10-Q
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falseP60Y2017-06-150000097210Q1--12-31Includes $3.1 million and $1.8 million in 2021 and 2020, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.”The carrying value represents the bifurcated debt component only, while the fair value is based on quoted market prices for the convertible note, which includes the equity conversion features.The amortization of prior service credit is included in the computation of net periodic postretirement benefit cost. See Note P: “Retirement Plans.”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 of $31.55, multiplied by 13.8 million 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 of $39.59, multiplied by 13.8 million 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. Included in income (loss) before taxes are charges and credits related to restructuring and other, loss on convertible debt conversions and inventory charges. Included in Corporate and Other are: contingent consideration adjustments, loss on convertible debt conversions, interest income, interest expense, net foreign exchange gains (losses), pension, intercompany eliminations and acquisition related charges, legal fees and compensation. Total assets are attributable to each segment. Corporate assets consist of cash and cash equivalents, marketable securities and certain other assets. In the three months ended April 4, 2021, the fair value of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide was reduced to zero, which resulted in a benefit of $7.2 million, primarily due to a decrease in forecasted revenues and earnings before interest and taxes. As of April 4, 2021, the maximum amount of contingent consideration that could be paid in connection with the acquisition of AutoGuide is $100.2 million. The remaining earn-out periods end on December 31, 2021 and December 31, 2022. The sellers of AutoGuide have filed an arbitration claim against Teradyne related to the earn-out alleging non-compliance with the earn-out provisions of the AutoGuide acquisition agreement. Teradyne disputes the allegations of non-compliance. The ultimate amount of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide may be affected by the outcome of the dispute.In the three months ended March 29, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisitions of Mobile Industrial Robots Aps (“MiR”) and AutoGuide decreased by $2.9 million and $7.1 million, respectively, due to lower forecasts.In the three months ended March 29, 2020, Teradyne paid $8.9 million of contingent consideration for the earn-out in connection with the acquisition of MiR. 0000097210 2021-01-01 2021-04-04 0000097210 2021-04-04 0000097210 2020-12-31 0000097210 2020-01-01 2020-03-29 0000097210 2020-03-29 0000097210 2021-01-05 2021-04-04 0000097210 2019-12-30 2020-03-29 0000097210 2020-01-01 2020-12-31 0000097210 2019-12-31 0000097210 2020-09-27 0000097210 2020-01-31 0000097210 2021-01-31 0000097210 2021-04-30 0000097210 2020-05-01 0000097210 2020-05-01 2020-05-01 0000097210 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Table of Contents
 
 
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 4, 2021
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 DriveNorth 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 April 30, 2021 was 166,266,321 shares.
 
 
 

Table of Contents
TERADYNE, INC.
INDEX
 
 
 
 
  
Page No.
 
 
 
  
 
 
     
Item 1.
 
  
     
     
 
 
  
 
1
 
     
 
 
  
 
2
 
     
 
 
  
 
3
 
     
 
 
  
 
4
 
     
 
 
  
 
5
 
     
 
 
  
 
6
 
     
Item 2.
 
  
 
26
 
     
Item 3.
 
  
 
33
 
     
Item 4.
 
  
 
33
 
     
 
 
  
     
     
Item 1.
 
  
 
34
 
     
Item 1A.
 
  
 
34
 
     
Item 2.
 
  
 
34
 
     
Item 4.
 
  
 
35
 
     
Item 6.
 
  
 
35
 
 
 

Table of Contents
PART I
 
Item 1:
Financial Statements
TERADYNE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
    
April 4,

2021
    
December 31,
2020
 
    
(in thousands,
except per share amount)
 
ASSETS
                 
Current assets:
                 
Cash and cash equivalents
   $ 831,149      $ 914,121  
Marketable securities
     478,293        522,280  
Accounts receivable, less allowance for credit losses of $1,939 and $2,034 at April 4, 2021 and December 31, 2020, respectively
     581,509        497,506  
Inventories, net
     262,474        222,189  
Prepayments and other current assets
     347,678        259,338  
    
 
 
    
 
 
 
Total current assets
     2,501,103        2,415,434  
Property, plant and equipment, net
     402,465        394,800  
Operating lease
right-of-use
assets, net
     51,516        54,569  
Marketable securities
     115,620        117,980  
Deferred tax assets
     92,365        87,913  
Retirement plans assets
     17,255        17,468  
Other assets
     8,942        9,384  
Acquired intangible assets, net
     92,850        100,939  
Goodwill
     437,601        453,859  
    
 
 
    
 
 
 
Total assets
   $ 3,719,717      $ 3,652,346  
    
 
 
    
 
 
 
LIABILITIES
                 
Current liabilities:
                 
Accounts payable
   $ 177,473      $ 133,663  
Accrued employees’ compensation and withholdings
     138,238        220,321  
Deferred revenue and customer advances
     144,812        134,662  
Other accrued liabilities
     105,238        77,581  
Operating lease liabilities
     19,675        20,573  
Income taxes payable
     90,349        80,728  
Current debt
     11,057        33,343  
    
 
 
    
 
 
 
Total current liabilities
     686,842        700,871  
Retirement plans liabilities
     152,508        151,140  
Long-term deferred revenue and customer advances
     55,138        58,359  
Long-term contingent consideration
     —          7,227  
Long-term other accrued liabilities
     18,982        19,352  
Deferred tax liabilities
     9,606        10,821  
Long-term operating lease liabilities
     39,048        42,073  
Long-term incomes taxes payable
     74,930        74,930  
Debt
     356,877        376,768  
    
 
 
    
 
 
 
Total liabilities
     1,393,931        1,441,541  
    
 
 
    
 
 
 
Commitments and contingencies (See Note Q)
                 
Mezzanine equity:
                 
Convertible common shares
     1,233        3,787  
SHAREHOLDERS’ EQUITY
                 
Common stock, $0.125 par value, 1,000,000 shares authorized; 166,419 and 166,123 shares issued and outstanding at April 4, 2021 and December 31, 2020, respectively
     20,802        20,765  
Additional
paid-in
capital
     1,765,971        1,765,323  
Accumulated other comprehensive income
     8,677        33,516  
Retained earnings
     529,103        387,414  
    
 
 
    
 
 
 
Total shareholders’ equity
     2,324,553        2,207,018  
    
 
 
    
 
 
 
Total liabilities, convertible common shares and shareholders’ equity
   $ 3,719,717      $ 3,652,346  
    
 
 
    
 
 
 
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, 2020, are an integral part of the condensed
consolidated financial statements.
 
1

Table of Contents
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
                 
    
For the Three Months Ended
 
    
April 4,
   
March 29,
 
    
2021
   
2020
 
    
(in thousands, except per share
amount)
 
Revenues:
                
Products
   $
660,508
    $
610,906
 
Services
    
121,098
     
93,449
 
    
 
 
   
 
 
 
Total revenues
    
781,606
     
704,355
 
Cost of revenues:
                
Cost of products
    
267,784
     
259,996
 
Cost of services
    
52,204
     
38,809
 
    
 
 
   
 
 
 
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)
    
319,988
     
298,805
 
    
 
 
   
 
 
 
Gross profit
    
461,618
     
405,550
 
Operating expenses:
                
Selling and administrative
    
129,797
     
111,388
 
Engineering and development
    
100,402
     
85,159
 
Acquired intangible assets amortization
    
5,536
     
9,891
 
Restructuring and other
    
(7,130
   
(7,606
    
 
 
   
 
 
 
Total operating expenses
    
228,605
     
198,832
 
    
 
 
   
 
 
 
Income from operations
    
233,013
     
206,718
 
Non-operating
(income) expense:
                
Interest income
    
(808
   
(2,751
Interest expense
    
6,004
     
5,551
 
Other (income) expense, net
    
3,824
     
6,849
 
    
 
 
   
 
 
 
Income before income taxes
    
223,993
     
197,069
 
Income tax provision
    
18,481
     
20,878
 
    
 
 
   
 
 
 
Net income
   $
205,512
    $
176,191
 
    
 
 
   
 
 
 
Net income per common share:
                
Basic
   $
1.23
    $
1.06
 
    
 
 
   
 
 
 
Diluted
   $
1.09
    $
0.97
 
    
 
 
   
 
 
 
Weighted average common shares—basic
    
166,491
     
166,589
 
    
 
 
   
 
 
 
Weighted average common shares—diluted
    
187,740
     
180,736
 
    
 
 
   
 
 
 
Cash dividend declared per common share
   $
0.10
    $
0.10
 
    
 
 
   
 
 
 
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, 2020, are an integral part of the condensed
consolidated financial statements.
 
2

Table of Contents
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
    
For the Three Months Ended
 
    
April 4,
   
March 29,
 
    
2021
   
2020
 
    
(in thousands)
 
Net income
   $ 205,512     $ 176,191  
Other comprehensive income, net of tax:
                
Foreign currency translation adjustment, net of tax of $0, $0
     (21,123     (8,779
Available-for-sale
marketable securities:
                
Unrealized (losses) gains on marketable securities arising during period, net of tax of $(908), $187, respectively
     (3,270     1,037  
Less: Reclassification adjustment for gains included in net income, net of tax of $(123), $(145), respectively
     (444     (515
    
 
 
   
 
 
 
       (3,714     522  
Defined benefit post-retirement plan:
                
Amortization of prior service credit, net of tax of $0, $0, respectively
     (2     (2
    
 
 
   
 
 
 
Other comprehensive loss
     (24,839     (8,259
    
 
 
   
 
 
 
Comprehensive income
   $ 180,673     $ 167,932  
    
 
 
   
 
 
 
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, 2020, are an integral part of the condensed
consolidated financial statements.
 
3

Table of Contents
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
 
          
Shareholders’ Equity
 
    
Convertible
Common
Shares
Value
   
Common
Stock
Shares
   
Common
Stock Par
Value
   
Additional
Paid-in Capital
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Retained
Earnings
(Accumulated
Deficit)
   
Total
Shareholders’
Equity
 
          
(in thousands)
 
Three Months Ended April 4, 2021
                                                        
Balance, December 31, 2020
   $ 3,787       166,123     $ 20,765     $ 1,765,323     $ 33,516     $ 387,414     $ 2,207,018  
Net issuance of common stock under stock-based plans
             670       84       (14,071                     (13,987
Stock-based compensation expense
                             13,359                       13,359  
Repurchase of common stock
             (374     (47                     (47,141     (47,188
Cash dividends ($0.10 per share)
                                             (16,682     (16,682
Settlements of convertible notes
             1,222       153       157,529                       157,682  
Exercise of convertible notes hedge call options
             (1,222     (153     (158,723                     (158,876
Convertible common shares
     (2,554                     2,554                       2,554  
Net income
                                             205,512       205,512  
Other comprehensive loss
                                     (24,839             (24,839
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, April 4, 2021
   $ 1,233       166,419     $ 20,802     $ 1,765,971     $ 8,677     $ 529,103     $ 2,324,553  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 29, 2020
                                                        
Balance, December 31, 2019
   $ —         166,410     $ 20,801     $ 1,720,129     $ (18,854   $ (241,918   $ 1,480,158  
Net issuance of common stock under stock-based plans
             872       109       (10,045                     (9,936
Stock-based compensation expense
                             11,283                       11,283  
Repurchase of common stock
             (1,344     (168                     (81,897     (82,065
Cash dividends ($0.10 per share)
                                             (16,699     (16,699
Net income
                                             176,191       176,191  
Other comprehensive loss
                                     (8,259             (8,259
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, March 29, 2020
   $ —         165,938     $ 20,742     $ 1,721,367     $ (27,113   $ (164,323   $ 1,550,673  
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
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, 2020, are an integral part of the condensed
consolidated financial statements.
 
4

Table of Contents
TERADYNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    
For the Three Months Ended
 
    
April 4,
   
March 29,
 
    
2021
   
2020
 
    
(in thousands)
 
Cash flows from operating activities:
                
Net income
   $ 205,512     $ 176,191  
Adjustments to reconcile net income from operations to net cash provided by operating activities:
                
Depreciation
     23,910       18,489  
Stock-based compensation
     12,232       10,460  
Amortization
     9,822       13,391  
Loss on convertible debt conversion
     4,069       —    
Provision for excess and obsolete inventory
     2,285       4,057  
Contingent consideration adjustment
     (7,227     (10,020
(Gains) losses on investments
     (2,491     4,657  
Deferred taxes
     (1,057     (1,825
Other
     200       503  
Changes in operating assets and liabilities, net of businesses acquired:
                
Accounts receivable
     (87,512     (126,779
Inventories
     (35,870     15,818  
Prepayments and other assets
     (86,131     (39,620
Accounts payable and other liabilities
     (10,571     (35,323
Deferred revenue and customer advances
     7,952       (913
Retirement plans contributions
     (1,925     (1,262
Income taxes
     4,941       15,278  
    
 
 
   
 
 
 
Net cash provided by operating activities
     38,139       43,102  
    
 
 
   
 
 
 
Cash flows from investing activities:
                
Purchases of property, plant and equipment
     (39,250     (36,700
Purchases of marketable securities
     (211,604     (187,119
Proceeds from maturities of marketable securities
     194,228       98,457  
Proceeds from sales of marketable securities
     61,293       15,005  
Acquisition of businesses, net of cash acquired
     —         149  
    
 
 
   
 
 
 
Net cash provided by (used for) investing activities
     4,667       (110,208
    
 
 
   
 
 
 
Cash flows from financing activities:
                
Issuance of common stock under stock purchase and stock option plans
     17,144       12,752  
Payments of convertible debt principal
     (51,275     —    
Repurchase of common stock
     (45,188     (79,039
Dividend payments
     (16,667     (16,686
Payments related to net settlement of employee stock compensation awards
     (30,675     (22,070
Payments of contingent consideration
     —         (8,852
    
 
 
   
 
 
 
Net cash used for financing activities
     (126,661     (113,895
    
 
 
   
 
 
 
Effects of exchange rate changes on cash and cash equivalents
     883       571  
    
 
 
   
 
 
 
Decrease in cash and cash equivalents
     (82,972     (180,430
Cash and cash equivalents at beginning of period
     914,121       773,924  
    
 
 
   
 
 
 
Cash and cash equivalents at end of period
   $ 831,149     $ 593,494  
    
 
 
   
 
 
 
Non-cash
investing activities:
                
Capital expenditures incurred but not yet paid:
   $ 3,840     $ 5,357  
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, 2020, are an integral part of the condensed
consolidated financial statements.
 
5

Table of Contents
TERADYNE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. THE COMPANY
Teradyne, Inc. (“Teradyne”) is a leading global supplier of automation equipment for test and industrial applications. Teradyne designs, develops, manufactures and sells automatic test systems 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 industrial automation products include collaborative robotic arms, autonomous mobile robots, and advanced robotic control software used by global manufacturing, logistics and light industrial customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Teradyne’s automatic test equipment and industrial automation 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
 
   
industrial automation (“Industrial Automation”) 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 were reclassified to conform to the current year presentation. The December 31, 2020 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, 2021, for the year ended December 31, 2020.
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 May 7, 2021, 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 August 2020, the FASB issued ASU
2020-06
– “Debt—Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity,” which simplifies the accounting for convertible debt instruments by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. This ASU requires a convertible debt instrument to be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. This ASU requires an entity to use the
if-converted
method in the diluted earnings per share calculation for convertible instruments. This ASU will be effective for Teradyne on January 1, 2022. This ASU permits the use of either the modified retrospective or fully retrospective method of transition. Teradyne is evaluating the effects of the adoption of this ASU on its financial statements.
 
6

Table of Contents
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
         
Industrial Automation
                   
   
System
on-a-Chip
   
Memory
   
System

Test
   
Universal
Robots
   
Mobile
Industrial
Robots
   
AutoGuide
   
Wireless

Test
   
Corporate

and

Other
   
Total
 
   
(in thousands)
 
For the Three Months Ended April 4, 2021 (1)
                                                                       
Timing of Revenue Recognition
                                                                       
Point in Time
  $ 364,190     $ 101,892     $ 119,314     $ 64,007     $ 14,064     $ (120   $ 37,880     $ (143   $ 701,084  
Over Time
    56,040       5,941       13,523       1,594       67       339       3,018       —         80,522  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $ 420,230     $ 107,833     $ 132,837     $ 65,601     $ 14,131     $ 219     $ 40,898     $ (143   $ 781,606  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Geographical Market
                                                                       
Asia Pacific
  $ 387,236     $ 104,049     $ 99,520     $ 17,833     $ 3,447     $ —       $ 33,532     $ —       $ 645,617  
Americas
    20,779       3,420       27,659       18,153       5,153       219       5,769       (143     81,010  
Europe, Middle East and Africa
    12,215       364       5,658       29,615       5,531       —         1,597       —         54,980  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $ 420,230     $ 107,833     $ 132,837     $ 65,601     $ 14,131     $ 219     $ 40,898     $ (143   $ 781,606  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
For the Three Months Ended March 29, 2020 (1)
                                                                       
Timing of Revenue Recognition
                                                                       
Point in Time
  $ 348,044     $ 79,398     $ 100,712     $ 47,502     $ 9,097     $ 1,124     $ 41,056     $ —       $ 626,933  
Over Time
    52,095       4,952       15,364       2,195       41       346       2,429       —         77,422  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $ 400,139     $ 84,350     $ 116,076     $ 49,697     $ 9,138     $ 1,470     $ 43,485     $ —       $ 704,355  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Geographical Market
                                                                       
Asia Pacific
  $ 362,732     $ 76,110     $ 80,017     $ 10,917     $ 1,593     $ —       $ 37,805     $ —       $ 569,174  
Americas
    17,386       6,896       28,291       14,743       3,465       1,470       4,688       —         76,939  
Europe, Middle East and Africa
    20,021       1,344       7,768       24,037       4,080       —         992       —         58,242  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
  $ 400,139     $ 84,350     $ 116,076     $ 49,697     $ 9,138     $ 1,470     $ 43,485     $ —       $ 704,355  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
Includes $3.1 million and $1.8 million in 2021 and 2020, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606
“Revenue from Contracts with Customers.”
Contract Balances
For the three months ended April 4, 2021 and March 29, 2020, Teradyne recognized $27.8 million and $39.5 million, respectively, that was previously 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 4, 2021, Teradyne has $1,456.0 million of unsatisfied performance obligations. Teradyne expects to recognize 95% of the remaining performance obligations in the next 12 months, 4% in
1-3
years, and the remainder thereafter.
Accounts Receivable
Teradyne sells certain trade accounts receivables on a
non-recourse
basis to third-party financial institutions pursuant to factoring agreements. Teradyne accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in the consolidated statements of cash flows. Total trade accounts receivable sold under the factoring agreements were $7.3 million and $46.8 million for the three months ended April 4, 2021 and March 29, 2020, respectively. Factoring fees for the sales of receivables were recorded in interest expense and were not material.
 
7

Table of Contents
E. INVENTORIES
Inventories, net consisted of the following at April 4, 2021 and December 31, 2020:
 
    
April 4,
    
December 31,
 
    
2021
    
2020
 
    
(in thousands)
 
Raw material
   $ 117,552      $ 114,133  
Work-in-process
     32,772        25,408  
Finished goods
     112,150        82,648  
    
 
 
    
 
 
 
     $ 262,474      $ 222,189  
    
 
 
    
 
 
 
Inventory reserves at April 4, 2021 and December 31, 2020 were $107.8 million and $110.6 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
available-for-sale
debt securities are classified as Level 2 and equity and debt mutual funds are classified as Level 1. 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 4, 2021 and March 29, 2020, 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 4, 2021 and March 29, 2020 were $1.2 million and $1.4 million, respectively. Realized losses recorded in the three months ended March 29, 2020 were $0.1 million. Realized gains and losses are included in other (income) expense, net.
Unrealized gains on equity securities recorded in the three months ended April 4, 2021, were $1.4 million. Unrealized losses on equity securities recorded in the three months ended March 29, 2020 were $6.0 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).
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 4, 2021 and December 31, 2020.​​​​​​​
 
8

Table of Contents
    
April 4,

2021
 
    
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
   $ 417,888               $ —        $ 417,888  
Cash equivalents
     386,694        26,567        —          413,261  
Available-for-sale
securities:
                                   
Commercial paper
     —          306,715        —          306,715  
U.S. Treasury securities
     —          155,190        —          155,190  
Corporate debt securities
     —          83,372        —          83,372  
Debt mutual funds
     9,288        —          —          9,288  
U.S. government agency securities
               4,612        —          4,612  
Certificates of deposit and time deposits
     —          966        —          966  
Non-U.S.
government securities
     —          619        —          619  
Equity securities:
                                   
Mutual funds
     33,151        —          —          33,151  
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 847,021      $ 578,041      $ —        $ 1,425,062  
Derivative assets
     —          16        —          16  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 847,021      $ 578,057      $ —        $ 1,425,078  
    
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities
                                   
Derivative liabilities
   $ —        $ 393      $ —        $ 393  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ —        $ 393      $ —        $ 393  
    
 
 
    
 
 
    
 
 
    
 
 
 
Reported as follows:
 
    
    (Level 1)    
    
    (Level 2)    
    
    (Level 3)    
    
      Total      
 
    
(in thousands)
 
Assets
                                   
Cash and cash equivalents
   $ 804,582      $ 26,567      $ —        $ 831,149  
Marketable securities
     —          478,293        —          478,293  
Long-term marketable securities
     42,439        73,181        —          115,620  
Prepayments and other current assets
     —          16        —          16  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 847,021      $ 578,057      $ —        $ 1,425,078  
    
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities
                                   
Other current liabilities
   $ —        $ 393      $ —        $ 393  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ —        $ 393      $ —        $ 393  
    
 
 
    
 
 
    
 
 
    
 
 
 
 
9

Table of Contents
    
December 31,

2020
 
    
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
   $ 443,166      $ —        $ —          443,166  
Cash equivalents
     347,768        123,187        —          470,955  
Available-for-sale
securities:
                                —    
U.S. Treasury securities
     —          258,304        —          258,304  
Commercial paper
     —          254,413        —          254,413  
Corporate debt securities
     —          83,615        —          83,615  
Debt mutual funds
     8,565        —          —          8,565  
U.S. government agency securities
     —          4,339        —          4,339  
Certificates of deposit and time deposits
     —          979        —          979  
Non-U.S.
government securities
     —          625        —          625  
Equity securities:
                                   
Equity mutual funds
     29,420        —          —          29,420  
    
 
 
    
 
 
    
 
 
    
 
 
 
     $ 828,919      $ 725,462      $ —        $ 1,554,381  
Derivative assets
     —          95        —          95  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ 828,919      $ 725,557      $ —        $ 1,554,476  
    
 
 
    
 
 
    
 
 
    
 
 
 
Liabilities
                                   
Contingent consideration
   $ —        $ —        $ 7,227      $ 7,227  
Derivative liabilities
     —          504        —          504  
    
 
 
    
 
 
    
 
 
    
 
 
 
Total
   $ —        $ 504      $ 7,227      $ 7,731  
    
 
 
    
 
 
    
 
 
    
 
 
 
Reported as follows:
 
 
  
    (Level 1)    
 
  
    (Level 2)    
 
  
    (Level 3)    
 
  
      Total      
 
 
  
(in thousands)
 
Assets
  
     
  
     
  
     
  
     
Cash and cash equivalents
  
$
790,934
 
  
$
123,187
 
  
$
—  
 
  
$
914,121
 
Marketable securities
  
 
—  
 
  
 
522,280
 
  
 
—  
 
  
 
522,280
 
Long-term marketable securities
  
 
37,985
 
  
 
79,995
 
  
 
—  
 
  
 
117,980
 
Prepayments and other current assets
  
 
—  
 
  
 
95
 
  
 
—  
 
  
 
95
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total
  
$
828,919
 
  
$
725,557
 
  
$
—  
 
  
$
1,554,476
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Liabilities
  
     
  
     
  
     
  
     
Other accrued liabilities
  
$
—  
 
  
$
504
 
  
$
—  
 
  
$
504
 
Long-term contingent consideration
  
 
—  
 
  
 
—  
 
  
 
7,227
 
  
 
7,227
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total
  
$
—  
 
  
$
504
 
  
$
7,227
 
  
$
7,731
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Changes in the fair value of Level 3 contingent consideration for the three months ended April 4, 2021, and March 29, 2020 were as follows:
 
 
  
For the Three Months Ended
 
 
  
April 4,
 
  
March 29,
 
 
  
2021
 
  
2020
 
 
  
(in thousands)
 
Balance at beginning of period
  
$
7,227
 
  
$
39,705
 
Fair value adjustment (a)(b)
  
 
(7,227
  
 
(10,020
Foreign currency impact
  
 
—  
 
  
 
(361
Payments (c)
  
 
—  
 
  
 
(8,852
 
  
 
 
 
  
 
 
 
Balance at end of period
  
$
—  
 
  
$
20,472
 
 
  
 
 
 
  
 
 
 
 
10

Table of Contents
 
 
(a)
In the three months ended April 4, 2021, the fair value of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide was reduced to zero, which resulted in a benefit of $7.2 million, primarily due to a decrease in forecasted revenues and earnings before interest and taxes. As of April 4, 2021, the maximum amount of contingent consideration that could be paid in connection with the acquisition of AutoGuide is $100.2 million. The remaining
earn-out
periods end on December 31, 2021 and December 31, 2022. The sellers of AutoGuide have filed an arbitration claim against Teradyne related to the
earn-out
alleging
non-compliance
with the
earn-out
provisions of the AutoGuide acquisition agreement. Teradyne disputes the allegations of
non-compliance.
The ultimate amount of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide may be affected by the outcome of the dispute.
(b)
In the three months ended March 29, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisitions of Mobile Industrial Robots Aps (“MiR”) and AutoGuide decreased by $2.9 million and $7.1 million, respectively, due to lower forecasts.
(c)
In the three months ended March 29, 2020, Teradyne paid $8.9 million of contingent consideration for the
earn-out
in connection with the acquisition of MiR.
The carrying amounts and fair values of Teradyne’s financial instruments at April 4, 2021 and December 31, 2020 were as follows:
 
    
April 4,

2021
    
December 31,

2020
 
    
Carrying Value
    
Fair Value
    
Carrying Value
    
Fair Value
 
    
(in thousands)
 
Assets