TERADYNE INC - 10-Q Quarterly Report

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 July 4, 2004

¨	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 July 30, 2004 was 194,124,642 shares.

TERADYNE, INC.

INDEX


		Page No.
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets as of July 4, 2004 and December 31, 2003	3

	Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 4, 2004 and June 29, 2003	4

	Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 4, 2004 and June 29, 2003	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	44

Item 4.	Controls and Procedures	44

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	45

Item 4.	Submission of Matters to a Vote of Security Holders	46

Item 6.	Exhibits and Reports on Form 8-K	46

TERADYNE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	July 4, 2004			December 31, 2003
	(in thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	224,335		$	228,444
Marketable securities		104,849			60,974
Accounts receivable, net of allowance for doubtful accounts of $5,691 and $5,986 on July 4, 2004 and December 31, 2003, respectively		295,453			229,532
Inventories:
Parts		134,218			109,538
Assemblies in process		149,692			105,396

		283,910			214,934
Prepayments and other current assets		34,603			35,393

Total current assets		943,150			769,277
Property, plant, and equipment, at cost		1,313,382			1,305,254
Less: accumulated depreciation		(774,913	)		(760,885	)

Net property, plant, and equipment		538,469			544,369
Marketable securities		320,203			296,618
Goodwill		116,176			118,203
Other assets		49,834			56,895

Total assets	$	1,967,832		$	1,785,362

LIABILITIES
Current liabilities:
Notes payable—banks	$	7,217		$	7,272
Current portion of long-term debt		308			310
Accounts payable		130,942			74,097
Accrued employees’ compensation and withholdings		87,575			91,244
Deferred revenue and customer advances		34,698			25,391
Other accrued liabilities		66,553			75,125
Income taxes payable		13,179			7,376

Total current liabilities		340,472			280,815
Pension liability		82,573			93,878
Long-term other accrued liabilities		47,977			53,441
Convertible senior notes		400,000			400,000
Other long-term debt		7,486			7,658

Total liabilities		878,508			835,792

Commitments and contingencies (Note J)

SHAREHOLDERS’ EQUITY
Common stock, $0.125 par value, 1,000,000 shares authorized, 194,095 and 218,628 shares issued and 194,095 and 191,973 shares outstanding at July 4, 2004 and December 31, 2003, respectively		27,598			27,329
Additional paid-in capital		763,670			1,294,661
Accumulated other comprehensive loss		(59,167	)		(51,846	)
Retained earnings		357,223			236,483
Treasury shares, at cost, 26,655 shares at December 31, 2003		—			(557,057	)

Total shareholders’ equity		1,089,324			949,570

Total liabilities and shareholders’ equity	$	1,967,832		$	1,785,362

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, 2003 are an integral part of the condensed consolidated financial statements.

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Three Months Ended						For the Six Months Ended
	July 4, 2004			June 29, 2003			July 4, 2004			June 29, 2003
	(in thousands, except per share amounts)
Net revenues:
Products	$	466,802		$	276,394		$	840,769		$	557,659
Services		59,661			55,135			116,297			108,446

Net revenues		526,463			331,529			957,066			666,105

Cost of revenues:
Cost of products		259,500			203,781			474,902			414,708
Cost of services		40,335			39,140			79,561			78,683

Gross profit		226,628			88,608			402,603			172,714

Operating expenses:
Engineering and development		66,914			63,804			131,608			132,389
Selling and administrative		69,991			61,512			136,233			128,914
Restructuring and other charges		152			13,378			282			32,864
Gain on sale of business		(865	)		—			(865	)		—

Operating expenses		136,192			138,694			267,258			294,167

Income (loss) from operations		90,436			(50,086	)		135,345			(121,453	)
Interest income		3,470			3,299			7,061			7,478
Interest expense		(4,895	)		(5,402	)		(9,527	)		(10,813	)
Other income and expense, net		426			1,400			1,277			(1,299	)

Income (loss) before income taxes		89,437			(50,789	)		134,156			(126,087	)
Income tax expense		8,944			1,700			13,416			2,900

Net income (loss)	$	80,493		$	(52,489	)	$	120,740		$	(128,987	)

Net income (loss) per common share—basic	$	0.41		$	(0.28	)	$	0.62		$	(0.70	)

Shares used in calculations of net income (loss) per common share—basic		194,015			185,465			193,934			185,177

Net income (loss) per common share—diluted	$	0.39		$	(0.28	)	$	0.60		$	(0.70	)

Shares used in calculations of net income (loss) per common share—diluted		213,486			185,465			214,383			185,177

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Six Months Ended
	July 4, 2004			June 29, 2003
	(in thousands)
Cash flows from operating activities:
Net income (loss)	$	120,740		$	(128,987	)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation		61,687			76,069
Amortization		2,922			3,808
Impairment of long-lived assets		277			13,988
(Gain) loss on sale of product lines		(865	)		8,048
Provision for inventory		6,563			5,592
Provision for doubtful accounts		94			842
Other non-cash items, net		377			4,578
Changes in operating assets and liabilities, net of product lines sold:
Accounts receivable		(66,015	)		(49,143	)
Inventories		(53,780	)		35,387
Other assets		3,648			(18,553	)
Accounts payable, deferred revenue and accrued expenses		37,517			24,494
Accrued income taxes		5,803			(2,487	)

Net cash provided by (used for) operating activities		118,968			(26,364	)

Cash flows from investing activities:
Additions to property, plant and equipment	&nb

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