10-Q
falseP60Y2017-06-150000097210Q2--12-31Includes $4.2 million and $2.5 million in 2021 and 2020, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.”Includes $7.3 million and $4.3 million in 2021 and 2020, respectively, for leases of Teradyne’s systems recognized outside ASC 606 “Revenue from Contracts with Customers.”In the six months ended June 28, 2020, Teradyne paid $8.9 million of contingent consideration for the earn-out in connection with the acquisition of MiR. In the six months ended July 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 July 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 allegations of non-compliance with its earn-out obligations. 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 arbitration (see Note:R).In the three and six months ended June 28, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisition of Mobile Industrial Robots (“MiR”) decreased by $0.6 million and $3.6 million, respectively, due to lower forecasted results. In the three and six months ended June 28, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide increased by $29.9 million and $22.8 million, respectively, due to higher forecasted results. The carrying value represents the bifurcated debt component only, while the level 2 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 Q: “Retirement Plans.”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: (a) charges; (b) legal fees; (c) compensation. Included in income (loss) before taxes are charges and credits related to restructuring and other, loss on convertible debt conversions and inventory charges.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 $31.54, multiplied by 12.7 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 $39.58, multiplied by 14.6 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. Total assets are attributable to each segment. 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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 July 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 August 2, 2021
 
was
164,973,199
shares.
 
 
 

Table of Contents
TERADYNE, INC.
INDEX
 
         
Page No.
 
     
             
     
Item 1.
   Financial Statements (Unaudited):         
     
     Condensed Consolidated Balance Sheets as of July 4, 2021 and December 31, 2020      1  
     
     Condensed Consolidated Statements of Operations for the Three and Six Months Ended July 4, 2021 and June 28, 2020      2  
     
     Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended July 4, 2021 and June 28, 2020      3  
     
     Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended July 4, 2021 and June 28, 2020      4  
     
     Condensed Consolidated Statements of Cash Flows for the Six Months Ended July 4, 2021 and June 28, 2020      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      35  
     
Item 4.
   Controls and Procedures      36  
     
             
     
Item 1.
   Legal Proceedings      36  
     
Item 1A.
   Risk Factors      36  
     
Item 2.
   Unregistered Sales of Equity Securities and Use of Proceeds      37  
     
Item 4.
   Mine Safety Disclosures      37  
     
Item 6.
   Exhibits      38  

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

2021
    
December 31,

2020
 
    
(in thousands, except per share amount)
 
ASSETS
                 
Current assets:
                 
Cash and cash equivalents
   $ 954,441      $ 914,121  
Marketable securities
     282,121        522,280  
Accounts receivable, less allowance for credit losses of $1,931 and $2,034 at July 4, 2021 and December 31, 2020, respectively
     868,457        497,506  
Inventories, net
     226,138        222,189  
Prepayments and other current assets
     368,315        259,338  
    
 
 
    
 
 
 
Total current assets
     2,699,472        2,415,434  
Property, plant and equipment, net
     395,395        394,800  
Operating lease right-of-use assets, net
     61,849        54,569  
Marketable securities
     181,560        117,980  
Deferred tax assets
     94,438        87,913  
Retirement plans assets
     17,170        17,468  
Other assets
     21,320        9,384  
Acquired intangible assets, net
     88,121        100,939  
Goodwill
     441,597        453,859  
    
 
 
    
 
 
 
Total assets
   $ 4,000,922      $ 3,652,346  
    
 
 
    
 
 
 
LIABILITIES
                 
Current liabilities:
                 
Accounts payable
   $ 156,103      $ 133,663  
Accrued employees’ compensation and withholdings
     205,717        220,321  
Deferred revenue and customer advances
     148,882        134,662  
Other accrued liabilities
     146,484        77,581  
Operating lease liabilities
     20,539        20,573  
Income taxes payable
     93,876        80,728  
Current debt
     213,761        33,343  
    
 
 
    
 
 
 
Total current liabilities
     985,362        700,871  
Retirement plans liabilities
     154,311        151,140  
Long-term deferred revenue and customer advances
     58,534        58,359  
Long-term contingent consideration
               7,227  
Long-term other accrued liabilities
     19,387        19,352  
Deferred tax liabilities
     8,961        10,821  
Long-term operating lease liabilities
     49,066        42,073  
Long-term incomes taxes payable
     67,041        74,930  
Debt
     143,618        376,768  
Total liabilities
     1,486,280        1,441,541  
    
 
 
    
 
 
 
Commitments and contingencies
             
Mezzanine equity:
                 
Convertible common shares
     21,386        3,787  
SHAREHOLDERS’ EQUITY
                 
Common stock, $0.125 par value, 1,000,000 shares authorized; 165,444 and 166,123 shares issued and outstanding at July 4, 2021 and December 31, 2020, respectively
     20,680        20,765  
Additional paid-in capital
     1,772,302        1,765,323  
Accumulated other comprehensive income
     15,322        33,516  
Retained earnings
     684,952        387,414  
    
 
 
    
 
 
 
Total shareholders’ equity
     2,493,256        2,207,018  
    
 
 
    
 
 
 
Total liabilities, convertible common shares and shareholders’ equity
   $ 4,000,922      $ 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
   
For the Six Months

Ended
 
    
July 4,

2021
   
June 28,

2020
   
July 4,

2021
   
June 28,

2020
 
    
(in thousands, except per share amount)
 
Revenues:
                                
Products
   $ 951,945     $ 734,630     $ 1,612,453     $ 1,345,536  
Services
     133,783       104,031       254,881       197,480  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total revenues
     1,085,728       838,661       1,867,334       1,543,016  
Cost of revenues:
                                
Cost of products
     388,845       322,732       656,629       582,728  
Cost of services
     49,894       44,456       102,098       83,265  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)
     438,739       367,188       758,727       665,993  
    
 
 
   
 
 
   
 
 
   
 
 
 
Gross profit
     646,989       471,473       1,108,607       877,023  
Operating expenses:
                                
Selling and administrative
     140,187       113,259       269,984       224,647  
Engineering and development
     110,021       94,102       210,423       179,261  
Acquired intangible assets amortization
     5,402       8,941       10,938       18,832  
Restructuring and other
     2,507       37,222       (4,623     29,616  
    
 
 
   
 
 
   
 
 
   
 
 
 
Total operating expenses
     258,117       253,524       486,722       452,356  
    
 
 
   
 
 
   
 
 
   
 
 
 
Income from operations
     388,872       217,949       621,885       424,667  
Non-operating (income) expense:
                                
Interest income
     (633     (1,368     (1,441     (4,119
Interest expense
     5,566       6,043       11,569       11,594  
Other (income) expense, net
     (87     (4,017     3,738       2,833  
    
 
 
   
 
 
   
 
 
   
 
 
 
Income before income taxes
     384,026       217,291       608,019       414,359  
Income tax provision
     55,707       28,383       74,188       49,261  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income
   $ 328,319     $ 188,908     $ 533,831     $ 365,098  
    
 
 
   
 
 
   
 
 
   
 
 
 
Net income per common share:
                                
Basic
   $ 1.98     $ 1.14     $ 3.21     $ 2.20  
    
 
 
   
 
 
   
 
 
   
 
 
 
Diluted
   $ 1.76     $ 1.05     $ 2.85     $ 2.02  
    
 
 
   
 
 
   
 
 
   
 
 
 
Weighted average common shares—basic
     165,995       165,789       166,243       166,189  
    
 
 
   
 
 
   
 
 
   
 
 
 
Weighted average common shares—diluted
     186,750       180,257       187,245       180,497  
    
 
 
   
 
 
   
 
 
   
 
 
 
Cash dividend declared per common share
   $ 0.10     $ 0.10     $ 0.20     $ 0.20  
    
 
 
   
 
 
   
 
 
   
 
 
 
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
   
For the Six Months

Ended
 
    
July 4,

2021
   
June 28,
2020
   
July 4,
2021
   
June 28,
2020
 
    
(in thousands)
 
Net income
   $ 328,319     $ 188,908     $ 533,831     $ 365,098  
Other comprehensive income, net of tax:
                                
Foreign currency translation adjustment, net of tax of $0, $0, $0, $0, respectively
     5,150       15,805       (15,974     7,026  
Available-for-sale marketable securities:
                                
Unrealized gains (losses) on marketable securities arising during period, net of tax of $436, $1,084, $(472), $1,271, respectively
     1,494       3,793       (1,776     4,830  
Less: Reclassification adjustment for losses (gains) included in net income, net of tax of $2, $(277), $(121), $(421), respectively
     3       (983     (441     (1,499
    
 
 
   
 
 
   
 
 
   
 
 
 
       1,497       2,810       (2,217     3,331  
Defined benefit post-retirement plan:
                                
Amortization of prior service credit, net of tax of $0, $0, $(1), $(1), respectively
     (2     (2     (3     (3
    
 
 
   
 
 
   
 
 
   
 
 
 
Other comprehensive income (loss)
     6,645       18,613       (18,194     10,354  
    
 
 
   
 
 
   
 
 
   
 
 
 
Comprehensive income
   $ 334,964     $ 207,521     $ 515,637     $ 375,452  
    
 
 
   
 
 
   
 
 
   
 
 
 
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 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
Income (Loss)
   
Retained
Earnings
(Accumulated
Deficit)
   
Total
Shareholders’
Equity
 
           
(in thousands)
 
Three Months Ended July 4, 2021
                                                         
Balance, April 4, 2021
   $ 1,233        166,419     $ 20,802     $ 1,765,971     $ 8,677     $ 529,103     $ 2,324,553  
Net issuance of common stock under stock-based plans
              215       27       14,283                       14,310  
Stock-based compensation expense
                              12,515                       12,515  
Repurchase of common stock
              (1,190     (149                     (155,846     (155,995
Cash dividends ($0.10 per share)
                                              (16,624     (16,624
Settlements of convertible notes
              367       46       45,977                       46,023  
Exercise of convertible notes hedge call options
              (367     (46     (46,291                     (46,337
Convertible common shares
     20,153                        (20,153                     (20,153
Net income
                                              328,319       328,319  
Other comprehensive income
                                      6,645               6,645  
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, July 4, 2021
   $ 21,386        165,444     $ 20,680     $ 1,772,302     $ 15,322     $ 684,952     $ 2,493,256  
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
               
Three Months Ended June 28, 2020
                                                         
Balance, March 29, 2020
   $ —          165,938     $ 20,742     $ 1,721,367     $ (27,113   $ (164,323   $ 1,550,673  
Net issuance of common stock under stock-based plans
              41       5       (451                     (446
Stock-based compensation expense
                              9,800                       9,800  
Repurchase of common stock
              (173     (22                     (6,379     (6,401
Cash dividends ($0.10 per share)
                                              (16,596     (16,596
Net income
                                              188,908       188,908  
Other comprehensive income
                                      18,613               18,613  
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, June 28, 2020
   $ —          165,806     $ 20,725     $ 1,730,716     $ (8,500   $ 1,610     $ 1,744,551  
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
               
Six Months Ended July 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
              885       111       211                       322  
Stock-based compensation expense
                              25,874                       25,874  
Repurchase of common stock
              (1,564     (196                     (202,988     (203,184
Cash dividends ($0.20 per share)
                                              (33,305     (33,305
Settlements of convertible notes
              1,589       199       203,507                       203,706  
Exercise of convertible notes hedge call options
              (1,589     (199     (205,014                     (205,213
Convertible common shares
     17,599                        (17,599                     (17,599
Net income
                                              533,831       533,831  
Other comprehensive loss
                                      (18,194             (18,194
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, July 4, 2021
   $ 21,386        165,444     $ 20,680     $ 1,772,302     $ 15,322     $ 684,952     $ 2,493,256  
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
               
Six Months Ended June 28, 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
              913       114       (10,496                     (10,382
Stock-based compensation expense
                              21,083                       21,083  
Repurchase of common stock
              (1,517     (190                     (88,275     (88,465
Cash dividends ($0.20 per share)
                                              (33,295     (33,295
Net income
                                              365,098       365,098  
Other comprehensive income
                                      10,354               10,354  
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance, June 28, 2020
   $ —          165,806     $ 20,725     $ 1,730,716     $ (8,500   $ 1,610     $ 1,744,551  
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
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 Six Months Ended
 
    
July 4,

2021
   
June 28,
2020
 
    
(in thousands)
 
Cash flows from operating activities:
                
Net income
   $ 533,831     $ 365,098  
Adjustments to reconcile net income from operations to net cash provided by operating activities:
                
Depreciation
     45,848       38,305  
Stock-based compensation
     23,231       21,367  
Amortization
     19,343       26,234  
Loss on convertible debt conversion
     5,244       —    
Provision for excess and obsolete inventory
     3,625       9,637  
Contingent consideration adjustment
     (7,227     19,239  
Gains on investments
     (4,650     (469
Deferred taxes
     (800     (7,163
Retirement plans actuarial gains
     (627     (99
Other
     199       523  
Changes in operating assets and liabilities, net of business acquired:
                
Accounts receivable
     (372,698     (331,040
Inventories
     19,908       (3,728
Prepayments and other assets
     (117,416     (49,479
Accounts payable and other liabilities
     86,790       113,578  
Deferred revenue and customer advances
     15,189       28,655  
Retirement plans contributions
     (2,739     (2,501
Income taxes
     (2,628     37,842  
    
 
 
   
 
 
 
Net cash provided by operating activities
     244,423       265,999  
    
 
 
   
 
 
 
Cash flows from investing activities:
                
Purchases of property, plant and equipment
     (73,957     (84,014
Purchases of marketable securities
     (398,086     (299,548
Proceeds from maturities of marketable securities
     460,213       182,984  
Proceeds from sales of marketable securities
     116,112       26,661  
Purchase of investment and acquisition of business
     (12,000     149  
Proceeds from life insurance
     —         546  
    
 
 
   
 
 
 
Net cash provided by (used for) investing activities
     92,282       (173,222
    
 
 
   
 
 
 
Cash flows from financing activities:
                
Issuance of common stock under stock purchase and stock option plans
     32,581       12,757  
Repurchase of common stock
     (196,584     (88,465
Payments of convertible debt principal
     (66,828     —    
Dividend payments
     (33,271     (33,266
Payments related to net settlement of employee stock compensation awards
     (31,794     (22,519
Payments of contingent consideration
     —         (8,852
    
 
 
   
 
 
 
Net cash used for financing activities
     (295,896     (140,345
    
 
 
   
 
 
 
Effects of exchange rate changes on cash and cash equivalents
     (489     (925
    
 
 
   
 
 
 
Increase (decrease) in cash and cash equivalents
     40,320       (48,493
Cash and cash equivalents at beginning of period
     914,121       773,924  
    
 
 
   
 
 
 
Cash and cash equivalents at end of period
   $ 954,441     $ 725,431  
    
 
 
   
 
 
 
Non-cash investing activities:
                
Capital expenditures incurred but not yet paid:
   $ 4,503     $ 6,281  
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 August 
6
, 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 Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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.
 
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Table of Contents
D. INVESTMENT IN OTHER COMPANY
On June 1, 2021, Teradyne
 invested $12.0 million in MachineMetrics, Inc. (“MachineMetrics”), a private company that develops and sells products to improve manufacturing performance through automated machine data collection, alerting, and analytics. Teradyne’s investment in MachineMetrics aligns with its strategy of providing and investing in leading edge products for automating industrial production processes in growing markets. The investment was recorded at cost and is evaluated for impairment or an indication of changes in fair value resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer on a quarterly basis. At July 4, 2021, the value of the investment was $12.0 million,
 
and there was
no
change during the three months ended July 4, 2021.
E. 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 July 4, 2021 (1)
 
 
 
 
 
 
 
 
 
Timing of Revenue Recognition
 
 
 
 
 
 
 
 
 
Point in Time
 
$
675,958
 
 
$
84,232
 
 
$
88,197
 
 
$
74,412
 
 
$
15,091
 
 
$
  
 
 
$
51,619
 
 
$
(146
 
$
989,363
 
Over Time
 
 
65,712
 
 
 
8,074
 
 
 
16,622
 
 
 
1,665
 
 
 
809
 
 
 
209
 
 
 
3,274
 
 
 
—  
 
 
 
96,365
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
 
$
741,670
 
 
$
92,306
 
 
$
104,819
 
 
$
76,077
 
 
$
15,900
 
 
$
209
 
 
$
54,893
 
 
$
(146
 
$
1,085,728
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Geographical Market
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asia Pacific
 
$
710,995
 
 
$
87,151
 
 
$
61,230
 
 
$
18,044
 
 
$
2,439
 
 
$
—  
 
 
$
45,802
 
 
$
—  
 
 
$
925,661
 
Americas
 
 
21,664
 
 
 
3,672
 
 
 
36,256
 
 
 
24,808
 
 
 
6,897
 
 
 
209
 
 
 
7,107
 
 
 
(146
 
 
100,467
 
Europe, Middle East and Africa
 
 
9,011
 
 
 
1,483
 
 
 
7,333
 
 
 
33,225
 
 
 
6,564
 
 
 
—  
 
 
 
1,984
 
 
 
—  
 
 
 
59,600
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total
 
$
741,670
 
 
$
92,306
 
 
$
104,819
 
 
$
76,077
 
 
$
15,900
 
 
$
209
 
 
$
54,893
 
 
$
(146
 
$