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 April 4, 1999
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 04-227214
(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 May 2, 1999 was 85,107,879 shares.
<PAGE>
<TABLE>
TERADYNE, INC.
INDEX
Page No.
--------
<CAPTION>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of
April 4, 1999 and December 31, 1998...........................................................3
Condensed Consolidated Statements of Income for the
Three Months Ended April 4, 1999 and March 29, 1998...........................................4
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended April 4, 1999 and March 29, 1998...........................................5
Notes to Condensed Consolidated Financial Statements..............................................6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................................................9-12
Item 3. Quantitative and Qualitative Disclosures about Market Risk..........................................12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................................................................12
</TABLE>
<PAGE>
<TABLE>
TERADYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
April 4, 1999 December 31, 1998
------------- -----------------
(Unaudited)
(In thousands)
<S> <C> <C>
Current assets:
Cash and cash equivalents.................................................... $ 195,758 $ 185,514
Marketable securities........................................................ 11,805 15,914
Accounts receivable.......................................................... 260,063 219,303
Inventories:
Parts.................................................................. 150,981 154,706
Assemblies in process.................................................. 91,363 111,641
------------- -------------
242,344 266,347
Deferred tax assets.......................................................... 49,262 49,262
Prepayments and other current assets......................................... 27,908 23,200
------------- -------------
Total current assets................................................... 787,140 759,540
Property, plant, and equipment, at cost:........................................ 881,863 857,551
Less: Accumulated depreciation............................................ (444,122) (422,594)
------------- -------------
Net property, plant, and equipment..................................... 437,741 434,957
Marketable securities........................................................... 104,342 96,494
Other assets.................................................................... 20,005 21,823
------------- -------------
Total assets........................................................... $ 1,349,228 $ 1,312,814
============= =============
LIABILITIES
Current liabilities:
Notes payable - banks........................................................ $ 7,077 $ 7,393
Current portion of long-term debt............................................ 940 1,309
Accounts payable............................................................. 65,803 45,042
Accrued employees' compensation and withholdings............................. 53,216 68,431
Unearned service revenue and customer advances............................... 60,943 64,674
Other accrued liabilities.................................................... 59,864 54,071
Income taxes payable......................................................... 7,360 14,770
------------- ------------
Total current liabilities.............................................. 255,203 255,690
Deferred tax liabilities........................................................ 17,554 17,554
Long-term debt.................................................................. 12,985 13,200
------------- ------------
Total liabilities...................................................... 285,742 286,444
------------- ------------
SHAREHOLDERS' EQUITY
Common stock, $0.125 par value, 250,000 shares authorized,
84,982 and 83,744 net shares issued and outstanding
in 1999 and 1998, respectively............................................... 10,623 10,468
Additional paid-in capital...................................................... 329,018 310,052
Retained earnings............................................................... 723,845 705,850
------------- ------------
Total shareholders' equity............................................. 1,063,486 1,026,370
------------- ------------
Total liabilities and shareholders' equity............................. $ 1,349,228 $ 1,312,814
============= ============
<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, 1998 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
--------------------------
April 4, 1999 March 29, 1998
-------------- --------------
(In thousands, except per share amounts)
<S> <C> <C>
Net sales..................................................... $ 344,454 $ 431,569
Expenses:
Cost of sales............................................ 219,858 251,947
Engineering and development.............................. 47,724 48,922
Selling and administrative............................... 54,481 58,713
---------- ---------
322,063 359,582
Income from operations........................................ 22,391 71,987
Interest income........................................... 3,778 3,473
Interest expense.......................................... (462) (247)
---------- ---------
Income before income taxes.................................... 25,707 75,213
Provision for income taxes.................................... 7,712 25,572
---------- ---------
Net income.................................................... $ 17,995 $ 49,641
========== ==========
Net income per common share - basic........................... $ 0.21 $ 0.59
========== ==========
Net income per common share - diluted......................... $ 0.20 $ 0.58
========== ==========
Shares used in calculations of net income
per common share - basic.................................. 85,016 83,651
========== ==========
Shares used in calculations of net income
per common share - diluted................................ 88,997 85,928
========== ==========
<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, 1998 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 Three Months Ended
--------------------------
April 4, 1999 March 29, 1998
------------- --------------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 17,995 $ 49,641
Adjustments to reconcile net income to net cash
Provided by (used for) operating activities:
Depreciation .................................................. 21,768 16,852
Amortization................................................... 277 178
Other non-cash items, net...................................... (278) (3,760)
Changes in operating assets and liabilities:
Accounts receivable....................................... (40,760) (78,168)
Inventories............................................... 24,003 (57,762)
Other assets.............................................. (3,166) (9,259)
Accounts payable and accruals............................. 7,608 31,868
Income taxes payable...................................... 8,033 21,463
------------- -------------
Net cash provided by (used for) operating activities.. 35,480 (28,947)
------------- -------------
Cash flows from investing activities:
Additions to property, plant and equipment........................ (22,207) (31,716)
Increase in equipment manufactured by the Company................. (2,545) (16,661)
Purchases of available-for-sale marketable securities............. (16,953) (28,489)
Maturities of available-for-sale marketable securities............ 13,213 73,107
------------- -------------
Net cash used for investing activities.................... (28,492) (3,759)
------------- -------------
Cash flows from financing activities:
Payments of long term debt........................................ (422) (415)
Acquisition of treasury stock..................................... (32,501) (22,256)
Issuance of common stock under employee stock
option and stock purchase plans............................... 36,179 13,620
------------- -------------
Net cash flows provided by (used for) financing activities 3,256 (9,051)
------------- -------------
Increase (decrease) in cash and cash equivalents....................... 10,244 (41,757)
Cash and cash equivalents at beginning of period....................... 185,514 74,668
------------ -------------
Cash and cash equivalents at end of period............................. $ 195,758 $ 32,911
============= =============
Supplementary disclosure of cash flow information:
Cash paid (received) during the period for:
Interest................................................ $ 610 $ 476
Income taxes............................................ (157) 10,640
<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, 1998 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
test systems, and backplane connection systems. The Company has five principal
products; semiconductor test systems, backplane connection systems,
circuit-board test systems, telecommunications test systems, and software test
systems.
Semiconductor test systems are used by electronic component manufacturers
in the design and testing of their products. Backplane connection systems are
used principally for the computer, communications, 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. Circuit-board test systems
are used by electronic equipment manufacturers for the design and testing of
circuit boards and other assemblies. Telecommunication test systems are used by
telephone operating companies for the testing and maintenance of their
subscriber telephone lines and related equipment. Software test systems are used
by a number of industries to test communications networks, computerized
telecommunication systems, and client/server applications.
B. Accounting Policies
- ----------------------
Basis of Presentation
The condensed consolidated interim financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated. The year-end condensed
consolidated 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 interim financial statements are
unaudited. However, in the opinion of management, all adjustments (consisting
only of normal recurring accrual entries) necessary for a fair statement of the
results for the interim periods 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.
Other Comprehensive Income
The Company previously adopted SFAS No. 130, "Reporting Comprehensive
Income" (Statement 130), which established standards for reporting and
displaying comprehensive income and its components in a financial statement that
is displayed with the same prominence as other financial statements.
Comprehensive income is equal to net income, for the three months ended April 4,
1999 and March 29, 1998.
C.Recently Issued Accounting Pronouncements
- -------------------------------------------
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.
<PAGE>
TERADYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
<TABLE>
D. Net Income per Common Share
- ------------------------------
<CAPTION>
The following table sets forth the computation of basic and diluted net income per common share (in thousands,
except per share amounts):
For the Three Months Ended
--------------------------
April 4, 1999 March 29, 1998
------------- --------------
<S> <C> <C>
Net Income............................................ $ 17,995 $ 49,641
Shares used in net income per common share - basic.... 85,016 83,651
Effect of dilutive securities:
Employee and director stock options.......... 3,913 2,188
Employee stock purchase rights............... 68 89
------ ------
Dilutive potential common shares................. 3,981 2,277
------ ------
Shares used in net income per common share - diluted.. 88,997 85,928
====== ======
Net income per common share - basic................... $ 0.21 $ 0.59
====== ======
Net income per common share - diluted................. $ 0.20 $ 0.58
====== ======
<FN>
Options to purchase 25,826 and 100,828 shares of common stock were outstanding during the three months ended April
4, 1999 and March 29, 1998, respectively, but were not included in the calculation of diluted net income per common
share because the options' price was greater than the average market price of the common shares during those periods.
</FN>
</TABLE>
<PAGE>
TERADYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(Unaudited)
<TABLE>
E. Operating Segment Information
- --------------------------------
<CAPTION>
The Company has five principal operating segments which are the design,
manufacturing and marketing of semiconductor test systems, backplane connection
systems, circuit-board test systems, telecommunication test systems, and
software test systems. These operating segments were determined based upon the
nature of the products and services offered. The Company has three reportable
segments; semiconductor test systems segment, backplane connection systems
segment, and other test systems segment. The other test systems segment is
comprised of circuit-board test systems, telecommunication test systems, and
software test systems.
The Company evaluates performance based on several factors, of which the
primary financial measure is business segment income before taxes. The
accounting policies of the business segments are the same as those described in
"Note B: Accounting Policies" in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998. Intersegment sales are accounted for at fair
value as if sales were to third parties. Operating segment information for the
three months ended April 4, 1999 and March 29, 1998 follows (in thousands):
Semiconductor Backplane Other
Test Connection Test Corporate
Systems Systems Systems and
Segment Segment Segment Eliminations Consolidated
------------- ------------- -------- ------------ --------------
<S> <C>
Three months ended April 4, 1999:
- ---------------------------------
Sales to unaffiliated customers $198,166 $89,561 $56,727 - $344,454
Intersegment sales - 1,238 - ($1,238) -
------------- ------------- -------- ------------- -------------
Net sales 198,166 90,799 56,727 (1,238) 344,454
Income before taxes (1) 19,022 14,486 1,193 (8,994) 25,707
Three months ended March 29, 1998:
- ----------------------------------
Sales to unaffiliated customers $319,014 $56,753 $55,802 - $431,569
Intersegment sales - 7,354 - (7,354) -
---------------------------------------------------------------
Net sales 319,014 64,107 55,802 (7,354) 431,569
Income before taxes (1) 77,490 5,825 3,497 (11,599) 75,213
<FN>
(1) Income before taxes of the principal businesses exclude the effects of employee profit sharing, management
incentive compensation, other unallocated expenses, and net interest income.
</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
--------------------------
April 4, 1999 March 29, 1998
------------- --------------
(In thousands)
<S> <C> <C>
Net sales................................................. $ 344,454 $ 431,569
============ ============
Net income................................................ $ 17,995 $ 49,641
============ ============
Percentage of net sales:
Net sales............................................ 100% 100%
Expenses:
Cost of sales.................................... 64 58
Engineering and development...................... 14 11
Selling and administrative....................... 16 14
Interest, net.................................... (1) (1)
------------ ------------
93 82
Income before income taxes........................... 7 18
Provision for income taxes........................... 2 6
Net income........................................... 5% 12%
============ ============
Provision for income taxes as a percentage of income
before taxes......................................... 30% 34%
============ ============
<FN>
Results of Operations
- ---------------------
Sales of $344.5 million in the first quarter of 1999 were $87.1 million or 20% below those of the first
quarter of 1998. Beginning in the first quarter of 1998 and continuing through the third quarter of 1998, the
incoming order rate weakened, due to a slowdown in the semiconductor industry. This order weakness resulted in
reductions in net sales beginning in the second quarter of 1998 and continuing through the fourth quarter of 1998.
Sales for the first quarter of 1999 increased 9% over the fourth quarter of 1998. First quarter 1999 semiconductor
test system sales decreased 38% when compared to the first quarter of 1998. Backplane connection systems sales to
unaffiliated customers increased 58% over the corresponding period in 1998 as a result of growth in demand for
networking, data storage, and other high performance systems. Other test systems sales increased a modest 2% over
the corresponding period in 1998. As a result of the overall drop in first quarter 1999 sales, income before income
taxes decreased $49.5 million to $25.7 million over the corresponding period in 1998.
Incoming orders were $444.1 million in the first quarter of 1999 compared to $340.6 million in the first
quarter of 1998. The increase in orders was primarily due to an increase in semiconductor test systems orders.
Orders for backplane connection systems and other test systems also increased over the corresponding period in 1998.
The Company's backlog was $679.4 million at the end of the first quarter of 1999 compared with $771.6 million at the
end of the first quarter of 1998.
Cost of sales, as a percentage of sales, increased from 58% in the first quarter of 1998 to 64% in the first
quarter of 1999. The increase was the result of the relationship of fixed manufacturing costs to the lower level of
sales. In addition, there was an unfavorable change in mix as a greater percentage of total Company sales were for
backplane connection systems whose product margins are generally lower than semiconductor test systems.
<PAGE>
Engineering and development expenses, as a percentage of sales, increased from 11% in the first quarter
of 1998 to 14% in the first quarter of 1999. Selling and administrative expenses increased to 16% of sales in
the first quarter of 1999 compared with 14% of sales in the first quarter of 1998. While the dollar amount of
these expenses declined in 1999, the decrease was not proportionate with the decrease in net sales.
The Company's overall effective tax rate was 30% in the first quarter of 1999. The overall effective tax rate
for the year ended 1998 was also 30%. The Company utilized export sales corporation benefits and certain research
and development tax credits to operate below the U.S. statutory rate of 35%
Liquidity and Capital Resources
- -------------------------------
The Company's cash, cash equivalents and marketable securities balance increased $14.0 million in the first
quarter of 1999, to $311.9 million. Cash generated from operations was $35.5 million in the first quarter of 1999.
The increase in cash generated from operations was principally due to net income of $18.0 million plus non-cash
charges for depreciation and amortization of $22.0 million. Accounts receivable increased $40.8 million in the first
quarter of 1999 as a result of an increase in first quarter sales from the fourth quarter of 1998. Inventories
decreased $24.0 million in the first quarter of 1999 as the Company utilized inventory on hand at the beginning of
the quarter in support of shipments. Cash was used to fund additions to property, plant and equipment of $24.8
million in the first quarter of 1999. Property, plant and equipment expenditures relate primarily to the expansion
of production capacity in semiconductor test and backplane connection systems.
The Company repurchased 0.6 million shares of common stock for $32.5 million in the first quarter of 1999. The
cumulative total through the first quarter of 1999, under the buyback program which began in 1996, aggregates to 5.9
million shares of common stock at a cost of $218.0 million. Cash of $36.2 million in the first quarter of 1999 was
generated from the sale of stock to employees and the exercise of stock options by employees and certain directors
under the Company's stock purchase and stock option plans.
The Company believes its cash, cash equivalents, and marketable securities balance of $311.9 million, together
with other sources of funds, including cash flow generated from operations and 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 for the foreseeable future.
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 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 expenditures, 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.
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, copyrights
and trade secrets held by others. An assertion of patent copyright, and/or trade secret infringement against the
Company, if successful, could have a material adverse effect on the Company's business or could require a lengthy
and expensive defense which could adversely affect the Company's financial condition and/or operating results.
<PAGE>
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, in each operating segment. Some of these
competitors have substantially greater financial and other resources to pursue engineering, manufacturing, marketing
and distribution of their products. The Company also faces competition from internal suppliers at several of its
customers. 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 and lower gross
margins, which could materially adversely affect the Company's business, financial condition and/or 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.
Competition for employees with skills required by the Company for its primary business segments is intense. The
Company's success will depend on its ability to attract and retain key technical employees in these business
segments.
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 and transition customers from existing to new products; 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. 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/or stock price.
Year 2000 Readiness
- -------------------
The "Year 2000 problem" arose because many existing computer programs use only the last two digits to refer to
a year. Therefore, these computer programs do not properly recognize a year that begins with "20" instead of "19".
If not corrected, many computer applications could fail or create erroneous results. The Company is employing a
combination of internal resources and outside consultants to coordinate and implement its program for Year 2000
readiness.
The Company has committed to having all its current products Year 2000 ready in advance of the Year 2000. All
of the Company's current products have been assessed, using industry accepted test procedures, and most have been
determined to be Year 2000 ready. The Company has also evaluated which of its former products, still in use but no
longer sold, will be made Year 2000 ready. The schedule of Company products which will or will not be made Year
2000 ready is published and updated regularly by the Company on its web site.
The Company has completed an inventory and assessment of internal business systems that use date-sensitive
software. The Company is actively working with suppliers and using consultants and internal engineering resources to
modify or replace internal business systems depending on the level of criticality for the Company's ongoing
operations.
The Company is also at risk of disruption to its business if Year 2000 problems are experienced by its key
suppliers. To mitigate this risk, the Company has contacted its suppliers to assess their Year 2000 readiness and
continually monitors the progress of its key suppliers. Alternate suppliers are being qualified in appropriate
circumstances.
<PAGE>
Most of the Company's effort toward Year 2000 readiness is funded as ongoing operating expenses, as a part of
ongoing software support operations. The Company is not able to estimate the amount of accelerated upgrade costs
which have been or will be incurred for third party software or systems. Expenditures directly related to the Year
2000 readiness program, consisting primarily of dedicated staff and consulting services, are estimated at less than
$5.0 million through 1999.
The Company believes that its Year 2000 readiness project will be completed on a timely basis. The Company
believes that the year 2000 transition will not have a material adverse effect on the Company's financial condition
or overall trends in its operating results. However, there can be no assurance that unexpected delays or problems,
including failure of Year 2000 readiness programs by its product and service suppliers, will not occur and have an
adverse effect on the Company's financial condition or performance, or its competitive position.
The Company has not yet adopted formal contingency plans, but such plans are under active development at this
time.
</FN>
</TABLE>
Item 3: - Quantitative and Qualitative Disclosures about Market Risk
There were no material changes in the Company's exposure to market risk
from December 31, 1998.
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
The Company is subject to legal proceedings and claims which arise in the
ordinary course of business. Management does not believe these actions will have
a material adverse affect on the financial position or results of operations of
the Company.
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES
<S> <C>
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
May 19, 1999
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated balance sheet at April 4, 1999 and the condensed
consolidated statement of income for the three months ended April 4, 1999 and is
qualified in its entirety by reference to such financial staements.
</LEGEND>
<CIK> 0000097210
<NAME> Teradyne, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> APR-04-1999
<EXCHANGE-RATE> 1.00
<CASH> 195,758
<SECURITIES> 11,805
<RECEIVABLES> 262,936
<ALLOWANCES> 2,873
<INVENTORY> 242,344
<CURRENT-ASSETS> 787,140
<PP&E> 881,863
<DEPRECIATION> 444,122
<TOTAL-ASSETS> 1,349,228
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0
0
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</TABLE>
