0001193125-22-277821 | 10-Q | XBRL Viewer

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Cover Page - shares	9 Months Ended
Cover Page - shares	Oct. 02, 2022	Oct. 31, 2022
Cover [Abstract]
Amendment Flag	false
Document Type	10-Q
Document Fiscal Year Focus	2022
Entity Central Index Key	0000097210
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Document Period End Date	Oct. 02, 2022
Entity Registrant Name	TERADYNE, INC
Entity Filer Category	Large Accelerated Filer
Trading Symbol	TER
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Title of 12(b) Security	Common Stock
Security Exchange Name	NASDAQ
Entity File Number	001-06462
Entity Incorporation, State or Country Code	MA
Entity Tax Identification Number	04-2272148
Entity Address, Address Line One	600 Riverpark Drive
Entity Address, City or Town	North Reading
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01864
City Area Code	978
Local Phone Number	370-2700
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		155,756,146

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands

Oct. 02, 2022

Dec. 31, 2021

Current assets:

Cash and cash equivalents

$ 710,746

$ 1,122,199

Marketable securities

65,310

244,231

Accounts receivable, less allowance for credit losses of $1,865 and $2,012 at October 2, 2022 and December 31, 2021, respectively

530,349

550,749

Inventories, net

310,754

243,330

Prepayments

502,678

406,266

Other current assets

7,717

9,452

Total current assets

2,127,554

2,576,227

Property, plant and equipment, net

415,181

387,240

Operating lease right-of-use assets, net

61,430

68,807

Marketable securities

111,039

133,858

Deferred tax assets

130,207

102,428

Retirement plans assets

13,805

15,110

Other assets

29,311

24,096

Acquired intangible assets, net

55,580

75,635

Goodwill

375,799

426,024

Total assets

3,319,906

^[1]

3,809,425

Current liabilities:

Accounts payable

167,975

153,133

Accrued employees' compensation and withholdings

168,102

253,667

Deferred revenue and customer advances

143,591

146,185

Other accrued liabilities

126,457

124,187

Operating lease liabilities

17,079

19,977

Income taxes payable

64,141

88,789

Current debt

14,596

19,182

Total current liabilities

701,941

805,120

Retirement plans liabilities

137,317

151,141

Long-term deferred revenue and customer advances

48,488

54,921

Long-term other accrued liabilities

15,506

15,497

Deferred tax liabilities

1,327

6,327

Long-term operating lease liabilities

51,872

56,178

Long-term incomes taxes payable

59,135

67,041

Debt

50,195

89,244

Total liabilities

1,065,781

1,245,469

Commitments and contingencies (Note Q)

Mezzanine equity:

Convertible common shares

1,512

SHAREHOLDERS' EQUITY

Common stock, $0.125 par value, 1,000,000 shares authorized; 157,880 and 162,251 shares issued and outstanding at July 3, 2022 and December 31, 2021, respectively

19,473

20,281

Additional paid-in capital

1,746,779

1,811,545

Accumulated other comprehensive loss

(84,779)

(5,948)

Retained earnings

572,652

736,566

Total shareholders' equity

2,254,125

2,562,444

Total liabilities and shareholders' equity

$ 3,319,906

$ 3,809,425

[1]	Total assets are attributable to each segment. Corporate assets consist of cash and cash equivalents, marketable securities, and certain other assets.

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Oct. 02, 2022	Dec. 31, 2021
Accounts receivable, less allowance for credit losses	$ 1,865	$ 2,012
Common stock, par value	$ 0.125	$ 0.125
Common stock, shares authorized	1,000,000	1,000,000
Common stock, shares issued	155,782	162,251
Common stock, shares outstanding	155,782	162,251

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands

3 Months Ended

9 Months Ended

Oct. 02, 2022

Oct. 03, 2021

Oct. 02, 2022

Oct. 03, 2021

Revenues:

Total revenues

$ 827,073

^[1]

$ 950,501

^[1]

$ 2,423,209

^[2]

$ 2,817,835

Cost of revenues:

Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)

341,694

379,500

976,508

1,138,227

Gross profit

485,379

571,001

1,446,701

1,679,608

Operating expenses:

Selling and administrative

135,632

134,829

415,351

404,812

Engineering and development

111,715

107,220

331,781

317,644

Acquired intangible assets amortization

4,729

5,355

14,663

16,293

Restructuring and other

1,796

1,197

19,554

(3,426)

Total operating expenses

253,872

248,601

781,349

735,323

Income from operations

231,507

322,400

665,352

944,285

Non-operating (income) expense:

Interest income

(1,318)

(626)

(2,972)

(2,066)

Interest expense

779

3,785

2,704

15,354

Other (income) expense, net

5,849

21,486

20,472

25,223

Income before income taxes

^[3],[4]

226,197

297,755

645,148

905,774

Income tax provision

42,712

41,037

101,948

115,225

Net income

$ 183,485

$ 256,718

$ 543,200

$ 790,549

Net income per common share:

Basic

$ 1.17

$ 1.56

$ 3.41

$ 4.77

Diluted

$ 1.1

$ 1.41

$ 3.17

$ 4.26

Weighted average common shares—basic

156,364

164,583

159,325

165,690

Weighted average common shares—diluted

166,733

181,987

171,156

185,492

Product [Member]

Revenues:

Total revenues

$ 676,252

$ 825,448

$ 2,000,081

$ 2,437,901

Cost of revenues:

Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)

277,539

333,229

795,229

989,859

Service [Member]

Revenues:

Total revenues

150,821

125,053

423,128

379,934

Cost of revenues:

Total cost of revenues (exclusive of acquired intangible assets amortization shown separately below)

$ 64,155

$ 46,271

$ 181,279

$ 148,368

[1]	Includes $3.8 million and $3.8 million in 2022 and 2021, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.”
[2]	Includes $11.1 million and $11.1 million in 2022 and 2021, respectively, for leases of Teradyne’s systems recognized outside ASC 606 “Revenue from Contracts with Customers.”
[3]	Included in Corporate and Eliminations are: legal and environmental fees, contingent consideration fair value adjustments, interest income, interest expense, severance charges, net foreign exchange gains (losses), acquisition related charges and compensation, pension, intercompany eliminations and for the three and nine months ended October 3, 2021, loss on convertible debt conversions.
[4]	Included in income (loss) before taxes are charges and credits related to restructuring and other, inventory charges and, for the three and nine months ended October 3, 2021, loss on convertible debt conversions.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2022	Oct. 03, 2021	Oct. 02, 2022	Oct. 03, 2021
Net income	$ 183,485	$ 256,718	$ 543,200	$ 790,549
Other comprehensive income, net of tax:
Foreign currency translation adjustment, net of tax of $0, $0, $0, $0, respectively	(28,951)	(10,698)	(66,258)	(26,672)
Available-for-sale marketable securities:
Unrealized losses arising during period, net of tax of $(997), $(44), $(3,570), $(516), respectively	(3,581)	(176)	(13,491)	(1,952)
Less: Reclassification adjustment for losses (gains) included in net income, net of tax of $(11), $(65), $(48), $(186), respectively	177	(229)	386	(670)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax, Total	(3,404)	(405)	(13,105)	(2,622)
Defined benefit post-retirement plan:
Amortization of prior service credit, net of tax of $0, $0, $(2), $(2), respectively	(2)	(2)	(5)	(5)
Cash flow hedges:
Unrealized gains arising during period, net of tax of $0, $0, $0, $0, respectively	537	0	537	0
Other comprehensive (loss) income	(31,820)	(11,105)	(78,831)	(29,299)
Comprehensive income	$ 151,665	$ 245,613	$ 464,369	$ 761,250

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 02, 2022	Oct. 03, 2021	Oct. 02, 2022	Oct. 03, 2021
Foreign currency translation adjustment, net of tax	$ 0	$ 0	$ 0	$ 0
Unrealized (losses) gains on marketable securities arising during period	997	44	3,570	516
Reclassification adjustment for gains included in net income	11	65	48	186
Amortization of prior service credit, net of tax	0	0	2	2
Cash flow hedges Unrealized gains	$ 0	$ 0	$ 0	$ 0

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE COMMON SHARES AND SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Convertible Common Shares	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive (Loss) Income	Retained Earnings (Accumulated Deficit)
Balance at Dec. 31, 2020	$ 2,207,018		$ 20,765	$ 1,765,323	$ 33,516	$ 387,414
Balance, Shares at Dec. 31, 2020		3,787	166,123
Net issuance of common stock under stock-based plans	64		$ 112	(48)
Net issuance of common stock under stock-based plans (in shares)			893
Stock-based compensation expense	35,915			35,915
Repurchase of common stock	$ (416,180)		$ (411)			(415,769)
Repurchase of common stock (in shares)	3,300		(3,288)
Cash dividends	$ (49,757)					(49,757)
Settlements of convertible notes	841,202		$ 897	840,305
Settlement of convertible debt (in shares)			7,178
Exercise of convertible notes hedge call options	(842,925)		$ (897)	(842,028)
Exercise of convertible notes hedge call options (in shares)			(7,178)
Convertible common shares	906			906
Convertible common shares (in shares)		(906)
Net income	790,549					790,549
Other comprehensive loss	(29,299)				(29,299)
Balance at Oct. 03, 2021	2,537,493		$ 20,466	1,800,373	4,217	712,437
Balance, Shares at Oct. 03, 2021		2,881	163,728
Balance at Jul. 04, 2021	2,493,256		$ 20,680	1,772,302	15,322	684,952
Balance, Shares at Jul. 04, 2021		21,386	165,444
Net issuance of common stock under stock-based plans	(258)		$ 1	(259)
Net issuance of common stock under stock-based plans (in shares)			8
Stock-based compensation expense	10,042			10,042
Repurchase of common stock	(212,996)		$ (215)			(212,781)
Repurchase of common stock (in shares)			(1,724)
Cash dividends	(16,452)					(16,452)
Settlements of convertible notes	637,497		$ 699	636,798
Settlement of convertible debt (in shares)			5,589
Exercise of convertible notes hedge call options	(637,714)		$ (699)	(637,015)
Exercise of convertible notes hedge call options (in shares)			(5,589)
Convertible common shares	18,505			18,505
Convertible common shares (in shares)		(18,505)
Net income	256,718					256,718
Other comprehensive loss	(11,105)				(11,105)
Balance at Oct. 03, 2021	2,537,493		$ 20,466	1,800,373	4,217	712,437
Balance, Shares at Oct. 03, 2021		2,881	163,728
Balance at Dec. 31, 2021	2,562,444		$ 20,281	1,811,545	(5,948)	736,566
Balance, Shares at Dec. 31, 2021		1,512	162,251
Net issuance of common stock under stock-based plans	(4,192)		$ 95	(4,287)
Net issuance of common stock under stock-based plans (in shares)			754
Stock-based compensation expense	39,056			39,056
Repurchase of common stock	$ (750,000)		$ (903)			(749,097)
Repurchase of common stock (in shares)	7,200		(7,223)
Cash dividends	$ (52,617)					(52,617)
Settlements of convertible notes	(213)		$ 151	(364)
Settlement of convertible debt (in shares)			1,211
Exercise of convertible notes hedge call options	0		$ (151)	151
Exercise of convertible notes hedge call options (in shares)			(1,211)
Convertible common shares	1,512
Convertible common shares (in shares)		(1,512)
Cumulative-effect of change in accounting principle related to convertible debt	(6,234)			(100,834)		94,600
Net income	543,200					543,200
Other comprehensive loss	(78,831)				(78,831)
Balance at Oct. 02, 2022	2,254,125		$ 19,473	1,746,779	(84,779)	572,652
Balance, Shares at Oct. 02, 2022		0	155,782
Balance at Jul. 03, 2022	2,298,596		$ 19,735	1,721,586	(52,959)	610,234
Balance, Shares at Jul. 03, 2022		0	157,880
Net issuance of common stock under stock-based plans	12,052		$ 21	12,031
Net issuance of common stock under stock-based plans (in shares)			169
Stock-based compensation expense	13,194			13,194
Repurchase of common stock	(204,201)		$ (283)			(203,918)
Repurchase of common stock (in shares)			(2,267)
Cash dividends	(17,149)					(17,149)
Settlements of convertible notes	(32)		$ 26	(58)
Settlement of convertible debt (in shares)			207
Exercise of convertible notes hedge call options	0		$ (26)	26
Exercise of convertible notes hedge call options (in shares)			(207)
Net income	183,485					183,485
Other comprehensive loss	(31,820)				(31,820)
Balance at Oct. 02, 2022	$ 2,254,125		$ 19,473	$ 1,746,779	$ (84,779)	$ 572,652
Balance, Shares at Oct. 02, 2022		0	155,782

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE COMMON SHARES AND SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Oct. 02, 2022	Oct. 03, 2021	Oct. 02, 2022	Oct. 03, 2021
Common Stock, Dividends, Per Share, Cash Paid	$ 0.11	$ 0.1	$ 0.33	$ 0.3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Oct. 02, 2022	Oct. 03, 2021
Cash flows from operating activities:
Net income	$ 543,200	$ 790,549
Adjustments to reconcile net income from operations to net cash provided by operating activities:
Depreciation	67,902	67,866
Stock-based compensation	37,420	34,649
Provision for excess and obsolete inventory	18,929	11,775
Amortization	15,012	27,626
Losses (gains) on investments	11,436	(4,750)
Deferred taxes	(28,373)	(10,732)
Contingent consideration fair value adjustments	0	(7,227)
Loss on convertible debt conversions	0	25,397
Retirement plan actuarial (gains) losses	0	(627)
Other	740	243
Changes in operating assets and liabilities, net of businesses acquired:
Accounts receivable	4,248	(103,299)
Inventories	(68,817)	21,943
Prepayments and other assets	(94,331)	(138,564)
Accounts payable and other liabilities	(71,682)	65,064
Deferred revenue and customer advances	(5,896)	8,699
Retirement plans contributions	(3,897)	(4,123)
Income taxes	(31,370)	(17,406)
Net cash provided by operating activities	394,521	767,083
Cash flows from investing activities:
Purchases of property, plant and equipment	(128,672)	(103,162)
Purchases of marketable securities	(267,175)	(509,470)
Proceeds from sales of marketable securities	259,200	209,437
Proceeds from maturities of marketable securities	182,092	571,277
Purchase of investment	0	(12,000)
Net cash provided by investing activities	45,445	156,082
Cash flows from financing activities:
Issuance of common stock under stock purchase and stock option plans	28,733	32,590
Repurchase of common stock	(750,000)	(406,180)
Payments related to net settlement of employee stock compensation awards	(32,987)	(32,045)
Payments of convertible debt principal	(52,005)	(301,997)
Dividend payments	(52,578)	(49,711)
Net cash used for financing activities	(858,837)	(757,343)
Effects of exchange rate changes on cash and cash equivalents	7,418	(489)
(Decrease) increase in cash and cash equivalents	(411,453)	165,333
Cash and cash equivalents at beginning of period	1,122,199	914,121
Cash and cash equivalents at end of period	710,746	1,079,454
Non-cash investing activities:
Capital expenditures incurred but not yet paid	$ 2,349	$ 2,286

The Company

9 Months Ended

Oct. 02, 2022

The Company

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.

Accounting Policies

9 Months Ended

Oct. 02, 2022

Accounting Policies

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, 2021 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 23, 2022, for the year ended December 31, 2021.

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, 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.

Convertible Debt

Teradyne adopted Accounting Standards Update (“ASU”) ASU

2020-06

–

“Debt—Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity’s Own Equity,”

on January 1, 2022 using the modified retrospective method of adoption

Under ASU

2020-06,

Teradyne accounts for a convertible debt instrument as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. Unsettled shares are recorded in current debt, and there is no recognition of a debt discount, which was previously amortized to interest expense. Teradyne uses the

if-converted

method in the diluted earnings per share (“EPS”) calculation for convertible instruments. As a result of adoption, Teradyne recorded an increase of $1.4 million to current debt for unsettled shares, an increase of $6.6 million to long-term debt for unamortized debt discount, an increase of $1.8 million to deferred tax assets 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.

Recently Issued Accounting Pronouncements	9 Months Ended
Recently Issued Accounting Pronouncements	Oct. 02, 2022
Recently Issued Accounting Pronouncements	C. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS For the nine months ended October 2, 2022, there were no recently issued accounting pronouncements that had, or are expected to have, a material impact to Teradyne’s consolidated financial statements.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Section 65
-Paragraph 6
-Subparagraph (f)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Section 65
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Section 65
-Paragraph 2
-Subparagraph (d)(2)
-URI https://asc.fasb.org/extlink&oid=126986314&loc=SL124402458-218513

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 65
-Paragraph 2
-Subparagraph (g)(2)(iv)
-URI https://asc.fasb.org/extlink&oid=124501264&loc=SL117420844-207641

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-URI https://asc.fasb.org/extlink&oid=122038215&loc=d3e31137-122693

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-Name Accounting Standards Codification
-Topic 326
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-Section 65
-Paragraph 4
-Subparagraph (e)(1)
-URI https://asc.fasb.org/extlink&oid=122640432&loc=SL121648383-210437

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+ Details

Investment In Other Company	9 Months Ended
Investment In Other Company	Oct. 02, 2022
Equity Method Investments and Joint Ventures [Abstract]
Investment In Other Company	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 October 2, 2022, the value of the investment was $12.0 million, and there were no changes during the three and nine months ended October 2, 2022.

Revenue

9 Months Ended

Oct. 02, 2022

Revenue from Contract with Customer [Abstract]

Revenue

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. During the three months ended October 2, 2022 Teradyne combined Mobile Industrial Robots and AutoGuide into one business unit. Revenues for all periods shown below have been combined accordingly.


	Semiconductor Test						Industrial Automation
	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 October 2, 2022 (1)
Timing of Revenue Recognition
Point in Time	$	383,801	$	117,943	$	93,248	$	71,300	$	15,025	$	42,885	$	—		$	724,202
Over Time		66,614		7,346		22,906		2,062		680		3,263		—			102,871

Total	$	450,415	$	125,289	$	116,154	$	73,362	$	15,705	$	46,148	$	—		$	827,073

Geographical Market
Asia Pacific	$	399,323	$	122,839	$	73,768	$	18,850	$	2,917	$	34,420	$	—		$	652,117
Americas		31,719		2,129		35,865		26,515		8,877		9,481		—			114,586
Europe, Middle East and Africa		19,373		321		6,521		27,997		3,911		2,247		—			60,370

Total	$	450,415	$	125,289	$	116,154	$	73,362	$	15,705	$	46,148	$	—		$	827,073

For the Three Months Ended October 3, 2021 (1)
Timing of Revenue Recognition
Point in Time	$	508,747	$	105,454	$	88,155	$	76,008	$	12,577	$	65,409	$	(63	)	$	856,287
Over Time		66,270		7,761		14,450		1,742		687		3,304		—			94,214

Total	$	575,017	$	113,215	$	102,605	$	77,750	$	13,264	$	68,713	$	(63	)	$	950,501

Geographical Market
Asia Pacific	$	519,886	$	110,362	$	62,757	$	19,654	$	2,788	$	54,344	$	—		$	769,791
Americas		29,119		2,281		34,560		23,429		5,321		11,352		(63	)		105,999
Europe, Middle East and Africa		26,012		572		5,288		34,667		5,155		3,017		—			74,711

Total	$	575,017	$	113,215	$	102,605	$	77,750	$	13,264	$	68,713	$	(63	)	$	950,501

For the Nine Months Ended October 2, 2022 (2)
Timing of Revenue Recognition
Point in Time	$	1,102,467	$	281,456	$	317,230	$	234,352	$	49,570	$	152,079	$	—		$	2,137,154
Over Time		193,996		21,473		52,295		6,268		2,582		9,441		—			286,055

Total	$	1,296,463	$	302,929	$	369,525	$	240,620	$	52,152	$	161,520	$	—		$	2,423,209

Geographical Market
Asia Pacific	$	1,153,599	$	294,986	$	243,135	$	54,828	$	10,826	$	113,472	$	—		$	1,870,846
Americas		90,148		6,727		105,884		81,857		24,670		36,628		—			345,914
Europe, Middle East and Africa		52,716		1,216		20,506		103,935		16,656		11,420		—			206,449

Total	$	1,296,463	$	302,929	$	369,525	$	240,620	$	52,152	$	161,520	$	—		$	2,423,209


	Semiconductor Test						Industrial Automation
	System on-a-Chip		Memory		System Test		Universal Robots		Mobile Industrial Robots		Wireless Test		Corporate and Eliminations			Total
	(in thousands)
For the Nine Months Ended October 3, 2021 (2)
Timing of Revenue Recognition
Point in Time	$	1,548,895	$	291,578	$	295,666	$	214,427	$	41,612	$	154,908	$	(352	)	$	2,546,734
Over Time		188,022		21,776		44,595		5,001		2,111		9,596		—			271,101

Total	$	1,736,917	$	313,354	$	340,261	$	219,428	$	43,723	$	164,504	$	(352	)	$	2,817,835

Geographical Market
Asia Pacific	$	1,618,117	$	301,562	$	223,507	$	55,531	$	8,674	$	133,678	$	—		$	2,341,069
Americas		71,562		9,373		98,475		66,390		17,799		24,228		(352	)		287,475
Europe, Middle East and Africa		47,238		2,419		18,279		97,507		17,250		6,598		—			189,291

Total	$	1,736,917	$	313,354	$	340,261	$	219,428	$	43,723	$	164,504	$	(352	)	$	2,817,835

(1)	Includes $1.8 million and $3.8 million in 2022 and 2021, respectively, for leases of Teradyne’s systems recognized outside Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers.”

(2)	Includes $5.9 million and $11.1 million in 2022 and 2021, respectively, for leases of Teradyne’s systems recognized outside ASC 606 “Revenue from Contracts with Customers.”

Contract Balances

During the three and nine months ended October 2, 2022, Teradyne recognized $27.1 million and $87.3 million, respectively, that was previously included within the deferred revenue and customer advances balances at the beginning of the period. During the three and nine months ended October 3, 2021, Teradyne recognized $32.9 million and $82.5 million, respectively, that was previously included within the deferred revenue and customer advances balances. 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 October 2, 2022, Teradyne has $1,506 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 at October 2, 2022 and December 31, 2021, and are included in short and long-term deferred revenue and customer advances on the balance sheet:


	October 2, 2022		December 31, 2021
	(in thousands)
Maintenance, service and training	$	76,310	$	81,826
Extended warranty		61,920		64,168
Customer advances, undelivered elements and other		53,849		55,112

Total deferred revenue and customer advances	$	192,079	$	201,106

Accounts Receivable

During the three and nine months ended October 2, 2022 and October 3, 2021, 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 October 2, 2022 and October 3, 2021, total trade accounts receivable sold under the factoring agreements were $15.9 million and $66.9 million, respectively. During the nine months ended October 2, 2022 and October 3, 2021, total trade accounts receivable sold under the factoring agreements were $73.0 million and $81.7 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.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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+ Details

Inventories

9 Months Ended

Oct. 02, 2022

Inventories

F. INVENTORIES

Inventories, net consisted of the following at October 2, 2022 and December 31, 2021:


	October 2, 2022		December 31, 2021
	(in thousands)

Raw material	$	228,762	$	155,641
Work-in-process		42,093		37,740
Finished goods		39,899		49,949

	$	310,754	$	243,330

Inventory reserves at October 2, 2022 and December 31, 2021 were $124.8 million and $114.1 million, respectively.

Financial Instruments

9 Months Ended

Oct. 02, 2022

Financial Instruments

G. FINANCIAL INSTRUMENTS

Cash Equivalents

Teradyne considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents.

Marketable Securities

Teradyne’s equity and debt mutual funds are classified as Level 1 and

available-for-sale

debt securities are classified as Level 2. 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 and nine months ended October 2, 2022 and October 3, 2021, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.

Realized gains recorded in the three and nine months ended October 2, 2022 were $0.1 million and $0.6 million, respectively. Realized gains recorded in the three and

nine months ended October 3, 2021 were $0.5 million and $2.6 million, respectively. Realized losses recorded in the three and nine months ended October 2, 2022 were $0.3 million and $0.9 million, respectively. No realized losses were recorded in the three and nine months ended October 3, 2021. Realized gains and losses are included in other (income) expense, net.

Unrealized losses on equity securities recorded in the three and nine months ended October 2, 2022 were $2.3 million and $11.1 million, respectively. No unrealized gains on equity securities were recorded in the three and nine months ended October 2, 2022. Unrealized gains on equity securities recorded in

the

nine months ended October 3, 2021 were $3.3 million. Unrealized losses on equity securities recorded in the three and nine months ended October 3, 2021 were $0.4 million and $1.1 million, respectively. Unrealized gains and losses on equity securities are included in other (income) expense, net.

Unrealized gains and losses on

available-for-sale

debt securities are included in accumulated other comprehensive income (loss).

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 October 2, 2022 and December 31, 2021.


	October 2, 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	$	464,744	$	—	$	—	$	464,744
Cash equivalents		51,243		194,759		—		246,002
Available-for-sale securities:
U.S. Treasury securities		—		65,354		—		65,354
Corporate debt securities		—		45,864		—		45,864
Commercial paper		—		17,719		—		17,719
Debt mutual funds		6,441		—		—		6,441
U.S. government agency securities		—		4,681		—		4,681
Certificates of deposit and time deposits		—		1,205		—		1,205
Non-U.S. government securities		—		512		—		512
Equity securities:
Mutual funds		34,573		—		—		34,573

	$	557,001	$	330,094	$	—	$	887,095
Derivative assets		—		546		—		546

Total	$	557,001	$	330,640	$	—	$	887,641

Liabilities
Derivative liabilities	$	—	$	1,106	$	—	$	1,106

Total	$	—	$	1,106	$	—	$	1,106


Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	515,987	$	194,759	$	—	$	710,746
Marketable securities		—		65,310		—		65,310
Long-term marketable securities		41,014		70,025		—		111,039
Prepayments and other current assets		—		546		—		546

Total	$	557,001	$	330,640	$	—	$	887,641

Liabilities		.
Other cur r ent liabilities	$	—	$	1,106	$	—	$	1,106

Total	$	—	$	1,106	$	—	$	1,106


	December 31, 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	$	628,740	$	—	$	—	$	628,740
Cash equivalents		412,212		81,247		—		493,459
Available-for-sale securities:								—
Commercial paper		—		189,620		—		189,620
U.S. Treasury securities		—		77,789		—		77,789
Corporate debt securities		—		56,901		—		56,901
Debt mutual funds		7,971		—		—		7,971
U.S. government agency securities		—		4,610		—		4,610
Certificates of deposit and time deposits		—		1,356		—		1,356
Non-U.S. government securities		—		589		—		589
Equity securities:
Mutual Funds		39,253		—		—		39,253

	$	1,088,176	$	412,112	$	—	$	1,500,288
Derivative assets		—		92		—		92

Total	$	1,088,176	$	412,204	$	—	$	1,500,380

Liabilities
Derivative liabilities		—		118		—		118

Total	$	—	$	118	$	—	$	118


Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	1,040,952	$	81,247	$	—	$	1,122,199
Marketable securities		—		244,231		—		244,231
Long-term marketable securities		47,224		86,634		—		133,858
Prepayments and other current assets		—		92		—		92

Total	$	1,088,176	$	412,204	$	—	$	1,500,380

Liabilities