30
EXHIBIT 99.2
31
TERADYNE AND MEGATEST
UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial
statements assume a business combination between Teradyne and Megatest accounted
for on a pooling of interests basis and are based on the respective historical
financial statements and the notes thereto. The unaudited pro forma condensed
combined balance sheet gives effect to the Merger as if it had occurred on
October 1, 1995, combining the balance sheets of Teradyne and Megatest at
October 1, 1995 and August 31, 1995, respectively. The unaudited pro forma
condensed combined statements of operations give effect to the Merger as if it
had occurred at the beginning of each of the periods presented combining
Teradyne's historical results for the nine month periods ended October 1, 1995
and October 2, 1994 and each of the three years ended December 31, 1994, 1993
and 1992 with corresponding Megatest results for the nine month periods ended
August 31, 1995 and 1994 and the twelve month periods ended November 30, 1994,
1993 and 1992, respectively.
The pro forma information is presented for illustrative purposes only
and is not necessarily indicative of the operating results or financial position
that would have occurred if the Merger had been consummated at the beginning of
the earliest period presented, nor is it necessarily indicative of future
operating results or financial position.
These unaudited pro forma condensed combined financial statements are
based on, and should be read in conjunction with, the historical consolidated
financial statements and the related notes thereto of Teradyne and Megatest.
32
TERADYNE AND MEGATEST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AT OCTOBER 1, 1995
(amounts in thousands)
Historical Pro Forma
---------- ---------
Teradyne Megatest Adjustments Combined
-------- -------- ----------- --------
Current assets:
Cash and cash equivalents.......................... $234,187 $ 11,609 $245,796
Marketable securities.............................. 19,920 19,920
Accounts receivable, net........................... 206,359 31,386 237,745
Inventories........................................ 128,532 38,116 166,648
Deferred tax assets................................ 14,767 3,852 18,619
Prepayments and other current assets............... 10,978 1,618 12,596
------ ----- ------
Total current assets............................ 614,743 86,581 701,324
Property and equipment, net........................... 216,329 28,882 245,211
Other assets.......................................... 17,794 3,395 21,189
------ ----- ------
Total assets.................................... $848,866 $118,858 $967,724
======== ======== ========
Current liabilities:
Notes payable - banks.............................. $8,455 $10,000 $18,455
Current portion of long term debt.................. 418 1,657 2,075
Accounts payable - trade and accrued liabilities... 106,290 26,659 132,949
Unearned service revenue and customer advances..... 50,653 1,751 52,404
Income taxes payable............................... 13,807 1,655 15,462
------ ----- ------
Total current liabilities....................... 179,623 41,722 221,345
Deferred tax liabilities.............................. 14,722 14,722
Long-term debt........................................ 8,482 11,728 20,210
----- ------ ------
Total liabilities............................... 202,827 53,450 256,277
------- ------ -------
Shareholders' equity:
Common stock (Note 2)................................. 9,467 7 836 10,310
Additional paid-in capital (Note 2)................... 282,895 82,007 (836) 364,066
Retained earnings (deficit)........................... 353,677 (16,606) 337,071
------- -------- ----- -------
Total shareholders' equity...................... 646,039 65,408 711,447
------- ------ ----- -------
Total liabilities and shareholders' equity...... $848,866 $118,858 $967,724
======== ======== ===== ========
<FN>
See accompanying notes to unaudited pro forma condensed combined
financial statements.
</FN>
33
TERADYNE AND MEGATEST
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 1, 1995
(in thousands, except per share amounts)
Historical
----------
Pro Forma
Teradyne Megatest Combined
-------- -------- --------
Net sales.............................................. $754,952 $85,257 $840,209
Expenses:
Cost of sales....................................... 402,482 51,424 453,906
Engineering and development......................... 72,454 15,738 88,192
Selling and administrative.......................... 111,535 16,884 128,419
------- ------ -------
586,471 84,046 670,517
------- ------ -------
Income from operations................................. 168,481 1,211 169,692
Other income (expense)................................. 8,811 (501) 8,310
----- ----- -----
Income before income taxes............................. 177,292 710 178,002
Provision for income taxes............................. 63,828 434 64,262
------ --- ------
Income from continuing operations...................... $113,464 $ 276 $113,740
======== ===== ========
Income from continuing operations per common share
(Notes 2 and 3)..................................... $ 1.47 $ 0.04 $ 1.35
======== ======= ========
Shares used in calculations of income per common
share (000's) (Notes 2 and 3)....................... 77,253 7,403 83,983
====== ===== ======
<FN>
See accompanying notes to unaudited pro forma condensed combined
financial statements.
</FN>
34
TERADYNE AND MEGATEST
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 2, 1994
(in thousands, except per share amounts)
Historical
----------
Pro Forma
Teradyne Megatest Combined
-------- -------- --------
Net sales................................................. $487,349 $ 77,844 $565,193
Expenses:
Cost of sales.......................................... 272,968 44,151 317,119
Engineering and development............................ 51,096 12,121 63,217
Selling and administrative............................. 95,783 13,661 109,444
------ ------ -------
419,847 69,933 489,780
------- ------ -------
Income from operations.................................... 67,502 7,911 75,413
Other income ............................................. 2,751 1,181 3,932
----- ----- -----
Income before income taxes................................ 70,253 9,092 79,345
Provision for income taxes................................ 21,778 1,771 23,549
------ ----- ------
Income from continuing operations......................... $ 48,475 $ 7,321 $ 55,796
======== ======== ========
Income from continuing operations per common share
(Notes 2 and 3)........................................ $ 0.66 $ 1.00 $ 0.69
======== ======== ========
Shares used in calculations of income per common share
(000's) (Notes 2 and 3)................................ 73,976 7,340 80,649
====== ===== ======
<FN>
See accompanying notes to unaudited pro forma condensed combined
financial statements.
</FN>
35
TERADYNE AND MEGATEST
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(in thousands, except per share amounts)
Historical
----------
Pro Forma
Teradyne Megatest Combined
-------- -------- --------
Net sales.................................................... $677,440 $ 90,046 $767,486
Expenses:
Cost of sales............................................. 378,933 52,264 431,197
Engineering and development............................... 70,442 16,541 86,983
Selling and administrative................................ 129,935 18,141 148,076
Write-off of acquired in-process technology............... 8,837 8,837
------- ----- -----
579,310 95,783 675,093
------- ------ -------
Income (loss) from operations................................ 98,130 (5,737) 92,393
Other income................................................. 4,682 1,515 6,197
----- ----- -----
Income (loss) before income taxes............................ 102,812 (4,222) 98,590
Provision for income taxes................................... 31,871 923 32,794
------ --- ------
Income (loss) from continuing operations..................... $ 70,941 $ (5,145) $ 65,796
======== ========= ========
Income (loss) from continuing operations per common share
(Notes 2 and 3) $ 0.96 $ (0.72) $ 0.82
======== ======== ========
Shares used in calculations of income per common share
(000's) (Notes 2 and 3).................................. 74,190 7,160 80,699
====== ===== ======
<FN>
See accompanying notes to unaudited pro forma condensed combined
financial statements.
</FN>
36
TERADYNE AND MEGATEST
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(in thousands, except per share amounts)
Historical
----------
Pro Forma
Teradyne Megatest Combined
-------- -------- --------
Net sales................................................. $554,734 $ 81,731 $636,465
Expenses:
Cost of sales........................................ 314,596 43,838 358,434
Engineering and development.......................... 62,356 13,330 75,686
Selling and administrative........................... 126,508 16,888 143,396
------- ------ -------
503,460 74,056 577,516
------- ------ -------
Income from operations.................................... 51,274 7,675 58,949
Other income.............................................. 45 64 109
-- -- ---
Income before income taxes, extraordinary item and
cumulative effect of adopting new accounting principle 51,319 7,739 59,058
Provision for income taxes................................ 15,396 1,187 16,583
------ ----- ------
Income from continuing operations......................... $ 35,923 $ 6,552 $ 42,475
======== ======== ========
Income from continuing operations per common share
(Notes 2 and 3)........................................ $ 0.50 $ 1.21 $ 0.55
======== ======== ========
Shares used in calculations of income per common share
(000's) (Notes 2 and 3)............................... 71,664 5,407 76,580
====== ===== ======
<FN>
See accompanying notes to unaudited pro forma condensed combined
financial statements.
</FN>
37
TERADYNE AND MEGATEST
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1992
(in thousands, except per share amounts)
Historical
----------
Pro Forma
Teradyne Megatest Combined
-------- -------- --------
Net sales................................................. $529,581 $ 69,391 $598,972
Expenses:
Cost of sales........................................ 312,478 39,443 351,921
Engineering and development.......................... 62,023 10,874 72,897
Selling and administrative........................... 127,427 14,305 141,732
------- ------ -------
501,928 64,622 566,550
------- ------ -------
Income from operations.................................... 27,653 4,769 32,422
Other expense............................................. 1,585 465 2,050
----- --- -----
Income before income taxes................................ 26,068 4,304 30,372
Provision for income taxes................................ 3,520 336 3,856
----- --- -----
Income from continuing operations......................... $ 22,548 $ 3,968 $ 26,516
======== ======== ========
Income from continuing operations per common share
(Notes 2 and 3)........................................ $ 0.33 $ 0.97 $ 0.37
======== ======== ========
Shares used in calculations of income per common share
(000's) (Notes 2 and 3)............................... 67,700 4,072 71,402
====== ===== ======
<FN>
See accompanying notes to unaudited pro forma condensed combined
financial statements.
</FN>
38
TERADYNE AND MEGATEST
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
1. The unaudited pro forma condensed combined financial statements of Teradyne
and Megatest give retroactive effect to the Merger which is being accounted
for as a pooling of interests and, as a result, such statements are
presented as if the combining companies had been combined for all periods
presented. The unaudited pro forma condensed combined financial statements
reflect the issuance of 0.9091 (Exchange Ratio) of a share of Teradyne
Common Stock for each share of Megatest Common Stock to effect the Merger.
The Exchange Ratio was calculated using the average of the closing prices
of Teradyne Common Stock for the twenty consecutive days ending on October
23, 1995. The actual number of shares of Teradyne Common Stock to be issued
will be determined at the effective time of the Merger based on the
Exchange Ratio and the number of shares of Megatest Common Stock then
outstanding.
2. For purposes of the unaudited pro forma condensed combined financial
statements, the pro forma condensed combined net income per share is based
on the combined weighted average number of Common Stock and Common Stock
Equivalents of Teradyne and Megatest for each period, based upon an
effective Exchange Ratio of 0.9091 shares of Teradyne Common Stock for each
share of Megatest Common Stock. The unaudited pro forma condensed combined
balance sheet reflects the issuance of 6,747,000 shares of Teradyne Common
Stock ($0.125 par value) in exchange for all of the shares of Megatest
Common Stock outstanding at August 31, 1995. The pro forma adjustments were
calculated as follows:
Elimination of Megatest Common Stock................... $ (7)
Issuance of Teradyne Common Stock...................... 843
---
Total adjustments......................................... $ 836
=====
3. On July 24, 1995, Teradyne's Board of Directors approved a 2-for-1 stock
split of its $0.125 par value common stock effected in the form of a 100%
stock dividend distributed on August 29, 1995 to shareholders of record as
of August 8, 1995. The rights of the holders of these securities were not
otherwise modified. All per share amounts and shares used in calculations
of net income per common share have been restated to reflect the
retroactive effect of the stock split.
4. The unaudited pro forma financial data combines Teradyne's financial data
for the nine months ended October 1, 1995 and October 2, 1994 and the three
years ended December 31, 1994, 1993 and 1992 with Megatest's financial data
for the nine months ended August 31, 1995 and 1994 and the twelve month
periods ended November 30, 1994, 1993 and 1992, respectively.
5. The unaudited pro forma condensed combined financial statements do not
include adjustments to conform the accounting policies of Megatest to those
followed by Teradyne. The nature and extent of such adjustments, if any,
will be based upon further study and analysis and are not expected to be
material.
6. Estimated merger expenses to be incurred by Teradyne and Megatest are
approximately $5,500,000. These expenses will be charged against net income
in the periods subsequent to the unaudited pro forma condensed combined
financial statements. Accordingly, the effects of these expenses have not
been reflected in these unaudited pro forma condensed combined financial
statements.