Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income from Continuing Operations Before Income Taxes

The components of income from continuing operations before income taxes and the provision (benefit) for income taxes from continuing operations as shown in the consolidated statements of operations were as follows:

	2013			2012			2011
	(in thousands)
Income from continuing operations before income taxes:
U.S.	$	79,229		$	112,008		$	68,943
Non-U.S.		122,693			153,968			145,478
	$	201,922		$	265,976		$	214,421
Provision (benefit) for income taxes from continuing operations:
Current:
U.S. Federal	$	18,051		$	22,695		$	3,668
Non-U.S.		22,509			18,261			23,994
State		(269	)		(12	)		760
		40,291			40,944			28,422
Deferred:
U.S. Federal		(1,692	)		8,158			(139,929	)
Non-U.S.		(1,386	)		5,997			(10,549	)
State		(238	)		(6,172	)		(7,480	)
		(3,316	)		7,983			(157,958	)
Total provision (benefit) for income taxes from continuing operations:	$	36,975		$	48,927		$	(129,536	)

Total Income Tax Provision (Benefit)

The total income tax provision (benefit) for the years ended December 31, 2013, 2012 and 2011 was as follows:

	2013		2012		2011
	(in thousands)
Continuing operations	$	36,975	$	48,927	$	(129,536	)
Discontinued operations		—		—		4,311
Total income tax provision (benefit)	$	36,975	$	48,927	$	(125,225	)

Reconciliation of Effective Tax Rate

A reconciliation of the effective tax rate for the years 2013, 2012 and 2011 follows:

	2013			2012			2011
U.S. statutory federal tax rate		35.0	%		35.0	%		35.0	%
Foreign taxes		(10.8	)		(11.5	)		(12.6	)
U.S. research and development credit		(7.2	)		—			(1.1	)
Other U.S. permanent items		1.1			(2.8	)		5.7
Valuation allowance		0.4			(0.5	)		(86.6	)
State income taxes, net of federal tax benefit		0.1			(1.7	)		—
Other, net		(0.3	)		(0.1	)		(0.8	)
		18.3	%		18.4	%		(60.4	)%

Deferred Tax Assets (Liabilities)

Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2013 and 2012 were as follows:

	2013			2012
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	14,679		$	36,674
Tax credits		65,210			64,123
Inventory valuations		38,452			50,886
Pension liability		22,966			28,674
Research and development		—			284
Accruals		17,828			14,246
Equity compensation		10,498			9,355
Vacation accrual		7,291			6,452
Other		2,613			282
Deferred revenue		12,379			15,118
Gross deferred tax assets		191,916			226,094
Less: valuation allowance		(40,386	)		(55,446	)
Total deferred tax assets		151,530			170,648
Deferred tax liabilities:
Marketable securities		(794	)		(996	)
Intangible assets		(89,268	)		(114,730	)
Excess of tax over book depreciation		(24,458	)		(22,446	)
Total deferred tax liabilities		(114,520	)		(138,172	)
Net deferred assets	$	37,010		$	32,476

Operating Loss Carryforwards

At December 31, 2013, Teradyne had operating loss carryforwards that expire in the following years:

	U.S. Federal Operating Loss Carryforwards		State Net Operating Loss Carryforwards		Foreign Net Operating Loss Carryforwards
	(in thousands)
2014	$	—	$	335	$	—
2015		—		2		—
2016		—		843		—
2017		—		831		—
2018		—		706		—
2019-2024		16,600		2,791		—
2025-2027		300		52		—
Beyond 2027		2,454		3,673		—
Non-expiring		—		—		10,380
Total	$	19,354	$	9,233	$	10,380

Unrecognized Tax Benefits

Teradyne’s gross unrecognized tax benefits for the years ended December 31, 2013, 2012 and 2011 were as follows:

	2013			2012			2011
	(in thousands)
Beginning balance, as of January 1	$	18,666		$	19,391		$	11,777
Additions:
Tax positions for current year		4,586			459			6,131
Tax positions for prior years		2,112			2,259			1,065
Acquired tax positions		—			—			1,388
Reductions:
Tax positions for prior years		(4,161	)		(3,443	)		(970	)
Settlements with tax authorities		—			—			—
Ending Balance as of December 31	$	21,203		$	18,666		$	19,391