-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UM6uuOx0payTzh1k9BLEL4qnTgippg99HXoJcEEndkaiIVN6+BV4jjRMJzR7mpj5 3B00ZPPfvBRYFokGa4Kgmw== 0000097210-97-000003.txt : 19970515 0000097210-97-000003.hdr.sgml : 19970515 ACCESSION NUMBER: 0000097210-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970330 FILED AS OF DATE: 19970514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TERADYNE INC CENTRAL INDEX KEY: 0000097210 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042272148 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06462 FILM NUMBER: 97605436 BUSINESS ADDRESS: STREET 1: 321 HARRISON AVE CITY: BOSTON STATE: MA ZIP: 02118 BUSINESS PHONE: 6174822700 MAIL ADDRESS: STREET 1: 321 HARRISON AVENUE STREET 2: H93 CITY: BOSTON STATE: MA ZIP: 02118 10-Q 1 FIRST QUARTER REPORT TERADYNE, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-Q ------------- (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ______________ Commission File No. 1-6462 TERADYNE, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2272148 (State or Other Jurisdiction (I.R.S.Employer Incorporation or Organization) Identification No.) 321 Harrison Avenue, Boston, Massachusetts 02118 (Address of principal executive offices) (Zip Code) 617-482-2700 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes X No _ The number of shares outstanding of the registrant's only class of Common Stock as of April 27, 1997 was 83,338,700 shares. 1 TERADYNE, INC. INDEX Page No. --------
PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets - March 30, 1997 and December 31, 1996..........................................................3 Condensed Consolidated Statements of Income - Quarters Ended March 30, 1997 and March 31, 1996..............................................4 Condensed Consolidated Statements of Cash Flows - Quarters Ended March 30, 1997 and March 31, 1996..............................................5 Notes to Condensed Consolidated Financial Statements...............................................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................................7-8
2 TERADYNE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
ASSETS March 30, 1997 December 31, 1996 -------------- ----------------- (Unaudited) Current assets: Cash and cash equivalents.................................................... $ 91,689 $ 201,452 Marketable securities........................................................ 106,567 48,266 Accounts receivable.......................................................... 192,768 178,430 Inventories: Parts.................................................................. 98,725 91,792 Assemblies in process.................................................. 52,937 47,162 ------------- ------------- 151,662 138,954 Deferred tax assets.......................................................... 32,340 32,340 Prepayments and other current assets......................................... 19,185 17,666 ------------- ------------- Total current assets................................................... 594,211 617,108 Property, plant, and equipment, at cost:........................................ 577,559 563,585 Less: Accumulated depreciation............................................ (308,392) (290,088) ------------- ------------- Net property, plant, and equipment..................................... 269,167 273,497 Long-term marketable securities................................................. 211,514 181,776 Other assets.................................................................... 21,922 24,435 ------------- ------------- Total assets........................................................... $ 1,096,814 $ 1,096,816 ============= ============= LIABILITIES Current liabilities: Notes payable - banks........................................................ $ 6,916 $ 7,316 Current portion of long-term debt............................................ 1,782 1,778 Accounts payable............................................................. 34,690 34,482 Accrued employees' compensation and withholdings............................. 43,436 58,696 Unearned service revenue and customer advances............................... 56,745 62,771 Other accrued liabilities.................................................... 46,302 53,537 Income taxes payable......................................................... 6,542 6,677 ------------- ------------- Total current liabilities.............................................. 196,413 225,257 Deferred tax liabilities........................................................ 13,898 13,898 Long-term debt.................................................................. 15,053 15,650 ------------- ------------- Total liabilities...................................................... 225,364 254,805 ------------- ------------- SHAREHOLDERS' EQUITY Common stock $0.125 par value; 250,000 shares authorized; 83,509 and 82,480 shares issued and outstanding after deduction of reacquired shares in 1997 and 1996, respectively........................................ 10,438 10,310 Additional paid-in capital...................................................... 367,727 355,576 Retained earnings............................................................... 493,285 476,125 ------------ ------------ Total shareholders' equity............................................. 871,450 842,011 ------------ ------------ Total liabilities and shareholders' equity............................. $ 1,096,814 $ 1,096,816 ============ ============ The accompanying notes, together with the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996 are an integral part of the condensed consolidated financial statements.
3 TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For the Three Months Ended (In thousands, except per share amounts) March 30, 1997 March 31, 1996 --------------- -------------- Net sales............................................................ $ 248,302 $ 348,967 Expenses: Cost of sales................................................... 152,935 186,637 Engineering and development..................................... 33,308 36,740 Selling and administrative...................................... 40,783 46,929 --------- --------- Total expenses.............................................. 227,026 270,306 --------- --------- Income from operations............................................... 21,276 78,661 Other income (expense): Interest income.................................................. 5,665 3,759 Interest expense................................................. (541) (642) --------- --------- Income before income taxes........................................... 26,400 81,778 Provision for income taxes........................................... 9,240 28,623 --------- --------- Net income........................................................... $ 17,160 $ 53,155 ========= ========= Net income per common share.......................................... $ 0.20 $ 0.63 ========= ========= Shares used in calculations of net income per common share...................................... 85,810 84,970 ========= ========= The accompanying notes, together with the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996 are an integral part of the condensed consolidated financial statements.
4 TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Three Months Ended March 30, 1997 March 31, 1996 (In thousands) Cash flows from operating activities: Net income........................................................ $ 17,160 $ 53,155 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation................................................... 14,344 11,999 Amortization................................................... 330 318 Other non-cash items, net...................................... (572) (134) Changes in operating assets and liabilities: Accounts receivable....................................... (14,338) (13,746) Inventories............................................... (10,668) (24,092) Other assets.............................................. 664 (5,642) Accounts payable and accruals............................. (28,313) 1,492 Income taxes payable...................................... 6,297 24,787 ---------- ---------- Net cash provided (used) by operating activities...... (15,096) 48,137 ---------- ---------- Cash flows from investing activities: Additions to property, plant and equipment........................ (11,194) (18,002) Increase in equipment manufactured by the Company................. (860) (4,717) Purchases of available-for-sale marketable securities............. (55,070) Maturities of available-for-sale marketable securities............ 17,513 Purchases of held-to-maturity marketable securities............... (84,983) (93,067) Maturities of held-to-maturity marketable securities.............. 34,501 49,406 ---------- --------- Net cash used in investing activities................. (100,093) (66,380) ---------- --------- Cash flows from financing activities: Payments of long term debt........................................ (420) (489) Acquisition of treasury stock..................................... (15,415) Issuance of common stock under employee stock option and stock purchase plans............................... 21,261 8,160 ---------- --------- Net cash flows provided by financing activities....... 5,426 7,671 ---------- --------- Decrease in cash and cash equivalents.................................. (109,763) (10,572) Cash and cash equivalents at beginning of period....................... 201,452 182,165 ---------- --------- Cash and cash equivalents at end of period............................. $ 91,689 $ 171,593 ========== ========= Supplementary disclosure of cash flow information: Cash paid during the period for: Interest................................................ $ 732 $ 806 Income taxes............................................ 2,409 3,639 The accompanying notes, together with the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1996 are an integral part of the condensed consolidated financial statements.
-5- TERADYNE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) A. The Company - -------------- Teradyne, Inc. (the "Company") designs, manufactures, markets, and services electronic test systems and related software used by component manufacturers in the design and testing of their products and by electronic equipment manufacturers for the design and testing of circuit boards and other assemblies. Manufacturers use such systems and software to increase product performance, to improve product quality, to shorten time to market, to enhance manufacturability, to conserve labor costs, and to increase production yields. The Company's electronic systems are also used by telephone operating companies for the testing and maintenance of their subscriber telephone lines and related equipment. The Company also manufactures backplane connection systems, principally for the computer, telecommunications, and military/aerospace industries. A backplane is a panel that supports the circuit boards in an electronic assembly and carries the wiring that connects the boards to each other and to other elements of a system. B. Accounting Policies - ---------------------- Basis of Presentation --------------------- The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated. Certain prior years' amounts were reclassified to conform to the current year presentation. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. Preparation of Financial Statements ----------------------------------- The accompanying condensed consolidated financial statements are unaudited. However, in the opinion of management, all adjustments (consisting only of normal recurring accrual entries) necessary for a fair presentation of such information have been made. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates. C. Recently Issued Accounting Standard - ---------------------------------------- In February 1997, The Financial Accounting Standards Board issued Statement on Financial Accounting Standards No. 128, Earnings per Share, which specifies the computation, presentation, and disclosure requirements for earnings per share. The statement is effective for periods ending after December 15, 1997, including interim periods. The adoption of this statement will not have a material impact on reported net income per common share. 6 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 30, 1997 March 31, 1996 -------------- -------------- (In thousands) Net sales............................................................ $ 248,302 $ 348,967 ============= ============== Net income........................................................... $ 17,160 $ 53,155 ============= ============== Percentage of net sales: Net sales....................................................... 100% 100% Expenses: Cost of sales.............................................. 62 54 Engineering and development................................ 13 11 Selling and administrative................................. 16 13 Interest, net.............................................. (2) (1) ------------- -------------- 89 77 Income before income taxes...................................... 11 23 Provision for income taxes...................................... 4 8 ------------- -------------- Net income...................................................... 7% 15% ============= ============== Provision for income taxes as a percentage of income before income taxes................................... 35% 35% ============= ============== Results of Operations - --------------------- Sales of $248.3 million in the first quarter of 1997 were $100.7 million or 29% below those of the first quarter of 1996. The incoming order rate weakened in the first three quarters of 1996, due to a slowdown in the semiconductor industry. This order weakness resulted in reductions in net sales beginning in the second quarter of 1996 and continuing through the first quarter of 1997. Sales for the first quarter of 1997 increased 3% over the fourth quarter of 1996. First quarter 1997 semiconductor test system sales and telecommunications test systems sales decreased 42% and 43%, respectively, when compared to the first quarter of 1996. Backplane connection systems increased 30% and circuit-board test systems sales increased 8% over the corresponding period in 1996. As a result of the decrease in sales, income before income taxes decreased $55.4 million to $26.4 million. Incoming orders were $335.6 million in the first quarter of 1997 compared to $305.6 million in the first quarter of 1996. The increase in orders was primarily due to an 11% increase in semiconductor test systems orders. Orders for backplane connection systems and telecommunications test systems also increased while circuit-board test systems declined. The Company's backlog was $603.7 million at the end of the first quarter of 1997 compared with $615.9 million at the end of the first quarter of 1996. Cost of sales, as a percentage of sales, increased from 54% in the first quarter of 1996 to 62% in the first quarter of 1997. The increase was the result of the relationship of fixed manufacturing costs and the costs associated with new product introductions to the lower level of sales. In addition, there was an unfavorable change in mix as a greater percentage of total Company sales were for backplane connection systems and circuit-board test systems, whose product margins are generally lower than semiconductor test systems. 7 Engineering and development expenses, as a percentage of sales, increased from 11% in the first quarter of 1996 to 13% in the first quarter of 1997. Selling and administrative expenses increased to 16% of sales in the first quarter of 1997 compared with 13% of sales in the first quarter of 1996. While the dollar amount of these expenses declined in 1997, the decrease was not proportionate with the decrease in net sales. Interest income increased in the first quarter of 1997 to $5.7 million from $3.8 million in the first quarter of 1996 due to an increase in the Company's average invested balances and interest yields. The Company's effective income tax rate was 35% in the first quarter of 1997 and 1996. The first quarter of 1996 effective tax rate was adjusted downward in subsequent quarters to 33% due to the increased utilization of domestic export sales corporation benefits and certain research and development tax credits. Liquidity and Capital Resources - ------------------------------- The Company's cash, cash equivalents, and marketable securities balance decreased $21.7 million in the first three months of 1997. Contributing to the decrease in cash, cash equivalents, and marketable securities was cash flow used in operations of $15.1 million and the expenditure of $12.1 million to fund additions to property, plant and equipment in the first quarter of 1997. The Company generated $21.3 million from the sale of stock to employees under the Company's stock option and stock purchase plans in the first quarter of 1997. Cash of $15.4 million was used to purchase 0.6 million shares under the Company's buyback program. The Company believes its cash, cash equivalents and marketable securities balance of $409.8 million, together with other sources of funds, including the available borrowing capacity of $120.0 million under its line of credit agreement, will be sufficient to meet working capital and capital expenditure requirements in 1997. Certain Factors That May Affect Future Results - ---------------------------------------------- From time to time, information provided by the Company, statements made by its employees or information included in its filings with the Securities and Exchange Commission (including this Form 10-Q, the Company's Annual Report on Form 10-K, and the Company's Annual Report to Shareholders) may contain statements which are not historical facts, so-called "forward looking statements," which involve risks and uncertainties. In particular, statements in "Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations" relating to the sufficiency of capital to meet working capital and planned capital expenditure requirements may be forward looking statements. The Company's actual future results may differ significantly from those stated in any forward looking statements. Factors that may cause such differences include, but are not limited to, the factors discussed below. Each of these factors, and others, are discussed from time to time in the Company's filings with the Securities and Exchange Commission. The Company's future results are subject to substantial risks and uncertainties. The Company's business and results of operations depend in significant part upon capital expenditures of manufacturers of semiconductors, which in turn depend upon the current and anticipated market demand for semiconductors and products incorporating semiconductors. The semiconductor industry has been highly cyclical with recurring periods of over supply, which often have had a severe effect on the semiconductor industry's demand for test equipment, including systems manufactured and marketed by the Company. The Company believes that the markets for newer generations of semiconductors will also be subject to similar fluctuations. The most recent downturn experienced during 1996 contributed to a 37% decline in semiconductor test systems orders. There can be no assurance that any increase in semiconductor test systems bookings for a calendar quarter will be sustained in subsequent quarters. In addition, any factor adversely affecting the semiconductor industry or particular segments within the semiconductor industry may adversely affect the Company's business, financial condition and operating results. The Company's quarterly and annual operating results are affected by a wide variety of factors that could materially adversely affect revenues and profitability, including: competitive pressures on selling prices; the timing and cancellation of customer orders; changes in product mix; the Company's ability to introduce new products and technologies on a timely basis; introduction of products and technologies by the Company's competitors; market acceptance of the Company's and its competitors' products; potential retrofit costs; the level of orders received which can be shipped in a quarter; and the timing of investments in engineering and development. As a result of the foregoing and other factors, the Company may experience material fluctuations in future operating results on a quarterly or annual basis which could materially and adversely affect its business, financial condition, operating results and stock price.
8
SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TERADYNE, INC. ------------------------ Registrant OWEN W.ROBBINS ------------------------ Owen W. Robbins Executive Vice President May 14, 1997 9
EX-27.0 2 FDS TERADYNE, INC. 3/30/97 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AT MARCH 30, 1997 AND THE CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000097210 TERADYNE, INC. 1,000 U.S. DOLLARS 3-MOS DEC-31-1997 JAN-01-1997 MAR-30-1997 1.00 91,689 106,567 194,704 1,936 151,662 594,211 577,559 308,392 1,096,814 196,413 15,053 10,438 0 0 861,012 1,096,814 248,302 248,302 152,935 227,026 0 0 541 26,400 9,240 17,160 0 0 0 17,160 0.20 0.20
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