Teradyne Announces Third Quarter Results

BOSTON--(BUSINESS WIRE)--Oct. 15, 2002--Teradyne, Inc. (NYSE: TER) reported sales of $330.7 million for the third quarter of 2002, a net loss of $49.9 million or $0.27 per share before special charges, and a net loss of $166.8 million or $0.91 per share including special charges. Net bookings in the third quarter totaled $231.5 million.

"Based on orders expected in the fourth quarter and our existing shippable backlog, we expect fourth quarter shipments to be about flat with third quarter's, although we expect our losses to be reduced due to the cost cutting actions we are taking," stated Teradyne chairman and CEO George Chamillard. "Our guidance for the fourth quarter is for sales of between $310 and $340 million with losses of 22 cents per share, plus or minus 3 cents."

"Although we believe our sales will be flat, our short-term future is uncertain. We therefore feel it's necessary to downsize our business to break-even assuming little or no growth in sales. Consequently, our target is to achieve break-even at sales of about $350 million per quarter by the middle of next year. If that level of sales is too high, we'll do what we must to adjust to a break-even level that reflects business reality," he concluded.

Teradyne will be conducting its conference call tomorrow, October 16, 2002, at 10:00 a.m. EDT. The call will be webcast at www.teradyne.com

TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2002
CONDENSED  CONSOLIDATED  OPERATING  STATEMENTS  
(In thousands, except per share amounts)

                               Quarter Ended:      Nine Months Ended:
                             9/29/02    9/30/01    9/29/02    9/30/01

Net Sales                   $330,732   $249,355   $888,638 $1,220,367
 Cost of Sales               254,805    205,292    710,727    820,067
 Cost of Sales - 
  Special Charges(1)           1,426     41,220      1,426     92,881
 Engineering and 
  Development                 78,002     64,667    219,626    219,266
 Selling and Administrative   74,318     59,928    224,757    199,122
 Restructuring, Asset 
  Impairment
  and Other Charges (1)      138,883     48,122    144,968     57,183
 Other and Interest (1)         (174)    (2,353)     3,457    (23,594)
  Net Expenses               547,260    416,876  1,304,961  1,364,925
Loss Before Taxes           (216,528)  (167,521)  (416,323)  (144,558)
Net Loss                   $(166,833) $(103,404) $(294,702)  $(89,626)
Earnings per common
 share - diluted:
Net Loss per Common
 Share - Diluted              $(0.91)    $(0.59)    $(1.61)    $(0.51)
Shares used in calculation
 of Net Loss
 per Common Share - Diluted  183,063    175,689    182,776    174,673
Net Orders                  $231,493   $113,462   $670,149   $680,709

(1) - Included in the Statement of Operations for the third quarter 
ended September 29, 2002 are the following special items:

                       Goodwill Facility  Workforce
                     Impairment Closures  Reduction  Other    Total
                         (2)       (3)       (4)      (5)
Cost of Sales - Special
 Charges                                            $1,426    $1,426
Restructuring, Asset
 Impairment and Other 
 Charges                $78,486  $44,395  $12,222    3,780   138,883
Other and Interest                                  (1,741)   (1,741)
Total Pre-Tax Special 
 Charges                 78,486   44,395   12,222    3,465   138,568
Tax Benefit                --    (15,982)  (4,400)  (1,247)  (21,629)
Total After-Tax Special
 Charges                $78,486  $28,413   $7,822   $2,218  $116,939
EPS Impact                                                     $0.64

(2) - Goodwill Impairment consists of the writedown of Assembly Test 
Division Goodwill of $78.5 million from the Genrad acquisition.

(3) - Facility Closures consists of: Connection Systems Division -
the writedown of machinery and equipment, buildings and CIP and the
accrual of certain commitments related to the shutdown of a printed
circuit board facility in San Diego of $27.3 million; Semiconductor
Test Division - the writedown of manufacturing facilities on the West
Coast held for sale of $9.7 million; and Assembly Test Division,
Semiconductor Test Division, and Connection Systems Division - future
lease commitments on vacated space of $6.2 million, $0.7 million, and
$0.5 million, respectively.

(4) - Workforce reduction provision for approximately 500 people 
across all functional groups and divisions.

(5) - Cost of Sales consists of: a provision for inventory of a
discontinued product line at the Assembly Test Division of $1.0
million and a provision for excess inventory related to the shutdown
of a printed circuit board facility in San Diego at the Connection
Systems Division of $0.4 million; Restructuring, Asset Impairment and
Other Charges consists of asset impairments of $3.8 million related to
two facilities held for sale; and Other and Interest consists of a
gain from the repayment of a loan to a divested entity previously
valued at zero of $7.1 million, offset to a lesser extent by an other
than temporary impairment of a common stock investment of $3.1 million
and a writedown of a mortgage loan to an engineering services provider
of $2.3 million.

CONDENSED  CONSOLIDATED  BALANCE  SHEETS (In thousands)
                                               09/29/02     12/31/01

Assets
 Cash, Cash Equivalents and Marketable 
  Securities                                 $  320,868   $  367,687
 Accounts Receivable                            223,283      169,630
 Income Tax Receivable and Prepaid Amounts        4,718       97,000
 Inventories                                    326,575      406,989
 Deferred Tax Assets                            116,148      141,013
 Other Current Assets                            29,056       24,703
                                             $1,020,648   $1,207,022  
 Net Property, Plant and Equipment              737,089      835,566
 Long-term Marketable Securities                222,504      218,544
 Long-term Deferred Tax Assets                  164,404        4,313
 Goodwill                                       118,653      190,276
 Intangible and Other Assets                     74,571       86,670
                                             $2,337,869   $2,542,391
Liabilities
     Current Liabilities                     $  321,087   $  296,131
     Long-term Liabilities                      498,509      481,876
Shareholders' Equity                          1,518,273    1,764,384
                                             $2,337,869   $2,542,391

ABOUT TERADYNE

Teradyne (NYSE: TER) delivers solutions for testing and connecting electronics. It is the world's leading supplier of automatic test equipment for testing semiconductors, circuit boards and modules, and voice and broadband telephone networks. Teradyne is also the technology leader in high performance interconnection systems, providing vertically integrated products and services, including high-speed, high-density connectors, circuit boards, backplanes and complete systems integration. The company had sales of $1.4 billion in 2001 and currently employs about 8000 people worldwide. For more information visit www.teradyne.com.

SAFE HARBOR STATEMENT

Some statements in this release are forward-looking statements made under Section 21E of the Securities Exchange Act of 1934. These statements are neither promises nor guarantees but involve risks and uncertainties, both known and unknown, that could cause Teradyne's financial results to differ materially from our expectations. These forward-looking statements include statements regarding our revenue and profit and loss expectations, our future business strategies and market opportunities, improvements in our business, backlog and design-ins, demand for our products and the general economic outlook. Among the factors that could cause results to differ from expectations are the following: further downturn in market demand for electronics (including especially the markets for semiconductor and telecommunications equipment) which has been affected by the economic slowdown that began in 2000; further downturn in the U.S. economy caused by the prospect of war in the Middle East; uncertainty regarding the future growth rate of worldwide economies, which has caused may companies to reduce capital investment; the historically cyclical nature of the markets that Teradyne serves; decisions by customers to cancel or defer orders that previously had been accepted; the presence of intense competition throughout the world in each of our operating segments from substantial competitors; 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; the possibility of intense price competition and the resulting prospect of having to lower our prices and therefore possibly our revenue; 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; our ability to manage the effects of past or future acquisitions or divestitures; 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 and $45 million in mortgage financing that we obtained in 2001; and other risks we have detailed in our 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. Teradyne assumes no obligation to update the information in this press release.

“Based on orders expected in the fourth quarter and our existing shippable backlog, we expect fourth quarter shipments to be about flat with third quarter's, although we expect our losses to be reduced due to the cost cutting actions we are taking”