Segment Information

9 Months Ended

Sep. 30, 2012

Segment Information

Q. Segment Information

Teradyne has three operating segments (Semiconductor Test, Systems Test Group and Wireless Test), which are its reportable segments. The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test products and services. The Systems Test Group segment includes operations related to design, manufacturing and marketing of products and services for military/aerospace instrumentation test, storage test and circuit-board test. The Wireless Test segment includes operations related to design, manufacturing and marketing of wireless test products and services. Each operating segment has a segment manager who is directly accountable to and maintains regular contact with Teradyne’s chief operating decision maker (Teradyne’s chief executive officer) to discuss operating activities, financial results, forecasts, and plans for the segment.

Teradyne evaluates performance based on several factors, of which the primary financial measure is business segment income before income taxes. The accounting policies of the business segments are the same as those described in Note B “Accounting Policies” in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2011. Segment information is as follows:

	Semiconductor Test		Systems Test Group			Wireless Test		Corporate and Eliminations			Consolidated
	(in thousands)
Three months ended September 30, 2012:
Net revenues	$	310,979	$	33,844		$	118,571	$	—		$	463,394
Income (loss) from continuing operations before income taxes(1)(2)		55,348		(2,642	)		58,902		(8,583	)		103,025
Three months ended October 2, 2011:
Net revenues	$	241,394	$	102,995		$	—	$	—		$	344,389
Income (loss) from continuing operations before income taxes(1)(2)		37,244		25,563			—		(4,342	)		58,465
Nine months ended September 30, 2012:
Net revenues	$	943,625	$	202,894		$	261,827	$	—		$	1,408,346
Income (loss) from continuing operations before income taxes(1)(2)		181,594		30,964			97,729		(14,026	)		296,261
Nine months ended October 2, 2011:
Net revenues	$	903,740	$	228,329		$	—	$	—		$	1,132,069
Income (loss) from continuing operations before income taxes(1)(2)		205,144		39,877			—		(15,209	)		229,812

(1) Pension and post retirement actuarial gains and losses, interest income, and interest expense and other are included in Corporate and Eliminations.

(2) Included in the income (loss) from continuing operations before income taxes for each of the segments are charges and credits for the three and nine months ended September 30, 2012 and October 2, 2011 that include restructuring and other, net, and provision for excess and obsolete inventory, as follows:

Included in the Semiconductor Test segment are charges for the following:

	For the Three Months Ended					For the Nine Months Ended
	September 30,  2012			October 2,  2011		September 30,  2012		October 2,  2011
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	3,085		$	4,202	$	9,254	$	10,144
Restructuring and other, net		(4	)		137		315		2,307
Total	$	3,081		$	4,339	$	9,569	$	12,451

Included in the Systems Test Group segment are charges and credits for the following:

	For the Three Months Ended				For the Nine Months Ended
	September 30,  2012		October 2,  2011		September 30,  2012		October 2,  2011
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	378	$	211	$	3,020	$	612
Restructuring and other, net		451		—		451		(246	)
Total	$	829	$	211	$	3,471	$	366

Included in the Wireless Test segment are charges for the following:

	For the Three Months Ended				For the Nine Months Ended
	September 30,  2012		October 2,  2011		September 30,  2012		October 2,  2011
	(in thousands)
Cost of revenues—inventory step-up	$	—	$	—	$	6,089	$	—
Cost of revenues—provision for excess and obsolete inventory		2,018		—		4,134		—
Restructuring and other, net		236		—		236		—
Total	$	2,254	$	—	$	10,459	$	—

Included in Corporate and Eliminations are charges and credits for the following:

	For the Three Months Ended				For the Nine Months Ended
	September 30,  2012		October 2,  2011		September 30,  2012			October 2,  2011
	(in thousands)
Restructuring and other, net	$	—	$	1,328	$	(8,406	)	$	1,096
Total	$	—	$	1,328	$	(8,406	)	$	1,096