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 2013, Teradyne had sales of $1.43 billion and currently employs approximately 3,800 people worldwide. For more information, visit www.teradyne.com.Teradyne (R) is a registered trademark of Teradyne, Inc. in the U.S. and other countries.

Safe Harbor Statement

This release contains forward-looking statements regarding future business prospects, Teradyne’s results of operations, market conditions and the payment of a quarterly dividend. Such statements are based on the current assumptions and expectations of Teradyne’s management and are neither promises nor guarantees of future performance or future payment of dividends. 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 or that dividends will be declared in the future. Important factors that could cause actual results or dividend payments 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; deterioration of Teradyne’s financial condition, the business judgment of the board of directors that a declaration of a dividend is not in the company’s best interests 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, 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 FIRST FISCAL QUARTER OF 2014
CONDENSED CONSOLIDATED OPERATING STATEMENTS
(In thousands, except per share amounts)
							Quarter Ended
							March 30, 2014						December 31, 2013					March 31, 2013
Net revenues							$	321,010					$	285,301				$	280,367
	Cost of revenues (1) (2)							153,963						125,444					126,950
Gross profit								167,047						159,857					153,417
Operating expenses:
	Engineering and development (1)							67,085						64,613					62,751
	Selling and administrative (1) (3)							78,003						69,523					67,890
	Acquired intangible asset amortization							18,271						18,284					18,036
	Restructuring and other (4)							-						600					332
			Operating expenses					163,359						153,020					149,009
Income from operations								3,688						6,837					4,408
	Interest and other (5)							(5,561	)					28,602					(5,834	)
(Loss) income before income taxes								(1,873	)					35,439					(1,426	)
	Income tax (benefit) provision							(2,802	)					13,096					(8,015	)
Net income							$	929					$	22,343				$	6,589
Net income per common share:
Basic							$	0.00					$	0.12				$	0.03
Diluted							$	0.00					$	0.09				$	0.03
Weighted average common shares - basic								193,311						191,525					189,686
Weighted average common shares - diluted (6)								236,484						236,903					234,757
Cash dividend declared per common share							$	0.06					$	-				$	-
Net orders							$	449,826					$	289,653				$	400,082

(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
										March 30, 2014						December 31, 2013						March 31, 2013
						Cost of revenues				$	-					$	(2,742	)				$	-
						Engineering and development					-						(3,782	)					-
						Selling and administrative					-						(2,540	)					-
										$	-					$	(9,064	)				$	-
(2	)			Cost of revenues includes:						Quarter Ended
										March 30, 2014						December 31, 2013						March 31, 2013
						Provision for excess and obsolete inventory				$	10,039					$	6,976					$	3,800
						Sale of previously written down inventory					(1,380	)					(861	)					(1,783	)
										$	8,659					$	6,115					$	2,017

(3)			For the quarter ended March 30, 2014, selling and administrative expenses include an equity charge of $6,598 for the modification of Teradyne's retired CEO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his January 31, 2014 retirement.

(4	)			Restructuring and other consists of:				Quarter Ended
								March 30, 2014					December 31, 2013						March 31, 2013
						Employee severance		$	-				$	600					$	332
(5	)			Interest and other includes:				Quarter Ended
								March 30, 2014					December 31, 2013						March 31, 2013
						Gain from the sale of an equity investment		$	-				$	(34,212	)				$	-
						Non-cash convertible debt interest expense			4,290					4,158						3,754

(6)

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 March 30, 2014, December 31, 2013 and March 31, 2013, 20.1 million, 23.5 million and 23.4 million shares, respectively, have been included in diluted shares.

CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
									March 30, 2014						December 31, 2013
Assets
	Cash and cash equivalents								$	232,626					$	341,638
	Marketable securities									462,150						586,882
	Accounts receivable									216,524						157,642
	Inventories									137,434						137,939
	Deferred tax assets									68,780						72,478
	Prepayments									131,484						136,374
	Other current assets									12,249						7,324
			Total current assets							1,261,247						1,440,277
	Net property, plant and equipment									278,727						275,236
	Marketable securities									272,068						271,078
	Deferred tax assets									5,551						5,217
	Other assets									10,574						14,591
	Retirement plans assets									9,443						9,342
	Intangible assets									234,020						252,291
	Goodwill									361,819						361,792
			Total assets						$	2,433,449					$	2,629,824
Liabilities
	Accounts payable								$	70,597					$	62,874
	Accrued employees' compensation and withholdings									58,687						95,619
	Deferred revenue and customer advances									64,811						55,404
	Dividend payable (1)									11,648						-
	Other accrued liabilities									65,561						63,712
	Accrued income taxes									1,749						11,360
	Current debt									-						186,663
			Total current liabilities							273,053						475,632
	Long-term deferred revenue and customer advances									13,526						13,306
	Retirement plans liabilities									92,530						91,517
	Deferred tax liabilities									50,532						40,686
	Long-term other accrued liabilities									13,978						23,589
			Total liabilities							443,619						644,730
Shareholders' equity										1,989,830						1,985,094
			Total liabilities and shareholders' equity						$	2,433,449					$	2,629,824

(1)

In January 2014, the Board declared an initial quarterly cash dividend of $0.06 per share to be paid on June 2, 2014 to shareholders of record as of May 9, 2014.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
					Quarter Ended
					March 30, 2014						March 31, 2013
Cash flows from operating activities:
	Net income				$ 929						$ 6,589
	Adjustments to reconcile net income to net cash used for operating activities:
		Depreciation			15,259						14,115
		Amortization			23,925						23,002
		Stock-based compensation			15,233						9,023
		Provision for excess and obsolete inventory			10,039						3,800
		Deferred taxes			12,699						(6,183)
		Other			(141)						(987)
		Changes in operating assets and liabilities:
			Accounts receivable		(58,882)						(13,191)
			Inventories		2,635						(4,040)
			Prepayments and other assets		(628)						(1,070)
			Accounts payable and accrued expenses		(45,482)						(47,258)
			Deferred revenue and customer advances		9,627						(10,146)
			Retirement plans contributions		(1,425)						(1,063)
			Accrued income taxes		(9,609)						(9,085)
Net cash used for operating activities					(25,821)						(36,494)

Cash flows from investing activities:
	Purchases of property, plant and equipment																		(31,197	)												(22,547	)
	Purchases of marketable securities																		(257,260	)												(124,514	)
	Proceeds from maturities of marketable securities																		280,322													119,552
	Proceeds from sales of marketable securities																		101,363													21,694
	Proceeds from life insurance																		4,391													-
Net cash provided by (used for) investing activities																			97,619													(5,815	)
Cash flows from financing activities:
	Issuance of common stock under stock option and stock purchase plans																		10,165													8,921
	Payments of long-term debt																		(190,975	)												-
	Payments of contingent consideration																		-													(313	)
Net cash (used for) provided by financing activities																			(180,810	)												8,608
Decrease in cash and cash equivalents																			(109,012	)												(33,701	)
Cash and cash equivalents at beginning of period																			341,638													338,920
Cash and cash equivalents at end of period																		$	232,626												$	305,219

GAAP to Non-GAAP Earnings Reconciliation
(In millions, except per share amounts)
																						Quarter Ended
				March 30, 2014				% of Net Revenues														December 31, 2013				% of Net Revenues														March 31, 2013				% of Net Revenues
Net revenues				$	321.0																	$	285.3																	$	280.4
Gross profit - GAAP				$	167.0			52.0	%													$	159.9			56.0	%													$	153.4			54.7	%
	Pension mark-to-market adjustments (1)				-			-															(2.7	)		-0.9	%														-			-
Gross profit - non-GAAP				$	167.0			52.0	%													$	157.2			55.1	%													$	153.4			54.7	%
Income from operations - GAAP				$	3.7			1.2	%													$	6.8			2.4	%													$	4.4			1.6	%
	Acquired intangible asset amortization				18.3			5.7	%														18.3			6.4	%														18.0			6.4	%
	Equity modification charge (2)				6.6			2.1	%														-			-															-			-
	Restructuring and other (3)				-			-															0.6			0.2	%														0.3			0.1	%
	Pension mark-to-market adjustments (1)				-			-															(9.1	)		-3.2	%														-			-
Income from operations - non-GAAP				$	28.6			8.9	%													$	16.6			5.8	%													$	22.7			8.1	%
											Net Income per Common Share																		Net Income per Common Share																		Net Income per Common Share
				March 30, 2014				% of Net Revenues			Basic				Diluted							December 31, 2013				% of Net Revenues			Basic				Diluted							March 31, 2013				% of Net Revenues			Basic				Diluted
Net income - GAAP				$	0.9			0.3	%		$	0.00			$	0.00						$	22.3			7.8	%		$	0.12			$	0.09						$	6.6			2.4	%		$	0.03			$	0.03
	Acquired intangible asset amortization				18.3			5.7	%			0.09				0.08							18.3			6.4	%			0.10				0.08							18.0			6.4	%			0.09				0.08
	Income tax adjustment (4)				-			-				-				-							11.1			3.9	%			0.06				0.05							(10.5	)		-3.7	%			(0.06	)			(0.04	)
	Interest and other (5)				4.3			1.3	%			0.02				0.02							(30.0	)		-10.5	%			(0.16	)			(0.13	)						3.8			1.4	%			0.02				0.02
	Equity modification charge (2)				6.6			2.1	%			0.03				0.03							-			-				-				-							-			-				-				-
	Exclude discrete tax adjustments (6)				(2.4	)		-0.7	%			(0.01	)			(0.01	)						-			-				-				-							-			-				-				-
	Tax effect of non-GAAP adjustments				(5.3	)		-1.6	%			(0.03	)			(0.02	)						-			-				-				-							-			-				-				-
	Restructuring and other (3)				-			-				-				-							0.6			0.2	%			0.00				0.00							0.3			0.1	%			0.00				0.00
	Pension mark-to-market adjustments (1)				-			-				-				-							(9.1	)		-3.2	%			(0.05	)			(0.04	)						-			-				-				-
	Convertible share adjustment (7)				-			-				-				0.01							-			-				-				0.02							-			-				-				0.01
Net income - non-GAAP				$	22.4			7.0	%		$	0.12			$	0.11						$	13.2			4.6	%		$	0.07			$	0.07						$	18.2			6.5	%		$	0.10			$	0.09
GAAP and non-GAAP weighted average common shares - basic					193.3																		191.5																		189.7
GAAP weighted average common shares - diluted					236.5																		236.9																		234.8
	Exclude dilutive shares from convertible note				(20.1	)																	(42.4	)																	(42.3	)
Non-GAAP weighted average common shares - diluted (7)					216.4																		194.5																		192.5

(1)			Actuarial (gains) losses recognized under GAAP in accordance with the Company's mark-to-market pension accounting.
(2)			For the quarter ended March 30, 2014, selling and administrative expenses include an equity charge for the modification of Teradyne's retired CEO's outstanding equity awards to allow continued vesting and maintain the original term in connection with his January 31, 2014 retirement.

(3)	Restructuring and other consists of:
						Quarter Ended
						March 30, 2014								December 31, 2013								March 31, 2013
		Employee severance				$ -								$ 0.6								$ 0.3

(4)			For the quarters December 31, 2013 and March 31, 2013, adjustment to record income taxes on a cash basis. Cash taxes reflects the usage of prior year favorable tax attributes (e.g. NOLs and credits) against current year tax liability.
(5)			For the quarters ended March 30, 2014, December 31, 2013 and March 31, 2013, Interest and other included non-cash convertible debt interest expense. For the quarter ended December 31, 2013, Interest and other included a gain from the sale of an equity investment.
(6)			For the quarter ended March 30, 2014, adjustment to exclude discrete income tax items.
(7)			For the quarter ended March 30, 2014, 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 20.9 million shares have been included in non-GAAP diluted shares and net interest expense of $2.0 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 Second Quarter 2014 guidance:
GAAP and non-GAAP second quarter revenue guidance:								$460 million				to		$490 million
GAAP net income per diluted share								$	0.29					$	0.36
	Exclude acquired intangible asset amortization								0.08						0.08
	Tax effect of non-GAAP adjustment								(0.02	)					(0.02	)
Non-GAAP net income per diluted share								$	0.36					$	0.43

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