Teradyne (TER) 8-K Teradyne Reports Third Quarter 2013 Results

Exhibit 99.1

Teradyne Reports Third Quarter 2013 Results

Q3’13 revenue of $433 million, up 1% from Q2’13 and down 6% from Q3’12

Q3’13 orders of $271 million, down 43% from Q2’13 and up 17% from Q3’12

Q3’13 diluted non-GAAP net income of $0.46 per share, up from $0.43 per share in Q2’13 and down from $0.53 per share in Q3’12. Q3’13 diluted GAAP net income of $0.29 per share

Q4’13 guidance: Revenue of $260 million to $285 million; Diluted non-GAAP net income of $0.00 to $0.07 per share; Diluted GAAP net income of $0.04 to $0.08 per share

NORTH READING, Mass. – October 23, 2013 –Teradyne, Inc. (NYSE: TER) reported revenue of $433 million for the third quarter of 2013 of which $304 million was in Semiconductor Test, $93 million in Wireless Test and $36 million in System Test. On a non-GAAP basis, Teradyne’s net income in the third quarter was $95.0 million, or $0.46 per diluted share, which excluded acquired intangible asset amortization, non-cash convertible debt interest, and included income taxes on a cash basis. GAAP net income for the third quarter was $69.5 million, or $0.29 per diluted share.

Bookings in the third quarter of 2013 were $271 million of which $207 million were in Semiconductor Test, $40 million in Wireless Test and $24 million in System Test.

“Despite industry-wide lower capital spending this year, we’ve achieved solid operating results and market share momentum through three quarters,” said CEO, Mike Bradley. “Consistent with prior years, we’re projecting the normal seasonal slowdown in the fourth quarter, but at somewhat higher revenue levels than we experienced at this time last year. We continue to make progress in mobility applications in both Semiconductor Test and LitePoint and will be well-positioned for any expected market growth in 2014.”

Guidance for the fourth quarter of 2013 is revenue of $260 million to $285 million with non-GAAP net income per diluted share of $0.00 to $0.07 and GAAP net income per diluted share of $0.04 to $0.08. Non-GAAP net income guidance excludes a gain from the sale of an equity investment, acquired intangible asset amortization, non-cash convertible debt interest and includes income taxes on a cash basis.

Webcast

A conference call to discuss the third quarter of 2013 results, along with management’s business outlook is scheduled at 10 a.m. EDT, Thursday, October 24, 2013. The call will be broadcast simultaneously over the Internet. Interested investors should access the webcast atwww.teradyne.com and click on “Investors” at least five minutes before the call begins. Presentation materials will be available atwww.teradyne.com at 10 a.m. EDT.

A replay will be available approximately two hours after the completion of the call. The replay number in the U.S. & Canada is 855-859-2056. The replay number outside the U.S. & Canada is 404-537-3406. The pass code for both numbers is 76276015. A replay will also be available on the Teradyne websitewww.teradyne.com. Click on “Investors” for a link to the replay. The replay will be available via phone and website through November 10, 2013.

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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. Non-GAAP income from operations and non-GAAP net income exclude acquired intangible asset amortization, non-cash convertible debt interest, fair value inventory step-up related to LitePoint, pension and post retirement actuarial gains and losses, restructuring and other, and a gain from the sale of an equity investment, and include income taxes on a cash basis. GAAP requires that these items be included in determining income from operations and net income. Non-GAAP income from operations, non-GAAP net income, non-GAAP income from operations and non-GAAP net income as a percentage of revenue, and non-GAAP net income per share are non-GAAP measures presented to provide meaningful supplemental information regarding Teradyne’s baseline performance before gains, losses or other charges that may not be indicative of Teradyne’s current core business or future outlook. These non-GAAP measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with Teradyne’s business plan, historical operating results and the operating results of Teradyne’s competitors. Non-GAAP gross margin excludes charges related to the fair value inventory step-up recorded as part of acquisition purchase accounting and pension and post retirement actuarial gains and losses. GAAP requires that this item be included in determining gross margin. Non-GAAP gross margin dollar amount and percentage are non-GAAP measures that management believes provide useful supplemental information for management and the investor. Management uses non-GAAP gross margin as a performance measure for Teradyne’s current core business and future outlook and for comparison with Teradyne’s business plan, historical gross margin results and the gross margin results of Teradyne’s competitors. Non-GAAP diluted shares include the impact of Teradyne’s call option on its shares. Management believes each of these non-GAAP measures provides useful supplemental information for investors, allowing greater transparency to the information used by management in its operational decision making and in the review of Teradyne’s financial and operational performance, as well as facilitating meaningful comparisons of Teradyne’s results in the current period compared with those in prior and future periods. 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 non-GAAP financial measures discussed in this press release may not be comparable to similarly titled measures used by other companies. 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

Teradyne (NYSE:TER) is a leading supplier of Automatic Test Equipment used to test semiconductors, wireless products, data storage and complex electronic systems which serve consumer, communications, industrial and government customers. In 2012, Teradyne had sales of $1.66 billion and currently employs approximately 3,700 people worldwide. For more information, visitwww.teradyne.com. Teradyne(R) is a registered trademark of Teradyne, Inc. in the U.S. and other countries.

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Safe Harbor Statement

This release contains forward-looking statements regarding future business prospects, Teradyne’s results of operations and market conditions. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance. You can 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 Teradyne’s future results or other forward looking statements 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; decreased or delayed product demand; increased research and development spending; the closing of the sale of an equity investment and other events, factors and risks disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” section of Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and Quarterly Report on Form 10-Q for the period ended June 30, 2013. The forward-looking statements provided by Teradyne in this press release represent management’s views as of the date of this release. Teradyne anticipates that subsequent events and developments may cause management’s views to change. However, while Teradyne may elect to update these forward-looking statements at some point in the future, Teradyne specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Teradyne’s views as of any date subsequent to the date of this release.

TERADYNE, INC. REPORT FOR THIRD FISCAL QUARTER OF 2013

CONDENSED CONSOLIDATED OPERATING STATEMENTS

(In thousands, except per share amounts)

	Quarter Ended									Nine Months Ended
	September 29, 2013			June 30, 2013			September 30, 2012			September 29, 2013			September 30, 2012
Net revenues	$	433,376		$	428,889		$	463,394		$	1,142,632		$	1,408,346
Cost of revenues (1) (2)		179,082			187,656			203,194			493,688			647,714
Gross profit		254,294			241,233			260,200			648,944			760,632
Operating expenses:
Engineering and development (1)		68,918			67,773			63,946			199,442			193,059
Selling and administrative (1)		72,917			69,230			69,030			210,037			207,727
Acquired intangible asset amortization		18,064			18,063			18,429			54,163			55,287
Restructuring and other (3)		889			259			683			1,480			(7,404	)
Operating expenses		160,788			155,325			152,088			465,122			448,669
Income from operations		93,506			85,908			108,112			183,822			311,963
Interest and other (4)		(5,954	)		(5,551	)		(5,087	)		(17,339	)		(15,702	)
Income before income taxes		87,552			80,357			103,025			166,483			296,261
Income tax provision		18,093			13,801			14,384			23,879			62,669
Net income	$	69,459		$	66,556		$	88,641		$	142,604		$	233,592
Net income per common share:
Basic	$	0.36		$	0.35		$	0.47		$	0.75		$	1.25
Diluted	$	0.29		$	0.28		$	0.39		$	0.61		$	1.02
Weighted average common shares - basic		191,307			190,569			187,364			190,521			186,592
Weighted average common shares - diluted (5)		235,828			234,909			229,210			235,165			230,003
Net orders	$	270,733		$	473,815		$	230,794		$	1,144,630		$	1,280,579

(1) In the first quarter of 2012, we changed our accounting method from delayed recognition of actuarial gains and losses for our defined benefit pension plans and other post retirement benefit plans to immediate recognition. We elected to immediately recognize net actuarial gains and losses and the change in the fair value of plan assets in our operating results in the year in which they occur. Below are the pension (gains) and losses included in our operating results:

	Quarter Ended							Nine Months Ended
	September 29, 2013		June 30, 2013			September 30, 2012		September 29, 2013			September 30, 2012
Cost of revenues	$	—	$	(335	)	$	449	$	(335	)	$	1,227
Engineering and development		—		(659	)		936		(659	)		2,399
Selling and administrative		—		(365	)		552		(365	)		1,365
	$	—	$	(1,359	)	$	1,937	$	(1,359	)	$	4,991

(2) Cost of revenues includes:

	Quarter Ended									Nine Months Ended
	September 29, 2013			June 30, 2013			September 30, 2012			September 29, 2013			September 30, 2012
Provision for excess and obsolete inventory	$	3,841		$	1,975		$	5,481		$	9,616		$	16,408
Sale of previously written down inventory		(4,093	)		(3,058	)		(651	)		(8,934	)		(3,170	)
Inventory step-up		—			—			—			—			6,089
	$	(252	)	$	(1,083	)	$	4,830		$	682		$	19,327

(3) Restructuring and other consists of:

	Quarter Ended							Nine Months Ended
	September 29, 2013			June 30, 2013		September 30, 2012		September 29, 2013			September 30, 2012
Employee severance	$	1,337		$	259	$	683	$	1,928		$	969
Facility related		(448	)		—		—		(448	)		—
Contingent consideration fair value adjustment		—			—		—		—			(8,373	)
	$	889		$	259	$	683	$	1,480		$	(7,404	)

(4) Interest and other includes:

	Quarter Ended						Nine Months Ended
	September 29, 2013		June 30, 2013		September 30, 2012		September 29, 2013		September 30, 2012
Non-cash convertible debt interest expense	$	4,018	$	3,884	$	3,506		11,656	$	10,170

(5) Under GAAP, when calculating diluted earnings per share, convertible debt must be assumed to have converted if the effect on EPS would be dilutive. Diluted shares assume the conversion of the convertible debt as the effect would be dilutive. Accordingly, for the quarters ended September 29, 2013, June 30, 2013 and September 30, 2012, and for the nine months ended September 29, 2013 and September 30, 2012, 23.3 million, 23.3 million, 21.9 million, 23.3 million and 22.4 million shares, respectively, have been included in diluted shares.

CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)

	September 29, 2013		December 31, 2012
Assets
Cash and cash equivalents	$	572,868	$	338,920
Marketable securities		384,334		431,516
Accounts receivable		209,386		153,423
Inventories		123,032		139,410
Deferred tax assets		83,780		77,305
Prepayments and other current assets		120,980		95,487
Total current assets		1,494,380		1,236,061
Net property, plant and equipment		275,421		265,782
Marketable securities		202,087		235,872
Other assets		19,763		20,209
Retirement plan assets		5,020		3,282
Intangible assets		265,705		318,867
Goodwill		349,272		349,272
Total assets	$	2,611,648	$	2,429,345
Liabilities
Accounts payable	$	67,734	$	58,324
Accrued employees’ compensation and withholdings		78,616		86,264
Deferred revenue and customer advances		70,367		81,357
Other accrued liabilities		62,184		57,249
Accrued income taxes		25,249		12,306
Current debt		183,573		2,328
Total current liabilities		487,723		297,828
Long-term deferred revenue and customer advances		17,455		16,227
Retirement plan liabilities		95,982		94,373
Deferred tax liabilities		37,632		50,201
Long-term other accrued liabilities		21,355		21,302
Long-term debt		—		171,059
Total liabilities		660,147		650,990
Shareholders’ equity		1,951,501		1,778,355
Total liabilities and shareholders’ equity	$	2,611,648	$	2,429,345

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

	Quarter Ended						Nine Months Ended
	September 29, 2013			September 30, 2012			September 29, 2013			September 30, 2012
Cash flows from operating activities:
Net income	$	69,459		$	88,641		$	142,604		$	233,592
Adjustments to reconcile net income to net cash provided by operating  activities:
Depreciation		14,321			14,234			41,873			39,812
Amortization		22,175			22,046			66,100			65,790
Stock-based compensation		9,150			9,238			27,227			30,634
Provision for excess and obsolete inventory		3,841			5,481			9,616			16,408
Deferred taxes		(3,981	)		(8,861	)		(19,211	)		7,076
Inventory step-up		—			—			—			6,089
Contingent consideration adjustment		—			—			—			(8,373	)
Tax benefit related to stock options and restricted stock units		777			—			(807	)		(7,600	)
Retirement plan actuarial losses (gains)		—			1,937			(1,359	)		4,991
Impairment loss on property, plant and equipment		—			—			1,074			—
Other		2,401			(312	)		3,478			(783	)
Changes in operating assets and liabilities:
Accounts receivable		18,822			140,660			(55,963	)		(76,134	)
Inventories		7,821			3,624			34,194			25,070
Prepayments and other assets		(9,035	)		2,251			(26,312	)		7,278
Accounts payable and accrued expenses		15,645			(44,740	)		496			(17,600	)
Deferred revenue and customer advances		(6,672	)		(4,453	)		(9,762	)		(10,651	)
Retirement plan contributions		(1,058	)		(1,129	)		(3,569	)		(3,679	)
Accrued income taxes		10,786			20,355			13,750			50,313
Net cash provided by operating activities		154,452			248,972			223,429			362,233
Cash flows from investing activities:
Purchases of property, plant and equipment		(32,127	)		(33,328	)		(82,925	)		(91,132	)
Purchases of marketable securities		(199,118	)		(356,286	)		(657,188	)		(510,157	)
Proceeds from maturities of marketable securities		133,355			70,230			401,901			156,422
Proceeds from sales of marketable securities		282,342			4,222			332,597			14,250
Net cash provided by (used for) investing activities		184,452			(315,162	)		(5,615	)		(430,617	)
Cash flows from financing activities:
Issuance of common stock under stock option and stock purchase plans		7,140			975			16,778			17,959
Tax benefit related to stock options and restricted stock units		(777	)		—			807			7,600
Payments of long-term debt		—			—			(1,063	)		(1,246	)
Payments of contingent consideration		—			(38,149	)		(388	)		(43,973	)
Net cash provided by (used for) financing activities		6,363			(37,174	)		16,134			(19,660	)
Increase (decrease) in cash and cash equivalents		345,267			(103,364	)		233,948			(88,044	)
Cash and cash equivalents at beginning of period		227,601			589,056			338,920			573,736
Cash and cash equivalents at end of period	$	572,868		$	485,692		$	572,868		$	485,692

GAAP to Non-GAAP Earnings Reconciliation

(In millions, except per share amounts)

	Quarter Ended
	September 29, 2013			% of Net Revenues							June 30, 2013			% of Net Revenues									September 30, 2012			% of Net Revenues
Net revenues	$	433.4									$	428.9											$	463.4
Gross profit—GAAP	$	254.3			58.7	%					$	241.2			56.2	%							$	260.2			56.2	%
Pension mark-to-market adjustments(1)		—			—							(0.3	)		-0.1	%								0.4			0.1	%
Gross profit—non-GAAP	$	254.3			58.7	%					$	240.9			56.2	%							$	260.6			56.2	%
Income from operations - GAAP	$	93.5			21.6	%					$	85.9			20.0	%							$	108.1			23.3	%
Acquired intangible asset amortization		18.1			4.2	%						18.1			4.2	%								18.4			4.0	%
Restructuring and other(2)		0.9			0.2	%						0.3			0.1	%								0.7			0.2	%
Pension mark-to-market adjustments(1)		—			—							(1.4	)		-0.3	%								1.9			0.4	%
Income from operations - non-GAAP	$	112.5			26.0	%					$	102.9			24.0	%							$	129.1			27.9	%
							Net Income per Common Share										Net Income per Common Share												Net Income per Common Share
	September 29, 2013			% of Net Revenues			Basic		Diluted		June 30, 2013			% of Net Revenues			Basic			Diluted			September 30, 2012			% of Net Revenues			Basic			Diluted
Net income —GAAP	$	69.5			16.0	%	$	0.36	$	0.29	$	66.6			15.5	%	$	0.35		$	0.28		$	88.6			19.1	%	$	0.47		$	0.39
Acquired intangible asset amortization		18.1			4.2	%		0.09		0.08		18.1			4.2	%		0.09			0.08			18.4			4.0	%		0.10			0.09
Income tax adjustment(3)		2.5			0.6	%		0.01		0.01		1.6			0.4	%		0.01			0.01			(4.7	)		-1.0	%		(0.03	)		(0.02	)
Interest and other(4)		4.0			0.9	%		0.02		0.02		3.9			0.9	%		0.02			0.02			3.5			0.8	%		0.02			0.02
Restructuring and other(2)		0.9			0.2	%		0.00		0.00		0.3			0.1	%		0.00			0.00			0.7			0.2	%		0.00			0.00
Pension mark-to-market adjustments(1)		—			—			—		—		(1.4	)		-0.3	%		(0.01	)		(0.01	)		1.9			0.4	%		0.01			0.01
Convertible share adjustment (5)		—			—			—		0.06		—			—			—			0.05			—			—			—			0.04
Net income—non-GAAP	$	95.0			21.9	%	$	0.50	$	0.46	$	89.1			20.8	%	$	0.47		$	0.43		$	108.4			23.4	%	$	0.58		$	0.53
GAAP and non-GAAP weighted average common shares—basic		191.3										190.6												187.4
GAAP weighted average common shares—diluted		235.8										234.9												229.2
Exclude dilutive shares from convertible note		(23.3	)									(23.3	)											(21.9	)
Non-GAAP weighted average common shares—diluted(5)		212.5										211.6												207.3
(1)    Actuarial (gain) loss recognized under GAAP in accordance with the Company’s mark-to-market pension accounting.
(2)    Restructuring and other consists of:
	Quarter Ended
	September 29, 2013										June 30, 2013												September 30, 2012
Employee severance	$	1.3									$	0.3											$	0.7
Facility related		(0.4	)									—												—
	$	0.9									$	0.3											$	0.7

(3) For the quarters ended September 29, 2013, June 30, 2013 and September 30, 2012, adjustment to record income taxes on a cash basis.

(4) For the quarters ended September 29, 2013, June 30, 2013 and September 30, 2012, Interest and other included non-cash convertible debt interest expense.

(5) For the quarters ended September 29, 2013, June 30, 2013 and September 30, 2012, the calculation of non-GAAP diluted earnings per share gives benefit to the Company’s call option on its stock for 34.7 million shares at $5.48. As a result, 18.7 million, 18.7 million, and 16.8 million shares have been included in non-GAAP diluted shares and net interest expense of $2.3 million has been added back to non-GAAP net income for the non-GAAP diluted earnings per share calculation.

	Nine Months Ended
	September 29, 2013			% of Net Revenues									September 30, 2012			% of Net Revenues
Net Revenues	$	1,142.6											$	1,408.3
Gross profit - GAAP	$	648.9			56.8	%							$	760.6			54.0	%
Pension mark-to-market adjustments(1)		(0.3	)		0.0	%								1.2			0.1	%
Inventory step-up		—			—									6.1			0.4	%
Gross profit - non-GAAP	$	648.6			56.8	%							$	767.9			54.5	%
Income from operations - GAAP	$	183.8			16.1	%							$	312.0			22.2	%
Acquired intangible asset amortization		54.2			4.7	%								55.3			3.9	%
Restructuring and other(2)		1.5			0.1	%								(7.4	)		-0.5	%
Pension mark-to-market adjustments(1)		(1.4	)		-0.1	%								5.0			0.4	%
Inventory step-up		—			—									6.1			0.4	%
Income from operations - non-GAAP	$	238.1			20.8	%							$	371.0			26.3	%
							Net Income per Common Share												Net Income per Common Share
	September 29, 2013			% of Net Revenues			Basic			Diluted			September 30, 2012			% of Net Revenues			Basic			Diluted
Net income - GAAP	$	142.6			12.5	%	$	0.75		$	0.61		$	233.6			16.6	%	$	1.25		$	1.02
Acquired intangible asset amortization		54.2			4.7	%		0.28			0.23			55.3			3.9	%		0.30			0.27
Income tax adjustment(3)		(6.3	)		-0.6	%		(0.03	)		(0.03	)		22.2			1.6	%		0.12			0.11
Interest and other(4)		11.7			1.0	%		0.06			0.05			10.2			0.7	%		0.05			0.05
Restructuring and other(2)		1.5			0.1	%		0.01			0.01			(7.4	)		-0.5	%		(0.04	)		(0.04	)
Pension mark-to-market adjustments(1)		(1.4	)		-0.1	%		(0.01	)		(0.01	)		5.0			0.4	%		0.03			0.02
Inventory step-up		—			—			—			—			6.1			0.4	%		0.03			0.03
Convertible share adjustment(5)		—			—			—			0.13			—			—			—			0.14
Net income - non-GAAP	$	202.3			17.7	%	$	1.06		$	0.99		$	325.0			23.1	%	$	1.74		$	1.60
GAAP and non-GAAP weighted average common shares—basic		190.5												186.6
GAAP weighted average common shares—diluted		235.2												230.0
Exclude dilutive shares from convertible note		(23.3	)											(22.4	)
Non-GAAP weighted average common shares—diluted(5)		211.9												207.6
(1)    Actuarial (gains) losses recognized under GAAP in accordance with the Company’s mark-to-market pension accounting.
(2)    Restructuring and other consists of:
	Nine Months Ended
	September 29, 2013												September 30, 2012
Employee severance	$	1.9											$	1.0
Facility related		(0.4	)											—
Contingent consideration fair value adjustment		—												(8.4	)
	$	1.5											$	(7.4	)

(3) For the nine months ended September 29, 2013 and September 30, 2012, adjustment to record income tax provision on a cash basis.

(4) For the nine months ended September 29, 2013 and September 30, 2012, Interest and Other included non-cash convertible debt interest expense.

(5) For the nine months ended September 29, 2013 and September 30, 2012, the calculation of non-GAAP diluted earnings per share gives benefit to the Company’s call option on its stock for 34.7 million shares at $5.48. As a result, 18.7 million and 17.5 million shares have been included in non-GAAP diluted shares and net interest expense of approximately $7.0 million has been added back to non-GAAP net income for the non-GAAP diluted earnings per share calculation.

GAAP to Non-GAAP Reconciliation of Fourth Quarter 2013 guidance:
GAAP and non-GAAP fourth quarter revenue guidance:	$260 million	to	$285 million
GAAP net income per diluted share	$0.04		$0.08
Exclude gain from the sale of an equity investment	(0.14)		(0.14)
Exclude acquired intangible asset amortization	0.08		0.08
Exclude non-cash convertible debt interest	0.02		0.02
Adjustment to record income taxes on a cash basis	0.00		0.01
Exclude dilutive shares from convertible note	0.00		0.02
Non-GAAP net income per diluted share	$0.00		$0.07

For press releases and other information of interest to investors, please visit Teradyne’s homepage at http://www.teradyne.com.

Contact: Teradyne, Inc.

Andy Blanchard 978-370-2425

Vice President of Corporate Relations