For fiscal 2005, sales were $1.08 billion. Net income for the year was $90.6 million, or $0.46 per diluted share. The company had a net loss from continuing operations of $60.5 million, or $0.31 per diluted share, and a net loss of $33.6 million, or $0.17 per diluted share on a non-GAAP basis.
“The fourth quarter capped a year of significant improvement for Teradyne”
"The fourth quarter capped a year of significant improvement for Teradyne," said Michael Bradley, Teradyne president and CEO. "Throughout 2005, we had solid sequential growth in sales and bookings, strong fourth quarter profit performance in both our Semiconductor Test and non-Semiconductor Test businesses, and a much-improved balance sheet. Our FLEX (TM) System-On-a-Chip (SOC) tester led the way throughout the year.
"As we enter 2006, we have excellent product momentum across all our businesses, we have delivered on our 2005 breakeven reduction goals and we're designed into end products that have great potential."
Sales in the first quarter of 2006 are expected to be between $340 million and $360 million, with earnings per diluted share between $0.18 and $0.22, including $6.8 million, or $0.03 per share of stock-based compensation.
On November 30, 2005, Teradyne completed the sale of its Connection Systems division to Amphenol Corporation for $385 million in cash as adjusted post-closing and further subject to post-closing net asset value adjustments. Connection Systems' revenue and expenses are reported on a net basis in discontinued operations, and therefore have been excluded from continuing operations in all reported periods.
Non-GAAP Results
In addition to disclosing results that are determined in accordance with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain charges. These results are provided as a complement to results provided in accordance with GAAP. Teradyne reports non-GAAP results in order to better assess and reflect operating performance. Management believes the non-GAAP measures help indicate Teradyne's baseline performance before gains, losses or other charges that are considered by Management to be outside the Company's ongoing operating results. The Company believes these non-GAAP measures will aid investors' overall understanding of the Company's results by providing a higher degree of transparency for certain expenses and providing a level of disclosure that will help investors understand how the Company plans and measures its own business. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the attached Exhibits and on the Company's website at www.teradyne.com by clicking on "Investors" and then selecting the "GAAP to Non-GAAP Reconciliation" link. The presentation of non-GAAP measures is not meant to be considered in isolation or as a substitute for financial measures or information provided in accordance with GAAP.
Conference Call/Webcast
A replay will be available approximately two hours after the completion of the call. The replay number in the U.S. & Canada is 1-800-642-1687. The replay number outside the U.S. & Canada is 1-706-645-9291. The pass code is 3787254. A replay will also be available on the Teradyne website www.teradyne.com. Click on "Investors" for a link to the replay. The replay will be available via phone and website through February 1, 2006.
About Teradyne, Inc.
Teradyne (NYSE:TER) is a leading supplier of Automatic Test Equipment used to test complex electronics used in the consumer electronics, automotive, computing, telecommunications, and aerospace and defense industries. In 2005, Teradyne had sales of $1.08 billion, and currently employs about 4,000 people worldwide. For more information, visit www.teradyne.com. Teradyne (R) is a registered trademark of Teradyne, Inc. in the U.S. and other countries. All product names are trademarks of Teradyne, Inc. (including its subsidiaries) or their respective owners.
Safe Harbor Statement
The forward-looking statements included in this release are made only as of the date of publication and Teradyne undertakes no obligation to update the information set forth in this release.
This release contains forward-looking statements regarding expected future revenues and earnings, future market conditions and business prospects. Such statements are based on the current assumptions and expectations of Teradyne's management and are neither promises nor guarantees. You can generally identify these forward-looking statements based on the context of the statements and by the fact that they use words such as "will," "anticipate," "expect," "project," "intend," "plan," "believe," "target," and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. There can be no assurance that management's estimates of our 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 downturns 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 we serve; war or the threat of terrorist attacks; disruptions or delays in our 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, 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; any material litigation against Teradyne; our 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 (including 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, our annual report on Form 10-K for the fiscal year ended December 31, 2004 and our periodic reports on Forms 10-Q and 8-K.
TERADYNE, INC. REPORT FOR FOURTH FISCAL QUARTER OF 2005
----------------------------------------------------------------------
CONDENSED CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
----------------------------------------------------------------------
Quarter Ended:
-----------------------------
December October December
31, 2005 2, 2005 31, 2004
--------- --------- ---------
Net Revenues $345,151 $293,573 $283,993
Cost of Revenues (1) 184,980 204,417 161,042
--------- --------- ---------
Gross Profit 160,171 89,156 122,951
Operating Expenses:
Engineering and
Development 49,770 53,699 60,238
Selling and
Administrative 60,972 62,639 59,410
Restructuring and
Other Charges,
net (2) (10,393) 13,796 1,591
--------- --------- ---------
Operating
Expenses 100,349 130,134 121,239
Income/(Loss) From
Operations 59,822 (40,978) 1,712
Interest Income 5,572 3,972 4,542
Interest Expense (3,583) (4,059) (4,529)
Other Income and
Expense, Net - - 1,259
--------- --------- ---------
Income/(Loss) From
Continuing Operations
Before Income Taxes 61,811 (41,065) 2,984
Income Tax
(Benefit)/Expense
(3) (27,814) 2,788 137
--------- --------- ---------
Income/(Loss) From
Continuing Operations 89,625 (43,853) 2,847
Income/(Loss) From
Discontinued
Operations (net of
income tax provision
of $262, $239 and $256,
respectively) (2,516) 8,475 501
Gain on Disposal of
Discontinued
Operations (net of
income tax provision of
$30,979 for the quarter
ended December 31,
2005) 136,953 - -
--------- --------- ---------
Net Income/(Loss) $224,062 $(35,378) $3,348
========= ========= =========
Net Income/(Loss) per
Common Share from
Continuing Operations:
-----------------------
Basic $0.46 $(0.22) $0.01
========= ========= =========
Diluted (4) $0.44 $(0.22) $0.01
========= ========= =========
Net Income (Loss) per
Common Share:
-----------------------
Basic $1.14 $(0.18) $0.02
========= ========= =========
Diluted (4) $1.07 $(0.18) $0.02
========= ========= =========
Shares used in
calculation of Net
Income/(Loss)
per Common Share -
Basic 196,919 196,835 194,199
========= ========= =========
Shares used in
calculation of Net
Income/(Loss)
per Common Share -
Diluted (4) 211,764 196,835 195,982
========= ========= =========
Gross Orders $385,956 $301,137 $220,946
========= ========= =========
Net Orders $377,636 $299,867 $220,849
========= ========= =========
Year Ended:
-----------------------
December December
31, 2005 31, 2004
----------- -----------
Net Revenues $1,075,232 $1,410,222
Cost of Revenues(1) 663,464 749,342
----------- -----------
Gross Profit 411,768 660,880
Operating Expenses:
Engineering and
Development 223,015 249,966
Selling and
Administrative 252,807 254,406
Restructuring and
Other Charges,
net (2) 17,644 1,211
----------- -----------
Operating
Expenses 493,466 505,583
(Loss)/Income From
Operations (81,698) 155,297
Interest Income 17,790 15,387
Interest Expense (16,229) (18,752)
Other Income and
Expense, Net - 2,536
----------- -----------
(Loss)/Income From
Continuing Operations
Before Income Taxes (80,137) 154,468
Income Tax
(Benefit)/Expense(3) (19,680) 21,849
----------- -----------
(Loss)/Income From
Continuing Operations (60,457) 132,619
Income From
Discontinued
Operations (net of
income tax provision of
$1,320 and $888,
respectively) 14,152 32,618
Gain on Disposal of
Discontinued
Operations (net of
income tax
provision of
$30,979 for the
year ended
December 31, 2005) 136,953 -
----------- -----------
Net Income $90,648 $165,237
=========== ===========
Net (Loss)/Income per
Common Share from
Continuing Operations:
-----------------------
Basic $(0.31) $0.68
=========== ===========
Diluted (4) $(0.31) $0.67
=========== ===========
Net Income per
Common Share:
-----------------------
Basic $0.46 $0.85
=========== ===========
Diluted (4) $0.46 $0.84
=========== ===========
Shares used in
calculation of Net
(Loss)/Income
per Common Share -
Basic 196,283 194,048
=========== ===========
Shares used in
calculation of Net
(Loss)/Income
per Common Share -
Diluted (4) 196,283 197,432
=========== ===========
Gross Orders $1,185,822 $1,316,827
=========== ===========
Net Orders $1,170,593 $1,306,058
=========== ===========
(1) Cost of revenues includes an inventory provision of $38.5 million
in the quarter ended October 2, 2005 for non-FLEX products in the
Semiconductor Test Division.
(2) Restructuring and Other Charges, net consists of:
Quarter Ended:
December October December
31, 2005 2, 2005 31, 2004
--------- --------- ---------
Gain on Sale of
Real Estate $(10,884) $- $-
Severance 2,862 11,817 2,285
Gain on Sale of
Product Lines (2,752) (458) (338)
Facility Related - - (356)
Long-Lived Asset
Impairment 164 841 -
Divestiture-
Related Fees - 1,596 -
Other 217 - -
--------- --------- ---------
$(10,393) $13,796 $1,591
========= ========= =========
Year Ended:
December December
31, 2005 31, 2004
----------- -----------
Gain on Sale of
Real Estate $(15,329) $-
Severance 21,252 1,591
Gain on Sale of
Product Lines (4,068) (1,875)
Facility Related 2,311 845
Long-Lived Asset
Impairment 10,231 650
Divestiture-
Related Fees 3,078 -
Other 169 -
----------- -----------
$17,644 $1,211
=========== ===========
(3) Under GAAP, there was a tax benefit recorded in continuing
operations for the current year operating loss used as a result of
the sale of TCS. There is an offsetting tax provision in the gain
on sale of TCS included in discontinued operations.
(4) 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 net income from continuing operations for the
quarter ended December 31, 2005, diluted shares assume the
conversion of the convertible debentures as the effect would be
dilutive. Accordingly, 13.7 million shares have been included in
diluted shares and net interest expense of $3.3 million has been
added back to net income for the diluted earnings per share
calculation. Diluted shares for net income from continuing
operations for the quarters ended October 2, 2005 and December 31,
2004 and the years ended December 31, 2005 and 2004 do not assume
the conversion of the convertible debentures, as the effect of the
conversion on EPS would be anti-dilutive.
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
----------------------------------------------------------
December December
31, 2005 31, 2004
----------- -----------
Assets
Cash and Cash
Equivalents $340,699 $209,147
Marketable
Securities 354,042 75,431
Accounts
Receivable 232,462 169,709
Inventories 142,706 214,916
Other Current
Assets 25,033 27,507
Current Assets of
Discontinued
Operations - 109,116
----------- -----------
1,094,942 805,826
Net Property,
Plant and
Equipment 421,286 467,648
Long-term
Marketable
Securities 232,952 406,615
Goodwill 69,147 69,147
Intangible and
Other Assets 41,405 46,433
Long-term Assets
of Discontinued
Operations - 126,893
----------- -----------
$1,859,732 $1,922,562
=========== ===========
Liabilities
Notes Payable -
Banks $2,547 $4,826
Current Portion of
Long-term Debt 300,282 321
Accounts Payable 48,012 45,520
Accrued Employees'
Compensation and
Withholdings 81,670 105,818
Deferred Revenue
and Customer
Advances 31,477 29,336
Other Accrued
Liabilities 48,273 50,621
Income Taxes
Payable 3,234 11,216
Current
Liabilities of
Discontinued
Operations - 28,900
----------- -----------
515,495 276,558
Pension Liability 58,758 69,187
Other Long-term
Liabilities 40,994 43,342
Convertible Senior
Notes - 391,500
Other Long-term
Debt 1,819 7,432
Long-term
Liabilities of
Discontinued
Operations - 979
----------- -----------
617,066 788,998
Shareholders' Equity 1,242,666 1,133,564
----------- -----------
$1,859,732 $1,922,562
=========== ===========
GAAP to Non-GAAP Earnings Reconciliation
References by the Company to non-GAAP income from continuing
operations and non-GAAP earnings per share refer to net income or
earnings per share excluding restructuring and other charges, net,
certain inventory provisions and the effect of one-time tax items.
GAAP requires that these costs and charges be included in costs and
expenses and accordingly is used to determine income from continuing
operations and earnings per share. Non-GAAP net income from continuing
operations (which is the basis for non-GAAP earnings per share) gives
an indication of Teradyne's baseline performance before gains, losses
or other charges that are considered by management to be outside the
Company's ongoing operating results. The Company believes these
non-GAAP measures will aid investors' overall understanding of the
Company's results by providing a higher degree of transparency for
certain expenses and a level of disclosure that will help
investors understand how the Company plans and measures its own
business. However, the presentation of non-GAAP measures is not meant
to be considered in isolation or as a substitute for financial
information provided in accordance with GAAP.
Quarter Ended:
-------------------------------------
December 31, October 2, December
2005 2005 31, 2004
(in millions, except per share data)
Net Income/(Loss) from Continuing
Operations - GAAP $89.6 $(43.9) $2.8
Tax Benefit from gain on disposal
of TCS (1) (29.2) - -
Restructuring and Other Charges,
net (2) (10.4) 52.3 1.6
-------------------------------------
Net Income from Continuing
Operations - non-GAAP $50.0 $8.4 $4.4
=====================================
GAAP Net Income/(Loss) per Common
Share - Basic $0.46 $(0.22) $0.01
=====================================
Non-GAAP Net Income per
Common Share - Basic $0.25 $0.04 $0.02
=====================================
Shares used in calculation of Net
Income/(Loss) 196.9 196.8 194.2
per Common Share - Basic
GAAP Net Income/(Loss) per Common
Share - Diluted (3) $0.44 $(0.22) $0.01
=====================================
Non-GAAP Net Income per
Common Share - Diluted $0.25 $0.04 $0.02
=====================================
GAAP shares used in calculation
of Net Income/(Loss) 211.8 196.8 196.0
per Common Share - Diluted (3)
(1) Under GAAP, there was a tax benefit recorded in continuing
operations for the current year loss used as a result of the sale of
TCS. There is an offsetting tax provision in the gain on sale of TCS
included in discontinued operations.
(2) Restructuring and Other Charges, net consists of:
Quarter Ended:
-------------------------------------
December 31, October 2, December
2005 2005 31, 2004
(in millions)
Gain on Sale of Real Estate $(10.9) $- $-
Employee severance 2.9 11.8 2.3
Gain on Sale of Product Lines (2.7) (0.5) (0.3)
Non-FLEX Inventory provision - 38.5 -
Facility Related - - (0.4)
Long-Lived Asset Impairment 0.1 0.9 -
Divestiture-Related fees - 1.6 -
Other 0.2 - -
-------------------------------------
$(10.4) $52.3 $1.6
=====================================
(3) 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 GAAP and non-GAAP net income from continuing
operations for the quarter ended December 31, 2005, diluted shares
assume the conversion of the convertible debentures as the effect
would be dilutive. Accordingly, 13.7 million shares have been
included in diluted shares and net interest expense of $3.3
million has been added back to net income for the diluted earnings
per share calculation. Diluted shares for the GAAP and non-GAAP
net income from continuing operations for the quarters ended
October 2, 2005 and December 31, 2004 do not assume the conversion
of the convertible debentures, as the effect of the conversion on
EPS would be anti-dilutive.
GAAP to Non-GAAP Earnings Reconciliation, continued
Year Ended:
------------------
December December
31, 31,
2005 2004
(in millions, except
per share data)
Net (Loss)/Income from Continuing Operations - GAAP $(60.5) $132.6
Tax Benefit from gain on disposal of TCS (1) (29.2) -
Restructuring and Other Charges, net (2) 56.1 1.2
-------- --------
Net (Loss)/Income from Continuing Operations - non-
GAAP $(33.6) $133.8
======== ========
GAAP Net (Loss)/Income per Common Share - Basic $(0.31) $0.68
======== ========
Non-GAAP Net (Loss)/Income per Common Share - Basic $(0.17) $0.69
======== ========
Shares used in calculation of Net (Loss)/Income 196.3 194.0
per Common Share - Basic
GAAP Net (Loss)/Income per Common Share - Diluted $(0.31) $0.67
======== ========
Non-GAAP Net (Loss)/Income per Common Share -
Diluted $(0.17) $0.68
======== ========
GAAP shares used in calculation of Net (Loss)/Income 196.3 197.4
per Common Share - Diluted
(1) Under GAAP, there was a tax benefit recorded in continuing
operations for a portion of the net operating loss carryforwards used
as a result of the sale of TCS. There is an offsetting tax provision
in the gain on sale of TCS included in discontinued operations.
(2) Restructuring and Other Charges, net consists of:
Year Ended:
------------------
December December
31, 31,
2005 2004
(in millions)
Non-FLEX Inventory provision $38.5 $-
Employee severance 21.3 1.6
Gain on Sale of Real Estate (15.3) -
Long-Lived Asset Impairment 10.2 0.7
Gain on Sale of Product Lines (4.1) (1.9)
Divestiture-Related Fees 3.1 -
Facility Related 2.3 0.8
Other 0.1 -
-------- --------
$56.1 $1.2
======== ========
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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