George Chamillard, Teradyne's chairman and chief executive officer, commented "At the time of our April earnings release, we were hopeful that our business would stabilize and that the levels of orders, cancellations and rescheduling of backlog would turn for the better. However, as the quarter progressed, the environment continued to deteriorate.
"Our sales of $366 million for this quarter are approaching the level we experienced at the trough quarters of the 1998 slowdown. The loss -- our first in over ten years, since the first quarter of 1991 - is an indication of just how dramatic and severe this downturn has been to date.
"Based on conversations with a broad cross section of our customers, we see no upturn in the near future", Chamillard continued. "Indications are that most semiconductor customers may not need to increase their test capacity until well into 2002. With that outlook, we expect revenue to be between $275 million and $325 million, with corresponding losses of between $0.22 to $0.32 per share, assuming no special charges.
"In the current environment," Chamillard added, "it is more important than ever to stay focused on the right priorities. I have said before that our focus is on supporting our customers, driving our new products into the marketplace and managing expenses. Those remain our priorities.
"Despite the gloom and doom of the current environment, we remain optimistic about the business for three reasons. First, our new products are gaining new customers across a broad front. Our Catalyst Tiger high-end SOC test system, our Probe One DRAM wafer probe test system, our Celerity product for DSL line qualification and our new Netflare product for helping service providers reduce the time to resolve customer Internet connection problems all are gaining share for us in a tough market.
"Second, our level of design-ins across all of our products and businesses indicates to us that our future market share ambitions will be met. Finally, I'm very optimistic about history. Teradyne has had a number of down years - 1971, 1975, 1985/1986, 1990 and 1996. Every one of these down years was followed by several years of strong growth. In fact, after three of these five downturns, we set a new sales record a year after the low. In the other two, 1975 and 1985/1986, it took two years to set a new record. In other words, when the business has snapped back in the past, it has snapped back quickly. As they say," Chamillard concluded, "past performance is no guarantee of future results, but unless you believe that semiconductors and electronics manufacturing are no longer growth businesses, you'd have to regard what's happening now as the calm before the next equipment buying storm."
About Teradyne
Teradyne (NYSE:TER) is the world's largest supplier of automatic test equipment and is also a leading supplier of high performance interconnection systems. Teradyne's test products are used by manufacturers of semiconductors, circuit assemblies and voice and broadband telephone networks. Teradyne's backplane assemblies and high-density connectors are used by manufacturers of communications and computing systems central to building networking infrastructure. The company had sales of $3 billion in 2000 and currently employs about 9000 people, world-wide. For information on Teradyne visit www.teradyne.com
Safe Harbor Statement
Statements in this release, other than historical performance, include forward-looking statements relating to future financial performance made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from expectations. In particular, our business is dependent on the current and anticipated market demand for electronics, which has been impacted by the economic slowdown that began in the latter portions of 2000. While in the past our diverse businesses have allowed us to perform better than some companies in periods of economic decline, there is no guarantee that this will be the case currently. In addition, the markets which Teradyne serves are highly cyclical and are in a period of oversupply. Further, our backlog has and may continue to be affected as customers may defer or cancel orders which previously had been accepted. Both of these factors could result in further decreased revenues. Our business is also affected by our ability to develop and ship new and sometimes more complex products to address changing customer needs, by new offerings by competitors and by intense competition throughout the world in each of our operating segments from competitors having substantial resources available for the engineering, manufacturing, marketing and distribution of their products. The economic decline and the resulting oversupply could increase the possibility of intensified price competition in certain markets and result in the need to lower our prices, which could result in decreased revenues. In addition, acquisitions or divestitures could affect our ability to manage and maintain our business. Finally, our expense control measures may not have the intended effect on our future financial results. These measures could have long-term effects on our business by reducing our pool of technical talent, decreasing improvements in our products and making it more difficult for us to respond to large customer orders if the economy does not recover. Teradyne undertakes no obligation to update the information contained in this release. For further information regarding risks and uncertainties associated with Teradyne's business, please refer to Teradyne's filings with the Securities and Exchange Commission, including, but not limited to, Teradyne's annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements should be considered in light of all these factors.
TERADYNE, INC. REPORT FOR SECOND FISCAL QUARTER OF 2001 CONDENSED
CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
Quarter Ended: Six Months Ended:
07/01/01 7/02/00 7/01/01 7/02/00
Net Sales $365,823 $747,458 $971,012 $1,362,816
Cost of Sales(1) 311,261 403,529 696,868 742,013
Engineering and
Development 61,324 73,637 132,521 142,662
Selling and
Administrative(2) 65,130 91,982 139,901 170,938
Other and
Interest (3) (17,771) (5,823) (21,241) (10,360)
Net Expenses 419,944 563,325 948,049 1,045,253
Income Before
Cumulative
Effect of Change
in Accounting
Principles
and Taxes (54,121) 184,133 22,963 317,563
Income Before
Cumulative
Effect of Change
In Accounting
Principle (40,181) 128,893 13,778 222,294
Cumulative effect
on prior years of
the application
of SAB 101
"Revenue
Recognition
in Financial
Statements,"
net of taxes - - - (64,138)
Net Income $(40,181) $128,893 $13,778 $158,156
Earnings per
common share
- diluted:
Income Before
Cumulative
Effect of Change
In Accounting
Principle per
common share
- diluted $(0.23) $0.71 $0.08 $1.23
Cumulative effect
on prior years of
the application
of SAB 101
"Revenue
Recognition in
Financial
Statements,"
per common share
- diluted $- $- $- $(0.35)
Net Income per
Common Share
- Diluted $(0.23) $0.71 $0.08 $0.87
Shares used in
calculation of
Net Income per
Common Share
- Diluted 174,538 181,697 180,151 181,285
Net Orders $210,183 $826,421 $567,247 $1,850,603
(1) - Included in Cost of Sales in the second quarter ended July 1,
2001 is a provision for excess inventory of $37.9 million pretax,
or $0.16 per share.
(2) - Included in Selling and Administrative in the second quarter
ended July 1, 2001 is a provision for workforce reduction of $3.4
million pretax, or $0.01 per share.
(3) - Included in Other and Interest in the second quarter ended July
1, 2001 is a gain from the sale of the aerospace and defense
connector and backplanes business of $14.8 million pretax, or
$0.06 per share.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
07/01/01 12/31/00
Assets
Cash, Cash Equivalents
and Marketable Securities $ 200,485 $ 302,575
Accounts Receivable 235,085 420,040
Inventories 475,379 512,563
Other Current Assets 110,606 142,656
1,021,555 1,377,834
Net Property, Plant
and Equipment 841,334 733,786
Long-term Marketable Securities 146,644 161,848
Other Assets 81,243 82,400
$2,090,776 $2,355,868
Liabilities
Current Liabilities $ 283,772 $ 619,288
Long-term Liabilities 29,942 29,609
Shareholders' Equity 1,777,062 1,706,971
$2,090,776 $2,355,868
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.
“At the time of our April earnings release, we were hopeful that our business would stabilize and that the levels of orders, cancellations and rescheduling of backlog would turn for the better. However, as the quarter progressed, the environment continued to deteriorate.”
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