George Chamillard, Teradyne's chairman and chief executive officer, identified some of the elements which made the quarter a particularly difficult one. "While our loss before special charges of $0.31 per share was within the $0.22 to $0.32 guidance we gave early in the quarter, the decline in our order rate and customer cancellations from our backlog were such that we could not reach the $275 million to $325 million revenue range which we had anticipated in our previous guidance." He went on to note that the special charges were due to personnel reductions of some 1,000 employees and write-downs of inventory and certain other assets in the company's connection systems and flash memory test businesses.
Looking to the future, while he was able to identify some encouraging areas of prospective customer demand, Chamillard observed there was no activity which would indicate an upward trend. "It appears to us that we will be dealing with low shipments and unfavorable financial results for the next several quarters. In the fourth quarter, including the impact of the acquisition of GenRad, we expect sales between $200 million and $250 million and to lose between $0.40 and $0.50 per share, before any special charges."
Chamillard emphasized that going forward, Teradyne will devote substantial attention to controlling expenses and managing its assets so as to assure its continued strength. The company will also continue its focus on the development of new products and having them designed into customer applications so as to be well positioned to achieve success in the next upturn in business. Chamillard noted that this applies not only to Teradyne's semiconductor test, broadband test and connection systems businesses, but also to the circuit board inspection and test market as Teradyne looks forward to combining its resources with those of GenRad, Inc. following the October vote of GenRad stockholders on Teradyne's proposed acquisition of GenRad. "While downturns are never easy or fun," Chamillard said, " Our employees are doing a great job of working with our customers to make sure that we provide the most economic solutions to their business problems and to make sure that Teradyne will emerge from this slowdown as winners, not just survivors."
ABOUT TERADYNE
Teradyne (NYSE: TER - news) is the world's largest supplier of automatic test equipment and is also a leading supplier of high performance interconnection systems. Manufacturers of semiconductors, circuit assemblies, and voice and broadband telephone networks use Teradyne's test products. Manufacturers of communications and computing systems central to building networking infrastructure use Teradyne's backplane assemblies and high-density connectors. The company had sales of $3.0 billion in 2000 and currently employs about 8000 people worldwide. For more information 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 and by the terrorist attacks of September 11, 2001. 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 that Teradyne serves have historically been quite cyclical, and they are currently in a period of oversupply. Further, our backlog has and may continue to be affected as customers continue to 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, our pending acquisition of GenRad, Inc. could affect our ability to manage and maintain our business. Finally, our ongoing and recently announced 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 THIRD FISCAL QUARTER OF 2001
CONDENSED CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
Quarter Ended: Nine Months Ended:
9/30/01 10/01/00 9/30/01 10/01/00
Net Sales $ 249,355 $ 859,478 $1,220,367 $2,222,294
Cost of Sales 227,466 457,976 924,334 1,199,989
Cost of Sales -
Special Charges (1) 44,551 -- 44,551 --
Engineering and
Development 56,863 78,963 189,384 221,625
Selling and
Administrative (2)(3) 90,349 95,149 230,250 266,087
Other and Interest (2,353) (6,071) (23,594) (16,431)
Net Expenses 416,876 626,017 1,364,925 1,671,270
Income (Loss) Before
Cumulative Effect
of Change in
Accounting Principle
and Taxes (167,521) 233,461 (144,558) 551,024
Income (Loss) Before
Cumulative Effect
of Change in
Accounting Principle (103,404) 163,423 (89,626) 385,717
Cumulative effect on
prior years of the
application of SAB
101 "Revenue
Recognition in
Financial
Statements," net of
taxes -- -- -- (64,138)
Net (Loss) Income $ (103,404) $ 163,423 $ (89,626) $ 321,579
Earnings per common
share - diluted:
Income (Loss) Before
Cumulative Effect of
change in accounting
principle per common
share - diluted $ (0.59) $ 0.90 $ (0.51) $ 2.13
Cumulative effect on
prior years of the
application of SAB
101 "Revenue
Recognition in
Financial
Statements," per
common share -
diluted $ -- $ -- $ -- $ (0.35)
Net (Loss) Income per
Common Share
- Diluted $ (0.59) $ 0.90 $ (0.51) $ 1.77
Shares used in
calculation of Net
(Loss) Income per
Common Share
- Diluted 175,689 181,937 174,673 181,502
Net Orders $ 113,462 $ 818,724 $ 680,709 $2,669,327
(1) - Included in Cost of Sales in the third quarter ended September
30, 2001 are inventory writedowns due to the discontinuance of the
Flash memory product line and certain impaired manufacturing assets.
The special charges total $44.6 million pretax, or $0.16 per share.
(2) - Included in Selling and Administrative in the third quarter
ended September 30, 2001 are charges for certain impaired fixed assets
of $13.9 million pretax, or $0.05 per share.
(3) - Included in Selling and Administrative in the third quarter
ended September 30, 2001 is a provision for workforce reduction and
early retirement of $20.6 million pretax, or $0.07 per share.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
09/30/01 12/31/00
Assets
Cash, Cash Equivalents and Marketable
Securities $ 161,980 $ 302,575
Accounts Receivable 187,917 420,040
Inventories 413,348 512,563
Other Current Assets 171,934 142,656
935,179 1,377,834
Net Property, Plant and Equipment 826,825 733,786
Long-term Marketable Securities 158,276 161,848
Other Assets 85,449 82,400
$2,005,729 $2,355,868
Liabilities
Current Liabilities $ 294,743 $ 619,288
Long-term Liabilities 30,429 29,609
Shareholders' Equity $1,680,557 $1,706,971
$2,005,729 $2,355,868
“While downturns are never easy or fun”
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