"The combination of a weak economy, weak demand for technology products and the uncertain world situation overwhelmed the recovery we had begun to see in the first half of 2002," said George Chamillard, Teradyne Chairman and CEO. "Unfortunately, none of those negative factors has changed as we enter 2003. Therefore, our guidance is for sales in the first quarter to be between $310 and $340 million, about flat with the last two quarters. We expect to sustain a loss of between 25 cents and 33 cents per share, before any special items, and assuming no tax benefit from the losses."
"Although we have a cautious outlook for the industry in the near term, we're pleased with Teradyne's relative position and recent performance," Chamillard added. "We had improvement in gross orders across our various product lines and businesses, with those orders growing sequentially 24% quarter-to-quarter, and 45% year-to-year. Our performance was particularly strong in semiconductor test, with gross orders increasing 43% quarter-to-quarter, and 122% year-to-year. This performance is further confirmation of our product strategies by our customers."
Teradyne will be conducting its conference call tomorrow, January 15, 2003, at 10:00 a.m. EST. The call will be webcast at www.teradyne.com
TERADYNE, INC. REPORT FOR FOURTH FISCAL QUARTER OF 2002
CONDENSED CONSOLIDATED OPERATING STATEMENTS (GAAP)
(In thousands, except per share amounts)
Quarter Ended: Year Ended:
12/31/02 12/31/01 12/31/02 12/31/01
Net Sales $ 333,598 $ 220,214 $ 1,222,236 $ 1,440,581
Cost of Sales 277,414 248,784 989,567 1,161,732
Engineering and
Development 74,296 68,052 293,922 287,318
Selling and
Administrative 65,619 70,962 290,376 270,084
Restructuring and
Asset Impairments 59,208 17,109 204,176 74,292
Other and Interest 1,683 (3,098) 5,140 (26,692)
Net Expenses 478,220 401,809 1,783,181 1,766,734
Loss Before Taxes (144,622) (181,595) (560,945) (326,153)
Income Tax
(Expense) Benefit (279,145) 69,006 (157,524) 123,938
Net Loss $ (423,767) $ (112,589) $ (718,469) $ (202,215)
Loss per common
share - diluted:
Net Loss per
Common Share -
Diluted $ (2.31) $ (0.63) $ (3.93) $ (1.15)
Shares used in
calculation of Net
Loss per Common
Share - Diluted 183,116 179,294 182,861 175,828
Gross Orders $ 306,818 $ 211,995 $ 1,064,307 $ 1,093,650
Net Orders $ 235,156 $ 127,472 $ 905,305 $ 808,181
PRO FORMA FINANCIAL INFORMATION
Management believes that pro forma financial information provides
useful information to aid in understanding operating results. Pro
Forma Net Loss is prepared by beginning with the Consolidated
Operating Statement, which complies with U.S. Generally Accepted
Accounting Principles ("GAAP"), and then excluding items which we
believe are unusual or non-recurring items. In Q4 of 2002, we exclude
the following from GAAP Net Loss to calculate Pro Forma Net Loss:
Valuation Allowance on Deferred Tax Assets, Restructuring and Asset
Impairments and the impact of accelerated depreciation.
Quarter Ended
12/31/02
GAAP Loss Before Taxes $ (144,622)
Pro Forma Adjustments:
Provisions for Product Lines (1) $ 32,722
Facility Closures (2) 18,128
Asset Impairments (3) 16,313
Divestiture of Product Lines (4) 7,710
Accelerated Depreciation (5) 7,649
Workforce Reduction (6) 5,012
Pro Forma Loss Before Taxes (57,088)
Pro Forma Tax Benefit (7) (20,552)
Pro Forma Net Loss $ (36,536)
Pro Forma EPS $ (0.20)
(1) - The $32.7 million charge for inventory and other related
assets in the Memory Test Division is due to the lack of demand for
the Probe-One product and the discontinuance of the J996 product after
a last time buy offer to our customers. In the GAAP operating
statement, $20.7 million is included in the Cost of Sales line and
$12.0 million is included in the Restructuring and Asset Impairments
line.
(2) - The $18.1 million charge for Facility Closures consists of
future lease commitments on facilities which will be exited prior to
the end of the lease term. The charge of $18.1 million includes $12.5
million at the Assembly Test Division related to the Westford, MA
facility which will be consolidated into the North Reading, MA
facility; $4.5 million at the Connection Systems Division related to
the Hudson, NH and Fremont, CA facilities which will be consolidated
into the Nashua, NH and San Jose, CA facilities, respectively; and
$1.1 million at the Semiconductor Test Division related to the
Bedford, MA facility which will be consolidated into the North
Reading, MA facility. This charge is included in the Restructuring and
Asset Impairments line on the GAAP Operating Statement.
(3) - The charge for Asset Impairments consists of $16.3 million
at the Connection Systems Division primarily related to excess
manufacturing equipment which was taken out of service during the
quarter and is in the process of being disposed. The charge is
included in the Restructuring and Asset Impairments line on the GAAP
Operating Statement.
(4) - The $7.7 million charge for Divestiture of Product Lines
relates to the divestiture of two product lines in the Assembly Test
Division that were acquired as part of the GenRad acquisition. The
$7.7 million charge is included in the Restructuring and Asset
Impairments line on the GAAP Operating Statement.
(5) - The $7.6 million charge for Accelerated Depreciation relates
to the incremental additional depreciation over the normal
depreciation expense for long-lived assets as a result of the decision
to consolidate locations and therefore shorten the service period. The
charge includes $4.5 million at the Connection Systems Division
related to the Hudson, NH, Fremont, CA, and Nashua, NH facilities;
$2.2 million at the Assembly Test Division related to the Westford, MA
facility; $0.6 million at the Semiconductor Test Division related to
the Bedford, MA facility; and $0.3 million at Corporate related to a
Boston facility. In the GAAP operating statement, the $7.6 million
charge is classified as: $5.7 million in Cost of Sales, $1.1 million
in Selling and Administrative, and $0.8 million in Engineering and
Development.
(6) - Workforce reduction charge of $5.0 million for approximately
271 people across all functional groups and divisions. This charge is
included in the Restructuring and Asset Impairments line on the GAAP
Operating Statement.
(7) - The Pro Forma Tax Benefit is determined by applying
Teradyne's effective tax rate of 36% to the pro forma net loss before
taxes. As of December 31, 2002, Teradyne has provided a full valuation
allowance against its net deferred tax assets which total $359 million
at year end. These assets remain available for use as deductions
against future taxable income on Teradyne's tax returns but are
reserved under U.S. GAAP.
CONDENSED CONSOLIDATED BALANCE SHEETS (GAAP)
(In thousands)
12/31/02 12/31/01
Assets
Cash, Cash Equivalents
and Marketable Securities $ 325,354 $ 367,687
Accounts Receivable 174,838 169,630
Income Tax Receivable
and Prepaid Amounts 4,816 97,000
Inventories 279,550 406,989
Deferred Tax Assets - 141,013
Other Current Assets 24,715 24,703
809,273 1,207,022
Net Property, Plant
and Equipment 685,266 835,566
Long-term Marketable
Securities 215,703 218,544
Long-term Deferred
Tax Assets - 4,313
Goodwill 118,203 190,276
Intangible and Other
Assets 66,232 86,670
$ 1,894,677 $ 2,542,391
Liabilities
Current Liabilities $ 292,077 $ 296,131
Long-term Liabilities (1) 574,127 481,876
Shareholders' Equity 1,028,473 1,764,384
$ 1,894,677 $ 2,542,391
(1) Includes minimum pension liability of $84 million at 12/31/02
and $22 million at 12/31/01. This liability represents the excess of
the accumulated benefit obligation over the fair value of plan assets.
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 $1.22 billion in 2002 and currently employs about 7200 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.
“The combination of a weak economy, weak demand for technology products and the uncertain world situation overwhelmed the recovery we had begun to see in the first half of 2002”
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