Financial Instruments and Derivatives (Tables)

9 Months Ended

Sep. 30, 2012

Schedule Of Fair Value Of Financial Assets And Liabilities Measured On Recurring Basis

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 September 30, 2012 and December 31, 2011.


	September 30, 2012
	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	$	194,724	$	—	$	—	$	194,724
Cash equivalents		275,546		15,422		—		290,968
Available for sale securities:
U.S. Treasury securities		268,020		—		—		268,020
U.S. government agency securities		—		146,655		—		146,655
Corporate debt securities		—		47,490		—		47,490
Commercial paper		—		44,476		—		44,476
Equity and debt mutual funds		9,552		—		—		9,552
Certificates of deposit and time deposits		—		6,660		—		6,660
Non-U.S. government securities		278		—		—		278

Total	$	748,120	$	260,703	$	—	$	1,008,823

Liabilities
Contingent consideration	$	—	$	—	$	16,513	$	16,513
Derivatives		—		106		—		106

Total	$	—	$	106	$	16,513	$	16,619

Reported as follows:


	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	470,270	$	15,422	$	—	$	485,692
Marketable securities		198,289		146,561		—		344,850
Long-term marketable securities		79,561		98,720		—		178,281

	$	748,120	$	260,703	$	—	$	1,008,823

Liabilities
Contingent consideration	$	—	$	—	$	16,513	$	16,513
Other accrued liabilities		—		106		—		106

	$	—	$	106	$	16,513	$	16,619


	December 31, 2011
	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	$	161,243	$	—	$	—	$	161,243
Cash equivalents		396,329		16,164		—		412,493
Available for sale securities:
U.S. government agency securities		—		83,197		—		83,197
Corporate debt securities		—		44,829		—		44,829
Commercial paper		—		22,075		—		22,075
U.S. Treasury securities		14,180		—		—		14,180
Equity and debt mutual funds		8,237		—		—		8,237
Certificates of deposit and time deposits		—		8,117		—		8,117
Non-U.S. government securities		274		—		—		274

Total	$	580,263	$	174,382	$	—	$	754,645

Liabilities
Contingent consideration	$	—	$	—	$	68,892	$	68,892
Derivatives		—		314		—		314

Total	$	—	$	314	$	68,892	$	69,206

Reported as follows:


	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	557,572	$	16,164	$	—	$	573,736
Marketable securities		9,044		87,458		—		96,502
Long-term marketable securities		13,647		70,760		—		84,407

	$	580,263	$	174,382	$	—	$	754,645

Liabilities
Contingent consideration	$	—	$	—	$	68,892	$	68,892
Other accrued liabilities		—		314		—		314

	$	—	$	314	$	68,892	$	69,206

Schedule Of Quantitative Information Associated With Fair Value Measurement Of Level 3

The following table provides quantitative information associated with the fair value measurement of Teradyne’s Level 3 financial instrument:

September 30, 2012

Weighted
Average

Liability

Fair Value

Valuation Technique

Unobservable Inputs

(in thousands)

Contingent

consideration

16,513

Income approach—discounted
cash flow

Discount rate for revenue earn-out

3.5

Discount rate for new product earn-out

3.5

Schedule Of Changes In Fair Value Of Level 3 Contingent Consideration

The following table represents changes in the fair value of Level 3 contingent consideration:


	Contingent consideration
	(in thousands)
Balance at December 31, 2011	$	68,892
Fair value adjustment		(1,858	)
Payment		(5,824	)

Balance at April 1, 2012		61,210
Fair value adjustment		(6,548	)

Balance at July 1, 2012		54,662
Payment		(38,149	)

Balance at September 30, 2012	$	16,513

Schedule Of Carrying Amounts And Fair Values Of Financial Instruments

The carrying amounts and fair values of financial instruments at September 30, 2012 and December 31, 2011 were as follows:


	September 30, 2012				December 31, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Cash and cash equivalents	$	485,692	$	485,692	$	573,736	$	573,736
Marketable securities		523,131		523,131		180,909		180,909
Convertible debt(1)		166,268		499,225		156,098		485,925
Japan loan		5,151		5,151		6,431		6,431

(1)	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 feature.

Schedule Of Available-For-Sale Marketable Securities

The following tables summarize the composition of available for sale marketable securities at September 30, 2012 and December 31, 2011:


	September 30, 2012
	Available-for-Sale									Fair Market Value of Investments with Unrealized Losses
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	267,831	$	190	$	(1	)	$	268,020	$	175
U.S. government agency securities		146,418		237		—			146,655		—
Corporate debt securities		44,858		2,689		(57	)		47,490		872
Commercial paper		44,474		6		(4	)		44,476		10,235
Equity and debt mutual funds		8,471		1,084		(3	)		9,552		148
Certificates of deposit and time deposits		6,658		2		—			6,660		—
Non-U.S. government securities		278		—		—			278		—

	$	518,988	$	4,208	$	(65	)	$	523,131	$	11,430

Reported as follows:


	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	344,777	$	77	$	(4	)	$	344,850	$	10,235
Long-term marketable securities		174,211		4,131		(61	)		178,281		1,195

	$	518,988	$	4,208	$	(65	)	$	523,131	$	11,430


	December 31, 2011
	Available-for-Sale									Fair Market Value of Investments with Unrealized Losses
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. government agency securities	$	83,070	$	152	$	(25	)	$	83,197	$	28,510
Corporate debt securities		43,077		1,893		(141	)		44,829		17,033
Commercial paper		22,083		2		(10	)		22,075		9,479
U.S. Treasury securities		14,141		39		—			14,180		—
Equity and debt mutual funds		7,876		477		(116	)		8,237		3,749
Certificates of deposit and time deposits		8,122		—		(5	)		8,117		5,800
Non-U.S. government securities		256		18		—			274		—

	$	178,625	$	2,581	$	(297	)	$	180,909	$	64,571

Reported as follows:


	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	96,518	$	24	$	(40	)	$	96,502	$	35,595
Long-term marketable securities		82,107		2,557		(257	)		84,407		28,976

	$	178,625	$	2,581	$	(297	)	$	180,909	$	64,571

Contractual Maturities of Available-For-Sale Marketable Securities

The contractual maturities of available-for-sale marketable securities as of September 30, 2012 were as follows:


	September 30, 2012
	Cost		Fair Market Value
Due within one year	$	344,777	$	344,850
Due after 1 year through 5 years		155,621		157,028
Due after 5 years through 10 years		2,819		3,025
Due after 10 years		15,771		18,228

Total	$	518,988	$	523,131

Schedule Of Fair Value Of Derivative Instruments

The following table summarizes the fair value of derivative instruments at September 30, 2012 and December 31, 2011.


	Balance Sheet Location		September 30, 2012		December 31, 2011
			(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Other accrued liabilities	$	106	$	314

			$	106	$	314

Schedule Of Effect Of Derivative Instruments In Statement Of Operations Recognized

The following table summarizes the effect of derivative instruments in the statement of operations recognized during the three and nine months ended September 30, 2012 and October 2, 2011. The table does not reflect the corresponding gains (losses) from the remeasurement of the monetary assets and liabilities denominated in foreign currencies.


	Location of Gains (Losses) Recognized in Statement of Operations		For the Three Months Ended						For the Nine Months Ended
			September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
			(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Interest expense and other	$	(1,197	)	$	(1,429	)	$	(677	)	$	(858	)

			$	(1,197	)	$	(1,429	)	$	(677	)	$	(858	)

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References

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Reference 4: http://www.xbrl.org/2003/role/presentationRef

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+ Details

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

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