Teradyne Reports Third Quarter, 2007 Results

NORTH READING, Mass.--(BUSINESS WIRE)--Teradyne, Inc. reported sales of $299 million in the third quarter of 2007. Net income was $41 million, or $0.22 per diluted share. Income from continuing operations in the quarter was $35 million, or $0.19 per diluted share on a GAAP basis, and $32 million, or $0.17 per diluted share on a non-GAAP basis. Bookings for the third quarter were $273 million.

“We continue to make solid progress in new design wins, despite the third quarter decline in semiconductor test bookings”

"We continue to make solid progress in new design wins, despite the third quarter decline in semiconductor test bookings,” said Michael Bradley, Teradyne president and CEO. “Although tester utilization levels remained very high in the quarter, customers continue to be cautious about adding capacity in the short term.”

Guidance for the fourth quarter of 2007 is for sales between $250 million and $275 million, with earnings between $0.04 and $0.10 per diluted share.

As of October 17, 2007, Teradyne completed its authorized stock repurchase program. Since the inception of the program in the third quarter of 2006, Teradyne has repurchased 27,947,230 shares at an average price of $14.31.

Webcast

A webcast to discuss third quarter 2007 results, along with management's outlook, will be held on Thursday, October 18, 2007 at 10 a.m. EDT. 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 20095692. A replay will also be available on the Teradyne Web site www.teradyne.com. Click on "Investors" for a link to the replay. The replay will be available via phone and through the Web site until November 1, 2007.

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 2006, Teradyne had sales of $1.36 billion from continuing operations, and currently employs about 3,600 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).

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 decision by customers to cancel or defer orders that previously had been accepted; reductions or delays in capital investment by our customers; competitive pressures (including pricing and gross margin pressures); the risks of operating internationally, disruptions, delays or an inadequate supply of raw materials, components or internal and external manufacturing capability; the operational effectiveness of our outsourced manufacturing activities, 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, 2006, and; our periodic reports on Forms 10-Q and 8-K.

TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2007
CONDENSED CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
			Quarter Ended:									Nine Months Ended:
			September 30, 2007			July 1, 2007			October 1, 2006			September 30, 2007			October 1, 2006
Net Revenues			$	299,461		$	288,710		$	354,717		$	841,864		$	1,097,565
	Cost of Revenues (1)(2)			155,215			151,490			180,332			447,001			565,471
Gross Profit				144,246			137,220			174,385			394,863			532,094
Operating Expenses:
	Engineering and Development (1)			52,245			52,417			51,791			153,924			154,193
	Selling and Administrative (1)			62,870			62,760			70,452			188,642			214,789
	In-process Research and Development (3)			-			-			-			16,700			-
	Restructuring and Other, net (4)			(3,119	)		568			(15,112	)		(304	)		(36,806	)
		Operating Expenses		111,996			115,745			107,131			358,962			332,176
Income from Operations				32,250			21,475			67,254			35,901			199,918
	Interest Income			7,784			9,299			12,453			27,182			33,595
	Interest Expense			(119	)		(74	)		(3,518	)		(629	)		(10,359	)
	Other Income (5)			-			-			-			1,832			-
Income from Continuing Operations Before Income Taxes				39,915			30,700			76,189			64,286			223,154
	Income Tax Provision			4,717			3,454			9,866			9,556			27,874
Income from Continuing Operations				35,198			27,246			66,323			54,730			195,280
Income/(Loss) from Discontinued Operations (6)				6,084			618			(1,908	)		6,795			(3,623	)
	Income Tax Provision			293			210			3,850			518			3,774
Income/(Loss) from Discontinued Operations				5,791			408			(5,758	)		6,277			(7,397	)
Net Income			$	40,989		$	27,654		$	60,565			61,007		$	187,883
Income per Common Share from Continuing Operations:
Basic			$	0.19		$	0.14		$	0.34		$	0.29		$	0.99
Diluted (7)			$	0.19		$	0.14		$	0.34		$	0.29		$	0.97
Net Income per Common Share:
Basic			$	0.22		$	0.15		$	0.31		$	0.33		$	0.96
Diluted (7)			$	0.22		$	0.14		$	0.31		$	0.32		$	0.94
Weighted Average Common Shares - Basic				183,566			189,391			193,563			187,527			196,608
Weighted Average Common Shares - Diluted (7)				185,298			191,405			204,551			189,222			208,585
Net Orders			$	273,332		$	306,553		$	238,147		$	825,860		$	999,314
(1) Includes the following amounts related to stock-based compensation:
			September 30, 2007			July 1, 2007			October 1, 2006			September 30, 2007			October 1, 2006
		Cost of Revenues	$	1,059		$	1,289		$	1,110		$	3,732		$	3,343
		Engineering and Development		1,729			2,103			1,813		$	6,091			5,456
		Selling and Administrative		2,789			3,391			2,923			9,822			8,799
			$	5,577		$	6,783		$	5,846		$	19,645		$	17,598
(2) Cost of revenues includes an inventory provision of $8.0 million in the nine months ended October 1, 2006 for non-FLEX products in the Semiconductor Test Division. For the quarter ended July 1, 2007, and nine months ended September 30, 2007, $0.5 million was recorded as a credit related to previously written off inventory in the Semiconductor Test Division.
(3) In-process research and development charge from the acquisition of enabling test technology from MOSAID Technologies during the first quarter of 2007 for the Semiconductor Test Division.
(4) Restructuring and Other, net consists of:			Quarter Ended:									Nine Months Ended:
			September 30, 2007			July 1, 2007			October 1, 2006			September 30, 2007			October 1, 2006
		Severance	$	2,291		$	1,505		$	1,044		$	5,997		$	2,638
		Facility related		-			(52	)		447			(16	)		(821	)
		Loss/(gain) on sale of real estate		(3,628	)		21			(16,583	)		(3,597	)		(38,319	)
		Insurance gain from Taiwan fire		(1,782	)		-			-			(1,782	)		-
		Gain on sale of product lines		-			(906	)		(20	)		(906	)		(406	)
		Long-lived asset impairment		-			-			-			-			50
		Other		-			-			-			-			52
			$	(3,119	)	$	568		$	(15,112	)	$	(304	)	$	(36,806	)
(5) Recognition of fair value of an asset related to an equity investment.
(6) On August 1, 2007 Teradyne completed the sale of its Broadband Test Systems Division with Tollgrade Communications, Inc. for a gain of $6,282
The results for discontinued businesses have been included within discontinued operations for all periods presented.
(7) Teradyne had convertible debentures that matured in the fourth quarter of 2006. 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 occurred when earnings were greater than $0.24 per share per quarter.
			Quarter Ended:									Nine Months Ended:
			September 30, 2007			July 1, 2007			October 1, 2006			September 30, 2007			October 1, 2006
Shares included in diluted shares				-			-			10.4			-			10.9
Net interest expense added back to net income			$	-		$	-		$	2.6		$	-		$	7.9

CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
		September 30, 2007		December 31, 2006
Assets
	Cash and Cash Equivalents	$	429,078	$	568,025
	Marketable Securities		187,176		47,766
	Accounts Receivable		231,561		155,770
	Inventories		91,852		92,813
	Other Current Assets		31,345		21,527
	Current Assets from Discontinued Operations (1)		-		3,509
			971,012		889,410
	Net Property, Plant and Equipment		351,712		365,521
	Long-term Marketable Securities		131,409		328,827
	Goodwill		69,147		69,147
	Intangible and Other Assets		36,622		35,819
	Retirement Plans Assets		36,400		31,503
	Long-term Assets from Discontinued Operations (1)		-		828
		$	1,596,302	$	1,721,055
Liabilities
	Accounts Payable		64,515		39,918
	Accrued Employees' Compensation and Withholdings		65,188		87,811
	Deferred Revenue and Customer Advances		38,711		44,053
	Other Accrued Liabilities		48,375		47,023
	Income Taxes Payable		5,262		36,052
	Current Liabilities from Discontinued Operations (1)		-		4,859
			222,051		259,716
	Retirement Plans Liabilities		83,736		81,121
	Other Long-term Liabilities		21,071		18,352
	Long-term Liabilities from Discontinued Operations (1)		-		679
			326,858		359,868
Shareholders' Equity			1,269,444		1,361,187
		$	1,596,302	$	1,721,055
(1) On August 1, 2007 Teradyne completed the sale of its Broadband Test Systems Division with Tollgrade Communications, Inc. The division's assets and liabilities have been included within discontinued operations.

GAAP to Non-GAAP Earnings Reconciliation

References by the Company to non-GAAP income and non-GAAP income per share refer to income from continuing operations or income per common share from continuing operations excluding in-process research and development, restructuring and other, net, certain inventory provisions, certain other income and certain tax related items, as well as adjustments to profit sharing and taxes due to these exclusions. GAAP requires that these items be included in determining income from continuing operations. Non-GAAP income from continuing operations (which is the basis for non-GAAP income 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, or superior to, financial information provided in accordance with GAAP.

		Quarter Ended:						Nine Months Ended:
		September 30, 2007		July 1, 2007		October 1, 2006		September 30, 2007		October 1, 2006
(in millions, except per share data)
Gross Margin - GAAP		$ 144.2	48.2%	$ 137.2	47.5%	$ 174.4	49.2%	$ 394.9	46.9%	$ 532.1	48.5%
	Inventory provision / (reversal) ^(1)	-		(0.5)		-		(0.5)		8.0
Gross Margin - non-GAAP		$ 144.2	48.2%	$ 136.7	47.3%	$ 174.4	49.2%	$ 394.4	46.8%	$ 524.1	47.8%
Income from Continuing Operations - GAAP		$ 35.2	11.8%	$ 27.2	9.4%	$ 66.3	18.7%	$ 54.7	6.5%	$ 195.3	17.8%
	Inventory provision / (reversal) ^(1)	-		(0.5)		-		(0.5)		8.0
	In-process research and development ^(2)	-		-		-		16.7		-
	Restructuring and other, net ^(3)	(3.1)		0.5		(15.1)		(0.3)		(36.8)
	Other income ^(4)	-		-		-		(1.8)		-
	Profit sharing adjustment ^(5)	0.0		-		0.2		(1.6)		(0.4)
	Income tax adjustment ^(6)	(0.4)		-		0.3		(0.3)		0.5
	Tax benefit from gain on disposal of TCS ^(7)	-		-		(3.9)		-		(3.9)
Income from Continuing Operations - non-GAAP		$ 31.7	10.6%	$ 27.2	9.4%	$ 47.8	13.5%	$ 66.9	7.9%	$ 162.7	14.8%
GAAP Income per Common Share from Continuing Operations- Basic		$ 0.19		$ 0.14		$ 0.34		$ 0.29		$ 0.99
Non-GAAP Income per Common Share from Continuing Operations - Basic		$ 0.17		$ 0.14		$ 0.25		$ 0.36		$ 0.83
GAAP Weighted Average Common Shares - Basic		183.6		189.4		193.6		187.5		196.6
GAAP Income per Common Share from Continuing Operations - Diluted ^(8)		$ 0.19		$ 0.14		$ 0.34		$ 0.29		$ 0.97
Non-GAAP Income per Common Share from Continuing Operations - Diluted ^(8)		$ 0.17		$ 0.14		$ 0.25		$ 0.35		$ 0.82
GAAP Weighted Average Common Shares - Diluted ^(8)		185.3		191.4		204.6		189.2		208.6
^(1)Cost of revenues includes an inventory provision reversal of $0.5 million in the quarter ended July 1, 2007 and nine months ended September 30, 2007 and an inventory provision of $8.0 million for the nine months ended October 1, 2006 for non-FLEX products in the Semiconductor Test Division.
^(2)In-process research and development charge from the acquisition of enabling test technology from MOSAID Technologies during the first quarter of 2007 for the Semiconductor Test Division.

			Quarter Ended:			Nine Months Ended:
			September 30, 2007	July 1, 2007	October 1, 2006	September 30, 2007	October 1, 2006
^(3) Restructuring and other, net consists of (in millions):
		Employee severance	$ 2.3	$ 1.5	$ 1.0	$ 6.0	$ 2.6
		Facility related	-	(0.1)	0.4	(0.0)	(0.8)
		Gain on sale of real estate	(3.6)	0.0	(16.5)	(3.6)	(38.4)
		Insurance gain from Taiwan fire	(1.8)	-	-	(1.8)	-
		Gain on sale of product lines	-	(0.9)	(0.0)	(0.9)	(0.4)
		Long-lived asset impairment	-	-	-	-	0.1
		Other	-	-	-	-	0.1
			$ (3.1)	$ 0.5	$ (15.1)	$ (0.3)	$ (36.8)
^(4)Recognition of fair value of an asset related to an equity investment.
^(5) To adjust the profit sharing calculation in accordance with the profit sharing plan for the non-GAAP items.
^(6) To adjust the tax provision for the non-GAAP items.
^(7) Under GAAP, there was a tax benefit recorded in continuing operations for finalization of the 2005 U.S. tax losses, with an offsetting tax provision in the gain on sale of TCS included in discontinued operations.
^(8) Teradyne had convertible debentures that matured in the fourth quarter of 2006. 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 occurred when earnings were greater than $0.24 per share per quarter.
			Quarter Ended:			Nine Months Ended:
			September 30, 2007	July 1, 2007	October 1, 2006	September 30, 2007	October 1, 2006
	Shares included in diluted shares		-	-	10.4	-	10.9
	Net interest expense added back to net income		$ -	$ -	$ 2.6	$ -	$ 7.9

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.