Retirement Plans

9 Months Ended

Sep. 30, 2012

Retirement Plans

N. Retirement Plans

Defined Benefit Pension Plans

Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to these plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of these plans consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (“IRC”), as well as unfunded foreign plans.

Components of net periodic pension cost for all plans were as follows:

	For the Three Months Ended						For the Nine Months Ended
	September 30,  2012			October 2,  2011			September 30,  2012			October 2,  2011
	(in thousands)
Service cost	$	685		$	656		$	2,054		$	2,092
Interest cost		4,111			4,380			12,333			13,164
Expected return on plan assets		(4,090	)		(3,902	)		(12,269	)		(11,720	)
Amortization of unrecognized prior service cost		58			155			174			466
Settlement loss		—			—			—			680
Actuarial loss		1,937			—			5,083			4,279
Total net periodic pension cost	$	2,701		$	1,289		$	7,375		$	8,961

In the nine months ended September 30, 2012, Teradyne contributed $2.6 million to its defined benefit pension plans.

During the three months ended September 30, 2012, Teradyne offered to certain U.S. employees the option to receive their vested pension benefit as a one-time lump sum payment. Approximately 2,000 former employees selected to receive a one-time lump sum payment. Total one-time lump sum payments are expected to be approximately $52.0 million, of which $39.5 million was paid in the three months ended September 30, 2012, and the remainder is expected to be paid before December 31, 2012.

Post-Retirement Benefit Plans

In addition to receiving pension benefits, U.S. Teradyne employees who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes death, and medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits, and the existing benefit obligation relates primarily to those employees.

Components of net periodic post-retirement cost were as follows:

	For the Three Months Ended						For the Nine Months Ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
	(in thousands)
Service cost	$	17		$	15		$	50		$	45
Interest cost		109			135			328			405
Amortization of unrecognized prior service benefit		(150	)		(150	)		(449	)		(449	)
Actuarial gain		—			—			(92	)		(76	)
Total net periodic post-retirement cost	$	(24	)	$	—		$	(163	)	$	(75	)