"We had an exceptional quarter, seeing very strong demand for our Semiconductor Test products with short lead times, and steady growth in our system level test businesses," said Mike Bradley, Teradyne president and CEO. "Once again, our FLEX System-On-Chip tester led the way with record orders. We also had our highest Semiconductor Test bookings in Japan and Korea, combined with much stronger subcontract test ordering."
“Once again, our FLEX System-On-Chip tester led the way with record orders. We also had our highest Semiconductor Test bookings in Japan and Korea, combined with much stronger subcontract test ordering.”
Sales in the third quarter of 2006 are expected to be between $340 million and $370 million, with earnings per diluted share between $0.17 and $0.24.
In addition, Teradyne announced today that its Board of Directors authorized a Stock Repurchase Program. Under the Program, the company is permitted to spend an aggregate of $400 million to repurchase shares of its common stock in open market purchases, in privately negotiated transactions or through other appropriate means, over the next two years. Shares are to be repurchased at the company's discretion, subject to market conditions and other factors.
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 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, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP.
Conference Call/Webcast
A conference call to discuss Second Quarter 2006 results, along with management's outlook, will follow at 10:00 a.m. EDT, Thursday, July 20, 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 1810932. 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 August 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 SECOND FISCAL QUARTER OF 2006
----------------------------------------------------------------------
CONDENSED CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
----------------------------------------------------------------------
Quarter Ended: Six Months Ended:
----------------------------- -------------------
July 2, April 2, July 3, July 2, July 3,
2006 2006 2005 2006 2005
--------- --------- --------- -------------------
Net Revenues $391,635 $362,914 $226,151 $754,549 $436,508
Cost of
Revenues (1) (2) 198,576 192,276 141,380 390,852 274,067
--------- --------- --------- --------- ---------
Gross Profit 193,059 170,638 84,771 363,697 162,441
Operating Expenses:
Engineering and
Development (1) 53,581 52,194 58,167 105,775 119,546
Selling and
Administrative (1) 75,587 72,185 64,879 147,772 129,196
Restructuring and
Other Charges,
net (3) (19,702) (1,097) 7,883 (20,799) 14,241
--------- --------- --------- --------- ---------
Operating
Expenses 109,466 123,282 130,929 232,748 262,983
Income/(Loss) From
Operations 83,593 47,356 (46,158) 130,949 (100,542)
Interest Income 11,659 9,483 3,841 21,142 8,246
Interest Expense (3,470) (3,371) (4,153) (6,841) (8,587)
--------- --------- --------- --------- ---------
Income/(Loss) From
Continuing
Operations Before
Income Taxes 91,782 53,468 (46,470) 145,250 (100,883)
Income Tax Expense 9,377 8,555 4,308 17,932 5,346
--------- --------- --------- --------- ---------
Net Income/(Loss)
From Continuing
Operations 82,405 44,913 (50,778) 127,318 (106,229)
Income From
Discontinued
Operations (net of
income tax provision
of $0, $0, $357, $0,
and $819
respectively) - - 5,314 - 8,193
--------- --------- --------- --------- ---------
Net Income/(Loss) $82,405 $44,913 $(45,464) $127,318 $(98,036)
========= ========= ========= ========= =========
Net Income/(Loss) per
Common Share from
Continuing
Operations:
---------------------
Basic $0.42 $0.23 $(0.26) $0.64 $(0.54)
========= ========= ========= ========= =========
Diluted (4) $0.40 $0.23 $(0.26) $0.63 $(0.54)
========= ========= ========= ========= =========
Net Income/(Loss) per
Common Share:
---------------------
Basic $0.42 $0.23 $(0.23) $0.64 $(0.50)
========= ========= ========= ========= =========
Diluted (4) $0.40 $0.23 $(0.23) $0.63 $(0.50)
========= ========= ========= ========= =========
Shares used in
calculation of Net
Income/(Loss)
per Common Share -
Basic 198,243 198,017 195,757 198,130 195,688
========= ========= ========= ========= =========
Shares used in
calculation of Net
Income/(Loss)
per Common Share -
Diluted (4) 210,356 199,555 195,757 210,601 195,688
========= ========= ========= ========= =========
Gross Orders $405,662 $364,555 $256,654 $770,217 $498,729
========= ========= ========= ========= =========
Net Orders $403,682 $364,097 $252,334 $767,779 $493,093
========= ========= ========= ========= =========
(1) Includes the
following amounts
related to stock-based
compensation:
July 2, April 2, July 3, July 2, July 3,
2006 2006 2005 2006 2005
--------- --------- --------- --------- ---------
Cost of
Revenues $1,184 $1,159 $- $2,343 $-
Engineering and
Development 1,932 1,891 - 3,823 -
Selling and
Administrative 3,117 3,049 - 6,166 -
--------- --------- --------- --------- ---------
$6,233 $6,099 $- $12,332 $-
========= ========= ========= ========= =========
(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: Quarter Ended: Six Months Ended:
--------------------------- ------------------
July 2, April 2, July 3, July 2, July 3,
2006 2006 2005 2006 2005
--------- -------- -------- --------- --------
Gain on Sale of Real
Estate $(21,736) $- $(4,445) $(21,736) $(4,445)
Severance 2,422 67 2,610 2,489 6,573
Facility Related (182) (1,086) 896 (1,268) 3,207
Gain on Sale of
Product Lines (157) (229) (444) (386) (858)
Long-Lived Asset
Impairment - 50 7,833 50 8,331
Divestiture-Related
Fees - - 1,482 - 1,482
Other (49) 101 (49) 52 (49)
--------- -------- -------- --------- --------
$(19,702) $(1,097) $7,883 $(20,799) $14,241
========= ======== ======== ========= ========
(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 and six months ended July 2, 2006, diluted shares assume
the conversion of the convertible debentures as the effect would
be dilutive. Accordingly, 11.0 million shares have been included
in diluted shares and net interest expense of $2.6 million and
$5.4 million have been added back to net income for the diluted
earnings per share calculation for the quarter and six months
ended July 2, 2006, respectively. Diluted shares for net
income/(loss) from continuing operations for the three months
ended April 2, 2006 and July 3, 2005 and for the six months ended
July 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)
----------------------------------------------------------------------
July 2, 2006 December 31, 2005
---------------- -----------------
Assets
Cash and Cash Equivalents $336,522 $340,699
Marketable Securities 280,659 354,042
Accounts Receivable 276,962 232,462
Inventories 111,503 142,706
Other Current Assets 32,258 25,033
---------------- -----------------
1,037,904 1,094,942
Net Property, Plant and Equipment 390,444 421,286
Long-term Marketable Securities 498,296 232,952
Goodwill 69,147 69,147
Intangible and Other Assets 39,819 41,405
---------------- -----------------
$2,035,610 $1,859,732
================ =================
Liabilities
Notes Payable - Banks $- $2,547
Current Portion of Long-term Debt 285,000 300,282
Accounts Payable 82,908 48,012
Accrued Employees' Compensation and
Withholdings 78,907 81,670
Deferred Revenue and Customer
Advances 39,187 31,477
Other Accrued Liabilities 50,060 48,273
Income Taxes Payable 18,082 3,234
---------------- -----------------
554,144 515,495
Pension Liability 38,514 57,106
Other Long-term Debt - 1,819
Other Long-term Liabilities 48,409 42,646
---------------- -----------------
641,067 617,066
Shareholders' Equity 1,394,543 1,242,666
---------------- -----------------
$2,035,610 $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, and
certain inventory provisions. 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, as a substitute for, or
superior to, financial information provided in accordance with GAAP.
Quarter Ended:
------------------------------------------
July 2, April 2, July 3,
(in millions, except per 2006 2006 2005
share data)
Gross Margin - GAAP $193.1 49.3% $170.6 47.0% $84.8 37.5%
Inventory charge (1) - 8.0
------- ------- -------
Gross Margin - Non-GAAP $193.1 49.3% $178.6 49.2% $84.8 37.5%
Net Income/(Loss) from
Continuing Operations -
GAAP $82.4 21.0% $44.9 12.4% $(50.8) -22.5%
Inventory charge (1) - 8.0
Restructuring and Other
Charges, net (2) (19.7) (1.1) 7.9
Profit sharing adjustment (3) 0.2 (0.8) -
Income tax adjustment (4) 0.4 (0.2) (0.2)
------- ------- -------
Net Income/(Loss) from
Continuing Operations -
Non-GAAP $63.3 16.2% $50.8 14.0% $(43.1) -19.1%
======= ======= =======
GAAP Net Income/(Loss) per
Common Share - Basic $0.42 $0.23 $(0.26)
======= ======= =======
Non-GAAP Net Income/(Loss)
per Common Share - Basic $0.32 $0.26 $(0.22)
======= ======= =======
Shares used in calculation
of Net Income/(Loss) 198.2 198.0 195.8
per Common Share - Basic
GAAP Net Income/(Loss) per
Common Share - Diluted (5) $0.40 $0.23 $(0.26)
======= ======= =======
Non-GAAP Net Income/(Loss)
per Common Share - Diluted $0.31 $0.25 $(0.22)
======= ======= =======
GAAP shares used in
calculation of Net
Income/(Loss) per Common
Share - Diluted (5) 210.4 199.6 195.8
Non-GAAP shares used in
calculation of Net
Income/(Loss) per Common
Share - Diluted (5) 210.4 210.8 195.8
Six Months Ended:
-----------------------------
July 2, July 3,
(in millions, except per share data) 2006 2005
Gross Margin - GAAP $363.7 48.2% $162.4 37.2%
Inventory charge (1) 8.0
------- --------
Gross Margin - Non-GAAP $371.7 49.3% $162.4 37.2%
Net Income/(Loss) from Continuing
Operations - GAAP $127.3 16.9% $(106.2) -24.3%
Inventory charge (1) 8.0
Restructuring and Other Charges, net (2) (20.8) 14.2
Profit sharing adjustment (3) (0.6) -
Income tax adjustment (4) 0.2 (0.3)
------- --------
Net Income/(Loss) from Continuing
Operations - Non-GAAP $114.1 15.1% $(92.3) -21.1%
======= ========
GAAP Net Income/(Loss) per Common Share
- Basic $0.64 $(0.54)
======= ========
Non-GAAP Net Income/(Loss) per Common
Share - Basic $0.58 $(0.47)
======= ========
Shares used in calculation of Net
Income/(Loss) 198.1 195.7
per Common Share - Basic
GAAP Net Income/(Loss) per Common Share
- Diluted (5) $0.63 $(0.54)
======= ========
Non-GAAP Net Income/(Loss) per Common
Share - Diluted $0.57 $(0.47)
======= ========
GAAP shares used in calculation of Net
Income/(Loss) per Common
Share - Diluted (5) 210.6 195.7
Non-GAAP shares used in calculation of
Net Income/(Loss) per Common
Share - Diluted (5) 210.6 195.7
(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.
Six Months
Quarter Ended: Ended:
----------------------- ---------------
July 2, April 2, July 3, July 2, July 3,
2006 2006 2005 2006 2005
(2) Restructuring and Other
Charges, net consists of
(in millions):
Gain on Sale of Real Estate $(21.8) $- $(4.4) $(21.8) $(4.4)
Employee Severance 2.4 0.1 2.6 2.5 6.6
Facility Related (0.2) (1.2) 0.9 (1.4) 3.2
Gain on Sale of Product Lines (0.1) (0.2) (0.4) (0.3) (0.9)
Divestiture-Related Fees - - 1.5 - 1.5
Long-Lived Asset Impairment - 0.1 7.8 0.1 8.3
Other - 0.1 (0.1) 0.1 (0.1)
------- ------- ------ ------- -------
$(19.7) $(1.1) $7.9 $(20.8) $14.2
======= ======= ====== ======= =======
(3) To adjust the profit sharing calculation in accordance with the
profit sharing plan for the non-GAAP items.
(4) To adjust the tax provision for the non-GAAP items.
(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 and six months ended July 2, 2006, diluted shares assume
the conversion of the convertible debentures as the effect would
be dilutive. Accordingly, 11.0 million shares have been included
in diluted shares and net interest expense of $2.6 million and
$5.4 million has been added back to net income for the diluted
earnings per share calculation, for the quarter and six months
ended July 2, 2006, respectively. Diluted shares for net
income/(loss) from continuing operations for the three months
ended April 2, 2006 and July 3, 2005 and for the six months ended
July 3, 2005 do not assume the conversion of the convertible
debentures, as the effect of the conversion on EPS would be
anti-dilutive.
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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