Table of Contents
false0000097210Q1--12-31Includes $1.3 million and $2.3 million in 2023 and 2022, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.” 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 debt, was divided by the average Teradyne stock price for the period. 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. Total assets are attributable to each segment. Corporate assets consist of cash and cash equivalents, marketable securities, and certain other assets. Included in Corporate and Eliminations are: interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, legal and environmental fees, severance charges, acquisition related charges and compensation and an expense for the modification of Teradyne’s former chief executive officer’s outstanding equity awards.Included in income (loss) before taxes are charges related to restructuring and other, and inventory charges. 0000097210 2023-01-01 2023-04-02 0000097210 2023-04-02 0000097210 2022-12-31 0000097210 2022-01-01 2022-04-03 0000097210 2022-04-03 0000097210 2022-01-01 2022-12-31 0000097210 2021-12-31 0000097210 2016-12-12 2016-12-12 0000097210 2023-01-31 0000097210 2020-05-01 0000097210 2022-10-05 0000097210 2023-05-01 0000097210 2023-01-01 2023-01-01 0000097210 2022-08-16 2022-08-16 0000097210 2023-01-01 0000097210 us-gaap:CashEquivalentsMember us-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0000097210 us-gaap:FairValueInputsLevel3Member 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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 April 2, 2023
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
Incorporation or Organization)
 
(I.R.S. Employer
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:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Common Stock, par value $0.125
per share
 
TER
 
Nasdaq Stock Market LLC
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 May 1, 2023 was
155,038,743
shares.
 
 


Table of Contents

TERADYNE, INC.

INDEX

 

         Page No.  
PART I. FINANCIAL INFORMATION

 

Item 1.

 

Financial Statements (Unaudited):

  
 

Condensed Consolidated Balance Sheets as of April 2, 2023 and December 31, 2022

     1  
 

Condensed Consolidated Statements of Operations for the Three Months ended April 2, 2023 and April 3, 2022

     2  
 

Condensed Consolidated Statements of Comprehensive Income for the Three Months ended April 2, 2023 and April 3, 2022

     3  
 

Condensed Statements of Convertible Common Shares and Shareholders’ Equity for the Three Months Ended April 2, 2023 and April 3, 2022

     4  
 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended April 2, 2023 and April 3, 2022

     5  
 

Notes to Condensed Consolidated Financial Statements

     6  

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     26  

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

     32  

Item 4.

 

Controls and Procedures

     33  
PART II. OTHER INFORMATION

 

Item 1.

 

Legal Proceedings

     33  

Item 1A.

 

Risk Factors

     33  

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

     34  

Item 4.

 

Mine Safety Disclosures

     34  

Item 6.

 

Exhibits

     35  


Table of Contents
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PART I
 
Item 1:
Financial Statements
TERADYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
    
April 2,
2023
   
December 31,
2022
 
    
 
   
 
 
    
(in thousands,
except per share amount)
 
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 649,208     $ 854,773  
Marketable securities
     92,895       39,612  
Accounts receivable, less allowance for credit losses of $1,973 and $1,955 at April 2, 2023 and December 31, 2022, respectively
     455,334       491,145  
Inventories, net
     352,058       325,019  
Prepayments
     549,114       532,962  
Other current assets
     13,367       14,404  
    
 
 
   
 
 
 
Total current assets
     2,111,976       2,257,915  
Property, plant and equipment, net
     432,381       418,683  
Operating lease
right-of-use
assets, net
     74,939       73,734  
Marketable securities
     116,938       110,777  
Deferred tax assets
     148,527       142,784  
Retirement plans assets
     11,650       11,761  
Other assets
     27,922       28,925  
Acquired intangible assets, net
     49,246       53,478  
Goodwill
     409,828       403,195  
    
 
 
   
 
 
 
Total assets
   $ 3,383,407     $ 3,501,252  
    
 
 
   
 
 
 
LIABILITIES
                
Current liabilities:
                
Accounts payable
   $ 142,382     $ 139,722  
Accrued employees’ compensation and withholdings
     119,433       212,266  
Deferred revenue and customer advances
     119,355       148,285  
Other accrued liabilities
     114,739       112,271  
Operating lease liabilities
     19,985       18,594  
Income taxes payable
     77,089       65,010  
Current debt
     35,109       50,115  
    
 
 
   
 
 
 
Total current liabilities
     628,092       746,263  
Retirement plans liabilities
     121,303       116,005  
Long-term deferred revenue and customer advances
     41,797       45,131  
Long-term other accrued liabilities
     16,211       15,981  
Deferred tax liabilities
     2,325       3,267  
Long-term operating lease liabilities
     65,082       64,176  
Long-term incomes taxes payable
     59,135       59,135  
    
 
 
   
 
 
 
Total liabilities
     933,945       1,049,958  
    
 
 
   
 
 
 
Commitments and contingencies (Note P)
                
SHAREHOLDERS’ EQUITY
                
Common stock, $0.125 par value, 1,000,000 shares authorized; 155,445 and 155,759 shares issued and outstanding at April 2, 2023 and December 31, 2022, respectively
     19,431       19,470  
Additional
paid-in
capital
     1,772,352       1,755,963  
Accumulated other comprehensive loss
     (36,466     (49,868
Retained earnings
     694,145       725,729  
    
 
 
   
 
 
 
Total shareholders’ equity
     2,449,462       2,451,294  
    
 
 
   
 
 
 
Total liabilities and shareholders’ equity
   $ 3,383,407     $ 3,501,252  
    
 
 
   
 
 
 
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, 2022, are an integral part of the condensed consolidated financial statements.
 
1

TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
                 
    
For the Three Months

Ended
 
    
April 2,
   
April 3,
 
    
2023
   
2022
 
    
 
   
 
 
    
(in thousands, except per share
amount)
 
Revenues:
                
Products
   $ 473,418     $ 625,875  
Services
     144,111       129,495  
    
 
 
   
 
 
 
Total revenues
     617,529       755,370  
Cost of revenues:
                
Cost of products
     198,665       243,016  
Cost of services
     62,444       57,421  
    
 
 
   
 
 
 
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)
     261,109       300,437  
    
 
 
   
 
 
 
Gross profit
     356,420       454,933  
Operating expenses:
                
Selling and administrative
     150,955       140,185  
Engineering and development
     105,762       108,116  
Acquired intangible assets amortization
     4,802       5,063  
Restructuring and other
     2,037       15,714  
    
 
 
   
 
 
 
Total operating expenses
     263,556       269,078  
    
 
 
   
 
 
 
Income from operations
     92,864       185,855  
Non-operating
(income) expense:
                
Interest income
     (5,258     (703
Interest expense
     987       1,012  
Other (income) expense, net
     51       5,187  
    
 
 
   
 
 
 
Income before income taxes
     97,084       180,359  
Income tax provision
     13,553       18,431  
    
 
 
   
 
 
 
Net income
   $ 83,531     $ 161,928  
    
 
 
   
 
 
 
Net income per common share:
                
Basic
   $ 0.54     $ 1.00  
    
 
 
   
 
 
 
Diluted
   $ 0.50     $ 0.92  
    
 
 
   
 
 
 
Weighted average common shares—basic
     155,904       162,048  
    
 
 
   
 
 
 
Weighted average common shares—diluted
     166,308       175,575  
    
 
 
   
 
 
 
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, 2022, 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
 
    
April 2,
   
April 3,
 
    
2023
   
2022
 
    
 
   
 
 
    
(in thousands)
 
Net income
   $ 83,531     $ 161,928  
Other comprehensive income
 (loss)
, net of tax:
                
Foreign currency translation adjustment, net of tax of $0 and $0, respectively
     9,309       (8,076
Available-for-sale
marketable securities:
                
Unrealized gains (losses) on marketable securities arising during period, net of tax of $503 and $(1,333), respectively
     2,294       (5,388
Less: Reclassification adjustment for losses (gains) included in net income, net of tax of $2 and $(18), respectively
     5       (65
    
 
 
   
 
 
 
       2,299       (5,453
Cash flow hedges:
                
Unrealized gains arising during period, net
of
tax of $167, $0, respectively
     596       —    
Less: Reclassification adjustment for losses included in net income, net of tax of $338 and $0, respectively
     1,200       —    
    
 
 
   
 
 
 
       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)
     13,402       (13,531
    
 
 
   
 
 
 
Comprehensive income
   $ 96,933     $ 148,397  
    
 
 
   
 
 
 
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, 2022, are an integral part of the condensed consolidated financial statements.
 
3

TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE COMMON SHARES
AND SHAREHOLDERS’ EQUITY
(Unaudited)
 
          
Shareholders’ Equity
 
    
Convertible
Common
Shares
Value
   
Common
Stock Shares
   
Common
Stock Par
Value
   
Additional
Paid-in Capital
   
Accumulated
Other
Comprehensive
(Loss) Income
   
Retained
Earnings
   
Total
Shareholders’
Equity
 
    
 
   
 
   
 
   
 
   
 
   
 
   
 
 
          
(in thousands)
 
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
                                     13,402               13,402  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, April 2, 2023
   $ —         155,445     $ 19,431     $ 1,772,352     $ (36,466   $ 694,145     $ 2,449,462  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
For the Three Months Ended April 3, 2022
                                                        
Balance, December 31, 2021
   $ 1,512       162,251     $ 20,281     $ 1,811,545     $ (5,948   $ 736,566     $ 2,562,444  
Net issuance of common stock under stock-based plans
             552       70       (14,644                     (14,574
Stock-based compensation expense
                             14,204                       14,204  
Repurchase of common stock
             (1,750     (219                     (211,247     (211,466
Cash dividends ($0.11 per share)
                                             (17,908     (17,908
Settlements of convertible notes
             509       64       (157                     (93
Exercise of convertible notes hedge call options
             (509     (64     64                       —    
Cumulative-effect of change in accounting principle related to convertible debt
     (1,512                     (99,322             92,850       (6,472
Net income
                                             161,928       161,928  
Other comprehensive loss
                                     (13,531             (13,531
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, April 3, 2022
   $ —         161,053     $ 20,132     $ 1,711,690     $ (19,479   $ 762,189     $ 2,474,532  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
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, 2022, 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
 
    
April 2,
   
April 3,
 
    
2023
   
2022
 
    
 
   
 
 
    
(in thousands)
 
Cash flows from operating activities:
                
Net income
   $ 83,531     $ 161,928  
Adjustments to reconcile net income from operations to net cash provided by operating activities:
                
Depreciation
     22,680       22,503  
Stock-based compensation
     18,885       12,894  
Provision for excess and obsolete inventory
     5,610       1,590  
Amortization
     4,926       5,233  
Deferred taxes
     (7,634     11,288  
(Gains) losses on investments
     (2,238     2,001  
Other
     108       177  
Changes in operating assets and liabilities
                
Accounts receivable
     37,204       208  
Inventories
     (23,697     (9,480
Prepayments and other assets
     (15,380     (74,305
Accounts payable and other accrued expenses
     (83,208     (124,382
Deferred revenue and customer advances
     (32,705     6,747  
Retirement plan contributions
     (1,234     (1,329
Income taxes
     12,488       (7,611
    
 
 
   
 
 
 
Net cash provided by operating activities
     19,336       7,462  
    
 
 
   
 
 
 
Cash flows from investing activities:
                
Purchases of property, plant and equipment
     (41,444     (43,999
Purchases of marketable securities
     (69,276     (165,977
Proceeds from sales of marketable securities
     7,929       30,581  
Proceeds from maturities of marketable securities
     7,468       96,682  
Proceeds from life insurance
     460       —    
    
 
 
   
 
 
 
Net cash used for investing activities
     (94,863     (82,713
    
 
 
   
 
 
 
Cash flows from financing activities:
                
Issuance of common stock under stock purchase and stock option plans
     15,997       16,475  
Repurchase of common stock
     (93,308     (201,465
Payments related to net settlement of employee stock compensation awards
     (19,870     (31,048
Dividend payments
     (17,165     (17,895
Payments of convertible debt principal
     (15,155     (20,694
    
 
 
   
 
 
 
Net cash used for financing activities
     (129,501     (254,627
    
 
 
   
 
 
 
Effects of exchange rate changes on cash and cash equivalents
     (537     2,282  
    
 
 
   
 
 
 
Decrease in cash and cash equivalents
     (205,565     (327,596
Cash and cash equivalents at beginning of period
     854,773       1,122,199  
    
 
 
   
 
 
 
Cash and cash equivalents at end of period
   $ 649,208     $ 794,603  
    
 
 
   
 
 
 
Non-cash
investing activities:
                
Capital expenditures incurred but not yet paid:
   $ 3,823     $ 2,500  
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, 2022, 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 automatic test systems and robotics products. Teradyne’s automatic 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 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. Teradyne’s 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.
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. Certain prior year amounts may have been reclassified to conform to the current year presentation. The December 31, 2022 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, 2023, for the year ended December 31, 2022.
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 of assets, liabilities, revenues and expenses, and related disclosures 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 judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Due to the
COVID-19
pandemic, there has been uncertainty and disruption in the global economy and our markets. 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
For the three months ended April 2, 2023, there were no recently issued accounting pronouncements that had, or are expected to have, a material impact to Teradyne’s consolidated financial statements.
 
6

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.
 
    
Semiconductor Test
           
Robotics
                     
    
System on-
a-Chip
    
Memory
    
System
Test
    
Universal
Robots
    
Mobile
Industrial
Robots
    
Wireless
Test
    
Corporate
and
Eliminations
   
Total
 
    
 
    
 
    
 
    
 
    
 
    
 
    
 
   
 
 
    
(in thousands)
 
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  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
For the Three Months Ended April 3, 2022 (1)
                                                                      
Timing of Revenue Recognition
                                                                      
Point in Time
   $ 323,456      $ 88,723      $ 105,288      $ 83,182      $ 16,744      $ 48,429      $ (346   $ 665,476  
Over Time
     63,129        7,033        13,380        2,102        1,161        3,089        —         89,894  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total
   $ 386,585      $ 95,756      $ 118,668      $ 85,284      $ 17,905      $ 51,518      $ (346   $ 755,370  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Geographical Market
                                                                      
Asia Pacific
   $ 340,741      $ 93,151      $ 73,784      $ 18,621      $ 2,592      $ 34,946      $ —       $ 563,835  
Americas
     29,714        2,046        36,608        28,148        8,564        9,687        (346     114,421  
Europe, Middle East and Africa
     16,130        559        8,276        38,515        6,749        6,885        —         77,114  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total
   $ 386,585      $ 95,756      $ 118,668      $ 85,284      $ 17,905      $ 51,518      $ (346   $ 755,370  
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
 
(1)
Includes $1.3 million and $2.3 million in 2023 and 2022, 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 April 2, 2023 and April 3, 2022, Teradyne recognized $50.7 million and $35.0 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 April 2, 2023, Teradyne had $1,240.7 million of unsatisfied performance obligations. Teradyne expects to recognize 88% of the remaining performance obligations in the next 12 months and 12% in
1-3
years.
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:
 
    
April 2, 2023
    
December 31, 2022
 
    
 
    
 
 
    
(in thousands)
 
Maintenance, service and training
   $ 70,609      $ 78,089  
Extended warranty
     49,343        56,180  
Customer advances, undelivered elements and other
     41,200        59,147  
    
 
 
    
 
 
 
Total deferred revenue and customer advances
   $ 161,152      $ 193,416  
    
 
 
    
 
 
 
 
7

Accounts Receivable
During the three months ended April 2, 2023 and April 3, 2022, 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 April 2, 2023 and April 3, 2022, total trade accounts receivable sold under the factoring agreements were $34.2 million and $19.4 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. INVENTORIES 

Inventories, net consisted of the following at April 2, 2023 and December 31, 2022:
 
    
April 2, 2023
    
December 31, 2022
 
    
 
    
 
 
    
(in thousands)
 
Raw material
   $ 264,035      $ 256,065  
Work-in-process
     43,987        37,982  
Finished goods
     44,036        30,972  
    
 
 
    
 
 
 
     $ 352,058      $ 325,019  
    
 
 
    
 
 
 
Inventory reserves at April 2, 2023 and December 31, 2022 were $138.6 million and $136.8 million, respectively.
F
. 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. Contingent consideration is classified as Level 3. 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 April 2, 2023 and April 3, 2022, 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 April 2, 2023 and April 3, 2022 were $0.3 million and $0.4 million, respectively. Realized losses recorded in the three months ended April 2, 2023 and April 3, 2022 were $0.1 million and $0.2 million, respectively. Realized gains and losses are included in other (income) expense, net.
Unrealized gains on equity securities recorded in the three months ended April 2, 2023 were $2.0 million. Unrealized losses on equity securities recorded in the three months ended April 3, 2022 were $2.2 million. 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.
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 April 2, 2023 and December 31, 2022.
 
8

    
April 2, 2023
 
    
Quoted Prices

in Active

Markets for

Identical

Instruments

(Level 1)
    
Significant

Other

Observable

Inputs

(Level 2)
    
Significant

Unobservable

Inputs

(Level 3)
    
Total
 
                             
    
(in thousands)
 
Assets
                                   
Cash
   $ 244,542      $ —        $ —        $ 244,542  
Cash equivalents
     252,374        152,292        —          404,666  
Available-for-sale
securities:
                                   
U.S. Treasury securities
     —          52,168        —          52,168  
Corporate debt securities
     —          51,369        —          51,369  
Commercial paper
     —          47,548        —          47,548  
U.S. government agency securities
     —          7,394        —          7,394  
Debt mutual funds
     6,800        —          —          6,800  
Certificates of deposit and time deposits
     —          1,754        —          1,754  
Non-U.S.
government securities
     —          554        —          554  
Equity securities:
                                   
Mutual funds
     42,246        —          —          42,246  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 545,962      $ 313,079      $ —        $ 859,041  
    
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities
                                   
Derivative liabilities
   $ —        $ 1,980      $ —        $ 1,980  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ —        $ 1,980      $ —        $ 1,980  
    
 
 
    
 
 
    
 
 
    
 
 
 
Reported as follows:
 
    
(Level 1)
    
(Level 2)
    
(Level 3)
    
Total
 
                             
    
(in thousands)
 
Assets
                                   
Cash and cash equivalents
   $ 496,916      $ 152,292      $ —        $ 649,208  
Marketable securities
     —          92,895        —          92,895  
Long-term marketable securities
     49,046        67,892        —          116,938  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 545,962      $ 313,079      $ —        $ 859,041  
    
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities
                                   
Other current liabilities
   $ —        $ 1,980      $ —        $ 1,980  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ —        $ 1,980      $ —        $ 1,980  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
9

    
December 31, 2022
 
    
Quoted Prices

in Active

Markets for

Identical

Instruments

(Level 1)
    
Significant

Other

Observable

Inputs

(Level 2)
    
Significant

Unobservable

Inputs

(Level 3)
    
Total
 
                             
    
(in thousands)
 
Assets
                                   
Cash
   $ 632,417      $ —        $ —        $ 632,417  
Cash equivalents
     161,767        60,589        —          222,356  
Available for sale securities:
                                   
Corporate debt securities
     —          50,856        —          50,856  
U.S. Treasury securities
     —          39,649        —          39,649  
Commercial paper
     —          7,159        —          7,159  
Debt mutual funds
     6,580        —          —          6,580  
U.S. government agency securities
     —          6,352        —          6,352  
Certificates of deposit and time deposits
     —          1,740        —          1,740  
Non-U.S.
government securities
     —          535        —          535  
Equity securities:
                                   
Mutual funds
     37,518        —          —          37,518  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 838,282      $ 166,880      $ —        $ 1,005,162  
Derivative assets
     —          86        —          86  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 838,282      $ 166,966      $ —        $ 1,005,248  
    
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities
                                   
Derivative liabilities
   $ —        $ 4,215      $ —        $ 4,215  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ —        $ 4,215      $ —        $ 4,215  
    
 
 
    
 
 
    
 
 
    
 
 
 
Reported as follows:
 
    
(Level 1)
    
(Level 2)
    
(Level 3)
    
Total
 
                             
    
(in thousands)
 
Assets
                                   
Cash and cash equivalents
   $ 794,184      $ 60,589      $ —        $ 854,773  
Marketable securities
     —          39,612        —          39,612  
Long-term marketable securities
     44,098        66,679        —          110,777  
Prepayments
     —          86        —          86  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 838,282      $ 166,966      $ —        $ 1,005,248  
    
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities
                                   
Other current liabilities
   $ —        $ 4,215      $ —        $ 4,215  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ —        $ 4,215      $ —        $ 4,215  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
The carrying amounts and fair values of Teradyne’s financial instruments at April 2, 2023 and December 31, 2022 were as follows:
 
    
April 2, 2023
    
December 31, 2022
 
    
Carrying Value
    
Fair Value
    
Carrying Value
    
Fair Value
 
                             
    
(in thousands)
 
Assets
                                   
Cash and cash equivalents
   $ 649,208      $ 649,208      $ 854,773      $ 854,773  
Marketable securities
     209,833        209,833        150,389        150,389  
Derivative assets
     —          —          86        86  
Liabilities
                                   
Derivative liabilities
     1,980        1,980        4,215        4,215  
Convertible debt
     35,109        119,586        50,115        139,007  
 
10

The fair values of accounts receivable, net and accounts payable approximate the carrying value due to the short-term nature of these instruments.
The following table summarizes the composition of
available-for-sale
marketable securities at April 2, 2023:
 
    
April 2, 2023
 
    
Available-for-Sale
        
    
Cost
    
Unrealized

Gain
    
Unrealized

(Loss)
   
Fair Market

Value
    
Fair Market

Value of

Investments

with Unrealized

Losses
 
                                   
    
(in thousands)
 
U.S. Treasury securities
   $ 55,615      $ 38      $ (3,485   $ 52,168      $ 49,669  
Corporate debt securities
     56,040        41        (4,712     51,369        49,131  
Commercial paper
     47,225        337        (14     47,548        16,845  
U.S. government agency securities
     7,427        9        (42     7,394        4,419  
Debt mutual funds
     7,130        —          (330     6,800        3,312  
Certificates of deposit and time deposits
     1,754        —          —         1,754        —    
Non-U.S.
government securities
     554        —          —         554        —    
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
     $ 175,745      $ 425      $ (8,583   $ 167,587      $ 123,376  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
Reported as follows:
 
    
Cost
    
Unrealized

Gain
    
Unrealized

(Loss)
   
Fair Market

Value
    
Fair Market

Value of

Investments

with Unrealized

Losses
 
                                   
    
(in thousands)
 
Marketable securities
   $ 92,915      $ 337      $ (357   $ 92,895      $ 60,438  
Long-term marketable securities
     82,830        88        (8,226     74,692        62,938  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
     $ 175,745      $ 425      $ (8,583   $ 167,587      $ 123,376  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
The following table summarizes the composition of
available-for-sale
marketable securities at December 31, 2022:
 
    
December 31, 2022
 
    
Available-for-Sale
        
    
Cost
    
Unrealized

Gain
    
Unrealized

(Loss)
   
Fair Market

Value
    
Fair Market

Value of

Investments

with Unrealized

Losses
 
                                   
    
(in thousands)
 
Corporate debt securities
   $ 57,006      $ 3      $ (6,153   $ 50,856      $ 50,667  
U.S. Treasury securities
     44,030        —          (4,381     39,649        39,649  
Commercial paper
     7,089        70        —         7,159        —    
Debt mutual funds
     6,997        —          (417     6,580        3,095  
U.S. government agency securities
     6,442        —          (90     6,352        6,352  
Certificates of deposit and time deposits
     1,740        —          —         1,740        —    
Non-U.S.
government securities
     535        —          —         535        —    
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
     $ 123,839      $ 73      $ (11,041   $ 112,871      $ 99,763  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
 
11

Reported as follows:
 
    
Cost
    
Unrealized

Gain
    
Unrealized

(Loss)
   
Fair Market

Value
    
Fair Market

Value of

Investments

with Unrealized

Losses
 
                                   
    
(in thousands)
 
Marketable securities
   $ 39,950      $ 70      $ (408   $ 39,612      $ 30,713  
Long-term marketable securities
     83,889        3        (10,633     73,259        69,050  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
     $ 123,839      $ 73      $ (11,041   $ 112,871      $ 99,763  
    
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
As of April 2, 2023, the fair market value of investments with unrealized losses less than one year and greater than one year totaled $68.4 million and $55.0 million, respectively. As of December 31, 2022, the fair market value of investments with unrealized losses for less than one year and greater than one year totaled $66.3 million and $33.4 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 April 2, 2023 and December 31, 2022 were not other than temporary.
The contractual maturities of investments in
available-for-sale
securities held at April 2, 2023 were as follows:
 
    
April 2, 2023
 
    
Cost
    
Fair Market

Value
 
               
    
(in thousands)
 
Due within one year
   $ 92,915      $ 92,895  
Due after 1 year through 5 years
     31,721        30,672  
Due after 5 years through 10 years
     5,022        4,612  
Due after 10 years
     38,957        32,608  
    
 
 
    
 
 
 
Total
   $ 168,615      $ 160,787  
    
 
 
    
 
 
 
Contractual maturities of investments in
available-for-sale
securities held at April 2, 2023 exclude debt mutual funds with a fair market value of $6.8 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.
 
12

At April 2, 2023 and December 31, 2022, 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:
 
    
April 2, 2023
   
December 31, 2022
 
    
Buy

Position
   
Sell

Position
    
Net

Total
   
Buy

Position
   
Sell

Position
    
Net

Total
 
                                        
    
(in millions)
 
Japanese Yen
   $ (57.7   $ —        $ (57.7   $ (37.1   $ —        $ (37.1
Taiwan Dollar
     (38.3     —          (38.3     (29.2     —          (29.2
Korean Won
     (3.1     —          (3.1     (6.4     —          (6.4
British Pound Sterling
     (1.2     —          (1.2     (1.2     —          (1.2
Singapore Dollar
     —         35.7        35.7       —         33.5        33.5  
Euro
     —         24.3        24.3       —         38.4        38.4  
Philippine Peso
     —         2.5        2.5       —         2.7        2.7  
Chinese Yuan
     —         1.9        1.9       —         2.2        2.2  
    
 
 
   
 
 
    
 
 
   
 
 
   
 
 
    
 
 
 
Total
   $ (100.3   $ 64.4      $ (35.9   $ (73.9   $ 76.8      $ 2.9  
    
 
 
   
 
 
    
 
 
   
 
 
   
 
 
    
 
 
 
The fair value of the outstanding contracts was a loss of $1.1 million and $0.9 million, respectively, at April 2, 2023 and December 31, 2022.
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 April 2, 2023 and December 31, 2022, 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:
 
    
April 2, 2023
    
December 31, 2022
 
    
Buy

Position
   
Sell

Position
    
Net

Total
    
Buy

Position
   
Sell

Position
    
Net

Total
 
                                         
    
(in millions)
 
Japanese Yen
   $ (13.6   $ 30.2      $ 16.6      $ (23.4   $ 61.2      $ 37.8  
Taiwan Dollar
     —         —          —          (5.5     10.9        5.4  
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
Total
   $ (13.6   $ 30.2      $ 16.6      $ (28.9   $ 72.1      $ 43.2  
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
    
 
 
 
The fair value of the outstanding cash flow hedge contracts was a loss of $0.9 
million and $3.2 million at April 2, 2023 and December 31, 2022, respectively.
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.
The following table summarizes the fair value of derivative instruments as of April 2, 2023 and December 31, 2022:
 
    
Balance Sheet Location
    
April 2,

2023
    
December 31,

2022
 
                      
           
(in thousands)
 
Derivatives not designated as hedging instruments:
                          
Foreign exchange forward contracts
     Prepayments      $ —        $ 86  
Foreign exchange forward contracts
     Other current liabilities        (1,057      (990
Derivatives designated as hedging instruments:
                          
Foreign exchange option contracts
     Other current liabilities        (923      (3,225
             
 
 
    
 
 
 
Total derivatives
            $ (1,980    $ (4,129
             
 
 
    
 
 
 
 
13

The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three months ended April 2, 2023 and April 3, 2022:
 
           
For the Three Months

Ended
 
    
Location of Losses (Gains)

Recognized in Statement

of Operations
    
April 2, 2023
    
April 3, 2022
 
                      
           
(in thousands)
 
Derivatives not designated as hedging instruments:
                          
Foreign exchange forward contracts
     Other (income) expense, net      $ 1,259      $ (1,752
Derivatives designated as hedging instruments:
                          
Foreign exchange option contracts
     Revenue        1,538        —    
             
 
 
    
 
 
 
Total Derivatives
            $ 2,797      $ (1,752
             
 
 
    
 
 
 
 
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 April 2, 2023 and April 3, 2022 net losses from remeasurement of monetary assets and liabilities denominated in foreign currencies were $0.4 million, and $4.3 million, respectively.
See Note G: “Debt” regarding derivatives related to the convertible senior notes.
G
. 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”) due December 15, 2023 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 will mature on December 15, 2023, unless earlier repurchased or converted. The Notes bear interest at a rate of 1.25% per year payable semiannually in arrears on June 15 and December 15 of each year. The Notes will be convertible at the option of the noteholders at any time prior to the close of business on the business day immediately preceding September 15, 2023, only under the following circumstances: (1) during any calendar quarter beginning after March 31, 2017 (and only during such calendar quarter), if the closing sale price of Teradyne’s common stock, for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the closing sale price of the Teradyne’s common stock and the conversion rate on each such trading day; and (3) upon the occurrence of specified corporate events. On or after September 15, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Notes at any time, regardless of the foregoing circumstances. Teradyne may satisfy its future conversion obligation by paying cash for the principal amount of the Notes and paying or delivering cash, shares of its common stock or a combination of cash and shares of its common stock, at Teradyne’s election for the amount in excess of principal. On November 4, 2021, Teradyne made an irrevocable election under the Indenture to require the principal portion of the remaining Notes to be settled in cash. As of April 2, 2023, the conversion price was approximately $31.44 per share of Teradyne’s common stock. The conversion rate is subject to adjustment under certain circumstances. As of May 5, 2023, one hundred and thirty debt holders had exercised the option to convert $427.2 million worth of notes.
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, with a strike price equal to the conversion price of the Notes of $31.44.
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. The Warrant Transactions currently cover, subject to customary anti-dilution adjustments, approximately 14.6 million shares of common stock. As of April 2, 2023, the strike price of the warrants was approximately $39.46 per share. The strike price is subject to adjustment under certain circumstances. The Warrant Transactions could have a dilutive effect to Teradyne’s common stock 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.
 
14

The Note Hedge Transactions are expected to reduce the potential dilution to Teradyne’s common stock upon any conversion of the Notes. However, the Warrant Transactions could separately have a dilutive effect to the extent that the market value per share of Teradyne’s common stock exceeds the applicable strike price of the warrant. The net cost of the Note Hedge Transactions, after being partially offset by the proceeds from the sale of the warrants, was approximately $33.0 million.
In connection with establishing their initial hedge of these convertible note hedge and warrant transactions, the Option Counterparties have entered into various derivative transactions with respect to Teradyne’s common stock and/or purchased shares of Teradyne’s common stock or other securities, including the Notes, concurrent with, or shortly after, the pricing of the Notes. In addition, the Option Counterparties may modify their hedge positions by entering into or unwinding various derivative transactions with respect to Teradyne’s common stock or by selling Teradyne’s common stock or other securities, including the Notes, in secondary market transactions (and may do so during any observation period related to the conversion of the Notes). These activities could adversely affect the value of Teradyne’s common stock and the Notes.
Originally, Teradyne allocated $100.8 million of the $460.0 million principal amount of the Notes to the equity component, which represented a discount to the debt and was amortized to interest expense using the effective interest method through December 2023. Effective January 1, 2022, Teradyne adopted ASC
2020-06
using the modified retrospective method of transition and accounts for the debt as a single liability measured at its amortized cost. As a result of the adoption, Teradyne recorded an increase of $1.4 million to current debt for unsettled shares, an increase of $1.8 million to deferred tax assets, an increase of $6.6 million to long-term debt for unamortized debt discount, and an increase to retained earnings of $94.6 million for the reclassification of the equity component. Mezzanine equity representing unsettled shares value was reduced to zero and additional
paid-in
capital was reduced by $100.8 million.
Debt issuance fees at April 2, 2023, have been fully amortized to interest expense using the effective interest method over the seven-year term of the Notes.
The tables below represent the key components of Teradyne’s convertible senior notes:
 
    
April 2,

2023
    
December 31,

2022
 
               
    
(in thousands)
 
Debt principal
   $ 35,109      $ 50,228  
Unamortized debt issuance fees
     —          113  
    
 
 
    
 
 
 
Net carrying amount of convertible debt
   $ 35,109      $ 50,115  
    
 
 
    
 
 
 
Teradyne’s convertible senior notes were reported as current debt at April 2, 2023 and December 31, 2022.
The interest expense on Teradyne’s convertible senior notes for the three months ended April 2, 2023 and April 3, 2022 was as follows:
 
    
For the Three Months

Ended
 
    
April 2,

2023
    
April 3,

2022
 
               
    
(in thousands)
 
Contractual interest expense on the coupon
   $ 138      $ 311  
Amortization of the issue fees recognized as interest expense
     113        66  
    
 
 
    
 
 
 
Total interest expense on the convertible debt
   $ 251      $ 377  
    
 
 
    
 
 
 
As of April 2, 2023, the conversion price was approximately $31.44 per share and the if converted value of the notes was $120.0 million.
Additional conversions of approximately $2.3 million of debt principal will occur in the second quarter of 2023.
Teradyne expects to make principal interest payments of $0.4 million in the next 12 months.
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”).
 
15

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 5, 2023, the Credit Agreement was undrawn and Teradyne was in compliance with all covenants under the Credit Agreement.
H
. PREPAYMENTS
Prepayments consist of the following:
 
    
April 2,

2023
    
December 31,

2022
 
               
    
(in thousands)
 
Contract manufacturer and supplier prepayments
   $ 494,849      $ 491,105  
Prepaid taxes
     22,677        18,625  
Prepaid maintenance and other services
     16,591        14,545  
Other prepayments
     14,997        8,687  
    
 
 
    
 
 
 
Total prepayments
   $ 549,114      $ 532,962  
    
 
 
    
 
 
 
I
. 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
 
    
April 2,

2023
    
April 3,

2022
 
               
    
(in thousands)
 
Balance at beginning of period
   $ 14,181      $ 24,577  
Accruals for warranties issued during the period
     4,117        4,100  
Accruals related to
pre-existing
warranties
     (405      (2,758
Settlements made during the period
     (4,992      (5,814
    
 
 
    
 
 
 
Balance at end of period
   $ 12,901      $ 20,105  
    
 
 
    
 
 
 
 
16

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
 
    
April 2,

2023
    
April 3,

2022
 
               
    
(in thousands)
 
Balance at beginning of period
   $ 56,180      $ 64,168  
Deferral of new extended warranty revenue
     4,413        11,774  
Recognition of extended warranty deferred revenue
     (11,250      (10,216
    
 
 
    
 
 
 
Balance at end of period
   $ 49,343      $ 65,726  
    
 
 
    
 
 
 
J
. 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 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
 
17

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
During the three months ended April 2, 2023 and April 3, 2022, Teradyne granted 0.5 million and 0.4 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of $102.36 and $111.31, respectively.
During the three months ended April 2, 2023 and April 3, 2022, Teradyne granted 0.1 million of PBIT PRSUs with a grant date fair value of $102.23 and $110.84, respectively.
During the three months ended April 2, 2023 and April 3, 2022, Teradyne granted 0.1 million of TSR PRSUs, with a grant date fair value of $137.64 and $101.06, respectively. The fair value was estimated using the Monte Carlo simulation model with the following assumptions:
 
    
For the Three Months

Ended
 
    
April 2,

2023
   
April 3,

2022
 
Risk-free interest rate
     3.9     1.4
Teradyne volatility-historical
     50.2     47.1
NYSE Composite Index volatility-historical
     24.8     22.7
Dividend yield
     0.4     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 $0.44 per share divided by Teradyne’s stock price on the grant date of $103.44 for the 2023 grant and an estimated annual dividend amount of $0.44 per share divided by Teradyne’s stock price on the grant date of $112.12 for the 2022 grant.
During the three months ended April 2, 2023 and April 3, 2022, Teradyne granted 0.1 million of service-based stock options to executive officers at a weighted average grant date fair value of $40.90 and $39.01, respectively.
The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:
 
    
For the Three Months

Ended
 
    
April 2,

2023
   
April 3,

2022
 
Expected life (years)
     4.0       4.0  
Risk-free interest rate
     3.7     1.6
Volatility-historical
     46.7     43.7
Dividend yield
     0.4     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 $0.44 per share divided by Teradyne’s stock price on the grant date of $103.44 for the 2023 grant and an estimated annual dividend amount of $0.44 per share divided by Teradyne’s stock price on the grant date of $112.12 for the 2022 grant.
 
18

K
. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss), which are presented net of tax, consist of the following:
 
    
Foreign

Currency

Translation

Adjustment
   
Unrealized
(Losses)
Gains on

Marketable

Securities
   
Unrealized
(Losses)
Gains on
Cash Flow
Hedges
   
Retirement

Plans
Prior

Service

Credit
   
Total
 
                                
    
(in thousands)
 
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, 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
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Three Months Ended April 3, 2022
                                        
Balance at December 31, 2021, net of tax of $0, $1,055, $0, $(1,128), respectively
   $ (10,818   $ 3,704     $ —       $ 1,166     $ (5,948
Other comprehensive loss before reclassifications, net of tax of $0, $(1,333), $0, $0, respectively
     (8,076     (5,388     —         —         (13,464
Amounts reclassified from accumulated other comprehensive income, net of tax of $0, $(18), $0, $0, respectively
     —         (65     —         (2     (67
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Net current period other comprehensive loss, net of tax of $0, $(1,351), $0, $0, respectively
     (8,076     (5,453     —         (2     (13,531
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance at April 3, 2022, net of tax of $0, $(296), $0, $(1,128), respectively
   $ (18,894   $ (1,749   $ —       $ 1,164     $ (19,479
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Reclassifications out of accumulated other comprehensive income (loss) to the statement of operations for the three months ended April 2, 2023 and April 3, 2022, were as follows:
 
Details about Accumulated Other Comprehensive Income (Loss) Components
  
For the Three Months

Ended
    
Affected Line Item

in the Statements

of Operations
 
    
April 2,
    
April 3,
        
    
2023
    
2022
        
                      
    
(in thousands)
        
Available-for-sale
marketable securities:
                          
Unrealized (losses) gains, net of tax of $(2) and $18, respectively
   $ (5    $ 65        Other (income)
expense, net
 
 
Cash flow hedges:
                          
Unrealized losses, net of tax of $(338) and $0, respectively
     (1,200      —          Revenue  
Defined benefit pension and postretirement plans:
                          
Amortization of prior service benefit, net of tax of $0 and $0, respectively
     2        2        (a)  
    
 
 
    
 
 
          
Total reclassifications, net of tax of $(340) and $18, respectively
   $ (1,203    $ 67        Net income  
    
 
 
    
 
 
          
 
(a)
The amortization of prior service credit is included in the computation of net periodic postretirement benefit cost. See Note
O
: “Retirement Plans.”
 
19

L
. 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 April 2, 2023, 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 April 2, 2023, were as follows:
 
    
Robotics
    
Wireless

Test
   
Semiconductor

Test
   
System

Test
   
Total
 
                                 
    
(in thousands)
 
Balance at December 31, 2022
                                         
Goodwill
   $ 383,166      $ 361,819     $ 262,077     $ 158,699     $ 1,165,761  
Accumulated impairment losses
     —          (353,843     (260,540     (148,183     (762,566
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
       383,166        7,976       1,537       10,516       403,195  
Foreign currency translation adjustment
     6,609        —         24       —         6,633  
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
Balance at April 2, 2023
                                         
Goodwill
     389,775        361,819       262,101       158,699       1,172,394  
Accumulated impairment losses
     —          (353,843     (260,540     (148,183     (762,566
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
     $ 389,775      $ 7,976     $ 1,561     $ 10,516     $ 409,828  
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
 
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:
 
    
Gross

Carrying

Amount
    
Accumulated

Amortization
    
Foreign

Currency

Translation

Adjustment
    
Net

Carrying

Amount
 
                             
    
(in thousands)
 
Balance at April 2, 2023
        
Developed technology
   $ 270,967      $ (237,269    $ (5,560    $ 28,138  
Customer relationships
     57,739        (51,756      184        6,167  
Tradenames and trademarks
     59,387        (43,101      (1,345      14,941  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total intangible assets
   $ 388,093      $ (332,126    $ (6,721    $ 49,246  
    
 
 
    
 
 
    
 
 
    
 
 
 
Balance, December 31, 2022
                                   
Developed technology
   $ 270,967      $ (234,208    $ (5,935    $ 30,824  
Customer relationships
     57,739        (51,186      172        6,725  
Tradenames and trademarks
     59,387        (41,930      (1,528      15,929  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total intangible assets
   $ 388,093      $ (327,324    $ (7,291    $ 53,478  
    
 
 
    
 
 
    
 
 
    
 
 
 
Aggregate intangible asset amortization expense for the three months ended April 2, 2023 and April 3, 2022 was $4.8 million and $5.1 million, respectively.
Estimated intangible asset amortization expense for each of the five succeeding fiscal years and thereafter is as follows:
 
Year
  
Amortization Expense
 
    
(in thousands)
 
2023
   $ 14,219  
2024
     18,749  
2025
     11,320  
2026
     2,371  
2027
     1,155  
Thereafter
     1,432  
 
20

M
. 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
 
    
April 2,
    
April 3,
 
    
2023
    
2022
 
               
    
(in thousands, except per share
amounts)
 
Net income for basic and diluted net income per share
   $ 83,531      $ 161,928  
    
 
 
    
 
 
 
Weighted average common shares-basic
     155,904        162,048  
Effect of dilutive potential common shares:
                 
Convertible note hedge warrant shares (1)
     8,983        10,028  
Incremental shares from assumed conversion of convertible notes (2)
     914        2,541  
Restricted stock units
     453        875  
Stock options
     48        69  
Employee stock purchase plan
     6        14  
    
 
 
    
 
 
 
Dilutive potential common shares
     10,404        13,527  
    
 
 
    
 
 
 
Weighted average common shares-diluted
     166,308        175,575  
    
 
 
    
 
 
 
Net income per common share-basic
   $ 0.54      $ 1.00  
    
 
 
    
 
 
 
Net income per common share-diluted
   $ 0.50      $ 0.92  
    
 
 
    
 
 
 
 
(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 debt, 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 April 2, 2023 and April 3, 2022 excludes the effect of the potential vesting of 0.5 million and 0.1 million, respectively, of restricted stock units because the effect would have been anti-dilutive.
N
. RESTRUCTURING AND OTHER
During the three months ended April 2, 2023, Teradyne recorded $2.0 million of severance charges related to headcount reductions of 67 people primarily in Semiconductor Test, Robotics and Corporate.
During the three months ended April 3, 2022, Teradyne recorded a charge of $14.7 million related to the arbitration claim filed against Teradyne and AutoGuide related to an
earn-out
dispute, which was settled on March 25, 2022 for $26.7 million.
O
. 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 of 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.
 
21

In the three months ended April 2, 2023 and April 3, 2022, Teradyne contributed $0.8 million and $0.8 million, respectively, to the U.S. supplemental executive defined benefit pension plan, and $0.2 million and $0.3 million, respectively, to certain qualified pension plans for
non-U.S.
subsidiaries.
For the three months ended April 2, 2023 and April 3, 2022, Teradyne’s net periodic pension cost was comprised of the following:
 
    
For the Three Months Ended
 
    
April 2,

2023
    
April 3,

2022
 
    
United States
    
Foreign
    
United States
    
Foreign
 
                             
    
(in thousands)
 
Service cost
   $ 272      $ 109      $ 397      $ 206  
Interest cost
     1,711        262        1,222        118  
Expected return on plan assets
     (1,285      (9      (732      (20
    
 
 
    
 
 
    
 
 
    
 
 
 
Total net periodic pension cost
   $ 698      $ 362      $ 887      $ 304  
    
 
 
    
 
 
    
 
 
    
 
 
 
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 availab