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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K
---------
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NUMBER 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 Number)
321 HARRISON AVENUE, BOSTON, MASSACHUSETTS 02118
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 482-2700
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
- -------------------------------------------- --------------------------------------------
Common Stock, par value $.125 New York Stock Exchange
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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or in any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of February 25, 1994 was $1,015.8 million based upon the composite
closing price of the registrant's Common Stock on the New York Stock Exchange on
that date.
The number of shares outstanding of the registrant's only class of Common
Stock as of February 25, 1994 was 36,011,991 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's proxy statement in connection with its 1994
annual meeting of stockholders are incorporated by reference into Part III.
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TERADYNE, INC.
FORM 10-K
PART I
ITEM 1: BUSINESS
Teradyne, Inc. is a manufacturer of electronic test systems and backplane
connection systems used in the electronics and telecommunications industries.
For financial information concerning these two industry segments, see "Note L:
Industry Segment and Geographic Information" in Notes to Consolidated Financial
Statements. Unless the context indicates otherwise, the term "Company" as used
herein includes Teradyne, Inc. and all its subsidiaries.
ELECTRONIC TEST SYSTEMS
The Company designs, manufactures, markets, and services electronic test
systems and related software used by component manufacturers in the design and
testing of their products and by electronic equipment manufacturers for the
incoming inspection of components and for the design and testing of circuit
boards and other assemblies. Manufacturers use such systems and software to
increase product performance, to improve product quality, to shorten time to
market, to enhance manufacturability, to conserve labor costs, and to increase
production yields. The Company's electronic systems are also used by telephone
operating companies for the testing and maintenance of their subscriber
telephone lines and related equipment.
Electronic systems produced by the Company include: (i) test systems for a
wide variety of semiconductors, including digital and analog integrated
circuits, (ii) test systems for circuit boards and other assemblies, and (iii)
test systems for telephone lines and networks. The Company's test systems are
all controlled by computers, and programming and operating software is supplied
both as an integral part of the product and as a separately priced enhancement.
The Company's systems are extremely complex and require extensive support
both by the customer and by the Company. Prices for the Company's systems range
from less than $100,000 to $5 million or more.
BACKPLANE CONNECTION SYSTEMS
The Company also manufactures backplane connection systems, principally for
the computer, telecom-munications, and military/aerospace industries. A
backplane is a panel that supports the circuit boards in an electronic assembly
and carries the wiring that connects the boards to each other and to other
elements of a system. The Company produces both printed-circuit and metal
backplanes, along with mating circuit-board connectors. Backplanes are
custom-configured to meet specific customer requirements. The Company has begun
to evolve the manufacture of backplane connection systems to the manufacture of
fully integrated electronic assemblies that include backplane, card cage,
cabling, and related design and production services.
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MARKETING AND SALES
MARKETS
The Company sells its products across most sectors of the electronics
industry and to companies in other industries that use electronic devices in
high volume. The Company believes that it could suffer the loss of one or even a
few major customers without serious long-term adverse effects. Sales to
Motorola, Inc. were $69.3 million in 1993, which were greater than 10% of the
Company's net sales in 1993. No other customer accounted for more than 10% of
net sales in 1993.
Direct sales to United States Government agencies accounted for
approximately 2% of net sales in 1993 and 1992, and 1% in 1991. In addition,
sales are made, within each of the Company's segments, to customers who are
government contractors. Approximately 33% of all backplane connection systems
sales and less than 10% of all electronic test systems sales fell into this
category during 1993.
The Company's overseas customers are located primarily in Europe, Asia
Pacific, and Japan. Sales to overseas customers consist principally of
electronic test systems, and these sales occur either through foreign sales
subsidiaries or through direct exports. Substantially all of the Company's
manufacturing activities are conducted in the United States.
Sales to overseas customers accounted for 41% of net sales in 1993, 42% in
1992, and 47% in 1991. Identifiable assets of the Company's foreign
subsidiaries, consisting principally of accounts receivable and other operating
assets, approximated $65.0 million at December 31, 1993, $86.0 million at
December 31, 1992, and $82.0 million at December 31, 1991. Of these identifiable
assets at December 31, 1993, $39.0 million were in Europe, $23.0 million were in
Japan, and $3.0 million were in Asia Pacific. Since sales to overseas customers
have little correlation with the location of manufacture, it is not meaningful
to present operating profit by geographic area.
The Company is subject to the inherent risks involved in international
trade, such as political instability, restrictive trade policies, controls on
funds transfer, and foreign currency fluctuations. The Company attempts to
reduce the effects of currency fluctuations by hedging part of its exposed
position and by conducting some of its foreign transactions in U.S. dollars or
dollar equivalents.
DISTRIBUTION
The Company sells its electronic systems primarily through a direct sales
force. Backplane connection systems are sold by direct sales personnel as well
as by manufacturers' representatives. The Company has sales and service offices
throughout North America, Europe, Asia Pacific, and Japan.
COMPETITION
Competition is intense in each of the business areas that the Company
operates. In each market there are several significant competitors (three to
five). Many of these competitors have greater resources than the Company.
Competition is principally based on technical performance, equipment and service
reliability, reputation and accessibility to the vendor, and price. While
relative positions vary from year to year, the Company believes that it operates
with a significant market share position in each of its businesses.
BACKLOG
On December 31, 1993, the Company's backlog of unfilled orders for
electronic test systems and backplane connection systems was approximately
$238.9 million and $49.1 million, respectively, compared with $183.0 million and
$34.8 million, respectively, on December 31, 1992. Of the backlog at December
31, 1993, approximately 75% of the electronic test systems backlog, and
substantially all of the backplane connection systems backlog is expected to be
delivered in 1994, although the Company's past experience indicates that a
portion of orders included in the backlog may be cancelled. There are no
seasonal or unusual factors related to the backlog.
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RAW MATERIALS
The Company's products require a wide variety of electronic and mechanical
components. In the past, the Company has experienced occasional delays in
obtaining timely delivery of certain items. Additionally, the Company could
experience a temporary adverse impact if any of its sole source suppliers ceased
to deliver products. Management believes, however, that alternate sources could
be developed.
PATENTS AND LICENSES
The development of products by the Company, both hardware and software, is
largely based on proprietary information. The various copyrights, trademarks,
and patents owned by the Company, together with patent applications pending, are
generally not significant in relation to the Company's overall business.
However, protection of such proprietary information, through methods such as
patents, software license agreements with customers and employee agreements, is
important for certain of the Company's products. The Company does not hesitate
to assert its rights to intellectual property when, in its view, these rights
are infringed upon. Also from time to time, claims have been asserted that
certain of its products and technologies infringe the patent rights of third
parties. In the opinion of management, none of these claims are expected to have
a material effect on the consolidated financial or competitive position of the
Company.
EMPLOYEES
As of December 31, 1993, the Company employed approximately 4,000 persons.
Since the inception of the Company's business, there have been no work stoppages
or other labor disturbances. The Company has no collective bargaining contracts.
ENGINEERING AND DEVELOPMENT ACTIVITIES
The highly technical nature of the Company's products requires a large and
continuing engineering and development effort. Engineering and development
expenditures for new and improved products were approximately $62.4 million in
1993, and $62.0 million in 1992 and 1991. These expenditures amounted to
approximately 11% of net sales in 1993, and 12% in 1992 and 1991.
ENVIRONMENTAL AFFAIRS
The Company's manufacturing facilities are subject to numerous laws and
regulations designed to protect the environment, particularly from plant wastes
and emissions. These include laws such as the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Occupational
Safety and Health Act, the Clean Air Act, the Clean Water Act, the Hazardous and
Solid Waste Amendments of 1984 and Resource Conservation and Recovery Act of
1976. In the opinion of management, compliance with these laws and regulations
has not had and will not have a material effect upon the capital expenditures,
earnings and competitive position of the Company.
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EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names of all executive officers of the
Company and certain other information relating to their positions held with the
Company and other business experience. Executive officers of the Company do not
have a specific term of office but rather serve at the discretion of the Board
of Directors.
BUSINESS EXPERIENCE FOR THE PAST
EXECUTIVE OFFICER AGE POSITION 5 YEARS
----------------- --- -------- ---------------------------------
Alexander V. d'Arbeloff.......... 66 President and Chairman of Chairman of the Board of the
the Board Company since 1977; President
of the Company since 1971;
Director of the Company since
1960.
George V. d'Arbeloff............. 49 Vice President Vice President of the Company
since 1980.
George W. Chamillard............. 55 Executive Vice President Executive Vice President of the
Company beginning in 1994; Vice
President of the Company from
1981 to 1993.
Ronald J. Dias................... 50 Vice President Vice President of the Company
since 1988.
Loren G. Eaton................... 52 Vice President Vice President of the Company
since 1984.
James A. Prestridge.............. 62 Executive Vice President Executive Vice President of the
and Member of the Board Company since 1992; Vice
President of the Company from
1971 to 1992.
Edward Rogas, Jr................. 53 Vice President Vice President of the Company
since 1984.
Owen W. Robbins.................. 64 Executive Vice President Executive Vice President of the
and Member of the Board Company since 1992; Vice
President of the Company from
1977 to 1992.
Frederick T. Van Veen............ 63 Vice President Vice President of the Company
since 1980.
John P. McCabe................... 49 Controller Controller of the Company since
1975.
Stuart M. Osattin................ 48 Treasurer Treasurer of the Company since
1980.
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ITEM 2: PROPERTIES
The Company's executive offices are in Boston, Massachusetts. Manufacturing
and other operations are carried on in several locations. The following table
provides certain information as to the Company's principal general offices and
manufacturing facilities:
APPROXIMATE
PROPERTY SQ. FT. OF
LOCATION INTEREST FLOOR SPACE
-------- -------- -----------
ELECTRONIC TEST SYSTEMS INDUSTRY SEGMENT:
Boston, Massachusetts
321 Harrison Avenue......................................... Own 246,000
179 Lincoln Street.......................................... Own 246,000
Agoura Hills, California....................................... Own 360,000
Deerfield, Illinois............................................ Own 65,000
Deerfield, Illinois............................................ Lease 21,000
Walnut Creek, California....................................... Lease 60,000
BACKPLANE CONNECTION SYSTEMS INDUSTRY SEGMENT:
Nashua, New Hampshire.......................................... Own 299,000
The Company owns the majority of its manufacturing and office facilities.
The Company believes its present and planned facilities and equipment are
adequate to service its current and immediately foreseeable business needs.
Approximately 120,000 square feet of the Agoura Hills property listed above
is currently unoccupied. The Company is subleasing an additional 85,000 square
feet of space in Walnut Creek through the expiration of the lease in June 1996.
ITEM 3: LEGAL PROCEEDINGS
The Company is not a party to any litigation that, in the opinion of
management, could reasonably be expected to have a material adverse impact on
the Company's financial position.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
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PART II
ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
The following table shows the market range for the Company's Common Stock
based on reported sales prices on the New York Stock Exchange.
PERIOD HIGH LOW
------ ---- ----
1992 First Quarter.......................................................... 203/8 15 3/8
Second Quarter........................................................ 163/4 10 1/4
Third Quarter......................................................... 141/2 10
Fourth Quarter........................................................ 163/8 11 7/8
1993 First Quarter.......................................................... 181/8 13 1/4
Second Quarter........................................................ 211/2 13
Third Quarter......................................................... 295/8 20 1/2
Fourth Quarter........................................................ 281/4 20
The number of record holders of the Company's Common Stock at February 25,
1994 was 3,225.
The Company has never paid cash dividends because it has been its policy to
use earnings to finance expansion and growth. While payment of future dividends
will rest within the discretion of the Board of Directors and will depend, among
other things, upon the Company's earnings, capital requirements and financial
condition, the Company presently expects to retain all of its earnings for use
in the business.
ITEM 6: SELECTED FINANCIAL DATA
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
Net sales................................... $554,734 $529,581 $508,923 $458,877 $483,575
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Income (loss) before extraordinary item..... $ 35,923 $ 22,548 $ 18,253 $(21,332) $ 10,157
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Income (loss) before extraordinary item per
common share.............................. $ 1.00 $ 0.67 $ 0.58 $ (0.71) $ 0.35
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Total assets................................ $544,443 $461,055 $420,533 $388,931 $417,872
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Long-term obligations....................... $ 9,138 $ 23,647 $ 24,344 $ 25,045 $ 38,382
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SELECTED RELATIONSHIPS WITHIN THE CONSOLIDATED
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
------------------------------
1993 1992 1991
-------- -------- --------
(DOLLARS IN THOUSANDS)
Net sales...................................................... $554,734 $529,581 $508,923
-------- -------- --------
-------- -------- --------
Income before extraordinary item............................... $ 35,923 $ 22,548 $ 18,253
-------- -------- --------
-------- -------- --------
Increase in net sales from preceding year:
Amount....................................................... $ 25,153 $ 20,658 $ 50,046
-------- -------- --------
-------- -------- --------
Percentage................................................... 5% 4% 11%
-------- -------- --------
-------- -------- --------
Increase in income before extraordinary item from preceding
year......................................................... $ 13,375 $ 4,295 $ 39,585
-------- -------- --------
-------- -------- --------
Percentage of net sales:
Net sales.................................................... 100% 100% 100%
Expenses:
Cost of sales............................................. 57 59 58
Engineering and development............................... 11 12 12
Selling and administrative................................ 23 24 25
-------- -------- --------
91 95 95
Interest expense (net)....................................... (1)
-------- -------- --------
Income before income taxes and extraordinary item............ 9 5 4
Provision for income taxes................................... 3 1
-------- -------- --------
Income before extraordinary item............................. 6% 4% 4%
-------- -------- --------
-------- -------- --------
RESULTS OF OPERATIONS:
1993 Compared to 1992
Sales increased 5% in 1993, to $554.7 million. The increase in sales was
primarily due to a 13% increase in sales of semiconductor test systems and, to a
lesser extent, a 7% increase in sales of backplane connection systems. Sales of
semiconductor test systems increased as semiconductor manufacturers added
capacity in response to rising demand for their products. Sales of circuit-board
test systems and telecommunications systems declined 7% and 18%, respectively,
in 1993 compared to 1992. Incoming orders increased 19% in 1993 to $625.0
million over 1992 with increased orders occurring in each of the Company's major
groups. The Company's backlog grew during 1993 to $288.0 million.
Income before taxes increased by $25.3 million from 1992 to 1993 on a sales
increase of $25.2 million as the Company continued to control the growth in its
operating expenses. In addition, costs in 1993 were lower in the Company's
circuit-board test operations following actions taken by the Company in 1992 to
consolidate those operations. These lower costs helped to offset the impact of
the reduced sales of circuit-board test systems.
Cost of sales decreased from 59% of sales in 1992 to 57% in 1993. While
sales increased in 1993, the fixed and semi-variable components of cost of sales
decreased as a result of the Company's cost reduction programs. The changes in
engineering and development expenses and selling and administrative expenses
were each less than 1% in 1993, compared to 1992. These expenses have
essentially remained at their current level since 1991, as the Company has
controlled the growth of its fixed costs.
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Interest income increased 44% in 1993 as a result of a $76.2 million
increase in the Company's cash and cash equivalents balance during the year.
Interest expense decreased 12% in 1993 primarily as a result of the Company's
retirement of its 9.25% outstanding convertible subordinated debentures in the
fourth quarter.
The Company's effective tax rate increased from 13.5% in 1992 to 30% in
1993. The Company had been able to utilize net operating loss carryforwards to
lower its United States taxable income for financial reporting purposes in 1992,
while in 1993 those carryforwards were no longer available. However, the
Company's tax rate in 1993 was below the United States statutory rate of 35%, as
a result of the utilization of tax credit carryforwards and foreign net
operating loss carryforwards. There continue to be tax credit carryforwards and
foreign net operating loss carryforward amounts which will lower the Company's
prospective tax rate if utilized. The Company adopted Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes" at the beginning of
1993. The effect of this change in accounting principle was not material to the
Company's consolidated financial position. See "Note K: Income Taxes" in Notes
to Consolidated Financial Statements.
In connection with the retirement of the Company's outstanding 9.25%
convertible subordinated debentures, the Company incurred, in the fourth quarter
of 1993, an extraordinary charge of $0.7 million, net of income taxes, for the
costs of the redemption premium of 3.7% and the write off of unamortized debt
issuance costs.
1992 Compared to 1991
Sales increased 4% in 1992, to $529.6 million. The sales increase was
primarily due to a 13% increase in sales of semiconductor test systems over 1991
and, to a lesser extent, a 7% increase in sales of connection systems.
Offsetting the increased sales were reduced sales of circuit-board test systems
and telecommunications systems which were down 12% and 5%, respectively. The
Company believes that the over-all market for semiconductor test systems
declined in 1992 and that, the increase in sales represents market-share growth.
The decline in sales of circuit-board test systems was primarily due to a
decrease in demand from U.S. government defense contractors.
During the year, the Company decided to concentrate its efforts in
Electronic Design Automation (EDA) on software products for test generation and
design verification. This decision led to the closing of the EDA operation in
Santa Clara, California and the consolidation of the EDA operation in Boston,
Massachusetts with the circuit-board test division. The Company also decided to
move the circuit-board assembly operation in Walnut Creek, California to the
central circuit-board assembly operation in Boston.
Cost of sales increased as a percent of sales from 58% to 59%. This
increase was due to the fact that, while the Company reduced its overhead
associated with circuit-board test systems and telecommunications systems, it
did not reduce such expenses proportionately with the reduction in sales of
these two product lines.
Engineering and development expenses were essentially unchanged in 1992,
while the amount of selling and administrative expenses increased less than 1%
as the Company controlled the growth of these expenses.
Interest income increased 78% in 1992 to $2.5 million due to an increase in
the Company's cash and cash equivalents balance beginning in the second half of
1991. Cash had grown by $63.8 million from June 29, 1991 to December 31, 1992.
Interest expense decreased 21% in 1992 due to a reduction in the average level
of debt outstanding during the year and lower average short-term interest rates.
The Company's effective tax rate increased from 10% in 1991 to 13.5% in
1992. At the end of 1992, the Company had utilized all of its available U.S.
Federal net operating loss carryforwards for financial reporting purposes.
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LIQUIDITY AND CAPITAL RESOURCES
The Company's cash balance increased by $76.2 million in 1993, following an
increase of $32.0 million in 1992. Cash flow generated from operations was $91.8
million in 1993 and $40.7 million in 1992. Additional cash of $33.6 million in
1993 and $15.7 million in 1992 was generated from the sale of stock to employees
under the Company's stock option and stock purchase plans. In 1992, cash of $3.2
million was also raised from a bank note to finance future construction of a
plant in Kumamoto, Japan.
Cash was used to fund additions to property, plant and equipment of $32.2
million in 1993 and $28.2 million in 1992. The Company also used $14.7 million
of its cash to retire outstanding debt and $2.3 million to purchase stock from
its shareholders pursuant to the Company's open market stock repurchase program.
The debt retirement included $10.8 million for the repurchase of the outstanding
convertible debentures and a cash payment of $3.2 million for the exercise of a
purchase option on the Company's headquarters building in Boston, Massachusetts.
The Company believes its cash and cash equivalents balance of $143.6
million, together with other sources of funds, including cash flow generated
from operations and available borrowing capacity of $80.0 million under its line
of credit agreement, will be sufficient to meet future working capital and
capital expenditure requirements.
Inflation has not had a significant long-term impact on earnings. If there
were inflation, the Company's efforts to cover cost increases with price
increases would be frustrated in the short term by its relatively high backlog.
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ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Shareholders of
TERADYNE, INC.:
We have audited the consolidated financial statements and financial
statement schedules of Teradyne, Inc. and Subsidiaries listed below. These
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Teradyne, Inc.
and Subsidiaries as of December 31, 1993 and 1992, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedules
referred to above, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the information
required to be included therein.
COOPERS & LYBRAND
Boston, Massachusetts
January 24, 1994
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES COVERED BY THE
REPORT OF INDEPENDENT ACCOUNTANTS
Consolidated Financial Statements filed in Item 8:
Balance Sheets as of December 31, 1993 and 1992
Statements of Income for the years ended December 31, 1993, 1992 and 1991
Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991
Statements of Changes in Shareholders' Equity for the years ended December 31, 1993,
1992 and 1991
Consolidated Financial Statement Schedules for the years ended December 31, 1993, 1992
and 1991 filed in Item 14(d):
V -- Property
VI -- Accumulated Depreciation, Depletion and Amortization of Property
IX -- Short-term Borrowings
X -- Supplementary Income Statement Information
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TERADYNE, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
1993 1992
---- ----
(DOLLARS IN THOUSANDS)
ASSETS
Current assets:
Cash and cash equivalents (Note B)........................... $143,578 $ 67,383
Accounts receivable -- trade -- less allowance for doubtful
accounts of $1,990 in 1993 and $2,036 in 1992............. 101,669 120,156
Inventories:
Parts..................................................... 43,452 35,623
Assemblies in process..................................... 34,258 29,973
-------- --------
77,710 65,596
Refundable income taxes...................................... 2,049 2,050
Deferred tax assets (Note K)................................. 10,973
Prepayments and other current assets......................... 4,596 5,766
-------- --------
Total current assets................................. 340,575 260,951
Property (Note C and Schedule V):
Land......................................................... 19,482 19,482
Buildings and improvements................................... 112,290 110,906
Machinery and equipment...................................... 245,151 231,882
Construction in progress..................................... 3,259 734
-------- --------
Total................................................ 380,182 363,004
Less: Accumulated depreciation (Schedule VI)................. (194,103) (177,950)
-------- --------
Net property......................................... 186,079 185,054
Deferred charges and other assets.............................. 17,789 15,050
-------- --------
Total assets......................................... $544,443 $461,055
======== ========
LIABILITIES
Current liabilities:
Notes payable -- banks (Schedule IX)......................... $ 7,574 $ 6,849
Current portion of long-term debt (Note C)................... 521 3,962
Accounts payable -- trade.................................... 10,972 7,011
Accrued employees' compensation and withholdings............. 34,856 26,052
Unearned service revenue and customer advances............... 22,665 20,174
Other accrued liabilities.................................... 28,942 27,877
Income taxes payable......................................... 1,024 468
-------- --------
Total current liabilities............................ 106,554 92,393
Deferred tax liabilities (Note K).............................. 8,643 367
Long-term debt (Note C)........................................ 9,138 9,265
Convertible subordinated debentures, net of issuance costs
(Note D)..................................................... 14,382
Commitments (Notes E and F)....................................
-------- --------
Total liabilities.................................... 124,335 116,407
-------- --------
SHAREHOLDERS' EQUITY
Common stock $.125 par value, authorized 75,000,000 shares,
issued and outstanding after deduction of reacquired shares,
35,687,256 in 1993 and 33,045,660 in 1992 (Notes C, D, G, H,
I, and J).................................................... 4,461 4,131
Additional paid-in capital..................................... 247,843 206,439
Retained earnings.............................................. 167,804 134,078
-------- --------
Total shareholders' equity........................... 420,108 344,648
-------- --------
Total liabilities and shareholders' equity........... $544,443 $461,055
======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
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TERADYNE, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
-----------------------
1993 1992 1991
---- ---- ----
(DOLLARS IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
Net sales........................................... $ 554,734 $ 529,581 $ 508,923
Expenses:
Cost of sales..................................... 314,596 312,478 296,354
Engineering and development....................... 62,356 62,023 62,039
Selling and administrative........................ 126,508 127,427 126,463
----------- ----------- -----------
503,460 501,928 484,856
----------- ----------- -----------
Income from operations.............................. 51,274 27,653 24,067
Other income (expense):
Interest income................................... 3,649 2,529 1,420
Interest expense.................................. (3,604) (4,114) (5,205)
----------- ----------- -----------
Income before income taxes and extraordinary item... 51,319 26,068 20,282
Provision for income taxes (Note K)................. 15,396 3,520 2,029
----------- ----------- -----------
Income before extraordinary item.................... 35,923 22,548 18,253
Extraordinary item, less applicable income taxes
of $313 (Note D).................................. (729)
----------- ----------- -----------
Net income.......................................... $ 35,194 $ 22,548 $ 18,253
----------- ----------- -----------
----------- ----------- -----------
Income per common share:
Income before extraordinary item.................. $ 1.00 $ 0.67 $ 0.58
Extraordinary item, net of income taxes........... (0.02)
----------- ----------- -----------
Net income per common share....................... $ 0.98 $ 0.67 $ 0.58
----------- ----------- -----------
----------- ----------- -----------
Shares used in calculations of income per common
share............................................. 35,832,000 33,850,000 31,554,000
----------- ----------- -----------
----------- ----------- -----------
The accompanying notes are an integral part of the consolidated financial
statements.
12
14
TERADYNE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
------------------------------
1993 1992 1991
---- ---- ----
(DOLLARS IN THOUSANDS)
Cash flows from operating activities:
Net income................................................... $ 35,194 $ 22,548 $ 18,253
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation.............................................. 30,767 31,066 32,090
Amortization.............................................. 3,775 4,270 4,493
Deferred income taxes..................................... 3,828 (162) (803)
Extraordinary loss on retirement of debt.................. 1,042
Other non-cash items, net................................. 1,544 282 628
Changes in operating assets and liabilities:
Accounts receivable..................................... 18,487 (8,237) (18,320)
Inventories............................................. (12,114) (3,773) 2,617
Refundable income taxes................................. 1 (1,140) 676
Other assets............................................ (5,705) (4,145) (7,802)
Accounts payable and accruals........................... 14,423 1,323 97
Income taxes payable.................................... 556 (1,342) 859
-------- -------- --------
Net cash provided by operating activities............ 91,798 40,690 32,788
-------- -------- --------
Cash flows from investing activities:
Additions to property........................................ (20,568) (19,471) (14,552)
Increase in equipment manufactured by the Company............ (11,633) (8,759) (5,565)
Proceeds from sale of investment in joint venture............ 1,395 2,548
-------- -------- --------
Net cash used in investing activities................ (32,201) (26,835) (17,569)
-------- -------- --------
Cash flows from financing activities:
Proceeds from long-term debt................................. 3,205 6,900
Payments of long-term debt................................... (3,940) (741) (7,630)
Payment to retire convertible subordinated debentures........ (10,780)
Issuance of common stock under stock option
and stock purchase plans.................................. 24,652 13,269 13,504
Tax benefit from stock options............................... 8,943 2,383
Acquisition of treasury stock................................ (2,277)
-------- -------- --------
Net cash flows provided by financing activities...... 16,598 18,116 12,774
-------- -------- --------
Increase in cash and cash equivalents.......................... 76,195 31,971 27,993
Cash and cash equivalents at beginning of year................. 67,383 35,412 7,419
-------- -------- --------
Cash and cash equivalents at end of year....................... $143,578 $ 67,383 $ 35,412
-------- -------- --------
-------- -------- --------
Supplementary disclosure of cash flow information:
Cash paid during the year for:
Interest.................................................. $ 4,434 $ 4,230 $ 5,315
Income taxes.............................................. 1,755 3,781 1,297
The accompanying notes are an integral part of the consolidated financial
statements.
13
15
TERADYNE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
SHARES COMMON ADDITIONAL
---------------------- STOCK PAID-IN RETAINED
ISSUED REACQUIRED PAR VALUE CAPITAL EARNINGS
---------- ---------- --------- ---------- --------
(DOLLARS IN THOUSANDS)
Balance, December 31, 1990...................... 30,083,471 419,567 $3,708 $177,832 $ 93,277
Issuance of stock to:
Employees under Stock Option Plans (Note G)... 1,085,833 41,033 131 9,437
Trustees of Savings Plan (Note H)............. 100,000 12 938
Employees under Stock Purchase Plan
(Note I)................................... 523,897 66 2,920
Repurchase of stock............................. 8,000 (1) (125)
Net income...................................... 18,253
---------- ------- ------ -------- --------
Balance, December 31, 1991...................... 31,793,201 468,600 3,916 191,002 111,530
Issuance of stock to:
Employees under Stock Option Plans (Note G)... 1,025,104 86,318 117 8,096
Trustees of Savings Plan (Note H)............. 200,000 25 1,875
Employees under Stock Purchase Plan
(Note I)................................... 582,273 73 3,083
Tax benefit from stock options.................. 2,383
Net income...................................... 22,548
---------- ------- ------ -------- --------
Balance, December 31, 1992...................... 33,600,578 554,918 4,131 206,439 134,078
Tax benefit from stock options upon adoption of
SFAS 109 (Note K)............................. 5,734
Issuance of stock to:
Employees under Stock Option Plans (Note G)... 2,012,778 87,054 241 17,361
Trustees of Savings Plan (Note H)............. 335,000 42 3,141
Employees under Stock Purchase Plan
(Note I)................................... 295,867 37 3,830
Issuance of stock upon conversion of convertible
subordinated debentures....................... 210,585 26 4,656
Repurchase of stock............................. 125,580 (16) (2,261)
Tax benefit from stock options.................. 8,943
Net income...................................... 35,194
Pension adjustment (Note F)..................... (1,468)
---------- ------- ------ -------- --------
Balance, December 31, 1993...................... 36,454,808 767,552 $4,461 $247,843 $167,804
========== ======= ====== ======== ========
The accompanying notes are an integral part of the consolidated financial
statements.
14
16
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES:
Basis of Presentation
The consolidated financial statements include the accounts of Teradyne,
Inc. and its subsidiaries, all of which are wholly owned (referred to
collectively in these notes as the "Company"). All significant intercompany
balances and transactions have been eliminated. Certain prior years' amounts
have been reclassified to conform to the current year presentation.
Inventories
Inventories are stated at the lower of cost (first-in, first-out basis) or
market (net realizable value).
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Leasehold improvements
and major renewals are capitalized and included in property, plant and equipment
accounts while expenditures for maintenance and repairs and minor renewals are
charged to expense. When assets are retired, the assets and related allowances
for depreciation and amortization are eliminated from the accounts and any
resulting gain or loss is reflected in operations.
The Company provides for depreciation of its property principally on the
straight-line method by charges to expense which are sufficient to write off the
cost of the assets over their estimated useful lives.
Revenue Recognition
Revenue is recorded when products are shipped or, in instances where
products are configured to customer requirements, upon the successful completion
of test procedures. Service revenue is recognized ratably over applicable
contract periods or as services are performed. In certain situations, revenue is
recorded using the percentage of completion method based upon the completion of
measurable milestones, with changes to total estimated costs and anticipated
losses, if any, recognized in the period in which determined.
Engineering and Development Costs
The Company's products are highly technical in nature and require a large
and continuing engineering and development effort. All engineering and
development costs are expensed as incurred.
Income Taxes
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." This
statement superseded the previous accounting standard for income taxes, SFAS 96,
which the Company adopted January 1, 1991. The adoption of SFAS 109 had no
material effect on the results of operations.
Under SFAS 109, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. The measurement of deferred tax
assets is reduced by a valuation allowance if, based upon weighted available
evidence, it is more likely than not that some or all of the deferred tax assets
will not be realized.
In general, the Company's practice is to provide U.S. federal taxes on
undistributed earnings of the Company's foreign sales and service subsidiaries.
15
17
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES -- (CONTINUED)
Translation of Foreign Currencies
Assets and liabilities of foreign subsidiaries which are denominated in
foreign currencies have been remeasured into U.S. dollars at rates of exchange
in effect at the end of the fiscal year except fixed assets which have been
remeasured using historical exchange rates. Revenue and expense accounts have
been remeasured using an average of exchange rates in effect during the year.
Net realized and unrealized gains and losses resulting from foreign currency
remeasurement are included in operations.
Financial Instruments and Related Disclosures
Financial instruments consist primarily of investments in cash, cash
equivalents and accounts receivables and obligations under accounts payable and
debt instruments. Fair value of financial instruments have been determined
through information obtained from market sources and management estimates. At
December 31, 1993, the fair value of the Company's financial instruments
approximates the carrying value.
The Company enters into foreign exchange contracts to hedge assets,
liabilities, and transactions denominated in foreign currencies on a continuing
basis for periods consistent with its committed exposures. The foreign exchange
contracts are used to reduce the Company's risk associated with exchange rate
movements, as gains and losses on these contracts are intended to offset foreign
exchange gains and losses on the assets, liabilities, and transactions being
hedged. As of December 31, 1993, the Company had $51.9 million of foreign
exchange contracts outstanding, $40.0 million of which were in German marks,
$11.0 million in various other European currencies, and $0.9 million in Japanese
yen. The German mark contracts have maturities of one to three years. The
Company's other foreign exchange contracts generally have maturities which do
not exceed six months. All of the foreign exchange contracts require the Company
to exchange foreign currencies for U.S. dollars at maturity, at rates agreed to
at inception of the contracts.
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash equivalents and trade
receivables. The Company places its cash equivalents in high grade financial
instruments and, by policy, limits the amount of credit exposure to any one
financial institution. Concentrations of credit risk with respect to trade
receivables are limited due to the large number of diverse and geographically
dispersed customers.
Net Income Per Common Share
Net income per common share is based upon the weighted average number of
common and common equivalent shares (when dilutive) outstanding each year.
Common equivalent shares result from the assumed exercise of outstanding stock
options, the proceeds of which are then assumed to have been used to repurchase
outstanding common stock at the average market price during the year.
16
18
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
B. CASH AND CASH EQUIVALENTS
Cash equivalents consist of short-term investments in money market
instruments with an original maturity of three months or less. These amounts are
carried at cost plus accrued interest, which approximates market value. Of the
$143.6 million cash and cash equivalents balance at December 31, 1993, cash
equivalents amounted to $125.3 million, which included $112.5 million of U.S.
Treasury bills. Of the $67.4 million cash and cash equivalents balance at
December 31, 1992, cash equivalents amounted to $58.8 million, which included
$50.8 million of U.S. Treasury bills.
C. LONG-TERM DEBT
Long-term debt at December 31, 1993 and 1992 consisted of the following (in
thousands):
1993 1992
------ ------
Mortgage note payable.............................................. $4,500 $4,500
Industrial revenue bonds........................................... 1,333 1,563
Capitalized lease obligations...................................... 3,226
Other long-term debt............................................... 3,826 3,938
------ ------
Total.................................................... 9,659 13,227
Less current maturities............................................ 521 3,962
------ ------
$9,138 $9,265
------ ------
------ ------
The total maturities of long-term debt for each of the next five years are
$0.5 million.
Revolving Credit Agreement
The Company has $80.0 million of revolving credit available through January
31, 1996 under a domestic line of credit agreement with its banks. Under the
terms of the agreement, any amounts outstanding at December 31, 1996 are
converted into a one year term note. As of December 31, 1993, no amounts were
outstanding under this agreement. The terms of this line of credit also include
restrictive covenants regarding the working capital, tangible net worth and
leverage. Interest rates on borrowings are either at the stated prime rate or
based upon Eurocurrency or certificate of deposit interest rates. Additional
domestic and foreign borrowings up to $30.0 million are permitted outside the
agreement provided that the liabilities of the Company, exclusive of deferred
income taxes and subordinated debt, shall not exceed 100% of the Company's
tangible net worth.
Mortgage Note Payable
The Company has received a loan of $4.5 million from the Boston
Redevelopment Authority in the form of a 3% mortgage loan maturing March 31,
2013. This loan is collateralized by a mortgage on the Company's property at 321
Harrison Avenue which may, at the Company's option, become subordinated to
another mortgage up to a maximum of $5.0 million. For the first 4 1/2 years of
the note, interest was accrued but not paid ("Accrued Interest"). Beginning
September 30, 1987, semi-annual interest payments are being paid on principal
and Accrued Interest. The principal and Accrued Interest are payable in full at
maturity.
Industrial Revenue Bonds
At December 31, 1993, the Company has outstanding industrial revenue bonds,
in the amount of $1.3 million, maturing in 1998 and 1999. These bonds are
payable in quarterly installments, including interest at the higher of 75% of
the stated prime rate or 7 1/2%. The bonds are collateralized by mortgage
interests on certain properties owned by the Company.
17
19
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
C. LONG-TERM DEBT -- (CONTINUED)
Capitalized Lease Obligations
On December 31, 1993, the Company exercised its lease option to purchase
the property located at 321 Harrison Avenue, Boston, Massachusetts for $3.2
million.
Other Long-term Debts
At December 31, 1993, other long-term debt consists principally of a
Japanese yen-denominated note in the amount of $3.6 million at an interest rate
of 4.8%, secured by land in Kumamoto, Japan, with interest only payable until
March 31, 1995, and principal and interest payable in monthly installments from
April 29, 1995 to March 30, 2007.
D. CONVERTIBLE SUBORDINATED DEBENTURES
At December 31, 1992, the Company had outstanding $15.4 million of 9.25%
convertible subordinated debentures due March 15, 2012. These debentures were
convertible into shares of the Company's common stock any time prior to maturity
at a conversion price of $23.50 per share. The amount shown on the Consolidated
Balance Sheets at December 31, 1992 was net of $1.0 million unamortized debt
issue costs.
During 1993, $5.0 million principle amount of debentures were converted
into 210,585 shares of common stock resulting in an increase of $4.7 million of
shareholders' equity (net of the related $0.3 million unamortized debt issue
costs). On November 19, 1993, the Company exercised its option to repurchase the
remaining $10.4 million outstanding debentures. The Company used $10.8 million
of available cash from operations to repurchase the debentures at a premium of
103.7% of the principal amount. The premium amount and the writeoff of the
remaining unamortized debt issue cost resulted in a charge of $1.0 million. This
charge, net of the related taxes of $0.3 million, is reflected as an
extraordinary loss in the Consolidated Statements of Income.
E. COMMITMENTS
Rental expense for the years ended December 31, 1993, 1992, and 1991 was
$11.2 million, $12.6 million, and $13.0 million, respectively. Minimum annual
rentals under all noncancellable leases are: 1994 -- $6.8 million; 1995 -- $5.5
million; 1996 -- $2.6 million; 1997 -- $1.1 million; 1998 -- $0.9 million; and
$6.3 million thereafter, totalling $23.2 million. Offsetting the future lease
payments, the Company's income from noncancellable subleases totals $1.2
million.
18
20
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F. PENSION PLANS
The Company has defined benefit pension plans covering substantially all
domestic employees and employees of certain international subsidiaries. Benefits
under these plans are based on the employee's years of service and compensation.
The Company'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 1993, the Company established a supplemental defined benefit pension
plan in the United States to provide retirement benefits in excess of levels
allowed by ERISA.
In 1992, the Company established a defined benefit pension plan covering
its employees in Japan. The Company's foreign plans were not included in the
table below in 1991 because they were not significant in the aggregate. Net
pension expense for the domestic plans was $2.4 million in 1993, $1.8 million in
1992, and $1.5 million in 1991.
The components of net pension expense are summarized as follows (in
thousands):
1993 1992 1991
------- ------- -------
Service cost (benefits earned during the period)...... $ 2,968 $ 2,474 $ 1,579
Interest cost on projected benefit obligation......... 3,237 2,408 1,788
Actual return on plan assets.......................... (3,802) (1,688) (3,920)
Net amortization and deferral......................... 1,019 (484) 2,006
------- ------- -------
Net pension expense................................... $ 3,422 $ 2,710 $ 1,453
------- ------- -------
------- ------- -------
The following table sets forth the plans' funded status at December 31 (in
thousands):
1993 1992
--------------------- ---------------------
DOMESTIC FOREIGN DOMESTIC FOREIGN
-------- --------- -------- ---------
Actuarial present value of projected benefit
obligation:
Vested benefits............................... $(34,897) $ (4,051) $(23,294) $ (2,077)
Non-vested benefits........................... (2,437) (522) (1,708) (506)
-------- --------- -------- ---------
Accumulated benefit obligation................ (37,334) (4,573) (25,002) (2,583)
Effect of projected future compensation
levels..................................... (8,779) (2,314) (4,827) (1,821)
-------- --------- -------- ---------
Total projected benefit obligation.... (46,113) (6,887) (29,829) (4,404)
Plan assets at fair market value................ 35,633 3,963 28,115 1,264
-------- --------- -------- ---------
Projected benefit obligation in excess of plan
assets........................................ (10,480) (2,924) (1,714) (3,140)
Unrecognized prior service cost................. 6,157 1,930 1,045 1,862
Unrecognized net loss (gain).................... 10,884 (1,389) 5,127 (1,650)
Unrecognized net (asset) liability at
transition.................................... (727) (546) (970)
-------- --------- -------- ---------
Net pension asset (liability)................... $ 5,834 $ (2,929) $ 3,488 $ (2,928)
-------- --------- -------- ---------
-------- --------- -------- ---------
Actuarial assumptions:
Discount rate................................. 7.5% 5.5- 9.0% 8.5% 5.5-8.5%
Average increase in compensation levels....... 5% 4.6- 7.0% 5% 4.6-5.5%
Expected long-term return on assets........... 10% 5.5-10.5% 10% 5.5%
The Company has recorded an additional minimum pension liability for
underfunded plans of $7.5 million at December 31, 1993, representing the excess
of unfunded accumulated benefit obligations over previously recorded pension
cost liabilities. A corresponding amount has been recognized as an intangible
asset to the extent of related unrecognized prior service cost of $5.2 million,
with the remaining amount of $1.5 million, net of taxes of $0.8 million,
recorded as a charge to stockholders' equity.
19
21
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
G. STOCK OPTION PLANS
Under its stock option plans, the Company has granted options to certain
directors, officers and employees entitling them to purchase common stock at
100% of market value at the date of grant.
Information with respect to options granted, forfeited, and exercised is
set forth below:
OUTSTANDING OPTIONS
SHARES AVAILABLE ---------------------------------------
FOR GRANT NUMBER OF SHARES PRICE RANGE
---------------- ---------------- --------------------
Balance -- December 31, 1990................... 800,846 4,661,552 $ 2.05 - $ 26.25
Options authorized........................... 3,700,000 -- --
Options granted.............................. (1,264,800) 1,264,800 $ 6.63 - $ 13.88
Options exercised............................ (1,085,833) $ 2.05 - $ 10.88
Options canceled............................. 234,652 (234,652) $ 5.12 - $ 16.13
---------- ----------
Balance -- December 31, 1991................... 3,470,698 4,605,867 $ 4.25 - $ 26.25
Options granted.............................. (1,157,450) 1,157,450 $16.63 - $ 17.38
Options exercised............................ (1,025,104) $ 5.12 - $ 12.25
Options canceled............................. 206,490 (206,490) $ 6.63 - $ 26.25
Options terminated........................... (383,938) -- --
---------- ----------
Balance -- December 31, 1992................... 2,135,800 4,531,723 $ 4.25 - $ 17.38
Options authorized........................... 3,000,000 -- --
Options granted.............................. (1,214,350) 1,214,350 $14.13 - $ 24.88
Options exercised............................ (2,012,978) $ 4.25 - $ 17.75
Options canceled............................. 102,655 (102,655) $ 6.63 - $ 17.38
Options terminated........................... (25,790) -- --
---------- ----------
Balance -- December 31, 1993................... 3,998,315 3,630,440 $ 4.25 - $ 24.88
---------- ----------
---------- ----------
Options exercisable on December 31, 1993....... 1,366,112 $ 4.25 - $ 17.75
----------
----------
There have been no charges to income in connection with these options other
than incidental expenses related to the issuance of shares.
20
22
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
H. SAVINGS PLAN
The Company sponsors a Savings Plan covering substantially all domestic
employees. Under this plan, employees may contribute up to 12% of their
compensation (subject to Internal Revenue Service limitations). The Company
annually matches employee contributions of up to 6% of such compensation at
rates ranging from 50% to 100%. The Company's contributions vest after two
years, although contributions for those employees with five years of service
vest immediately.
The trustees of the Savings Plan have been granted an option to purchase
900,000 shares of the Company's common stock, exercisable at $9.50 per share
(the fair market value of the Company's common stock at the date of the grant)
in five cumulative annual installments beginning in 1990. The trustees exercised
335,000, 200,000, and 100,000 shares respectively in 1993, 1992, and 1991. Under
the terms of the Plan, any gains realized from the sale of option shares are
first allocated to participants' accounts to fund up to one-half of the minimum
Company contribution, with any excess applied to additional funding.
Under this plan, the amounts charged to operations were $2.0 million in
1993 and 1992, and $1.8 million in 1991.
I. EMPLOYEE STOCK PURCHASE PLAN
Under the 1979 Stock Purchase Plan, employees are entitled to purchase
shares of common stock through payroll deductions of up to 10% of their
compensation. The price paid for the common stock is equal to 85% of the lower
of the fair market value of the Company's common stock on either the first or
last business day of the year. In January 1994, the Company issued 375,124
shares of common stock to employees who participated in the plan during 1993 at
a price of $12.82 per share. Currently there are 405,869 shares reserved for
issuance.
There have been no charges to income in connection with this plan other
than incidental expenses related to the issuance of shares.
J. STOCKHOLDER RIGHTS PLAN
The Company's Board of Directors adopted a Stockholder Rights Plan on March
14, 1990. Under the Plan, the Company distributed to stockholders a dividend of
one Common Stock Purchase Right for each outstanding share of Common Stock.
Initially, the Purchase Rights enable a stockholder to purchase one share of
Teradyne Common Stock for $40.00. Upon certain events, such as the initiation of
a tender offer for more than 30% of the Company's Common Stock, the Purchase
Rights allow stockholders to purchase $80.00 worth of Common Stock (or other
securities or consideration as determined by Continuing Directors of the
Company) for $40.00. Generally, at any time until 10 days following the
announcement that a person has acquired 20% of the outstanding shares of the
Company, the Company may redeem the Purchase Rights for $0.01 per share. The
Plan will expire March 26, 2000, unless earlier redeemed by the Company.
K. INCOME TAXES
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes." As
permitted by SFAS 109, the Company has elected not to restate its financial
statements for any periods prior to 1993. The effect on operations for 1993 was
immaterial. However, upon adoption of SFAS 109 the Company increased Additional
Paid-in Capital by $5.7 million relating to the tax benefits to be derived from
the utilization of U.S. net operating loss carryforward amounts resulting from
tax deductions pertaining to the issuance of the Company's stock to employees
under its benefit plans.
21
23
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
K. INCOME TAXES -- (CONTINUED)
The components of income before income taxes and extraordinary item and the
provision (credit) for income taxes as shown in the Consolidated Statements of
Income are as follows (in thousands):
1993 1992 1991
------- ------- -------
Income (loss) before income taxes and extraordinary
item:
Domestic............................................ $51,142 $27,795 $10,340
Foreign............................................. 177 (1,727) 9,942
------- ------- -------
$51,319 $26,068 $20,282
------- ------- -------
------- ------- -------
Provision (credit) for income taxes:
Current:
Federal.......................................... 8,308 2,676 340
Foreign.......................................... 1,194 (19) 1,397
State............................................ 1,753 1,025 1,095
------- ------- -------
11,255 3,682 2,832
------- ------- -------
Deferred:
Federal.......................................... 3,590 96
Foreign.......................................... 259 (58) (508)
State............................................ 292 (200) (295)
------- ------- -------
4,141 (162) (803)
------- ------- -------
Total provision for income taxes...................... $15,396 $ 3,520 $ 2,029
------- ------- -------
------- ------- -------
Under SFAS 109, deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets (liabilities) as of
December 31, 1993 are as follows (in thousands):
Deferred tax assets:
Inventory valuations.......................................... $ 808
Accruals...................................................... 2,703
Vacation...................................................... 2,751
Federal net operating loss carryforwards...................... 2,939
Foreign net operating loss carryforwards...................... 3,417
Tax credit carryforwards...................................... 4,075
Other......................................................... 2,563
-------
Total deferred tax assets....................................... 19,256
-------
Deferred tax liabilities:
Excess of tax over book depreciation.......................... (8,560)
Capitalized construction costs................................ (2,839)
Pension....................................................... (1,207)
Other......................................................... (969)
-------
Total deferred tax liabilities.................................. (13,575)
-------
Valuation allowance............................................. (3,351)
-------
Net deferred tax asset.......................................... $ 2,330
-------
-------
22
24
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
K. INCOME TAXES -- (CONTINUED)
The valuation allowance applies to U.S. federal and foreign tax credit
carryforwards, and net operating losses carryforwards in certain foreign
jurisdictions that may expire before the Company can utilize them. For U.S.
federal and foreign tax return purposes, the Company has approximately $8.4
million and $10.7 million, respectively of net operating loss carryforwards, of
which $5.2 million expire in the years 1995 through 1998, $8.4 million expire in
the year 2005, and $5.5 million may be carried forward indefinitely. The Company
also has available U.S. federal and foreign tax credits carryforwards of
approximately $4.1 million, of which $2.4 million expire in the years 2000
through 2002, $0.5 million in the year 2008, and the remainder indefinitely.
The components of the provision (benefit) for deferred income taxes for the
years ended December 31, 1992 and 1991 are as follows (in thousands):
1992 1991
----- -----
Accelerated depreciation and amortization........................... $(295)
Restoration (reversal) of deferred taxes resulting from
application of net operating losses............................... (300)
Other, net.......................................................... $(162) (208)
----- -----
Total............................................................... $(162) $(803)
----- -----
----- -----
Below is a reconciliation of the effective tax rates for the three years
indicated:
1993 1992 1991
---- ----- -----
U.S. statutory federal tax rate.............................. 35.0% 34.0% 34.0%
State income taxes, net of federal tax benefit............... 2.6 1.3 3.9
Utilization of operating loss carryforwards.................. (0.8) (23.0) (24.0)
Foreign losses not tax benefitted............................ 1.2 4.9
Foreign taxes................................................ (1.9)
Tax credits.................................................. (3.5)
Foreign sales corporation.................................... (2.4) (2.3)
Other, net................................................... (2.1) (1.4) (2.0)
---- ----- -----
Effective tax rate......................................... 30.0% 13.5% 10.0%
---- ----- -----
---- ----- -----
23
25
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
L. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates in principally two industry segments, which are the
design, manufacturing and marketing of electronic test systems and backplane
connection systems. Corporate assets consist principally of cash and cash
equivalents, deferred tax assets and certain other assets.
ELECTRONIC BACKPLANE
TEST CONNECTION
SYSTEMS SYSTEMS CORPORATE
INDUSTRY INDUSTRY AND
SEGMENT SEGMENT ELIMINATIONS CONSOLIDATED
---------- ---------- ------------ ------------
(IN THOUSANDS)
1993 Sales to unaffiliated customers........... $466,305 $88,429 $554,734
Intersegment sales........................ 4,185 $(4,185)
-------- ------- ------- --------
Net sales................................. 466,305 92,614 (4,185) 554,734
Operating income.......................... 57,493 7,652 (13,871) 51,274
Identifiable assets....................... 322,437 64,705 157,301 544,443
Property additions........................ 26,374 5,526 301 32,201
Depreciation and amortization expense..... 27,944 5,545 1,053 34,542
1992 Sales to unaffiliated customers........... $446,885 $82,696 $529,581
Intersegment sales........................ 4,061 $(4,061)
-------- ------- ------- --------
Net sales................................. 446,885 86,757 (4,061) 529,581
Operating income.......................... 32,436 6,075 (10,858) 27,653
Identifiable assets....................... 304,471 60,005 96,579 461,055
Property additions........................ 20,780 6,525 925 28,230
Depreciation and amortization expense..... 28,414 5,792 1,130 35,336
1991 Sales to unaffiliated customers........... $431,742 $77,181 $508,923
Intersegment sales........................ 4,462 $(4,462)
-------- ------- ------- --------
Net sales................................. 431,742 81,643 (4,462) 508,923
Operating income.......................... 28,144 4,863 (8,940) 24,067
Identifiable assets....................... 293,286 58,187 69,060 420,533
Property additions........................ 16,185 3,383 549 20,117
Depreciation and amortization expense..... 29,832 5,669 1,082 36,583
The Company's sales to unaffiliated customers for the three years ended
December 31 were made to customers in the following geographic areas:
1993 1992 1991
-------- -------- --------
(IN THOUSANDS)
Sales to unaffiliated customers:
United States............................................ $329,729 $308,635 $269,482
Europe................................................... 95,877 97,681 104,740
Asia Pacific............................................. 64,963 49,452 48,881
Japan.................................................... 49,146 62,680 74,291
Other.................................................... 15,019 11,133 11,529
-------- -------- --------
Total sales...................................... $554,734 $529,581 $508,923
-------- -------- --------
-------- -------- --------
See "Item 1: Business -- Marketing and Sales" elsewhere in this report for
information on the Company's export activities, identifiable assets of foreign
subsidiaries, and major customers.
24
26
SUPPLEMENTARY INFORMATION
(UNAUDITED)
Quarterly financial information for 1993 and 1992 (in thousands of dollars,
except per share amounts):
1993
-----------------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
Net sales.................................. $127,779 $139,336 $140,279 $147,340
Expenses:
Cost of sales............................ 73,476 80,666 78,213 82,241
Engineering and development.............. 15,154 15,035 15,684 16,483
Selling and administrative............... 31,141 32,557 32,073 30,737
-------- -------- -------- --------
119,771 128,258 125,970 129,461
-------- -------- -------- --------
Income from operations..................... 8,008 11,078 14,309 17,879
Other income (expense):
Interest income.......................... 714 843 1,064 1,028
Interest expense......................... (1,028) (982) (937) (657)
-------- -------- -------- --------
Income before income taxes and
extraordinary item....................... 7,694 10,939 14,436 18,250
Provision for income taxes................. 2,308 3,282 4,331 5,475
-------- -------- -------- --------
Income before extraordinary item........... 5,386 7,657 10,105 12,775
Extraordinary item (net of income taxes)... (729)
-------- -------- -------- --------
Net income................................. $ 5,386 $ 7,657 $ 10,105 $ 12,046
-------- -------- -------- --------
-------- -------- -------- --------
Income per common share:
Income before extraordinary item......... $ 0.16 $ 0.21 $ 0.28 $ 0.35
Extraordinary item....................... (0.02)
-------- -------- -------- --------
Net income............................... $ 0.16 $ 0.21 $ 0.28 $ 0.33
-------- -------- -------- --------
-------- -------- -------- --------
1992
-----------------------------------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
----------- ----------- ----------- -----------
Net sales.................................. $133,924 $134,813 $131,465 $129,379
Expenses:
Cost of sales............................ 77,088 80,260 77,800 77,330
Engineering and development.............. 15,445 15,799 15,366 15,413
Selling and administrative............... 32,238 32,480 32,378 30,331
-------- -------- -------- --------
124,771 128,539 125,544 123,074
-------- -------- -------- --------
Income from operations..................... 9,153 6,274 5,921 6,305
Other income (expense):
Interest income.......................... 767 466 636 660
Interest expense......................... (1,040) (1,044) (1,021) (1,009)
-------- -------- -------- --------
Income before income taxes................. 8,880 5,696 5,536 5,956
Provision (credit) for income taxes........ 1,776 1,139 (199) 804
-------- -------- -------- --------
Net income................................. $ 7,104 $ 4,557 $ 5,735 $ 5,152
-------- -------- -------- --------
-------- -------- -------- --------
Net income per common share................ $ 0.21 $ 0.14 $ 0.17 $ 0.15
-------- -------- -------- --------
-------- -------- -------- --------
ITEM 9: DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
25
27
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Certain information relating to directors and executive officers of the
Company, executive compensation, security ownership of certain beneficial owners
and management, and certain relationships and related transactions is
incorporated by reference herein from the Company's definitive proxy statement
in connection with its Annual Meeting of Stockholders to be held on May 26,
1994, which proxy statement will be filed with the Securities and Exchange
Commission not later than 120 days after the close of the fiscal year. For this
purpose, the Management Compensation and Development Committee Report and
Performance Graph included in such proxy statement are specifically not
incorporated herein. (Also see "Item I -- Executive Officers of the Company"
elsewhere in this report.)
ITEM 11: EXECUTIVE COMPENSATION.
Certain information relating to directors and executive officers of the
Company, executive compensation, security ownership of certain beneficial owners
and management, and certain relationships and related transactions is
incorporated by reference herein from the Company's definitive proxy statement
in connection with its Annual Meeting of Stockholders to be held on May 26,
1994, which proxy statement will be filed with the Securities and Exchange
Commission not later than 120 days after the close of the fiscal year. For this
purpose, the Management Compensation and Development Committee Report and
Performance Graph included in such proxy statement are specifically not
incorporated herein.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Certain information relating to directors and executive officers of the
Company, executive compensation, security ownership of certain beneficial owners
and management, and certain relationships and related transactions is
incorporated by reference herein from the Company's definitive proxy statement
in connection with its Annual Meeting of Stockholders to be held on May 26,
1994, which proxy statement will be filed with the Securities and Exchange
Commission not later than 120 days after the close of the fiscal year. For this
purpose, the Management Compensation and Development Committee Report and
Performance Graph included in such proxy statement are specifically not
incorporated herein.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Certain information relating to directors and executive officers of the
Company, executive compensation, security ownership of certain beneficial owners
and management, and certain relationships and related transactions is
incorporated by reference herein from the Company's definitive proxy statement
in connection with its Annual Meeting of Stockholders to be held on May 26,
1994, which proxy statement will be filed with the Securities and Exchange
Commission not later than 120 days after the close of the fiscal year. For this
purpose, the Management Compensation and Development Committee Report and
Performance Graph included in such proxy statement are specifically not
incorporated herein.
26
28
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A)1. FINANCIAL STATEMENTS
The following consolidated financial statements are included in Item 8:
Balance Sheets as of December 31, 1993 and 1992
Statements of Income for the years ended December 31, 1993, 1992 and 1991
Statements of Cash Flows for the years ended December 31, 1993, 1992
and 1991
Statements of Changes in Shareholders' Equity for the years ended
December 31, 1993, 1992 and 1991
(A)2. FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statement schedules are included in
Item 14(d):
Schedule V -- Property
Schedule VI -- Accumulated Depreciation, Depletion and Amortization of
Property
Schedule IX -- Short-term Borrowings
Schedule X -- Supplementary Income Statement Information
Schedules other than those listed above have been omitted since they are
either not required or the information is otherwise included.
(A)3. LISTING OF EXHIBITS
3.3 (i) -- Restated Articles of Organization of the Company, as amended (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-3, filed with the
Securities and Exchange Commission, effective December 12, 1991 and incorporated
herein by reference).
3.3 (ii) -- Amended and Restated By-laws of the Company (filed as Exhibit 3.3(iii) to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990
and incorporated herein by reference).
3.4 (i) -- Indenture dated as of March 15, 1987 between Zehntel, Inc. and the Bank of
California, National Association, Trustees (filed as Exhibit 2.3 to the
Company's Registration Statement on Form 8-A, filed with the Securities and
Exchange Commission, effective February 17, 1988 and incorporated herein by
reference).
3.4 (ii) -- First Supplemental Indenture between the Company, Zehntel, Inc. and the Bank of
California, National Association, Trustee, dated as of December 1, 1987 (filed
as Exhibit 2.4 to the Company's Registration Statement on Form 8-A, filed with
the Securities and Exchange Commission, effective February 17, 1988 and
incorporated herein by reference).
3.4 (iii) -- Second Supplemental Indenture by and among the Company, Zehntel, Inc., and
Bankers Trust Company of California, N.A. (filed as Exhibit 3.4(iii) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1989 and
incorporated herein by reference).
3.4 (iv) -- Instrument of Acknowledgment of Satisfaction and Discharge of Indenture and
Securities executed by First Trust of California, National Association,
successor trustee.
3.4 (v) -- Rights Agreement between the Company and The First National Bank of Boston dated
as of March 14, 1990 (filed as Exhibit 4.1 to the Company's Current Report on
Form 8-K dated March 15, 1990 and incorporated herein by reference).
3.10 (i) -- Multicurrency Revolving Credit Agreement dated April 29, 1991 (filed in the
Company's Quarterly Report on Form 10-Q for the quarterly period ended March 30,
1991 and incorporated herein by reference).
27
29
3.10 (ii) -- First Amendment to Multicurrency Revolving Credit Agreement dated as of March 5,
1993 (filed as Exhibit 3.10(ii) to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992).
3.10 (iii) -- 1987 Non-Employee Director Stock Option Plan (filed as Exhibit 3.10(iii) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1992).
3.10 (iv) -- Teradyne, Inc. Supplemental Executive Retirement Plan (filed as Exhibit 3.10(iv)
to the Company's Annual Report on Form 10-K for the year ended December 31,
1992).
3.10 (v) -- 1991 Employee Stock Option Plan, as amended.
3.21 -- Subsidiaries of the Company.
3.23 -- Consent of Coopers & Lybrand.
Executive Compensation Plans and Arrangements
1. 1987 Non-Employee Director Stock Option Plan (filed as Exhibit
3.10(iii) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992).
2. Teradyne, Inc. Supplemental Executive Retirement Plan (filed as
Exhibit 3.10(iv) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1992).
(B) REPORTS ON FORM 8-K
There have been no 8-K filings during the three months ended December 31,
1993.
(C) EXHIBITS
The Company hereby files as part of this Form 10-K the exhibits listed in
Item 14 (a) 3 as set forth above.
28
30
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 THIS DAY OF MARCH, 1994.
TERADYNE, INC.
By: /s/ OWEN W. ROBBINS
------------------------------------
OWEN W. ROBBINS,
EXECUTIVE VICE PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
ALEXANDER V. D'ARBELOFF President and Chairman of the March 31, 1994
- --------------------------------------------- Board (Principal Executive
Alexander V. d'Arbeloff Officer)
OWEN W. ROBBINS Executive Vice President March 31, 1994
- --------------------------------------------- and Director
Owen W. Robbins (Principal Financial Officer)
JOHN P. MCCABE Controller March 31, 1994
- ---------------------------------------------
John P. McCabe
Director March , 1994
- ---------------------------------------------
Edwin L. Artzt
ALBERT CARNESALE Director March 31, 1994
- ---------------------------------------------
Albert Carnesale
DANIEL S. GREGORY Director March 31, 1994
- ---------------------------------------------
Daniel S. Gregory
Director March , 1994
- ---------------------------------------------
Dwight H. Hibbard
Director March , 1994
- ---------------------------------------------
Franklin P. Johnson, Jr.
Director March , 1994
- ---------------------------------------------
John H. McArthur
JOHN P. MULRONEY Director March 31, 1994
- ---------------------------------------------
John P. Mulroney
JAMES A. PRESTRIDGE Executive Vice President March 31, 1994
- --------------------------------------------- and Director
James A. Prestridge
RICHARD J. TESTA Director March 31, 1994
- ---------------------------------------------
Richard J. Testa
Director March , 1994
- ---------------------------------------------
Henry M. Watts, Jr.
29
31
ITEM 14(D): FINANCIAL STATEMENT SCHEDULES
TERADYNE, INC.
SCHEDULE V (CONSOLIDATED) -- PROPERTY
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ----------------------------------------------------------------------------------------------------------------------
OTHER CHANGES
BALANCE AT ADD (DEDUCT) BALANCE AT
BEGINNING ADDITIONS -------------------- END OF
DESCRIPTION OF PERIOD AT COST RETIREMENTS TRANSFERS OTHER PERIOD
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Year ended December 31, 1993:
Land................................. $ 19,482 $ 19,482
Buildings and improvements........... 110,906 $ 1,948 $ 616 $ 52 112,290
Machinery and equipment.............. 231,882 15,194(1) 14,407 849 $11,633(3) 245,151
Construction in progress............. 734 3,426 (901) 3,259
-------- ------- ------- ------- ------- --------
$363,004 $20,568 $15,023 $ $11,633 $380,182
-------- ------- ------- ------- ------- --------
-------- ------- ------- ------- ------- --------
Year ended December 31, 1992:
Land................................. $ 19,482 $ 19,482
Buildings and improvements........... 119,647 $ 2,315 $11,181(2) $ 125 110,906
Machinery and equipment.............. 264,422 13,010(1) 58,373(2) 4,064 $ 8,759(3) 231,882
Construction in progress............. 777 4,146 (4,189) 734
-------- ------- ------- ------- ------- --------
$404,328 $19,471 $69,554 $ $ 8,759 $363,004
-------- ------- ------- ------- ------- --------
-------- ------- ------- ------- ------- --------
Year ended December 31, 1991:
Land................................. $ 17,849 $ 1,633 $ 19,482
Buildings and improvements........... 117,094 2,264 $ 269 $ 558 119,647
Machinery and equipment.............. 264,361 9,680(1) 15,620 436 $ 5,565(3) 264,422
Construction in progress............. 796 975 (994) 777
-------- ------- ------- ------- ------- --------
$400,100 $14,552 $15,889 $ $ 5,565 $404,328
-------- ------- ------- ------- ------- --------
-------- ------- ------- ------- ------- --------
- ---------------
(1) Backplane connection manufacturing equipment; printed-circuit board
manufacturing equipment;
engineering test equipment; computer equipment and office furniture and
equipment.
(2) Consists principally of the retirement of fully depreciated assets.
(3) Transfer of equipment manufactured by the Company from inventory.
S-1
32
TERADYNE, INC.
SCHEDULE VI (CONSOLIDATED) -- ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES BALANCE
BEGINNING COST AND ADD AT END
DESCRIPTION OF PERIOD EXPENSES(1) RETIREMENTS (DEDUCT) OF PERIOD
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Year ended December 31, 1993:
Buildings and improvements........ $ 24,431 $ 4,169 $ 616 $ 27,984
Machinery and equipment........... 153,519 26,598 13,998 166,119
--------- -------- -------- --------- --------
$ 177,950 $ 30,767 $ 14,614 $ $194,103
--------- -------- -------- --------- --------
--------- -------- -------- --------- --------
Year ended December 31, 1992:
Buildings and improvements........ $ 31,378 $ 4,194 $ 11,141(2) $ 24,431
Machinery and equipment........... 184,817 26,872 58,170(2) 153,519
--------- -------- -------- --------- --------
$ 216,195 $ 31,066 $ 69,311 $ $177,950
--------- -------- -------- --------- --------
--------- -------- -------- --------- --------
Year ended December 31, 1991:
Buildings and improvements........ $ 27,271 $ 4,092 $ 189 $ 204 (3) $ 31,378
Machinery and equipment........... 172,517 27,998 15,494 (204)(3) 184,817
--------- -------- -------- --------- --------
$ 199,788 $ 32,090 $ 15,683 $ $216,195
--------- -------- -------- --------- --------
--------- -------- -------- --------- --------
- ---------------
(1) The annual provisions for depreciation are principally on the straight-line
method with the cost of the assets being written off over their useful lives
as follows: buildings and improvements -- 5 to 40 years; and machinery and
equipment -- 2 to 10 years.
(2) Consists principally of the retirement of fully depreciated assets.
(3) Reclassifications.
S-2
33
TERADYNE, INC.
SCHEDULE IX (CONSOLIDATED) -- SHORT TERM BORROWINGS
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE MAXIMUM AVERAGE AVERAGE
INTEREST AMOUNT AMOUNT INTEREST
BALANCE AT RATE OUTSTANDING OUTSTANDING RATE
CATEGORY OF AGGREGATE END OF AT END DURING DURING DURING THE
SHORT-TERM BORROWINGS PERIOD(1) OF PERIOD THE PERIOD THE PERIOD(2) PERIOD(2)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Year Ended December 31, 1993:
Notes payable -- banks................. $ 7,574 3.4% $ 8,118 $ 7,684 4.0%
Year Ended December 31, 1992:
Notes payable -- banks................. $ 6,849 5.3% $ 7,060 $ 6,765 5.4%
Year Ended December 31, 1991:
Notes payable -- banks................. $ 6,850 7.2% $16,746 $ 10,556 7.6%
- ---------------
(1) Notes payable -- banks consist principally of one year yen denominated
notes.
(2) The average amount outstanding and weighted average interest rate during the
period were computed based on month-end amounts.
SCHEDULE X (CONSOLIDATED) -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B
- ---------------------------------------------------------------------------------------------------------
CHARGES TO COSTS
AND EXPENSES
YEARS ENDED DECEMBER 31,
--------------------------------
ITEMS 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
Maintenance and repairs............................................ $8,375 $8,420 $8,586
- ---------------
Taxes, other than payroll and income taxes, royalties, advertising and
depreciation and amortization of intangible assets are not present as such
amounts are less than 1% of net sales.
S-3