-----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, LY7i8wSy12Pa8RKKS/d0/CNTnE90B6psxdJavkIgWQWLSuL+nI4J6am9YdpS+IEr pZIlpC7KhTvZZh63xvbkFQ== 0000097210-98-000004.txt : 19980813 0000097210-98-000004.hdr.sgml : 19980813 ACCESSION NUMBER: 0000097210-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980628 FILED AS OF DATE: 19980812 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: SEC FILE NUMBER: 001-06462 FILM NUMBER: 98682897 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 SECOND 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 June 28, 1998 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 July 26, 1998 was 84,001,649 shares. TERADYNE, INC. INDEX Page No. --------
PART I. FINANCIAL INFORMATION Item 1. Financial Statements: Condensed Consolidated Balance Sheets - June 28, 1998 and December 31, 1997.................................................. 3 Condensed Consolidated Statements of Income - Three and Six Months Ended June 28, 1998 and June 29, 1997........................... 4 Condensed Consolidated Statements of Cash Flows - Six Months Ended June 28, 1998 and June 29, 1997..................................... 5 Notes to Condensed Consolidated Financial Statements...................................... 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................ 8-10 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders....................................... 11
TERADYNE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS June 28, 1998 December 31, 1997 ------------- ----------------- (Unaudited) (In thousands) Current assets: Cash and cash equivalents.................................................... $ 67,308 $ 74,668 Marketable securities........................................................ 23,170 18,693 Accounts receivable.......................................................... 354,963 300,933 Inventories: Parts.................................................................. 201,961 168,385 Assemblies in process.................................................. 146,542 103,972 ------------ ------------ 348,503 272,357 Deferred tax assets.......................................................... 40,530 40,530 Prepayments and other current assets......................................... 27,853 19,902 ------------ ------------ Total current assets................................................... 862,327 727,083 Property, plant, and equipment, at cost:........................................ 798,704 692,832 Less: Accumulated depreciation............................................ (384,997) (349,707) ------------ ------------ Net property, plant, and equipment..................................... 413,707 343,125 Long-term marketable securities................................................. 70,527 156,574 Other assets.................................................................... 23,955 24,892 ------------ ------------ Total assets........................................................... $ 1,370,516 $ 1,251,674 ============ ============ LIABILITIES Current liabilities: Notes payable - banks........................................................ $ 6,133 $ 6,632 Current portion of long-term debt............................................ 1,601 1,807 Accounts payable............................................................. 78,029 58,685 Accrued employees' compensation and withholdings............................. 75,959 77,299 Unearned service revenue and customer advances............................... 58,294 49,122 Other accrued liabilities.................................................... 73,275 65,642 Income taxes payable......................................................... 14,410 18,786 ------------ ------------ Total current liabilities.............................................. 307,701 277,973 Deferred tax liabilities........................................................ 23,429 23,429 Long-term debt.................................................................. 13,046 13,141 ------------ ------------ Total liabilities...................................................... 344,176 314,543 ------------ ------------ SHAREHOLDERS' EQUITY Common stock $0.125 par value; 250,000 shares authorized; 83,998 and 83,303 shares issued and outstanding after deduction of reacquired shares in 1998 and 1997, respectively........................................ 10,499 10,413 Additional paid-in capital...................................................... 323,107 322,985 Retained earnings............................................................... 692,734 603,733 ------------ ------------ Total shareholders' equity............................................. 1,026,340 937,131 ------------ ------------ Total liabilities and shareholders' equity............................. $ 1,370,516 $ 1,251,674 ============ ============ 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, 1997 are an integral part of the condensed consolidated financial statements.
TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For the Three Months Ended For the Six Months Ended -------------------------- ------------------------ (In thousands, except per share amounts) June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997 ------------- ------------- ------------- ------------- Net sales................................... $ 406,236 $ 289,541 $ 837,805 $ 537,843 Expenses: Cost of sales.......................... 246,457 164,648 498,404 317,583 Engineering and development............ 49,164 42,635 98,086 75,943 Selling and administrative............. 57,549 47,449 116,262 88,232 ------------ ------------ ------------ ------------ 353,170 254,732 712,752 481,758 Income from operations...................... 53,066 34,809 125,053 56,085 Other income (expense): Interest income......................... 2,871 5,234 6,344 10,899 Interest expense........................ (266) (565) (513) (1,106) ------------ ------------ ------------ ------------ Income before income taxes.................. 55,671 39,478 130,884 65,878 Provision for income taxes.................. 16,311 14,476 41,883 23,716 ------------ ------------ ------------ ------------ Net income.................................. $ 39,360 $ 25,002 $ 89,001 $ 42,162 ============ ============ ============ ============ Net income per common share - basic......... $ 0.47 $ 0.30 $ 1.06 $ 0.51 ============ ============ ============ ============ Net income per common share - diluted....... $ 0.46 $ 0.29 $ 1.04 $ 0.49 ============ ============ ============ ============ Shares used in calculations of net income per common share - basic................ 83,649 83,494 83,650 83,401 ============ ============ ============ ============ Shares used in calculations of net income per common share - diluted.............. 85,632 86,283 85,780 86,047 ============ ============ ============ ============ 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, 1997 are an integral part of the condensed consolidated financial statements.
TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended ------------------------ June 28, 1998 June 29, 1997 ------------- ------------- (In thousands) Cash flows from operating activities: Net income........................................................ $ 89,001 $ 42,162 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation................................................... 35,973 28,669 Amortization................................................... 427 664 Deferred income taxes.......................................... (55) Other non-cash items, net...................................... (4,382) 355 Changes in operating assets and liabilities: Accounts receivable....................................... (54,030) (72,457) Inventories............................................... (76,146) (44,596) Other assets.............................................. (7,441) (614) Accounts payable and accruals............................. 34,808 (12,598) Income taxes payable...................................... (800) 21,639 ------------ ------------ Net cash provided (used) by operating activities...... 17,410 (36,831) Cash flows from investing activities: Additions to property, plant and equipment........................ (64,938) (34,801) Increase in equipment manufactured by the Company................. (37,198) (5,500) Purchases of available-for-sale marketable securities............. (51,370) (88,420) Maturities of available-for-sale marketable securities............ 152,637 46,927 Purchases of held-to-maturity marketable securities............... (19,697) (111,033) Maturities of held-to-maturity marketable securities.............. 90,916 ------------ ------------ Net cash used by investing activities................. (20,566) (101,911) Cash flows from financing activities: Payments of long term debt........................................ (836) (1,309) Acquisition of treasury stock..................................... (22,256) (45,692) Issuance of common stock under employee stock option and stock purchase plans................................ 18,888 30,770 ------------ ------------ Net cash used by financing activities........... (4,204) (16,231) ------------ ------------ Decrease in cash and cash equivalents.................................. (7,360) (154,973) Cash and cash equivalents at beginning of period....................... 74,668 201,452 ------------ ------------ Cash and cash equivalents at end of period............................. $ 67,308 $ 46,479 ============ ============ Supplementary disclosure of cash flow information: Cash paid during the period for: Interest................................................ $ 590 $ 1,203 Income taxes............................................ 43,101 7,683 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, 1997 are an integral part of the condensed consolidated financial statements.
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 an assembly, into which printed circuit boards are inserted, that provides for the interconnection of electrical signals between the circuit boards and the other elements of the 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. The year-end condensed balance sheet data were derived from audited financial statements, but do 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. TERADYNE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (Unaudited) C. Recently Issued Accounting Standards In June 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 131, "Disclosure about Segments of an Enterprise and Related Information," which changes the manner in which public companies report information about their operating segments. SFAS No. 131, which is based on the management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report entity-wide disclosures about products and services, major customers, and the geographic locations in which the entity holds assets and reports revenue. Management is currently evaluating the effects of this change on its reporting of segment information. The Company will adopt SFAS No. 131 for its fiscal year ending December 31, 1998. In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," which sets forth increased disclosure requirements for public entities. SFAS No. 132 only affects disclosure issues and does not change any existing measurement or recognition provisions previously required. The statement is effective for fiscal years beginning after December 15, 1997. Reclassification for earlier periods is required for comparative purposes. Management is currently evaluating the effects of this change on its reporting of pensions and other postretirement benefits. The Company will adopt SFAS No. 132 for its fiscal year ending December 31, 1998. In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The statement is effective for fiscal years beginning after June 15, 1999. Management is currently evaluating the effects of this change on its recording of derivatives and hedging activities. The Company will adopt SFAS No. 133 for its fiscal year ending December 31, 2000. In March 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-1, "Internal Use Software," which provides guidance on the accounting for the costs of software developed or obtained for internal use. SOP 98-1 is effective for fiscal years beginning after December 15, 1998. Management does not expect the statement to have a material impact on its financial position or results of operations. D. Net Income per Common Share The following table sets forth the computation of basic and diluted net income per common share (in thousands, except per share amounts):
For the Three Months Ended For the Six Months Ended -------------------------- ------------------------ June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997 ------------- ------------- ------------- ------------- Net Income................................................ $ 39,360 $ 25,002 $ 89,001 $ 42,162 ========== ========== ========== ========== Shares used in net income per common share - basic........ 83,649 83,494 83,650 83,401 Effect of dilutive securities:....................... Employee and director stock options.............. 1,713 2,581 1,950 2,507 Employee stock purchase rights................... 270 208 180 139 ---------- ---------- ---------- ---------- Dilutive potential common shares..................... 1,983 2,789 2,130 2,646 ---------- ---------- ---------- ---------- Shares used in net income per common share - diluted...... 85,632 86,283 85,780 86,047 ========== ========== ========== ========== Net income per common share - basic....................... $ 0.47 $ 0.30 $ 1.06 $ 0.51 ========== ========== ========== ========== Net income per common share - diluted..................... $ 0.46 $ 0.29 $ 1.04 $ 0.49 ========== ========== ========== ========== For purposes of computing diluted earnings per share, weighted average common share equivalents do not include stock options with an exercise price that exceeds the average fair market value of the Company's common stock for the period. Options to purchase 3,311,577 and 1,482,354 shares of common stock were outstanding during the three months ended June 28, 1998 and June 29, 1997,respectively, but were not included in the calculation of diluted net income per common share. Options to purchase 1,706,203 and 773,275 shares of common stock were outstanding during the six months ended June 28, 1998 and June 29, 1997,respectively, but were not included in the calculation of diluted net income per common share.
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 For the Six Months Ended -------------------------- ------------------------ June 28, 1998 June 29, 1997 June 28, 1998 June 29, 1997 ------------- ------------- ------------- ------------- (In thousands) (In thousands) Net sales.......................................... $ 406,236 $ 289,541 $ 837,805 $ 537,843 ============ ============ ============ ============ Net income......................................... $ 39,360 $ 25,002 $ 89,001 $ 42,162 ============ ============ ============ ============ Percentage of net sales: Net sales..................................... 100% 100% 100% 100% Expenses: Cost of sales............................. 61 57 59 59 Engineering and development............... 12 15 12 14 Selling and administrative................ 14 16 14 16 Interest, net............................. (1) (2) (1) (2) ------------ ------------ ------------ ------------ 86 86 84 87 Income before income taxes.................... 14 14 16 13 Provision for income taxes.................... 4 5 5 5 ------------ ------------ ------------ ------------ Net income.................................... 10% 9% 11% 8% ============ ============= ============ ============ Provision for income taxes as a percentage of income before taxes........................... 29% 37% 32% 36% ============ ============ ============ ============
Results of Operations - --------------------- Sales of $406.2 million in the second quarter of 1998 were $116.7 million or 40% above those of the second quarter of 1997. The increase in sales was primarily due to a 48% increase in shipments of semiconductor test systems following increased orders in 1997. Sales decreased 6% in the second quarter of 1998 down from a record high in the first quarter. As a result of the increase in sales in the second quarter of 1998 compared to 1997, income before income taxes increased $16.2 million to $55.7 million. For the first six months of 1998, income before income taxes increased $65.0 million to $130.9 million. Incoming orders were $249.8 million, net of $91.0 million in cancellations, in the second quarter of 1998 compared to $357.6 million in the second quarter of 1997. The decrease in orders was primarily driven by a slowing of semiconductor test systems orders which reflects the current industry conditions. Telecommunications test systems orders also declined. Orders for backplane connection systems, circuit-board test systems, and software test increased. The Company expects third quarter of 1998 shipments and net income to decline, from the second quarter of 1998, as a result of the reduction in semiconductor test systems orders. The Company's backlog was $615.1 million at the end of the second quarter of 1998 compared with $671.8 million at the end of the second quarter of 1997. Costs of products sold as a percentage of sales increased from 57% of sales in the second quarter of 1997 to 61% of sales in the second quarter of 1998. The increase was due to higher material and operating costs related to the Company's increased shipment of new semiconductor test systems products. Cost of products sold as a percentage of sales remained at 59% for the first six months of 1998 and 1997. Engineering and development expenses, as a percentage of sales, decreased from 15% of sales in the second quarter of 1997 and 14% of sales in the first six months of 1997 to 12% of sales in the second quarter and first six months of 1998. Engineering and development spending increased $6.5 million in the second quarter of 1998 over the same period in 1997. Included in the second quarter of 1997 was a pre-tax nonrecurring charge of $5.0 million for the purchase of in-process technology related to the acquisition Softbridge, Inc. Engineering and development spending, before the pre-tax nonrecurring charge, grew $11.5 million due primarily to increased investment in new product development of semiconductor and software test systems. Selling and administrative expenses were 14% of sales in the second quarter and first six months of 1998 compared with 16% of sales in the second quarter and first six months of 1997. Selling and administrative expenses increased $10.1 million in the second quarter of 1998 over the same period in 1997 to support increased semiconductor test systems sales. The Company's effective tax rate for the first six months of 1998 decreased to 32% from a 36% effective rate for the first six months of 1997. The Company's effective tax rate is below the statutory rate of 35% due to increased utilization of 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 $88.9 million in the first six months of 1998. The Company generated $17.4 million of cash from operations in the first six months of 1998. The primary source of cash from operations was net income (plus non-cash charges for depreciation) of $125.0 million, which was offset by increases in accounts receivable, inventories and other assets of $54.0 million, $76.1 million and $7.4 million, respectively, negated somewhat by an increase in accounts payable and accrued expenses of $34.8 million. Cash was used to fund additions to property, plant and equipment of $102.1 million in the first six months of 1998. Property, plant and equipment expenditures relate primarily to the expansion of production capacity. The Company purchased 0.6 million shares of the Company's common stock for $22.3 million in the first six months of 1998 under the Company's stock buyback plan. Cash of $18.9 million was generated in the first six months of 1998 from the sale of stock to employees under the Company's stock option and stock purchase plans. The Company believes its cash, cash equivalents and marketable securities balance of $161.0 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 over the next twelve months. 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 of 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, 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. There can be no assurance that any future 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. Also, the Company relies on certain intellectual property protections to preserve its intellectual property rights, including patents, copyrights and trade secrets. While the Company believes that its patents, copyrights and trade secrets have value, in general no single one is in itself essential. The Company believes that its technological position depends primarily on the technical competence and creative ability of its research and development personnel. From time to time the Company is notified that it may be in violation of patents held by others. An assertion of patent infringement against the Company, if successful, could have a material adverse effect on the Company or could require a lengthy and expensive defense which could adversely affect the Company's operating results. The development of new technologies, commercialization of those technologies into products, and market acceptance and customer demand for those products is critical to the Company's success. Successful product development and introduction depends upon a number of factors, including new product selection, development of competitive products by competitors, timely and efficient completion of product design, timely and efficient implementation of manufacturing and assembly processes and product performance at customer locations. The Company faces substantial competition throughout the world, primarily from electronic test systems manufacturers located in the United States, Europe and Japan, as well as internal test equipment groups at several of the Company's customers. Some of these competitors have substantially greater financial and other resources to pursue engineering, manufacturing, marketing and distribution of their products. Certain of the Company's competitors have introduced or announced new products with certain performance characteristics which may be considered equal or superior to those currently offered by the Company. The Company expects its competitors to continue to improve the performance of their current products and to introduce new products or new technologies that provide improved cost of ownership and performance characteristics. New product introductions by competitors could cause a decline in sales or loss of market acceptance of the Company's existing products. Moreover, increased competitive pressure could lead to intensified price based competition, which could materially adversely affect the Company's business, financial condition and results of operations. The Company derives a significant portion of its total revenue from customers outside the United States. International sales are subject to significant risks, including unexpected changes in legal and regulatory requirements and policy changes affecting the Company's markets, changes in tariffs, exchange rates and other barriers, political and economic instability, difficulties in accounts receivable collection, difficulties in managing distributors and representatives, difficulties in staffing and managing international operations, difficulties in protecting the Company's intellectual property and potentially adverse tax consequences. In the recent past there has been significant economic instability in several countries in Asia. Continued economic instability would increase the likelihood of either a direct or indirect adverse impact on the Company's future 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; fulfilling backlog on a timely basis; reliance on sole source suppliers; potential retrofit costs; the level of orders received which can be shipped in a quarter; and the timing of investments in engineering and development. In particular, the Company has introduced a significant number of new, complex test systems in 1996 and 1997, and there can be no assurance that the Company will not experience delays in shipment of such products or that such products will achieve customer acceptance. 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. Many computer systems experience problems handling dates beyond the year 1999. Therefore, some computer hardware and software will need to be modified prior to the year 2000 in order to remain functional. The Company is assessing both the internal readiness of its computer systems and the compliance of its computer products and software sold to customers for handling the year 2000. The Company expects to implement successfully the systems and programming changes necessary to address year 2000 issues, and does not believe that the cost of such actions will have a material effect on the Company's results of operations or financial condition. There can be no assurance, however, that there will not be a delay in, or increased costs associated with, the implementation of such changes, and the Company's inability to implement such changes could have an adverse effect on future results of operations. Item 4. Submission of Matters to a Vote of Security Holders The annual meeting of security holders of the Company was held May 21, 1998. The following were elected as Directors:
Total Vote Total Vote Withheld Nominee For Each Nominee For Each Nominee - ------- ---------------- ------------------- John P. Mulroney 70,218,437 459,880 Owen W. Robbins 70,212,586 465,731 Richard J. Testa 69,750,740 927,577 Patricia S. Wolpert 70,221,142 457,175 The term of office for the following directors continued after the meeting: Alexander V. d'Arbeloff, George W. Chamillard, James W. Bagley, Albert Carnesale, Daniel S. Gregory, Dwight H. Hibbard, Vincent O'Reilly, and James A. Prestridge.
In addition, the following proposals were approved: (A) an amendment to the 1996 Employee Stock Purchase Plan, to increase the aggregate number of shares of Common Stock which may be issued by 2,000,000, was approved, with 68,963,451 shares voting in favor, 1,571,919 shares voting against, and 142,947 shares abstaining. (B) to ratify the selection of the firm Coopers & Lybrand L.L.P. as auditors for the fiscal year ending December 31, 1998, with 70,415,646 shares voting in favor, 220,666 shares voting against, and 42,005 shares abstaining. 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 /s/ JEFFREY R. HOTCHKISS ------------------------- Jeffrey R. Hotchkiss Vice President and Chief Financial Officer August 12, 1998 EX-27 2 FDS TERADYNE, INC. 06/28/98 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 28, 1998 AND THE CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 28, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERNECE TO SUCH FINANCIAL STATEMENTS. 0000097210 TERADYNE, INC. 1,000 U.S. DOLLARS 6-MOS DEC-31-1998 JAN-01-1998 JUN-28-1998 1.00 67,308 23,170 356,975 2,012 348,503 862,327 798,704 384,997 1,370,516 307,701 13,046 10,499 0 0 1,015,841 1,370,516 837,805 837,805 498,404 712,752 0 0 513 130,884 41,883 89,001 0 0 0 89,001 1.06 1.04
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