SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended March 30, 2003 |
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from to |
Commission File No. 1-6462
TERADYNE, INC.
(Exact name of registrant as specified in its charter)
| Massachusetts |
04-2272148 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| 321 Harrison Avenue, Boston, Massachusetts |
02118 | |
| (Address of Principal Executive Offices) |
(Zip Code) |
617-482-2700
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of shares outstanding of the registrant’s only class of Common Stock as of April 25, 2003 was 184,939,144 shares.
TERADYNE, INC.
PART I. FINANCIAL INFORMATION
| Item 1. Financial Statements: |
Page No. | |
| Condensed Consolidated Balance Sheets as of March 30, 2003 and December 31, 2002 |
3 | |
| 4 | ||
| 5 | ||
| 6-14 | ||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
15-27 | |
| Item 3. Quantitative and Qualitative Disclosures about Market Risk |
27 | |
| 27 | ||
| PART II. OTHER INFORMATION | ||
| 28-29 | ||
| 29 | ||
2
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 30, 2003 |
December 31, 2002 |
|||||||
| (In thousands) |
||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
219,881 |
|
$ |
251,521 |
| ||
| Marketable securities |
|
58,601 |
|
|
73,833 |
| ||
| Accounts receivable |
|
221,833 |
|
|
174,838 |
| ||
| Inventories: |
||||||||
| Parts |
|
135,750 |
|
|
165,149 |
| ||
| Assemblies in process |
|
114,800 |
|
|
106,156 |
| ||
| Finished goods |
|
1,468 |
|
|
8,245 |
| ||
|
|
252,018 |
|
|
279,550 |
| |||
| Prepayments and other current assets |
|
32,532 |
|
|
29,531 |
| ||
| Total current assets |
|
784,865 |
|
|
809,273 |
| ||
| Property, plant, and equipment, at cost |
|
1,378,114 |
|
|
1,420,480 |
| ||
| Less: accumulated depreciation |
|
(727,008 |
) |
|
(735,214 |
) | ||
| Net property, plant, and equipment |
|
651,106 |
|
|
685,266 |
| ||
| Marketable securities |
|
229,228 |
|
|
215,703 |
| ||
| Goodwill |
|
118,203 |
|
|
118,203 |
| ||
| Intangible and other assets |
|
58,559 |
|
|
66,232 |
| ||
| Total assets |
$ |
1,841,961 |
|
$ |
1,894,677 |
| ||
| LIABILITIES |
||||||||
| Current liabilities: |
||||||||
| Notes payable – banks |
$ |
6,718 |
|
$ |
6,704 |
| ||
| Current portion of long-term debt |
|
1,386 |
|
|
1,365 |
| ||
| Accounts payable |
|
83,934 |
|
|
63,328 |
| ||
| Accrued employees’ compensation and withholdings |
|
65,764 |
|
|
96,848 |
| ||
| Deferred revenue and customer advances |
|
28,549 |
|
|
27,615 |
| ||
| Other accrued liabilities |
|
85,652 |
|
|
73,918 |
| ||
| Income taxes payable |
|
8,162 |
|
|
9,587 |
| ||
| Total current liabilities |
|
280,165 |
|
|
279,365 |
| ||
| Long-term other accrued liabilities |
|
139,330 |
|
|
136,278 |
| ||
| Long-term debt |
|
450,237 |
|
|
450,561 |
| ||
| Total liabilities |
|
869,732 |
|
|
866,204 |
| ||
| Commitments and contingencies (Note J) |
||||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Common stock, $0.125 par value, 1,000,000 shares authorized, 211,577 and 209,851 shares issued at March 30, 2003 and December 31, 2002, respectively, and 184,922 and 183,196 shares outstanding at March 30, 2003 and December 31, 2002, respectively |
|
26,447 |
|
|
26,231 |
| ||
| Additional paid-in capital |
|
1,214,198 |
|
|
1,195,246 |
| ||
| Accumulated other comprehensive loss |
|
(65,337 |
) |
|
(66,423 |
) | ||
| Retained earnings |
|
353,978 |
|
|
430,476 |
| ||
| Treasury stock, at cost, 26,655 shares at March 30, 2003 and December 31, 2002 |
|
(557,057 |
) |
|
(557,057 |
) | ||
| Total shareholders’ equity |
|
972,229 |
|
|
1,028,473 |
| ||
| Total liabilities and shareholders’ equity |
$ |
1,841,961 |
|
$ |
1,894,677 |
| ||
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, 2002 are an integral part of the condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Three Months Ended |
||||||||
| March 30, 2003 |
March 31, 2002 |
|||||||
| (In thousands, except per share amounts) |
||||||||
| Net revenue: |
||||||||
| Products |
$ |
277,231 |
|
$ |
193,072 |
| ||
| Services |
|
57,345 |
|
|
54,936 |
| ||
| Net revenues |
|
334,576 |
|
|
248,008 |
| ||
| Expenses: |
||||||||
| Cost of products |
|
210,927 |
|
|
177,196 |
| ||
| Cost of services |
|
39,543 |
|
|
39,532 |
| ||
| Cost of revenues |
|
250,470 |
|
|
216,728 |
| ||
| Engineering and development |
|
68,585 |
|
|
69,253 |
| ||
| Selling and administrative |
|
67,402 |
|
|
75,049 |
| ||
| Restructuring and other charges |
|
19,486 |
|
|
5,866 |
| ||
|
|
405,943 |
|
|
366,896 |
| |||
| Loss from operations |
|
(71,367 |
) |
|
(118,888 |
) | ||
| Interest income |
|
4,179 |
|
|
4,204 |
| ||
| Interest expense |
|
(5,411 |
) |
|
(5,334 |
) | ||
| Other expense |
|
(2,699 |
) |
|
(513 |
) | ||
| Loss before income taxes |
|
(75,298 |
) |
|
(120,531 |
) | ||
| Provision for (benefit from) income taxes |
|
1,200 |
|
|
(43,391 |
) | ||
| Net loss |
$ |
(76,498 |
) |
$ |
(77,140 |
) | ||
| Net loss per common share – basic and diluted |
$ |
(0.41 |
) |
$ |
(0.42 |
) | ||
| Shares used in calculations of net loss per common share – basic and diluted |
|
184,889 |
|
|
182,332 |
| ||
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, 2002 are an integral part of the condensed consolidated financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Three Months Ended |
||||||||
| March 30, 2003 |
March 31, 2002 |
|||||||
| (In thousands) |
||||||||
| Cash flows from operating activities: |
||||||||
| Net loss |
$ |
(76,498 |
) |
$ |
(77,140 |
) | ||
| Adjustments to reconcile net loss to net cash (used for) provided by operating activities: |
||||||||
| Depreciation |
|
38,033 |
|
|
35,696 |
| ||
| Amortization |
|
1,493 |
|
|
1,908 |
| ||
| Impairment of long-lived assets |
|
7,494 |
|
|
824 |
| ||
| Loss on sale of product lines |
|
5,836 |
|
|
— |
| ||
| Provision for doubtful accounts |
|
842 |
|
|
219 |
| ||
| Deferred income tax credit |
|
— |
|
|
(56,920 |
) | ||
| Other non-cash items, net |
|
2,682 |
|
|
9,154 |
| ||
| Changes in operating assets and liabilities, net of product lines sold: |
||||||||
| Accounts receivable |
|
(49,911 |
) |
|
(6,397 |
) | ||
| Inventories |
|
24,430 |
|
|
33,755 |
| ||
| Other assets |
|
(3,532 |
) |
|
76,970 |
| ||
| Accounts payable, deferred revenue and accruals |
|
|||||||