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TERADYNE, INC Annual Report, Year Ended Dec 31, 1994

Filing Date
Filed March 23, 1995
Period End
December 31, 1994
Security
TER
In the record · 2016–202610-K1110-Q328-K91

TER filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 91 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Dec ’16Dec ’16
  2. FY2018 annual report10-K · Mar ’19Mar ’19
  3. Leadership change8-K · Sep ’21Sep ’21
  4. Leadership change8-K · Oct ’25Oct ’25

01—Abstract

Summary

Summary of the 10-K filed March 23, 1995. Cited figures are marked; the original filing is the authoritative source.

Teradyne, Inc. (NYSE: TER) closed 1994 with a strong year of growth and improved profitability.

Net sales rose 22% to $677.4 milliona from $554.7 million, driven by semiconductor test systems (up 22%) and backplane connection systems (up 48%). Income before extraordinary item nearly doubled to $70.9 million, or $1.91 per share, from $35.9 million, and the net margin expanded to about 10% from 6%. Incoming orders grew 28% to $803.4 million, and backlog rose 44% to $414.0 million, which gives management good visibility into 1995 revenue, with roughly 91-92% of year-end backlog expected to ship during 1995.

The balance sheet is conservative. Cash and equivalents reached $182.8 millionb, shareholder equity was $493.3 million, and long-term debt was only $8.8 million. Operating cash flow was $89.4 million, and the company bought back $24.6 million of stock.

Management expects a tax rate near the 35%c statutory rate in 1995, up from an effective 31% in 1994 that benefited from carryforwards that are no longer as available. Gross margin slipped slightly, as lower-margin backplane sales grew faster, and engineering spending (about 10% of sales) is rising to support new semiconductor test products.

Key risks for investors include customer concentration (Motorola accounted for about 10%d of 1994 sales), cyclicality tied to semiconductor capacity spending, intense competition from larger rivals, and international exposure, with 46% of sales coming from outside the U.S. The company has never paid a cash dividend and plans to retain earnings for growth. The company's auditor, Coopers & Lybrand, issued an unqualified opinion.

02—Key points

Key Highlights

  1. Net sales grew 22% to $677.4 million in 1994, led by a 22% increase in semiconductor test systems and a 48% increase in backplane connection systems.
  2. Income before extraordinary item nearly doubled to $70.9 million ($1.91 per share) from $35.9 million ($1.00 per share) in 1993.
  3. Incoming orders rose 28% to $803.4 million, and backlog grew 44% to $414.0 million, with about 91-92% expected to ship in 1995.
  4. Cash and cash equivalents of $182.8 million and marketable securities of $19.8 million, against only $8.8 million of long-term debt, indicate a very strong liquidity position.
  5. Operating cash flow was $89.4 million, and the company repurchased $24.6 million of its stock during 1994.
  6. Motorola accounted for approximately 10% of 1994 net sales, and international customers accounted for 46% of sales.
  7. Engineering and development spending rose to $70.4 million (about 10% of sales), reflecting continued investment in new semiconductor test products; the company has never paid cash dividends.

03—Questions

Frequently Asked Questions

  1. What drove Teradyne's revenue growth in 1994?

    Growth came mainly from semiconductor manufacturers adding capacity to meet rising demand for chips. Semiconductor test system sales rose 22%, and backplane connection systems, sold to computer, telecom, and military/aerospace customers, rose 48%. Incoming orders grew even faster, at 28%, which supports continued growth.

  2. Is Teradyne's balance sheet strong enough to support its growth plans?

    Yes. The company held $182.8 million in cash and equivalents and $19.8 million in marketable securities at year end, with only $8.8 million of long-term debt. The $80.0 million revolving credit line was undrawn, and management believes these resources are sufficient for 1995 working capital and capital spending needs.

  3. What are the main risks to Teradyne's business?

    The main risks are customer concentration (Motorola was about 10% of sales), dependence on semiconductor capacity cycles, intense competition from companies with greater resources, and international exposure to currency and political risks. Sales are about 46% international. Backplane products also carry lower margins than test systems, which weighed on gross margin in 1994.

  4. Does Teradyne pay dividends, and what is the outlook for taxes?

    Teradyne has never paid cash dividends and expects to retain its earnings to fund growth. Its 1994 effective tax rate was 31%, helped by carryforwards, but management expects the rate to approximate the 35% federal statutory rate in 1995, which would reduce net margins somewhat.

04—Continue

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