10-Q

UNITED STATES

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 April 5, 2009

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. 001-06462

TERADYNE, INC.

(Exact name of registrant as specified in its charter)

Massachusetts	04-2272148
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
600 Riverpark Drive, North Reading, Massachusetts	01864
(Address of Principal Executive Offices)	(Zip Code)

978-370-2700

(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  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the proceeding 12 months (or for such shorter period that the registrant was required to submit and post such files)    Yes  ¨    No  ¨

* The registrant has not yet been phased into the interactive data requirements

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨    Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares outstanding of the registrant’s only class of Common Stock as of May 11, 2009 was 173,107,305 shares.

TERADYNE, INC.

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets as of April 5, 2009 and December 31, 2008	3
	Condensed Consolidated Statements of Operations for the Three Months Ended April 5, 2009 and March 30, 2008	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 5, 2009 and March 30, 2008	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29
Item 4.	Controls and Procedures	29
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	32

2

PART I

Item 1: Financial Statements

TERADYNE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	April 5, 2009			December 31, 2008
	(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	279,057		$	322,705
Accounts receivable, net of allowance for doubtful accounts of $4,666 and $4,712 at April 5, 2009 and December 31, 2008, respectively		67,259			109,625
Inventories:
Parts		79,392			89,140
Assemblies in process		77,931			65,818
Finished goods		8,026			13,493
		165,349			168,451
Deferred tax assets		17,120			16,988
Warrant receivable		42,956			—
Prepayments and other current assets		61,401			60,884
Total current assets		633,142			678,653
Property, plant, and equipment, at cost		785,346			782,774
Less: accumulated depreciation		502,498			484,325
Net property, plant, and equipment		282,848			298,449
Marketable securities		41,668			51,613
Intangible assets, net		178,759			186,998
Other assets		17,974			19,534
Total assets	$	1,154,391		$	1,235,247
LIABILITIES
Current liabilities:
Accounts payable	$	35,510		$	61,164
Current debt		124,514			122,500
Accrued employees’ compensation and withholdings		59,742			73,521
Deferred revenue and customer advances		54,689			58,030
Convertible note hedge payable		64,616			—
Other accrued liabilities		44,183			51,748
Total current liabilities		383,254			366,963
Retirement plans liabilities		132,012			125,877
Deferred tax liabilities		5,203			8,730
Long-term other accrued liabilities		25,547			27,565
Long-term debt		8,056			—
Total liabilities		554,072			529,135
Commitments and contingencies (Note M)
SHAREHOLDERS’ EQUITY
Common stock, $0.125 par value, 1,000,000 shares authorized, 172,545 shares and 169,651 shares issued and outstanding at April 5, 2009 and December 31, 2008, respectively		21,568			21,206
Additional paid-in capital		1,114,234			1,124,390
Accumulated other comprehensive loss		(153,439	)		(148,108	)
Accumulated deficit		(382,044	)		(291,376	)
Total shareholders’ equity		600,319			706,112
Total liabilities and shareholders’ equity	$	1,154,391		$	1,235,247

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s

Annual Report on Form 10-K for the year ended December 31, 2008, are an integral part of the condensed

consolidated financial statements.

3

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended
	April 5, 2009			March 30, 2008
	(in thousands, except per share data)
Net revenues:
Products	$	64,735		$	232,991
Services		55,873			64,324
Total net revenues		120,608			297,315
Cost of revenues:
Cost of products		56,160			118,307
Cost of services		31,088			40,505
Total cost of revenues		87,248			158,812
Gross profit		33,360			138,503
Operating expenses:
Engineering and development		47,198			55,149
Selling and administrative		55,373			65,221
Acquired intangible asset amortization		8,239			3,863
In-process research and development		—			1,100
Restructuring and other, net		15,965			11,785
Total operating expenses		126,775			137,118
(Loss) income from operations		(93,415	)		1,385
Interest income		777			4,612
Interest expense and other		(5,830	)		470
(Loss) income before income taxes		(98,468	)		6,467
Income tax (benefit) provision		(7,800	)		4,100
Net (loss) income	$	(90,668	)	$	2,367
Net (loss) income per common share:
Basic	$	(0.53	)	$	0.01
Diluted	$	(0.53	)	$	0.01
Weighted average common share—basic		172,130			173,762
Weighted average common share—diluted		172,130			175,722

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2008, 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
	April 5, 2009			March 30, 2008
	(in thousands)
Cash flows from operating activities:
Net (loss) income	$	(90,668	)	$	2,367
Adjustments to reconcile net (loss) income to net cash (used for) provided by operating activities:
Depreciation		15,395			19,069
Amortization		10,098			4,361
Provision for excess and obsolete inventory		8,597			1,348
Stock-based compensation		6,077			5,155
Loss on sale and impairment of marketable securities		2,563			—
Non-cash charge for the sale of inventories revalued at the date of acquisition		1,238			4,346
In-process research and development charge		—			1,100
Other		(3,241	)		(599	)
Changes in operating assets and liabilities, net of businesses acquired:
Accounts receivable		42,412			15,040
Inventories		(4,140	)		78
Other assets		(7,621	)		(9,454	)
Accounts payable, deferred revenue and accrued expenses		(44,311	)		287
Retirement plan contributions		(1,604	)		(1,104	)
Accrued income taxes		—			(7,573	)
Net cash (used for) provided by operating activities		(65,205	)		34,421
Cash flows from investing activities:
Investments in property, plant and equipment		(6,087	)		(28,984	)
Proceeds from life insurance		1,076			—
Proceeds from sales and maturities of available-for-sale marketable securities		9,045			60,530
Acquisition of businesses, net of cash acquired		—			(280,463	)
Net cash provided by (used for) investing activities		4,034			(248,917	)
Cash flows from financing activities:
Proceeds from long-term debt		10,070			—
Issuance of common stock under employee stock option and stock purchase plans		7,453			8,182
Repurchase of common stock		—			(32,977	)
Net cash provided by (used for) financing activities		17,523			(24,795	)
Decrease in cash and cash equivalents		(43,648	)		(239,291	)
Cash and cash equivalents at beginning of period		322,705			562,371
Cash and cash equivalents at end of period	$	279,057		$	323,080

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2008, are an integral part of the condensed consolidated financial statements.

5

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A. The Company

Teradyne, Inc. is a leading global supplier of automatic test equipment.

Teradyne’s automatic test equipment products and services include:

• semiconductor test (“Semiconductor Test”) systems and

• military/aerospace test (“Mil/Aero”) instrumentation and systems, circuit-board test and inspection (“Commercial Board Test”) systems, automotive diagnostic and test (“Diagnostic Solutions”) systems and hard disk drive test (“HDD”) systems, collectively these products represent “Systems Test Group”.

Statements in this Quarterly Report on Form 10-Q which are not historical facts, so called “forward looking statements,” are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward looking statements involve risks and uncertainties, including those detailed in Teradyne’s filings with the Securities and Exchange Commission (the “SEC”). See also “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Certain Factors That May Affect Future Results” and Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2008.

B. Accounting Policies

Basis of Presentation

The condensed consolidated interim financial statements include the accounts of Teradyne and its subsidiaries. All significant intercompany balances and transactions have been eliminated. These interim financial statements are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of such interim financial statements. Certain prior years’ amounts were reclassified to conform to the current year presentation. The December 31, 2008 condensed consolidated balance sheet data were derived from audited financial statements, but do not include all disclosures required by generally accepted accounting principles.

The accompanying financial information should be read in conjunction with the consolidated financial statements and notes thereto contained in Teradyne’s Annual Report on Form 10-K, filed with the SEC on March 2, 2009 for the year ended December 31, 2008.

Preparation of Financial Statements

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates.

C. Recently Issued Accounting Pronouncements

In December 2008, the Financial Accounting Standards Board issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets,” (FSP FAS 132(R)-1), which amends SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” This guidance is intended to ensure that an employer meets the objectives of the disclosures about plan assets in an employer’s defined benefit pension or other postretirement plan to provide users of financial statements with an understanding of the following: how investment allocation decisions are made; the major categories of plan assets; the inputs and valuation techniques used to measure the fair value of plan assets; the effect of fair value

6

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

measurements using significant unobservable inputs on changes in plan assets; and significant concentrations of risk within plan assets. FSP FAS 132(R)-1 becomes effective for Teradyne on December 31, 2009. As FSP FAS 132(R)-1 only requires enhanced disclosures, Teradyne has determined that the adoption of FSP FAS 132(R)-1 will not have an impact on its financial position or results of operations.

In April 2009, the FASB issued three FASB Staff Positions (“FSPs”) in order to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities. These FSPs shall be effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ended after March 15, 2009.

FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. Teradyne is currently evaluating this new FSP but does not believe that it will have a significant impact on its financial position or results of operations.

FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments.” This FSP is intended to bring consistency to the timing of impairment recognition, and provide improved disclosures about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. The FSP also requires increased and more timely disclosures regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. Teradyne is currently evaluating this new FSP but does not believe that it will have a significant impact on its financial position or results of operations.

FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments.” This FSP relates to fair value disclosures for financial instruments that are not currently reflected on the balance sheet at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year. The FSP now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. Teradyne is currently evaluating the disclosure requirements.

D. Financial Instruments and Derivatives

Financial Instruments

Teradyne uses the market and income approaches to value its financial instruments and there were no changes in valuation techniques during the quarter ended April 5, 2009. SFAS No. 157, “Fair Value Measurements” requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reported date. For example, a common approach for valuing fixed income securities is the use of matrix pricing. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices, and therefore is considered a Level 2 input.

7

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Level 3: Unobservable inputs that are not corroborated by market data. Unobservable inputs are developed based on the best information available, which might include Teradyne’s own data.

Teradyne has elected fair value treatment for the right (“UBS Put”) to sell its auction rate securities back to UBS, under SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities.”

The following table sets forth by fair value hierarchy Teradyne’s financial assets and liabilities that were measured at fair value on a recurring basis as of April 5, 2009 and December 31, 2008. The UBS Put is included in other assets.

	April 5, 2009
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Long-term marketable securities	$	5,853	$	10,294	$	25,521	$	41,668
UBS Put		—		—		3,277		3,277
Derivatives		—		324		—		324
Total	$	5,853	$	10,618	$	28,798	$	45,269
	December 31, 2008
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Long-term marketable securities	$	6,192	$	19,453	$	25,968	$	51,613
UBS Put		—		—		3,330		3,330
Total	$	6,192	$	19,453	$	29,298	$	54,943
Liabilities:
Derivatives	$	—	$	767	$	—	$	767
Total	$	—	$	767	$	—	$	767

Changes in the fair value of Level 3 financial assets for the quarter ended April 5, 2009, were as follows. Teradyne had no Level 3 financial assets for the quarter ended March 30, 2008.

	Level 3 Financial Assets
	Long-Term Auction Rate Securities			UBS Put
	(in thousands)
Balance at December 31, 2008	$	25,968		$	3,330
Change in unrealized loss included in interest expense and other		(447	)		(53	)
Balance at April 5, 2009	$	25,521		$	3,277

On a quarterly basis Teradyne reviews its investments to identify and evaluate those that have an indication of a potential other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include:

• The length of time and the extent to which the market value has been less than cost;

• The financial condition and near-term prospects of the issuer; and

• The intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value.

8

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Teradyne has determined that it does not intend to hold certain marketable securities for a period of time sufficient to allow for recovery in market value and recognized an other-than-temporary impairment loss in the amount of $0.2 million, in the quarter ended April 5, 2009, primarily related to mortgage and asset backed debt securities. During the quarter ended April 5, 2009, Teradyne also recorded a loss of $0.5 million for the decrease in the auction rate securities fair value and $1.9 million of realized losses from sales of marketable securities. Other-than-temporary impairment losses, decreases in auction rate securities fair value and realized losses from sale of marketable securities are included in interest expense and other, net.

Derivatives

In March of 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). SFAS 161 requires entities to provide enhanced disclosure about how and why the entity uses derivative instruments, how the instruments and related hedged items are accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (SFAS 133) and how the instruments and related hedged items affect the financial position, results of operations, and cash flows of the entity. Teradyne adopted SFAS 161 during the quarter ended April 5, 2009.

Teradyne conducts business in a number of foreign countries, with certain transactions denominated in local currencies. The purpose of Teradyne’s foreign currency management is to minimize the effect of exchange rate fluctuations on certain foreign denominated net monetary assets and anticipated cash flows. The terms of currency instruments used for hedging purposes are consistent with the timing of the transactions being hedged. Teradyne does not use derivative financial instruments for trading or speculative purposes.

To minimize the effect of exchange rate fluctuations associated with the remeasurement of net monetary assets denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings, and is used to offset the change in fair value of the net monetary assets denominated in foreign currencies.

The notional amount of foreign exchange contracts hedging foreign currency transactions was $61.5 million and $100.0 million at April 5, 2009 and December 31, 2008, respectively.

The following table summarizes the fair value of derivative instruments as of April 5, 2009.

	Liability Derivatives
	Balance Sheet Location	April 5, 2009
	(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other accrued liabilities	$	324
Total derivatives		$	324

9

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the effect of derivative instruments in the statement of operations recognized during the three months ended April 5, 2009. The table does not reflect the corresponding gain (loss) from the hedged balance sheet.

	Location of Gains (Losses) Recognized in Statement of Operations	For the Three Months Ended
		April 5, 2009
	(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Interest expense and other, net	$	(1,960	)
Total derivatives		$	(1,960	)

See Debt footnote E regarding derivatives related to convertible senior notes.

E. Debt

Revolving Credit Facility

On April 5, 2009 and December 31, 2008, Teradyne had $122.5 million outstanding under its revolving credit facility. Of the outstanding balance, $100 million would have been due on May 14, 2009 and $22.5 million would have been due on June 23, 2009. The weighted average interest rate on the outstanding amount was 5.4% at April 5, 2009 and December 31, 2008. As of April 5, 2009, Teradyne was in compliance with all financial covenants set forth in the revolving credit facility agreement. See Subsequent Events footnote O regarding the termination of the revolving credit facility.

Loan Agreement

On March 31, 2009, Teradyne K. K., Teradyne’s wholly-owned subsidiary in Japan, entered into a loan agreement with a local bank in Japan to borrow approximately $10 million. The loan has a term of 5 years and a fixed interest rate of 1.4%. Approximately $6 million of the loan is collateralized by a real estate mortgage on Teradyne K.K.’s building and land in Kumamoto, Japan and approximately $4 million is unsecured. Teradyne, Inc. has guaranteed payment of the loan obligation. The loan is amortized over the term of the loan with semiannual principal payments of approximately $1 million payable on September 30 and March 30 each year. At April 5, 2009, approximately $2 million of the outstanding loan principal is included in current debt and approximately $8 million is classified as long–term debt.

Convertible Senior Notes

On March 31, 2009, Teradyne entered into an underwriting agreement regarding a public offering of $175 million aggregate principal amount of 4.50% convertible senior notes due March 15, 2014 (the “Notes”). On April 1, 2009, the underwriters exercised their option to purchase an additional $15 million aggregate principal amount of the Notes for a total aggregate principal amount of $190 million. The Notes bear interest at a rate of 4.50% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2009. The Notes will mature on March 15, 2014, unless earlier repurchased by Teradyne or converted. The Notes will be convertible, under certain circumstances and during certain periods, at an initial conversion rate of approximately 182.65 shares of Teradyne’s common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $5.48, a 25% conversion

10

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

premium based on the last reported sale price of $4.38 per share of Teradyne’s common stock on March 31, 2009. The conversion rate is subject to adjustment in certain circumstances. Upon conversion, holders will receive, at Teradyne’s option, shares of Teradyne common stock, cash or a combination of cash and shares of Teradyne common stock, subject to Teradyne’s option to irrevocably elect to settle all future conversions in cash up to the principal amount of the Notes and shares of common stock for any excess.

Teradyne may not redeem the Notes prior to their maturity. Holders of the Notes may require Teradyne to purchase all or a portion of their Notes at a price equal to 100% of the principal amount of the Notes to be purchased, plus accrued and unpaid interest, in cash, upon the occurrence of certain fundamental changes involving Teradyne.

Concurrently with the offering of the Notes, Teradyne entered into a convertible note hedge transaction with a strike price equal to the initial conversion price of the Notes, or approximately $5.48. The convertible note hedge allows Teradyne to receive shares of its common stock and/or cash related to the excess conversion value that it would pay to the holders of the Notes upon conversion. The convertible note hedges will cover, subject to customary antidilution adjustments, approximately 34,703,196 shares of Teradyne’s common stock. Teradyne will pay approximately $64.6 million for the convertible note hedges and has recorded this amount as a convertible note hedge payable and a decrease to additional paid-in capital on the April 5, 2009 balance sheet.

Separately, Teradyne entered into a warrant transaction with a strike price of approximately $7.67 per share, which is 75% higher than the closing price of Teradyne’s common stock on March 31, 2009. The warrants will be net share settled and will cover, subject to customary antidilution adjustments, approximately 34,703,196 shares of Teradyne’s common stock. Teradyne will receive approximately $43.0 million for the warrant and has recorded this amount as a warrant receivable and an increase to additional paid-in capital on the April 5, 2009 balance sheet.

See Subsequent Events footnote O regarding the closing of the Notes offering and related convertible note hedge and warrant transactions.

F. Product Warranty

Teradyne generally provides a one-year warranty on its products commencing upon installation or shipment. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. Related costs are charged to the warranty accrual as incurred. The balance below is included in other accrued liabilities.

	For the Three Months Ended
	April 5, 2009			March 30, 2008
	(in thousands)
Balance at beginning of period	$	8,372		$	9,340
Acquisition		—			492
Accruals for warranties issued during the period		612			4,207
Settlements made during the period		(2,971	)		(4,106	)
Balance at end of period	$	6,013		$	9,933

11

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

When Teradyne receives revenue for extended warranties beyond one year, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. The balance below is included in long-term other accrued liabilities.

	For the Three Months Ended
	April 5, 2009			March 30, 2008
	(in thousands)
Balance at beginning of period	$	6,369		$	6,610
Deferral of new extended warranty revenue		277			1,194
Recognition of extended warranty deferred revenue		(1,329	)		(1,192	)
Balance at end of period	$	5,317		$	6,612

G. Stock-Based Compensation

During the three months ended April 5, 2009, Teradyne granted service based restricted stock units to employees and service based restricted stock units and stock options to executives. The total number of restricted stock units granted was 3.9 million at the weighted average grant date fair value of $4.81. The total number of stock options granted was 1.0 million at the weighted average grant date fair value of $1.91. Restricted stock units awards and stock options vest in equal installments over four years. Stock options have a term of seven years from the date of grant.

The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:

	For the Three Months Ended
	April 5, 2009
Expected life (years)	4.75
Interest rate	1.6	%
Volatility-historical	44.6	%
Dividend yield	0.0	%

During the three months ended March 30, 2008, Teradyne granted restricted stock units to employees, executives and directors. The total number of shares granted was 2.9 million at the weighted average grant date fair value of $10.51. Service based awards granted to employees and executives vest in equal installments over four years. Awards granted to non-employee directors vest on the first anniversary of the grant date. A significant number of awards granted to executive officers were performance-based restricted stock units; however, the performance criteria were not met and the performance-based restricted stock units were forfeited.

12

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

H. Other Comprehensive Loss

Other comprehensive loss is calculated as follows:

	For the Three Months Ended
	April 5, 2009			March 30, 2008
	(in thousands)
Net (loss) income	$	(90,668	)	$	2,367
Foreign currency translation adjustments		379			(822	)
Change in unrealized loss on marketable securities, net of applicable tax of $0		1,695			(2,454	)
Retirement plans net (loss) gain, net of applicable tax of $219		(7,863	)		345
Retirement plans prior service benefit, net of applicable tax of $0		458			153
Other comprehensive loss	$	(95,999	)	$	(411	)

I. Intangible Assets

Amortizable intangible assets consist of the following and are included in intangible and other assets on the balance sheet:

	April 5, 2009
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	122,393	$	32,946	$	89,447	6.1 years
Customer relationships and service and software maintenance contracts		92,279		13,830		78,449	8.6 years
Trade names and trademarks		15,000		4,137		10,863	11.5 years
Total intangible assets	$	229,672	$	50,913	$	178,759	7.5 years
	December 31, 2008
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	122,393	$	27,889	$	94,504	6.1 years
Customer relationships and service and software maintenance contracts		92,279		11,001		81,278	8.6 years
Tradenames and trademarks		15,000		3,784		11,216	11.5 years
Total intangible assets	$	229,672	$	42,674	$	186,998	7.6 years

13

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Aggregate intangible asset amortization expense was $8.2 million and $3.9 million for the three months ended April 5, 2009 and March 30, 2008, respectively. Estimated intangible asset amortization expense for each of the five succeeding fiscal years is as follows:

Year	Amount (in thousands)
2009 (remainder)	$	24,167
2010		29,717
2011		28,259
2012		26,132
2013		25,066

During the three months ended April 5, 2009, there were no events or changes in circumstances indicating that the carrying amounts of Teradyne’s long-lived assets may not be recoverable.

J. Net (Loss) Income per Common Share

The following table sets forth the computation of basic and diluted net (loss) income per common share:

	For the Three Months Ended
	April 5, 2009			March 30, 2008
	(in thousands, except per share amounts)
Net (loss) income	$	(90,668	)	$	2,367
Shares used in net (loss) income per common share—basic		172,130			173,762
Effect of dilutive potential common shares:
Employee and director stock options		—			1,178
Restricted stock units		—			730
Employee stock purchase rights		—			52
Warrants		—			—
Dilutive potential common shares		—			1,960
Shares used in net (loss) income per common share—diluted		172,130			175,722
Net (loss) income per common share—basic	$	(0.53	)	$	0.01
Net (loss) income per common share—diluted	$	(0.53	)	$	0.01

The computation of diluted net loss per common share for the three months ended April 5, 2009 excludes all outstanding stock options, restricted stock units and warrants because Teradyne had a net loss.

The computation of diluted net income per common share for the three months ended March 30, 2008 excludes the effect of the potential exercise of options to purchase approximately 16.9 million shares and restricted stock units of 1.8 million shares because the effect would have been anti-dilutive.

K. Restructuring and Other, Net

The tables below represent activity related to restructuring and other, net, in the three months ended April 5, 2009. The accrual for severance and benefits is reflected in accrued employees’ compensation and withholdings. All remaining severance and benefits will be paid by the end of the fourth quarter of 2009. The accrual for lease payments on vacated facilities is reflected in other accrued liabilities and other long-term accrued liabilities and is expected to be paid out over the lease terms, the latest of which expires in 2012. Teradyne expects to pay out approximately $2.4 million against the lease accruals over the next twelve months. Teradyne’s future lease commitments are net of expected sublease income of $6.8 million as of April 5, 2009.

14

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2009 Activities

	Severance and Benefits			Other			Total
	(in thousands)
Balance at December 31, 2008	$	—		$	—		$	—
Charges (credits)		16,332			(713	)		15,619
Cash payments		(4,528	)		—			(4,528	)
Other		—			713			713
Balance at April 5, 2009	$	11,804		$	—		$	11,804

During the three months ended April 5, 2009, Teradyne recorded the following 2009 restructuring activities:

• $16.3 million of severance charges related to headcount reductions of approximately 500 people across both segments; and

• ($0.7) million of credits related to finalization of certain Eagle Test purchase accounting items.

2008 Activities

	Facility Related			Severance and Benefits			Total
	(in thousands)
Balance at December 31, 2008	$	831		$	5,342		$	6,173
Charges		—			346			346
Cash payments		(10	)		(4,672	)		(4,682	)
Balance at April 5, 2009	$	821		$	1,016		$	1,837

Pre-2008 Activities

	Facility Related			Severance and Benefits			Total
	(in thousands)
Balance at December 31, 2008	$	8,472		$	81		$	8,553
Cash payments		(502	)		(56	)		(558	)
Balance at April 5, 2009	$	7,970		$	25		$	7,995

L. Retirement Plans

Defined Benefit Pension Plans

Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to the plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of the plans consist primarily of equity and fixed income securities. In addition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act and the Internal Revenue Code, as well as unfunded foreign plans.

15

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Components of net periodic pension cost for all plans for the three months ended April 5, 2009 and March 30, 2008 are as follows:

	For the Three Months Ended
	April 5, 2009			March 30, 2008
	(in thousands)
Service cost	$	1,118		$	1,383
Interest cost		4,488			4,438
Expected return on plan assets		(4,870	)		(5,178	)
Amortization of unrecognized:
Prior service cost		207			292
Net loss		1,074			367
Curtailment gain		(111	)		—
Total net periodic pension cost	$	1,906		$	1,302

In the three months ended April 5, 2009, Teradyne contributed $0.9 million, primarily, to its foreign pension plans.

Postretirement Benefit Plans

In addition to receiving pension benefits, Teradyne’s U.S. employees who meet specific retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes death benefits, and medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees.

Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits, and the existing benefit obligation relates primarily to those employees.

Components of net periodic postretirement cost are as follows:

	For the Three Months Ended
	April 5, 2009			March 30, 2008
	(in thousands)
Service cost	$	40		$	62
Interest cost		278			323
Amortization of unrecognized:
Prior service cost		(58	)		(59	)
Net loss		55			53
Total net periodic postretirement cost	$	315		$	379

In the three months ended April 5, 2009, Teradyne contributed $0.7 million to its postretirement benefit plan.

16

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

M. Commitments and Contingencies

Legal Claims

On July 11, 2008, Xyratex Technology, Ltd (“Xyratex”) filed a complaint against Teradyne in the United States District Court in Los Angeles, California alleging that certain of Teradyne disk drive test products infringe one of Xyratex’s patents. The complaint was served on Teradyne on October 29, 2008. The suit seeks temporary, preliminary and permanent injunctive relief as well as unspecified monetary damages, including treble damages, for patent infringement. On December 17, 2008, Teradyne filed an answer and counterclaims, denying that Teradyne’s disk drive test products infringe the asserted Xyratex patent and asking the court to declare such patent invalid. The case is currently in the discovery phase and trial is scheduled to begin in November 2009. On April 14, 2009, Teradyne filed a separate complaint in the United States District Court in Los Angeles alleging that Xyratex’s disk drive test products infringe two of Teradyne’s patents. Teradyne intends to vigorously defend against the Xyratex claim and to vigorously pursue its claims against Xyratex.

On September 5, 2001, after Teradyne’s August 2000 acquisition of Herco Technology Corp. and Perception Laminates, Inc., the former owners of those companies filed a complaint against Teradyne and two of Teradyne’s then executive officers in the United States District Court in San Diego, California, asserting securities fraud and breach of contract related to the acquisition. The District Court dismissed certain of the plaintiffs’ claims, granted partial summary judgment against them with respect to their breach of contract claim and denied their motion for reconsideration. In July 2007, after an appeal by the plaintiffs, the U.S. Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the District Court rulings. Teradyne petitioned the Ninth Circuit for rehearing, which was denied, and the case was remanded back to the District Court. On August 29, 2008, the District Court granted Teradyne’s motion for judgment on the pleadings. On September 11, 2008, the plaintiffs filed their notice of appeal. No hearing date has been scheduled for the appeal.

In 2001, Teradyne was designated as a Potentially Responsible Party (“PRP”) at a clean-up site in Los Angeles, California. This claim arose out of Teradyne’s acquisition of Perception Laminates in August 2000. Prior to that date, Perception Laminates had itself acquired certain assets of Alco Industries Inc. under an asset purchase agreement in 1992. Neither Teradyne nor Perception Laminates have ever conducted any operations at the Los Angeles site. Teradyne has asked the State of California to drop the PRP designation, but California has not yet agreed to do so.

In November 2008, Teradyne received a general notice letter from the California Department of Toxic Substances Control (“DTSC”) that informed it of potential liability with respect to contamination at the BKK Corporation Landfill Facility Site in West Covina, California. Similar to the PRP claim discussed above, this claim arose out of Teradyne’s acquisition of Perception Laminates in August 2000. Neither Teradyne nor Perception Laminates have ever conducted any operations at the West Covina site. Teradyne has asked the DTSC and the group of settling defendants to remove it as a PRP for this site.

Teradyne believes that it has meritorious defenses against the above unsettled claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of the unsettled claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions are unlikely to have a material adverse effect on its consolidated financial position, but could possibly be material to its consolidated results of operations and of cash flows of any one period.

N. Segment Information

Teradyne’s two reportable segments are Semiconductor Test and Systems Test Group. The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test

17

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

products and services. The Systems Test Group segment includes operations related to the design, manufacturing and marketing of products and services for: military/aerospace instrumentation test, circuit-board test and inspection, hard disk drive test and automotive diagnostic and test.

Teradyne evaluates performance based on several factors, of which the primary financial measure is business segment income before income taxes. The accounting policies of the business segments are the same as those described in Note B: “Accounting Policies” in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2008.

	Semiconductor Test			Systems Test Group			Corporate and Eliminations			Consolidated
	(in thousands)
Three months ended April 5, 2009:
Net revenues	$	78,527		$	42,081		$	—		$	120,608
Loss before income taxes(1)(2)		(86,942	)		(5,396	)		(6,130	)		(98,468	)
Three months ended March 30, 2008:
Net revenues	$	247,663		$	49,652		$	—		$	297,315
Income (loss) before income taxes(1)(2)		4,559			(2,709	)		4,617			6,467

(1) Interest income and interest expense and other included in Corporate and Eliminations.

(2) Included in the income before income taxes for each of the segments are charges for the three months ended April 5, 2009 and March 30, 2008 that include restructuring and other, net, in-process research and development charges, inventory step-up amortization and provision for excess and obsolete inventory, as follows:

Included in the Semiconductor Test segment are charges for the following:

	For the Three Months Ended
	April 5, 2009		March 30, 2008
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	5,630	$	1,155
Cost of revenues—inventory step-up		1,238	$	4,346
Restructuring and other, net		13,347		10,132
In-process research and development		—		1,100
Total	$	20,215	$	16,733

Included in the Systems Test Group are charges for the following:

	For the Three Months Ended
	April 5, 2009		March 30, 2008
	(in thousands)
Cost of revenues— provision for excess and obsolete inventory	$	2,967	$	193
Restructuring and other, net		1,977		1,434
Total	$	4,944	$	1,627

18

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Included in the Corporate and Eliminations segment are charges for the following:

	For the Three Months Ended
	April 5, 2009		March 30, 2008
	(in thousands)
Restructuring and other, net	$	641	$	219
Interest expense and other		2,562		—
Total	$	3,203	$	219

O. Subsequent Events

On April 6, 2009, Teradyne completed its registered underwritten public offering of $190 million aggregate principal amount of its 4.50% convertible senior notes due 2014 pursuant to an underwriting agreement, dated March 31, 2009, and settled the related convertible bond hedge and warrant transactions. On April 6, 2009, Teradyne received net proceeds of approximately $163 million as a result of these financing transactions.

On April 7, 2009, Teradyne terminated its revolving credit facility agreement. Teradyne used approximately $123.3 million of the net proceeds of the financing transactions to repay $122.5 million of principal and $0.8 million of accrued interest outstanding under the revolving credit facility agreement. Teradyne has also written off the remaining revolving credit facility debt issue costs of approximately $2.5 million.

On April 15, 2009, as part of its ongoing efforts to lower expenses and cost structure in light of the industry wide continued decline in orders for semiconductor production equipment Teradyne implemented a worldwide reduction in workforce of approximately 350 employees. The terminations are expected to be completed in the second quarter of 2009, and to result in an estimated total severance cash charge of approximately $12 million that will be expensed in the second quarter of 2009.

19

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies and Estimates

We have identified the policies which are critical to understanding our business and our results of operations. Management believes that there have been no significant changes during the three months ended April 5, 2009 to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in its Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

	For the Three Months Ended
	April 5, 2009		March 30, 2008
Percentage of total net revenues:
Products	54	%	78	%
Services	46		22
Total net revenues	100		100
Cost of revenues:
Cost of products	46		40
Cost of services	26		14
Total cost of revenues	72		54
Gross profit	28		46
Operating expenses:
Engineering and development	39		19
Selling and administrative	46		22
Acquired intangible asset amortization	7		1
Restructuring and other, net	13		4
Total operating expenses	105		46
(Loss) income from operations	(77	)	—
Interest & other	(5	)	2
(Loss) income before income taxes	(82	)	2
(Benefit) provision for income taxes	(7	)	1
Net (loss) income	(75	)%	1	%
Benefit/provision for income taxes as percentage of (loss) income before income taxes	8	%	63	%

20

Results of Operations

First Quarter 2009 Compared to First Quarter 2008

Bookings

Net bookings for our two reportable segments were as follows:

	For the Three Months Ended				Dollar Change
	April 5, 2009		March 30, 2008
	(in millions)
Semiconductor Test(1)	$	65.5	$	263.8	$	(198.3	)
Systems Test Group		70.8		47.6		23.2
	$	136.3	$	311.4	$	(175.1	)

(1) Bookings for the three months ended March 30, 2008 include Nextest Systems Corporation (“Nextest”) bookings from January 24, 2008 through March 30, 2008.

Semiconductor Test orders decreased 75% or $198.3 million from the first quarter of 2008 to 2009, primarily due to a decrease in Subcon and IDM orders across all products. The majority of the decrease was across South Asia, Taiwan and Korea, driven primarily by lower demand from our outsource, assembly and test (“OSAT”) customers.

Systems Test Group’s increase in orders of $23.2 million or 49% was primarily due to bookings related to Hard Disk Drive systems, partially offset by a decrease in Mil/Aero service orders.

Cancellations for our two principal reportable segments were as follows:

	For the Three Months Ended
	April 5, 2009		March 30, 2008
	(in millions)
Semiconductor Test	$	4.4	$	—
Systems Test Group		0.7		—
	$	5.1	$	—

Customers may delay delivery of products or cancel orders suddenly and without significant notice, subject to possible cancellation penalties. In the first quarter of 2009 there were no significant cancellation penalties received. Due to possible changes in delivery schedules and cancellations of orders, our backlog at any particular date is not necessarily indicative of the actual sales for any succeeding period. Delays in delivery schedules and/or cancellations of backlog during any particular period could have a material adverse effect on our business, financial condition and results of operations.

21

Net bookings by region as a percentage of total net bookings were as follows:

	For the Three Months Ended
	April 5, 2009		March 30, 2008
United States	30	%	18	%
Thailand	24		2
South Asia	15		23
Europe	14		11
Japan	7		9
Korea	6		11
Taiwan	3		25
Rest of World	1		1
	100	%	100	%

Backlog of unfilled orders for our two reportable segments was as follows:

	As of
	April 5, 2009		March 30, 2008
	(in millions)
Semiconductor Test	$	116.2	$	273.2
Systems Test Group		135.6		100.4
	$	251.8	$	373.6

Revenue

Net revenues for our two reportable segments were as follows:

	For the Three Months Ended				Dollar Change
	April 5, 2009		March 30, 2008
	(in millions)
Semiconductor Test	$	78.5	$	247.7	$	(169.2	)
Systems Test Group		42.1		49.6		(7.5	)
	$	120.6	$	297.3	$	(176.7	)

Semiconductor Test revenue decreased $169.2 million or 68% from the first quarter of 2008 to 2009, primarily due to lower sales across all products primarily in South Asia, Taiwan and Singapore. The decease was due to excess test capacity at our customers as a result of the global economic downturn.

The decrease in Systems Test Group revenue of $7.5 million or 15% from the first quarter of 2008 to 2009 resulted from a decrease in our Diagnostic Solutions and Commercial Board Test business units. The decline was driven primarily by product related revenue while service revenue remained flat.

22

Our revenues by region as a percentage of total net revenue were as follows:

	For the Three Months Ended
	April 5, 2009		March 30, 2008
United States	39	%	20	%
South Asia	19		28
Europe	16		8
Japan	11		10
Taiwan	9		19
Singapore	5		10
Rest of the World	1		5
	100	%	100	%

Gross Margin

Our gross profit was as follows:

	For the Three Months Ended						Dollar/ Point Change
	April 5, 2009			March 30, 2008
	(in millions)
Gross Profit	$	33.4		$	138.5		$	(105.1	)
Percent of Total Revenue		27.7	%		46.6	%		(18.9	)

Gross margins as a percentage of revenue decreased from 2008 to 2009 by 18.9 percentage points. This decrease in gross margin is the result of a decrease of 18.0 points from lower sales volume and a decrease of 6.2 points related to inventory provision charges across both segments. These decreases were partially offset by an increase of 5.3 points primarily from lower warranty and freight costs and lower acquired inventory fair value step-up charges.

We assess the carrying value of our inventory on a quarterly basis by estimating future demand and comparing that demand against on-hand and on-order inventory. Forecasted revenue information is obtained from the sales and marketing groups and incorporates factors such as backlog and future revenue demand. This quarterly process identifies obsolete and excess inventory. Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed during the next four quarters, is written-down to estimated net realizable value.

The provisions for excess and obsolete inventory were $8.6 million and $1.3 million for the three months ended April 5, 2009 and March 30, 2008, respectively. During the three months ended April 5, 2009 and March 30, 2008, we scrapped $1.1 million and $7.8 million of inventory, respectively. As of April 5, 2009, we have inventory related reserves for amounts which had been written-down or written-off totaling $136.3 million. We have no pre-determined timeline to scrap the remaining inventory.

Engineering and Development

Engineering and development expenses were as follows:

	For the Three Months Ended						Dollar Change
	April 5, 2009			March 30, 2008
	(in millions)
Engineering and Development	$	47.2		$	55.1		$	(7.9	)
Percent of Total Revenue		39.1	%		18.5	%

23

The decrease of $7.9 million in engineering and development expenses is due primarily to an $11.8 million decrease in spending due to workforce reductions, lower project spending and lower variable compensation. This decrease was partially offset by additional costs of $3.9 million related to the acquisition of Eagle Test Systems, Inc. (“Eagle Test”) and Nextest.

Selling and Administrative

Selling and administrative expenses were as follows:

	For the Three Months Ended						Dollar Change
	April 5, 2009			March 30, 2008
	(in millions)
Selling and Administrative	$	55.4		$	65.2		$	(9.8	)
Percent of Total Revenue		45.9	%		21.9	%

The decrease of $9.8 million from the first quarter of 2008 to 2009 is due primarily to a $13.1 million decrease from workforce reductions and on-going cost reduction initiatives, $3.3 million related to a decrease in variable compensation, partially offset by an increase of $6.6 million in higher selling and administrative expenses resulting from the acquisition of Eagle Test and Nextest.

Restructuring and Other, Net

The tables below represent activity related to restructuring and other, net, in the three months ended April 5, 2009. The accrual for severance and benefits is reflected in accrued employees’ compensation and withholdings. All remaining severance and benefits will be paid by the end of the year 2009. The accrual for lease payments on vacated facilities is reflected in other accrued liabilities and other long-term accrued liabilities and is expected to be paid out over the lease terms, the latest of which expires in 2012. We expect to pay out approximately $2.4 million against the lease accruals over the next twelve months. Our future lease commitments are net of expected sublease income of $6.8 million as of April 5, 2009.

The restructuring actions taken during the three months ended April 5, 2009 are expected to generate quarterly cost savings of approximately $10.9 million across all segments.

2009 Activities

	Severance and Benefits			Other			Total
	(in thousands)
Balance at December 31, 2008	$	—		$	—		$	—
Charges (credits)		16,332			(713	)		15,619
Cash payments		(4,528	)		—			(4,528	)
Other		—			713			713
Balance at April 5, 2009	$	11,804		$	—		$	11,804

During the three months ended April 5, 2009, we recorded the following 2009 restructuring activities:

• $16.3 million of severance charges related to headcount reductions of approximately 500 people across both segments; and

• ($0.7) million of credits related to finalization of certain Eagle Test purchase accounting items.

24

2008 Activities

	Facility Related			Severance and Benefits			Total
	(in thousands)
Balance at December 31, 2008	$	831		$	5,342		$	6,173
Charges		—			346			346
Cash payments		(10	)		(4,672	)		(4,682	)
Balance at April 5, 2009	$	821		$	1,016		$	1,837

Pre-2008 Activities

	Facility Related			Severance and Benefits			Total
	(in thousands)
Balance at December 31, 2008	$	8,472		$	81		$	8,553
Cash payments		(502	)		(56	)		(558	)
Balance at April 5, 2009	$	7,970		$	25		$	7,995

Interest and Other, net

In the three months ended April 5, 2009, interest income decreased by $3.8 million due primarily to lower cash balances as a result of our acquisitions of Nextest and Eagle Test. Interest expense and other increased by $6.3 million due primarily to the following, which occurred in the three months ended April 5, 2009: $2.6 million of realized and other than temporary impairment losses on our marketable securities, $1.7 million of interest expense related to the revolving credit facility and $1.1 million of foreign exchange losses.

Income Taxes

For the three months ended April 5, 2009, we recorded a tax benefit of $7.8 million primarily due to benefiting operating losses in foreign jurisdictions. For the three months ended March 30, 2008, we recorded the tax expense of $4.1 million, which consisted primarily of foreign taxes. Due to the continued uncertainty of realization, we have maintained our valuation allowance at April 5, 2009 for deferred tax assets in the U.S. and Singapore. We do not expect to significantly reduce our valuation allowance until sufficient positive evidence exists, including sustained profitability, that realization is more likely than not.

25

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities balance decreased $53.6 million in the first three months of 2009, to $320.7 million. Cash activity for the first three months of 2009 and 2008 was as follows:

	For the Three Months Ended
	April 5, 2009			March 30, 2008
	(in millions)
Cash (used for) provided by operating activities:
Net (loss) income, adjusted for non-cash items	$	(49.9	)	$	37.1
Change in operating assets and liabilities, net of business acquired		(15.3	)		(2.7	)
Total cash (used for) provided by operating activities	$	(65.2	)	$	34.4
Total cash provided by (used for) investing activities	$	4.1		$	(248.9	)
Total cash provided by (used for) financing activities	$	17.5		$	(24.8	)
Decrease in cash and cash equivalents	$	(43.6	)	$	(239.3	)

Changes in operating assets and liabilities, net of businesses acquired, used cash of $15.3 million in the first three months of 2009. This was due primarily to a decrease in accounts payable, deferred revenue and accrued expenses of $44.3 million due to on-going cost reduction initiatives, an increase in other current assets of $7.6 million, an increase in inventories of $4.1 million, and retirement plan contributions of $1.6 million, partially offset by a decrease in accounts receivable of $42.4 million due to lower sales volume.

Investing activities provided cash of $4.0 million in the three months ended April 5, 2009, due to sales of marketable securities that provided cash of $9.0 million, proceeds from life insurance policies that provided cash of $1.1 million, partially offset by investments in property, plant and equipment of $6.1 million.

During the three months ended April 5, 2009, financing activities provided cash of $17.5 million due to $10 million of long-term debt proceeds from a loan in Japan and $7.5 million from the issuance of common stock under stock option and stock purchase plans.

We believe our cash, cash equivalents and marketable securities balance of $320.7 million will be sufficient to meet working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings.

Subsequent Events

On April 6, 2009, we completed our registered underwritten public offering of $190 million aggregate principal amount of our 4.50% convertible senior notes due 2014 pursuant to an underwriting agreement, dated March 31, 2009, and settled the related convertible bond hedge and warrant transactions. On April 6, 2009, we received net proceeds of approximately $163 million as a result of these financing transactions.

On April 7, 2009, we terminated our revolving credit facility agreement. We used approximately $123.3 million of the net proceeds of the financing transactions to repay $122.5 million of principal and $0.8 million of accrued interest outstanding under the revolving credit facility agreement. We have also written off the remaining revolving credit facility debt issue costs of approximately $2.5 million.

On April 15, 2009, as part of our ongoing efforts to lower expenses and cost structure in light of the industry wide continued decline in orders for semiconductor production equipment we implemented a worldwide reduction in workforce of approximately 350 employees. The terminations are expected to be completed in the second quarter of 2009, and to result in an estimated total severance cash charge of approximately $12 million that will be expensed in the second quarter of 2009.

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Equity Compensation Plans

Discussed in “Note O: Stock Based Compensation” in our 2008 Form 10-K, we have a 1996 Employee Stock Purchase Plan and a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”), a cash and equity compensation incentive plan.

The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers, directors, consultants and/or advisors. Both plans were approved by our shareholders.

Recently Issued Accounting Pronouncements

In December 2008, the Financial Accounting Standards Board issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets,” (FSP FAS 132(R)-1), which amends SFAS No. 132 (revised 2003), “Employers’ Disclosures about Pensions and Other Postretirement Benefits.” This guidance is intended to ensure that an employer meets the objectives of the disclosures about plan assets in an employer’s defined benefit pension or other postretirement plan to provide users of financial statements with an understanding of the following: how investment allocation decisions are made; the major categories of plan assets; the inputs and valuation techniques used to measure the fair value of plan assets; the effect of fair value measurements using significant unobservable inputs on changes in plan assets; and significant concentrations of risk within plan assets. FSP FAS 132(R)-1 becomes effective for us on December 31, 2009. As FSP FAS 132(R)-1 only requires enhanced disclosures, we have determined that the adoption of FSP FAS 132(R)-1 will not have an impact on our financial position or results of operations.

In April 2009, the FASB issued three FASB Staff Positions (“FSPs”) in order to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities. These FSPs shall be effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ended after March 15, 2009.

FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”). FSP FAS 157-4 relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. We are currently evaluating this new FSP but do not believe that it will have a significant impact on its financial position or results of operations.

FSP FAS 115-2 and FAS 124-2 “Recognition and Presentation of Other-Than-Temporary Impairments.” This FSP is intended to bring consistency to the timing of impairment recognition, and provide improved disclosures about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. The FSP also requires increased and more timely disclosures regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. We are currently evaluating this new FSP but do not believe that it will have a significant impact on the determination or reporting of its financial result

FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments.” This FSP relates to fair value disclosures for financial instruments that are not currently reflected on the balance sheet at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year. The FSP now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. We are currently evaluating the disclosure requirements.

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Certain Factors That May Affect Future Results

Our future results of operations involve a number of risks and uncertainties. These factors include, but are not, limited to the following:

• Our business is impacted by worldwide economic cycles which are difficult to predict;

• Our business is dependent on the current and anticipated market for electronics, which historically has been highly cyclical;

• We are subject to intense competition;

• Our operating results are likely to fluctuate significantly;

• We are subject to risks of operating internationally;

• If we fail to develop new technologies to adapt to our customers’ needs and if our customers fail to accept our new products, our revenues will be adversely affected;

• If our suppliers do not meet product or delivery requirements, it could cause a reduction in our revenues and earnings;

• Our operations may be adversely impacted if our outsourced service providers fail to perform;

• We may not fully recognize the benefits of our acquisitions of Nextest Systems Corporation and Eagle Test Systems and other businesses that we acquire or strategic alliances that we form in the future;

• We may need additional financing, which could be difficult to obtain;

• We may be unable to perform our obligations under the indenture governing our senior convertible notes issuance;

• We have increased our indebtedness;

• Our convertible note hedge and warrant transactions could impact the value of our stock;

• We may not be able to pay our debt and other obligations;

• We have taken measures to address slowdowns in the market for our products, which could have long-term negative effects on our business or impact our ability to adequately address a rapid increase in customer demand;

• We may incur significant liabilities if we fail to comply with environmental regulations;

• We currently are and in the future may be subject to litigation that could have an adverse effect on our business;

• Third parties may claim we are infringing their intellectual property and we could suffer significant litigation cost, licensing expenses, or be prevented from selling our products;

• We have significant guarantees and indemnification obligations;

• If we are unable to protect our intellectual property, we may lose a valuable asset or may incur costly litigation to protect our rights;

• Our business may suffer if we are unable to attract and retain key employees;

• Acts of war, terrorist attacks and the threat of domestic and international terrorist attacks may adversely impact our business; and

• Provisions of our charter and by-laws and Massachusetts law make our takeover more difficult.

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Item 3: Quantitative and Qualitative Disclosures about Market Risk

For “Quantitative and Qualitative Disclosures about Market Risk” affecting Teradyne, see Item 7a. “Quantitative and Qualitative Disclosures About Market Risks,” in our Annual Report on Form 10-K filed with the SEC on March 2, 2009. There were no material changes in our exposure to market risk from those set forth in our Annual Report for the fiscal year ended December 31, 2008.

Item 4: Controls and Procedures

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

During the period covered by this report, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

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PART II. OTHER INFORMATION

Item 1: Legal Proceedings

On July 11, 2008, Xyratex Technology, Ltd (“Xyratex”) filed a complaint against us in the United States District Court in Los Angeles, California alleging that certain of our disk drive test products infringe one of Xyratex’s patents. The complaint was served on Teradyne on October 29, 2008. The suit seeks temporary, preliminary and permanent injunctive relief as well as unspecified monetary damages, including treble damages, for patent infringement. On December 17, 2008, we filed an answer and counterclaims, denying that our disk drive test products infringe the asserted Xyratex patent and asking the court to declare such patent invalid. The case is currently in the discovery phase and trial is scheduled to begin in November 2009. On April 14, 2009, we filed a separate complaint in the United States District Court in Los Angeles alleging that Xyratex’s disk drive test products infringe two of our patents. We intend to vigorously defend against the Xyratex claim and to vigorously pursue our claims against Xyratex.

On September 5, 2001, after our August 2000 acquisition of Herco Technology Corp. and Perception Laminates, Inc., the former owners of those companies filed a complaint against us and two of our then executive officers in the United States District Court in San Diego, California, asserting securities fraud and breach of contract related to the acquisition. The District Court dismissed certain of the plaintiffs’ claims, granted partial summary judgment against them with respect to their breach of contract claim and denied their motion for reconsideration. In July 2007, after an appeal by the plaintiffs, the U.S. Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the District Court rulings. We petitioned the Ninth Circuit for rehearing, which was denied, and the case was remanded back to the District Court. On August 29, 2008, the District Court granted Teradyne’s motion for judgment on the pleadings. On September 11, 2008, the plaintiffs filed their notice of appeal. No hearing date has been scheduled for the appeal.

In 2001, we were designated as a Potentially Responsible Party (“PRP”) at a clean-up site in Los Angeles, California. This claim arose out of our acquisition of Perception Laminates in August 2000. Prior to that date, Perception Laminates had itself acquired certain assets of Alco Industries Inc. under an asset purchase agreement in 1992. Neither we nor Perception Laminates have ever conducted any operations at the Los Angeles site. We have asked the State of California to drop the PRP designation, but California has not yet agreed to do so.

In November 2008, we received a general notice letter from the California Department of Toxic Substances Control (“DTSC”) that informed us of potential liability with respect to contamination at the BKK Corporation Landfill Facility Site in West Covina, California. Similar to the PRP claim discussed above, this claim arose out of our acquisition of Perception Laminates in August 2000. Neither we nor Perception Laminates have ever conducted any operations at the West Covina site. We have asked the DTSC and the group of settling defendants to remove us as a PRP for this site.

We believe that we have meritorious defenses against the above unsettled claims and intend to vigorously contest them. While it is not possible to predict or determine the outcomes of the unsettled claims or to provide possible ranges of losses that may arise, we believe the potential losses associated with all of these actions are unlikely to have a material adverse effect on our consolidated financial position, but could possibly be material to our consolidated results of operations and of cash flows of any one period.

Item 1A: Risk Factors

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Form 10-K remain applicable to our business, subject to the changes and the addition of the new risk factors set forth below. The risks described below and in our Annual Report on

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Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

We Have Increased Our Indebtedness.

On April 6, 2009, we completed a registered underwritten offering of $190 million aggregate principal amount of 4.50% Convertible Senior Notes (the “Notes”) due March 15, 2014 and received net proceeds of approximately $163 million. We used approximately $123.3 million of the net proceeds of this offering to repay all amounts outstanding under our revolving credit facility. Although we are no longer subject to the restrictive covenants under the revolving credit facility, we have incurred approximately $190 million principal amount of new indebtedness that the holders of the Notes may require us to repurchase upon the occurrence of certain fundamental changes involving us. In addition, on March 31, 2009, our wholly-owned subsidiary in Japan, Teradyne K.K., incurred approximately US$10.0 million in indebtedness that we guaranteed. The level of our indebtedness, among other things, could:

• make it difficult to make payments on our other obligations;

• make it difficult to obtain any necessary future financing for working capital, capital expenditures, debt service requirements or other purposes;

• require the dedication of a substantial portion of any cash flow from operations to service for indebtedness, thereby reducing the amount of cash flow available for other purposes, including capital expenditures; and

• limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we compete.

Our Convertible Note Hedge and Warrant Transactions Could Impact the Value of Our Stock

Concurrent with the offering of the Notes, we entered into a convertible note hedge transaction with Goldman, Sachs & Co. (the “hedge counterparty”) with a strike price equal to the initial conversion price of the Notes. The convertible note hedges cover, subject to customary antidilution adjustments, approximately 34,703,196 shares of our common stock.

Separately and concurrent with the pricing of the Notes, we entered into a warrant transaction with the hedge counterparty with a strike price of $7.6650 per share, which is 75% higher than the closing price of our common stock on March 31, 2009. The warrants will be net share settled and cover, subject to customary antidilution adjustments, approximately 31,963,470 shares of our common stock. On April 1, 2009, the hedge counterparty exercised its option to purchase warrants covering, subject to customary antidilution adjustments, an additional 2,739,726 shares of our common stock. However, we will not be obligated to deliver to the hedge counterparty more than 34,526,500 shares of common stock upon exercise of the warrants (which amount represents less than 19.99% of our outstanding shares of common stock as March 31, 2009, without giving effect to any shares of common stock issuable pursuant to the warrant transaction), subject to customary antidilution adjustments.

The convertible note hedges are expected to reduce the potential dilution to our common stock upon any conversion of the Notes. However, the warrant transaction could separately have a dilutive effect to the extent that the market value per share of our common stock exceeds the applicable strike price of the warrant. The net cost of the convertible note hedge transaction to us, after being partially offset by the proceeds from the sale of the warrants, was approximately $21.7 million.

In connection with establishing its initial hedge of these convertible note hedge and warrant transactions, the hedge counterparty has entered into various derivative transactions with respect to our common stock and/or purchase shares of our common stock or other securities, including the Notes, concurrent with, or shortly after,

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the pricing of the Notes. In addition, the hedge counterparty may modify its hedge positions by entering into or unwinding various derivative transactions with respect to our common stock or by selling our common stock or other securities, including the Notes, in secondary market transactions (and may do so during any observation period related to the conversion of the Notes). These activities could adversely impact the value of our common stock and the Notes.

We May Not Be Able to Pay Our Debt and Other Obligations.

If our cash flow is inadequate to meet our obligations, we could face substantial liquidity problems. If we are unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments on the Notes or certain of our other obligations, we would be in default under the terms thereof, which would permit the holders of those obligations to accelerate their maturity and also could cause defaults under future indebtedness we may incur. Any such default could have a material adverse effect on our business, prospects, financial position and operating results. In addition, we cannot be certain that we would be able to repay amounts due in respect of the Notes if those obligations were to be accelerated following the occurrence of any other event of default as defined in the instruments creating those obligations, or if the holders of the Notes require us to repurchase the Notes upon the occurrence of a fundamental change involving us. Moreover, we cannot be certain that we will have sufficient funds or will be able to arrange for financing to pay the principal amount due on the Notes at maturity.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

In November 2007, Teradyne’s Board of Directors (the “Board”) authorized a $400 million stock repurchase program. During the three months ended April 5, 2009, Teradyne did not repurchase any shares of common stock. The cumulative repurchases as of April 5, 2009 total 8.5 million shares of common stock for $102.6 million at an average price of $12.14 per share. As of November 4, 2008, the Board temporarily suspended the implementation of the stock repurchase program.

The following table includes information with respect to repurchases we made of our common stock during the quarter ended April 5, 2009 (in thousands except per share price):

Period	(a) Total Number of Shares (or units) Purchased	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Yet Be Purchased Under the Plans or Programs
January 1, 2009 – February 1, 2009	—	$	—	—	$	297,375
February 2, 2009 – March 5, 2009	—	$	—	—	$	297,375
March 6, 2009 – April 5, 2009	—	$	—	—	$	297,375

Item 6: Exhibits

Exhibit Number	Description
10.1	Severance Agreement, dated as of March 11, 2009, by and between Teradyne, Inc. and Eileen Casal.
31.1	Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1	Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2	Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

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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/    GREGORY R. BEECHER        

Gregory R. Beecher

Vice President,

Chief Financial Officer and Treasurer

(Duly Authorized Officer
and Principal Financial Officer)

May 15, 2009

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EX-10.1

Exhibit 10.1

SEVERANCE AGREEMENT AND RELEASE

This AGREEMENT (“Agreement”) is entered into by and between Teradyne, Inc. (the “Company”) and Eileen Casal (the “Executive”) (together, the “Parties”), as of March 11 2009.

WHEREAS, the parties wish to arrange for the Executive’s separation from the Company and establish the terms of the Executive’s separation and severance;

NOW, THEREFORE, in consideration of the promises and conditions set forth herein, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

1. Separation Date. The Executive’s employment with the Company, and all positions held by her with the Company, shall terminate effective March 31, 2009 (the “Separation Date”). On or before the Separation Date, Executive shall be paid for all earned salary and $37,388.34 (less applicable taxes and withholdings) for all accrued but unused Flex Time-Off earned through the Separation Date. Executive will also be entitled to reimbursement for any allowable business expenses incurred by her through the Separation Date for which she has not then been reimbursed, in accordance with the Company’s regular policies. Executive will receive the compensation set forth in this Section 1 regardless of whether she signs the attached Release of Claims attached hereto as Exhibit A (the “Release”). Except as expressly set forth in this Agreement, Executive agrees that she is not entitled to any additional compensation, bonuses, or equity as of the Separation Date, and that her entitlement to any benefits under the plans, policies or programs of the Company shall terminate as of the Separation Date, except where otherwise provided under the existing terms and conditions of such plans, policies and programs.

2. Stock Options and Restricted Stock. In accordance with the 2006 Equity and Cash Compensation Incentive Plan, the 1997 Employee Stock Option Plan, and the 1991 Employee Stock Option Plan (the “Equity Plans”), Executive shall cease vesting in all existing stock option grants and restricted stock unit awards (“RSUs”) as of the Separation Date. Executive’s equity holdings as of the Separation Date are as set forth in Exhibit B hereto. Executive’s options and RSUs shall continue to be governed by the terms and conditions set forth in their applicable Equity Plans and grant agreements, which shall continue in full force and effect following execution of this Agreement. In accordance with those terms, Executive shall have ninety (90) days following the Separation Date to exercise any vested but unexercised stock options.

3. Severance Benefits. Provided Executive signs this Agreement, signs the Release on or within 21 days following the Separation Date, and does not revoke her signature on the Release, the Company agrees to provide the Executive with the following severance benefits:

a. Severance Pay. The Company will continue to pay Executive at her current annual base salary rate of $277,742, less applicable taxes and withholdings and in accordance with the Company’s regular payroll practices (the “Severance Pay”), for one year following the Separation Date (the “Severance Period”), to commence on the first regular payroll

date following expiration of the Revocation Period described in Paragraph 3 of the Release, provided that all amounts that remain unpaid on March 12, 2010 shall be paid on March 12, 2010. The Company’s obligation to continue the Severance Pay through the Severance Period shall be subject to the Executive’s continued compliance with the terms of this Agreement and the May 3, 2004 Employment Agreement between Executive and the Company (the “Employment Agreement”);

b. Benefits Continuation. Provided the Executive timely elects and continues to be eligible to receive health, vision and dental insurance continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), 29 U.S.C. § 1161 et seq., the Company shall continue to pay the portion of such applicable insurance premiums that it pays for active employees (currently 75%) for the duration of the Severance Period (the “Benefits Continuation”) provided that all amounts that remain unpaid on March 12, 2010 shall be paid on March 12, 2010.

c. Outplacement Assistance. The Company agrees to pay for the costs for the Executive to participate in and receive the benefits of the Executive Career Transition Program currently offered by Right Management, as described in Exhibit C, provided that Executive commences the Program no later than ninety days following the Separation Date (the “Outplacement Assistance”). The Company shall pay Right Management for the cost of the Outplacement Assistance on or before March 12, 2010, upon receipt of invoices for Executive’s participation in the Program in compliance with this Paragraph 3(c).

d. Company Release. Following expiration of the Revocation Period, the Company will execute the Release and provide Executive with a fully-executed original of such Release.

4. Section 409A Compliance. Notwithstanding anything to the contrary herein, Company and Executive acknowledge that all payments and/or benefits provided by the Company to the Executive that may be deemed to constitute “non-qualified deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (Section 409A) are intended to comply with Section 409A. If, however, any payment and/or benefit is deemed not to comply with Section 409A, the Company and Executive agree to negotiate in good faith any such benefit or payment (including without limitation as to the timing of any severance payments payable hereunder) so that either (i) Section 409A will not apply or (ii) compliance with Section 409A will be achieved; provided, however, that any deferral of payments or other benefits shall be only for such time period as may be required to comply with Section 409A.

5. Cooperation.

a. Transition Assistance. During the Severance Period, Executive agrees that upon request by the Company, she shall provide, in reasonable amounts and at reasonable times mutually agreed upon by the Executive and the Company, assistance to and cooperation with the Company in order to ensure a smooth transition of her duties and responsibilities.

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b. Litigation and Related Matters. For three (3) years following the Separation Date, upon the Company’s request and at reasonable times mutually agreed upon by the Executive and the Company, the Executive agrees to provide reasonable assistance and cooperation to the Company with respect to any threatened or pending civil, criminal or administrative investigations, actions and/or proceedings involving the Company which relate to the Executive’s position, duties, and/or responsibilities, or to any other matters that Executive handled, participated in or had knowledge of, all while she was employed at the Company. Employee’s cooperation may include (but not be limited to) being available to meet with counsel to prepare its claims or defenses, to prepare for trial or discovery, and/or to act as a witness when and as reasonably requested by the Company and at reasonable times mutually agreed upon by the Executive and the Company. Executive shall be entitled to reimbursement for reasonable travel, food, lodging and other expenses incurred in connection with the provision of assistance and/or cooperation in connection with this Paragraph 5, subject to the Company’s regular policies on expense reimbursements. Furthermore, in the event that Executive is required to provide more than forty (40) hours of assistance under this Paragraph 5(b) in any calendar year after 2009, she shall be compensated at a reasonable hourly rate for her assistance (except for any time spent testifying under oath).

c. Notice of Subpoenas/Status Updates. Employee agrees that she will notify the Company promptly in the event that she is served with a subpoena or in the event that she is asked to provide a third party with information concerning any threatened or pending complaint, charge or claim against the Company. The Company will keep the Executive informed on a timely basis of the existence of, or any change in, any case or claim in which the Executive is involved as a defendant or has been called or named as a witness, or which has been threatened against the Executive by virtue of her position and responsibilities on behalf of the Company.

d. Notwithstanding the foregoing, the Executive’s obligation to provide the cooperation and assistance described in this Paragraph 5 shall be subject to Executive’s performance of duties in any subsequent employment, self employment or job search (provided that Executive shall make reasonable efforts to accommodate requests by the Company) and the Company’s continued compliance with the terms of this Agreement, the Employment Agreement and the April 1, 1999 Indemnification Agreement between the Executive and the Company (the “Indemnification Agreement”).

6. Executive Reference. Executive agrees that she will direct all requests by potential future employers for a reference from the Company regarding the Executive to Michael A. Bradley, President and Chief Executive Officer. The Company’s response to any inquiry and/or request for a reference regarding the Executive shall be governed by the terms of Exhibit D hereto.

7. Indemnification. The Parties agree that the Executive shall be entitled to indemnification for all of her acts and omissions on behalf of the Company to the fullest extent allowed under the Company’s by-laws in effect as of the date of this Agreement and under the Indemnification Agreement, which shall survive execution of this Agreement in full force and effect.

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8. Ongoing Restrictive Covenants. Executive acknowledges and confirms that she has complied and will continue to comply fully with the restrictions and obligations set forth in the Employment Agreement, which shall survive execution of this Agreement in full force and effect (excluding the non-competition provisions in the Employment Agreement, which the Parties agree will not be binding upon the Executive following the Separation Date). For purposes of clarity, the Parties agree that all provisions of the Employment Agreement shall be in effect following the Separation Date, with the exception of the paragraph pertaining to non- competition obligations, which shall not be deemed to apply.

9. Noncompetition. In exchange for the benefits set forth in Paragraph 3 and the other covenants set forth herein, Executive agrees that for a period of one (1) year after the Separation Date, she will not, directly or indirectly, enter the employment of or render any professional services, including but not limited to as an independent contractor, consultant, director, partner, owner (except as a holder of not more than 1% of the combined voting power of the outstanding stock of a publicly held company) or otherwise, to any individual, partnership, association or corporation who or which is a competitor of the Company, based on the Company’s products and services as of the Separation Date.

10. Return of Company Property. On or before the Separation Date, the Executive agrees to return all Company property, equipment, documents (hard copy or electronic) and other materials in her possession or control, including, but not limited to, the Executive’s laptop, PDA, telephone and all other computer or electronic devices and peripherals, keys, access cards, credit cards, and all documents that include or reference any confidential information of the Company. The Executive further agrees to refrain from taking any harmful or potentially harmful action with regard to the Company’s computer systems, and to leave intact all electronic Company documents and other information on the electronic system.

11. Non-Disparagement. The Executive understands and agrees that as a condition for payment to her of the Severance Pay, Benefits Continuation and Outplacement Assistance, for a period of three (3) years from the Separation Date, she agrees not to make any false, disparaging or derogatory statements to any third person or entity, including any media outlet, in public or private regarding the Company’s directors, officers, executives, agents, or representatives or the Company’s business affairs and financial condition. The Company understands and agrees that as a condition of the Executive’s performance of the obligations hereunder, for a period of three (3) years from the Separation Date, the Company shall cause its directors, executive officers and officers not to make any false, disparaging or derogatory statements to third parties in public or private, regarding the Executive.

Nothing in this Paragraph or in Paragraphs 5(b) or 6 herein shall prohibit or bar either Party from providing truthful testimony in any legal proceeding or in communicating with any governmental agency or representative or from making any truthful disclosure required under law; provided, however, that in the event of such a disclosure, each Party agrees to provide advance written notice to the other Party of her/its intent to make such disclosures and cooperate with the other Party to ensure that this Paragraph is complied with to the maximum extent possible. Moreover, nothing herein shall prevent Executive from participating in any proceeding before any federal or state administrative agency to the fullest extent permitted by applicable

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law, provided that she will be prohibited to the fullest extent authorized by law from obtaining monetary damages or other equitable remedies in any agency proceeding in which she does so participate arising out of or relating to matters released by Executive in Paragraph 1 of the Release.

12. Nature of Agreement. The Executive and the Company understand and agree that this Agreement does not constitute an admission of liability or wrongdoing on the part of the Company or the Executive. This is not intended to be, and shall not be construed as, an employment agreement and the parties agree and understand that the Executive is, and shall remain through the Separation Date, an at-will employee of the Company.

13. Amendment; Successors and Assigns. This Agreement shall be binding upon the parties and may not be abandoned, supplemented, changed or modified in any manner, orally or otherwise, except by an instrument in writing of concurrent or subsequent date signed by a duly authorized representative of the Parties. This Agreement is binding upon and shall inure to the benefit of the Parties and their respective agents, assigns, heirs, executors, successors and administrators, except that it may not be assigned by the Executive without prior written consent of the Company.

14. Validity. Should any provision of this Agreement be declared or be determined by any court of competent jurisdiction to be illegal or invalid, the validity of the remaining parts, terms, or provisions shall not be affected thereby and said illegal and invalid part, term or provision shall be deemed not to be a part of this Agreement. If, moreover, any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject so as to be unenforceable, Executive agrees that such provision or provisions shall be construed by the appropriate judicial body by limiting and reducing it or them so as to be enforceable to the maximum extent permitted by law.

15. Accord and Satisfaction. It is expressly agreed that the payments and benefits set forth in this Agreement, together with all other payments and benefits previously provided to Executive by the Company, are complete payment, settlement, satisfaction and accord with respect to all obligations and liabilities of the Released Parties (as defined in Paragraph 1 of the Release) to Executive (except as otherwise provided herein or in the Release). The Company agrees that Executive’s undertakings in this Agreement are complete payment, settlement, satisfaction and accord with respect to all obligations and liabilities of Executive to the Company (except as otherwise provided herein or in the Release).

16. Further Assurances. The Parties agree to execute, acknowledge (if necessary), and deliver such documents, certificates or other instruments, as mutually agreed, and take such other actions as may be seasonably required from time to time to carry out the intents and purposes of this Agreement.

17. Notice of Breach and Opportunity to Cure; Remedy for Breach. In the event either Party determines in good faith that the other Party has breached any provisions of this Agreement, the non-breaching Party shall provide written notice of such breach to the other Party specifying the nature of the breach and allowing the other Party a thirty (30) day period

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from receipt of notice to remedy any such breach. If the Executive is the breaching Party and does not remedy the breach within such thirty (30) day period, Executive’s entitlement to receive and the Company’s obligations to pay and provide the Severance Pay, Benefits Continuation and/or Outplacement Assistance described in Paragraph 3 above shall terminate immediately following the thirty (30) day period. If the Company is the breaching Party and does not remedy the breach within such thirty (30) day period, the Executive’s obligations under Sections 5 and 9 above shall terminate immediately following the thirty (30) day period.

The Parties further agree that if there is a breach by either Party of Paragraphs 1, 3, 5, 6, 7, 8, 9, 10 and/or 11 herein that is not remedied within the thirty (30) day period, the non-breaching Party shall be entitled to recover all reasonable attorneys fees and costs incurred in connection with litigation it commences to enforce its rights uncles those paragraphs of the Agreement; provided that a court of competent jurisdiction determines that (a) the non-breaching party is the prevailing party in the litigation, and (b) the other party has breached its obligation(s) and failed to remedy such breach(es).

18. Entire Agreement. With the exception of the Equity Plans and grant agreements described in Paragraph 2 above, the Employment Agreement and the Indemnification Agreement, each of which shall continue in full force and effect, this Agreement, together with the attached Release that is contemplated to be executed and delivered by the Executive promptly following the Separation Date, contain and constitute the entire understanding and agreement between the Parties and supersede all previous oral and written negotiations, agreements, commitments, and writings in connection therewith ((including but not limited to the December 30, 2008 Amended and Restated Executive Officer Change in Control Agreement between the Parties).

19. Applicable Law. This Agreement shall be interpreted and construed by the laws of the Commonwealth of Massachusetts, without regard to conflict of laws provisions. The Executive hereby irrevocably submits to and acknowledges and recognizes the jurisdiction of the courts of the Commonwealth of Massachusetts, or if appropriate, a federal court located in Massachusetts (which courts, for purposes of this Agreement and the Release, are the only courts of competent jurisdiction), over any suit, action or other proceeding arising out of, under or in connection with this Agreement, the Release or the subject matter hereof.

20. Other Terms. The waiver by any party of a breach of this Agreement shall not operate or be construed as a waiver of any subsequent breach. This Agreement may be executed in separate counter-parts, each of which shall be deemed an original, but all of which together shall constitute the same instrument. The language of all parts of this Agreement shall in all cases be construed as a whole, according to its fair meaning, and not strictly for or against either of the Parties.

21. Voluntary Assent. The Executive affirms that except as expressly set forth in this Agreement, no promises or agreements of any kind have been made to or with her by any person or entity whatsoever to cause her to sign this Agreement, and that she fully understands the meaning and intent of this Agreement. The Executive states and represents that she has had an opportunity to fully discuss and review the terms of this Agreement with an attorney. The

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Executive further states and represents that she has carefully read this Agreement, understands the contents herein, freely and voluntarily assents to all of the terms and conditions hereof, and signs her name of her own free act.

IN WITNESS WHEREOF, the Parties have set their hand and seal to this Agreement as of the date first written above.

Teradyne, Inc.		Eileen Casal
By	/s/ Michael A. Bradley	By:	/s/ Eileen Casal
Print Name:
Title:

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EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Michael A. Bradley, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2009
By:	/s/    MICHAEL A. BRADLEY
	Michael A. Bradley Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Gregory R. Beecher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2009
By:	/s/    GREGORY R. BEECHER
	Gregory R. Beecher Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Teradyne, Inc. (the “Company”) on Form 10-Q for the period ending April 5, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael A. Bradley, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C (S)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/    MICHAEL A. BRADLEY        

Michael A. Bradley

Chief Executive Officer

May 15, 2009

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Teradyne, Inc. (the “Company”) on Form 10-Q for the period ending April 5, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory R. Beecher, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C (S)1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/s/    GREGORY R. BEECHER        

Gregory R. Beecher

Chief Financial Officer and Treasurer

May 15, 2009