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 October 2, 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 October 28, 1994 was  36,048,127 shares.



                                 TERADYNE, INC.

                                     INDEX




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

     Condensed Consolidated Balance Sheets - 
        October 2, 1994 and December 31, 1993  .............................3

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

     Condensed Consolidated Statements of Cash Flows -  
        Nine Months Ended October 2, 1994 and October 3, 1993  .............5

     Notes to Condensed Consolidated Financial Statements  .................6

     Management's Discussion and Analysis of 
        Financial Condition and Results of Operations  ....................7-8


Part II.  Other Information:

     Item 6(b).  Reports on Form 8-K .......................................9


                                        2



                                                      TERADYNE, INC.

                                          CONDENSED CONSOLIDATED BALANCE SHEETS
                                                 (Dollars in thousands)

October 2, 1994 December 31, 1993 --------------- ----------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents .................................. $ 144,542 $ 143,578 Marketable securities ...................................... 19,475 Accounts receivable - trade ................................ 128,250 101,669 Inventories: Parts .................................................. 48,552 43,452 Assemblies in process .................................. 41,385 34,258 --------- --------- 89,937 77,710 Refundable income taxes .................................... 2,049 Deferred tax assets ........................................ 10,973 10,973 Prepayments and other current assets ....................... 9,945 4,596 --------- --------- Total current assets ................................ 403,122 340,575 Property, at cost ............................................. 390,118 380,182 Less accumulated depreciation .............................. (207,466) (194,103) --------- --------- Net property ........................................ 182,652 186,079 Other assets .................................................. 23,248 17,789 --------- --------- Total assets ........................................ $ 609,022 $ 544,443 ========= ========= LIABILITIES Current liabilities: Notes payable - banks ...................................... $ 8,515 $ 7,574 Current portion of long-term debt .......................... 521 Accounts payable - trade ................................... 17,022 10,972 Accrued employees' compensation and withholdings ........... 32,920 34,856 Unearned service revenue and customer advances ............. 37,256 22,665 Other accrued liabilities .................................. 26,524 28,942 Income taxes payable ....................................... 7,282 1,024 --------- --------- Total current liabilities ........................... 129,519 106,554 Deferred tax liabilities ...................................... 8,643 8,643 Long-term debt ................................................ 9,099 9,138 --------- --------- Total liabilities .................................... 147,261 124,335 --------- --------- SHAREHOLDERS' EQUITY Common stock $.125 par value, authorized 75,000,000 shares, issued and outstanding after deduction of reacquired shares 35,980,807 shares (35,687,256 in 1993) ...................... 4,498 4,461 Additional paid-in capital .................................... 240,984 247,843 Retained earnings ............................................. 216,279 167,804 --------- --------- Total shareholders' equity .......................... 461,761 420,108 --------- --------- Total liabilities and shareholders' equity .......... $ 609,022 $ 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.
3 TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the Quarters Ended For the Nine Months Ended ---------------------- ------------------------ Oct. 2, 1994 Oct. 3, 1993 Oct. 2, 1994 Oct. 3, 1993 ------------ ------------ ------------ ------------ (Dollars in thousands except per share amounts) Net sales ................................... $178,840 $140,279 $487,349 $407,394 Expenses: Cost of sales ............................ 99,964 78,213 272,968 232,355 Engineering and development .............. 17,934 15,684 51,096 45,873 Selling and administrative ............... 32,148 32,073 95,783 95,771 -------- -------- -------- -------- 150,046 125,970 419,847 373,999 -------- -------- -------- -------- Income from operations ...................... 28,794 14,309 67,502 33,395 Other income (expense): Interest income .......................... 1,708 1,064 4,033 2,621 Interest expense ......................... (413) (937) (1,282) (2,947) -------- -------- -------- -------- Income before income taxes .................. 30,089 14,436 70,253 33,069 Provision for income taxes .................. 9,729 4,331 21,778 9,921 -------- -------- -------- -------- Net income .................................. $ 20,360 $ 10,105 $ 48,475 $ 23,148 ======== ======== ======== ======== Net income per common share ................. $0.55 $0.28 $1.31 $0.65 ===== ===== ===== ===== Shares used in calculations of net income per common share .............. 37,009,000 35,480,000 36,988,000 35,480,000 ========== ========== ========== ========== 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.
4 TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Nine Months Ended ------------------------ October 2, 1994 October 3, 1993 --------------- --------------- (Dollars in thousands) Cash flows from operating activities: Net income ............................................ $ 48,475 $ 23,148 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ........................................ 23,584 22,938 Amortization ........................................ 2,628 2,926 Deferred income taxes ............................... 6,613 Other non-cash items, net ........................... 1,615 2,090 Changes in operating assets and liabilities: Accounts receivable .............................. (26,581) 11,682 Inventories ...................................... (12,227) (10,548) Refundable income taxes .......................... 2,049 1,142 Other assets ..................................... (13,036) (1,424) Accounts payable and accruals .................... 16,427 16,670 Income taxes payable ............................. 6,258 807 --------- --------- Net cash provided by operating activities ...... 49,192 76,044 --------- --------- Cash flows from investing activities: Additions to property ................................. (16,158) (15,798) Increase in equipment manufactured by the Company ..... (4,189) (11,814) Purchase of marketable securities ..................... (19,475) --------- --------- Net cash used in investing activities .......... (39,822) (27,612) --------- --------- Cash flows from financing activities: Payments of long-term debt ............................ (1,584) (570) Issuance of common stock under employee stock option and stock purchase plans ................... 13,230 21,992 Tax benefit from stock options ........................ 4,545 Acquisition of treasury stock ......................... (24,597) (2,277) --------- --------- Net cash flows provided by (used in) financing activities ......................... (8,406) 19,145 --------- --------- Increase in cash and cash equivalents .................... 964 67,577 Cash and cash equivalents at beginning of period ......... 143,578 67,383 --------- --------- Cash and cash equivalents at end of period ............... $ 144,542 $ 134,960 ========= ========= Supplementary disclosure of cash flow information: Cash paid during the period for: Interest ........................................... $ 1,266 $ 3,981 Income taxes ....................................... 8,926 1,359 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.
5 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. 6 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 Nine Months Ended ---------------------- ------------------------ Oct. 2, 1994 Oct. 3, 1993 Oct. 2, 1994 Oct. 3, 1993 ------------ ------------ ------------ ------------ (Dollars in thousands) Net sales .................................... $ 178,840 $ 140,279 $ 487,349 $ 407,394 ========= ========= ========= ========= Net income ................................... $ 20,360 $ 10,105 $ 48,475 $ 23,148 ========= ========= ========= ========= Percentage of net sales: Net sales ................................. 100% 100% 100% 100% Expenses: Cost of sales ........................... 56 56 56 57 Engineering and development ............. 10 11 10 11 Selling and administrative .............. 18 23 20 24 Interest, net ........................... (1) 0 0 0 --- --- --- --- 83 90 86 92 Income before income taxes ................ 17 10 14 8 Provision for income taxes ................ 5 3 4 2 --- --- --- --- Net income ................................ 12% 7% 10% 6% === === === === Provision for income taxes as a percentage of income before income taxes ............. 32% 30% 31% 30% === === === ===
Sales increased 27% to $178.8 million in the third quarter of 1994 compared to the third quarter of 1993. In the first nine months of 1994, sales increased 20% to $487.3 million compared to the first nine months of 1993. The growth in sales in the third quarter occurred primarily in semiconductor test systems and backplane connection systems and to a lesser extent in assembly test systems and telecommunications systems. In the nine month periods, the sales growth occurred in each of the groups except telecommunications systems, where sales declined slightly. Sales of semiconductor test systems 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 $15.7 million in the third quarter and $37.2 mill nine months ending October 2, 1994 compared to the same periods in 1993. Incoming orders were $180 million in the third quarter of 1994 compared to $198 million in the third quarter of 1993. In the third quarter of 1993, incoming orders included a contract in the amount of $63 million to supply telephone-line test equipment to Deutsche Bundepost Telekom in Germany. Backlog at the end of the third quarter of 1994 was $324 million. 7 Cost of sales was 56% of sales in both of the third quarters of 1994 and 1993. In the first nine months of 1994, cost of sales decreased to 56% of sales from 57% in the same period in 1993. While the fixed and semi-variable components of cost of sales have not increased at the same rate as the increase in sales, changes in product mix have had an offsetting impact on the cost of sales percentage. Engineering and development expenses were 10% of sales in the third quarter and the first nine months of 1994, compared to 11% in the third quarter and first nine months of 1993. The dollar amount of these expenses has increased at a lesser rate as sales have increased. The dollar amount increase was due primarily to support new product development efforts in semiconductor test systems. Selling and administrative expenses decreased from 23% of sales to 18% of sales in the third quarter of 1994 compared to the third quarter of 1993 and from 24% of sales to 20% in the first nine months of 1994 compared to the first nine months of 1993. The dollar amount of these expenses has remained constant while the Company's sales have increased. In the first nine months of 1994, the Company had net interest income of $2.8 million compared to net interest expense of $.3 million in the first nine months of 1993. This change was due to higher levels of invested cash and higher interest rates in the first nine months of 1994 compared to the first nine months of 1993, 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. During the third quarter of 1994, the Company's effective tax rate increased to 31% of pre-tax income on a year to date basis, creating a 32% effective tax rate in the third quarter. The 1993 effective tax rate was 30%. Changes in Financial Condition During the First Nine Months of 1994 - - ------------------------------------------------------------------- During the first nine months of 1994, cash and marketable securities increased $20.4 million to a balance of $164.0 million. Cash flow provided by operations was $49.2 million. The Company used cash of $24.6 million to purchase stock from its shareholders on the open market and generated cash of $17.8 million under the Company's employee stock option and stock purchase plans, resulting in a net cash outflow of $6.8 million for stock related activities. An additional $20.3 million was used to fund property and equipment additions during the nine month period. 8 Item 6(b). Reports on Form 8-K - - ------------------------------- There have been no Form 8-K filings during the quarter ended October 2, 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 November 11, 1994 9
 

5 1,000 9-MOS DEC-31-1994 OCT-02-1994 144,542 19,475 129,977 1,727 89,937 403,122 390,118 207,466 609,022 129,519 9,099 4,498 0 0 457,263 609,022 487,349 487,349 272,968 272,968 146,879 0 1,282 70,253 21,778 48,475 0 0 0 48,475 1.31 1.31