"Our customers sharply lowered their capital spending in the third quarter, resulting in a significant reduction in our orders compared with the second quarter," said Mike Bradley, Teradyne's President and CEO. "We're responding to this by lowering our shipment plan and reducing our costs in the fourth quarter. At the same time, we're maintaining our investments in new products and customer support. Our guidance for the fourth quarter is for sales to be between $360 and $380 million, with earnings per share of between break-even and four cents."
“Our customers sharply lowered their capital spending in the third quarter, resulting in a significant reduction in our orders compared with the second quarter”
Conference Call/Webcast
Teradyne will be conducting its conference call tomorrow, October 20, 2004, at 10:00 a.m. E.D.T. The call will be webcast at www.teradyne.com (click on "Investors"). A replay will be available via phone starting at Noon E.D.T. and continuing through November 3, 2004. 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 1164207, 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 2003, Teradyne had sales of $ 1.4 billion, and currently employs about 6300 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 the current downturn 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; the class action securities litigation brought against Teradyne and any other 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, 2003 and quarterly reports on Form 10-Q including that for the quarter ended July 4, 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.
TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2004
----------------------------------------------------------------------
CONDENSED CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
----------------------------------------------------------------------
Quarter Ended: Nine Months Ended:
--------------------- ----------------------
10/3/04 9/28/03 10/3/04 9/28/03
--------------------- ----------------------
Net Revenues $457,800 $329,172 $1,414,866 $995,277
Cost of Revenues 269,344 230,622 823,807 724,013
--------- ----------- ----------- ----------
Gross Profit 188,456 98,550 591,059 271,264
Operating Expenses:
Engineering and
Development 67,243 61,248 198,851 193,637
Selling and
Administrative 70,270 60,062 206,503 188,976
Restructuring and
Other Charges (46) 23,330 236 56,194
Gain on Sale of
Business - - (865) -
--------- ----------- ----------- ----------
Operating
Expenses 137,467 144,640 404,725 438,807
Income/(Loss)
From Operations 50,989 (46,090) 186,334 (167,543)
Interest Income 3,784 3,510 10,845 10,988
Interest Expense (4,696) (5,502) (14,223) (16,315)
Other Income and
Expense, Net - (3,232) 1,277 (4,531)
--------- ----------- ----------- ----------
Income/(Loss)
Before Income Taxes 50,077 (51,314) 184,233 (177,401)
Income Tax Expense(1) 8,928 2,200 22,344 5,100
--------- ----------- ----------- ----------
Net Income/(Loss) $41,149 $(53,514) $161,889 $(182,501)
========= =========== =========== ==========
Income/(Loss) per Common
Share - Basic and Diluted:
--------------------------
Net Income/(Loss)
per Common Share
- Basic $0.21 $(0.28) $0.83 $(0.98)
========= =========== =========== ==========
Shares used in calculation
of Net Income/(Loss)
per Common Share
- Basic 194,128 189,479 193,998 186,611
========= =========== =========== ==========
Net Income/(Loss)
per Common Share
- Diluted $0.21 $(0.28) $0.81 $(0.98)
========= =========== =========== ==========
Shares used in calculation
of Net Income/(Loss)
per Common Share
- Diluted (2) 195,751 189,479 213,137 186,611
========= =========== =========== ==========
Gross Orders $294,512 $337,025 $1,403,913 $943,549
========= =========== =========== ==========
Net Orders $284,060 $336,304 $1,393,244 $929,926
========= =========== =========== ==========
(1) Income Tax Expense for the quarter ended October 3, 2004
includes a $3 million IRS Settlement charge related to the closing out
of the audits for tax years 1999 through 2001, and an increase in the
estimated annual tax rate from 10% to 10.5%.
(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 ended October 3, 2004, diluted shares do not assume the
conversion of the convertible debentures as the effect on EPS would be
anti-dilutive. Diluted shares for the nine months ended October 3,
2004 assumes the conversion of the convertible debentures, as the
effect of the conversion on EPS would be dilutive. Accordingly, 15.2
million shares have been included in diluted shares and net interest
expense of $11.1 million has been added back to net income for the
diluted earnings per share calculation.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
--------------------------------------------------------------
10/3/04 12/31/03
----------------------
Assets
Cash and Cash Equivalents $264,019 $228,444
Marketable Securities 86,215 60,974
Accounts Receivable 255,519 229,532
Inventories 292,064 214,934
Other Current Assets 33,914 35,393
----------------------
931,731 769,277
Net Property, Plant and Equipment 546,826 544,369
Long-term Marketable Securities 325,385 296,618
Goodwill 116,176 118,203
Intangible and Other Assets 48,541 56,895
----------------------
$1,968,659 $1,785,362
======================
Liabilities
Notes Payable - Banks $7,081 $7,272
Current Portion of
Long-term Debt 302 310
Accounts Payable 85,315 74,097
Accrued Employees' Compensation
and Withholdings 93,589 91,244
Deferred Revenue and
Customer Advances 36,624 25,391
Other Accrued Liabilities 70,227 75,125
Income Taxes Payable 19,012 7,376
----------------------
312,150 280,815
Pension Liability 76,373 93,878
Other Long-term Liabilities 47,437 53,441
Convertible Senior Notes (3) 391,500 400,000
Other Long-term Debt 7,364 7,658
----------------------
834,824 835,792
Shareholders' Equity 1,133,835 949,570
----------------------
$1,968,659 $1,785,362
======================
(3) During the quarter ended October 3, 2004, $8.5 million of the
Convertible Senior Notes were purchased on the open market. No gain
was recognized on the purchase of the Notes.
----------------------------------------------------------------------
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.
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