses:
Cost of sales ........................... 56 58 56 58
Engineering and development ............. 11 11 11 11
Selling and administrative .............. 20 23 21 24
Interest, net ........................... 0 0 (1) 0
--- --- --- ---
87 92 87 93
Income before income taxes ................ 13 8 13 7
Provision for income taxes ................ 4 2 4 2
--- --- --- ---
Net income ................................ 9% 6% 9% 5%
=== === === ===
Provision for income taxes as a percentage
of income before income taxes ............. 30% 30% 30% 30%
=== === === ===
</TABLE>
Sales increased 12% to $156.5 million in the second quarter of 1994 compared
with the second quarter of 1993. For the first six months of 1994, sales
increased 15% to $308.5 compared to the first six months of 1993. The
increase in sales in both the quarter and the six months periods occurred
primarily in semiconductor test systems and backplane connection systems.
Sales of semiconductor test sytems 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 $10.0 million in the
second quarter of 1994 and $21.5 million in the first six months of 1994
compared to the same periods in 1993.
Incoming orders increased from $167 million in the second quarter of 1993 to
$186 million in the second quarter of 1994. Backlog at the end of the second
quarter of 1994 was $323 million.
Cost of sales decreased from 58% of sales in the second quarter and first six
months of 1993 to 56% of sales in the second quarter and first six months of
1994 as the fixed and semi-variable components of cost of sales did not
increase at the same rate as the increase in sales.
5
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Engineering and development expenses were 11% of sales in the first quarter
and the first six months of both 1994 and 1993. The dollar amount of these
expenses has increased at the same rate as sales have increased. The
increase was due primarily to support new product development efforts in
semiconductor test systems.
Selling and administrative expenses decreased from 23% of sales to 20% of
sales in the second quarter of 1994 compared to the second quarter of 1993
and from 24% of sales to 21% in the first six months of 1994 compared to the
first six months of 1993. The dollar amount of these expenses decreased
slightly as a result of the Company's efforts to control these expenses.
In the first six months of 1994, the Company had net interest income of $1.5
million compared to net interest expense of $.5 million in the first six
months of 1993. This change was due to interest earned on the increase in
cash of $34.4 million between July 4, 1993 and July 3, 1994, 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.
The Comapany's effective tax rate was 30% in both the first six months of
1994 and 1993.
Changes in Financial Condition During the First Six Months of 1994
- - ------------------------------------------------------------------
During the first six months of 1994, cash increased $6.8 million to a balance
of $150.4 million. Cash flow provided by operations was $30.9 million. The
Company used cash of $24.6 million to purchase stock from its stockholders on
the open market and generated cash of $13.2 million from employees under the
Company's employee stock option and stock purchase plans, resulting in a net
cash outflow of $11.4 million for stock related activities. An additional
$11.1 million was used to fund property and equipment additions during the
six month period.
6
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Item 6(b). Reports on Form 8-K
- - -------------------------------
There have been no Form 8-K filings during the quarter ended July 3,
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
August 5, 1994
7
