SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 28, 1998
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 (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 26, 1998 was 84,001,649 shares.
<PAGE>
<TABLE>
TERADYNE, INC.
INDEX
Page No.
--------
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets -
June 28, 1998 and December 31, 1997.................................................. 3
Condensed Consolidated Statements of Income -
Three and Six Months Ended June 28, 1998 and June 29, 1997........................... 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 28, 1998 and June 29, 1997..................................... 5
Notes to Condensed Consolidated Financial Statements...................................... 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........................................ 8-10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders....................................... 11
</TABLE>
<PAGE>
<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
June 28, 1998 December 31, 1997
------------- -----------------
(Unaudited)
(In thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................................... $ 67,308 $ 74,668
Marketable securities........................................................ 23,170 18,693
Accounts receivable.......................................................... 354,963 300,933
Inventories:
Parts.................................................................. 201,961 168,385
Assemblies in process.................................................. 146,542 103,972
------------ ------------
348,503 272,357
Deferred tax assets.......................................................... 40,530 40,530
Prepayments and other current assets......................................... 27,853 19,902
------------ ------------
Total current assets................................................... 862,327 727,083
Property, plant, and equipment, at cost:........................................ 798,704 692,832
Less: Accumulated depreciation............................................ (384,997) (349,707)
------------ ------------
Net property, plant, and equipment..................................... 413,707 343,125
Long-term marketable securities................................................. 70,527 156,574
Other assets.................................................................... 23,955 24,892
------------ ------------
Total assets........................................................... $ 1,370,516 $ 1,251,674
============ ============
LIABILITIES
Current liabilities:
Notes payable - banks........................................................ $ 6,133 $ 6,632
Current portion of long-term debt............................................ 1,601 1,807
Accounts payable............................................................. 78,029 58,685
Accrued employees' compensation and withholdings............................. 75,959 77,299
Unearned service revenue and customer advances............................... 58,294 49,122
Other accrued liabilities.................................................... 73,275 65,642
Income taxes payable......................................................... 14,410 18,786
------------ ------------
Total current liabilities.............................................. 307,701 277,973
Deferred tax liabilities........................................................ 23,429 23,429
Long-term debt.................................................................. 13,046 13,141
------------ ------------
Total liabilities...................................................... 344,176 314,543
------------ ------------
SHAREHOLDERS' EQUITY
Common stock $0.125 par value; 250,000 shares authorized;
83,998 and 83,303 shares issued and outstanding after deduction of reacquired
shares in 1998 and 1997, respectively........................................ 10,499 10,413
Additional paid-in capital...................................................... 323,107 322,985
Retained earnings............................................................... 692,734 603,733
------------ ------------
Total shareholders' equity............................................. 1,026,340 937,131
------------ ------------
Total liabilities and shareholders' equity............................. $ 1,370,516 $ 1,251,674
============ ============
<FN>
The accompanying notes, together with the Notes to Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 are an integral part of the condensed consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
For the Three Months Ended For the Six Months Ended
-------------------------- ------------------------
(In thousands, except per share amounts)
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales................................... $ 406,236 $ 289,541 $ 837,805 $ 537,843
Expenses:
Cost of sales.......................... 246,457 164,648 498,404 317,583
Engineering and development............ 49,164 42,635 98,086 75,943
Selling and administrative............. 57,549 47,449 116,262 88,232
------------ ------------ ------------ ------------
353,170 254,732 712,752 481,758
Income from operations...................... 53,066 34,809 125,053 56,085
Other income (expense):
Interest income......................... 2,871 5,234 6,344 10,899
Interest expense........................ (266) (565) (513) (1,106)
------------ ------------ ------------ ------------
Income before income taxes.................. 55,671 39,478 130,884 65,878
Provision for income taxes.................. 16,311 14,476 41,883 23,716
------------ ------------ ------------ ------------
Net income.................................. $ 39,360 $ 25,002 $ 89,001 $ 42,162
============ ============ ============ ============
Net income per common share - basic......... $ 0.47 $ 0.30 $ 1.06 $ 0.51
============ ============ ============ ============
Net income per common share - diluted....... $ 0.46 $ 0.29 $ 1.04 $ 0.49
============ ============ ============ ============
Shares used in calculations of net income
per common share - basic................ 83,649 83,494 83,650 83,401
============ ============ ============ ============
Shares used in calculations of net income
per common share - diluted.............. 85,632 86,283 85,780 86,047
============ ============ ============ ============
<FN>
The accompanying notes, together with the Notes to Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 are an integral part of the condensed consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Six Months Ended
------------------------
June 28, 1998 June 29, 1997
------------- -------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 89,001 $ 42,162
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation................................................... 35,973 28,669
Amortization................................................... 427 664
Deferred income taxes.......................................... (55)
Other non-cash items, net...................................... (4,382) 355
Changes in operating assets and liabilities:
Accounts receivable....................................... (54,030) (72,457)
Inventories............................................... (76,146) (44,596)
Other assets.............................................. (7,441) (614)
Accounts payable and accruals............................. 34,808 (12,598)
Income taxes payable...................................... (800) 21,639
------------ ------------
Net cash provided (used) by operating activities...... 17,410 (36,831)
Cash flows from investing activities:
Additions to property, plant and equipment........................ (64,938) (34,801)
Increase in equipment manufactured by the Company................. (37,198) (5,500)
Purchases of available-for-sale marketable securities............. (51,370) (88,420)
Maturities of available-for-sale marketable securities............ 152,637 46,927
Purchases of held-to-maturity marketable securities............... (19,697) (111,033)
Maturities of held-to-maturity marketable securities.............. 90,916
------------ ------------
Net cash used by investing activities................. (20,566) (101,911)
Cash flows from financing activities:
Payments of long term debt........................................ (836) (1,309)
Acquisition of treasury stock..................................... (22,256) (45,692)
Issuance of common stock under employee stock
option and stock purchase plans................................ 18,888 30,770
------------ ------------
Net cash used by financing activities........... (4,204) (16,231)
------------ ------------
Decrease in cash and cash equivalents.................................. (7,360) (154,973)
Cash and cash equivalents at beginning of period....................... 74,668 201,452
------------ ------------
Cash and cash equivalents at end of period............................. $ 67,308 $ 46,479
============ ============
Supplementary disclosure of cash flow information:
Cash paid during the period for:
Interest................................................ $ 590 $ 1,203
Income taxes............................................ 43,101 7,683
<FN>
The accompanying notes, together with the Notes to Consolidated Financial
Statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 are an integral part of the condensed consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
TERADYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. The Company
Teradyne, Inc. (the "Company") designs, manufactures, markets, and services
electronic test systems and related software used by component manufacturers in
the design and testing of their products and by electronic equipment
manufacturers for the design and testing of circuit boards and other assemblies.
Manufacturers use such systems and software to increase product performance, to
improve product quality, to shorten time to market, to enhance
manufacturability, to conserve labor costs, and to increase production yields.
The Company's electronic systems are also used by telephone operating companies
for the testing and maintenance of their subscriber telephone lines and related
equipment.
The Company also manufactures backplane connection systems, principally for
the computer, telecommunications, and military/aerospace industries. A backplane
is an assembly, into which printed circuit boards are inserted, that provides
for the interconnection of electrical signals between the circuit boards and the
other elements of the system.
B. Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated. The year-end condensed balance sheet data were derived
from audited financial statements, but do not include all disclosures required
by generally accepted accounting principles.
Preparation of Financial Statements
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. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and expenses
during the reported periods. Actual results could differ from those estimates.
<PAGE>
TERADYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
C. Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 131, "Disclosure about
Segments of an Enterprise and Related Information," which changes the manner in
which public companies report information about their operating segments. SFAS
No. 131, which is based on the management approach to segment reporting,
establishes requirements to report selected segment information quarterly and to
report entity-wide disclosures about products and services, major customers, and
the geographic locations in which the entity holds assets and reports revenue.
Management is currently evaluating the effects of this change on its reporting
of segment information. The Company will adopt SFAS No. 131 for its fiscal year
ending December 31, 1998.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits," which sets forth increased
disclosure requirements for public entities. SFAS No. 132 only affects
disclosure issues and does not change any existing measurement or recognition
provisions previously required. The statement is effective for fiscal years
beginning after December 15, 1997. Reclassification for earlier periods is
required for comparative purposes. Management is currently evaluating the
effects of this change on its reporting of pensions and other postretirement
benefits. The Company will adopt SFAS No. 132 for its fiscal year ending
December 31, 1998.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. The statement
is effective for fiscal years beginning after June 15, 1999. Management is
currently evaluating the effects of this change on its recording of derivatives
and hedging activities. The Company will adopt SFAS No. 133 for its fiscal year
ending December 31, 2000.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-1, "Internal Use Software," which provides
guidance on the accounting for the costs of software developed or obtained for
internal use. SOP 98-1 is effective for fiscal years beginning after December
15, 1998. Management does not expect the statement to have a material impact on
its financial position or results of operations.
D. Net Income per Common Share
The following table sets forth the computation of basic and diluted net
income per common share (in thousands, except per share amounts):
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
-------------------------- ------------------------
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Income................................................ $ 39,360 $ 25,002 $ 89,001 $ 42,162
========== ========== ========== ==========
Shares used in net income per common share - basic........ 83,649 83,494 83,650 83,401
Effect of dilutive securities:.......................
Employee and director stock options.............. 1,713 2,581 1,950 2,507
Employee stock purchase rights................... 270 208 180 139
---------- ---------- ---------- ----------
Dilutive potential common shares..................... 1,983 2,789 2,130 2,646
---------- ---------- ---------- ----------
Shares used in net income per common share - diluted...... 85,632 86,283 85,780 86,047
========== ========== ========== ==========
Net income per common share - basic....................... $ 0.47 $ 0.30 $ 1.06 $ 0.51
========== ========== ========== ==========
Net income per common share - diluted..................... $ 0.46 $ 0.29 $ 1.04 $ 0.49
========== ========== ========== ==========
<FN>
For purposes of computing diluted earnings per share, weighted average common
share equivalents do not include stock options with an exercise price that
exceeds the average fair market value of the Company's common stock for the
period. Options to purchase 3,311,577 and 1,482,354 shares of common stock were
outstanding during the three months ended June 28, 1998 and June 29,
1997,respectively, but were not included in the calculation of diluted net
income per common share. Options to purchase 1,706,203 and 773,275 shares of
common stock were outstanding during the six months ended June 28, 1998 and June
29, 1997,respectively, but were not included in the calculation of diluted net
income per common share.
</FN>
</TABLE>
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
<TABLE>
SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
<CAPTION>
For the Three Months Ended For the Six Months Ended
-------------------------- ------------------------
June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997
------------- ------------- ------------- -------------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Net sales.......................................... $ 406,236 $ 289,541 $ 837,805 $ 537,843
============ ============ ============ ============
Net income......................................... $ 39,360 $ 25,002 $ 89,001 $ 42,162
============ ============ ============ ============
Percentage of net sales:
Net sales..................................... 100% 100% 100% 100%
Expenses:
Cost of sales............................. 61 57 59 59
Engineering and development............... 12 15 12 14
Selling and administrative................ 14 16 14 16
Interest, net............................. (1) (2) (1) (2)
------------ ------------ ------------ ------------
86 86 84 87
Income before income taxes.................... 14 14 16 13
Provision for income taxes.................... 4 5 5 5
------------ ------------ ------------ ------------
Net income.................................... 10% 9% 11% 8%
============ ============= ============ ============
Provision for income taxes as a percentage of
income before taxes........................... 29% 37% 32% 36%
============ ============ ============ ============
</TABLE>
Results of Operations
- ---------------------
Sales of $406.2 million in the second quarter of 1998 were $116.7 million
or 40% above those of the second quarter of 1997. The increase in sales was
primarily due to a 48% increase in shipments of semiconductor test systems
following increased orders in 1997. Sales decreased 6% in the second quarter of
1998 down from a record high in the first quarter. As a result of the increase
in sales in the second quarter of 1998 compared to 1997, income before income
taxes increased $16.2 million to $55.7 million. For the first six months of
1998, income before income taxes increased $65.0 million to $130.9 million.
Incoming orders were $249.8 million, net of $91.0 million in cancellations,
in the second quarter of 1998 compared to $357.6 million in the second quarter
of 1997. The decrease in orders was primarily driven by a slowing of
semiconductor test systems orders which reflects the current industry
conditions. Telecommunications test systems orders also declined. Orders for
backplane connection systems, circuit-board test systems, and software test
increased. The Company expects third quarter of 1998 shipments and net income to
decline, from the second quarter of 1998, as a result of the reduction in
semiconductor test systems orders. The Company's backlog was $615.1 million at
the end of the second quarter of 1998 compared with $671.8 million at the end of
the second quarter of 1997.
Costs of products sold as a percentage of sales increased from 57% of sales
in the second quarter of 1997 to 61% of sales in the second quarter of 1998. The
increase was due to higher material and operating costs related to the Company's
increased shipment of new semiconductor test systems products. Cost of products
sold as a percentage of sales remained at 59% for the first six months of 1998
and 1997.
Engineering and development expenses, as a percentage of sales, decreased
from 15% of sales in the second quarter of 1997 and 14% of sales in the first
six months of 1997 to 12% of sales in the second quarter and first six months of
1998. Engineering and development spending increased $6.5 million in the second
quarter of 1998 over the same period in 1997. Included in the second quarter of
1997 was a pre-tax nonrecurring charge of $5.0 million for the purchase of
in-process technology related to the acquisition Softbridge, Inc. Engineering
and development spending, before the pre-tax nonrecurring charge, grew $11.5
million due primarily to increased investment in new product development of
semiconductor and software test systems.
Selling and administrative expenses were 14% of sales in the second quarter
and first six months of 1998 compared with 16% of sales in the second quarter
and first six months of 1997. Selling and administrative expenses increased
$10.1 million in the second quarter of 1998 over the same period in 1997 to
support increased semiconductor test systems sales.
The Company's effective tax rate for the first six months of 1998 decreased
to 32% from a 36% effective rate for the first six months of 1997. The Company's
effective tax rate is below the statutory rate of 35% due to increased
utilization of export sales corporation benefits and certain research and
development tax credits.
Liquidity and Capital Resources
- -------------------------------
The Company's cash, cash equivalents, and marketable securities balance
decreased $88.9 million in the first six months of 1998. The Company generated
$17.4 million of cash from operations in the first six months of 1998. The
primary source of cash from operations was net income (plus non-cash charges for
depreciation) of $125.0 million, which was offset by increases in accounts
receivable, inventories and other assets of $54.0 million, $76.1 million and
$7.4 million, respectively, negated somewhat by an increase in accounts payable
and accrued expenses of $34.8 million.
Cash was used to fund additions to property, plant and equipment of $102.1
million in the first six months of 1998. Property, plant and equipment
expenditures relate primarily to the expansion of production capacity. The
Company purchased 0.6 million shares of the Company's common stock for $22.3
million in the first six months of 1998 under the Company's stock buyback plan.
Cash of $18.9 million was generated in the first six months of 1998 from the
sale of stock to employees under the Company's stock option and stock purchase
plans.
The Company believes its cash, cash equivalents and marketable securities
balance of $161.0 million, together with other sources of funds, including the
available borrowing capacity of $120.0 million under its line of credit
agreement, will be sufficient to meet working capital and capital expenditure
requirements over the next twelve months.
Certain Factors That May Affect Future Results
- ----------------------------------------------
From time to time, information provided by the Company, statements made by
its employees or information included in its filings with the Securities and
Exchange Commission (including this Form 10-Q, the Company's Annual Report of
Form 10-K, and the Company's Annual Report to Shareholders) may contain
statements which are not historical facts, so-called "forward looking
statements," which involve risks and uncertainties. In particular, statements in
"Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations" relating to the sufficiency of capital to meet working capital
and planned capital expenditure, may be forward looking statements. The
Company's actual future results may differ significantly from those stated in
any forward looking statements. Factors that may cause such differences include,
but are not limited to, the factors discussed below. Each of these factors, and
others, are discussed from time to time in the Company's filings with the
Securities and Exchange Commission.
The Company's future results are subject to substantial risks and
uncertainties. The Company's business and results of operations depend in
significant part upon capital expenditures of manufacturers of semiconductors,
which in turn depend upon the current and anticipated market demand for
semiconductors and products incorporating semiconductors. The semiconductor
industry has been highly cyclical with recurring periods of over supply, which
often have had a severe effect on the semiconductor industry's demand for test
equipment, including systems manufactured and marketed by the Company. The
Company believes that the markets for newer generations of semiconductors will
also be subject to similar fluctuations. There can be no assurance that any
future increase in semiconductor test systems bookings for a calendar quarter
will be sustained in subsequent quarters. In addition, any factor adversely
affecting the semiconductor industry or particular segments within the
semiconductor industry may adversely affect the Company's business, financial
condition and operating results.
Also, the Company relies on certain intellectual property protections to
preserve its intellectual property rights, including patents, copyrights and
trade secrets. While the Company believes that its patents, copyrights and trade
secrets have value, in general no single one is in itself essential. The Company
believes that its technological position depends primarily on the technical
competence and creative ability of its research and development personnel. From
time to time the Company is notified that it may be in violation of patents held
by others. An assertion of patent infringement against the Company, if
successful, could have a material adverse effect on the Company or could require
a lengthy and expensive defense which could adversely affect the Company's
operating results.
The development of new technologies, commercialization of those
technologies into products, and market acceptance and customer demand for those
products is critical to the Company's success. Successful product development
and introduction depends upon a number of factors, including new product
selection, development of competitive products by competitors, timely and
efficient completion of product design, timely and efficient implementation of
manufacturing and assembly processes and product performance at customer
locations.
The Company faces substantial competition throughout the world, primarily
from electronic test systems manufacturers located in the United States, Europe
and Japan, as well as internal test equipment groups at several of the Company's
customers. Some of these competitors have substantially greater financial and
other resources to pursue engineering, manufacturing, marketing and distribution
of their products. Certain of the Company's competitors have introduced or
announced new products with certain performance characteristics which may be
considered equal or superior to those currently offered by the Company. The
Company expects its competitors to continue to improve the performance of their
current products and to introduce new products or new technologies that provide
improved cost of ownership and performance characteristics. New product
introductions by competitors could cause a decline in sales or loss of market
acceptance of the Company's existing products. Moreover, increased competitive
pressure could lead to intensified price based competition, which could
materially adversely affect the Company's business, financial condition and
results of operations.
The Company derives a significant portion of its total revenue from
customers outside the United States. International sales are subject to
significant risks, including unexpected changes in legal and regulatory
requirements and policy changes affecting the Company's markets, changes in
tariffs, exchange rates and other barriers, political and economic instability,
difficulties in accounts receivable collection, difficulties in managing
distributors and representatives, difficulties in staffing and managing
international operations, difficulties in protecting the Company's intellectual
property and potentially adverse tax consequences.
In the recent past there has been significant economic instability in
several countries in Asia. Continued economic instability would increase the
likelihood of either a direct or indirect adverse impact on the Company's future
results.
The Company's quarterly and annual operating results are affected by a wide
variety of factors that could materially adversely affect revenues and
profitability, including: competitive pressures on selling prices; the timing
and cancellation of customer orders; changes in product mix; the Company's
ability to introduce new products and technologies on a timely basis;
introduction of products and technologies by the Company's competitors; market
acceptance of the Company's and its competitors' products; fulfilling backlog on
a timely basis; reliance on sole source suppliers; potential retrofit costs; the
level of orders received which can be shipped in a quarter; and the timing of
investments in engineering and development. In particular, the Company has
introduced a significant number of new, complex test systems in 1996 and 1997,
and there can be no assurance that the Company will not experience delays in
shipment of such products or that such products will achieve customer
acceptance. As a result of the foregoing and other factors, the Company may
experience material fluctuations in future operating results on a quarterly or
annual basis which could materially and adversely affect its business, financial
condition, operating results and stock price.
Many computer systems experience problems handling dates beyond the year
1999. Therefore, some computer hardware and software will need to be modified
prior to the year 2000 in order to remain functional. The Company is assessing
both the internal readiness of its computer systems and the compliance of its
computer products and software sold to customers for handling the year 2000. The
Company expects to implement successfully the systems and programming changes
necessary to address year 2000 issues, and does not believe that the cost of
such actions will have a material effect on the Company's results of operations
or financial condition. There can be no assurance, however, that there will not
be a delay in, or increased costs associated with, the implementation of such
changes, and the Company's inability to implement such changes could have an
adverse effect on future results of operations.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of security holders of the Company was held May 21, 1998. The
following were elected as Directors:
<TABLE>
<CAPTION>
Total Vote Total Vote Withheld
Nominee For Each Nominee For Each Nominee
- ------- ---------------- -------------------
<S> <C> <C>
John P. Mulroney 70,218,437 459,880
Owen W. Robbins 70,212,586 465,731
Richard J. Testa 69,750,740 927,577
Patricia S. Wolpert 70,221,142 457,175
<FN>
The term of office for the following directors continued after the meeting: Alexander V. d'Arbeloff, George W. Chamillard, James
W. Bagley, Albert Carnesale, Daniel S. Gregory, Dwight H. Hibbard, Vincent O'Reilly, and James A. Prestridge.
</FN>
</TABLE>
In addition, the following proposals were approved:
(A) an amendment to the 1996 Employee Stock Purchase Plan, to increase the
aggregate number of shares of Common Stock which may be issued by
2,000,000, was approved, with 68,963,451 shares voting in favor, 1,571,919
shares voting against, and 142,947 shares abstaining.
(B) to ratify the selection of the firm Coopers & Lybrand L.L.P. as auditors
for the fiscal year ending December 31, 1998, with 70,415,646 shares voting
in favor, 220,666 shares voting against, and 42,005 shares abstaining.
<PAGE>
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
/s/ JEFFREY R. HOTCHKISS
-------------------------
Jeffrey R. Hotchkiss
Vice President and
Chief Financial Officer
August 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 28, 1998 AND THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 28, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERNECE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000097210
<NAME> TERADYNE, INC.
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0
0
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</TABLE>
