Financial Instruments and Derivatives (Tables)

3 Months Ended

Mar. 30, 2014

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 March 30, 2014 and December 31, 2013.

	March 30, 2014
	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	$	131,722	$	—	$	—	$	131,722
Cash equivalents		87,894		13,010		—		100,904
Available-for-sale securities:
U.S. Treasury securities		321,296		—		—		321,296
U.S. government agency securities		—		191,863		—		191,863
Commercial paper		—		116,767		—		116,767
Corporate debt securities		—		82,787		—		82,787
Equity and debt mutual funds		14,171		—		—		14,171
Certificates of deposit and time deposits		—		7,257		—		7,257
Non-U.S. government securities		—		77		—		77
Total		555,083		411,761		—		966,844
Derivatives		—		209		—		209
Total	$	555,083	$	411,970	$	—	$	967,053
Liabilities
Contingent consideration	$	—	$	—	$	2,230	$	2,230
Total	$	—	$	—	$	2,230	$	2,230

Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	219,616	$	13,010	$	—	$	232,626
Marketable securities		214,230		247,920		—		462,150
Long-term marketable securities		121,237		150,831		—		272,068
Other current assets		—		209		—		209
	$	555,083	$	411,970	$	—	$	967,053
Liabilities
Long-term other accrued liabilities	$	—	$	—	$	2,230	$	2,230
	$	—	$	—	$	2,230	$	2,230

	December 31, 2013
	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	$	117,242	$	—	$	—	$	117,242
Cash equivalents		165,865		58,531		—		224,396
Available-for-sale securities:
U.S. Treasury securities		467,895		—		—		467,895
U.S. government agency securities		—		202,588		—		202,588
Commercial paper		—		105,598		—		105,598
Corporate debt securities		—		65,387		—		65,387
Equity and debt mutual funds		13,156		—		—		13,156
Certificates of deposit and time deposits		—		3,258		—		3,258
Non-U.S. government securities		—		78		—		78
Total		764,158		435,440		—		1,199,598
Derivatives		—		153		—		153
Total	$	764,158	$	435,593	$	—	$	1,199,751
Liabilities
Contingent consideration	$	—	$	—	$	2,230	$	2,230
Total	$	—	$	—	$	2,230	$	2,230

Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	283,107	$	58,531	$	—	$	341,638
Marketable securities		371,101		215,781		—		586,882
Long-term marketable securities		109,950		161,128		—		271,078
Other current assets		—		153		—		153
	$	764,158	$	435,593	$	—	$	1,199,751
Liabilities
Long-term other accrued liabilities	$	—	$	—	$	2,230	$	2,230
	$	—	$	—	$	2,230	$	2,230

Schedule of Changes in Fair Value of Level 3 Contingent Consideration

Changes in the fair value of Level 3 contingent consideration for the three months ended March 30, 2014 and March 31, 2013 were as follows:

	For the Three Months Ended March 30, 2014
	(in thousands)
Balance at December 31, 2013	$	2,230
Contingent consideration payments		—
Balance at March 30, 2014	$	2,230

	For the Three Months Ended March 31, 2013
	(in thousands)
Balance at December 31, 2012	$	388
Contingent consideration payments		(313	)
Balance at March 31, 2013	$	75

Schedule of Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of Teradyne’s financial instruments at March 30, 2014 and December 31, 2013 were as follows:

	March 30, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Cash and cash equivalents	$	232,626	$	232,626	$	341,638	$	341,638
Marketable securities		734,218		734,218		857,960		857,960
Convertible debt(1)		—		—		185,708		611,433
Japan loan		—		—		955		955

(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 March 30, 2014 and December 31, 2013:

	March 30, 2014
	Available-for-Sale									Fair Market Value of Investment with  Unrealized Losses
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value
	(in thousands)
U.S. Treasury securities	$	321,184	$	236	$	(124	)	$	321,296	$	23,205
U.S. government agency securities		191,856		92		(85	)		191,863		91,951
Commercial paper		116,758		13		(4	)		116,767		38,906
Corporate debt securities		81,913		1,337		(463	)		82,787		49,413
Equity and debt mutual funds		11,483		2,725		(37	)		14,171		810
Certificates of deposit and time deposits		7,257		—		—			7,257		—
Non-U.S. government securities		77		—		—			77		—
	$	730,528	$	4,403	$	(713	)	$	734,218	$	204,285

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	462,031	$	146	$	(27	)	$	462,150	$	99,303
Long-term marketable securities		268,497		4,257		(686	)		272,068		104,982
	$	730,528	$	4,403	$	(713	)	$	734,218	$	204,285

	December 31, 2013
	Available-for-Sale									Fair Market Value of Investments with  Unrealized Losses
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value
	(in thousands)
U.S. Treasury securities	$	468,084	$	94	$	(283	)	$	467,895	$	108,212
U.S. government agency securities		202,573		75		(60	)		202,588		84,498
Commercial paper		105,583		16		(1	)		105,598		7,993
Corporate debt securities		65,747		762		(1,122	)		65,387		40,355
Equity and debt mutual funds		10,463		2,742		(49	)		13,156		702
Certificates of deposit and time deposits		3,258		—		—			3,258		—
Non-U.S. government securities		78		—		—			78		—
	$	855,786	$	3,689	$	(1,515	)	$	857,960	$	241,760

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	586,818	$	85	$	(21	)	$	586,882	$	137,670
Long-term marketable securities		268,968		3,604		(1,494	)		271,078		104,090
	$	855,786	$	3,689	$	(1,515	)	$	857,960	$	241,760

Contractual Maturities of Investments Held

The contractual maturities of investments held at March 30, 2014 were as follows:

	March 30, 2014
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	462,031	$	462,150
Due after 1 year through 5 years		226,558		226,607
Due after 5 years through 10 years		5,854		5,954
Due after 10 years		24,602		25,336
Total	$	719,045	$	720,047

Schedule of Derivative Instruments in Statement of Financial Position at Fair Value

The following table summarizes the fair value of derivative instruments at March 30, 2014 and December 31, 2013:

	Balance Sheet Location		March 30, 2014		December 31, 2013
			(in thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts		Other current assets	$	209	$	153
			$	209	$	153

Schedule of Effect of Derivative Instruments on Statement of Operations Recognized

The following table summarizes the effect of derivative instruments recognized in the statement of operations during the three months ended March 30, 2014 and March 31, 2013. The table does not reflect the corresponding gains (losses) from the remeasurement of the monetary assets and liabilities denominated in foreign currencies. For the three months ended March 30, 2014 and March 31, 2013, gains (losses) from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $0.6 million and $(2.8) million, respectively.

	Location of (Losses) Gains Recognized in Statement of Operations	For the Three Months Ended
		March 30, 2014			March 31, 2013
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Interest expense and other	$	(747	)	$	2,248
		$	(747	)	$	2,248