"We're off to a strong start in 2006," said Mike Bradley, Teradyne president and CEO. "Our semiconductor test business posted its sixth straight quarter of increased bookings, driven by another record order level for our FLEX (TM) System-On-a-Chip (SOC) test systems."
“Our semiconductor test business posted its sixth straight quarter of increased bookings, driven by another record order level for our FLEX (TM) System-On-a-Chip (SOC) test systems.”
Sales in the second quarter of 2006 are expected to be between $360 million and $380 million, with earnings per diluted share between $0.31 and $0.35, including $18 million, or $0.08 of net gains on the sale of real estate.
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 Teradyne's ongoing operating results. Teradyne believes these non-GAAP measures will aid investors' overall understanding of its results by providing a higher degree of transparency for certain expenses and by providing a level of disclosure that will help investors understand how Teradyne 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 Teradyne 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 conference call to discuss First Quarter 2006 results, along with management's outlook, will be held at 10:00 a.m. EDT, Wednesday, April 19, 2006. The call will be broadcast simultaneously over the Internet. Interested investors should access the webcast at www.teradyne.com and click on "Investors" at least five minutes before the call begins. 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 for both numbers is 6934534. 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 May 3, 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); the historically cyclical nature and volatility of the markets that we serve; 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 decision by customers to cancel or defer orders that previously had been accepted; reduced bookings; reductions or delays in capital investment by our customers; competitive pressures (including pricing and gross margin pressures); 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); disruptions, delays or shortages in an adequate supply of raw materials, components or internal and external manufacturing capability; disruptions or delays in our supply chain; incoming quality of components or raw materials; insufficient or excess inventory; the effectiveness of our implementation of cost cutting and expense control measures (including facility consolidations, the centralization of certain shared services, seeking lower prices from suppliers and the outsourcing of selected manufacturing, information technology and engineering activities); the risks of potential environmental liability; any material litigation against Teradyne; the ability to attract and retain key employees; war or the threat of terrorist attacks; 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, 2005 and our periodic reports on Forms 10-Q and 8-K.
TERADYNE, INC. REPORT FOR FIRST FISCAL QUARTER OF 2006
----------------------------------------------------------------------
CONDENSED CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
----------------------------------------------------------------------
Quarter Ended:
-------------------------------------
April 2, December 31, April 3,
2006 2005 2005
----------- ------------ ------------
Net Revenues $362,914 $345,151 $210,357
Cost of Revenues (1) (2) 192,276 184,980 132,687
----------- ------------ ------------
Gross Profit 170,638 160,171 77,670
Operating Expenses:
Engineering and
Development (1) 52,194 49,770 61,379
Selling and Administrative
(1) 72,185 60,972 64,317
Restructuring and Other
Charges, net (3) (1,097) (10,393) 6,358
----------- ------------ ------------
Operating Expenses 123,282 100,349 132,054
Income/(Loss) From Operations 47,356 59,822 (54,384)
Interest Income 9,483 5,572 4,405
Interest Expense (3,371) (3,583) (4,434)
----------- ------------ ------------
Income/(Loss) From Continuing
Operations Before Income Taxes 53,468 61,811 (54,413)
Income Tax
Expense/(Benefit) (4) 8,555 (27,814) 1,038
----------- ------------ ------------
Net Income/(Loss) From
Continuing Operations 44,913 89,625 (55,451)
(Loss)/Income From Discontinued
Operations (net of income tax
provision of $0, $262, and
$462, respectively) - (2,516) 2,879
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) $44,913 $224,062 $(52,572)
=========== ============ ============
Net Income/(Loss) per Common
Share from Continuing
Operations:
--------------------------------
Basic $0.23 $0.46 $(0.28)
=========== ============ ============
Diluted (5) $0.23 $0.44 $(0.28)
=========== ============ ============
Net Income/(Loss) per Common
Share:
--------------------------------
Basic $0.23 $1.14 $(0.27)
=========== ============ ============
Diluted (5) $0.23 $1.07 $(0.27)
=========== ============ ============
Shares used in calculation of
Net Income/(Loss) per Common
Share - Basic 198,017 196,919 195,619
=========== ============ ============
Shares used in calculation of
Net Income/(Loss) per Common
Share - Diluted (5) 199,555 211,764 195,619
=========== ============ ============
Gross Orders $364,555 $385,956 $341,986
=========== ============ ============
Net Orders $364,097 $377,636 $340,670
=========== ============ ============
(1) Includes the following
amounts related to stock-based
compensation:
April 2, December 31, April 3,
2006 2005 2005
----------- ------------ ------------
Cost of Revenues $1,159 $290 $-
Engineering and
Development 1,891 137 -
Selling and
Administrative 3,049 335 -
----------- ------------ ------------
$6,099 $762 $-
=========== ============ ============
(2) Cost of revenues includes an inventory provision of $8 million in
the quarter ended April 2, 2006 for non-FLEX products in the
Semiconductor Test Division.
(3) Restructuring and Other
Charges, net consists of:
April 2, December 31, April 3,
2006 2005 2005
----------- ------------ ------------
Facility Related $(1,086) $- $2,311
Gain on Sale of
Product Lines (229) (2,752) (414)
Severance 67 2,862 3,963
Long-Lived Asset
Impairment 50 164 498
Gain on Sale of Real
Estate - (10,884) -
Other 101 217 -
----------- ------------ ------------
$(1,097) $(10,393) $6,358
=========== ============ ============
(4) For the quarter ended December 31, 2005, for GAAP purposes, there
was a tax benefit of $29.2 million recorded in continuing operations
for the 2005 operating loss used as a result of the sale of the
Connection Systems segment ("TCS"). There was an offsetting tax
provision in the gain on sale of TCS included in discontinued
operations.
(5) 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 April 2,
2006 and April 3, 2005 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)
----------------------------------------------------------------------
April 2, December 31,
2006 2005
------------- --------------
Assets
Cash and Cash Equivalents $322,781 $340,699
Marketable Securities 321,227 354,042
Accounts Receivable 259,201 232,462
Inventories 115,658 142,706
Other Current Assets 31,802 25,033
------------- --------------
1,050,669 1,094,942
Net Property, Plant and Equipment 413,732 421,286
Long-term Marketable Securities 321,852 232,952
Goodwill 69,147 69,147
Intangible and Other Assets 41,046 41,405
------------- --------------
$1,896,446 $1,859,732
============= ==============
Liabilities
Notes Payable - Banks $- $2,547
Current Portion of Long-term Debt 285,000 300,282
Accounts Payable 68,845 48,012
Accrued Employees' Compensation and
Withholdings 63,467 81,670
Deferred Revenue and Customer
Advances 38,448 31,477
Other Accrued Liabilities 49,014 48,273
Income Taxes Payable 9,199 3,234
------------- --------------
513,973 515,495
Pension Liability 37,852 57,106
Other Long-term Debt - 1,819
Other Long-term Liabilities 39,836 42,646
------------- --------------
591,661 617,066
Shareholders' Equity 1,304,785 1,242,666
------------- --------------
$1,896,446 $1,859,732
============= ==============
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 determining
Net Income/(Loss) and Net Income/(Loss) 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 credits, through providing 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:
-----------------------------------------
April 2, December 31, April 3,
2006 2005 2005
(in millions, except per share data)
Gross Margin - GAAP $170.6 47.0% $160.2 46.4% $77.7 36.9%
Inventory charge (1) 8.0 - -
------- ---------- -------
Gross Margin - Non-GAAP $178.6 49.2% $160.2 46.4% $77.7 36.9%
Net Income/(Loss) from
Continuing Operations - GAAP $44.9 $89.6 $(55.5)
Inventory charge (1) 8.0 - -
Tax Benefit from gain
on disposal of TCS
(2) - (29.2) -
Restructuring and
Other Charges, net
(3) (1.1) (10.4) 6.4
Profit sharing
adjustment (4) (0.8) - -
Income tax adjustment
(5) (0.2) 0.3 (0.2)
------- ---------- -------
Net Income/(Loss) from
Continuing Operations - non-
GAAP $50.8 $50.3 $(49.3)
======= ========== =======
GAAP Net Income/(Loss) per
Common Share - Basic $0.23 $0.46 $(0.28)
======= ========== =======
Non-GAAP Net Income/(Loss)
per Common Share - Basic $0.26 $0.26 $(0.25)
======= ========== =======
Shares used in calculation of
Net Income/(Loss) 198.0 196.9 195.6
per Common Share -
Basic
GAAP Net Income/(Loss) per
Common Share - Diluted (6) $0.23 $0.44 $(0.28)
======= ========== =======
Non-GAAP Net Income/(Loss)
per Common Share - Diluted $0.25 $0.25 $(0.25)
======= ========== =======
GAAP shares used in
calculation of Net
Income/(Loss)
per Common Share - 199.6 211.8 195.6
Diluted (6)
Non-GAAP shares used in
calculation of Net
Income/(Loss)
per Common Share - 210.8 211.8 195.6
Diluted (6)
GAAP Continuing Operations
Income Tax Benefit $- $(27.8) $-
Tax Benefit from gain
on disposal of TCS
(2) - 29.2 -
------- ---------- -------
Non-GAAP Continuing
Operations Income Tax
Provision $- $1.4 $-
======= ========== =======
(1) Cost of revenues includes an inventory provision of
$8 million in the quarter ended April 2, 2006 for non-
FLEX products in the Semiconductor Test Division.
(2) Under GAAP, there was a tax benefit recorded in continuing
operations for the 2005 operating loss used as a result of the sale
of TCS. There was an offsetting tax provision in the gain on sale of
TCS included in discontinued operations.
Quarter Ended:
-----------------------------------------
April 2, December 31, April 3,
2006 2005 2005
(in millions)
(3) Restructuring and Other
Charges, net consists of:
Facility Related $(1.1) $- $2.3
Gain on Sale of
Product Lines (0.2) (2.7) (0.4)
Employee Severance 0.1 2.9 4.0
Long-Lived Asset
Impairment 0.1 0.1 0.5
Gain on Sale of
Real Estate - (10.9) -
Other 0.1 0.2 -
------- ---------- -------
$(1.0) $(10.4) $6.4
======= ========== =======
(4) To adjust the profit sharing calculation in accordance with the
profit sharing plan.
(5) To adjust the tax provision for the non-GAAP items.
(6) 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 GAAP net income
from continuing operations for the quarter ended April 2, 2006 and
both GAAP and non-GAAP net income from continuing operations for the
quarter ended April 3, 2005 do not assume the conversion of the
convertible debentures, as the effect of the conversion on EPS would
be anti-dilutive. Non-GAAP net income from continuing operations for
the quarter ended April 2, 2006 assumes the conversion of the
convertible debentures as the effect would be dilutive. Accordingly,
11.2 million shares have been included in the diluted shares and net
interest expense of $2.7 million has been added back to net income for
the non-GAAP dilutive earnings per share calculation.
----------------------------------------------------------------------
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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