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 3, 1994

                                       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                                (I.R.S.Employer 
Incorporation or Organization)                             Identification No.)

                321 Harrison Avenue, Boston, Massachusetts  02118
               (Address of principal executive offices) (Zip Code)

                                  617-482-2700
              (Registrant's telephone number, including area code)



     Indicate by check mark whether the registrant:  (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the preceding 12 months (or for such shorter 
period that the registrant was required to file such reports), and (2) has 
been subject to the filing requirements for the past 90 days.  Yes X No _

     The number of shares outstanding of the registrant's only class of Common 
Stock as of July 29, 1994 was  35,754,426 shares.



                                 TERADYNE, INC.

                                     INDEX




												                                                    
                                                                    Page No.
                                                                    --------
Part I.  Financial Information:

     Condensed Consolidated Balance Sheets - 
        July 3, 1994 and December 31, 1993  ............................. 1

     Condensed Consolidated Statements of Income - 
        Quarters and Six Months Ended July 3, 1994 and July 4, 1993 ..... 2

     Condensed Consolidated Statements of Cash Flows -  
        Six Months Ended July 3, 1994 and July 4, 1993  ................. 3

     Notes to Condensed Consolidated Financial Statements  .............. 4

     Management's Discussion and Analysis of 
        Financial Condition and Results of Operations  ................. 5-6


Part II.  Other Information:

     Item 6(b).  Reports on Form 8-K .................................... 7



                                                      TERADYNE, INC.

                                          CONDENSED CONSOLIDATED BALANCE SHEETS
                                                 (Dollars in thousands)

July 3, 1994 December 31, 1993 ------------ ----------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents .................................. $ 150,351 $ 143,578 Accounts receivable - trade ................................ 104,448 101,669 Inventories: Parts .................................................. 47,007 43,452 Assemblies in process .................................. 38,260 34,258 --------- --------- 85,267 77,710 Refundable income taxes .................................... 249 2,049 Deferred tax assets ........................................ 10,973 10,973 Prepayments and other current assets ....................... 9,452 4,596 --------- --------- Total current assets ................................ 360,740 340,575 Property, at cost ............................................. 385,497 380,182 Less accumulated depreciation .............................. (204,115) (194,103) --------- --------- Net property ........................................ 181,382 186,079 Other assets .................................................. 21,015 17,789 --------- --------- Total assets ........................................ $ 563,137 $ 544,443 ========= ========= LIABILITIES Current liabilities: Notes payable - banks ...................................... $ 8,520 $ 7,574 Current portion of long-term debt .......................... 521 Accounts payable - trade ................................... 14,366 10,972 Accrued employees' compensation and withholdings ........... 29,446 34,856 Unearned service revenue and customer advances ............. 24,244 22,665 Other accrued liabilities .................................. 25,821 28,942 Income taxes payable ....................................... 6,178 1,024 --------- --------- Total current liabilities ........................... 108,575 106,554 Deferred tax liabilities ...................................... 8,643 8,643 Long-term debt ................................................ 9,100 9,138 --------- --------- Total liabilities .................................... 126,318 124,335 --------- --------- SHAREHOLDERS' EQUITY Common stock $.125 par value, authorized 75,000,000 shares, issued and outstanding after deduction of reacquired shares 35,723,984 shares (35,687,256 in 1993) ...................... 4,465 4,461 Additional paid-in capital .................................... 236,435 247,843 Retained earnings ............................................. 195,919 167,804 --------- --------- Total shareholders' equity .......................... 436,819 420,108 --------- --------- Total liabilities and shareholders' equity .......... $ 563,137 $ 544,443 ========= ========= The accompanying notes, together with the Notes to Consolidated Financial Statements included in the Company's Form 10-K for the year ended December 31, 1993 are an integral part of the condensed consolidated financial statements.
1 TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Quarters Ended For the Six Months Ended ---------------------- ------------------------ July 3, 1994 July 4, 1993 July 3, 1994 July 4, 1993 ------------ ------------ ------------ ------------ (Dollars in thousands except per share amounts) Net sales ................................... $156,497 $139,336 $308,509 $267,115 Expenses: Cost of sales ............................ 87,342 80,666 173,004 154,142 Engineering and development .............. 17,305 15,035 33,162 30,189 Selling and administrative ............... 31,764 32,557 63,635 63,698 -------- -------- -------- -------- 136,411 128,258 269,801 248,029 -------- -------- -------- -------- Income from operations ...................... 20,086 11,078 38,708 19,086 Other income (expense): Interest income .......................... 1,237 843 2,325 1,557 Interest expense ......................... (399) (982) (869) (2,010) -------- -------- -------- -------- Income before income taxes .................. 20,924 10,939 40,164 18,633 Provision for income taxes .................. 6,277 3,282 12,049 5,590 -------- -------- -------- -------- Net income .................................. $ 14,647 $ 7,657 $ 28,115 $ 13,043 ======== ======== ======== ======== Net income per common share ................. $0.40 $0.21 $0.76 $0.37 ===== ===== ===== ===== Shares used in calculations of net income per common share .............. 36,729,000 34,985,000 36,978,000 34,985,000 ========== ========== ========== ========== The accompanying notes, together with the Notes to Consolidated Financial Statements included in the Company's Form 10-K for the year ended December 31, 1993 are an integral part of the condensed consolidated financial statements.
2 TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended ------------------------ July 3, 1994 July 4, 1993 ------------ ------------ (Dollars in thousands) Cash flows from operating activities: Net income ............................................ $ 28,115 $ 13,043 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ........................................ 15,776 15,013 Amortization ........................................ 1,655 1,937 Deferred income taxes ............................... 1,274 Other non-cash items, net ........................... 1,450 1,881 Changes in operating assets and liabilities: Accounts receivable .............................. (2,779) 16,265 Inventories ...................................... (7,557) (1,607) Refundable income taxes .......................... 1,800 491 Other assets ..................................... (9,337) (2,851) Accounts payable and accruals .................... (3,418) 7,623 Income taxes payable ............................. 5,154 (12) --------- --------- Net cash provided by operating activities ...... 30,859 53,057 --------- --------- Cash flows from investing activities: Additions to property ................................. (8,692) (11,071) Increase in equipment manufactured by the Company ..... (2,406) (8,588) --------- --------- Net cash used in investing activities .......... (11,098) (19,659) --------- --------- Cash flows from financing activities: Payments of long-term debt ............................ (1,584) (420) Issuance of common stock under employee stock option and stock purchase plans ................... 10,048 14,807 Tax benefit from stock options ........................ 3,145 3,108 Acquisition of treasury stock ......................... (24,597) (2,277) --------- --------- Net cash flows provided by (used in) financing activities ......................... (12,988) 15,218 --------- --------- Increase in cash and cash equivalents .................... 6,773 48,616 Cash and cash equivalents at beginning of period ......... 143,578 67,383 --------- --------- Cash and cash equivalents at end of period ............... $ 150,351 $ 115,999 ========= ========= Supplementary disclosure of cash flow information: Cash paid during the period for: Interest ........................................... $ 880 $ 2,613 Income taxes ....................................... 1,950 729 The accompanying notes, together with the Notes to Consolidated Financial Statements included in the Company's Form 10-K for the year ended December 31, 1993 are an integral part of the condensed consolidated financial statements.
3 TERADYNE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) A. Financial Information --------------------- The accompanying condensed consolidated financial statements are unaudited. However, in the opinion of management, all adjustments (consisting only of normal recurring accrual entries) necessary for a fair presentation of such information have been made. Certain amounts contained in the accompanying condensed consolidated financial statements for 1993 have been reclassified to conform with the 1994 presentation. 4 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations: SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Quarters Ended For the Six Months Ended ---------------------- ------------------------ July 3, 1994 July 4, 1993 July 3, 1994 July 4, 1993 ------------ ------------ ------------ ------------ (Dollars in thousands) Net sales .................................... $ 156,497 $ 139,336 $ 308,509 $ 267,115 ========= ========= ========= ========= Net income ................................... $ 14,647 $ 7,657 $ 28,115 $ 13,043 ========= ========= ========= ========= Percentage of net sales: Net sales ................................. 100% 100% 100% 100% Expenses: Cost of sales ........................... 56 58 56 58 Engineering and development ............. 11 11 11 11 Selling and administrative .............. 20 23 21 24 Interest, net ........................... 0 0 (1) 0 --- --- --- --- 87 92 87 93 Income before income taxes ................ 13 8 13 7 Provision for income taxes ................ 4 2 4 2 --- --- --- --- Net income ................................ 9% 6% 9% 5% === === === === Provision for income taxes as a percentage of income before income taxes ............. 30% 30% 30% 30% === === === ===
Sales increased 12% to $156.5 million in the second quarter of 1994 compared with the second quarter of 1993. For the first six months of 1994, sales increased 15% to $308.5 compared to the first six months of 1993. The increase in sales in both the quarter and the six months periods occurred primarily in semiconductor test systems and backplane connection systems. Sales of semiconductor test sytems increased as semiconductor manufacturers added capacity in response to rising demand for their products. Sales of backplane connection systems increased in response to the increasing demand for the high technology products of the Company's customer base. As a result of the increase in sales, income before taxes increased $10.0 million in the second quarter of 1994 and $21.5 million in the first six months of 1994 compared to the same periods in 1993. Incoming orders increased from $167 million in the second quarter of 1993 to $186 million in the second quarter of 1994. Backlog at the end of the second quarter of 1994 was $323 million. Cost of sales decreased from 58% of sales in the second quarter and first six months of 1993 to 56% of sales in the second quarter and first six months of 1994 as the fixed and semi-variable components of cost of sales did not increase at the same rate as the increase in sales. 5 Engineering and development expenses were 11% of sales in the first quarter and the first six months of both 1994 and 1993. The dollar amount of these expenses has increased at the same rate as sales have increased. The increase was due primarily to support new product development efforts in semiconductor test systems. Selling and administrative expenses decreased from 23% of sales to 20% of sales in the second quarter of 1994 compared to the second quarter of 1993 and from 24% of sales to 21% in the first six months of 1994 compared to the first six months of 1993. The dollar amount of these expenses decreased slightly as a result of the Company's efforts to control these expenses. In the first six months of 1994, the Company had net interest income of $1.5 million compared to net interest expense of $.5 million in the first six months of 1993. This change was due to interest earned on the increase in cash of $34.4 million between July 4, 1993 and July 3, 1994, and lower interest expense as a result of the retirement of the Company's convertible debentures in the fourth quarter of 1993 and industrial revenue bonds in the second quarter of 1994. The Comapany's effective tax rate was 30% in both the first six months of 1994 and 1993. Changes in Financial Condition During the First Six Months of 1994 - - ------------------------------------------------------------------ During the first six months of 1994, cash increased $6.8 million to a balance of $150.4 million. Cash flow provided by operations was $30.9 million. The Company used cash of $24.6 million to purchase stock from its stockholders on the open market and generated cash of $13.2 million from employees under the Company's employee stock option and stock purchase plans, resulting in a net cash outflow of $11.4 million for stock related activities. An additional $11.1 million was used to fund property and equipment additions during the six month period. 6 Item 6(b). Reports on Form 8-K - - ------------------------------- There have been no Form 8-K filings during the quarter ended July 3, 1994 as none were required. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TERADYNE, INC. ------------------------------------- Registrant OWEN W. ROBBINS ------------------------------------- Owen W. Robbins Executive Vice President August 5, 1994 7