SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                             ----------------------

                                    FORM 10-Q
                                    ---------

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934

         For the quarterly period ended July 4, 1999

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934

         For the transition period from __________ to ______________

                           Commission File No. 1-6462


                                 TERADYNE, INC.
             (Exact name of registrant as specified in its charter)

 Massachusetts                                         04-2272148
(State or Other Jurisdiction                           (I.R.S.Employer
Incorporation or Organization)                         Identification No.)

321 Harrison Avenue, Boston, Massachusetts             02118
(Address of principal executive offices)               (Zip Code)

                                  617-482-2700
              (Registrant's telephone number, including area code)



     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such  reports),  and (2) has been subject to the
filing requirements for the past 90 days. Yes X No _

     The number of shares  outstanding of the registrant's  only class of Common
Stock as of August 1, 1999 was 171,184,404 shares.




                                 TERADYNE, INC.
                                      INDEX




                                                                                                        Page No.
                                                                                                        --------

                                                                                                     

                                                     PART I. FINANCIAL INFORMATION

Item 1. Financial Statements:

         Condensed Consolidated Balance Sheets as of
              July 4, 1999 and December 31, 1998............................................................3

         Condensed Consolidated Statements of Income for the
              Three and Six Months Ended July 4, 1999 and June 28, 1998.....................................4

         Condensed Consolidated Statements of Cash Flows for the
              Six Months Ended July 4, 1999 and June 28, 1998...............................................5

         Notes to Condensed Consolidated Financial Statements...............................................6-8

Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations.................................................9-12

Item 3. Quantitative and Qualitative Disclosures about Market Risk..........................................12

                                                      PART II. OTHER INFORMATION

Item 1. Legal Proceedings...................................................................................12

Item 4.  Submission of Matters to a Vote of Security Holders................................................12

Item 6 (b). Reports on Form 8-K.............................................................................12







                                                           TERADYNE, INC.
                                                 CONDENSED CONSOLIDATED BALANCE SHEETS


                                                                ASSETS
                                                                                    July 4, 1999          December 31, 1998
                                                                                    ------------          -----------------
                                                                                    (Unaudited)
                                                                                              (In thousands)
                                                                                                    
Current assets:
   Cash and cash equivalents.................................................... $     143,285            $     185,514
   Marketable securities........................................................       103,316                   15,914
   Accounts receivable..........................................................       284,813                  219,303
   Inventories:
         Parts..................................................................       123,803                  154,706
         Assemblies in process..................................................       133,354                  111,641
                                                                                 -------------            -------------
                                                                                       257,157                  266,347
   Deferred tax assets..........................................................        49,262                   49,262
   Prepayments and other current assets.........................................        36,928                   23,200
                                                                                 -------------            -------------
         Total current assets...................................................       874,761                  759,540
Property, plant, and equipment, at cost:........................................       905,884                  857,551
      Less: accumulated depreciation............................................      (457,418)                (422,594)
                                                                                 -------------            -------------
         Net property, plant, and equipment.....................................       448,466                  434,957
Marketable securities...........................................................       102,405                   96,494
Other assets....................................................................        24,872                   21,823
                                                                                 -------------            -------------
         Total assets........................................................... $   1,450,504            $   1,312,814
                                                                                 =============            =============

                                                              LIABILITIES
Current liabilities:
   Notes payable - banks........................................................ $       7,065            $       7,393
   Current portion of long-term debt............................................           418                    1,309
   Accounts payable.............................................................        99,971                   45,042
   Accrued employees' compensation and withholdings.............................        82,495                   68,431
   Unearned service revenue and customer advances...............................        63,160                   64,674
   Other accrued liabilities....................................................        67,298                   54,071
   Income taxes payable.........................................................         5,905                   14,770
                                                                                 -------------            -------------
         Total current liabilities..............................................       326,312                  255,690
Deferred tax liabilities........................................................        17,554                   17,554
Long-term debt..................................................................        12,978                   13,200
                                                                                 -------------            -------------
         Total liabilities......................................................       356,844                  286,444
                                                                                 -------------            -------------

                                                         SHAREHOLDERS' EQUITY

Common stock, $0.125 par value, 250,000 shares authorized,
   170,649  and 83,744 net shares issued and outstanding
   in 1999 and 1998, respectively...............................................        21,331                   10,468
Additional paid-in capital......................................................       312,680                  310,052
Retained earnings...............................................................       759,649                  705,850
                                                                                 -------------            -------------
         Total shareholders' equity.............................................     1,093,660                1,026,370
                                                                                 -------------            -------------
         Total liabilities and shareholders' equity............................. $   1,450,504            $   1,312,814
                                                                                 =============            =============




<FN>
     The accompanying notes,  together with the Notes to Consolidated  Financial
Statements  included in the  Company's  Annual  Report on Form 10-K for the year
ended  December  31, 1998 are an  integral  part of the  condensed  consolidated
financial statements.
</FN>





                                                            TERADYNE, INC.
                                              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                                              (Unaudited)


                                                          For the Three Months Ended                  For the Six Months Ended
                                                          --------------------------                  ------------------------

                                                        July 4, 1999        June 28, 1998         July 4, 1999       June 28, 1998
                                                        ------------        -------------         ------------       -------------
                                                                      (In thousands, except per share amounts)
                                                                                                           
Net sales...................................             $ 400,904          $ 406,236               $ 745,358          $ 837,805

Expenses:
     Cost of sales..........................               236,940            246,457                 456,798            498,404
     Engineering and development............                56,829             49,164                 104,553             98,086
     Selling and administrative.............                59,386             57,549                 113,867            116,262
                                                     -------------      --------------          --------------    ---------------
                                                           353,155            353,170                 675,218            712,752
                                                     -------------      --------------          --------------    ---------------

Income from operations......................                47,749             53,066                  70,140            125,053

Other income (expense):
    Interest income.........................                 3,842              2,871                   7,620              6,344
    Interest expense........................                 (442)              (266)                   (904)              (513)
                                                     --------------     --------------          --------------    ---------------

Income before income taxes..................                51,149             55,671                  76,856            130,884

Provision for income taxes..................                15,345             16,311                  23,057             41,883
                                                     --------------     --------------          --------------    ---------------

Net income..................................              $ 35,804          $  39,360               $  53,799           $ 89,001
                                                     ==============     ==============          ==============    ===============

Net income per common share - basic.........              $   0.21          $    0.24               $    0.32           $   0.53
                                                     ==============     ==============          ==============    ===============

Net income per common share - diluted.......              $   0.20          $    0.23               $    0.30           $   0.52
                                                     ==============     ==============          ==============    ===============

Shares used in calculations of net income
    per common share - basic................               170,245            167,299                 170,138            167,300
                                                     ==============     ==============          ==============    ===============

Shares used in calculations of net income
    per common share - diluted..............               178,061            171,264                 178,028            171,560
                                                     ==============     ==============          ==============    ===============







<FN>
     The accompanying notes,  together with the Notes to Consolidated  Financial
Statements  included in the  Company's  Annual  Report on Form 10-K for the year
ended  December  31, 1998 are an  integral  part of the  condensed  consolidated
financial statements.
</FN>






                                                            TERADYNE, INC.
                                            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                              (Unaudited)


                                                                                       For the Six Months Ended
                                                                                       ------------------------
                                                                                 July 4, 1999            June 28, 1998
                                                                                 ------------            -------------
                                                                                        (In thousands)
                                                                                                     
Cash flows from operating activities:
     Net income........................................................         $     53,799            $    89,001
     Adjustments to reconcile net income to net cash
           Provided by operating activities:
        Depreciation ..................................................               43,536                 35,973
        Amortization...................................................                  554                    427
        Other non-cash items, net......................................                  713                (4,382)
        Changes in operating assets and liabilities:
             Accounts receivable.......................................             (65,510)               (54,030)
             Inventories...............................................                9,190               (76,146)
             Other assets..............................................             (17,330)                (7,441)
             Accounts payable and accruals.............................               80,707                 34,808
             Income taxes payable......................................               18,670
                                                                                                              (800)
                                                                                -------------          -------------

                 Net cash provided by operating activities.............              124,329                 17,410
                                                                                -------------          -------------

Cash flows from investing activities:
     Additions to property, plant and equipment........................             (51,678)               (64,938)
     Increase in equipment manufactured by the Company.................              (6,570)               (37,198)
     Purchases of available-for-sale marketable securities.............             (32,437)               (51,370)
     Maturities of available-for-sale marketable securities............               27,626                152,637
     Purchases of held-to-maturity marketable securities...............             (88,503)              ( 19,697)
                                                                                -------------          -------------

             Net cash used for investing activities....................            (151,562)               (20,566)
                                                                                -------------          -------------

Cash flows from financing activities:
     Payments of long term debt........................................                (951)                  (836)
     Acquisition of treasury stock.....................................             (65,389)               (22,256)
     Issuance of common stock under employee stock
         option and stock purchase plans...............................               51,344                 18,888
                                                                                ------------           -------------
                 Net cash flows used for financing activities..........             (14,996)                (4,204)
                                                                                -------------          -------------

Decrease in cash and cash equivalents..................................             (42,229)                (7,360)
Cash and cash equivalents at beginning of period.......................              185,514                 74,668
                                                                                ------------           -------------
Cash and cash equivalents at end of period.............................         $    143,285           $     67,308
                                                                                =============          =============

Supplementary disclosure of cash flow information:
        Cash paid during the period for:
               Interest................................................         $        951           $        590
               Income taxes............................................                4,910                 43,101







<FN>

     The accompanying notes,  together with the Notes to Consolidated  Financial
Statements  included in the  Company's  Annual  Report on Form 10-K for the year
ended  December  31, 1998 are an  integral  part of the  condensed  consolidated
financial statements.
</FN>



                                 TERADYNE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

A. The Company
- --------------

     Teradyne, Inc. (the "Company") designs, manufactures, markets, and services
test systems,  and backplane  connection systems. The Company has five principal
products;    semiconductor   test   systems,   backplane   connection   systems,
circuit-board test systems,  telecommunications  test systems, and software test
systems.

     Semiconductor test systems are used by electronic  component  manufacturers
in the design and testing of their products.  Backplane  connection  systems are
used  principally  for  the  computer,  communications,  and  military/aerospace
industries.  A backplane is an assembly  into which printed  circuit  boards are
inserted that provides for the interconnection of electrical signals between the
circuit boards and the other elements of the system.  Circuit-board test systems
are used by  electronic  equipment  manufacturers  for the design and testing of
circuit boards and other assemblies.  Telecommunication test systems are used by
telephone   operating  companies  for  the  testing  and  maintenance  of  their
subscriber telephone lines and related equipment. Software test systems are used
by  a  number  of  industries  to  test  communications  networks,  computerized
telecommunication systems, and client/server applications.

B. Accounting Policies
- ----------------------

   Basis of Presentation

     The  condensed   consolidated  interim  financial  statements  include  the
accounts of the  Company  and its  subsidiaries.  All  significant  intercompany
balances  and  transactions  have  been  eliminated.   The  year-end   condensed
consolidated balance sheet data were derived from audited financial  statements,
but do not include all  disclosures  required by generally  accepted  accounting
principles.

   Preparation of Financial Statements

     The accompanying  condensed  consolidated  interim financial statements are
unaudited.  However, in the opinion of management,  all adjustments  (consisting
only of normal recurring accrual entries)  necessary for a fair statement of the
results for the interim  periods have been made.  The  preparation  of financial
statements in conformity with generally accepted accounting  principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the dates of the financial  statements and the reported  amounts of revenues and
expenses  during the reported  periods.  Actual  results could differ from those
estimates.

   Other Comprehensive Income

     The  Company  previously  adopted  SFAS No. 130,  "Reporting  Comprehensive
Income"   (Statement  130),  which  established   standards  for  reporting  and
displaying comprehensive income and its components in a financial statement that
is  displayed  with  the  same   prominence  as  other   financial   statements.
Comprehensive income is equal to net income, for the three and six month periods
ended July 4, 1999 and June 28, 1998.

C. Recently Issued Accounting Pronoucements
- -------------------------------------------

     In June 1999, the Financial Accounting Standards Board issued SFAS No. 137,
"Accounting for Derivative  Instruments and Hedging Activities - Deferral of the
Effective  Date of FASB  Statement  No.  133." SFAS No. 137 amends SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging Activities" which was issued
in June 1998 and was to be  effective  for all fiscal  quarters of fiscal  years
beginning  after June 15, 1999.  SFAS No. 137 defers the effective  date of SFAS
No. 133 to June 15, 2000. Accordingly,  the Company will adopt the provisions of
SFAS No. 133 for its 2001 fiscal year. SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current  earnings or other
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and the type of hedge  transaction.  Management is currently
evaluating  the  effects of this  change on its  recording  of  derivatives  and
hedging activities.


D. Common Stock Split
- ---------------------

     On July 30, 1999 the Company's Board of Directors  authorized a two for one
stock split  effected in the form of a 100% stock  dividend to be distributed on
August 31, 1999 to  shareholders of record as of August 17, 1999. As a result of
the stock split,  the  accompanying  condensed  consolidated  interim  financial
statements  reflect an  increase in the number of  outstanding  shares of common
stock and the transfer of the par value of these additional  shares from paid-in
capital.  All share and per  share  amounts  have  been  stated to  reflect  the
retroactive  effect of the stock  split,  except for the  capitalization  of the
Company at December 31, 1998.


                                 TERADYNE, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued
                                   (Unaudited)



E. Net Income per Common Share
- ------------------------------


     The  following  table sets forth the  computation  of basic and diluted net
income per common share (in thousands,except per share amounts):
                                                                     For the Three Months Ended            For the Six Months Ended
                                                                     --------------------------            ------------------------
                                                                  July 4, 1999       June 28, 1998      July 4, 1999  June 28, 1998
                                                                  ------------       -------------      ------------  -------------

                                                                                                                     
Net Income.............................................              $ 35,804           $ 39,360        $ 53,799            $ 89,001

Shares used in net income per common share - basic....                170,245            167,299         170,138             167,300
     Effect of dilutive securities:
         Employee and director stock options..........                  7,431              3,425           7,629              3,900
         Employee stock purchase rights...............                    385                540             261                360
                                                                      -------            -------         -------            -------
     Dilutive potential common shares.................                  7,816              3,965           7,890              4,260
                                                                      -------            -------         -------            -------
Shares used in net income per common share - diluted..                178,061            171,264         178,028             171,560
                                                                      =======            =======         =======            =======

Net income per common share - basic...................                 $ 0.21             $ 0.24          $ 0.32             $ 0.53
                                                                       ======             ======          ======             ======

Net income per common share - diluted.................                 $ 0.20             $ 0.23          $ 0.30             $ 0.52
                                                                       ======             ======          ======             ======

<FN>
     For purposes of computing  diluted  earnings  per share,  weighted  average
common share  equivalents  do not include stock  options with an exercise  price
that exceeds the average fair market value of the Company's common stock for the
three and six month periods then ended.  Outstanding  options to purchase 89,134
and 6,623,154  shares of common stock during the three months ended July 4, 1999
and June 28, 1998, respectively, were not included in the calculation of diluted
net  income  per  common  share.  Outstanding  options  to  purchase  70,394 and
3,412,406  shares of common  stock  during the six months ended July 4, 1999 and
June 28, 1998, respectively, were not included in the calculation of diluted net
income per common share.
</FN>



                                 TERADYNE, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Concluded
                                   (Unaudited)



F. Operating Segment Information
- --------------------------------


     The Company has five  principal  operating  segments  which are the design,
manufacturing and marketing of semiconductor test systems,  backplane connection
systems,  circuit-board  test  systems,   telecommunication  test  systems,  and
software test systems.  These operating  segments were determined based upon the
nature of the products and services  offered.  The Company has three  reportable
segments;  semiconductor  test systems  segment,  backplane  connection  systems
segment,  and other test  systems  segment.  The other test  systems  segment is
comprised of circuit-board  test systems,  telecommunication  test systems,  and
software test systems.

     The Company evaluates  performance  based on several factors,  of which the
primary   financial  measure  is  business  segment  income  before  taxes.  The
accounting  policies of the business segments are the same as those described in
"Note B:  Accounting  Policies" in the Company's  Annual Report on Form 10-K for
the year ended December 31, 1998.  Intersegment  sales are accounted for at fair
value as if sales were to third parties.  Operating segment  information for the
three and six month  periods  ended July 4, 1999 and June 28,  1998  follows (in
thousands):

                              Sales to                                              Sales to
                              Unafilliated  Intersegment   Net      Income          Unafilliated Intersegment Net    Income
Reportable Segments           Customers     Sales          Sales    Before Taxes(1) Customers    Sales        Sales  Before Taxes(1)
- -------------------           ---------     -----          -----    ------------    ---------    -----        -----  --------------

                              Three months ended July 4, 1999:                       Three months ended June 28, 1998:
                              --------------------------------                       ---------------------------------

                                                                                                         
Semiconductor Test Systems    $263,263                     $263,263 $51,962          $275,000                 $275,000  $41,922
Backplane Connection Systems    86,530     $4,766            91,296  14,716            61,197     $2,761        63,958    7,280
Other Test Systems              51,111                       51,111  (4,806)           70,039                   70,039   13,750
Corporate and Eliminations                 (4,766)           (4,766)(10,723)                      (2,761        (2,761)  (7,281)
                              --------     -------         -------- --------         --------     -------     --------  -------
Consolidated                  $400,904     $  -            $400,904 $51,149          $406,236     $  -        $406,236  $55,671
                              ========     =======         ======== ========         ========     =======     ========  =======

                              Six months ended July 4, 1999:                         Six months ended June 28, 1998:
                              --------------------------------                       ---------------------------------

Semiconductor Test Systems    $461,429                     $461,429 $70,984          $594,014                 $594,014 $119,412
Backplane Connection Systems   176,091     $6,004           182,095  29,202           117,950     $10,115      128,065   13,105
Other Test Systems             107,838                      107,838  (3,613)          125,841                  125,841   17,247
Corporate and Eliminations                 (6,004)           (6,004)(19,717)                      (10,115)     (10,115) (18,880)
                              --------     -------         -------- --------         --------     --------    -------- --------
Consolidated                  $745,358     $  -            $745,358 $76,856          $837,805     $  -        $837,805 $130,884
                              ========     =======         ======== ========         ========     ========    ======== ========

<FN>
(1) Income before taxes of the principal  businesses exclude the effects of
employee profit sharing,  management incentive  compensation,  other unallocated
expenses, and net interest income.
</FN>




Item 2: Management's Discussion and Analysis of Financial Condition
         and Results of Operations



                                       SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED
                                                         STATEMENTS OF INCOME



                                                              For the Three Months Ended                For the Six Months Ended
                                                              --------------------------                ------------------------
                                                         July 4, 1999          June 28, 1998       July 4, 1999       June 28, 1998
                                                         ------------          -------------       ------------       -------------
                                                                    (In thousands)                        (In thousands)

                                                                                                             
Net sales....................................            $   400,904           $    406,236         $   745,358          $  837,805
                                                         ===========           ============         ===========          ===========

Net income...................................              $  35,804           $     39,360         $    53,799          $    89,001
                                                         ===========           ============         ===========          ===========

Percentage of net sales:
     Net sales...............................                    100%                  100%                100%                 100%
     Expenses:
         Cost of sales.......................                     59                    61                  62                  59
         Engineering and development.........                     14                    12                  14                  12
         Selling and administrative..........                     15                    14                  15                  14
         Interest, net.......................                     (1)                   (1)                 (1)                 (1)
                                                            ---------             ---------           ---------           ----------
                                                                  87                    86                  90                  84

     Income before income taxes..............                     13                    14                  10                  16
     Provision for income taxes..............                      4                     4                   3                   5

                                                            ---------             ---------           ---------           ----------
     Net income..............................                      9%                   10%                  7%                  11%
                                                            =========             =========           =========           ==========

Provision for income taxes as a percentage of income
     before taxes............................                     30%                   29%                 30%                  32%
                                                            =========             =========           =========           ==========


<FN>
Results of Operations
- ---------------------

     Sales of $400.9  million  in the  second  quarter  of 1999  decreased  $5.3
million or 1% from the second quarter of 1998. Second quarter 1999 semiconductor
test  systems  sales  and  other  test  systems  sales  decreased  4%  and  27%,
respectively,  when compared to the second quarter of 1998.  Second quarter 1999
backplane connection systems sales to unaffiliated  customers increased 41% over
the  corresponding  period in 1998. Sales increased 16% in the second quarter of
1999 over the first  quarter of 1999 due to an increase  in  incoming  orders of
semiconductor  test systems during the fourth quarter of 1998 and the first half
of 1999. Income before income taxes in the second quarter of 1999 decreased $4.5
million  from the  second  quarter of 1998 to $51.1  million.  For the first six
months of 1999,  income  before  income taxes  decreased  $54.0 million to $76.9
million.

     Incoming  orders were a record $571.0 million in the second quarter of 1999
compared  to $249.8  million in the  second  quarter of 1998.  The  increase  in
incoming orders was led by a 242% increase in semiconductor test systems orders.
The  Company's  backlog was $849.5  million at the end of the second  quarter of
1999 compared with $615.1 million at the end of the second quarter of 1998.

     Cost of sales  decreased from 61% of sales in the second quarter of 1998 to
59% in the second  quarter  of 1999.  The  margin  improvement  was due to lower
average costs on  semiconductor  test systems sales. For the first six months of
1999 cost of sales,  as a percentage of sales,  increased to 62% from 59% in the
first six months of 1998.  The  increase in the first six months of 1999 was the
result of the  relationship of fixed  manufacturing  costs to the lower level of
sales.  In  addition,  there  was an  unfavorable  change  in  mix as a  greater
percentage of total Company  sales were for backplane  connection  systems whose
product margins are generally lower than semiconductor test systems.

     Engineering and development expenses,  as a percentage of sales,  increased
from 12% in the second quarter and first six months of 1998 to 14% in the second
quarter  and first six months of 1999.  These  increases  were due to  increased
engineering and development spending to support new product development efforts.





     Selling and administrative expenses, as a percentage of sales, increased to
15% in the second  quarter and first six months of 1999 compared with 14% in the
second  quarter and first six months of 1998.  These  percentage  increases were
primarily  due to the  decrease  in sales in the  second  quarter  and first six
months  of  1999  compared   with  1998.   The  dollar  amount  of  selling  and
administrative  expenses for the second quarter and first six months of 1999 did
not  materially  fluctuate from those of the second quarter and first six months
of 1998.


     The Company's  overall  effective tax rate was 30% in the second quarter of
1999 and the first six months of 1999.  The overall  effective  tax rate for the
year ended 1998 was also 30%.  The Company  utilized  export  sales  corporation
benefits and certain  research and  development tax credits to operate below the
U.S. statutory rate of 35%.


Liquidity and Capital Resources
- -------------------------------

     The Company's cash,  cash  equivalents  and marketable  securities  balance
increased $51.1 million in the first six months of 1999, to $349.0 million. Cash
generated  from  operations  was $124.3 million in the first six months of 1999.
Cash  generated  from  operations  was  principally  due to net  income of $53.8
million  plus  non-cash  charges  for  depreciation  and  amortization  of $44.1
million.  Accounts receivable increased $65.5 million in the first six months of
1999 as a result of an increase in sales volume from the fourth quarter of 1998.
Inventories  decreased  $9.2  million  in the  first  six  months of 1999 as the
Company  utilized  inventory on hand at the  beginning of the year in support of
increased  shipments.  Cash was used to fund  additions to  property,  plant and
equipment of $58.2 million in the first six months of 1999. Property,  plant and
equipment  expenditures relate primarily to the expansion of production capacity
in semiconductor test and backplane connection systems.

     The  Company  repurchased  1.1  million  shares of  common  stock for $65.4
million in the first six months of 1999.  Cash of $51.3 million in the first six
months  of 1999 was  generated  from the  sale of  stock  to  employees  and the
exercise of stock options by employees and certain directors under the Company's
stock purchase and stock option plans.

     The Company believes its cash, cash equivalents,  and marketable securities
balance of $349.0 million,  together with other sources of funds, including cash
flow generated from  operations and the available  borrowing  capacity of $120.0
million under its line of credit  agreement,  will be sufficient to meet working
capital and capital expenditure requirements for the foreseeable future.

Certain Factors That May Affect Future Results
- ----------------------------------------------

     From time to time, information provided by the Company,  statements made by
its employees or  information  included in its filings with the  Securities  and
Exchange Commission (including this Form 10-Q and the Company's Annual Report to
Shareholders) may contain  statements which are not historical facts,  so-called
"forward  looking  statements,"  which  involve  risks  and  uncertainties.   In
particular,  statements  in "Item 2:  Management's  Discussion  and  Analysis of
Financial  Condition and Results of Operations"  relating to the  sufficiency of
capital to meet working capital and planned capital expenditures, may be forward
looking statements. The Company's actual future results may differ significantly
from those stated in any forward looking statements. Factors that may cause such
differences  include,  but are not limited to, the factors discussed below. Each
of these factors,  and others,  are discussed from time to time in the Company's
filings with the Securities and Exchange Commission.

     The  Company's  future  results  are  subject  to  substantial   risks  and
uncertainties.  The  Company's  business  and  results of  operations  depend in
significant part upon capital  expenditures of manufacturers of  semiconductors,
which  in turn  depend  upon the  current  and  anticipated  market  demand  for
semiconductors  and products  incorporating  semiconductors.  The  semiconductor
industry has been highly cyclical with recurring  periods of over supply,  which
often have had a severe effect on the  semiconductor  industry's demand for test
equipment,  including  systems  manufactured  and marketed by the  Company.  The
Company believes that the markets for newer generations of  semiconductors  will
also be subject  to similar  fluctuations.  There can be no  assurance  that any
increase in  semiconductor  test systems bookings for a calendar quarter will be
sustained in subsequent  quarters.  In addition,  any factor adversely affecting
the  semiconductor  industry or  particular  segments  within the  semiconductor
industry may adversely affect the Company's  business,  financial  condition and
operating results.

     The Company relies on certain intellectual property protections to preserve
its  intellectual  property rights,  including  patents,  copyrights,  and trade
secrets.  While the Company  believes  that its patents,  copyrights,  and trade
secrets have value, in general no single one is in itself essential. The Company
believes  that its  technological  position  depends  primarily on the technical
competence and creative ability of its research and development personnel.  From
time to time the Company is  notified  that it may be in  violation  of patents,
copyrights and trade secrets held by others.  An assertion of patent  copyright,
and/or trade secret infringement against the Company, if successful,  could have
a material  adverse effect on the Company's  business or could require a lengthy
and expensive  defense  which could  adversely  affect the  Company's  financial
condition and/or operating results.


     The   development   of  new   technologies,   commercialization   of  those
technologies into products,  and market acceptance and customer demand for those
products is critical to the Company's success.  Successful  product  development
and  introduction  depends  upon a number  of  factors,  including  new  product
selection,  development  of  competitive  products  by  competitors,  timely and
efficient completion of product design,  timely and efficient  implementation of
manufacturing  and  assembly  processes  and  product  performance  at  customer
locations.

     The Company faces  substantial  competition,  throughout the world, in each
operating  segment.   Some  of  these  competitors  have  substantially  greater
financial and other resources to pursue  engineering,  manufacturing,  marketing
and  distribution of their  products.  The Company also faces  competition  from
internal  suppliers  at  several  of its  customers.  Certain  of the  Company's
competitors  have introduced or announced new products with certain  performance
characteristics  which may be  considered  equal or superior to those  currently
offered by the  Company.  The  Company  expects its  competitors  to continue to
improve the performance of their current  products and to introduce new products
or new  technologies  that provide  improved cost of ownership  and  performance
characteristics.  New product introductions by competitors could cause a decline
in  sales or loss of  market  acceptance  of the  Company's  existing  products.
Moreover,  increased  competitive pressure could lead to intensified price based
competition and lower gross margins, which could materially adversely affect the
Company's business, financial condition and/or results of operations.

     The  Company  derives  a  significant  portion  of its total  revenue  from
customers  outside  the  United  States.  International  sales  are  subject  to
significant  risks,   including  unexpected  changes  in  legal  and  regulatory
requirements  and policy  changes  affecting the Company's  markets,  changes in
tariffs, exchange rates and other barriers,  political and economic instability,
difficulties  in  accounts  receivable  collection,   difficulties  in  managing
distributors  and   representatives,   difficulties  in  staffing  and  managing
international operations,  difficulties in protecting the Company's intellectual
property and potentially adverse tax consequences.

     Competition  for  employees  with  skills  required  by the Company for its
primary business  segments is intense.  The Company's success will depend on its
ability  to  attract  and  retain  key  technical  employees  in these  business
segments.

     The Company's quarterly and annual operating results are affected by a wide
variety  of  factors  that  could  materially   adversely  affect  revenues  and
profitability,  including:  competitive  pressures on selling prices; the timing
and  cancellation  of customer  orders;  changes in product mix;  the  Company's
ability  to  introduce  new  products  and  technologies  on a timely  basis and
transition customers from existing to new products; introduction of products and
technologies by the Company's  competitors;  market  acceptance of the Company's
and its competitors' products; fulfilling backlog on a timely basis; reliance on
sole source  suppliers;  potential  retrofit costs; the level of orders received
which can be shipped in a quarter;  and the timing of investments in engineering
and development. As a result of the foregoing and other factors, the Company may
experience  material  fluctuations in future operating results on a quarterly or
annual basis which could materially and adversely affect its business, financial
condition, operating results and/or stock price.

Year 2000 Readiness
- -------------------

     The "Year 2000 problem" arose because many existing  computer  programs use
only the last two digits to refer to a year. Therefore,  these computer programs
do not properly  recognize a year that begins with "20" instead of "19".  If not
corrected,  many computer  applications  could fail or create erroneous results.
The  Company is  employing  a  combination  of  internal  resources  and outside
consultants to coordinate and implement its program for Year 2000 readiness.

     The Company has  committed  to having all its  current  products  Year 2000
ready in advance of the Year 2000.  All of the Company's  current  products have
been  assessed,  using  industry  accepted test  procedures,  and most have been
determined to be Year 2000 ready.  The Company has also  evaluated  which of its
former products,  still in use but no longer sold, will be made Year 2000 ready.
The schedule of Company  products which will or will not be made Year 2000 ready
is published and updated regularly by the Company on its web site.

     The Company has completed an inventory and assessment of internal  business
systems  that  use   date-sensitive   software.   As  of  July  30,  1999,   all
enterprise-wide  business  systems have been tested and modified as necessary to
be Year 2000 ready.  Most other internal  business and operating systems are now
Year 2000 ready,  with the remaining  systems scheduled to be ready on or before
September 30, 1999.

     The  Company is also at risk of  disruption  to its  business  if Year 2000
problems  are  experienced  by its key  suppliers.  To mitigate  this risk,  the
Company has surveyed and done  follow-up  investigations  with a large number of
its suppliers to determine their readiness for the year 2000.  Telephone  audits
and on-site  visits to evaluate key suppliers  were  substantially  completed by
July 30, 1999.


     Most of the  Company's  effort  toward  Year  2000  readiness  is funded as
ongoing operating  expenses,  as a part of ongoing software support  operations.
The  Company is not able to estimate  the amount of  accelerated  upgrade  costs
which  have  been or will be  incurred  for third  party  software  or  systems.
Expenditures  directly  related to the Year 2000 readiness  program,  consisting
primarily of dedicated staff and consulting services, are estimated at less than
$5.0 million through 1999.

     The Company believes that its Year 2000 readiness project will be completed
on a timely basis.  The Company  believes that the year 2000 transition will not
have a material adverse effect on the Company's  financial  condition or overall
trends  in its  operating  results.  However,  there  can be no  assurance  that
unexpected delays or problems, including failure of Year 2000 readiness programs
by its product and service suppliers,  will not occur and have an adverse effect
on  the  Company's  financial  condition  or  performance,  or  its  competitive
position.

     The Company has not yet adopted formal  contingency  plans,  but such plans
are under active development at this time.
</FN>


Item 3: Quantitative and Qualitative Disclosures about Market Risk

     There were no  material  changes in the  Company's  exposure to market risk
from December 31, 1998.

                           PART II. OTHER INFORMATION

Item 1: Legal Proceedings

     The Company is subject to legal  proceedings  and claims which arise in the
ordinary course of business. Management does not believe these actions will have
a material adverse affect on the financial  position or results of operations of
the Company.

Item 4: Submission of Matters to a Vote of Security Holders


     The annual  meeting of  security  holders of the  Company  was held May 27,
1999. The following were elected as Directors:


                                                           Total Vote                           Total Vote Withheld
Nominee                                                 For Each Nominee                          For Each Nominee

                                                                                               
Alexander V. d'Arbeloff                                    63,999,440                                7,536,930
James W. Bagley                                            64,050,735                                7,485,635
Daniel S. Gregory                                          64,013,375                                7,522,995
Vincent M. O'Reilly                                        64,046,884                                7,489,486

<FN>
     The term of office for the following directors continued after the meeting:
Albert  Carnesale,  George W. Chamillard,  Dwight H. Hibbard,  John P. Mulroney,
James A. Prestridge, Owen W. Robbins, Richard J. Testa, and Patricia S. Wolpert.

     In  addition,  the  security  holders  ratified  the  selection of the firm
PricewaterhouseCoopers  LLP as auditors for the fiscal year ending  December 31,
1999, with 71,475,107 shares voting in favor, 23,862 shares voting against,  and
37,401 shares abstaining.
</FN>


Item 6(b): Reports on Form 8-K

     There had been no Form 8-K filings  during the quarter  ended July 4, 1999,
as none were required.















                                                              SIGNATURES


                                                           
                                                              Pursuant to the requirements of the Securities
                                                              Exchange Act of 1934, the registrant has duly caused
                                                              this report to be signed on its behalf by the
                                                              undersigned thereunto duly authorized.



                                                                           TERADYNE, INC.
                                                                             Registrant



                                                                    /s/ JEFFREY R. HOTCHKISS
                                                                    ------------------------
                                                                        Jeffrey R. Hotchkiss
                                                                         Vice President and
                                                                       Chief Financial Officer


                                                                           August 18, 1999