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d UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ? QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 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. 001-06462 TERADYNE, INC. (Exact name of registrant as specified in its charter) Massachusetts 04-2272148 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 600 Riverpark Drive, North Reading, Massachusetts 01864 (Address of Principal Executive Offices) (Zip Code) 978-370-2700 (Registrant’s Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Trading Name of each exchange Title of each class Symbol(s) on which registered Common Stock, par value $0.125 TER Nasdaq Stock Market LLC per share 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 ? No ? Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes ? No ? Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one): Large accelerated filer ? Accelerated filer ? Non-accelerated filer ? Emerging growth company ? Smaller reporting company ? If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ? Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ? No ? The number of shares outstanding of the registrant’s only class of Common Stock as of April 29, 2024, was 156,111,885 shares. -------------------------------------------------------------------------------- TERADYNE, INC. INDEX Page No. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited): 1 Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 1 f Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2024 and April 2, 2023 2 Condensed Consolidated Statements of Comprehensive Income for the Three Months ended March 31, 2024 and April 2, 2023 3 Condensed Statements of Shareholders’ Equity for the Three Months Ended March 31, 2024 and April 2, 2023 4 d Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and April 2, 2023 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27 Item 3. Quantitative and Qualitative Disclosures about Market Risk 33 Item 4. Controls and Procedures 33 PART II. OTHER INFORMATION Item 1. Legal Proceedings 34 Item 1A. Risk Factors 34 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35 Item 4. Mine Safety Disclosures 35 Item 5. Other Information 36 Item 6. Exhibits 37 -------------------------------------------------------------------------------- PART I Item 1: Financial Statements TERADYNE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2024 2023 (in thousands, except per share amount) ASSETS Current assets: Cash and cash equivalents $ 707,403 $ 757,571 Marketable securities 41,300 62,154 Accounts receivable, less allowance for credit losses of $1,947 and $1,988 at March 31, 2024 and December 31, 2023, respectively 426,333 422,124 Inventories, net 314,232 309,974 Prepayments 537,642 548,970 Other current assets 16,057 37,992 Current assets held for sale 22,426 23,250 Total current assets 2,065,393 2,162,035 Property, plant and equipment, net 457,248 445,492 Operating lease right-of-use assets, net 74,625 73,417 Marketable securities 121,905 117,434 Deferred tax assets 185,734 175,775 Retirement plans assets 11,449 11,504 Other assets 45,098 38,580 Acquired intangible assets, net 30,234 35,404 Goodwill 407,576 415,652 Long-term assets held for sale 11,458 11,531 Total assets $ 3,410,720 $ 3,486,824 LIABILITIES Current liabilities: Accounts payable $ 153,873 $ 180,131 Accrued employees’ compensation and withholdings 121,144 191,750 Deferred revenue and customer advances 100,058 99,804 Other accrued liabilities 101,275 114,712 Operating lease liabilities 17,400 17,522 Income taxes payable 55,922 48,653 Current liabilities held for sale 4,687 7,379 Total current liabilities 554,359 659,951 Retirement plans liabilities 134,878 132,090 Long-term deferred revenue and customer advances 35,044 37,282 Long-term other accrued liabilities 16,653 19,998 Deferred tax liabilities 134 183 Long-term operating lease liabilities 65,554 65,092 Long-term incomes taxes payable 44,331 44,331 Long-term liabilities held for sale 1,938 2,000 Total liabilities 852,891 960,927 Commitments and contingencies (Note Q) SHAREHOLDERS’ EQUITY Common stock, $0.125 par value, 1,000,000 shares authorized; 153,757 and 152,698 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 19,220 19,087 Additional paid-in capital 1,848,088 1,827,274 Accumulated other comprehensive loss (39,739 ) (26,978 ) Retained earnings 730,260 706,514 Total shareholders’ equity 2,557,829 2,525,897 Total liabilities and shareholders’ equity $ 3,410,720 $ 3,486,824 The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements. 1 -------------------------------------------------------------------------------- TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended March 31, April 2, 2024 2023 (in thousands, except per share amount) Revenues: Products $ 458,433 $ 473,418 Services 141,386 144,111 Total revenues 599,819 617,529 Cost of revenues: Cost of products 200,763 198,665 Cost of services 59,774 62,444 Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) 260,537 261,109 Gross profit 339,282 356,420 Operating expenses: Selling and administrative 149,188 150,955 Engineering and development 103,199 105,762 Acquired intangible assets amortization 4,697 4,802 Restructuring and other 4,427 2,037 Total operating expenses 261,511 263,556 Income from operations 77,771 92,864 Non-operating (income) expense: Interest income (7,867 ) (5,258 ) Interest expense 661 987 Other (income) expense, net 12,075 51 Income before income taxes 72,902 97,084 Income tax provision 8,705 13,553 Net income $ 64,197 $ 83,531 Net income per common share: Basic $ 0.42 $ 0.54 Diluted $ 0.40 $ 0.50 Weighted average common shares—basic 153,047 155,904 Weighted average common shares—diluted 162,348 166,308 The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements. 2 -------------------------------------------------------------------------------- TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) For the Three Months Ended March 31, April 2, 2024 2023 (in thousands) Net income $ 64,197 $ 83,531 Other comprehensive income (loss), net of tax: Foreign currency translation adjustment, net of tax of $0 and $0, respectively (11,457 ) 9,309 Available-for-sale marketable securities: Unrealized (losses) gains on marketable securities arising during period, net of tax of $(221) and $503, respectively (902 ) 2,294 Less: Reclassification adjustment for losses included in net income, net of tax of $30 and $2, respectively 106 5 (796 ) 2,299 Cash flow hedges: Unrealized gains arising during period, net of tax of $358 and $167, respectively 1,274 596 Less: Reclassification adjustment for (gains) losses included in net income, net of tax of $(500) and $338 respectively (1,780 ) 1,200 (506 ) 1,796 Defined benefit post-retirement plan: Amortization of prior service credit, net of tax of $0 and $0, respectively (2 ) (2 ) Other comprehensive income (loss) (12,761 ) 13,402 Comprehensive income $ 51,436 $ 96,933 The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements. 3 -------------------------------------------------------------------------------- TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) Shareholders' Equity Accumulated Common Common Additional Other Total Stock Stock Paid-in Comprehensive Retained Shareholders’ Shares Par Value Capital Income (Loss) Earnings Equity (in thousands) For the Three Months Ended March 31, 2024 Balance, December 31, 2023 152,698 $ 19,087 $ 1,827,274 $ (26,978 ) $ 706,514 $ 2,525,897 Net issuance of common stock under stock-based plans 466 58 3,758 3,816 Stock-based compensation expense 17,158 17,158 Warrant exercises 813 102 (102 ) — Repurchase of common stock (220 ) (27 ) (22,068 ) (22,095 ) Cash dividends ($0.12 per share) (18,383 ) (18,383 ) Net income 64,197 64,197 Other comprehensive income (loss) (12,761 ) (12,761 ) Balance, March 31, 2024 153,757 $ 19,220 $ 1,848,088 $ (39,739 ) $ 730,260 $ 2,557,829 For the Three Months Ended April 2, 2023 Balance, December 31, 2022 155,759 $ 19,470 $ 1,755,963 $ (49,868 ) $ 725,729 $ 2,451,294 Net issuance of common stock under stock-based plans 579 73 (3,943 ) (3,870 ) Stock-based compensation expense 20,332 20,332 Repurchase of common stock (893 ) (112 ) (97,936 ) (98,048 ) Cash dividends ($0.11 per share) (17,179 ) (17,179 ) Settlements of convertible notes 324 41 (41 ) — Exercise of convertible notes hedge call options (324 ) (41 ) 41 — Net income 83,531 83,531 Other comprehensive income (loss) 13,402 13,402 Balance, April 2, 2023 155,445 $ 19,431 $ 1,772,352 $ (36,466 ) $ 694,145 $ 2,449,462 The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements. 4 -------------------------------------------------------------------------------- TERADYNE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Three Months Ended March 31, April 2, 2024 2023 (in thousands) Cash flows from operating activities: Net income $ 64,197 $ 83,531 Adjustments to reconcile net income from operations to net cash provided by operating activities: Depreciation 23,354 22,680 Stock-based compensation 15,758 18,885 Provision for excess and obsolete inventory 6,177 5,610 Amortization 4,766 4,926 Deferred taxes (9,669 ) (7,634 ) Losses (gains) on investments 10,466 (2,238 ) Other 787 108 Changes in operating assets and liabilities Accounts receivable (8,055 ) 37,204 Inventories (6,932 ) (23,697 ) Prepayments and other assets 11,089 (15,380 ) Accounts payable and other liabilities (105,548 ) (83,208 ) Deferred revenue and customer advances (1,444 ) (32,705 ) Retirement plans contributions (1,421 ) (1,234 ) Income taxes 3,754 12,488 Net cash provided by operating activities 7,279 19,336 Cash flows from investing activities: Purchases of property, plant and equipment (44,023 ) (41,444 ) Purchases of marketable securities (16,042 ) (69,276 ) Proceeds from maturities of marketable securities 14,438 7,468 Proceeds from sales of marketable securities 20,734 7,929 Proceeds from insurance 873 460 Net cash used for investing activities (24,020 ) (94,863 ) Cash flows from financing activities: Repurchase of common stock (22,117 ) (93,308 ) Dividend payments (18,370 ) (17,165 ) Payments of convertible debt principal — (15,155 ) Payments related to net settlement of employee stock compensation awards (13,115 ) (19,870 ) Issuance of common stock under stock purchase and stock option plans 16,934 15,997 Net cash used for financing activities (36,668 ) (129,501 ) Effects of exchange rate changes on cash and cash equivalents 3,241 (537 ) Decrease in cash and cash equivalents (50,168 ) (205,565 ) Cash and cash equivalents at beginning of period 757,571 854,773 Cash and cash equivalents at end of period $ 707,403 $ 649,208 Non-cash investing activities: Capital expenditures incurred but not yet paid: $ 3,086 $ 3,823 The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023, are an integral part of the condensed consolidated financial statements. 5 -------------------------------------------------------------------------------- TERADYNE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) A. THE COMPANY Teradyne, Inc. (“Teradyne”) is a leading global supplier of automated test equipment and robotics solutions. Teradyne designs, develops, manufactures and sells automated test systems and robotics products. Teradyne’s automated test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Teradyne’s robotics products include collaborative robotic arms, autonomous mobile robots, and advanced robotic control software used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Teradyne’s automated test equipment and robotics products and services include: • semiconductor test (“Semiconductor Test”) systems; • storage and system level test (“Storage Test”) systems, defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”); • wireless test (“Wireless Test”) systems; and • robotics (“Robotics”) products. B. ACCOUNTING POLICIES Basis of Presentation The consolidated interim financial statements include the accounts of Teradyne and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These interim financial statements are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair statement of such interim financial statements. The December 31, 2023 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by United States of America generally accepted accounting principles (“U.S. GAAP”) for complete financial statements. The accompanying financial information should be read in conjunction with the consolidated financial statements and notes thereto contained in Teradyne’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 22, 2024, for the year ended December 31, 2023. Preparation of Financial Statements and Use of Estimates The preparation of consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, management evaluates its estimates, including those related to inventories, investments, goodwill, intangible and other long-lived assets, accounts receivable, income taxes, deferred tax assets and liabilities, pensions, warranties, contingent consideration liabilities, and loss contingencies. Management bases its estimates on historical experience and on appropriate and customary assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Management is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur and additional information is obtained. Actual results may differ significantly from these estimates under different assumptions or conditions. C. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which will require Teradyne to disclose significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, Teradyne will be required to disclose the title and position of the CODM. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU will have no impact on results of operations, cash flows or financial condition. Upon 6 -------------------------------------------------------------------------------- adoption, Teradyne will apply the amendments in this ASU retrospectively to all prior period disclosures presented in the financial statements. In December 2023, FASB issued ASU 2023-09 –“Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. This ASU will have no impact on results of operations, cash flows or financial condition. D. REVENUE Disaggregation of Revenue The following table provides information about disaggregated revenue by timing of revenue recognition, primary geographical market, and major product lines. Wireless Semiconductor Test System Test Robotics Test Mobile System Universal Industrial on-a-Chip Memory Robots Robots Total (in thousands) For the Three Months Ended March 31, 2024 (1) Timing of Revenue Recognition Point in Time $ 229,592 $ 102,436 $ 58,073 $ 65,893 $ 19,290 $ 20,914 $ 496,198 Over Time 72,716 7,510 17,249 1,868 603 3,675 103,621 Total $ 302,308 $ 109,946 $ 75,322 $ 67,761 $ 19,893 $ 24,589 $ 599,819 Geographical Market Asia Pacific $ 270,567 $ 95,606 $ 25,781 $ 11,625 $ 2,954 $ 17,141 $ 423,674 Americas 22,551 9,052 36,594 20,005 14,625 5,824 108,651 Europe, Middle East and Africa 9,190 5,288 12,947 36,131 2,314 1,624 67,494 Total $ 302,308 $ 109,946 $ 75,322 $ 67,761 $ 19,893 $ 24,589 $ 599,819 For the Three Months Ended April 2, 2023 (1) Timing of Revenue Recognition Point in Time $ 273,275 $ 61,258 $ 56,857 $ 70,029 $ 15,959 $ 35,363 $ 512,741 Over Time 73,559 6,917 17,774 2,008 1,218 3,312 104,788 Total $ 346,834 $ 68,175 $ 74,631 $ 72,037 $ 17,177 $ 38,675 $ 617,529 Geographical Market Asia Pacific $ 283,259 $ 63,695 $ 39,590 $ 13,217 $ 1,502 $ 23,231 $ 424,494 Americas 41,568 2,944 28,980 20,447 11,806 12,846 118,591 Europe, Middle East and Africa 22,007 1,536 6,061 38,373 3,869 2,598 74,444 Total $ 346,834 $ 68,175 $ 74,631 $ 72,037 $ 17,177 $ 38,675 $ 617,529 (1) Includes $0.9 million and $1.3 million in the three months ended March 31, 2024 and in the three months ended April 2, 2023, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.” Contract Balances During the three months ended March 31, 2024 and April 2, 2023, Teradyne recognized $28.2 million and $50.7 million, respectively, that was included within the deferred revenue and customer advances balances at the beginning of the period. This revenue primarily relates to undelivered hardware, extended warranties, training, application support, and post contract support. Each of these represents a distinct performance obligation. As of March 31, 2024, Teradyne had $1,075.2 million of unsatisfied performance obligations. Teradyne expects to recognize approximately 90% of the remaining performance obligations in the next 12 months and the remainder in 1-3 years. 7 -------------------------------------------------------------------------------- Deferred revenue and customer advances consist of the following and are included in short and long-term deferred revenue and customer advances on the balance sheet: March 31, December 31, 2024 2023 (in thousands) Maintenance, service and training $ 61,404 $ 66,458 Customer advances, undelivered elements and other 39,189 35,731 Extended warranty 34,509 34,897 Total deferred revenue and customer advances $ 135,102 $ 137,086 Accounts Receivable During the three months ended March 31, 2024 and April 2, 2023, Teradyne sold certain trade accounts receivables on a non-recourse basis to third-party financial institutions pursuant to factoring agreements. During the three months ended March 31, 2024 and April 2, 2023, total trade accounts receivable sold under the factoring agreements were $23.4 million and $34.2 million, respectively. Factoring fees for the sales of receivables were recorded in interest expense and were not material. Teradyne accounted for these transactions as sales of receivables and presented cash proceeds as cash provided by operating activities in the consolidated statements of cash flows. E. ASSETS HELD FOR SALE On November 7, 2023, Teradyne entered into a definitive agreement to sell Teradyne’s Device Interface Solutions ("DIS") business, a component of the Semiconductor Test segment, to Technoprobe S.p.A. ("Technoprobe") for $85.0 million in cash. As a result, the related assets and liabilities met the criteria and were classified as held-for-sale in Teradyne’s consolidated balance sheet as of December 31, 2023. The transaction, which does not qualify as a strategic shift required for discontinued operations treatment, is expected to close in the second quarter of 2024, subject to regulatory approval. Assets held-for-sale is comprised of the following as of March 31, 2024 and December 31, 2023: March 31, December 31, 2024 2023 (in thousands) Current assets: Inventories, net $ 19,276 $ 17,952 Prepayments 3,150 5,298 Total current assets held for sale 22,426 23,250 Property, plant and equipment, net 8,994 8,986 Operating lease right-of-use assets, net 2,464 2,545 Total assets held for sale $ 33,884 $ 34,781 Current liabilities: Accounts payable $ 3,954 $ 6,356 Other accrued liabilities 323 552 Operating lease liabilities 410 471 Total current liabilities held for sale 4,687 7,379 Long-term operating lease liabilities 1,938 2,000 Total liabilities held for sale $ 6,625 $ 9,379 Net assets held for sale $ 27,259 $ 25,402 8 -------------------------------------------------------------------------------- F. INVENTORIES Inventories, net consisted of the following at March 31, 2024 and December 31, 2023: March 31, December 31, 2024 2023 (in thousands) Raw material $ 243,871 $ 258,422 Work-in-process 39,870 26,851 Finished goods 30,491 24,701 Total inventories, net (1) $ 314,232 $ 309,974 (1) Inventories, net at March 31, 2024 and December 31, 2023 excludes $19.3 million and $18.0 million, respectively, of primarily work-in-process inventories, net classified as assets held for sale. See Note E: "Assets held for sale" for additional information. Inventory reserves at March 31, 2024 and December 31, 2023 were $136.0 million and $136.0 million, respectively. G. FINANCIAL INSTRUMENTS Cash Equivalents Teradyne considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents. Marketable Securities Teradyne’s equity and debt mutual funds are classified as Level 1 and available-for-sale debt securities are classified as Level 2. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities. During the three months ended March 31, 2024 and April 2, 2023, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments. Realized gains recorded in the three months ended March 31, 2024 and April 2, 2023, were $1.0 million and $0.3 million, respectively. Realized losses recorded in the three months ended March 31, 2024 and April 2, 2023, were $0.2 million and $0.1 million, respectively. Realized gains and losses are included in other (income) expense, net. Unrealized gains on equity securities recorded in the three months ended March 31, 2024 and April 2, 2023 were $2.6 million and $2.0 million, respectively. Unrealized gains and losses on equity securities are included in other (income) expense, net. Unrealized gains and losses on available-for-sale debt securities are included in accumulated other comprehensive income (loss) on the balance sheet. The cost of securities sold is based on average cost. 9 -------------------------------------------------------------------------------- The following table sets forth by fair value hierarchy Teradyne’s financial assets and liabilities that were measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023. March 31, 2024 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Instruments Inputs Inputs (Level 1) (Level 2) (Level 3) Total (in thousands) Assets Cash $ 278,229 $ — $ — $ 278,229 Cash equivalents 428,675 499 — 429,174 Available-for-sale securities: U.S. Treasury securities — 40,068 — 40,068 Corporate debt securities — 35,845 — 35,845 Certificates of deposit and time deposits — 21,706 — 21,706 Debt mutual funds 10,007 — — 10,007 U.S. government agency securities — 3,863 — 3,863 Commercial paper — 1,689 — 1,689 Non-U.S. government securities — 798 — 798 Equity securities: Mutual funds 49,229 — — 49,229 $ 766,140 $ 104,468 $ — $ 870,608 Derivative assets — 4,251 — 4,251 Total $ 766,140 $ 108,719 $ — $ 874,859 Liabilities Derivative liabilities — 936 — $ 936 Total $ — $ 936 $ — $ 936 Reported as follows: (Level 1) (Level 2) (Level 3) Total (in thousands) Assets Cash and cash equivalents $ 706,904 $ 499 $ — $ 707,403 Marketable securities — 41,300 — 41,300 Long-term marketable securities 59,236 62,669 — 121,905 Prepayments — 4,251 — 4,251 Total $ 766,140 $ 108,719 $ — $ 874,859 Liabilities Other current liabilities $ — $ 936 $ — $ 936 Total $ — $ 936 $ — $ 936 10 -------------------------------------------------------------------------------- December 31, 2023 Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Instruments Inputs Inputs (Level 1) (Level 2) (Level 3) Total (in thousands) Assets Cash $ 298,156 $ — $ — $ 298,156 Cash equivalents 453,298 6,117 — 459,415 Available-for-sale securities: Corporate debt securities — 52,734 — 52,734 U.S. Treasury securities — 41,808 — 41,808 Certificates of deposit and time deposits — 21,772 — 21,772 Debt mutual funds 8,773 — — 8,773 U.S. government agency securities — 4,892 — 4,892 Commercial paper — 1,667 — 1,667 Non-U.S. government securities — 810 — 810 Equity securities: Mutual Funds 47,132 — — 47,132 $ 807,359 $ 129,800 $ — $ 937,159 Derivative assets — 18,746 — 18,746 Total $ 807,359 $ 148,546 $ — $ 955,905 Liabilities Derivative liabilities — 2,545 — 2,545 Total $ — $ 2,545 $ — $ 2,545 Reported as follows: (Level 1) (Level 2) (Level 3) Total (in thousands) Assets Cash and cash equivalents $ 751,454 $ 6,117 $ — $ 757,571 Marketable securities — 62,154 — 62,154 Long-term marketable securities 55,905 61,529 — 117,434 Prepayments — 18,746 — 18,746 Total $ 807,359 $ 148,546 $ — $ 955,905 Liabilities Other current liabilities $ — $ 2,545 $ — $ 2,545 Total $ — $ 2,545 $ — $ 2,545 The carrying amounts and fair values of Teradyne’s financial instruments at March 31, 2024 and December 31, 2023, were as follows: March 31, 2024 December 31, 2023 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Assets Cash and cash equivalents $ 707,403 $ 707,403 $ 757,571 $ 757,571 Marketable securities 163,205 163,205 179,588 179,588 Derivative assets 4,251 4,251 18,746 18,746 Liabilities Derivative liabilities 936 936 2,545 2,545 The fair values of accounts receivable, net and accounts payable approximate the carrying value due to the short-term nature of these instruments. 11 -------------------------------------------------------------------------------- The following table summarizes the composition of available-for-sale marketable securities at March 31, 2024: March 31, 2024 Available-for-Sale Fair Market Value of Fair Investments Unrealized Unrealized Market with Unrealized Cost Gain (Loss) Value Losses (in thousands) Corporate debt securities $ 39,946 $ 89 $ (4,190 ) $ 35,845 $ 31,461 U.S. Treasury securities 44,519 1 (4,452 ) 40,068 38,914 Certificates of deposit and time deposits 21,706 — — 21,706 — Debt mutual funds 10,363 — (356 ) 10,007 3,303 U.S. government agency securities 3,883 — (20 ) 3,863 3,863 Commercial paper 1,670 19 — 1,689 — Non-U.S. government securities 798 — — 798 — $ 122,885 $ 109 $ (9,018 ) $ 113,976 $ 77,541 Reported as follows: Fair Market Value of Fair Investments Unrealized Unrealized Market with Unrealized Cost Gain (Loss) Value Losses (in thousands) Marketable securities $ 41,308 $ 19 $ (27 ) $ 41,300 $ 17,657 Long-term marketable securities 81,577 90 (8,991 ) 72,676 59,884 $ 122,885 $ 109 $ (9,018 ) $ 113,976 $ 77,541 The following table summarizes the composition of available-for-sale marketable securities at December 31, 2023: December 31, 2023 Available-for-Sale Fair Market Value of Fair Investments Unrealized Unrealized Market with Unrealized Cost Gain (Loss) Value Losses (in thousands) Corporate debt securities $ 56,458 $ 201 $ (3,925 ) $ 52,734 $ 44,263 U.S. Treasury securities 45,725 14 (3,931 ) 41,808 35,080 Certificates of deposit and time deposits 21,772 — — 21,772 — Debt mutual funds 9,081 — (308 ) 8,773 3,303 U.S. government agency securities 4,898 — (6 ) 4,892 4,892 Commercial paper 1,633 34 — 1,667 — Non-U.S. government securities 810 — — 810 — $ 140,377 $ 249 $ (8,170 ) $ 132,456 $ 87,538 Reported as follows: Fair Market Value of Fair Investments Unrealized Unrealized Market with Unrealized Cost Gain (Loss) Value Losses (in thousands) Marketable securities $ 62,385 $ 36 $ (267 ) 62,154 $ 34,844 Long-term marketable securities 77,992 213 (7,903 ) 70,302 52,694 $ 140,377 $ 249 $ (8,170 ) $ 132,456 $ 87,538 12 -------------------------------------------------------------------------------- As of March 31, 2024, the fair market value of investments with unrealized losses less than one year and greater than one year totaled $36.2 million and $41.4 million, respectively. As of December 31, 2023, the fair market value of investments with unrealized losses for less than one year and greater than one year totaled $22.3 million and $65.2 million, respectively. Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments at March 31, 2024 and December 31, 2023 were not other than temporary. The contractual maturities of investments in available-for-sale securities held at March 31, 2024, were as follows: March 31, 2024 Fair Market Cost Value (in thousands) Due within one year $ 41,308 $ 41,300 Due after 1 year through 5 years 26,360 25,819 Due after 5 years through 10 years 7,760 7,405 Due after 10 years 37,094 29,445 Total $ 112,522 $ 103,969 Contractual maturities of investments in available-for-sale securities held at March 31, 2024, exclude debt mutual funds with a fair market value of $10.0 million as they do not have a contractual maturity date. Derivatives Teradyne conducts business in various foreign countries, with certain transactions denominated in local currencies. As a result, Teradyne is exposed to risks relating to changes in foreign currency exchange rates. Teradyne’s foreign currency risk management objective is to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, and changes in its cash inflows attributable to the forecasted cash flows from certain foreign currency denominated revenues. To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings and is used to offset the change in value of monetary assets and liabilities denominated in foreign currencies. Teradyne also enters into foreign currency forward and option contracts designated as cash flow hedges to hedge the risk of changes in its cash inflows attributable to changes in foreign currency exchange rates. The cash flow hedges have maturities of less than six months and mature in the period of revenue recognition for certain products and services in backlog and forecasted to be recognized in a future period. Teradyne evaluates cash flow hedges for effectiveness at inception based on the critical terms match method. The hedges are not expected to incur any ineffectiveness however a quarterly qualitative assessment of effectiveness is done to determine if the critical terms match method remains appropriate to use. The change in fair value of the contracts is recorded in accumulated other comprehensive income (loss) and reclassified to earnings at maturity date. Teradyne does not use derivative financial instruments for speculative purposes. 13 -------------------------------------------------------------------------------- At March 31, 2024 and December 31, 2023, Teradyne had the following contracts to buy and sell non-U.S. currencies for U.S. dollars and other non-U.S. currencies with the following notional amounts: Net Notional Value March 31, December 31, 2024 2023 (in millions) Currency Hedged (Buy/Sell) U.S. dollar/Japanese yen $ 57.5 $ 11.0 U.S. dollar/Danish krone 28.4 36.0 U.S. dollar/Taiwan dollar 20.1 42.7 U.S. dollar/Korean won 6.6 7.2 U.S. dollar/British pound sterling 1.0 1.5 Euro/U.S. dollar 25.8 25.3 Singapore dollar/U.S. dollar 17.6 16.6 Philippine peso/U.S. dollar 9.9 10.1 Chinese yuan/U.S. dollar 0.6 1.0 Danish krone/U.S. dollar 0.6 0.7 Total $ 168.1 $ 152.1 The fair value of the outstanding contracts was a net loss of $0.1 million and a net loss of $1.8 million at March 31, 2024 and December 31, 2023, respectively. Unrealized gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities are included in other (income) expense, net. At March 31, 2024 and December 31, 2023, Teradyne had the following cash flow hedge contracts to buy and sell non-U.S. currencies for U.S. dollars with the following notional amounts: Net Notional Value March 31, December 31, 2024 2023 (in millions) Currency Hedged (Buy/Sell) U.S. dollar/Japanese yen $ — $ 35.5 Total $ — $ 35.5 There were no outstanding cash flow hedge contracts at March 31, 2024. The fair value of the outstanding cash flow hedge contracts was a gain of $0.6 million at December 31, 2023. Unrealized gains and losses on foreign currency cash flow hedge contracts are included in accumulated other comprehensive income (loss). At maturity, the gains or losses associated with cash flow hedge contracts are recorded to revenue. On November 7, 2023, in connection with our agreement to acquire 10% investment in Technoprobe S.p.A we purchased a call option to buy 481.0 million Euros. The expiration date of the option is April 26, 2024. On April 12, 2024, Teradyne entered into a forward to buy 481.0 million Euros expiring on May 23, 2024. At March 31, 2024 and December 31, 2023, the fair value of the outstanding contract was $3.4 million and $17.4 million, respectively. For the three months ended March 31, 2024, an unrealized loss of $13.9 million was recorded in other (income) expense, net. 14 -------------------------------------------------------------------------------- The following table summarizes the fair value of derivative instruments as of March 31, 2024 and December 31, 2023: March 31, December 31, Balance Sheet Location 2024 2023 (in thousands) Derivatives not designated as hedging instruments: Foreign exchange forward contracts Other current assets $ 805 $ 733 Foreign exchange option contracts Other current assets 3,446 17,364 Foreign exchange forward contracts Other current liabilities (936 ) (2,545 ) Derivatives designated as hedging instruments: Foreign exchange forward contracts Other current assets — 648 Total derivatives $ 3,315 $ 16,200 The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three months ended March 31, 2024 and April 2, 2023: For the Three Months Ended Location of (Gains) Losses Recognized in Statement March 31, April 2, of Operations 2024 2023 (in thousands) Derivatives not designated as hedging instruments: Foreign exchange forward Other (income) expense, net $ (1,699 ) $ 1,259 contracts (1) Foreign exchange option Other (income) expense, net 13,918 contracts — Derivatives designated as hedging instruments: Foreign exchange forward and Revenue option contracts (2,280 ) 1,538 Total Derivatives $ 9,939 $ 2,797 (1) The table does not reflect the corresponding gains and losses from the remeasurement of the monetary assets and liabilities denominated in foreign currencies. For the three months ended March 31, 2024 and April 2, 2023, net losses from remeasurement of monetary assets and liabilities denominated in foreign currencies were $2.7 million and $0.4 million, respectively. See Note H: “Debt” regarding derivatives related to the convertible senior notes. H. DEBT Convertible Senior Notes On December 12, 2016, Teradyne completed a private offering of $460.0 million aggregate principal amount of 1.25% convertible senior unsecured notes (the “Notes”) and received net proceeds, after issuance costs, of approximately $450.8 million, $33.0 million of which was used to pay the net cost of the convertible note hedge transactions and $50.1 million of which was used to repurchase 2.0 million shares of Teradyne’s common stock under its existing stock repurchase program from purchasers of the Notes in privately negotiated transactions effected through one of the initial purchasers or its affiliates conducted concurrently with the pricing of the Note offering. The Notes bore interest at a rate of 1.25% per year payable semiannually in arrears on June 15 and December 15 of each year. The Notes matured on December 15, 2023. Concurrent with the offering of the Notes, Teradyne entered into convertible note hedge transactions (the “Note Hedge Transactions”) with the initial purchasers or their affiliates (the “Option Counterparties”). The Note Hedge Transactions cover, subject to customary anti-dilution adjustments, the number of shares of the common stock that underlie the Notes. Separately and concurrent with the pricing of the Notes, Teradyne entered into warrant transactions with the Option Counterparties (the “Warrant Transactions”) in which it sold net-share-settled (or, at its election subject to certain conditions, cash-settled) warrants to the Option Counterparties. These transactions have been accounted for as an adjustment to our shareholders’ equity. The Warrant Transactions, which began expiring March 18, 2024 and will continue to expire through July 10, 2024, currently cover, subject to customary anti-dilution adjustments, approximately 13.8 million shares of common stock. During the three months ended March 31, 2024, 0.8 million warrants expired. As of March 31, 2024, the strike price of the warrants was approximately $39.37 per share. The strike price is subject to adjustment under certain circumstances. The Warrant Transactions could result in additional shares of Teradyne’s common stock being issued to the extent that the market price per share of Teradyne’s common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants. 15 -------------------------------------------------------------------------------- The interest expense on Teradyne's senior notes for three months ended April 2, 2023 was as follows: For the Three Months Ended March 31, April 2, 2024 2023 (in thousands) Contractual interest expense on the coupon $ — $ 138 Amortization of debt issuance fees recognized as interest expense — 113 Total interest expense on the convertible debt $ — $ 251 Revolving Credit Facility On May 1, 2020, Teradyne entered into a credit agreement (the “Credit Agreement”) with Truist Bank, as administrative agent and collateral agent, and the lenders party thereto. The Credit Agreement provided for a three-year, senior secured revolving credit facility of $400.0 million (the “Credit Facility”). On December 10, 2021, the Credit Agreement was amended to extend the maturity date of the Credit Facility to December 10, 2026. On October 5, 2022, the Credit Agreement was amended to increase the amount of the Credit Facility to $750.0 million from $400.0 million. The Credit Agreement provides that, subject to customary conditions, Teradyne may seek to obtain from existing or new lenders the available incremental amount under the Credit Facility, not to exceed the greater of $200.0 million or 15% of consolidated EBIDTA. The interest rate applicable to loans under the Credit Facility are, at Teradyne’s option, equal to either a base rate plus a margin ranging from 0.00% to 0.75% per annum or SOFR plus a margin ranging from 1.10% to 1.85% per annum, based on the consolidated leverage ratio of Teradyne. In addition, Teradyne will pay a commitment fee on the unused portion of the commitments under the Credit Facility ranging from 0.15% to 0.25% per annum, based on the then applicable consolidated leverage ratio. Teradyne is not required to repay any loans under the Credit Facility prior to maturity, subject to certain customary exceptions. Teradyne is permitted to prepay all or any portion of the loans under the Credit Facility prior to maturity without premium or penalty, other than customary SOFR breakage costs. The Credit Agreement contains customary events of default, representations, warranties and affirmative and negative covenants that, among other things, limit Teradyne’s ability to sell assets, grant liens on assets, incur other secured indebtedness and make certain investments and restricted payments, all subject to exceptions set forth in the Credit Agreement. The Credit Agreement also requires Teradyne to satisfy two financial ratios measured as of the end of each fiscal quarter: a consolidated leverage ratio and an interest coverage ratio. The Credit Facility is guaranteed by certain of Teradyne’s domestic subsidiaries and collateralized by assets of Teradyne and such subsidiaries, including a pledge of 65% of the capital stock of certain foreign subsidiaries. As of May 3, 2024, the Credit Agreement was undrawn and Teradyne was in compliance with all covenants under the Credit Agreement. I. PREPAYMENTS Prepayments consist of the following: March 31, December 31, 2024 2023 (in thousands) Contract manufacturer and supplier prepayments $ 491,512 $ 502,257 Prepaid maintenance and other services 21,894 17,592 Prepaid taxes 14,335 16,083 Other prepayments 9,901 13,038 Total prepayments (1) $ 537,642 $ 548,970 (1) Excludes $3.2 million and $5.3 million at March 31, 2024 and December 31, 2023, respectively, of contract manufacturer and supplier prepayments, classified as assets held for sale. See Note E: “Assets held for sale” for additional information. 16 -------------------------------------------------------------------------------- J. PRODUCT WARRANTY Teradyne generally provides a one-year warranty on its products, commencing upon installation, acceptance or shipment. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. Related costs are charged to the warranty accrual as incurred. The balance below is included in other accrued liabilities. For the Three Months Ended March 31, April 2, 2024 2023 (in thousands) Balance at beginning of period $ 15,698 $ 14,181 Accruals for warranties issued during the period 3,259 4,117 Accruals related to pre-existing warranties (683 ) (405 ) Settlements made during the period (2,950 ) (4,992 ) Balance at end of period $ 15,324 $ 12,901 When Teradyne receives revenue for extended warranties, beyond one year, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. The balance below is included in short and long-term deferred revenue and customer advances. For the Three Months Ended March 31, April 2, 2024 2023 (in thousands) Balance at beginning of period $ 34,897 $ 56,180 Deferral of new extended warranty revenue 6,914 4,413 Recognition of extended warranty deferred revenue (7,302 ) (11,250 ) Balance at end of period $ 34,509 $ 49,343 K. STOCK-BASED COMPENSATION On February 1, 2023 (the “Retirement Date”), Mark E. Jagiela retired as Chief Executive Officer of Teradyne and a member of Teradyne’s Board of Directors, and Teradyne entered into an agreement (the “Retirement Agreement”) with Mr. Jagiela. Under the Retirement Agreement, Mr. Jagiela’s unvested time-based restricted stock units and stock options granted prior to his Retirement Date were modified to allow continued vesting; and any vested options or options that vest during that period may be exercised for the remainder of the applicable option term. During the three months ended April 2, 2023, Teradyne recorded a stock-based compensation expense of $5.9 million related to the Retirement Agreement. Under Teradyne’s stock compensation plans, Teradyne grants time-based restricted stock units, performance-based restricted stock units and stock options, and employees are eligible to purchase Teradyne’s common stock through its Employee Stock Purchase Plan (“ESPP”). Service-based restricted stock unit awards granted to employees vest in equal annual installments over four years. Restricted stock unit awards granted to non-employee directors vest after a one-year period, with 100% of the award vesting on the earlier of (a) the first anniversary of the grant date or (b) the date of the following year’s Annual Meeting of Shareholders. Teradyne expenses the cost of the restricted stock unit awards subject to time-based vesting, which is determined to be the fair market value of the shares at the date of grant, ratably over the period during which the restrictions lapse. Performance-based restricted stock units (“PRSUs”) granted to Teradyne’s executive officers may have a performance metric based on relative total shareholder return (“TSR”). Teradyne’s three-year TSR performance is measured against the New York Stock Exchange (“NYSE”) Composite Index. The final number of TSR PRSUs that vest will vary based upon the level of performance achieved from 0% to 200% of the target shares. The TSR PRSUs will vest upon the three-year anniversary of the grant date. The TSR PRSUs are valued using a Monte Carlo simulation model. The number of units expected to be earned, based upon the achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation. Compensation expense is recognized on a straight-line basis over the shorter of the three-year service period or the period from the grant to the date described in the retirement provisions below. Compensation expense for executive officers meeting the retirement provisions prior to the grant date is recognized 17 -------------------------------------------------------------------------------- during the year following the grant. Compensation expense is recognized regardless of the eventual number of units that are earned based upon the market condition, provided the executive officer remains an employee at the end of the three-year period. Compensation expense is reversed if at any time during the three-year service period the executive officer is no longer an employee, subject to the retirement and termination eligibility provisions noted below. PRSUs granted to Teradyne’s executive officers may also have a performance metric based on three-year cumulative non-GAAP profit before interest and tax (“PBIT”) as a percent of Teradyne’s revenue. Non-GAAP PBIT is a financial measure equal to GAAP income from operations less restructuring and other, net; amortization of acquired intangible assets; acquisition and divestiture related charges or credits; pension actuarial gains and losses; non-cash convertible debt interest expense; and other non-recurring gains and charges. The final number of PBIT PRSUs that vest will vary based upon the level of performance achieved from 0% to 200% of the target shares. The PBIT PRSUs will vest upon the three-year anniversary of the grant date. Compensation expense is recognized on a straight-line basis over the shorter of the three-year service period or the period from the grant date to the date described in the retirement provisions below. Compensation expense for executive officers meeting the retirement provisions prior to the grant date is recognized during the year following the grant. Compensation expense is recognized based on the number of units that are earned based upon the three-year Teradyne PBIT as a percent of Teradyne’s revenue, provided the executive officer remains an employee at the end of the three-year period subject to the retirement and termination eligibility provisions noted below. If a PRSU recipient’s employment ends prior to the determination of the performance percentage due to (1) permanent disability or death or (2) retirement or termination other than for cause, after attaining both at least age sixty and at least ten years of service, then all or a portion of the recipient’s PRSUs (based on the actual performance percentage achieved on the determination date) will vest on the date the performance percentage is determined. Except as set forth in the preceding sentence, no PRSUs will vest if the executive officer is no longer an employee at the end of the three-year period. Stock options to purchase Teradyne’s common stock at 100% of the fair market value on the grant date vest in equal annual installments over four years from the grant date and have a maximum term of seven years. On January 22, 2024, the Board enacted the Executive Retirement Policy for Restricted Stock Unit and Option Vesting (the "Retirement Policy"). Under the Retirement Policy, an executive officer that is over the age of 65 and has 10 or more years of service as of the effective date of his or her retirement will be eligible for continued vesting of his or her unvested time-based restricted stock units and stock options granted prior to his or her retirement date. During the three months ended March 31, 2024 and April 2, 2023, Teradyne granted 0.5 million and 0.5 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of $94.28 and $102.36, respectively. During the three months ended March 31, 2024 and April 2, 2023, Teradyne granted 0.1 million and 0.1 million of PBIT PRSUs with a grant date fair value of $94.01 and $102.23, respectively. During the three months ended March 31, 2024 and April 2, 2023, Teradyne granted 0.1 million and 0.1 million of TSR PRSUs, with a grant date fair value of $100.87 and $137.64, respectively. The fair value was estimated using the Monte Carlo simulation model with the following assumptions: For the Three Months Ended March 31, April 2, 2024 2023 Risk-free interest rate 3.9 % 3.9 % Teradyne volatility-historical 42.4 % 50.2 % NYSE Composite Index volatility-historical 15.6 % 24.8 % Dividend yield 0.5 % 0.4 % Expected volatility was based on the historical volatility of Teradyne’s stock and the NYSE Composite Index over the most recent three-year period. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of $0.48 per share divided by Teradyne’s stock price on the grant date of $95.14 for the 2024 grant, and an estimated annual dividend amount of $0.44 per share divided by Teradyne’s stock price on the grant date of $103.44 for the 2023 grant. During the three months ended March 31, 2024 and April 2, 2023, Teradyne granted 0.1 million and 0.1 million of service-based stock options to executive officers at a weighted average grant date fair value of $37.50 and $40.90, respectively. 18 -------------------------------------------------------------------------------- The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions: For the Three Months Ended March 31, April 2, 2024 2023 Expected life (years) 4.0 4.0 Risk-free interest rate 4.0 % 3.7 % Volatility-historical 46.3 % 46.7 % Dividend yield 0.5 % 0.4 % Teradyne determined the stock options’ expected life based upon historical exercise data for executive officers, the age of the executive officers and the terms of the stock option grant. Volatility was determined using historical volatility for a period equal to the expected life. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of $0.48 per share divided by Teradyne’s stock price on the grant date of $95.14 for the 2024 grant and an estimated annual dividend amount of $0.44 per share divided by Teradyne’s stock price on the grant date of $103.44 for the 2023 grant. L. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Changes in accumulated other comprehensive income (loss), which are presented net of tax, consist of the following: Unrealized Foreign (Losses) Retirement Currency Gains on Unrealized Plans Prior Translation Marketable (Losses) Gains on Service Adjustment Securities Cash Flow Hedges Credit Total (in thousands) Three Months Ended March 31, 2024 Balance at December 31, 2023, net of tax of $0, $(1,728), $142, $(1,132), respectively $ (22,442 ) $ (6,194 ) $ 506 $ 1,152 $ (26,978 ) Other comprehensive (loss) gain before reclassifications, net of tax of $0, $(221), $358, $0, respectively (11,457 ) (902 ) 1,274 — (11,085 ) Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $0, $30, $(500), $0, respectively — 106 (1,780 ) (2 ) (1,676 ) Net current period other comprehensive loss, net of tax of $0, $(191), $(142), $0, respectively (11,457 ) (796 ) (506 ) (2 ) (12,761 ) Balance at March 31, 2024, net of tax of $0, $(1,919), $0, $(1,132), respectively $ (33,899 ) $ (6,990 ) $ — $ 1,150 $ (39,739 ) Three Months Ended April 2, 2023 Balance at December 31, 2022, net of tax of $0, $(2,308), ($708), $(1,130), respectively $ (39,849 ) $ (8,661 ) $ (2,517 ) $ 1,159 $ (49,868 ) Other comprehensive gain before reclassifications, net of tax of $0, $503, $167, $0, respectively 9,309 2,294 596 — 12,199 Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $0, $2, $338, $0, respectively — 5 1,200 (2 ) 1,203 Net current period other comprehensive gain (loss), net of tax of $0, $505, $505, $0, respectively 9,309 2,299 1,796 (2 ) 13,402 Balance at April 2, 2023, net of tax of $0, $(1,803), $(203), $(1,130), respectively $ (30,540 ) $ (6,362 ) $ (721 ) $ 1,157 $ (36,466 ) 19 -------------------------------------------------------------------------------- Reclassifications out of accumulated other comprehensive income (loss) to the statement of operations for the three months ended March 31, 2024 and April 2, 2023, were as follows: Affected Line Item Details about Accumulated Other For the Three Months in the Statements Comprehensive Income (Loss) Components Ended of Operations March 31, April 2, 2024 2023 (in thousands) Available-for-sale marketable securities: Unrealized losses, net of tax of $(30), Other (income) $(2), respectively $ (106 ) $ (5 ) expense, net Cash flow hedges: Unrealized (losses) gains, net of tax of $500, $(338), respectively 1,780 (1,200 ) Revenue Defined benefit pension and postretirement plans: Amortization of prior service credit, net of tax of $0, $0, respectively 2 2 (a) Total reclassifications, net of tax of $470, $(340), respectively $ 1,676 $ (1,203 ) Net income (a) The amortization of prior service credit is included in the computation of net periodic postretirement benefit cost. See Note P: “Retirement Plans.” M. GOODWILL AND ACQUIRED INTANGIBLE ASSETS Goodwill Teradyne performs its annual goodwill impairment test as required under the provisions of ASC 350-10, “Intangibles—Goodwill and Other” on December 31 of each fiscal year unless interim indicators of impairment exist. In the three months ended March 31, 2024, there were no interim indicators of impairment. Goodwill is considered impaired when the net book value of a reporting unit exceeds its estimated fair value. The changes in the carrying amount of goodwill by reportable segments for the three months ended March 31, 2024, were as follows: Wireless Semiconductor System Robotics Test Test Test Total (in thousands) Balance at December 31, 2023 Goodwill $ 395,463 $ 361,819 $ 262,237 $ 158,699 $ 1,178,218 Accumulated impairment losses — (353,843 ) (260,540 ) (148,183 ) (762,566 ) Total Goodwill 395,463 7,976 1,697 10,516 415,652 Foreign currency translation adjustment (7,962 ) — (114 ) — (8,076 ) Balance at March 31, 2024 Goodwill $ 387,502 $ 361,819 $ 262,123 $ 158,699 1,170,142 Accumulated impairment losses — (353,843 ) (260,540 ) (148,183 ) (762,566 ) Total Goodwill $ 387,502 $ 7,976 $ 1,583 $ 10,516 $ 407,576 20 -------------------------------------------------------------------------------- Intangible Assets Teradyne reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheet: Foreign Gross Currency Net Carrying Accumulated Translation Carrying Amount Amortization Adjustment Amount (in thousands) Balance at March 31, 2024 Developed technology $ 267,706 $ (246,266 ) $ (5,635 ) $ 15,805 Customer relationships 52,109 (48,278 ) 203 4,034 Tradenames and trademarks 59,007 (47,231 ) (1,381 ) 10,395 Total intangible assets $ 378,822 $ (341,775 ) $ (6,813 ) $ 30,234 Balance at December 31, 2023 Developed technology $ 267,706 $ (243,191 ) $ (5,343 ) $ 19,172 Customer relationships 52,109 (47,850 ) 232 4,491 Tradenames and trademarks 59,007 (46,021 ) (1,245 ) 11,741 Total intangible assets $ 378,822 $ (337,062 ) $ (6,356 ) $ 35,404 Aggregate intangible asset amortization expense was $4.7 million and $4.8 million, respectively, for the three months ended March 31, 2024 and April 2, 2023. Estimated intangible asset amortization expense for each of the five succeeding fiscal years and thereafter is as follows: Amortization Year Expense (in thousands) 2024 $ 14,010 2025 11,290 2026 2,364 2027 1,148 2028 1,066 Thereafter 356 N. NET INCOME PER COMMON SHARE The following table sets forth the computation of basic and diluted net income per common share: For the Three Months Ended March 31, April 2, 2024 2023 (in thousands, except per share amounts) Net income for basic and diluted net income per share $ 64,197 $ 83,531 Weighted average common shares-basic 153,047 155,904 Effect of dilutive potential common shares: Convertible note hedge warrant shares (1) 8,862 8,983 Incremental shares from assumed conversion of convertible notes (2) — 914 Restricted stock units 419 453 Stock options 16 48 Employee stock purchase plan 4 6 Dilutive potential common shares 9,301 10,404 Weighted average common shares-diluted 162,348 166,308 Net income per common share-basic $ 0.42 $ 0.54 Net income per common share-diluted $ 0.40 $ 0.50 21 -------------------------------------------------------------------------------- (1) Convertible notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the period and the warrant price, multiplied by the number of warrant shares. The result of this calculation, representing the total intrinsic value of the warrant, was divided by the average Teradyne stock price for the period. (2) Incremental shares from assumed conversion of the convertible notes were calculated using the difference between the average Teradyne stock price for the period and the conversion price, multiplied by the number of convertible notes shares. The result of this calculation, representing the total intrinsic value of the convertible notes, was divided by the average Teradyne stock price for the period. The computation of diluted net income per common share for the three months ended March 31, 2024 and April 2, 2023, excludes the effect of the potential vesting of 0.4 million and 0.5 million, respectively, of restricted stock units because the effect would have been anti-dilutive. O. RESTRUCTURING AND OTHER During the three months ended March 31, 2024, Teradyne recorded $2.2 million of acquisition and divestiture expenses related to the Technoprobe transaction, and $2.0 million of severance charges related to headcount reductions primarily in Robotics and Semiconductor Test, which included charges related to a voluntary early retirement program for employees meeting certain conditions. During the three months ended April 2, 2023, Teradyne recorded a charge of $2.0 million of severance charges related to headcount reductions primarily in Semiconductor Test, Robotics, and Corporate. P. RETIREMENT PLANS ASC 715, “Compensation—Retirement Benefits,” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation at December 31. Teradyne uses a December 31 measurement date for all its plans. Defined Benefit Pension Plans Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to these plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of the U.S. qualified pension plan consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “IRC”), as well as unfunded qualified foreign plans. In the three months ended March 31, 2024 and April 2, 2023, Teradyne contributed $0.8 million and $0.8 million, respectively, to the U.S. supplemental executive defined benefit pension plan, and $0.3 million and $0.2 million, respectively, to certain qualified pension plans for non-U.S. subsidiaries. For the three months ended March 31, 2024 and April 2, 2023, Teradyne’s net periodic pension cost was comprised of the following: For the Three Months Ended March 31, 2024 April 2, 2023 United United States Foreign States Foreign (in thousands) Service cost $ 231 $ 117 $ 272 $ 109 Interest cost 1,647 246 1,711 262 Expected return on plan assets (1,268 ) (16 ) (1,285 ) (9 ) Total net periodic pension cost $ 610 $ 347 $ 698 $ 362 22 -------------------------------------------------------------------------------- Postretirement Benefit Plan In addition to receiving pension benefits, Teradyne employees in the United States who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits and the existing benefit obligation relates primarily to those employees. During the three months ended March 31, 2024, Teradyne recorded special termination benefit charges associated with a voluntary early retirement program. For the three months ended March 31, 2024 and April 2, 2023, Teradyne’s net periodic postretirement benefit cost was comprised of the following: For the Three Months Ended March 31, April 2, 2024 2023 (in thousands) Service cost $ 10 $ 9 Interest cost 73 61 Amortization of prior service credit (2 ) (2 ) Special termination benefits 292 — Total net periodic postretirement benefit cost $ 373 $ 68 Q. COMMITMENTS AND CONTINGENCIES Purchase Commitments As of March 31, 2024, Teradyne had entered into purchase commitments for certain components and materials. The purchase commitments covered by the agreements aggregate to approximately $428.8 million, of which $404.7 million is for less than one year. Legal Claims Teradyne is subject to various legal proceedings and claims which have arisen in the ordinary course of business such as, but not limited to, patent, employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all pending claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions are unlikely to have a material adverse effect on its business, financial position or results of operations. Guarantees and Indemnification Obligations Teradyne provides indemnification, to the extent permitted by law, to its officers, directors, employees and agents for liabilities arising from certain events or occurrences, while the officer, director, employee, or agent, is or was serving, at Teradyne’s request in such capacity. Teradyne may enter into indemnification agreements with certain of its officers and directors. With respect to acquisitions, Teradyne provides indemnifications to or assumes indemnification obligations for the current and former directors, officers and employees of the acquired companies in accordance with the acquired companies’ by-laws and charter. As a matter of practice, Teradyne has maintained directors’ and officers’ liability insurance coverage including coverage for directors and officers of acquired companies. Teradyne enters into agreements in the ordinary course of business with customers, resellers, distributors, integrators and suppliers. Most of these agreements require Teradyne to defend and/or indemnify the other party against intellectual property infringement claims brought by a third party with respect to Teradyne’s products. From time to time, Teradyne also indemnifies customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal property damage, product liability, breach of confidentiality obligations and environmental claims relating to the use of Teradyne’s products and services or resulting from the acts or omissions of Teradyne, its employees, authorized agents or subcontractors. On occasion, Teradyne has also provided guarantees to customers regarding the delivery and performance of its products in addition to the warranty described below. As a matter of ordinary course of business, Teradyne warrants that its products will substantially perform in accordance with its standard published specifications in effect at the time of delivery. Most warranties have a one-year duration commencing from 23 -------------------------------------------------------------------------------- installation. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based upon historical experience. When Teradyne receives revenue for extended warranties beyond the standard duration, the revenue is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. As of March 31, 2024 and December 31, 2023, Teradyne had a product warranty accrual of $15.3 million and $15.7 million, respectively, included in other accrued liabilities and revenue deferrals related to extended warranties of $34.5 million and $34.9 million, respectively, included in short and long-term deferred revenue and customer advances. In addition, in the ordinary course of business, Teradyne provides minimum purchase guarantees to certain vendors to ensure continuity of supply against the market demand. Although some of these guarantees provide penalties for cancellations and/or modifications to the purchase commitments as the market demand decreases, most of the guarantees do not. Therefore, as the market demand decreases, Teradyne re-evaluates these guarantees and determines what charges, if any, should be recorded. With respect to its agreements covering product, business or entity divestitures and acquisitions, Teradyne provides certain representations, warranties and covenants to purchasers and agrees to indemnify and hold such purchasers harmless against breaches of such representations, warranties and covenants. Many of the indemnification claims have a definite expiration date while some remain in force indefinitely. With respect to its acquisitions, Teradyne may, from time to time, assume the liability for certain events or occurrences that took place prior to the date of acquisition. As a matter of ordinary course of business, Teradyne occasionally guarantees certain indebtedness obligations of its subsidiary companies, limited to the borrowings from financial institutions, purchase commitments to certain vendors and lease commitments to landlords. Based on historical experience and information known as of March 31, 2024 and December 31, 2023, except for product warranty, Teradyne has not recorded any liabilities for these guarantees and obligations because the amount would be immaterial. R. INCOME TAXES A reconciliation of the United States federal statutory corporate tax rate to Teradyne’s effective tax rate was as follows: For the Three Months Ended March 31, April 2, 2024 2023 U.S. statutory federal tax rate 21.0 % 21.0 % Tax credits (3.1 ) (2.5 ) Discrete benefit related to reserves for uncertain tax positions (3.1 ) — International provisions of the U.S. Tax Cuts and Jobs Act of 2017 (2.2 ) (3.2 ) Foreign taxes (2.1 ) (0.6 ) Discrete benefit related to equity compensation (0.9 ) (3.3 ) Other, net 2.3 2.6 Effective tax rate 11.9 % 14.0 % On a quarterly basis, Teradyne evaluates the realizability of the deferred tax assets by jurisdiction and assesses the need for a valuation allowance. As of March 31, 2024, Teradyne believes that it will ultimately realize the deferred tax assets recorded on the condensed consolidated balance sheet. However, should Teradyne believe that it is more-likely-than-not that the deferred tax assets would not be realized, the tax provision would increase in the period in which Teradyne determined that the realizability was not likely. Teradyne considers the probability of future taxable income and historical profitability, among other factors, in assessing the realizability of the deferred tax assets. As of March 31, 2024 and December 31, 2023, Teradyne had $15.9 million and $18.6 million, respectively, of reserves for uncertain tax positions. The $2.7 million net decrease in reserves for uncertain tax positions is related to the settlement of an audit. As of March 31, 2024, Teradyne estimates that it is reasonably possible that the balance of unrecognized tax benefits may decrease approximately $0.8 million in the next twelve months because of a lapse of statutes of limitation. The estimated decrease relates to U.S. federal and state research and development credits. Teradyne recognizes interest and penalties related to income tax matters in income tax expense. As of March 31, 2024 and December 31, 2023, $0.7 million and $1.3 million, respectively, of interest and penalties were accrued for uncertain tax positions. For the three months ended March 31, 2024 and April 2, 2023, benefit of $0.6 million and expense of $0.1 million, respectively, was recorded for interest and penalties related to income tax items. 24 -------------------------------------------------------------------------------- Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings due to the tax holiday for the three months ended March 31, 2024, was $1.1 million, or $0.01 per diluted share. The tax savings due to the tax holiday for the three months ended April 2, 2023, was $0.2 million, or $0.0 per diluted share. In November 2020, Teradyne entered into an agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2020. The new tax holiday is scheduled to expire on December 31, 2025. On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA introduced a 15% alternative minimum tax based on the financial statement income of certain large corporations (“CAMT”), effective January 1, 2023. Teradyne currently does not expect the CAMT to have a material impact on its financial results. On December 15, 2022, the European Union ("EU") Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development ("OECD") Pillar Two Framework. The EU’s Pillar Two Directive effective dates are January 1, 2024, and January 1, 2025, for different aspects of the directive. On July 17, 2023, the OECD published Administrative Guidance proposing certain safe harbor rules that effectively extend certain effective dates to January 1, 2027. Certain EU Member States where Teradyne has a legal presence have recently enacted the directive and administrative guidance into their local tax legislation. Additionally, countries outside the EU where Teradyne has a legal presence have enacted similar language as the EU Members States in their local tax legislation. Teradyne is closely monitoring these developments and evaluating the potential financial impact on income tax expense. As of March 31, 2024, Teradyne anticipates it will meet the safe harbors in most jurisdictions, and any remaining tax under the rules should be immaterial for the year ending December 31, 2024. S. SEGMENT INFORMATION Teradyne has four reportable segments (Semiconductor Test, System Test, Wireless Test and Robotics). Each of the reportable segments represents an individual operating segment. The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test products and services. The System Test segment includes operations related to the design, manufacturing and marketing of products and services for storage and system level test, defense/aerospace instrumentation test, and circuit-board test. The Wireless Test segment includes operations related to the design, manufacturing and marketing of wireless test products and services. The Robotics segment includes operations related to the design, manufacturing and marketing of collaborative robotic arms, autonomous mobile robots and advanced robotic control software. Each operating segment has a segment manager who is accountable to and maintains regular contract with Teradyne’s chief operating decision maker (Teradyne’s chief executive officer) to discuss operating activities, financial results, forecasts, and plans for the segment. Teradyne evaluates performance based on several factors, of which the primary financial measure is business segment income (loss) before income taxes. The accounting policies of the business segments are the same as those described in Note B: “Accounting Policies” in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2023. Segment information for the three months ended March 31, 2024 and April 2, 2023 is as follows: Corporate Semiconductor System Wireless and Test Test Robotics Test Segment Total Eliminations Consolidated (in thousands) Three Months Ended March 31, 2024 Revenues $ 412,254 $ 75,322 $ 87,654 $ 24,589 $ 599,819 $ — $ 599,819 Income (loss) before income taxes (1)(2) 79,414 18,391 (14,047 ) (893 ) $ 82,865 (9,963 ) $ 72,902 Total assets (3) 1,348,829 181,803 721,318 69,519 $ 2,321,469 1,089,251 $ 3,410,720 Three Months Ended April 2, 2023 Revenues $ 415,009 $ 74,631 $ 89,214 $ 38,675 $ 617,529 $ — $ 617,529 Income (loss) before income taxes (1)(2) 96,185 15,275 (18,490 ) 9,352 $ 102,322 (5,238 ) $ 97,084 Total assets (3) 1,386,851 173,669 676,092 87,875 $ 2,324,487 1,058,920 $ 3,383,407 (1) Included in Corporate and Eliminations are: interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension, acquisition and divestiture related fees, and an expense for the modification of outstanding equity awards. (2) Included in income (loss) before taxes are charges related to restructuring and other, expense for the modification of outstanding equity awards, and inventory charges. 25 -------------------------------------------------------------------------------- (3) Total assets are attributable to each segment. Semiconductor Test includes $33.9 million of total assets classified as assets held for sale. See Note E: "Assets held for sale" for additional information. Corporate assets consist of cash and cash equivalents, marketable securities, and certain other assets. Included in each segment are charges and credits in the following line items in the statements of operations: For the Three Months Ended March 31, April 2, 2024 2023 (in thousands) Semiconductor Test: Cost of revenues—inventory charge $ 4,956 $ 3,768 Restructuring and other—employee severance 983 794 System Test: Cost of revenues—inventory charge $ — $ 675 Robotics: Cost of revenues—inventory charge $ — $ 782 Corporate and Eliminations: Restructuring and other—acquisition & divestiture related expenses 2,214 — Selling and administrative —equity modification 1,469 5,889 Restructuring and other—employee severance $ — $ 659 T. SHAREHOLDERS’ EQUITY Stock Repurchase Program In January 2023, Teradyne’s Board of Directors cancelled its January 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. As of January 1, 2023, share repurchases in excess of issuances are subject to a 1% excise tax, which is included as part of the cost basis of the shares acquired. Teradyne intends to repurchase up to $90.0 million of its common stock in 2024 based on market conditions. During the three months ended March 31, 2024, Teradyne repurchased 0.2 million shares of common stock for a total cost of $22.1 million at an average price of $100.31 per share. The cumulative repurchases under the January 2023 repurchase program as of March 31, 2024 were 4.1 million shares of common stock for $422.6 million at an average price per share of $102.35. During the three months ended April 2, 2023, Teradyne repurchased 0.9 million shares of common stock for $93.7 million at an average price of $104.88 per share. The total cost of shares acquired includes commissions and related excise tax, and is recorded as a reduction to retained earnings. Dividend Holders of Teradyne’s common stock are entitled to receive dividends when they are declared by Teradyne’s Board of Directors. In January 2024 and January 2023, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.12 per share and $0.11 per share, respectively. Dividend payments for the three months ended March 31, 2024 and April 2, 2023, were $18.4 million and $17.2 million, respectively. 26 -------------------------------------------------------------------------------- Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations Statements in this Quarterly Report on Form 10-Q which are not historical facts, so called “forward-looking statements,” are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. See also Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law. Overview We are a leading global supplier of automated test equipment and robotics products. We design, develop, manufacture and sell automatic test systems and robotics products. Our automatic test systems are used to test semiconductors, wireless products, data storage and complex electronics systems in many industries including the consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our robotics products include collaborative robotic arms and autonomous mobile robots (“AMRs”) used by global manufacturing, logistics and industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Our automatic test equipment and robotics products and services include: • semiconductor test (“Semiconductor Test”) systems; • storage and system level test (“Storage Test”) systems, defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, and circuit-board test and inspection (“Production Board Test”) systems (collectively these products represent “System Test”); • wireless test (“Wireless Test”) systems; and • robotics (“Robotics”) products. The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our test products both through direct sales and sales to the customers’ supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future. In the first quarter of 2024, artificial intelligence applications (“AI”) drove Semiconductor Test performance above our plan, particularly in Memory. We expect AI to continue to drive meaningful demand into the second quarter of 2024, helping to offset weak demand in the smartphone mobility test market. We anticipate an upturn in mobility, which may not materialize until 2025. Our Robotics segment consists of Universal Robots A/S (“UR”), a leading supplier of collaborative robotic arms, and Mobile Industrial Robots A/S (“MiR”), a leading maker of AMRs for industrial automation. The market for our Robotics segment products is dependent on the adoption of new automation technologies by large manufacturers as well as small and medium enterprises (“SMEs”) throughout the world. Robotics results in the first quarter of 2024 were in line with our forecast, putting us in position for full year growth due to new product offerings, expansion of our Original Equipment Manufacturer (“OEM”) and large account channels, along with increasing recurring revenue via service and software offerings. On November 7, 2023, Teradyne and Technoprobe S.p.A, (“Technoprobe”), a leader in the design and production of probe cards, announced the establishment of a strategic partnership that will seek to accelerate growth for both companies and enable higher performance semiconductor test interfaces for customers worldwide. As part of the partnership, Teradyne agreed to make an investment of 481.0 million Euros in exchange for a 10% equity investment in Technoprobe, and Technoprobe agreed to acquire 100% of Teradyne’s Device Interface Solutions ("DIS") business in exchange for $85.0 million. The transaction is expected to close during the second quarter of 2024, subject to regulatory approval. Our financial statements are denominated in U.S. dollars. While the majority of our revenues are in U.S. dollars, historically approximately 70 percent of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar would negatively affect Robotics revenue growth in 2024. 27 -------------------------------------------------------------------------------- Our corporate strategy continues to focus on profitably gaining market share in our test businesses through the introduction of differentiated products that target expanding segments and accelerating growth through continued investment in our Robotics businesses. We plan to execute on our strategy while balancing capital allocations between returning capital to our shareholders through stock repurchases and dividends and using capital for opportunistic accretive acquisitions. Critical Accounting Policies and Estimates We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the three months ended March 31, 2024, to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, except as noted below. Critical accounting estimates are complex and may require significant judgment by management. Changes to the underlying assumptions may have a material impact on our financial condition and results of operations. These estimates may change, as new events occur and additional information is obtained. Actual results could differ significantly from these estimates under different assumptions or conditions. Preparation of Financial Statements and Use of Estimates The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates under different assumptions or conditions. SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three Months Ended March 31, April 2, 2024 2023 Percentage of revenues: Revenues: Products 76 % 77 % Services 24 23 Total revenues 100 100 Cost of revenues: Cost of products 33 32 Cost of services 10 10 Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below) 43 42 Gross profit 57 58 Operating expenses: Selling and administrative 25 24 Engineering and development 17 17 Acquired intangible assets amortization 1 1 Restructuring and other 1 — Total operating expenses 44 43 Income from operations 13 15 Non-operating (income) expense: Interest income (1 ) (1 ) Interest expense — — Other (income) expense, net 2 — Income before income taxes 12 16 Income tax provision 1 2 Net income 11 % 14 % 28 -------------------------------------------------------------------------------- Results of Operations First Quarter 2024 Compared to First Quarter 2023 Revenues Revenues by our reportable segments were as follows: For the Three Months Ended March 31, April 2, Dollar 2024 2023 Change (in millions) Semiconductor Test $ 412.3 $ 415.0 $ (2.7 ) System Test 75.3 74.6 0.7 Robotics 87.7 89.2 (1.5 ) Wireless Test 24.6 38.7 (14.1 ) $ 599.8 $ 617.5 $ (17.7 ) The decrease in Semiconductor Test revenues of $2.7 million, or 0.7%, was driven primarily by lower tester sales for automotive applications, offset by Memory Test sales in DRAM wafer sort. The increase in System Test revenues of $0.7 million, or 0.9%, was primarily due to higher sales in Defense/Aerospace, partially offset by lower sales in Storage Test of system level testers. The decrease in Wireless Test revenues of $14.1 million, or 36.4% was primarily due to a decrease in connectivity and ultra wide band test products. Revenues by country as a percentage of total revenues were as follows (1): For the Three Months Ended March 31, April 2, 2024 2023 Korea 28 % 12 % United States 17 18 Taiwan 12 18 Japan 11 9 Europe 11 12 China 7 10 Singapore 3 8 Malaysia 3 3 Philippines 2 5 Thailand 2 3 Rest of World 4 2 100 % 100 % (1) Revenues attributable to a country are based on location of customer site. Gross Profit Our gross profit was as follows: For the Three Months Ended March 31, April 2, Dollar/Point 2024 2023 Change (in millions) Gross profit $ 339.3 $ 356.4 $ (17.1 ) Percent of total revenues 56.6 % 57.7 % (1.2 ) Gross profit as a percent of revenue decreased by 1.2 points, primarily due to product mix and lower volume. 29 -------------------------------------------------------------------------------- Selling and Administrative Selling and administrative expenses were as follows: For the Three Months Ended March 31, April 2, Dollar 2024 2023 Change (in millions) Selling and administrative $ 149.2 $ 151.0 $ (1.8 ) Percent of total revenues 24.9 % 24.4 % The decrease of $1.8 million in selling and administrative expenses was primarily due to lower spending in Robotics, partially offset by higher spending in Semiconductor Test. Engineering and Development Engineering and development expenses were as follows: For the Three Months Ended March 31, April 2, Dollar 2024 2023 Change (in millions) Engineering and development $ 103.2 $ 105.8 $ (2.6 ) Percent of total revenues 17.2 % 17.1 % The decrease of $2.6 million in engineering and development expenses was primarily due to lower spending in Robotics. Restructuring and Other During the three months ended March 31, 2024, we recorded $2.2 million of acquisition and divestiture related costs and $2.0 million of severance charges related to headcount reductions primarily in Semiconductor Test and Robotics. During the three months ended April 2, 2023, we recorded $2.0 million of severance charges related to headcount reduction primarily in Semiconductor Test, Robotics and Corporate. Interest and Other For the Three Months Ended March 31, April 2, Dollar 2024 2023 Change (in millions) Interest income $ (7.9 ) $ (5.3 ) $ (2.6 ) Interest expense 0.7 1.0 $ (0.3 ) Other (income) expense, net 12.1 0.1 $ 12.0 Other (income) expense, net increased $12.0 million primarily due to the change in value of our call option purchased in connection with the anticipated acquisition of Technoprobe. 30 -------------------------------------------------------------------------------- Income (Loss) Before Income Taxes For the Three Months Ended March 31, April 2, Dollar 2024 2023 Change (in millions) Semiconductor Test $ 79.4 $ 96.2 $ (16.8 ) System Test 18.4 15.3 3.1 Wireless Test (0.9 ) 9.4 (10.3 ) Robotics (14.0 ) (18.5 ) 4.5 Corporate and Eliminations (1) (10.0 ) (5.2 ) (4.8 ) $ 72.9 $ 97.1 $ (24.2 ) (1) Included in Corporate and Eliminations are: interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension, acquisition and divestiture related fees, and an expense for the modification of outstanding equity awards The decrease in income before income taxes in Semiconductor Test was driven primarily by lower margins due to product mix as well as higher operating expenses on similar sales levels. The decrease in income before income taxes in Wireless Test was primarily due to a decrease in sales of connectivity and ultra wide band test products. The increase in income before income taxes in Robotics was driven primarily by lower operating expenses on similar sales. The loss before income taxes in Corporate and Eliminations was primarily due to changes in unrealized gains/losses on equity securities and the call option related to our anticipated investment in Technoprobe. Income Taxes The effective tax rate for the three months ended March 31, 2024 and April 2, 2023, was 11.9% and 14.0%, respectively. The decrease in the effective tax rate from the three months ended April 2, 2023, to three months ended March 31, 2024, primarily resulted from the benefit of a reduction in uncertain tax positions and the benefit of a projected shift in the geographic distribution of income. These benefits were partially offset by a decrease in benefit related to equity compensation. Contractual Obligations There have been no changes outside of the ordinary course of business to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023. Liquidity and Capital Resources Our cash, cash equivalents and marketable securities balances decreased by $66.6 million in the three months ended March 31, 2024, to $870.6 million. Operating activities during the three months ended March 31, 2024, provided cash of $7.3 million. Changes in operating assets and liabilities used cash of $108.6 million due to a $3.9 million increase in operating assets and a $104.7 million decrease in operating liabilities. The increase in operating assets was primarily due to an $8.1 million and $6.9 million increase in accounts receivable and inventories, respectively, partially offset by a $11.1 million decrease in other assets. The decrease in operating liabilities was due to a $70.2 million decrease in accrued employee compensation $28.4 million decrease in accounts payable, $7.0 million decrease in accrued other, $1.4 million decrease in deferred revenue and customer advance payments, and $1.4 million of retirement plan contributions, partially offset by a $3.8 million increase in income taxes. Investing activities during the three months ended March 31, 2024, used cash of $24.0 million due to $44.0 million used for the purchases of property, plant and equipment, $16.0 million used for the purchase of marketable securities, partially offset by $20.7 million and $14.4 million in proceeds from the sale of maturities and marketable securities, respectively, and $0.9 million in proceeds from life insurance. 31 -------------------------------------------------------------------------------- Financing activities during the three months ended March 31, 2024, used cash of $36.7 million due to $22.1 million used for the repurchase of 0.2 million shares of common stock at an average price of $100.31 per share, $18.4 million used for dividend payments and $13.1 million used for payment related to net settlements of employee stock compensation awards, partially offset by $16.9 million from the issuance of common stock under employee stock purchase and stock option plans. Operating activities during the three months ended April 2, 2023, provided cash of $19.3 million. Changes in operating assets and liabilities used cash of $106.5 million due to a $1.9 million increase in operating assets and $104.7 million decrease in operating liabilities. The increase in operating assets was due to a $23.7 million increase in inventories, a $15.4 million increase in prepayments and other assets due to prepayments to our contract manufactures, partially offset by a $37.2 million decrease in accounts receivable. The decrease in operating liabilities was due to a $93.1 million decrease in accrued employee compensation, a $32.7 million decrease in deferred revenue and customer advance payments, and $1.2 million of retirement plan contributions, partially offset by a $12.5 million increase in income taxes, a $9.6 million increase in accrued other liabilities, and a $0.3 million increase in accounts payable. In January 2024 and January 2023, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.12 per share and $0.11 per share, respectively. Dividend payments for the three months ended March 31, 2024 and April 2, 2023, were $18.4 million and $17.2 million, respectively. In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. During the three months ended March 31, 2024, we repurchased 0.2 million shares of common stock for $22.1 million, which excludes related excise tax, at an average price of $100.31 per share. We intend to repurchase up to $90.0 million of common stock in 2024 subject to market conditions. The cumulative repurchases under the 2023 repurchase program as of March 31, 2024 were 4.1 million shares of common stock for $419.4 million, which excludes related excise tax, at an average price per share of $102.35. During the three months ended April 2, 2023 , we repurchased 0.9 million shares of common stock for $93.3 million, which excludes related excise tax, at an average price of $104.88 per share. While we have previously declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. Cash dividends and stock repurchases are subject to the discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition. On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400 million. On December 10, 2021, the credit agreement was amended to extend the senior secured revolving credit facility to December 10, 2026. On October 5, 2022, the credit agreement was amended to increase the amount of the credit facility to $750.0 million from $400.0 million. As of May 3, 2024, we have not borrowed any funds under the credit facility. We believe our cash, cash equivalents, marketable securities and senior secured revolving credit facility will be sufficient to pay our quarterly dividend and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings. Equity Compensation Plans In addition to our 1996 Employee Stock Purchase Program as discussed in Note Q: “Stock-Based Compensation” in our 2023 Annual Report on Form 10-K, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”). The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers and directors. Both plans were approved by our shareholders. Recently Issued Accounting Pronouncements In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which will require us to disclose 32 -------------------------------------------------------------------------------- significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, we will be required to disclose the title and position of the CODM. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This ASU will have no impact on our results of operations, cash flows or financial condition. Upon adoption, we will apply the amendments in this ASU retrospectively to all prior period disclosures presented in the financial statements. In December 2023, FASB issued ASU 2023-09 –“Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU 2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a prospective basis, but retrospective application is permitted. This ASU will have no impact on results of operations, cash flows or financial condition. Item 3: Quantitative and Qualitative Disclosures about Market Risks For “Quantitative and Qualitative Disclosures about Market Risk” affecting Teradyne, see Part 2 Item 7A, “Quantitative and Qualitative Disclosures about Market Risks,” in our Annual Report on Form 10-K filed with the SEC on February 22, 2024. There were no material changes in our exposure to market risk from those set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Item 4: Controls and Procedures As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) or Rule 15d-15(f) promulgated under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 33 -------------------------------------------------------------------------------- PART II. OTHER INFORMATION Item 1: Legal Proceedings We are subject to various legal proceedings and claims which have arisen in the ordinary course of business such as, but not limited to, patent, employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all pending claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions are unlikely to have a material adverse effect on its business, financial position or results of operations. Item 1A: Risk Factors In addition to other information set forth in this Form 10-Q, including the risk discussed below, you should carefully consider the factors discussed in Part I, “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Form 10-K remain applicable to our business. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. 34 -------------------------------------------------------------------------------- Item 2: Unregistered Sales of Equity Securities and Use of Proceeds In January 2023, Teradyne’s Board of Directors cancelled our 2021 repurchase program and approved a new repurchase program for up to $2.0 billion of common stock. During the three months ended March 31, 2024, we repurchased 0.2 million shares of common stock for a total cost of $22.1 million at an average price of $100.31 per share. We record share repurchases at cost, which includes broker commissions and related excise taxes. During the three months ended April 2, 2023, we repurchased 0.9 million shares of common stock for $93.7 million at an average price of $104.88 per share. The following table includes information with respect to repurchases we made of our common stock during the three months ended March 31, 2024, (in thousands except per share price): Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Total Total Number of Yet Be Number of Shares (or Units) Purchased Under Shares Average Purchased as Part of the (or Units) Price Paid per Publicly Announced Plans or Period Purchased Share (or Unit) Plans or Programs Programs (2) January 1, 2024 - January 28, 2024 22 $ 110.59 — $ 1,599,497 January 29, 2024 - February 25, 2024 229 $ 101.92 130 $ 1,586,608 February 26, 2024 - March 31, 2024 92 $ 102.51 90 $ 1,577,380 343 (1) 102.65 (1) 220 (1) Includes approximately one hundred twenty two thousand shares at an average price of $106.86 withheld from employees for the payment of taxes. (2) As of January 1, 2023, share repurchases net of share issuances are subject to a 1% excise tax under the Inflation Reduction Act. Excise tax incurred is included as part of the cost basis of shares repurchased in the Condensed Consolidated Statements of Convertible Common Shares and Stockholders’ Equity. We satisfy U.S. federal and state minimum withholding tax obligations due upon the vesting and the conversion of restricted stock units into shares of our common stock, by automatically withholding from the shares being issued, a number of shares with an aggregate fair market value on the date of such vesting and conversion that would satisfy the minimum withholding amount due. Item 4: Mine Safety Disclosures Not Applicable 35 -------------------------------------------------------------------------------- Item 5: Other Information 10b 5-1 Trading Plans Our officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Section 16 Officers”) and directors from time to time enter into contracts, instructions or written plans for the purchase or sale of our securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense against liability for trading in securities on the basis of material nonpublic information. We refer to these contracts, instructions, and written plans as “Rule 10b5-1 trading plans” and each one as a “Rule 10b5-1 trading plan.” During our fiscal quarter ended March 31, 2024, the following Section 16 Officers or directors adopted, modified or terminated Rule 10b5-1 trading plans: Richard Burns, President, Semiconductor Test Richard Burns, our President, Semiconductor Test, entered into a new Rule 10b5-1 trading plan on February 15, 2024. The Rule 10b5-1 trading plan provides that Mr. Burns, acting through a broker, may sell up to an aggregate of (i) 50% of the (net) shares resulting from the vesting of 10,759 (gross) restricted stock units (net shares are net of tax withholding), and (ii) 100% of the (net) shares resulting from the exercise of up to 8,700 stock options (net shares are net of the stock option exercise prices). Subject to price limits, the first trade under Mr. Burns’s Rule 10b5-1 trading plan is scheduled for May 20, 2024. Mr. Burns’s plan is scheduled to terminate on February 28, 2025, subject to earlier termination upon the sale of all shares subject to the plan, upon termination by Mr. Burns or the broker, or as otherwise provided in the plan. Mercedes Johnson, Director Mercedes Johnson, a member of our Board of Directors, entered into a new Rule 10b5-1 trading plan on February 2, 2024. The Rule 10b5-1 trading plan provides that Ms. Johnson, acting through a broker, may sell up to an aggregate of 7,500 shares. Subject to price limits, the first trade under Ms. Johnson’s Rule 10b5-1 trading plan is scheduled for June 3, 2024. Ms. Johnson’s plan is scheduled to terminate on April 30, 2025, subject to earlier termination upon the sale of all shares subject to the plan, upon termination by Ms. Johnson or the broker, or as otherwise provided in the plan. 36 -------------------------------------------------------------------------------- Item 6: Exhibits Exhibit Number Description 10.1 Form of Time-Based Restricted Stock Unit Agreement for Executive Officers under the 2006 Equity and Cash Compensation Incentive Plan, as amended* (filed herewith) 10.2 Form of Executive Officer Stock Option Agreement under the 2006 Equity and Cash Compensation Incentive Plan, as amended* (filed herewith) 31.1 Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) 31.2 Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith) 32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) 32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith) 101.INS Inline XBRL Instance Document 101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents 104 Cover Page Interactive Data File (formatted as Inline XBRL, and contained in Exhibit 101) 37 -------------------------------------------------------------------------------- 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/ SANJAY MEHTA Sanjay Mehta Vice President, Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer) May 3, 2024 38 -------------------------------------------------------------------------------- EX-10.1 2 ter-ex10_1.htm EX-10.1 Exhibit 10.1 TERADYNE, INC. 2006 EQUITY AND CASH COMPENSATION INCENTIVE PLAN NOTICE OF RESTRICTED STOCK UNIT GRANT AND TERMS FOR U.S. EXECUTIVE RECIPIENTS Name: Employee ID: In granting restricted stock units, Teradyne, Inc. (“Teradyne”) seeks to provide employees of Teradyne and its subsidiaries with incentive to help drive Teradyne’s future success and to share in the economic benefits of that success. We all look forward to your contributions to that effort. You have been granted a restricted stock unit award consisting of the right to receive up to XX shares of Teradyne common stock. This grant was approved effective [ ](the “Effective Date”). This award is subject to the Restricted Stock Unit Terms for U.S. Recipients attached hereto and the terms of the Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan (the “Plan”). The shares covered by this award will be delivered over time as described in and subject to the vesting conditions of the Restricted Stock Unit Terms for U.S. Recipients. The Plan prospectus, consisting of a “Participant Information” document that summarizes the Plan and the complete Plan, is available on “In-Site,” Teradyne’s internal Web site: Equity Compensation (Options & RSU's) (sharepoint.com) Please note that printed versions of the Plan prospectus documents are available to you, at no charge, upon request to the HR Service Center, Teradyne, Inc., 600 Riverpark Drive, North Reading, MA 01864, (978) 370-3041 or hr.service.center@teradyne.com TERADYNE, INC /s/ Ryan E. Driscoll Ryan E. Driscoll V.P., General Counsel and Secretary (US Executive RSU) Grant # 1 -------------------------------------------------------------------------------- RESTRICTED STOCK UNIT TERMS FOR U.S. RECIPIENTS 1. Award Grant, Vesting and Transfer (a) Award Grant. Teradyne, Inc. hereby grants to the recipient an award (this “Award”) of restricted stock units (the “RSUs”) under the Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan (the “Plan”). The RSUs represent the right of the recipient to receive that number of shares of Teradyne common stock set forth in the Notice of Restricted Stock Unit Grant and Terms for U.S. Recipients (the “Notice of Grant”) attached hereto upon satisfaction of the terms set forth in these Restricted Stock Unit Terms for U.S. Recipients (this “Agreement”). This Award is governed by and subject to the terms of the Plan, the Notice of Grant and this Agreement. Capitalized terms used but not otherwise defined herein will have the meaning set forth in the Notice of Grant or the Plan. In the event of any inconsistencies or differences between the Plan and this Agreement, the Plan shall prevail. The terms governing this Award are intended to comply with all applicable laws and regulations. (b) This Award vests yearly on the anniversary of the Effective Date. None of the RSUs subject to this Award will be vested on the Effective Date. Except as provided in (c) below, 25% of the RSUs granted will vest on the first and each of the three subsequent anniversaries of the Effective Date until the total grant is fully vested on the fourth anniversary of the Effective Date. The Committee shall have the right to accelerate the date that any installment of this Award becomes vested, including, but not limited to, events such as disability, death or upon the acquisition of control of Teradyne by another entity. (c) This Award will not vest further after termination of employment or other business relationship except in limited certain circumstances. This Award will not vest after the recipient’s employment or other business relationship ends, regardless of the reason, provided, however, that if the recipient’s employment or other business relationship with Teradyne or, if different, the recipient’s employer (the “Employer”) or any of the other Subsidiaries of Teradyne ends on account of (1) death, the unvested portion of this Award which would have vested under the applicable rule stated in (b) above shall automatically become vested in full on the date of his or her termination of employment or business relationship on account of death or (2) retirement after attaining both at least age sixty-five and at least ten years of service, provided that the recipient submits written notice of such intent to retire at least six months prior to its effective date, then (i) one hundred percent of the unvested portion of this Award granted at least 365 calendar days prior to retirement shall vest in accordance with the rule stated in (b) above and (ii) a pro-rated portion of the unvested portion of this Award granted within 365 calendar days of the retirement based on the number of days of employment or other business relationship during the 365 calendar day period from the grant date shall continue to vest in accordance with the rule stated in (b) above. The recipient’s employment or other business relationship shall be considered as continuing uninterrupted during any bona fide approved leave of absence provided (i) that the period of such leave does not exceed 90 days and is not a personal leave unless the personal leave is based on recipient’s accrued, unused personal paid time-off benefits provided under a program sponsored by Teradyne, the Employer or any other Subsidiary of Teradyne, (ii) the recipient’s right to reemployment is guaranteed by statute following the approved leave of absence, or (iii) the Committee has agreed in writing that Teradyne, the Employer or any other Subsidiary of Teradyne is contractually obligated to continue the recipient’s employment or other business relationship after the approved leave of absence period. Notwithstanding the foregoing leave of absence provision, vesting of this Award shall continue during the period a recipient is determined to be disabled under the Teradyne Short-Term Disability program and Long-Term Disability Plan, provided that such vesting shall cease upon the earlier to occur of the recipient’s (A) termination of employment from Teradyne, the Employer or any other Subsidiary of Teradyne and (B) the last day of the twenty-four (24) month period beginning on the date on which Long-Term Disability benefits commenced. (d) No rights as stockholder; Issuance. The recipient shall not have any rights as a stockholder in, to or with respect to any shares which may be covered by this Award (including but not limited to the right to vote or to receive dividends) until this Award is settled by issuance of shares to the recipient. All shares issued in respect of this Award will be transferred or issued to the recipient (or his or her estate, in the event of his or her death) as soon as is practicable after the date the RSUs vest but, in any event, within 2½ months following the calendar year in which the RSUs become vested (or any earlier date, after vesting, as required to avoid characterization as non-qualified deferred compensation under Section 409A of the Code). Teradyne will not be required to transfer or issue any shares upon vesting 2 -------------------------------------------------------------------------------- of the RSUs until arrangements satisfactory to it have been made by the recipient to address any Tax-Related Items (as defined in Section 4 below) which might arise by reason of the vesting of the RSUs and/or transfer or issuance of shares. (e) This Award may not be assigned or transferred. Other than as provided in Section 11(a) of the Plan, this Award is not assignable or transferable (except by will or the laws of descent and distribution). 2. Capital Changes and Business Succession. Section 3(c) of the Plan contains provisions for adjusting (or substituting) the number and class of securities, vesting schedule and other terms of outstanding stock-based awards granted under the Plan if a recapitalization, stock split, merger, or other specified event occurs and the Committee determines that an adjustment (or substitution) is appropriate. In that event, the recipient of this Award will be notified of the adjustment (or substitution), if any, to this Award. 3. Employment or Business Relationship. This Award and the recipient’s participation in the Plan shall not create any right of continued employment or business relationship or be interpreted as forming or amending an employment contract or business relationship with Teradyne or its Subsidiaries, and does not affect the right of the recipient, Teradyne or the Employer to terminate the recipient's employment or a business relationship at any time. 4. Tax Obligations. (a) Responsibility for Taxes. The recipient acknowledges that, regardless of any action taken by Teradyne or the Employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to the recipient’s participation in the Plan and legally applicable to the recipient (“Tax-Related Items”), is and remains the recipient’s responsibility and may exceed the amount actually withheld by Teradyne or the Employer. The recipient further acknowledges that Teradyne and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Award, including, but not limited to, the grant, vesting or settlement of the RSUs, the subsequent sale of shares acquired pursuant to such settlement and the receipt of any dividends or other distributions, and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of this Award to reduce or eliminate the recipient’s liability for Tax-Related Items or achieve any particular tax result. Further, if the recipient is subject to Tax-Related Items in more than one jurisdiction, the recipient acknowledges that Teradyne and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. (b) Tax Withholding. Prior to any relevant taxable or tax withholding event, as applicable, the recipient agrees to make adequate arrangements satisfactory to Teradyne and/or the Employer to satisfy all Tax-Related Items. The recipient authorizes Teradyne and/or the Employer, or their respective agents, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by withholding in shares to be issued upon settlement of the RSUs; provided, however, that the number of shares withheld will be determined using rates that do not exceed the maximum statutory tax rates for the jurisdiction(s) applicable to the recipient. For tax purposes, the recipient is deemed to have been issued the full number of shares subject to the vested RSUs, notwithstanding that a number of the shares are held back solely for the purpose of paying the Tax-Related Items. Alternatively, a recipient may elect to satisfy his or her obligations for Tax-Related Items by delivery of cash or check to Teradyne or the Employer. In the event that withholding in shares is problematic under applicable tax or securities law or has materially adverse accounting consequences and the recipient does not satisfy his or her obligations for Tax-Related Items by delivery of cash or check, the recipient (1) authorizes and directs Teradyne and any brokerage firm determined acceptable to Teradyne to sell on the recipient's behalf a whole number of shares from those shares issuable to the recipient as Teradyne determines to be appropriate to generate cash proceeds sufficient to satisfy any applicable withholding obligation for Tax-Related Items; (2) authorizes Teradyne or the Employer to withhold the Tax-Related Items from the recipient’s wages or other compensation; and (3) agrees, upon request from Teradyne or the Employer, to make a cash payment in an amount equal to the withholding obligations for any Tax-Related Items. Teradyne may refuse to issue or deliver the shares or the proceeds of the sale of shares if the recipient fails to comply with his or her obligations in connection with the Tax-Related Items. 5. Compliance with Laws. Shares to be issued under this Award are currently registered under the United States Securities Act of 1933, as amended. If such registration is not in effect at the time of vesting, the recipient will be required to represent to Teradyne that he or she is acquiring such shares as an investment and not with a view to the sale of those shares. Notwithstanding any other provision of the Plan or the Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the shares of common stock, Teradyne shall not be required to deliver any shares of common stock issuable upon settlement of the RSUs prior to the completion of any registration or qualification of the shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the United States Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign 3 -------------------------------------------------------------------------------- governmental agency, which registration, qualification or approval Teradyne shall, in its absolute discretion, deem necessary or advisable. The recipient understands that Teradyne is under no obligation to register or qualify the shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares. Further, the recipient agrees that Teradyne shall have unilateral authority to amend the Plan and the Agreement without the recipient’s consent to the extent necessary to comply with securities or other laws applicable to issuance of shares. 6. Code Section 409A. This Award is intended to be exempt from the application of Section 409A of the Code, and any ambiguities herein will be interpreted to so comply. Teradyne reserves the right, to the extent Teradyne deems necessary or advisable in its sole discretion, to amend or modify the terms of this Award (or the Plan) or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take other actions, including any amendments or actions that would result in a reduction to the benefit payable under this Award, in each case, without the consent of the recipient of the Award, as may be necessary to ensure that all vesting or settlement provided under this Award are made in a manner that complies with Section 409A of the Code or to mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Section 409A of the Code if compliance is not practical; provided, however, that nothing in this Section 6 creates an obligation on the part of Teradyne to modify the terms of this Award or the Plan. In that light, Teradyne makes no representation that the terms of this Award will comply with Section 409A of the Code or that the settlement of this Award will not be subject to taxes, interest and penalties or other adverse tax consequences under Section 409A of the Code. In no event whatsoever shall Teradyne or any of its affiliates be liable to the recipient of this Award or any other party for any additional tax, interest, penalties or other liability that may be imposed on the recipient of this Award by Section 409A of the Code or for any action taken by Teradyne with respect thereto. 7. Governing Law and Venue. The Award and the provisions of this Agreement are governed by, and subject to, the laws of the Commonwealth of Massachusetts, without regard to the conflict of law provisions, as provided in the Plan. For purposes of litigating any dispute that arises under this Award or this Agreement, the parties hereby submit to and consent to the jurisdiction of the Commonwealth of Massachusetts, agree that such litigation shall be conducted in the courts of Middlesex County, or the federal courts for the United States for the District of Massachusetts, where this grant is made and/or to be performed. 8. Electronic Delivery and Acceptance. Teradyne may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The recipient hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by Teradyne or a third party designated by Teradyne. 9. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. 10. Imposition of Other Requirements. Teradyne reserves the right to impose other requirements on the recipient’s participation in the Plan, on the RSUs and on any shares of common stock acquired under the Plan, to the extent Teradyne determines it is necessary or advisable for legal or administrative reasons, and to require the recipient to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. 11. Waiver. The recipient acknowledges that a waiver by Teradyne of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the recipient or any other recipient. 12. No Advice Regarding Grant. Teradyne is not providing any tax, legal or financial advice, nor is Teradyne making any recommendations regarding the recipient’s participation in the Plan, or the recipient’s acquisition or sale of the underlying shares of common stock. The recipient should consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan. 13. Insider Trading Restrictions/Market Abuse Laws. The recipient acknowledges that, depending on the recipient’s or his or her broker’s country of residence or where the shares of common stock are listed, the recipient may be subject to insider trading restrictions and/or market abuse laws which may affect the recipient’s ability to accept, acquire, sell or otherwise dispose of shares of common stock, rights to shares of common stock (e.g., RSUs) or rights linked to the value of shares of common stock under the Plan during such times the recipient is considered to have “inside information” regarding Teradyne (as defined by the laws or regulations in the recipient’s country). The recipient is responsible for ensuring compliance with any restrictions and should consult his or her personal legal advisor on this matter. 4 -------------------------------------------------------------------------------- 14. Recoupment. The recipient agrees that the RSUs and any financial gain realized by the recipient through settlement of the RSUs or sale of any shares of common stock acquired shall be subject to forfeiture and/or repayment to the Company to the extent required to comply with the application of any recoupment policy or any recovery or clawback policy required by law or any other applicable laws or the rules and regulations of the securities exchange or inter-dealer quotation system on which the shares of common stock are listed or quoted, including, without limitation, pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. 5 -------------------------------------------------------------------------------- EX-10.2 3 ter-ex10_2.htm EX-10.2 Exhibit 10.2 TERADYNE, INC. 2006 EQUITY AND CASH COMPENSATION INCENTIVE PLAN NOTICE OF STOCK OPTION GRANT AND TERMS FOR U.S. RECIPIENTS Name: Employee Number: In granting stock options, Teradyne, Inc. (“Teradyne”) seeks to provide employees with incentive to help drive Teradyne’s future success and to share in the economic benefits of that success. We all look forward to your contributions to that effort. In recognition of your contributions to Teradyne, you have been granted a stock option award consisting of the right to receive up to xx shares of Teradyne common stock upon exercise of this option in accordance with its terms. This stock option grant was approved effective (the “Effective Date”). The Stock Option Grant Details applicable to this stock option grant are listed below. This stock option grant is subject to the Stock Option Terms for U.S. Recipients attached hereto and the terms of the Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan (the “Plan”). Stock options covered by this award will be exercisable over time as described in and subject to the vesting conditions of the attached Stock Option Terms for U.S. Recipients. The Plan prospectus, consisting of a “Participant Information” document that summarizes the Plan and the complete Plan, is available on “In-Site,” Teradyne’s internal Web site. To access the information, go to: Equity Compensation (Options & RSU's) (sharepoint.com) Please note that printed versions of the Plan prospectus documents are available to you, at no charge, upon request to the HR Service Center, Teradyne, Inc., 600 Riverpark Drive, North Reading, MA 01864, (978) 370-3041 or hr.service.center@teradyne.com TERADYNE, INC. Stock Option Grant Details: Grant Date/Effective Date: Number of Shares under Option: Per Share Exercise Price/FMV on Grant Date: /s/ Ryan E. Driscoll Ryan E. Driscoll Vice President, General Counsel and Secretary (2024 Stock Option) Grant # 1 -------------------------------------------------------------------------------- STOCK OPTION TERMS FOR U.S. RECIPIENTS 1. Option Grant, Exercise and Vesting. (a) Stock Option Grant. Teradyne, Inc. hereby grants to the recipient an award (this “Award”) of nonstatutory stock options (the “Stock Options”) under the Teradyne, Inc. 2006 Equity and Cash Compensation Incentive Plan (the “Plan”). The Stock Options represent the right of the recipient to purchase that number of shares of Teradyne common stock set forth in the Notice of Stock Option Grant and Terms for U.S. Recipients (the “Notice of Grant”) attached hereto upon satisfaction of the terms set forth in these Stock Option Terms for U.S. Recipients (this “Agreement”). This Award is governed by and subject to the terms of the Plan, the Notice of Grant and this Agreement. Capitalized terms used but not otherwise defined herein will have the meaning set forth in the Notice of Grant or the Plan. In the event of any inconsistencies or differences between the Plan and this Agreement, the Plan shall prevail. The terms governing this Award are intended to comply with all applicable laws and regulations. (b) These Stock Options vest and become exercisable yearly on the anniversary of the Effective Date. None of the Stock Options subject to this Award will be vested or exercisable on the Effective Date. Except as provided in (d) below, 25% of the Stock Options granted will vest and become exercisable on the first and each of the three subsequent anniversaries of the Effective Date until the total grant is fully vested and exercisable on the fourth anniversary of the Effective Date. The Committee shall have the right to accelerate the date that any installment of this Award becomes vested and exercisable, including, but not limited, to events such as disability, death or upon the acquisition of control of Teradyne by another entity. (c) After Stock Options become exercisable, they can be exercised at any time prior to and on the Option Expiration Date. This Award expires at the close of business at Teradyne’s headquarters on the date that is seven years from the Effective Date (the “Option Expiration Date”). This Award may expire earlier if the recipient’s employment or other business relationship terminates, as described below. (d) The Stock Options will not vest further after termination of employment or other business relationship except in limited certain circumstances. If the recipient’s employment or business relationship with Teradyne or, if different, the recipient’s employer (the “Employer”) or any Subsidiary of Teradyne terminates for any reason except death, then this Award will not vest after the recipient’s employment or other business relationship ends and this Award will automatically expire at the close of business at Teradyne’s headquarters on the date ninety (90) days after the recipient’s termination date, or if earlier, the Option Expiration Date. If the recipient’s employment or other business relationship with Teradyne, the Employer or any Subsidiary of Teradyne ends on account of death, the unvested portion of this Award which would have vested under the applicable rule stated in (b) above shall automatically become vested in full on the date of the recipient’s termination of employment or business relationship on account of death and the vested portion of this Award may be exercised in accordance with Section 11(a) of the Plan until the earlier of (1) the close of business at Teradyne’s headquarters on the date that is one year subsequent to the recipient’s termination due to death or (2) the Option Expiration Date. If the recipient’s employment or other business relationship with Teradyne, ends on account of retirement after attaining both at least age sixty-five and at least ten years of service to Teradyne, provided that the recipient submits written notice of such intent to retire at least six months prior to its effective date, then (i) one hundred percent of the unvested portion of this Award granted at least 365 calendar days prior to retirement shall continue to vest in accordance with the rule stated in (b) above and (ii) a pro-rated portion of the unvested portion of this Award granted within 365 calendar days of the retirement based on the number of days of employment or other business relationship during the 365 calendar day period from the grant date shall continue to vest in accordance with the rule stated in (b) above, in both cases such vested portion of this Award may be exercised in accordance with Section 11(a) of the Plan until the Option Expiration Date. The recipient’s employment or other business relationship shall be considered as continuing uninterrupted during any bona fide approved leave of absence provided (i) that the period of such leave 1 -------------------------------------------------------------------------------- does not exceed 90 days and is not a personal leave unless the personal leave is based on recipient’s accrued, unused personal paid time-off benefits provided under a program sponsored by Teradyne, the Employer or any other Subsidiary of Teradyne, (ii) the recipient’s right to reemployment is guaranteed by statute following the approved leave of absence, or (iii) the Committee has agreed in writing that Teradyne, the Employer or any other Subsidiary of Teradyne is contractually obligated to continue the recipient’s employment or other business relationship after the approved leave of absence period. Notwithstanding the foregoing leave of absence provision, vesting of this Award shall continue during the period a recipient is determined to be disabled under the Teradyne Short-Term Disability program and Long-Term Disability Plan, provided that such vesting shall cease upon the earlier to occur of the recipient’s (A) termination of employment from Teradyne, the Employer or any other Subsidiary of Teradyne and (B) the last day of the twenty-four (24) month period beginning on the date on which Long-Term Disability benefits commenced. 2. Procedure for Exercising Stock Options. (a) Stock Options are exercised by giving written notice to Teradyne in the form (or by such other procedures as) specified by the Committee stating the election to exercise, specifying the number of shares as to which Stock Options are being exercised and paying Teradyne the full exercise price for such shares, plus any applicable Tax-Related Items (as defined in Section 6 below). Payment can be made to Teradyne by a combination of cash, certified or bank check, or personal check (in each case in United States dollars), or by delivery of shares of Teradyne common stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Option or through a broker-dealer sale and remittance procedure pursuant to which the recipient shall provide written irrevocable instructions to a brokerage firm to effect the immediate sale of some or all of the purchased shares and remit to Teradyne sufficient funds to cover the aggregate exercise price payable for the purchased shares, plus any applicable Tax-Related Items designated by Teradyne, and shall provide written directives to Teradyne to deliver the purchased shares directly to such brokerage firm to complete the sale transaction, provided that such process is consistent with and permissible under applicable law. (b) The recipient shall not have any rights as a stockholder in, to or with respect to any shares which may be covered by this Award (including but not limited to the right to vote or to receive dividends) until the issuance of shares to the recipient upon exercise of the Stock Options. All shares issuable upon exercise of the Stock Options will be transferred or issued to the recipient (or his or her estate, in the event of death) promptly upon exercise. (c) With regard to any Stock Option exercises, Teradyne will not be required to transfer or issue any shares until arrangements satisfactory to it have been made to address any Tax-Related Items and withholding requirements which might arise by reason of the Stock Option exercise. Teradyne will pay any transfer or issue tax and deliver the shares purchased. 3. Assignment and Transferability. This Stock Option may not be assigned or transferred (except by will or the laws of descent and distribution) other than as provided in Section 11(a) of the Plan. 4. Capital Changes and Business Succession. Section 3(c) of the Plan contains provisions for adjusting (or substituting) the number and class of securities, vesting schedule, exercise price and other terms of outstanding stock-based awards granted under the Plan if a recapitalization, stock split, merger, or other specified event occurs and the Committee determines that an adjustment (or substitution) is appropriate. In that event, the recipient will be notified of the adjustment (or substitution), if any, to this Award. 5. Employment or Business Relationship. This Award and the recipient’s participation in the Plan shall not create any right of continued employment or business relationship or be interpreted as forming or amending an employment contract or business relationship with Teradyne or its Subsidiaries, and does not affect the right of the recipient, Teradyne or the Employer to terminate the recipient’s employment or a business relationship at any time. 6. Tax Obligations. (a) Responsibility for Taxes. The recipient acknowledges that, regardless of any action taken by Teradyne or the Employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax­related items related to the recipient’s participation in the Plan and legally applicable to the recipient (“Tax-Related Items”), is and remains the recipient’s responsibility and may exceed the amount actually withheld by Teradyne or the Employer. The recipient further acknowledges that Teradyne and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection 2 -------------------------------------------------------------------------------- with any aspect of the Stock Options, including, but not limited to, the grant, vesting or exercise of the Stock Options, the subsequent sale of shares acquired pursuant to such exercise and the receipt of any dividends or other distributions, and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Stock Option to reduce or eliminate the recipient’s liability for Tax-Related Items or achieve any particular tax result. Further, if the recipient is subject to Tax-Related Items in more than one jurisdiction, the recipient acknowledges that Teradyne and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. (b) Tax Withholding. Prior to any relevant taxable or tax withholding event, as applicable, the recipient agrees to make adequate arrangements satisfactory to Teradyne and/or the Employer to satisfy all Tax-Related Items. In this regard, the recipient authorizes Teradyne and/or the Employer, or their respective agents, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by withholding from proceeds of the sale of shares acquired at exercise of the Stock Options either through a voluntary sale or through a mandatory sale arranged by Teradyne (on the recipient’s behalf pursuant to this authorization) without further consent. Teradyne may withhold or account for Tax-Related Items by considering maximum applicable rates, in which case the recipient will receive a refund of any over-withheld amount in cash and will have no entitlement to the common stock equivalent. Alternatively, the recipient may elect to satisfy the recipient’s obligations for Tax-Related Items by delivery of cash or check to Teradyne or the Employer. 7. Compliance with Laws. Shares to be issued under this Award are currently registered under the United States Securities Act of 1933, as amended. If such registration is not in effect at the time of vesting, the recipient will be required to represent to Teradyne that the recipient is acquiring such shares as an investment and not with a view to the sale of those shares. Notwithstanding any other provision of the Plan or the Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the shares of common stock, Teradyne shall not be required to deliver any shares of common stock issuable upon exercise of the Stock Options prior to the completion of any registration or qualification of the shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the United States Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval Teradyne shall, in its absolute discretion, deem necessary or advisable. The recipient understands that Teradyne is under no obligation to register or qualify the shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares. Further, the recipient agrees that Teradyne shall have unilateral authority to amend the Plan and the Agreement without the recipient’s consent to the extent necessary to comply with securities or other laws applicable to issuance of shares. 8. Governing Law and Venue. The Award and the provisions of this Agreement are governed by, and subject to, the laws of the Commonwealth of Massachusetts, without regard to the conflict of law provisions, as provided in the Plan. For purposes of litigating any dispute that arises under this Award or this Agreement, the parties hereby submit to and consent to the jurisdiction of the Commonwealth of Massachusetts, agree that such litigation shall be conducted in the courts of Middlesex County, or the federal courts for the United States for the District of Massachusetts, where this grant is made and/or to be performed. 9. Electronic Delivery and Acceptance. Teradyne may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The recipient hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by Teradyne or a third party designated by Teradyne. 10. Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. 11. Imposition of Other Requirements. Teradyne reserves the right to impose other requirements on the recipient’s participation in the Plan, on the Stock Options and on any shares of common stock acquired under the Plan, to the extent Teradyne determines it is necessary or advisable for legal or administrative reasons, and to require the recipient to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. 12. Waiver. The recipient acknowledges that a waiver by Teradyne of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the recipient or any other recipient. 3 -------------------------------------------------------------------------------- 13. No Advice Regarding Grant. Teradyne is not providing any tax, legal or financial advice, nor is Teradyne making any recommendations regarding the recipient’s participation in the Plan, or the recipient’s acquisition or sale of the underlying shares of common stock. The recipient should consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan. 14. Insider Trading Restrictions/Market Abuse Laws. The recipient acknowledges that, depending on the recipient’s or his or her broker’s country of residence or where the shares of common stock are listed, the recipient may be subject to insider trading restrictions and/or market abuse laws which may affect the recipient’s ability to accept, acquire, sell or otherwise dispose of shares of common stock, rights to shares of common stock (e.g., Stock Options) or rights linked to the value of shares of common stock under the Plan during such times the recipient is considered to have “inside information” regarding Teradyne (as defined by the laws or regulations in the recipient’s country). The recipient is responsible for ensuring compliance with any restrictions and should consult his or her personal legal advisor on this matter. 15. Recoupment. The recipient agrees that the Stock Option and any financial gain realized by the recipient through exercise of the Stock Option or sale of any shares of common stock acquired shall be subject to forfeiture and/or repayment to the Company to the extent required to comply with the application of any recoupment policy or any recovery or clawback policy required by law or any other applicable laws or the rules and regulations of the securities exchange or inter-dealer quotation system on which the shares of common stock are listed or quoted, including, without limitation, pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. 4 -------------------------------------------------------------------------------- EX-31.1 4 ter-ex31_1.htm EX-31.1 Exhibit 31.1 CERTIFICATIONS I, Gregory S. Smith, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: May 3, 2024 By: /s/ GREGORY S. SMITH Gregory S. Smith Chief Executive Officer -------------------------------------------------------------------------------- EX-31.2 5 ter-ex31_2.htm EX-31.2 Exhibit 31.2 CERTIFICATIONS I, Sanjay Mehta, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: May 3, 2024 By: /s/ SANJAY MEHTA Sanjay Mehta Chief Financial Officer -------------------------------------------------------------------------------- EX-32.1 6 ter-ex32_1.htm EX-32.1 Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Teradyne, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory S. Smith, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. /s/ GREGORY S. SMITH Gregory S. Smith Chief Executive Officer May 3, 2024 -------------------------------------------------------------------------------- EX-32.2 7 ter-ex32_2.htm EX-32.2 Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Teradyne, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sanjay Mehta, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. /s/ SANJAY MEHTA Sanjay Mehta Chief Financial Officer May 3, 2024 --------------------------------------------------------------------------------