10-KPeriod: FY2003

TERADYNE, INC Annual Report, Year Ended Dec 31, 2003

Filed March 15, 2004For Securities:TER

Summary

Teradyne, Inc. reported a net loss for the fiscal year ended December 31, 2003. Despite a revenue increase of 11% year-over-year to $1.35 billion, the company incurred a net loss of $194 million, a significant improvement from the $718 million net loss in 2002. This loss was primarily driven by the ongoing impact of the technology and semiconductor industry downturn, although recent upticks in business activity suggest a potential recovery. The Semiconductor Test Systems segment showed strong growth, with revenue up 32% and bookings increasing by 74%, driven by demand from subcontractors in Asia and the wireless/baseband industries. Conversely, the Connection Systems segment experienced a revenue decline of 10%, largely due to exiting lower-margin EMS business. The company has been actively managing its cost structure through workforce reductions, facility consolidations, and product line rationalization to navigate the challenging market environment.

Key Highlights

  • 1Teradyne reported an 11% increase in net revenue to $1.35 billion for the fiscal year ended December 31, 2003.
  • 2The company posted a net loss of $194 million, a significant improvement from the $718 million net loss in the prior year.
  • 3The Semiconductor Test Systems segment saw strong revenue growth of 32% and a substantial increase in bookings (74%), indicating recovery in this key area.
  • 4Connection Systems experienced a 10% revenue decline, attributed to the strategic exit from lower-margin EMS business.
  • 5Significant restructuring and cost-reduction initiatives were undertaken, including workforce reductions and facility consolidations, to address market downturns.
  • 6Backlog increased by approximately 15% to $506.1 million, primarily driven by Semiconductor Test Systems.
  • 7Teradyne's gross margin improved significantly to 29.5% in 2003 from 19.0% in 2002, reflecting operational efficiencies and product mix changes.

Frequently Asked Questions

In fiscal year 2003, Teradyne's net revenue increased by 11% to $1.35 billion. However, the company reported a net loss of $194 million, which was an improvement compared to the $718 million net loss in 2002. This indicates a challenging but recovering market environment.

The Semiconductor Test Systems segment showed the strongest performance with a 32% revenue increase and robust booking growth. The Connection Systems segment experienced a revenue decline of 10%, partly due to the company's decision to exit its lower-margin EMS business.

Teradyne implemented several cost-saving measures, including workforce reductions across various groups, consolidation and reorganization of functions, curtailment of discretionary expenses, shifts to lower-cost manufacturing regions, reduction in operating facilities, and outsourcing of certain manufacturing and development activities. The company also eliminated certain product lines.

Teradyne's backlog of unfilled orders increased by approximately 15% from $440.9 million in 2002 to $506.1 million in 2003. This growth was primarily driven by a sharp increase in demand for testers in the Semiconductor Test Systems segment.