Teradyne Announces Second Quarter, 2008 Results

NORTH READING, Mass.--(Business Wire)--
Teradyne, Inc. reported sales of $318 million in the second
quarter of 2008. Net income for the second quarter was $28.1 million,
or $0.16 per diluted share, on a non-GAAP basis, and $11.1 million or
$0.06 per diluted share on a GAAP basis. Bookings for the second
quarter were $308 million.

"Our System-On-a-Chip (SOC) test business further strengthened in
the second quarter, driven by record first-half demand in wireless
test applications, however we saw a softening in memory test
capacity-driven orders," said Mike Bradley Teradyne president and CEO.
"Overall, our roll-out of new SOC test products is on track for the
year."

Guidance for the third quarter of 2008 is for sales of $290
million to $310 million, with earnings per diluted share between $0.10
and $0.15 on a non-GAAP basis. Non-GAAP guidance excludes
restructuring and other charges, net, as well as acquired intangible
asset amortization.

Webcast

A webcast to discuss second quarter 2008 results and management's
business outlook will be held at 10 a.m. Eastern Time, Thursday, July
24. Interested investors should access the webcast at www.teradyne.com
and click on "Investors" at least five minutes before the call begins.
The webcast replay will be available on www.teradyne.com. In addition,
a conference call replay will be available approximately two hours
after the call. The replay number in the U.S. & Canada is
800-642-1687. The replay number outside the U.S. & Canada is
706-645-9291. The pass code for both numbers is 12340. The replay will
be available via phone and website through August 7.

Non-GAAP Results

In addition to disclosing results that are determined in
accordance with GAAP, Teradyne also discloses non-GAAP results of
operations that exclude certain income items and charges. These
results are provided as a complement to results provided in accordance
with GAAP. Teradyne reports non-GAAP results in order to better assess
and reflect operating performance. Management believes the non-GAAP
measures help indicate Teradyne's baseline performance before gains,
losses or other charges that are considered by management to be
outside Teradyne's ongoing operating results. Teradyne believes these
non-GAAP measures will aid investors' overall understanding of its
results by providing a higher degree of transparency for certain
expenses and providing a level of disclosure that will help investors
understand how Teradyne plans and measures its own business.
Teradyne's earnings per share guidance is only provided on a non GAAP
basis due to the difficulty in forecasting and quantifying the amounts
that would be required to be included in the GAAP measure. Although
Teradyne expects certain known charges, such as intangible asset
amortization expense, other additional charges excluded from the
non-GAAP measure are difficult to predict and estimate and are
primarily dependent on future events and unknown factors, such as the
sale of a facility. A reconciliation of each available GAAP to
non-GAAP financial measure discussed in this press release is
contained in the attached Exhibits and on the Teradyne website at
www.teradyne.com by clicking on "Investors" and then selecting the
"GAAP to Non-GAAP Reconciliation" link. The presentation of non-GAAP
measures is not meant to be considered in isolation, as a substitute
for, or superior to, financial measures or information provided in
accordance with GAAP.

About Teradyne, Inc.

Teradyne (NYSE:TER) is a leading supplier of Automatic Test
Equipment used to test complex electronics used in the consumer
electronics, automotive, computing, telecommunications, and aerospace
and defense industries. In 2007, Teradyne had sales of $1.1 billion
and currently employs about 3,600 people worldwide. For more
information, visit www.teradyne.com. Teradyne (R) is a registered
trademark of Teradyne, Inc. in the U.S. and other countries. All
product names are trademarks of Teradyne, Inc. (including its
subsidiaries) or their respective owners.

Safe Harbor Statement

The forward-looking statements included in this release are made
only as of the date of publication. Teradyne disclaims any intention
or obligation to update any forward-looking statements as a result of
developments occurring after the date of this press release.

This release contains forward-looking statements regarding future
business prospects and market conditions. Such statements are based on
the current assumptions and expectations of Teradyne's management and
are neither promises nor guarantees. You can generally identify these
forward-looking statements based on the context of the statements and
by the fact that they use words such as "will," "anticipate,"
"expect," "project," "intend," "plan," "believe," "target" and other
words and terms of similar meaning in connection with any discussion
of future operating or financial performance. There can be no
assurance that management's estimates of our future results will be
achieved. Important factors that could cause actual results to differ
materially from those presently expected include: conditions affecting
the markets in which Teradyne operates; delays in new product
introductions; lack of customer acceptance of new products; the
ability to realize synergies and cost savings from the integration of
Nextest Systems Corporation with Teradyne's existing operations; and
other events, factors and risks previously and from time to time
disclosed in filings with the SEC, including, but not limited to,
Teradyne's annual report on Form 10-K for the fiscal year ended
December 31, 2007.

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*T
TERADYNE, INC. REPORT FOR SECOND FISCAL QUARTER OF 2008

----------------------------------------------------------------------
CONDENSED CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
------------------------------------------------- -------------------

Quarter Ended: Six Months Ended:
---------------------------- -------------------
June 29, March July 1, June 29, July 1,
2008 30, 2007 2008 2007
2008
---------------------------- -------------------

Net Revenues (1) $317,705 $297,315 $288,710 $615,020 $542,403

Cost of Revenues
(2)(3) 163,857 158,812 151,490 322,669 291,786
--------- -------- --------- --------- ---------

Gross Profit 153,848 138,503 137,220 292,351 250,617

Operating Expenses:
Engineering and
Development (2) 56,154 55,149 52,417 111,303 101,679
Selling and
Administrative
(2) 65,463 65,221 62,182 130,684 125,129
Acquired
Intangible Asset
Amortization 4,774 3,863 955 8,637 1,866
In-process
Research and
Development (4) - 1,100 - 1,100 16,700
Restructuring and
Other, net (5) 12,726 11,785 568 24,511 2,815
--------- -------- --------- --------- ---------
Operating
Expenses 139,117 137,118 116,122 276,235 248,189

Income from
Operations 14,731 1,385 21,098 16,116 2,428

Interest & Other,
net (6) 2,448 5,082 9,602 7,530 21,943
--------- -------- --------- --------- ---------

Income from
Continuing
Operations Before
Income Taxes 17,179 6,467 30,700 23,646 24,371
Income Tax
Provision 6,100 4,100 3,454 10,200 4,839
--------- -------- --------- --------- ---------
Income from
Continuing
Operations 11,079 2,367 27,246 13,446 19,532

Income from
Discontinued
Operations - - 618 - 711
Income Tax
Provision - - 210 - 225
--------- -------- --------- --------- ---------
Income from
Discontinued
Operations - - 408 - 486

Net Income $ 11,079 $ 2,367 $ 27,654 13,446 $ 20,018
========= ======== ========= ========= =========

Income per Common
Share from
Continuing
Operations:
---------------------
Basic $ 0.06 $ 0.01 $ 0.14 $ 0.08 $ 0.10
========= ======== ========= ========= =========
Diluted $ 0.06 $ 0.01 $ 0.14 $ 0.08 $ 0.10
========= ======== ========= ========= =========

Net Income per
Common Share:
--------------------
Basic $ 0.06 $ 0.01 $ 0.15 $ 0.08 $ 0.11
========= ======== ========= ========= =========
Diluted $ 0.06 $ 0.01 $ 0.14 $ 0.08 $ 0.10
========= ======== ========= ========= =========

Weighted Average
Common Shares -
Basic 170,644 173,762 189,391 172,203 189,508
========= ======== ========= ========= =========

Weighted Average
Common Shares -
Diluted 174,096 175,722 191,405 174,909 191,184
========= ======== ========= ========= =========

Net Orders $307,940 $321,055 $306,553 $628,995 $552,528
========= ======== ========= ========= =========

(1) For the quarters ended June 29, 2008 and March 30, 2008, net
revenues excluded $3 million and $4 million, respectively, of Nextest
revenue, that would otherwise be recognized except for purchase
accounting effects on acquired deferred revenue. The quarter ended
June 29, 2008 includes three months of Nextest's results and cost
structure and the quarter ended March 30, 2008 only includes two
months.

(2) Includes the following amounts related to stock-based
compensation:
June 29, March July 1, June 29, July 1,
2008 30, 2007 2008 2007
2008
---------------------------- -------------------
Cost of
Revenues $ 898 $ 863 $ 1,289 $ 1,761 $ 2,673
Engineering and
Development 1,809 1,632 2,103 $ 3,441 4,362
Selling and
Administrative 2,960 2,660 3,391 5,620 7,033
--------- -------- --------- --------- ---------
$ 5,667 $ 5,155 $ 6,783 $ 10,822 $ 14,068
========= ======== ========= ========= =========

(3) For the quarter ended March 30, 2008 and six months ended June 29,
2008, cost of revenues included a credit of $0.9 million related to
previously written off inventory in the Semiconductor Test Division
and a charge of $4.3 million to adjust Nextest acquired inventory to
fair value.

(4) For the quarter ended March 30, 2008 and six months ended June 29,
2008, in-process research and development included a charge related
to the Nextest acquisition. For the six months ended July 1, 2007,
in-process research and development included a charge from the
acquisition of enabling test technology from MOSAID Technologies.

(5) Restructuring
and Other, net
consists of: Quarter Ended: Six Months Ended:
---------------------------- -------------------
June 29, March July 1, June 29, July 1,
2008 30, 2007 2008 2007
2008
---------------------------- -------------------
Facility
Related $ 8,348 $ 4,672 $ (52) $ 13,020 $ (16)
Employee
Severance 5,510 7,113 1,505 12,623 3,706
(Gain)/Loss on
Sale of Real
Estate (1,682) - 21 (1,682) 31
(Gain) on Sale
of Product
Lines - - (906) - (906)
Long-Lived
Asset
Impairment 550 - - 550 -
--------- -------- --------- --------- ---------
$ 12,726 $ 11,785 $ 568 $ 24,511 $ 2,815
========= ======== ========= ========= =========

(6) For the six months ended July 1, 2007, interest and other, net
included income of $1.8 million for the recognition of fair value of
an asset related to an equity investment.
*T

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CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
----------------------------------------------------------------------
June 29, December 31,
2008 2007
-------------- ----------------

Assets
Cash and Cash Equivalents $ 286,094 $ 562,371
Marketable Securities 19,780 75,593
Accounts Receivable 212,458 189,487
Inventories 118,441 80,313
Deferred Tax Asset 30,779 3,216
Prepayments and Other Current
Assets 39,805 33,953
-------------- ----------------
707,357 944,933

Net Property, Plant and Equipment 353,105 352,707
Long-term Marketable Securities 108,462 104,978
Goodwill 241,730 69,147
Intangible and Other Assets 122,225 30,847
Retirement Plans Assets 48,028 46,396
Long-term Deferred Tax Assets - 6,280
-------------- ----------------
$ 1,580,907 $ 1,555,288
============== ================

Liabilities
Accounts Payable 80,456 57,426
Accrued Employees' Compensation and
Withholdings 70,991 71,691
Deferred Revenue and Customer
Advances 53,781 41,928
Other Accrued Liabilities 46,330 47,002
Income Taxes Payable 2,366 5,187
-------------- ----------------
253,924 223,234

Retirement Plans Liabilities 77,876 80,388
Deferred Tax Liabilities 20,495 -
Other Long-term Liabilities 30,705 22,492
-------------- ----------------
383,000 326,114

Shareholders' Equity 1,197,907 1,229,174
-------------- ----------------

$ 1,580,907 $ 1,555,288
============== ================

----------------------------------------------------- ----------------
*T

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GAAP to Non-GAAP Earnings Reconciliation

References by the Company to non-GAAP income and non-GAAP income per
share refer to income from operations, income from continuing
operations or income per common share from continuing operations
excluding in-process research and development, restructuring and
other, net, certain inventory provisions and fair value adjustment
related to Nextest, interest and other, net, and acquired intangible
asset amortization, as well as adjustments to profit sharing and
income taxes due to these exclusions. GAAP requires that these items
be included in determining income from operations and income from
continuing operations. Non-GAAP income from operations and non-GAAP
income from continuing operations (which is the basis for non-GAAP
income per share) gives an indication of Teradyne's baseline
performance before gains, losses or other charges that are considered
by management to be outside the Company's ongoing operating results.
The Company believes these non-GAAP measures will aid investors'
overall understanding of the Company's results by providing a higher
degree of transparency for certain expenses providing a level of
disclosure that will help investors understand how the Company plans
and measures its own business. However, the presentation of non-GAAP
measures is not meant to be considered in isolation or as a
substitute for, or superior to, financial information provided in
accordance with GAAP.

Quarter Ended:
------------------------------------
June 29, March 30, July 1,
2008 2008 2007
--------- --------- -------
(in millions, except per
share data)

Net
Revenues $317.7 $297.3 $288.7

Gross Margin - GAAP $153.8 48.4% $138.5 46.6%$137.2 47.5%
Nextest inventory fair
value adjustment
reversal (1) - 4.3 -
Inventory provision
reversal (2) - (0.9) (0.5)
--------- --------- -------
Gross Margin - non-GAAP $153.8 48.4% $141.9 47.7%$136.7 47.4%

Income from Operations -
GAAP $ 14.7 4.6% $ 1.4 0.5%$ 21.1 7.3%
Restructuring and other,
net (3) 12.7 11.8 0.6
Acquired intangible asset
amortization 4.8 3.9 1.0
Nextest inventory fair
value adjustment
reversal (1) - 4.3 -
In-process research and
development (4) - 1.1 -
Inventory provision
reversal (2) - (0.9) (0.5)
Interest and Other, net
(5) - - -
Profit sharing adjustment
(6) (0.7) (0.8) (0.1)
--------- --------- -------
Income from Operations -
Non-GAAP $ 31.5 9.9% $ 20.8 7.0%$ 22.1 7.7%
========= ========= =======

Income from Continuing
Operations - GAAP $ 11.1 3.5% $ 2.4 0.8%$ 27.2 9.4%
Restructuring and other,
net (3) 12.7 11.8 0.6
Acquired intangible asset
amortization 4.8 3.9 1.0
Nextest inventory fair
value adjustment
reversal (1) - 4.3 -
In-process research and
development (4) - 1.1 -
Inventory provision
reversal (2) - (0.9) (0.5)
Interest and Other, net
(5) - - -
Profit sharing adjustment
(6) (0.7) (0.8) (0.1)
Income tax adjustment (7) 0.2 - -
--------- --------- -------
Income from Continuing
Operations - non-GAAP $ 28.1 8.8% $ 21.8 7.3%$ 28.2 9.8%
========= ========= =======

GAAP Income per Common
Share from Continuing
Operations- Basic $ 0.06 $ 0.01 $ 0.14
========= ========= =======
Non-GAAP Income per Common
Share from Continuing
Operations - Basic $ 0.16 $ 0.13 $ 0.15
========= ========= =======

GAAP Weighted Average
Common Shares - Basic 170.6 173.8 189.4

GAAP Income per Common
Share from Continuing
Operations - Diluted $ 0.06 $ 0.01 $ 0.14
========= ========= =======
Non-GAAP Income per Common
Share from Continuing
Operations - Diluted $ 0.16 $ 0.12 $ 0.15
========= ========= =======

GAAP Weighted Average
Common Shares - Diluted 174.1 175.7 191.4

Six Months Ended:
-------------------------------
June 29, July 1,
2008 2007
------------- ------------
(in millions, except per share
data)

Net
Revenues $615.0 $542.4

Gross Margin - GAAP $292.4 47.5% $250.6 46.2%
Nextest inventory fair value
adjustment reversal (1) 4.3 -
Inventory provision reversal
(2) (0.9) (0.5)
------------- ------------
Gross Margin - non-GAAP $295.8 48.1% $250.1 46.1%

Income from Operations - GAAP $ 16.1 2.6% $ 2.4 0.4%
Restructuring and other, net
(3) 24.5 2.8
Acquired intangible asset
amortization 8.6 1.9
Nextest inventory fair value
adjustment reversal (1) 4.3 -
In-process research and
development (4) 1.1 16.7
Inventory provision reversal
(2) (0.9) (0.5)
Interest and Other, net (5) - (1.8)
Profit sharing adjustment (6) (1.5) (1.9)
------------- ------------
Income from Operations - Non-GAAP $ 52.2 8.5% $ 19.6 3.6%
============= ============

Income from Continuing Operations
- GAAP $ 13.4 2.2% $ 19.5 3.6%
Restructuring and other, net
(3) 24.5 2.8
Acquired intangible asset
amortization 8.6 1.9
Nextest inventory fair value
adjustment reversal (1) 4.3 -
In-process research and
development (4) 1.1 16.7
Inventory provision reversal
(2) (0.9) (0.5)
Interest and Other, net (5) - (1.8)
Profit sharing adjustment (6) (1.5) (1.9)
Income tax adjustment (7) 0.2 0.1
------------- ------------
Income from Continuing Operations
- non-GAAP $ 49.7 8.1% $ 36.8 6.8%
============= ============

GAAP Income per Common Share from
Continuing Operations- Basic $ 0.08 $ 0.10
============= ============
Non-GAAP Income per Common Share
from Continuing Operations -
Basic $ 0.29 $ 0.19
============= ============

GAAP Weighted Average Common
Shares - Basic 172.2 189.5

GAAP Income per Common Share from
Continuing Operations - Diluted $ 0.08 $ 0.10
============= ============
Non-GAAP Income per Common Share
from Continuing Operations -
Diluted $ 0.28 $ 0.19
============= ============

GAAP Weighted Average Common
Shares - Diluted 174.9 191.2

(1) Reversal of a charge adjusting Nextest acquired inventory to fair
value.

(2) Reversal of previously written off inventory for non-FLEX
products in the Semiconductor Test Division.

(3) Restructuring and
other, net consists
of (in millions): Quarter Ended: Six Months Ended:
--------------------------- -----------------
June 29, March 30, July 1, June 29, July 1,
2008 2008 2007 2008 2007
-------- --------- ------- -------- -------

Facility
related $ 8.3 $ 4.7 $ - $13.0 $ -
Employee
severance 5.5 7.1 1.5 12.6 3.7
Gain on Sale of
Real Estate (1.7) - - (1.7) -
Gain on Sale of
Product Lines - - (0.9) - (0.9)
Long-Lived
Asset
Impairment 0.6 - - 0.6 -
-------- --------- ------- -------- -------
$12.7 $11.8 $ 0.6 $24.5 $ 2.8
======== ========= ======= ======== =======

(4) For the quarter ended March 30, 2008 and six months ended June 29,
2008, in-process research and development included a charge related
to the Nextest acquisition. For the six months ended July 1, 2007,
in-process research and development included a charge from the
acquisition of enabling test technology from MOSAID Technologies.

(5) Recognition of fair value of an asset related to an equity
investment.

(6) Profit sharing adjustment for non-GAAP items.

(7) Income tax adjustment for non-GAAP items.
*T

For press releases and other information of interest to investors,
please visit Teradyne's homepage on the World Wide Web at
http://www.teradyne.com.

Teradyne, Inc.
Tom Newman, 978-370-2425
Vice President of Corporate Relations

Copyright Business Wire 2008