Teradyne Announces Second Quarter Results
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Teradyne Announces Second Quarter Results

BOSTON—(BUSINESS WIRE)—July 19, 2005— Teradyne, Inc. reported sales of $320.2 million in the second quarter of 2005, up 5% compared to the first quarter of 2005. The company had a net loss in the second quarter of $45.5 million or $0.23 per share, which included $10.2 million in net restructuring and other charges. This compares to a net loss of $52.6 million or $0.27 per share in the previous quarter, which included $10.6 million in net restructuring and other charges. The company's orders for the second quarter were $349 million, up 2% over the first quarter.

"In the second quarter, our FLEX System-On-a-Chip (SOC) semiconductor tester continued to gather momentum, " said Teradyne President and CEO Mike Bradley, "with a broadening of customers and applications driving record orders for the system. The FLEX has now moved on to customer production floors in a wide range of parallel test SOC applications."

In the third quarter, the company's guidance is for sales to be between $350 and $370 million, with a loss per share between $0.08 and $0.15. This guidance includes approximately $17 million, or $0.09 per share, in net restructuring and other charges.

Conference Call/Webcast

Teradyne will be conducting its conference call tomorrow, July 20, 2005, at 10:00 a.m. EDT The call will be webcast at www.teradyne.com (click on "Investors"). A replay will be available via phone starting at noon EDT and continuing through August 3, 2005. The replay may be accessed by calling 1-800-642-1687 in the US and Canada, or 706-645-9291 outside the US and Canada, and providing conference code 7400188, or by visiting www.teradyne.com and clicking on "Investors" for a link to the replay.

About Teradyne

Teradyne (NYSE: TER) is a leading supplier of Automatic Test Equipment and interconnection systems. The company's products deliver competitive advantage to the world's leading semiconductor, electronics, automotive and network systems companies. In 2004, Teradyne had sales of $1.8 billion, and currently employs about 5,700 people worldwide. For more information, visit www.teradyne.com. Teradyne(R) is a registered trademark of Teradyne, Inc. in the US and other countries. All product names are trademarks of Teradyne, Inc. (including its subsidiaries) or their respective owners.

Safe Harbor Statement

This release contains statements regarding expected future revenues and earnings and future market conditions which are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Such statements are based on the current assumptions and expectations of Teradyne's management and are neither promises nor guarantees but involve risks and uncertainties, both known and unknown, that could cause Teradyne's actual results to differ materially from those projected in the forward-looking statements. There can be no assurance that such estimates of future results will be achieved. Important factors that could cause actual results to differ materially from those presently expected include: adverse changes in general economic or market conditions, including market demand for electronics and downturns in the semiconductor industry; reductions or delays in capital investment by our customers; the decision by customers to cancel or defer orders that previously had been accepted; reduced bookings; the "hockey-stick" pattern of sales resulting in a disproportionately large percentage of total quarterly sales occurring in the last month and weeks of each quarter; the historically cyclical nature and volatility of the markets that Teradyne serves; war or the threat of terrorist attacks; disruptions or delays in Teradyne's supply chain; new product development introductions and transitions and any delays; uncertainty of customer acceptance of new product offerings including the timing, price and mix of new product acceptance; competitive pressures including new products, pricing and gross margin pressures; the effectiveness of our implementation of cost cutting and expense control measures, including facility consolidations, employee reductions, the centralization of certain shared services, seeking lower prices from suppliers and the outsourcing of selected manufacturing and engineering activities; insufficient, excess or obsolete inventory; disruptions, delays or shortages in an adequate supply of raw materials, components or internal and external manufacturing capability; incoming quality of components or raw materials; the impact of our ability to manage the effects of past or future acquisitions or divestitures; any material litigation against Teradyne; the increase in our debt service obligations and debt to capital ratio resulting from our issuance of $400 million aggregate principal amount of senior convertible notes in 2001; the availability of additional financing; Teradyne's obligations in the event of a change of control; the impact of being required to account for stock options as an expense; the ability to attract and retain key employees; the risks of potential environmental liability; the risks of operating internationally, which include political and economic instability and unexpected changes in legal and regulatory requirements and in policy changes affecting international markets; and other events, factors and risks previously and from time to time disclosed in our filings with the Securities and Exchange Commission including, but not limited to, Teradyne's annual report on Form 10-K for the period ending December 31, 2004. The "forward-looking statements" included herein are made only as of the date of publication and Teradyne undertakes no obligation to update the information set forth in this release.
CONDENSED  CONSOLIDATED  OPERATING  STATEMENTS
(In thousands, except per share amounts)
----------------------------------------------
                            Quarter Ended          Six Months Ended
                   ----------------------------- ---------------------
                    July 3,  April 3,   July 4,   July 3,    July 4,
                     2005      2005      2004      2005       2004
                   ----------------------------- ---------------------

Net Revenues       $320,172  $305,581  $526,463  $625,753    $957,066

  Cost of Revenues  222,007   216,441   299,835   438,448     554,463
                   --------- --------- --------- --------- -----------

Gross Profit         98,165    89,140   226,628   187,305     402,603

Operating Expenses:
  Engineering and
   Development       60,915    64,240    66,914   125,155     131,608
  Selling and
   Administrative    67,542    65,315    69,991   132,857     136,233
  Restructuring and
   Other Charges,
   net(1)            10,195    10,628      (713)   20,823        (583)
                   --------- --------- --------- --------- -----------
    Operating
     Expenses       138,652   140,183   136,192   278,835     267,258

(Loss)/Income From
 Operations         (40,487)  (51,043)   90,436   (91,530)    135,345

  Interest Income     3,841     4,405     3,470     8,246       7,061
  Interest Expense   (4,153)   (4,434)   (4,895)   (8,587)     (9,527)
  Other Income and
   Expense, net           -         -       426         -       1,277
                   --------- --------- --------- --------- -----------

(Loss)/Income Before
 Income Taxes       (40,799)  (51,072)   89,437   (91,871)    134,156
  Income Tax Expense  4,665     1,500     8,944     6,165      13,416
                   --------- --------- --------- --------- -----------

Net (Loss)/Income  $(45,464) $(52,572)  $80,493  $(98,036)   $120,740
                   ========= ========= ========= ========= ===========

(Loss)/Income per Common Share - Basic and Diluted:
---------------------------------------------------

Net (Loss)/Income per
 Common Share -
 Basic               $(0.23)   $(0.27)    $0.41    $(0.50)      $0.62
                   ========= ========= ========= ========= ===========

Shares used in calculation
 of Net (Loss)/Income
 per Common Share
 - Basic            195,757   195,619   194,015   195,688     193,934
                   ========= ========= ========= ========= ===========

Net (Loss)/Income
 per Common Share -
 Diluted (2)         $(0.23)   $(0.27)    $0.39    $(0.50)      $0.60
                   ========= ========= ========= ========= ===========

Shares used in calculation
 of Net (Loss)/Income
 per Common Share
 - Diluted          195,757   195,619   213,486   195,688     214,383
                   ========= ========= ========= ========= ===========

Gross Orders       $353,328  $341,986  $557,944  $695,314  $1,109,401
                   ========= ========= ========= ========= ===========
Net Orders         $348,952  $340,670  $557,944  $689,622  $1,109,184
                   ========= ========= ========= ========= ===========

(1) Restructuring and Other Charges, net consists of:


                     July 3,  April 3,   July 4,   July 3,    July 4,
                      2005        2005    2004      2005       2004
                   ------------------- -------------------------------
    Severance        $4,624    $7,083     $(458)  $11,707       $(760)
    Facility Related    896     2,536     1,201     3,432       2,136
    Long-Lived Asset
     Impairment       9,157       595      (100)    9,752        (603)
    Gain on Sale of
     Real Estate     (4,445)        -         -    (4,445)          -
    Gain on Sale of
     Business          (612)        -      (865)     (612)       (865)
    Other               575       414      (491)      989        (491)
                   --------- --------- --------- --------- -----------
                    $10,195   $10,628     $(713)  $20,823       $(583)

(2) Under GAAP, when calculating diluted earnings per share,
convertible debentures must be assumed to have converted if the effect
on EPS would be dilutive. For Teradyne, dilution occurs when earnings
are greater than $0.24 per share per quarter. Accordingly, for the
quarter and the six months ended July 4, 2004, diluted shares assumes
the conversion of the convertible debentures, as the effect of the
conversion on EPS would be dilutive. Accordingly for the quarter and
the six months ended July 4, 2004, 15.4 million shares have been
included in diluted shares and net interest expense of $3.7 million
and $7.3 million, respectively, has been added back to net income for
the diluted earnings per share calculation.


CONDENSED  CONSOLIDATED  BALANCE  SHEETS  (In thousands)
--------------------------------------------------------
                                         July 3, 2005  Dec. 31, 2004
                                         ------------  -------------
Assets
  Cash and Cash Equivalents               $   199,060   $   209,147
  Marketable Securities                        73,224        75,431
  Accounts Receivable                         235,275       223,491
  Inventories                                 257,619       262,996
  Other Current Assets                         34,116        34,761
                                           -----------   -----------
                                              799,294       805,826

  Net Property, Plant and Equipment           528,114       547,075
  Long-term Marketable Securities             277,151       406,615
  Goodwill                                    116,176       116,176
  Intangible and Other Assets                  44,179        46,870
                                           -----------   -----------
                                          $ 1,764,914   $ 1,922,562
                                           ===========   ===========

Liabilities
  Notes Payable - Banks                   $     2,705   $     4,826
  Current Portion of Long-term Debt               300           321
  Accounts Payable                             70,347        62,006
  Accrued Employees' Compensation and
   Withholdings                                54,724       106,298
  Deferred Revenue and Customer Advances       34,204        30,399
  Other Accrued Liabilities                    57,761        60,970
  Income Taxes Payable                          3,242        11,738
                                           -----------   -----------
                                              223,283       276,558

  Pension Liability                            54,257        69,187
  Other Long-term Liabilities                  45,057        44,321
  Convertible Senior Notes                    371,500       391,500
  Other Long-term Debt                          7,123         7,432
                                           -----------   -----------
                                              701,220       788,998

Shareholders' Equity                        1,063,694     1,133,564
                                           -----------   -----------

                                          $ 1,764,914   $ 1,922,562
                                           ===========   ===========


For press releases and other information of interest to investors, please visit Teradyne's homepage on the World Wide Web at http://www.teradyne.com.



Contact:
Teradyne, Inc.
Tom Newman, 617-422-2425

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