10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File No. 001-06462

TERADYNE, INC.

(Exact name of registrant as specified in its charter)

Massachusetts	04-2272148
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
600 Riverpark Drive, North Reading, Massachusetts	01864
(Address of Principal Executive Offices)	(Zip Code)

978-370-2700

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange

Act).     Yes  ¨    No  x

The number of shares outstanding of the registrant’s only class of Common Stock as of August 1, 2014 was 204,676,850 shares.

TERADYNE, INC.

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of June 29, 2014 and December 31, 2013		1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 29, 2014 and June 30, 2013		2
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 29, 2014 and June 30, 2013		3
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 29, 2014 and June 30, 2013		4
	Notes to Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		33
Item 4.	Controls and Procedures		33
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		34
Item 1A.	Risk Factors		34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		34
Item 4.	Mine Safety Disclosures		34
Item 6.	Exhibits		35

PART I

Item 1: Financial Statements

TERADYNE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 29,  2014		December 31,  2013
	(in thousands, except per share information)
ASSETS
Current assets:
Cash and cash equivalents	$	254,625	$	341,638
Marketable securities		488,439		586,882
Accounts receivable, less allowance for doubtful accounts of $2,461 and $2,912 at June 29, 2014 and December 31, 2013, respectively		300,767		157,642
Inventories:
Parts		70,444		84,232
Assemblies in process		15,191		15,539
Finished goods		41,239		38,168
		126,874		137,939
Deferred tax assets		68,460		72,478
Prepayments		110,473		136,374
Other current assets		4,989		7,324
Total current assets		1,354,627		1,440,277
Net property, plant and equipment		308,521		275,236
Marketable securities		364,077		271,078
Deferred tax assets		5,810		5,217
Other assets		10,927		14,591
Retirement plans assets		9,134		9,342
Intangible assets, net		215,748		252,291
Goodwill		361,819		361,792
Total assets	$	2,630,663	$	2,629,824
LIABILITIES
Current liabilities:
Accounts payable	$	102,214	$	62,874
Accrued employees’ compensation and withholdings		86,765		95,619
Deferred revenue and customer advances		63,968		55,404
Other accrued liabilities		93,103		63,712
Accrued income taxes		15,182		11,360
Current debt		—		186,663
Total current liabilities		361,232		475,632
Long-term deferred revenue and customer advances		18,992		13,756
Retirement plans liabilities		92,485		91,517
Deferred tax liabilities		39,616		40,686
Long-term other accrued liabilities		16,865		23,139
Total liabilities		529,190		644,730
Commitments and contingencies (Note O)
SHAREHOLDERS’ EQUITY
Common stock, $0.125 par value, 1,000,000 shares authorized, 196,321 shares and 191,731 shares issued and outstanding at June 29, 2014 and December 31, 2013, respectively		24,540		23,966
Additional paid-in capital		1,414,513		1,390,896
Accumulated other comprehensive income		5,709		4,000
Retained earnings		656,711		566,232
Total shareholders’ equity		2,101,473		1,985,094
Total liabilities and shareholders’ equity	$	2,630,663	$	2,629,824

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s

Annual Report on Form 10-K for the year ended December 31, 2013, are an integral part of the condensed

consolidated financial statements.

1

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended				For the Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(in thousands, except per share amount)
Net revenues:
Products	$	452,488	$	363,087	$	707,874	$	577,387
Services		73,079		65,802		138,703		131,869
Total net revenues		525,567		428,889		846,577		709,256
Cost of revenues:
Cost of products		202,411		158,411		326,859		255,204
Cost of services		32,743		29,245		62,258		59,402
Total cost of revenues		235,154		187,656		389,117		314,606
Gross profit		290,413		241,233		457,460		394,650
Operating expenses:
Engineering and development		73,414		67,773		140,499		130,524
Selling and administrative		77,489		69,230		155,492		137,120
Acquired intangible assets amortization		18,271		18,063		36,542		36,099
Restructuring and other		572		259		572		591
Total operating expenses		169,746		155,325		333,105		304,334
Income from operations		120,667		85,908		124,355		90,316
Interest income		1,266		903		2,302		1,975
Interest expense and other		541		6,454		7,138		13,360
Income before income taxes		121,392		80,357		119,519		78,931
Income tax provision		20,187		13,801		17,385		5,786
Net income	$	101,205	$	66,556	$	102,134	$	73,145
Net income per common share:
Basic	$	0.52	$	0.35	$	0.53	$	0.38
Diluted	$	0.47	$	0.28	$	0.45	$	0.31
Weighted average common shares—basic		194,408		190,569		193,860		190,128
Weighted average common shares—diluted		216,568		234,909		226,526		234,833
Cash dividend declared per common share	$	—	$	—	$	0.06	$	—

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s

Annual Report on Form 10-K for the year ended December 31, 2013, are an integral part of the condensed

consolidated financial statements.

2

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Net income	$	101,205		$	66,556		$	102,134		$	73,145
Other comprehensive income (loss):
Available-for-sale marketable securities:
Net unrealized gains (losses) on marketable securities arising during period, net of tax of $558, $(841), $1,242, $(726)		1,165			(1,463	)		2,304			(1,263	)
Less: Reclassification adjustment for net gains included in net income, net of tax of $(141), $(39), $(243), $(122)		(272	)		(68	)		(448	)		(212	)
		893			(1,531	)		1,856			(1,475	)
Defined benefit pension and post-retirement plans:
Amortization of net prior service benefit included in net periodic pension expense and post-retirement income, net of tax of $(42), $(40), $(85), $(79)		(74	)		(69	)		(147	)		(138	)
Other comprehensive income (loss)		819			(1,600	)		1,709			(1,613	)
Comprehensive income	$	102,024		$	64,956		$	103,843		$	71,532

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s

Annual Report on Form 10-K for the year ended December 31, 2013, are an integral part of the condensed

consolidated financial statements.

3

TERADYNE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Six Months Ended
	June 29, 2014			June 30, 2013
	(in thousands)
Cash flows from operating activities:
Net income	$	102,134		$	73,145
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		33,785			27,552
Amortization		42,990			46,052
Stock-based compensation		23,530			18,077
Provision for excess and obsolete inventory		15,071			5,775
Deferred taxes		(5,697	)		(15,230	)
Tax benefit related to stock options and restricted stock units		(1,671	)		(1,584	)
Retirement plans actuarial gains		—			(1,359	)
Other		1,165			24
Changes in operating assets and liabilities:
Accounts receivable		(143,125	)		(74,785	)
Inventories		18,469			26,373
Prepayments and other assets		27,000			(17,277	)
Accounts payable and other accrued expenses		52,796			(15,428	)
Deferred revenue and customer advances		13,800			(2,811	)
Retirement plans contributions		(2,388	)		(2,511	)
Accrued income taxes		5,495			2,964
Net cash provided by operating activities		183,354			68,977
Cash flows from investing activities:
Purchases of property, plant and equipment		(91,389	)		(50,798	)
Purchases of marketable securities		(523,306	)		(458,070	)
Proceeds from maturities of marketable securities		377,436			268,546
Proceeds from sales of marketable securities		152,818			50,255
Proceeds from life insurance		4,391			—
Net cash used for investing activities		(80,050	)		(190,067	)
Cash flows from financing activities:
Issuance of common stock under employee stock purchase and stock options plans		10,643			9,638
Tax benefit related to stock options and restricted stock units		1,671			1,584
Payments of dividend		(11,656	)		—
Payments of long-term debt		(190,975	)		(1,063	)
Payments of contingent consideration		—			(388	)
Net cash (used for) provided by financing activities		(190,317	)		9,771
Decrease in cash and cash equivalents		(87,013	)		(111,319	)
Cash and cash equivalents at beginning of period		341,638			338,920
Cash and cash equivalents at end of period	$	254,625		$	227,601

The accompanying notes, together with the Notes to Consolidated Financial Statements included in Teradyne’s

Annual Report on Form 10-K for the year ended December 31, 2013, are an integral part of the condensed

consolidated financial statements.

4

TERADYNE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A. The Company

Teradyne, Inc. (the “Company” or “Teradyne”) is a leading global supplier of automatic test equipment. Teradyne’s automatic test equipment products and services include:

• semiconductor test (“Semiconductor Test”) systems;

• wireless test (“Wireless Test”) systems; and

• military/aerospace (“Mil/Aero”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test (“Production Board Test”) systems (collectively these products represent “System Test”).

B. Accounting Policies

Basis of Presentation

The consolidated interim financial statements include the accounts of Teradyne and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These interim financial statements are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of such interim financial statements. Certain prior year’s amounts were reclassified to conform to the current year presentation. The December 31, 2013 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The accompanying financial information should be read in conjunction with the consolidated financial statements and notes thereto contained in Teradyne’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 28, 2014, for the year ended December 31, 2013.

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates.

C. Recently Issued Accounting Pronouncements

On July 18, 2013, Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” Under this ASU, unrecognized tax benefits will be netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by unrecognized tax benefits. The provisions of this ASU are effective for interim and annual periods beginning on or after December 15, 2013. Teradyne’s implementation of this ASU did not have a material impact on Teradyne’s financial position and results of operations.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” which will replace numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The

5

core principle of the new standard is that a company should recognize revenue to show the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. For Teradyne, the standard will be effective in the first quarter of 2017. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. Teradyne has not yet selected a transition method. Teradyne is currently evaluating the impact of this ASU on its financial position and results of operations.

D. Financial Instruments and Derivatives

Cash Equivalents

Teradyne considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents.

Financial Instruments

Teradyne accounts for its investments in debt and equity securities in accordance with the provisions of ASC 320-10, “Investments—Debt and Equity Securities.” ASC 320-10 requires that certain debt and equity securities be classified into one of three categories; trading, available-for-sale or held-to-maturity securities. As of June 29, 2014, Teradyne’s investments in debt and equity securities were classified as available-for-sale and recorded at their fair market value.

On a quarterly basis, Teradyne reviews its investments to identify and evaluate those that have an indication of a potential other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include:

• The length of time and the extent to which the market value has been less than cost;

• The financial condition and near-term prospects of the issuer; and

• The intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value.

Teradyne uses the market and income approach techniques to value its financial instruments and there were no changes in valuation techniques during the three and six months ended June 29, 2014 and June 30, 2013. As defined in ASC 820-10 “Fair Value Measurements and Disclosures”, fair value is the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820-10 requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets as of the reporting date.

Level 2: Inputs other than Level 1, that are observable either directly or indirectly as of the reporting date. For example, a common approach for valuing fixed income securities is the use of matrix pricing, a technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are not supported by market data. Unobservable inputs are developed based on the best information available, which might include Teradyne’s own data.

Substantially all of Teradyne’s fixed income securities are classified as Level 2, with the exception of investments in equity and debt mutual funds, which are classified as Level 1, and contingent consideration, which

6

is classified as Level 3. The majority of Teradyne’s Level 2 securities are priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.

During the six months ended June 29, 2014 and June 30, 2013, there were no transfers in or out of Level 1, Level 2 or Level 3 financial instruments.

There were no realized losses recorded in the three and six months ended June 29, 2014 and June 30, 2013. Realized gains recorded in the three and six months ended June 29, 2014 were $0.4 million and $0.7 million, respectively. Realized gains recorded in the three and six months ended June 30, 2013 were $0.1 million and $0.3 million, respectively. Realized gains are included in interest income.

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 June 29, 2014 and December 31, 2013.

	June 29, 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	$	136,730	$	—	$	—	$	136,730
Cash equivalents		112,152		5,743		—		117,895
Available-for-sale securities:
U.S. Treasury securities		—		404,942		—		404,942
U.S. government agency securities		—		228,075		—		228,075
Commercial paper		—		108,459		—		108,459
Corporate debt securities		—		82,490		—		82,490
Equity and debt mutual funds		14,441		—		—		14,441
Certificates of deposit and time deposits		—		14,030		—		14,030
Non-U.S. government securities		—		79		—		79
Total	$	263,323	$	843,818	$	—	$	1,107,141
Liabilities
Contingent consideration	$	—	$	—	$	2,230	$	2,230
Derivatives		—		306		—		306
Total	$	—	$	306	$	2,230	$	2,536

7

Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	248,882	$	5,743	$	—	$	254,625
Marketable securities		—		488,439		—		488,439
Long-term marketable securities		14,441		349,636		—		364,077
	$	263,323	$	843,818	$	—	$	1,107,141
Liabilities
Other accrued liabilities	$	—	$	306	$	—	$	306
Long-term other accrued liabilities		—		—		2,230		2,230
	$	—	$	306	$	2,230	$	2,536

	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		296,263		903,335		—		1,199,598
Derivatives		—		153		—		153
Total	$	296,263	$	903,488	$	—	$	1,199,751
Liabilities
Contingent consideration	$	—	$	—	$	2,230	$	2,230
Total	$	—	$	—	$	2,230	$	2,230

8

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		—		586,882		—		586,882
Long-term marketable securities		13,156		257,922		—		271,078
Other current assets		—		153		—		153
	$	296,263	$	903,488	$	—	$	1,199,751
Liabilities
Long-term other accrued liabilities	$	—	$	—	$	2,230	$	2,230
	$	—	$	—	$	2,230	$	2,230

Contingent consideration relates to Teradyne’s acquisition of ZTEC on October 25, 2013. The total purchase price included $2.2 million in fair value of contingent consideration payable upon achievement of certain customer order and revenue targets through 2015. The maximum amount of contingent consideration that could be paid is $5.0 million. Based on the projected results for the acquisition, no value was assigned to the revenue component of the contingent consideration.

The valuation of the customer order component of the contingent consideration utilized the following assumptions: (1) probability of meeting each benchmark; (2) expected timing of meeting each benchmark; and (3) discount rate reflecting the risk associated with the expected payments. The probabilities and timing for each benchmark were estimated based on a review of the historical and projected results. A discount rate of 5.2 percent was selected based on the cost of debt for the business, as a significant portion of the risk in achieving the customer order contingent consideration was captured in the probabilities assigned to meeting each benchmark. There were no changes to the fair value of the contingent consideration during the six months ended June 29, 2014.

Changes in the fair value of Level 3 contingent consideration for the three and six months ended June 29, 2014 and June 30, 2013 were as follows:

Contingent consideration related to Teradyne’s acquisition of ZTEC in October 2013
	For the Three and Six Months Ended
	June 29, 2014
	(in thousands)
Balance at December 31, 2013	$	2,230
Contingent consideration payments		—
Balance at March 30, 2014		2,230
Contingent consideration payments		—
Balance at June 29, 2014	$	2,230

Contingent consideration related to Teradyne’s acquisition of LitePoint in October 2011	For the Three and Six Months Ended
	June 30, 2013
	(in thousands)
Balance at December 31, 2012	$	388
Contingent consideration payments		(313	)
Balance at March 31, 2013		75
Contingent consideration payments		(75	)
Balance at June 30, 2013	$	—

9

The carrying amounts and fair values of Teradyne’s financial instruments at June 29, 2014 and December 31, 2013 were as follows:

	June 29, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Cash and cash equivalents	$	254,625	$	254,625	$	341,638	$	341,638
Marketable securities		852,516		852,516		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.

The fair values of cash and cash equivalents, accounts receivable, net and accounts payable approximate the carrying amount due to the short-term nature of these instruments.

The following tables summarize the composition of available-for-sale marketable securities at June 29, 2014 and December 31, 2013:

	June 29, 2014
	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	$	404,707	$	308	$	(73	)	$	404,942	$	36,402
U.S. government agency securities		227,889		202		(16	)		228,075		41,122
Commercial paper		108,446		13		—			108,459		—
Corporate debt securities		80,771		1,903		(184	)		82,490		25,959
Equity and debt mutual funds		11,567		2,898		(24	)		14,441		839
Certificates of deposit and time deposits		14,027		3		—			14,030		—
Non-U.S. government securities		79		—		—			79		—
	$	847,486	$	5,327	$	(297	)	$	852,516	$	104,322

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	488,257	$	186	$	(4	)	$	488,439	$	26,407
Long-term marketable securities		359,229		5,141		(293	)		364,077		77,915
	$	847,486	$	5,327	$	(297	)	$	852,516	$	104,322

10

	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

As of June 29, 2014, the fair market value of investments with unrealized losses was $104.3 million. Of this value, $6.9 million had unrealized losses greater than one year and $97.4 million had unrealized losses less than one year. As of December 31, 2013, the fair market value of investments with unrealized losses was $241.8 million. Of this value, $0.9 million had unrealized losses greater than one year and $240.9 million had unrealized losses less than one year. Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments, at June 29, 2014 and December 31, 2013, were temporary.

The contractual maturities of investments held at June 29, 2014 were as follows:

	June 29, 2014
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	488,257	$	488,439
Due after 1 year through 5 years		317,047		317,321
Due after 5 years through 10 years		6,289		6,467
Due after 10 years		24,326		25,848
Total	$	835,919	$	838,075

Contractual maturities of investments held at June 29, 2014 exclude equity and debt mutual funds as they do not have a contractual maturity date.

Derivatives

Teradyne conducts business in a number of foreign countries, with certain transactions denominated in local currencies. The purpose of Teradyne’s foreign currency management is to minimize the effect of exchange rate fluctuations on certain foreign currency denominated monetary assets and liabilities. Teradyne does not use derivative financial instruments for trading or speculative purposes.

11

To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings, and is used to offset the change in value of the monetary assets and liabilities denominated in foreign currencies.

The notional amount of foreign currency forward contracts was $69.4 million and $74.8 million at June 29, 2014 and December 31, 2013, respectively.

The fair value of the outstanding contracts was a loss of $0.3 million and a gain of $0.2 million at June 29, 2014 and December 31, 2013, respectively. The following table summarizes the fair value of derivative instruments at June 29, 2014 and December 31, 2013:

	Balance Sheet Location	June 29, 2014		December 31, 2013
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other current assets	$	—	$	153
	Other accrued liabilities		306		—
		$	306	$	153

Teradyne had no offsetting foreign exchange contracts at June 29, 2014 and December 31, 2013.

In the three and six months ended June 29, 2014, Teradyne recorded net realized losses of $1.1 million and $1.9 million, respectively, related to foreign currency forward contracts hedging net monetary positions. In the three and six months ended June 30, 2013, Teradyne recorded net realized gains of $1.8 million and $4.1 million, respectively, related to foreign currency forward contracts hedging net monetary positions. Gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities are included in interest expense and other.

The following table summarizes the effect of derivative instruments recognized in the statement of operations during the three and six months ended June 29, 2014 and June 30, 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 and six months ended June 29, 2014, gains from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $0.7 million and $1.3 million, respectively. For the three and six months ended June 30, 2013, (losses) from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $(1.8) million and $(4.6) million, respectively.

	Location of Gains (Losses) Recognized in Statement of Operations		For the Three Months Ended					For the Six Months Ended
			June 29, 2014			June 30, 2013		June 29, 2014			June 30, 2013
			(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Interest expense and other	$	(1,122	)	$	1,818	$	(1,869	)	$	4,067
			$	(1,122	)	$	1,818	$	(1,869	)	$	4,067

See Note E: “Debt” regarding derivatives related to convertible senior notes.

12

E. Debt

Loan Agreement

On March 31, 2009, Teradyne K.K., Teradyne’s wholly-owned subsidiary in Japan, entered into a loan agreement with a local bank in Japan to borrow approximately $10.0 million (the loan was denominated in Japanese Yen). The loan had a term of 5 years and a fixed interest rate of 0.8%. Approximately $6.0 million of the loan was collateralized by a real estate mortgage on Teradyne K.K.’s building and land in Kumamoto, Japan and approximately $4.0 million was unsecured. Teradyne, Inc. guaranteed payment of the loan obligation. The loan was amortized over the term of the loan with semiannual principal payments of approximately $1.0 million on September 30 and March 30 each year. The final principal and interest payments were made in March 2014.

Convertible Senior Notes

In April 2009, Teradyne issued 4.50% convertible senior notes (the “Notes”) at an aggregate principal amount of $190 million and a conversion price of $5.4750 or 182.65 shares of Teradyne’s common stock per $1,000 principal amount of Notes. The Notes had a maturity date of March 15, 2014. Substantially all of the Notes were converted prior to March 15, 2014 and were “net share settled,” meaning that the holders received, for each $1,000 in principal amount of Notes, $1,000 in cash and approximately 131.95 shares of Teradyne common stock (calculated by taking 182.65 shares less 50.7 shares). The 50.7 shares were determined by dividing the $1,000 principal amount by the $19.74 average trading price of Teradyne’s common stock over the 25 day trading period from February 5, 2014 to March 12, 2014.

Teradyne satisfied the Notes “net share settlement” by paying the aggregate principal amount of $190 million in cash and issuing 25.1 million shares of common stock. On March 13, 2014, Teradyne exercised its call option agreement entered into with Goldman, Sachs & Co. (the “hedge counterparty”) at the time of issuance of the Notes and received 25.1 million shares of Teradyne’s common stock, which were retired.

Subsequently, the hedge counterparty can exercise warrants with a strike price of $7.6389. The warrants are net share settled. Approximately 536,000 warrants expire on a daily basis over a 65-day trading period from June 17, 2014 to September 17, 2014. In the three months ended June 29, 2014, approximately 1.9 million shares were issued for warrants exercised.

The tables below represent the components of Teradyne’s convertible senior notes:

	June 29, 2014		December 31, 2013
	(in thousands)
Debt principal	$	—	$	189,998
Unamortized debt discount		—		4,290
Net carrying amount of the convertible debt	$	—	$	185,708

The interest expense on Teradyne’s convertible senior notes for the three and six months ended June 29, 2014 and June 30, 2013 was as follows:

	For the Three Months Ended				For the Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(in thousands)
Contractual interest expense	$	—	$	2,137	$	1,757	$	4,274
Amortization of the discount component and debt issue fees		—		4,087		4,493		8,044
Total interest expense on the convertible debt	$	—	$	6,224	$	6,250	$	12,318

13

F. Prepayments

Prepayments consist of the following and are included in prepayments on the balance sheet:

	June 29, 2014		December 31, 2013
	(in thousands)
Contract manufacturer prepayments	$	92,196	$	115,388
Prepaid maintenance and other services		6,838		6,538
Prepaid taxes		1,960		3,281
Other prepayments		9,479		11,167
Total prepayments	$	110,473	$	136,374

G. Deferred Revenue and Customer Advances

Deferred revenue and customer advances consist of the following and are included in short and long-term deferred revenue and customer advances on the balance sheet:

	June 29, 2014		December 31, 2013
	(in thousands)
Extended warranty	$	40,052	$	34,909
Equipment maintenance and training		26,535		22,455
Customer advances		8,926		4,825
Undelivered elements		5,831		6,971
Customer acceptance		1,616		—
Total deferred revenue and customer advances	$	82,960	$	69,160

H. Product Warranty

Teradyne generally provides a one-year warranty on its products, commencing upon installation or shipment. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. Related costs are charged to the warranty accrual as incurred. The warranty balance below is included in other accrued liabilities on the balance sheet.

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Balance at beginning of period	$	6,615		$	7,075		$	6,660		$	9,786
Accruals for warranties issued during the period		5,399			3,684			8,257			5,107
Adjustments related to pre-existing warranties		(302	)		(869	)		(442	)		(1,798	)
Settlements made during the period		(2,639	)		(2,539	)		(5,402	)		(5,744	)
Balance at end of period	$	9,073		$	7,351		$	9,073		$	7,351

When Teradyne receives revenue for extended warranty beyond one year, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. The extended warranty balance below is included in short and long-term deferred revenue and customer advances on the balance sheet.

14

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Balance at beginning of period	$	33,949		$	28,599		$	34,909		$	26,987
Deferral of new extended warranty revenue		11,960			8,734			14,321			12,205
Recognition of extended warranty deferred revenue		(5,857	)		(2,479	)		(9,178	)		(4,338	)
Balance at end of period	$	40,052		$	34,854		$	40,052		$	34,854

I. Stock-Based Compensation

In January 2014, Teradyne granted performance-based restricted stock units (“PRSUs”) to its executive officers with a performance metric based on relative total shareholder return (“TSR”). Teradyne’s three-year TSR performance will be measured against the Philadelphia Semiconductor Index, which consists of thirty companies in the semiconductor device and capital equipment industries. The final number of TSR PRSUs that vest will vary based upon the level of performance achieved from 200% of the target shares to 0% of the target shares. All TSR PRSUs will vest upon the three-year anniversary of the January 24, 2014 grant date. No TSR PRSUs will vest if the executive officer is no longer an employee at the end of the three-year period. The TSR PRSUs are valued using a Monte Carlo simulation model. The number of units expected to be earned, based upon the achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation. Compensation expense is recognized on a straight-line basis over the three-year service period. Compensation expense is recognized regardless of the eventual number of units that are earned based upon the market condition, provided the executive officer remains an employee at the end of the three-year period. Compensation expense is reversed if the executive officer is not an employee at the end of the three-year service period. During the six months ended June 29, 2014, Teradyne granted 0.1 million TSR performance-based restricted stock unit awards with a grant date fair value of $22.06. The fair value was estimated using the Monte Carlo simulation model with the following assumptions:

	For the Six Months Ended
	June 29, 2014
Risk-free interest rate		0.75	%
Teradyne volatility-historical		36.1	%
Philadelphia Semiconductor Index volatility-historical		24.6	%
Dividend yield		1.25	%

Expected volatility was based on the historical volatility of Teradyne’s stock and the Philadelphia Semiconductor Index over the most recent three year period. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of $0.24 per share divided by Teradyne’s January 24, 2014 stock price of $19.16.

During the six months ended June 29, 2014, Teradyne granted 1.6 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of $19.08 and 0.1 million of service-based stock options to executive officers at a weighted average grant date fair value of $5.49.

During the six months ended June 30, 2013, Teradyne granted 1.9 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of $16.60 and 0.2 million of service-based stock options to executive officers at a weighted average grant date fair value of $6.09.

Restricted stock unit awards granted to employees vest in equal annual installments over four years. Stock options vest in equal annual installments over four years, and have a term of seven years from the date of grant.

15

The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:

	For the Six Months Ended
	June 29, 2014			June 30, 2013
Expected life (years)		4.0			4.0
Risk-free interest rate		1.2	%		0.6	%
Volatility-historical		38.8	%		46.8	%
Dividend yield		1.25	%		0.0	%

Teradyne determined the stock options’ expected life based upon historical exercise data for executive officers, the age of the executive officers and the terms of the stock option grant. Volatility was determined using historical volatility for a period equal to the expected life. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of $0.24 per share divided by Teradyne’s January 24, 2014 stock price of $19.16.

Effective January 31, 2014, Michael Bradley retired as Chief Executive Officer of Teradyne. Mr. Bradley will continue to serve on Teradyne’s Board of Directors. On January 22, 2014, Teradyne entered into an agreement (the “Retirement Agreement”) with Mr. Bradley. Under the Retirement Agreement, Mr. Bradley’s unvested restricted stock units and stock options granted prior to his retirement date will continue to vest in accordance with their terms through January 31, 2017; and any vested options or options that vest during that period may be exercised for the remainder of the applicable option term. In the Retirement Agreement, Mr. Bradley agreed to be bound by non-competition and non-solicitation restrictions through January 31, 2017. In January 2014, Teradyne recorded a one-time charge to stock-based compensation expense of $6.6 million related to the Retirement Agreement.

J. Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income, which is presented net of tax, consist of the following:

	Unrealized Gains on Marketable Securities			Retirement Plans Prior Service Credit			Total
	(in thousands)
Balance at December 31, 2013, net of tax of $794, $(284)	$	1,381		$	2,619		$	4,000
Other comprehensive income before reclassifications, net of tax of $1,242, $0		2,304			—			2,304
Amounts reclassified from accumulated other comprehensive income, net of tax of $(243), $(85)		(448	)		(147	)		(595	)
Net current period other comprehensive income		1,856			(147	)		1,709
Balance at June 29, 2014, net of tax of $1,793, $(369)	$	3,237		$	2,472		$	5,709

16

Reclassifications out of accumulated other comprehensive income to the statement of operations for the three and six months ended June 29, 2014 and June 30, 2013, were as follows:

Details about Accumulated Other Comprehensive Income Components	For the Three Months Ended				For the Six Months Ended				Affected Line Item in the Statements of Operations
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
			(in thousands)
Available-for-sale marketable securities:
Unrealized gains, net of tax of $141, $39, $243, $122	$	272	$	68	$	448	$	212	Interest income
Amortization of defined benefit pension and postretirement plans:
Prior service benefit, net of tax of $42, $40, $85, $79		74		69		147		138	(a)
Total reclassifications	$	346	$	137	$	595	$	350	Net income

(a) The amortization of prior service benefit is included in the computation of net periodic pension cost and postretirement benefit; see Note N: “Retirement Plans.”

K. Intangible Assets

Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheet:

	June 29, 2014
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	342,933	$	200,154	$	142,779		6.2 years
Customer relationships		141,497		86,145		55,352		8.0 years
Trade names and trademarks		30,034		12,417		17,617		9.1 years
Customer backlog		1,000		1,000		—		0.4 years
Total intangible assets	$	515,464	$	299,716	$	215,748		6.9 years

	December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	342,933	$	174,563	$	168,370		6.2 years
Customer relationships		141,497		76,963		64,534		8.0 years
Trade names and trademarks		30,034		10,647		19,387		9.1 years
Customer backlog		1,000		1,000		—		0.4 years
Total intangible assets	$	515,464	$	263,173	$	252,291		6.9 years

17

Aggregate intangible asset amortization expense was $18.3 million and $36.5 million, respectively, for the three and six months ended June 29, 2014 and $18.1 million and $36.1 million, respectively, for the three and six months ended June 30, 2013. Estimated intangible asset amortization expense for each of the five succeeding fiscal years is as follows:

Year	Amortization Expense
	(in thousands)
2014 (remainder)	$	33,598
2015		53,391
2016		53,391
2017		47,232
2018		22,691

L. Net Income per Common Share

The following table sets forth the computation of basic and diluted net income per common share:

	For the Three Months Ended				For the Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	101,205	$	66,556	$	102,134	$	73,145
Weighted average common shares-basic		194,408		190,569		193,860		190,128
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		—		23,266		10,026		23,326
Convertible note hedge warrant shares (2)		20,406		18,689		20,674		18,774
Restricted stock units		705		772		878		947
Stock options		1,006		1,554		1,056		1,615
Employee stock purchase rights		43		59		32		43
Dilutive potential common shares		22,160		44,340		32,666		44,705
Weighted average common shares-diluted		216,568		234,909		226,526		234,833
Net income per common share-basic	$	0.52	$	0.35	$	0.53	$	0.38
Net income per common share-diluted	$	0.47	$	0.28	$	0.45	$	0.31

(1) Incremental shares from conversion of the convertible notes for the six months ended June 29, 2014 were calculated using the difference between the average Teradyne stock price from January 1, 2014 through March 12, 2014 and the conversion price of $5.4750, multiplied by 34.7 million shares. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period from January 1, 2014 to March 12, 2014 and adjusted for the number of days the convertible notes were outstanding during the six months ended June 29, 2014. Incremental shares from assumed conversion of the convertible notes for the three and six months ended June 30, 2013 were calculated using the difference between the average Teradyne stock price for the period and the conversion price of $5.4750, multiplied by the 34.7 million shares to be issued upon conversion. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period.

(2) Convertible note hedge warrant shares for the three and six months ended June 29, 2014 and June 30, 2013 are calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.6389, multiplied by the weighted average warrant shares outstanding. The result of this calculation, representing the total intrinsic value of the warrant, is divided by the average Teradyne stock price for the period.

18

The computation of diluted net income per common share for the three and six months ended June 29, 2014 excludes the effect of the potential exercise of stock options to purchase approximately 0.3 million shares because the effect would have been anti-dilutive.

The computation of diluted net income per common share for the three and six months ended June 30, 2013 excludes the effect of the potential exercise of stock options to purchase approximately 0.5 million shares because the effect would have been anti-dilutive.

M. Restructuring and Other

Restructuring

During the six months ended June 29, 2014, Teradyne recorded $0.6 million of severance charges related to headcount reductions of 28 people, primarily in Wireless Test. During the six months ended June 30, 2013, Teradyne recorded $0.6 million of severance charges related to headcount reductions in System Test and Semiconductor Test.

	Severance and Benefits			Facility Exit Costs			Total
	(in thousands)
Pre-2013 Activities
Balance at December 31, 2012	$	243		$	1,084		$	1,327
Change in estimate		—			(553	)		(553	)
Cash payments		(243	)		(531	)		(774	)
Balance at December 31, 2013	$	—		$	—		$	—
2013 Activities
Q3 2013 Activity:
Provision	$	1,337		$	—		$	1,337
Cash payments		(966	)		—			(966	)
Balance at December 31, 2013		371			—			371
Cash payments		(161	)		—			(161	)
Balance at March 30, 2014		210			—			210
Cash payments		—			—			—
Balance at June 29, 2014	$	210		$	—		$	210
Q4 2013 Activity:
Provision	$	600		$	—		$	600
Cash payments		(486	)		—			(486	)
Balance at December 31, 2013		114			—			114
Cash payments		(114	)		—			(114	)
Balance at March 30, 2014	$	—		$	—		$	—
2014 Activities
Q2 2014 Activity:
Provision	$	572		$	—		$	572
Cash payments		(530	)		—			(530	)
Balance at June 29, 2014	$	42		$	—		$	42
Balance at June 29, 2014	$	252		$	—		$	252

The accrual balance for severance and benefits of $0.3 million is reflected in the accrued employees’ compensation and withholdings on the balance sheet and is expected to be paid by September 2014.

19

N. Retirement Plans

ASC 715, “Compensation—Retirement Benefits” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation.

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. In the six months ended June 29, 2014, Teradyne contributed $0.9 million to the U.S. supplemental executive defined benefit pension plan and $1.0 million to certain qualified plans for non-U.S. subsidiaries.

For the three and six months ended June 29, 2014 and June 30, 2013, Teradyne’s net periodic pension cost was comprised of the following:

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Service cost	$	811		$	852		$	1,607		$	1,686
Interest cost		3,732			3,281			7,452			6,651
Expected return on plan assets		(3,384	)		(3,631	)		(6,725	)		(7,261	)
Amortization of unrecognized prior service cost		34			41			67			82
Actuarial loss (gain)		362			(1,123	)		362			(1,123	)
Total net periodic pension cost (benefit)	$	1,555		$	(580	)	$	2,763		$	35

Postretirement Benefit Plan

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.

For the three and six months ended June 29, 2014 and June 30, 2013, Teradyne’s net periodic postretirement benefit was comprised of the following:

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Service cost	$	17		$	21		$	29		$	37
Interest cost		82			84			168			171
Amortization of unrecognized prior service benefit		(150	)		(150	)		(299	)		(299	)
Actuarial gain		(247	)		(236	)		(247	)		(236	)
Total net periodic post-retirement benefit	$	(298	)	$	(281	)	$	(349	)	$	(327	)

20

O. Commitments and Contingencies

Purchase Commitments

As of June 29, 2014, Teradyne had entered into purchase commitments for certain components and materials. The purchase commitments covered by the agreements aggregate to approximately $222.5 million, of which $211.5 million is for less than one year.

Legal Claims

Teradyne is subject to various legal proceedings and claims which have arisen in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on Teradyne’s results of operations, financial condition or cash flows.

P. Income Taxes

The effective tax rate for the three months ended June 29, 2014 and June 30, 2013 was 17%. The effective tax rate for the six months ended June 29, 2014 and June 30, 2013 was 15% and 7%, respectively. The increase in the tax rate for the six months ended June 29, 2014 compared to the six months ended June 30, 2013 was primarily because income tax expense for the six months ended June 30, 2013 was reduced for a discrete tax benefit from the January 2013 reinstatement of the U.S. research and development credit for fiscal year 2012.

The effective tax rate for each of these periods is lower than the 35% U.S. statutory federal tax rate primarily due to the geographic mix of income and profits earned by Teradyne’s international subsidiaries being taxed at rates lower than the U.S. statutory rate.

Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings due to the tax holiday for the six months ended June 29, 2014 were $6.1 million or $0.03 per diluted share. The tax holiday is currently expected to expire on December 31, 2015.

Q. Segment Information

Teradyne has three operating segments (Semiconductor Test, Wireless Test and System 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 Wireless Test segment includes operations related to design, manufacturing and marketing of wireless test products and services. The System Test segment includes operations related to design, manufacturing and marketing of products and services for military/aerospace instrumentation test, storage test and circuit-board test. 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.

21

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, 2013. Segment information is as follows:

	Semiconductor Test		Wireless Test			System Test			Corporate and Eliminations			Consolidated
	(in thousands)
Three months ended June 29, 2014:
Net revenues	$	421,434	$	68,699		$	35,434		$	—		$	525,567
Income (loss) before income taxes(1)(2)		107,270		14,229			(715	)		608			121,392
Three months ended June 30, 2013:
Net revenues	$	292,431	$	99,386		$	37,072		$	—		$	428,889
Income (loss) before income taxes(1)(2)		58,606		23,913			779			(2,941	)		80,357
Six months ended June 29, 2014:
Net revenues	$	683,171	$	89,909		$	73,497		$	—		$	846,577
Income (loss) before income taxes(1)(2)		141,870		(10,856	)		(267	)		(11,228	)		119,519
Six months ended June 30, 2013:
Net revenues	$	503,937	$	132,984		$	72,335		$	—		$	709,256
Income (loss) before income taxes(1)(2)		72,372		13,916			2,309			(9,666	)		78,931

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

(2) Included in the income (loss) before income taxes for each of the segments are charges and credits for the three and six months ended June 29, 2014 and June 30, 2013 that include restructuring and other, 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 Six Months Ended
	June 29,  2014		June 30,  2013		June 29,  2014		June 30,  2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	3,713	$	287	$	9,918	$	500
Total	$	3,713	$	287	$	9,918	$	500

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

	For the Three Months Ended				For the Six Months Ended
	June 29,  2014		June 30,  2013		June 29,  2014		June 30,  2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	879	$	1,398	$	3,972	$	4,066
Restructuring and other		426		—		426		—
Total	$	1,305	$	1,398	$	4,398	$	4,066

22

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

	For the Three Months Ended				For the Six Months Ended
	June 29,  2014		June 30,  2013		June 29,  2014		June 30,  2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	440	$	290	$	1,181	$	1,209
Restructuring and other		146		131		146		375
Total	$	586	$	421	$	1,327	$	1,584

R. Shareholders’ Equity

Stock Repurchase Program

In November 2010, Teradyne’s Board of Directors authorized a stock repurchase program for up to $200 million. In the three and six months ended June 29, 2014 and June 30, 2013, Teradyne did not repurchase any shares. The cumulative repurchases under the new program as of June 29, 2014 totaled 2.6 million shares of common stock for $31.2 million at an average price of $11.84.

Dividend

In January 2014, Teradyne’s Board of Directors declared an initial quarterly cash dividend of $0.06 per share that was paid on June 2, 2014 to stockholders of record as of May 9, 2014. The total dividend payment was $11.7 million. Payment of future cash dividends will rest within the discretion of Teradyne’s Board of Directors and will depend, among other things, upon Teradyne’s earnings, capital requirements and financial condition.

23

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Statements in this Quarterly Report on Form 10-Q which are not historical facts, so called “forward looking statements,” are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward looking statements involve risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. See also Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

Overview

We are a leading global supplier of automatic test equipment. We design, develop, manufacture and sell automatic test systems and solutions used to test semiconductors, wireless products, hard disk drives and circuit boards in the consumer electronics, wireless, automotive, industrial, computing, communications and aerospace and defense industries. Our automatic test equipment products and services include:

• semiconductor test (“Semiconductor Test”) systems;

• wireless test (“Wireless Test”) systems; and

• military/aerospace (“Mil/Aero”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test (“Production Board Test”) systems (collectively these products represent “System Test”).

We have a broad customer base which includes integrated device manufacturers (“IDMs”), outsourced semiconductor assembly and test providers (“OSATs”), wafer foundries, fabless companies that design, but contract with others for the manufacture of integrated circuits (“ICs”), developers of wireless devices and consumer electronics, manufacturers of circuit boards, automotive suppliers, wireless product manufacturers, storage device manufacturers, aerospace and military contractors.

In October 2013, we acquired ZTEC Instruments Inc. (“ZTEC”), a supplier of modular wireless test instruments. The acquisition of ZTEC expands our Wireless Test segment into the design verification test of wireless components and chipsets.

We will continue to invest in our business to further expand our addressable markets while tightly managing our costs.

The sales of our products and services are dependent, to a large degree, on customers who are subject to cyclical trends in the demand for their products. These cyclical periods have had, and will continue to have, a significant effect on our business because our customers often delay or accelerate purchases in reaction to changes in their businesses and to demand fluctuations in the semiconductor and electronics industries. Historically, these demand fluctuations have resulted in significant variations in our results of operations. The sharp swings in the semiconductor and electronics industries in recent years have generally affected the semiconductor and electronics test equipment and services industries more significantly than the overall capital equipment sector.

Critical Accounting Policies and Estimates

We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the six months ended June 29, 2014 to the items disclosed as our critical accounting policies and estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

24

SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
Percentage of total net revenues:
Net revenues:
Products		86	%		85	%		84	%		81	%
Services		14			15			16			19
Total net revenues		100			100			100			100
Cost of revenues:
Cost of products		39			37			39			36
Cost of services		6			7			7			8
Total cost of revenues		45			44			46			44
Gross profit		55			56			54			56
Operating expenses:
Engineering and development		14			16			17			18
Selling and administrative		15			16			18			19
Acquired intangible assets amortization		3			4			4			5
Restructuring and other		—			—			—			—
Total operating expenses		32			36			39			43
Income from operations		23			20			15			13
Interest income		—			—			—			—
Interest expense and other		—			2			1			2
Income before income taxes		23			19			14			11
Income tax provision		4			3			2			1
Net income		19	%		16	%		12	%		10	%

Results of Operations

Second Quarter 2014 Compared to Second Quarter 2013

Book to Bill Ratio

Book to bill ratio is calculated as net bookings divided by net sales. Book to bill ratio by reportable segment was as follows:

	For the Three Months Ended
	June 29, 2014		June 30, 2013
Semiconductor Test		1.3		1.2
Wireless Test		0.8		0.9
System Test		1.1		0.7
Total Company		1.2		1.1

25

Revenues

Net revenues by reportable segment were as follows:

	For the Three Months Ended				Dollar Change
	June 29, 2014		June 30, 2013
	(in millions)
Semiconductor Test	$	421.5	$	292.4	$	129.1
Wireless Test		68.7		99.4		(30.7	)
System Test		35.4		37.1		(1.7	)
	$	525.6	$	428.9	$	96.7

The increase in Semiconductor Test revenues of $129.1 million or 44% was primarily due to higher system-on-a-chip (“SOC”) product volume driven by application processors and microcontrollers, as well as higher Memory product volume driven by FLASH memory market. The decrease in Wireless Test revenue of $30.7 million or 31% was primarily due to lower cellular product volume. The decrease in System Test revenue of $1.7 million or 5% was primarily due to lower Mil/Aero product sales, partially offset by higher product volume in Production Board Test and Storage Test systems.

Our revenues by region as a percentage of total net revenue were as follows:

	For the Three Months Ended
	June 29, 2014			June 30, 2013
Taiwan		30	%		19	%
China		19			28
Korea		13			8
United States		11			12
Singapore		6			11
Europe		5			6
Malaysia		5			6
Philippines		4			2
Thailand		4			1
Japan		2			5
Rest of World		1			2
		100	%		100	%

Gross Profit

Our gross profit was as follows:

	For the Three Months Ended						Dollar/Point Change
	June 29, 2014			June 30, 2013
	(in millions)
Gross Profit	$	290.4		$	241.2		$	49.2
Percent of Total Revenue		55.3	%		56.2	%		(0.9	)

Gross profit as a percent of revenue decreased by 0.9 percentage points, a decrease of 1.3 points related to product mix in SOC Semiconductor Test and lower Wireless Test sales, a decrease of 0.7 points due to higher excess and obsolete inventory provisions, partially offset by higher sales volume.

26

We assess the carrying value of our inventory on a quarterly basis by estimating future demand and comparing that demand against on-hand and on-order inventory positions. Forecasted revenue information is obtained from the sales and marketing groups and incorporates factors such as backlog and future revenue demand. This quarterly process identifies obsolete and excess inventory. Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed during the next twelve quarters, is written-down to estimated net realizable value.

During the three months ended June 29, 2014, we recorded an inventory provision of $5.0 million included in cost of revenues primarily due to downward revisions to previously forecasted demand levels. Of the $5.0 million of total excess and obsolete provisions, $3.7 million was related to Semiconductor Test, $0.9 million was related to Wireless Test, and $0.4 million was related to System Test.

During the three months ended June 30, 2013, we recorded an inventory provision of $2.0 million included in cost of revenues, due to downward revisions to previously forecasted demand levels. Of the $2.0 million of total excess and obsolete provisions, $1.4 million was related to Wireless Test, $0.3 million was related to System Test, and $0.3 million was related to Semiconductor Test.

During the three months ended June 29, 2014 and June 30, 2013, we scrapped $2.3 million and $2.3 million of inventory, respectively. During the three months ended June 29, 2014 and June 30, 2013, we sold $2.1 million and $3.1 million, respectively, of previously written-down inventory. As of June 29, 2014, we had inventory related reserves for inventory which had been written-down totaling $125.5 million. We have no pre-determined timeline to scrap the remaining inventory.

Engineering and Development

Engineering and development expenses were as follows:

	For the Three Months Ended						Dollar Change
	June 29, 2014			June 30, 2013
	(in millions)
Engineering and Development	$	73.4		$	67.8		$	5.6
Percent of Total Revenue		14.0	%		15.8	%

The increase of $5.6 million in engineering and development expenses was due primarily to increased spending in Semiconductor Test and Wireless Test and higher variable compensation.

Selling and Administrative

Selling and administrative expenses were as follows:

	For the Three Months Ended						Dollar Change
	June 29, 2014			June 30, 2013
	(in millions)
Selling and Administrative	$	77.5		$	69.2		$	8.3
Percent of Total Revenue		14.7	%		16.1	%

The increase of $8.3 million in selling and administrative expenses was due primarily to increased sales and marketing spending in Semiconductor Test and Wireless Test and higher variable compensation.

27

Restructuring and Other

Restructuring

During the three months ended June 29, 2014, we recorded $0.6 million of severance charges related to headcount reductions of 28 people, primarily in Wireless Test.

Income Taxes

The effective tax rate for the three months ended June 29, 2014 and June 30, 2013 was 17%. The effective tax rate for each of these periods is lower than the 35% U.S. statutory federal tax rate primarily due to the geographic mix of income and profits earned by Teradyne’s international subsidiaries being taxed at rates lower than the U.S. statutory rate.

Six Months of 2014 Compared to Six Months of 2013

Revenues

Net revenues by reportable segment were as follows:

	For the Six Months Ended				Dollar Change
	June 29, 2014		June 30, 2013
	(in millions)
Semiconductor Test	$	683.2	$	504.0	$	179.2
Wireless Test		89.9		133.0		(43.1	)
System Test		73.5		72.3		1.2
	$	846.6	$	709.3	$	137.3

The increase in Semiconductor Test revenues of $179.2 million or 36% was primarily due to higher SOC product volume, driven by application processors and microcontrollers. The decrease in Wireless Test revenue of $43.1 million or 32% was primarily due to lower cellular product volume. The increase in System Test revenue of $1.2 million or 2% was primarily due to higher product volume in Storage Test systems, partially offset by lower Mil/Aero product sales.

Our revenues by region as a percentage of total net revenue were as follows:

	For the Six Months Ended
	June 29, 2014			June 30, 2013
Taiwan		29	%		18	%
China		17			24
United States		12			15
Korea		10			8
Singapore		8			10
Europe		6			7
Malaysia		5			6
Japan		4			5
Philippines		4			3
Thailand		4			2
Rest of World		1			2
		100	%		100	%

28

Gross Profit

Our gross profit was as follows:

	For the Six Months Ended						Dollar/Point Change
	June 29, 2014			June 30, 2013
	(in millions)
Gross Profit	$	457.5		$	394.7		$	62.8
Percent of Total Revenue		54.0	%		55.6	%		(1.6	)

Gross profit as a percent of revenue decreased by 1.6 percentage points due to a decrease of 1.8 points related to product mix in SOC Semiconductor Test, lower Wireless Test sales and higher Storage Test sales, a decrease of 1.0 point due to higher excess and obsolete inventory provisions, partially offset by higher sales volume.

We assess the carrying value of our inventory on a quarterly basis by estimating future demand and comparing that demand against on-hand and on-order inventory positions. Forecasted revenue information is obtained from the sales and marketing groups and incorporates factors such as backlog and future revenue demand. This quarterly process identifies obsolete and excess inventory. Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items that are not expected to be consumed during the next twelve quarters, is written-down to estimated net realizable value.

During the six months ended June 29, 2014, we recorded an inventory provision of $15.1 million included in cost of revenues with $6.1 million related to product transitions in Semiconductor Test and $9.0 million due to downward revisions to previously forecasted demand levels. Of the $15.1 million of total excess and obsolete provisions, $9.9 million was related to Semiconductor Test, $4.0 million was related to Wireless Test, and $1.2 million was related to System Test.

During the six months ended June 30, 2013, we recorded an inventory provision of $5.8 million included in cost of revenues, due to downward revisions to previously forecasted demand levels. Of the $5.8 million of total excess and obsolete provisions, $4.1 million was related to Wireless Test, $1.2 million was related to System Test, and $0.5 million was related to Semiconductor Test.

During the six months ended June 29, 2014 and June 30, 2013, we scrapped $3.3 million and $2.9 million of inventory, respectively. During the six months ended June 29, 2014 and June 30, 2013, we sold $3.6 million and $4.8 million of previously written-down or written-off inventory. As of June 29, 2014, we had inventory related reserves for inventory which had been written-down or written-off totaling $125.5 million. We have no pre-determined timeline to scrap the remaining inventory.

Engineering and Development

Engineering and development expenses were as follows:

	For the Six Months Ended						Dollar Change
	June 29, 2014			June 30, 2013
	(in millions)
Engineering and Development	$	140.5		$	130.5		$	10.0
Percent of Total Revenue		16.6	%		18.4	%

The increase of $10.0 million in engineering and development expenses was due primarily to increased spending in Semiconductor Test and Wireless Test and higher variable compensation.

29

Selling and Administrative

Selling and administrative expenses were as follows:

	For the Six Months Ended						Dollar Change
	June 29, 2014			June 30, 2013
	(in millions)
Selling and Administrative	$	155.5		$	137.1		$	18.4
Percent of Total Revenue		18.4	%		19.3	%

The increase of $18.4 million in selling and administrative expenses was due primarily to a one-time $6.6 million stock-based compensation charge related to Michael Bradley’s (retired Chief Executive Officer) Retirement Agreement, increased sales and marketing spending in Semiconductor Test and Wireless Test, and higher variable compensation.

Restructuring and Other

Restructuring

During the six months ended June 29, 2014, we recorded $0.6 million of severance charges related to headcount reductions of 28 people, primarily in Wireless Test. During the six months ended June 30, 2013, we recorded $0.6 million of severance charges related to headcount reductions in System Test and Semiconductor Test.

Income Taxes

The effective tax rate for the six months ended June 29, 2014 and June 30, 2013 was 15% and 7%, respectively. The increase in the tax rate for the six months ended June 29, 2014 compared to the six months ended June 30, 2013 was primarily because income tax expense for the six months ended June 30, 2013 was reduced for a discrete tax benefit from the January 2013 reinstatement of the U.S. research and development credit for fiscal year 2012.

The effective tax rate for each of these periods is lower than the 35% U.S. statutory federal tax rate primarily due to the geographic mix of income and profits earned by Teradyne’s international subsidiaries being taxed at rates lower than the U.S. statutory rate.

Contractual Obligations

The following table reflects our contractual obligations at June 29, 2014:

	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Other
	(in thousands)
Purchase Obligations	$	222,482	$	211,477	$	11,005	$	—	$	—	$	—
Retirement Plan Contributions		96,442		4,834		9,024		8,994		73,590		—
Operating Lease Obligations		57,937		13,571		20,576		8,760		15,030		—
Long-Term Other Liabilities Reflected on the Balance Sheet under GAAP(1)		75,473		—		18,992		—		—		56,481
Total	$	452,334	$	229,882	$	59,597	$	17,754	$	88,620	$	56,481

(1) Included in Long-Term Other Liabilities are liabilities for customer advances, extended warranty, uncertain tax positions, deferred tax liabilities and other obligations. For certain long-term obligations, we are unable to provide a reasonably reliable estimate of the timing of future payments relating to these obligations and therefore we included these amounts in the column marked “Other”.

30

Liquidity and Capital Resources

Our cash, cash equivalents and marketable securities balances decreased by $92.5 million in the six months ended June 29, 2014, to $1,107 million. Cash activity for the six months ended June 29, 2014 and June 30, 2013 was as follows:

	For the Six Months Ended
	June 29, 2014			June 30, 2013
	(in millions)
Cash provided by operating activities:
Net income, adjusted for non-cash items	$	211.3		$	152.5
Change in operating assets and liabilities		(27.9	)		(83.5	)
Net cash provided by operating activities		183.4			69.0
Net cash used for investing activities		(80.1	)		(190.1	)
Net cash (used for) provided by financing activities		(190.3	)		9.8
Decrease in cash and cash equivalents	$	(87.0	)	$	(111.3	)

In the six months ended June 29, 2014, changes in operating assets and liabilities used cash of $27.9 million. This was due to a $97.7 million increase in operating assets and a $69.7 million increase in operating liabilities.

The increase in operating assets was due to a $143.1 million increase in accounts receivable due to higher sales, partially offset by a $27.0 million decrease in prepayments and other assets and an $18.5 million decrease in inventories due to higher sales. The increase in operating liabilities was due to a $39.3 million increase in accounts payable due to higher sales, a $37.9 million increase in other accrued liabilities, a $13.8 million increase in customer advance payments and deferred revenue and a $5.5 million increase in accrued income taxes, partially offset by a $20.1 million decrease in accrued employee compensation due primarily to variable compensation and employee stock award payroll tax payments, a $4.3 million convertible note interest payment, and $2.4 million of retirement plan contributions.

Investing activities during the six months ended June 29, 2014 used cash of $80.1 million, due to $523.3 million used for purchases of marketable securities and $91.4 million used for purchases of property, plant and equipment, partially offset by proceeds from maturities and sales of marketable securities that provided cash of $377.4 million and $152.8 million, respectively, and proceeds from life insurance of $4.4 million related to the cash surrender value from the cancellation of Teradyne owned life insurance policies on its retired chief executive officer. The increase in purchases of property, plant and equipment of $40.6 million compared to the six months ended June 30, 2013 is primarily due to testers used for customer leases.

Financing activities during the six months ended June 29, 2014 used cash of $190.3 million. $191.0 million of cash was used for payments on long-term debt related to the convertible note and the Japan loan and $11.7 million was used for dividend payments, partially offset by $10.6 million provided by the issuance of common stock under employee stock purchase and stock option plans and $1.7 million from the tax benefit related to stock options and restricted stock units.

In the six months ended June 30, 2013, changes in operating assets and liabilities used cash of $83.5 million. This was due to a $65.7 million increase in operating assets and a $17.8 million decrease in operating liabilities.

The increase in operating assets was due to a $74.8 million increase in accounts receivable resulting from higher sales volume, a $17.3 million increase in other assets primarily due to an increase in prepayments, partially offset by a $26.4 million decrease in inventories. The decrease in operating liabilities was due to a $24.0 million decrease in accrued employee compensation due primarily to variable compensation and employee stock

31

awards payroll taxes payments, a $2.8 million decrease in customer advance payments and deferred revenue, and $2.5 million of retirement plan contributions, partially offset by an $8.5 million increase in accounts payable due to increased sales volume and a $3.0 million increase in accrued income taxes.

Investing activities during the six months ended June 30, 2013 used cash of $190.1 million, due to $458.1 million used for purchases of marketable securities and $50.8 million used for purchases of property, plant and equipment, partially offset by proceeds from maturities and sales of marketable securities that provided cash of $268.5 million and $50.3 million, respectively.

Financing activities during the six months ended June 30, 2013 provided cash of $9.8 million, of which $9.6 million was from the issuance of common stock under employee stock purchase and stock option plans and $1.6 million from the tax benefit related to stock options and restricted stock units, partially offset by $0.4 million of cash used for payments related to LitePoint acquisition contingent consideration and $1.1 million of cash used for the payments on long-term debt related to the Japan loan.

In January 2014, our Board of Directors declared an initial quarterly cash dividend of $0.06 per share that was paid on June 2, 2014 to stockholders of record as of May 9, 2014. The total dividend payment was $11.7 million. Holders of our common stock are entitled to receive dividends if and when they are declared by our Board of Directors. Payment of future cash dividends will rest within the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition.

In 2014, we expect to deploy approximately $75 million of capital into testers for customer leases bringing our total forecasted 2014 capital additions to $162 million. As of June 29, 2014, we purchased approximately $45 million of the forecasted $75 million of testers for customer leases.

We believe our cash, cash equivalents and marketable securities balance will be sufficient to meet working capital and expenditure needs for at least the next twelve months. The amount of cash, cash equivalents and marketable securities in the U.S. and our operations in the U.S. provide sufficient liquidity to fund our business activities in the U.S. We have approximately $430 million of cash, cash equivalents and marketable securities outside the U.S. that if repatriated would incur additional taxes. Inflation has not had a significant long-term impact on earnings.

Equity Compensation Plans

As discussed in Note O: “Stock Based Compensation” in our 2013 Form 10-K, we have a 1996 Employee Stock Purchase Plan and a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”).

The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers, directors, consultants and/or advisors. Both plans were approved by our shareholders.

Recently Issued Accounting Pronouncements

On July 18, 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” Under this ASU, unrecognized tax benefits will be netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by unrecognized tax benefits. The provisions of this ASU are effective for interim and annual periods beginning on or after December 15, 2013. Our implementation of this ASU did not have a material impact on our financial position and results of operations.

32

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” which will replace numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenue to show the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. For Teradyne, the standard will be effective in the first quarter of 2017. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. We have not yet selected a transition method. We are currently evaluating the impact of this ASU on our financial position and results of operations.

Item 3: Quantitative and Qualitative Disclosures about Market Risk

For “Quantitative and Qualitative Disclosures about Market Risk” affecting Teradyne, see Item 7a, “Quantitative and Qualitative Disclosures about Market Risks,” in our Annual Report on Form 10-K filed with the SEC on February 28, 2014. There were no material changes in our exposure to market risk from those set forth in our Annual Report for the fiscal year ended December 31, 2013.

Item 4: Controls and Procedures

As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

During the period covered by this report, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

33

PART II. OTHER INFORMATION

Item 1: Legal Proceedings

We are subject to various legal proceedings and claims which have arisen in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on our results of operations, financial condition or cash flows.

Item 1A: Risk Factors

You should carefully consider the factors discussed in Part I, “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Form 10-K remain applicable to our business.

The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

In November 2010, Teradyne’s Board of Directors authorized a stock repurchase program for up to $200 million. The cumulative repurchases under the new program as of June 29, 2014 totaled 2.6 million shares of common stock for $31.2 million at an average price of $11.84.

The following table includes information with respect to repurchases we made of our common stock during the three months ended June 29, 2014 (in thousands except per share price):

Period	(a) Total Number of Shares (or Units) Purchased		(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may Yet Be Purchased Under the Plans or Programs
March 31, 2014 – April 27, 2014		—	$	—		—	$	168,825
April 28, 2014 – May 25, 2014		—	$	—		—	$	168,825
May 26, 2014 – June 29, 2014		—	$	—		—	$	168,825
		—	$	—		—	$	168,825

We satisfy the U.S. minimum statutory withholding tax obligation due upon the vesting and the conversion of restricted stock units into shares of our common stock, by automatically withholding from the shares being issued a number of shares with an aggregate fair market value on the date of such vesting and conversion that would satisfy the minimum withholding amount due.

Item 4: Mine Safety Disclosures

Not Applicable

34

Item 6: Exhibits

Exhibit Number	Description
31.1	Certification of Principal Executive Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of Principal Financial Officer, pursuant to Rule 13a-14(a) of Securities and Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TERADYNE, INC.

Registrant

/S/ GREGORY R. BEECHER        

Gregory R. Beecher

Vice President,

Chief Financial Officer and Treasurer

(Duly Authorized Officer

and Principal Financial Officer)

August 8, 2014

36

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Mark E. Jagiela, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2014

By:	/S/ MARK E. JAGIELA
	Mark E. Jagiela Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Gregory R. Beecher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Teradyne, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2014

By:	/S/ GREGORY R. BEECHER
	Gregory R. Beecher Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Teradyne, Inc. (the “Company”) on Form 10-Q for the period ending June 29, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark E. Jagiela, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C (S) 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/S/ MARK E. JAGIELA        

Mark E. Jagiela

Chief Executive Officer

August 8, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Teradyne, Inc. (the “Company”) on Form 10-Q for the period ending June 29, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gregory R. Beecher, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C (S) 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

/S/ GREGORY R. BEECHER        

Gregory R. Beecher

Chief Financial Officer

August 8, 2014

XML

Financial Instruments and Derivatives - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended					6 Months Ended	12 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013	Dec. 31, 2013	Oct. 25, 2013 ZTEC Instruments, Inc.	Oct. 25, 2013 ZTEC Instruments, Inc. Maximum	Jun. 29, 2014 Foreign Currency Forward Contracts	Dec. 31, 2013 Foreign Currency Forward Contracts
Financial Instruments and Fair Value [Line Items]
Available-for-sale securities, realized gain	$ 400,000	$ 100,000	$ 700,000	$ 300,000
Available-for-sale securities, realized losses	0	0	0	0
Contingent consideration						2,200,000	5,000,000
Contingent consideration discount rate			5.20%
Changes to fair value of contingent consideration			0
Fair market value of investments with unrealized losses	104,322,000		104,322,000		241,760,000
Fair market value of investments with unrealized losses greater than one year	6,900,000		6,900,000		900,000
Fair market value of investments with unrealized losses less than one year	97,400,000		97,400,000		240,900,000
Notional amount of foreign currency forward contracts								69,400,000	74,800,000
Gains (losses) on foreign currency transactions	700,000	(1,800,000)	1,300,000	(4,600,000)				(300,000)	200,000
Offsetting foreign exchange contracts	0		0		0
Realized (losses) gains on foreign currency contracts	$ (1,100,000)	$ 1,800,000	$ (1,900,000)	$ 4,100,000

XML

Extended Product Warranty Included in Short and Long-Term Deferred Revenue and Customer Advances (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Schedule of Accrued Liabilities [Line Items]
Balance at beginning of period	$ 33,949	$ 28,599	$ 34,909	$ 26,987
Deferral of new extended warranty revenue	11,960	8,734	14,321	12,205
Recognition of extended warranty deferred revenue	(5,857)	(2,479)	(9,178)	(4,338)
Balance at end of period	$ 40,052	$ 34,854	$ 40,052	$ 34,854

XML

Debt - Additional Information (Detail) (USD $)	0 Months Ended	3 Months Ended		6 Months Ended				0 Months Ended	1 Months Ended	6 Months Ended
	Mar. 31, 2009	Mar. 30, 2014	Sep. 30, 2013	Jun. 29, 2014	Jun. 30, 2013	Dec. 31, 2013	Mar. 31, 2009	Mar. 13, 2014 4.50% Convertible Senior Notes Due March 15, 2014	Apr. 30, 2009 4.50% Convertible Senior Notes Due March 15, 2014	Jun. 29, 2014 4.50% Convertible Senior Notes Due March 15, 2014
Debt Instrument
Borrowings from local bank							$ 10,000,000
Term of loan, years	5 years
Debt instrument, interest rate, stated percentage							0.80%		4.50%
Loan collateralized by real estate mortgage							6,000,000
Unsecured loan							4,000,000
Semiannual principal payments of loan		1,000,000	1,000,000
Aggregate principal amount				0		189,998,000			190,000,000
Initial debt conversion price									$ 5.4750
Conversion rate in number of shares									182.65	131.95
Additional aggregate principal amount									1,000
Senior notes maturity date									Mar. 15, 2014
Number of shares excluded for conversion rate calculation										50.7
Trading days used to determine average price per share										25 days
Average trading price of common shares										$ 19.74
Payments of long-term debt				$ 190,975,000	$ 1,063,000					$ 190,000,000
Stock issued in conversion of notes										25,100,000
Stock received and retired								25,100,000
Strike price per share of warrant				$ 7.6389
Warrants settled on a daily basis				536,000
Warrant settlement period				65 days
Common stock shares were issued for warrants exercised				1,900,000

XML

Retirement Plans - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 29, 2014
U.S. Supplemental Executive Defined Benefit Pension Plan
Defined Benefit Plan Disclosure
Contribution to defined benefit pension plans	$ 0.9
Foreign Pension Plans, Defined Benefit
Defined Benefit Plan Disclosure
Contribution to defined benefit pension plans	$ 1.0

XML

Stock Based Compensation - Additional Information (Detail) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	1 Months Ended	6 Months Ended							1 Months Ended	6 Months Ended		1 Months Ended
	Jan. 31, 2014	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014 Service-Based Restricted Stock Units	Jun. 30, 2013 Service-Based Restricted Stock Units	Jun. 29, 2014 Restricted Stock Units Employees	Jun. 29, 2014 Stock Options	Jan. 24, 2014 Stock Options	Jan. 31, 2014 TSR Performance-Based Restricted Stock Units	Jun. 29, 2014 TSR Performance-Based Restricted Stock Units	Jan. 24, 2014 TSR Performance-Based Restricted Stock Units	Jan. 31, 2014 TSR Performance-Based Restricted Stock Units Maximum	Jan. 31, 2014 TSR Performance-Based Restricted Stock Units Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Total shareholder return performance measurement period									3 years
Percentage of vesting of target shares upon performance achieved												200.00%	0.00%
Restricted stock unit awards to employees				1.6	1.9					0.1
Weighted average grant date fair value of restricted stock units granted				$ 19.08	$ 16.60					$ 22.06
Estimated annual dividend amount per share							$ 0.24			$ 0.24
Stock price								$ 19.16			$ 19.16
Number of service-based stock options granted to executive officers		0.1	0.2
Weighted average grant date fair value of stock options granted to executive officers		$ 5.49	$ 6.09
Period of stock granted to employees and executive officers vest in equal installments						4 years	4 years
Stock options term		7 years
Stock based compensation expense related to retirement agreement	$ 6,600,000

XML

Contractual Maturities of Investments Held (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014
Schedule of Available-for-sale Securities
Due within one year, cost	$ 488,257
Due after 1 year through 5 years, cost	317,047
Due after 5 years through 10 years, cost	6,289
Due after 10 years, cost	24,326
Total, cost	835,919
Due within one year, fair value	488,439
Due after 1 year through 5 years, fair value	317,321
Due after 5 years through 10 years, fair value	6,467
Due after 10 years, fair value	25,848
Total, fair value	$ 838,075

XML

Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 29, 2014

Changes in Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income, which is presented net of tax, consist of the following:

	Unrealized Gains on Marketable Securities			Retirement Plans Prior Service Credit			Total
	(in thousands)
Balance at December 31, 2013, net of tax of $794, $(284)	$	1,381		$	2,619		$	4,000
Other comprehensive income before reclassifications, net of tax of $1,242, $0		2,304			—			2,304
Amounts reclassified from accumulated other comprehensive income, net of tax of $(243), $(85)		(448	)		(147	)		(595	)
Net current period other comprehensive income		1,856			(147	)		1,709
Balance at June 29, 2014, net of tax of $1,793, $(369)	$	3,237		$	2,472		$	5,709

Reclassification Out of Accumulated Other Comprehensive Income to Statement of Operations

Reclassifications out of accumulated other comprehensive income to the statement of operations for the three and six months ended June 29, 2014 and June 30, 2013, were as follows:

Details about Accumulated Other Comprehensive Income Components	For the Three Months Ended				For the Six Months Ended				Affected Line Item in the Statements of Operations
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
			(in thousands)
Available-for-sale marketable securities:
Unrealized gains, net of tax of $141, $39, $243, $122	$	272	$	68	$	448	$	212	Interest income
Amortization of defined benefit pension and postretirement plans:
Prior service benefit, net of tax of $42, $40, $85, $79		74		69		147		138	(a)
Total reclassifications	$	346	$	137	$	595	$	350	Net income

(a) The amortization of prior service benefit is included in the computation of net periodic pension cost and postretirement benefit; see Note N: “Retirement Plans.”

XML

Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Income Taxes [Line Items]
Effective tax rate	17.00%	17.00%	15.00%	7.00%
U.S. statutory federal tax rate			35.00%
Tax savings due to the tax holiday			$ 6.1
Tax savings due to the tax holiday, per share			$ 0.03
Tax holiday expiration date			December 31, 2015

XML

Schedule of Estimated Fair Value of Stock Options Assumptions (Detail) (Stock Options)	6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award
Expected life (years)	4 years	4 years
Risk-free interest rate	1.20%	0.60%
Volatility-historical	38.80%	46.80%
Dividend yield	1.25%	0.00%

XML

Shareholders' Equity - Additional Information (Detail) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	1 Months Ended	3 Months Ended	6 Months Ended		44 Months Ended	1 Months Ended
	Jan. 31, 2014	Jun. 29, 2014	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Nov. 30, 2010 Maximum
Stockholders Equity Note Disclosure [Line Items]
Stock repurchase program, authorized amount						$ 200,000,000
Repurchase of stock, shares		0		0	2.6
Repurchase of stock, value					31,200,000
Common stock average price					$ 11.84
Dividends payable, amount per share	$ 0.06
Dividends payable, date to be paid	Jun. 02, 2014
Dividends payable, record date	May 09, 2014
Dividend payment	$ 11,700,000		$ 11,656,000

XML

Schedule of Net Periodic Pension and Postretirement Cost (Benefit) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Defined Benefit Plan Disclosure
Actuarial gain				$ (1,359)
Defined Benefit Pension Plans
Defined Benefit Plan Disclosure
Service cost	811	852	1,607	1,686
Interest cost	3,732	3,281	7,452	6,651
Expected return on plan assets	(3,384)	(3,631)	(6,725)	(7,261)
Amortization of unrecognized prior service benefit	34	41	67	82
Actuarial gain	362	(1,123)	362	(1,123)
Total net periodic pension/ postretirement cost (benefit)	1,555	(580)	2,763	35
Postretirement Benefit Plans
Defined Benefit Plan Disclosure
Service cost	17	21	29	37
Interest cost	82	84	168	171
Amortization of unrecognized prior service benefit	(150)	(150)	(299)	(299)
Actuarial gain	(247)	(236)	(247)	(236)
Total net periodic pension/ postretirement cost (benefit)	$ (298)	$ (281)	$ (349)	$ (327)

XML

Shareholders' Equity

6 Months Ended

Jun. 29, 2014

Shareholders' Equity

R. Shareholders’ Equity

Stock Repurchase Program

In November 2010, Teradyne’s Board of Directors authorized a stock repurchase program for up to $200 million. In the three and six months ended June 29, 2014 and June 30, 2013, Teradyne did not repurchase any shares. The cumulative repurchases under the new program as of June 29, 2014 totaled 2.6 million shares of common stock for $31.2 million at an average price of $11.84.

Dividend

In January 2014, Teradyne’s Board of Directors declared an initial quarterly cash dividend of $0.06 per share that was paid on June 2, 2014 to stockholders of record as of May 9, 2014. The total dividend payment was $11.7 million. Payment of future cash dividends will rest within the discretion of Teradyne’s Board of Directors and will depend, among other things, upon Teradyne’s earnings, capital requirements and financial condition.

XML

Interest Expense on Convertible Senior Notes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Debt Instrument
Contractual interest expense	$ 0	$ 2,137	$ 1,757	$ 4,274
Amortization of the discount component and debt issue fees	0	4,087	4,493	8,044
Total interest expense on the convertible debt	$ 0	$ 6,224	$ 6,250	$ 12,318

XML

Schedule of Changes in Fair Value of Level 3 Contingent Consideration (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 29, 2014	Mar. 30, 2014	Jun. 30, 2013	Mar. 31, 2013
Fair Value Measurements
Beginning Balance	$ 2,230	$ 2,230	$ 75	$ 388
Contingent consideration payments	0	0	(75)	(313)
Ending Balance	$ 2,230	$ 2,230	$ 0	$ 75

XML

Schedule of Segment Reporting Information by Segment Charges (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Segment Reporting Information [Line Items]
Restructuring and other	$ 572	$ 259	$ 572	$ 591
Semiconductor Test
Segment Reporting Information [Line Items]
Cost of revenues-provision for excess and obsolete inventory	3,713	287	9,918	500
Total	3,713	287	9,918	500
System Test
Segment Reporting Information [Line Items]
Cost of revenues-provision for excess and obsolete inventory	440	290	1,181	1,209
Restructuring and other	146	131	146	375
Total	586	421	1,327	1,584
Wireless Test
Segment Reporting Information [Line Items]
Cost of revenues-provision for excess and obsolete inventory	879	1,398	3,972	4,066
Restructuring and other	426		426
Total	$ 1,305	$ 1,398	$ 4,398	$ 4,066

XML

Retirement Plans (Tables)

6 Months Ended

Jun. 29, 2014

Postretirement Benefit Plans

Net Periodic Pension and Postretirement Cost (Benefit)

For the three and six months ended June 29, 2014 and June 30, 2013, Teradyne’s net periodic postretirement benefit was comprised of the following:

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Service cost	$	17		$	21		$	29		$	37
Interest cost		82			84			168			171
Amortization of unrecognized prior service benefit		(150	)		(150	)		(299	)		(299	)
Actuarial gain		(247	)		(236	)		(247	)		(236	)
Total net periodic post-retirement benefit	$	(298	)	$	(281	)	$	(349	)	$	(327	)

Defined Benefit Pension Plans

Net Periodic Pension and Postretirement Cost (Benefit)

For the three and six months ended June 29, 2014 and June 30, 2013, Teradyne’s net periodic pension cost was comprised of the following:

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Service cost	$	811		$	852		$	1,607		$	1,686
Interest cost		3,732			3,281			7,452			6,651
Expected return on plan assets		(3,384	)		(3,631	)		(6,725	)		(7,261	)
Amortization of unrecognized prior service cost		34			41			67			82
Actuarial loss (gain)		362			(1,123	)		362			(1,123	)
Total net periodic pension cost (benefit)	$	1,555		$	(580	)	$	2,763		$	35

XML

Deferred Revenue and Customer Advances (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Mar. 30, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Deferred Revenue Arrangement
Extended warranty	$ 40,052	$ 33,949	$ 34,909	$ 34,854	$ 28,599	$ 26,987
Equipment maintenance and training	26,535		22,455
Customer advances	8,926		4,825
Undelivered elements	5,831		6,971
Customer acceptance	1,616
Total deferred revenue and customer advances	$ 82,960		$ 69,160

XML

Net Income Per Common Share - Additional Information (Detail) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Net Income Loss Per Common Share
Exercise of stock options	0.3	0.5	0.3	0.5

XML

Reclassification Out of Accumulated Other Comprehensive Income to Statement of Operations (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Unrealized gains, tax	$ 141	$ 39	$ 243	$ 122
Prior service benefit, tax	$ 42	$ 40	$ 85	$ 79

XML

Schedule of Effect of Derivative Instruments in Statement of Operations Recognized (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013	Dec. 31, 2013
Fair Value, Option, Quantitative Disclosures
Derivatives not designated as hedging instruments	$ 306		$ 306		$ 153
Foreign exchange contracts derivatives not designated as hedging instruments, Gains (Losses) Recognized in Statement of Operations	(1,122)	1,818	(1,869)	4,067
Interest Expense and Other
Fair Value, Option, Quantitative Disclosures
Foreign exchange contracts derivatives not designated as hedging instruments, Gains (Losses) Recognized in Statement of Operations	(1,122)	1,818	(1,869)	4,067
Not Designated as Hedging Instrument | Foreign Currency Forward Contracts | Other current assets
Fair Value, Option, Quantitative Disclosures
Derivatives asset not designated as hedging instruments					153
Not Designated as Hedging Instrument | Foreign Currency Forward Contracts | Other Accrued Liabilities
Fair Value, Option, Quantitative Disclosures
Derivatives liability not designated as hedging instruments	$ 306		$ 306

XML

Accounting Policies

6 Months Ended

Jun. 29, 2014

Accounting Policies

B. Accounting Policies

Basis of Presentation

The consolidated interim financial statements include the accounts of Teradyne and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These interim financial statements are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of such interim financial statements. Certain prior year’s amounts were reclassified to conform to the current year presentation. The December 31, 2013 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The accompanying financial information should be read in conjunction with the consolidated financial statements and notes thereto contained in Teradyne’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 28, 2014, for the year ended December 31, 2013.

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates.

XML

Schedule of Amortizable Intangible Assets (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 29, 2014	Dec. 31, 2013
Finite-Lived Intangible Assets
Gross Carrying Amount	$ 515,464	$ 515,464
Accumulated Amortization	299,716	263,173
Net Carrying Amount	215,748	252,291
Weighted Average Useful Life, years	6 years 10 months 24 days	6 years 10 months 24 days
Developed technology
Finite-Lived Intangible Assets
Gross Carrying Amount	342,933	342,933
Accumulated Amortization	200,154	174,563
Net Carrying Amount	142,779	168,370
Weighted Average Useful Life, years	6 years 2 months 12 days	6 years 2 months 12 days
Customer Relationships
Finite-Lived Intangible Assets
Gross Carrying Amount	141,497	141,497
Accumulated Amortization	86,145	76,963
Net Carrying Amount	55,352	64,534
Weighted Average Useful Life, years	8 years	8 years
Trade names and trademarks
Finite-Lived Intangible Assets
Gross Carrying Amount	30,034	30,034
Accumulated Amortization	12,417	10,647
Net Carrying Amount	17,617	19,387
Weighted Average Useful Life, years	9 years 1 month 6 days	9 years 1 month 6 days
Customer backlog
Finite-Lived Intangible Assets
Gross Carrying Amount	1,000	1,000
Accumulated Amortization	$ 1,000	$ 1,000
Weighted Average Useful Life, years	4 months 24 days	4 months 24 days

XML

Schedule of Carrying Amounts and Fair Values of Financial Instruments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 31, 2013		Jun. 30, 2013	Dec. 31, 2012	Mar. 31, 2009
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash and cash equivalents, Carrying Value	$ 254,625	$ 341,638		$ 227,601	$ 338,920
Convertible debt, Carrying Value	0	185,708
Japan loan, Carrying Value						10,000
Carrying Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash and cash equivalents, Carrying Value	254,625	341,638
Marketable securities, Carrying Value	852,516	857,960
Convertible debt, Carrying Value		185,708	[1]
Japan loan, Carrying Value		955
Fair Value
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash and cash equivalents, Fair Value	254,625	341,638
Marketable securities, Fair Value	852,516	857,960
Convertible debt, Fair Value		611,433	[1]
Japan loan, Fair Value		$ 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.

XML

Prepayments (Tables)

6 Months Ended

Jun. 29, 2014

Schedule of Prepayments

Prepayments consist of the following and are included in prepayments on the balance sheet:

	June 29, 2014		December 31, 2013
	(in thousands)
Contract manufacturer prepayments	$	92,196	$	115,388
Prepaid maintenance and other services		6,838		6,538
Prepaid taxes		1,960		3,281
Other prepayments		9,479		11,167
Total prepayments	$	110,473	$	136,374

XML

Debt (Tables)

6 Months Ended

Jun. 29, 2014

Components of Convertible Senior Notes

The tables below represent the components of Teradyne’s convertible senior notes:

	June 29, 2014		December 31, 2013
	(in thousands)
Debt principal	$	—	$	189,998
Unamortized debt discount		—		4,290
Net carrying amount of the convertible debt	$	—	$	185,708

Interest Expense on Convertible Senior Notes

The interest expense on Teradyne’s convertible senior notes for the three and six months ended June 29, 2014 and June 30, 2013 was as follows:

	For the Three Months Ended				For the Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(in thousands)
Contractual interest expense	$	—	$	2,137	$	1,757	$	4,274
Amortization of the discount component and debt issue fees		—		4,087		4,493		8,044
Total interest expense on the convertible debt	$	—	$	6,224	$	6,250	$	12,318

XML

Schedule of Estimated Fair Value of TSR Performance-Based Restricted Stock Unit Awards Assumptions (Detail) (TSR Performance-Based Restricted Stock Units)	6 Months Ended
	Jun. 29, 2014
TSR Performance-Based Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award
Risk-free interest rate	0.75%
Teradyne volatility-historical	36.10%
Philadelphia Semiconductor Index volatility-historical	24.60%
Dividend yield	1.25%

XML

Schedule of Available for Sale Marketable Securities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	$ 847,486	$ 855,786
Available-for-sale marketable securities, Unrealized Gain	5,327	3,689
Available-for-sale marketable securities, Unrealized (Loss)	(297)	(1,515)
Available-for-sale marketable securities, Fair Market Value	852,516	857,960
Available-for-sale marketable securities, Fair Market Value of Investment with Unrealized Losses	104,322	241,760
U.S. Government Agency Securities
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	227,889	202,573
Available-for-sale marketable securities, Unrealized Gain	202	75
Available-for-sale marketable securities, Unrealized (Loss)	(16)	(60)
Available-for-sale marketable securities, Fair Market Value	228,075	202,588
Available-for-sale marketable securities, Fair Market Value of Investment with Unrealized Losses	41,122	84,498
U.S. Treasury Securities
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	404,707	468,084
Available-for-sale marketable securities, Unrealized Gain	308	94
Available-for-sale marketable securities, Unrealized (Loss)	(73)	(283)
Available-for-sale marketable securities, Fair Market Value	404,942	467,895
Available-for-sale marketable securities, Fair Market Value of Investment with Unrealized Losses	36,402	108,212
Commercial Paper
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	108,446	105,583
Available-for-sale marketable securities, Unrealized Gain	13	16
Available-for-sale marketable securities, Unrealized (Loss)		(1)
Available-for-sale marketable securities, Fair Market Value	108,459	105,598
Available-for-sale marketable securities, Fair Market Value of Investment with Unrealized Losses		7,993
Corporate Debt Securities
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	80,771	65,747
Available-for-sale marketable securities, Unrealized Gain	1,903	762
Available-for-sale marketable securities, Unrealized (Loss)	(184)	(1,122)
Available-for-sale marketable securities, Fair Market Value	82,490	65,387
Available-for-sale marketable securities, Fair Market Value of Investment with Unrealized Losses	25,959	40,355
Equity And Debt Mutual Funds
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	11,567	10,463
Available-for-sale marketable securities, Unrealized Gain	2,898	2,742
Available-for-sale marketable securities, Unrealized (Loss)	(24)	(49)
Available-for-sale marketable securities, Fair Market Value	14,441	13,156
Available-for-sale marketable securities, Fair Market Value of Investment with Unrealized Losses	839	702
Certificates of Deposit and Time Deposits
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	14,027	3,258
Available-for-sale marketable securities, Unrealized Gain	3
Available-for-sale marketable securities, Fair Market Value	14,030	3,258
Non-U.S. Government Securities
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	79	78
Available-for-sale marketable securities, Fair Market Value	$ 79	$ 78

XML

Deferred Revenue and Customer Advances (Tables)

6 Months Ended

Jun. 29, 2014

Deferred Revenue and Customer Advances

Deferred revenue and customer advances consist of the following and are included in short and long-term deferred revenue and customer advances on the balance sheet:

	June 29, 2014		December 31, 2013
	(in thousands)
Extended warranty	$	40,052	$	34,909
Equipment maintenance and training		26,535		22,455
Customer advances		8,926		4,825
Undelivered elements		5,831		6,971
Customer acceptance		1,616		—
Total deferred revenue and customer advances	$	82,960	$	69,160

XML

Product Warranty (Tables)

6 Months Ended

Jun. 29, 2014

Other Accrued Liabilities

The warranty balance below is included in other accrued liabilities on the balance sheet.

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Balance at beginning of period	$	6,615		$	7,075		$	6,660		$	9,786
Accruals for warranties issued during the period		5,399			3,684			8,257			5,107
Adjustments related to pre-existing warranties		(302	)		(869	)		(442	)		(1,798	)
Settlements made during the period		(2,639	)		(2,539	)		(5,402	)		(5,744	)
Balance at end of period	$	9,073		$	7,351		$	9,073		$	7,351

Extended Product Warranty of Short and Long-Term Deferred Revenue and Customer Advances

The extended warranty balance below is included in short and long-term deferred revenue and customer advances on the balance sheet.

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Balance at beginning of period	$	33,949		$	28,599		$	34,909		$	26,987
Deferral of new extended warranty revenue		11,960			8,734			14,321			12,205
Recognition of extended warranty deferred revenue		(5,857	)		(2,479	)		(9,178	)		(4,338	)
Balance at end of period	$	40,052		$	34,854		$	40,052		$	34,854

XML

The Company

6 Months Ended

Jun. 29, 2014

The Company

A. The Company

Teradyne, Inc. (the “Company” or “Teradyne”) is a leading global supplier of automatic test equipment. Teradyne’s automatic test equipment products and services include:

• semiconductor test (“Semiconductor Test”) systems;

• wireless test (“Wireless Test”) systems; and

• military/aerospace (“Mil/Aero”) test instrumentation and systems, storage test (“Storage Test”) systems, and circuit-board test (“Production Board Test”) systems (collectively these products represent “System Test”).

XML

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 29, 2014

Schedule of Estimated Fair Value of TSR Performance-Based Restricted Stock Unit Awards Assumptions

$22.06. The fair value was estimated using the Monte Carlo simulation model with the following assumptions:

	For the Six Months Ended
	June 29, 2014
Risk-free interest rate		0.75	%
Teradyne volatility-historical		36.1	%
Philadelphia Semiconductor Index volatility-historical		24.6	%
Dividend yield		1.25	%

Schedule of Estimated Fair Value of Stock Options Assumptions

The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:

	For the Six Months Ended
	June 29, 2014			June 30, 2013
Expected life (years)		4.0			4.0
Risk-free interest rate		1.2	%		0.6	%
Volatility-historical		38.8	%		46.8	%
Dividend yield		1.25	%		0.0	%

XML

Schedule of Fair Value of Financial Assets and Liabilities Measured on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	$ 852,516	$ 857,960
U.S. Treasury Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	404,942	467,895
U.S. Government Agency Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	228,075	202,588
Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	108,459	105,598
Corporate Debt Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	82,490	65,387
Equity And Debt Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	14,441	13,156
Certificates of Deposit and Time Deposits
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	14,030	3,258
Non-U.S. Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	79	78
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives assets		153
Available for sale securities	1,107,141
Total including derivatives	1,107,141	1,199,751
Contingent consideration	2,230	2,230
Derivatives liabilities	306
Liabilities	2,536	2,230
Fair Value, Measurements, Recurring | Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Cash and Cash equivalents	136,730	117,242
Fair Value, Measurements, Recurring | Cash Equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Cash and Cash equivalents	117,895	224,396
Fair Value, Measurements, Recurring | U.S. Treasury Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	404,942	467,895
Fair Value, Measurements, Recurring | U.S. Government Agency Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	228,075	202,588
Fair Value, Measurements, Recurring | Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	108,459	105,598
Fair Value, Measurements, Recurring | Corporate Debt Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	82,490	65,387
Fair Value, Measurements, Recurring | Equity And Debt Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	14,441	13,156
Fair Value, Measurements, Recurring | Certificates of Deposit and Time Deposits
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	14,030	3,258
Fair Value, Measurements, Recurring | Non-U.S. Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	79	78
Fair Value, Measurements, Recurring | Subtotal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities		1,199,598
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	263,323
Total including derivatives	263,323	296,263
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Fair Value, Measurements, Recurring | Cash
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Cash and Cash equivalents	136,730	117,242
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Fair Value, Measurements, Recurring | Cash Equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Cash and Cash equivalents	112,152	165,865
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Fair Value, Measurements, Recurring | Equity And Debt Mutual Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	14,441	13,156
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Fair Value, Measurements, Recurring | Subtotal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities		296,263
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivatives assets		153
Available for sale securities	843,818
Total including derivatives	843,818	903,488
Derivatives liabilities	306
Liabilities	306
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Cash Equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Cash and Cash equivalents	5,743	58,531
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | U.S. Treasury Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	404,942	467,895
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | U.S. Government Agency Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	228,075	202,588
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	108,459	105,598
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Corporate Debt Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	82,490	65,387
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Certificates of Deposit and Time Deposits
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	14,030	3,258
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Non-U.S. Government Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities	79	78
Significant Other Observable Inputs (Level 2) | Fair Value, Measurements, Recurring | Subtotal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale securities		903,335
Significant Unobservable Inputs (Level 3) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Contingent consideration	2,230	2,230
Liabilities	$ 2,230	$ 2,230

XML

Warranty Accrual Included in Other Accrued Liabilities (Detail) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Schedule of Accrued Liabilities [Line Items]
Balance at beginning of period	$ 6,615	$ 7,075	$ 6,660	$ 9,786
Accruals for warranties issued during the period	5,399	3,684	8,257	5,107
Adjustments related to pre-existing warranties	(302)	(869)	(442)	(1,798)
Settlements made during the period	(2,639)	(2,539)	(5,402)	(5,744)
Balance at end of period	$ 9,073	$ 7,351	$ 9,073	$ 7,351

XML

Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 29, 2014
Purchase Commitment, Excluding Long-term Commitment
Aggregate purchase commitments	$ 222.5
Purchase commitments less than one year	$ 211.5
Maximum
Purchase Commitment, Excluding Long-term Commitment
Purchase commitments period	1 year

XML

Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 254,625	$ 341,638
Marketable securities	488,439	586,882
Accounts receivable, less allowance for doubtful accounts of $2,461 and $2,912 at June 29, 2014 and December 31, 2013, respectively	300,767	157,642
Inventories:
Parts	70,444	84,232
Assemblies in process	15,191	15,539
Finished goods	41,239	38,168
Inventory, Net, Total	126,874	137,939
Deferred tax assets	68,460	72,478
Prepayments	110,473	136,374
Other current assets	4,989	7,324
Total current assets	1,354,627	1,440,277
Net property, plant and equipment	308,521	275,236
Marketable securities	364,077	271,078
Deferred tax assets	5,810	5,217
Other assets	10,927	14,591
Retirement plans assets	9,134	9,342
Intangible assets, net	215,748	252,291
Goodwill	361,819	361,792
Total assets	2,630,663	2,629,824
Current liabilities:
Accounts payable	102,214	62,874
Accrued employees' compensation and withholdings	86,765	95,619
Deferred revenue and customer advances	63,968	55,404
Other accrued liabilities	93,103	63,712
Accrued income taxes	15,182	11,360
Current debt		186,663
Total current liabilities	361,232	475,632
Long-term deferred revenue and customer advances	18,992	13,756
Retirement plans liabilities	92,485	91,517
Deferred tax liabilities	39,616	40,686
Long-term other accrued liabilities	16,865	23,139
Total liabilities	529,190	644,730
Commitments and contingencies (Note O)
SHAREHOLDERS' EQUITY
Common stock, $0.125 par value, 1,000,000 shares authorized, 196,321 shares and 191,731 shares issued and outstanding at June 29, 2014 and December 31, 2013, respectively	24,540	23,966
Additional paid-in capital	1,414,513	1,390,896
Accumulated other comprehensive income	5,709	4,000
Retained earnings	656,711	566,232
Total shareholders' equity	2,101,473	1,985,094
Total liabilities and shareholders' equity	$ 2,630,663	$ 2,629,824

XML

Schedule of Reported Available for Sale Marketable Securities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	$ 847,486	$ 855,786
Available-for-sale marketable securities, Unrealized Gain	5,327	3,689
Available-for-sale marketable securities, Unrealized (Loss)	(297)	(1,515)
Available-for-sale marketable securities, Fair Market Value	852,516	857,960
Available-for-sale marketable securities, Fair Market Value of Investments with Unrealized Losses	104,322	241,760
Marketable securities
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	488,257	586,818
Available-for-sale marketable securities, Unrealized Gain	186	85
Available-for-sale marketable securities, Unrealized (Loss)	(4)	(21)
Available-for-sale marketable securities, Fair Market Value	488,439	586,882
Available-for-sale marketable securities, Fair Market Value of Investments with Unrealized Losses	26,407	137,670
Long-term marketable securities
Schedule of Available-for-sale Securities
Available-for-sale marketable securities, Cost	359,229	268,968
Available-for-sale marketable securities, Unrealized Gain	5,141	3,604
Available-for-sale marketable securities, Unrealized (Loss)	(293)	(1,494)
Available-for-sale marketable securities, Fair Market Value	364,077	271,078
Available-for-sale marketable securities, Fair Market Value of Investments with Unrealized Losses	$ 77,915	$ 104,090

XML

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Net unrealized gains on marketable securities arising during period, tax	$ 558	$ (841)	$ 1,242	$ (726)
Reclassification adjustment for net gains included in net income, tax	(141)	(39)	(243)	(122)
Amortization of prior service benefit, tax	$ (42)	$ (40)	$ (85)	$ (79)

XML

Changes in Accumulated Other Comprehensive Income Balances (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013	Dec. 31, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income before reclassifications, tax	$ 558	$ (841)	$ 1,242	$ (726)
Other comprehensive income before reclassifications, tax			0
Amounts reclassified from accumulated other comprehensive income, tax	(141)	(39)	(243)	(122)
Amounts reclassified from accumulated other comprehensive income, tax	(42)	(40)	(85)	(79)
Unrealized gains on marketable securities, tax	1,793		1,793		794
Retirement plans prior service benefit, tax	(369)		(369)		(284)
Unrealized Gains on Marketable Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income before reclassifications, tax			1,242
Amounts reclassified from accumulated other comprehensive income, tax			(243)
Retirement Plans Prior Service Benefit
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income before reclassifications, tax			0
Amounts reclassified from accumulated other comprehensive income, tax			$ (85)

XML

Net Income per Common Share (Tables)

6 Months Ended

Jun. 29, 2014

Computation of Basic and Diluted Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share:

	For the Three Months Ended				For the Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	101,205	$	66,556	$	102,134	$	73,145
Weighted average common shares-basic		194,408		190,569		193,860		190,128
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		—		23,266		10,026		23,326
Convertible note hedge warrant shares (2)		20,406		18,689		20,674		18,774
Restricted stock units		705		772		878		947
Stock options		1,006		1,554		1,056		1,615
Employee stock purchase rights		43		59		32		43
Dilutive potential common shares		22,160		44,340		32,666		44,705
Weighted average common shares-diluted		216,568		234,909		226,526		234,833
Net income per common share-basic	$	0.52	$	0.35	$	0.53	$	0.38
Net income per common share-diluted	$	0.47	$	0.28	$	0.45	$	0.31

(1) Incremental shares from conversion of the convertible notes for the six months ended June 29, 2014 were calculated using the difference between the average Teradyne stock price from January 1, 2014 through March 12, 2014 and the conversion price of $5.4750, multiplied by 34.7 million shares. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period from January 1, 2014 to March 12, 2014 and adjusted for the number of days the convertible notes were outstanding during the six months ended June 29, 2014. Incremental shares from assumed conversion of the convertible notes for the three and six months ended June 30, 2013 were calculated using the difference between the average Teradyne stock price for the period and the conversion price of $5.4750, multiplied by the 34.7 million shares to be issued upon conversion. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period.

(2) Convertible note hedge warrant shares for the three and six months ended June 29, 2014 and June 30, 2013 are calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.6389, multiplied by the weighted average warrant shares outstanding. The result of this calculation, representing the total intrinsic value of the warrant, is divided by the average Teradyne stock price for the period.

XML

Computation of Basic and Diluted Net Income Per Common Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2014		Jun. 30, 2013		Jun. 29, 2014		Jun. 30, 2013
Net Income Loss Per Common Share
Net income for basic and diluted net income per share	$ 101,205		$ 66,556		$ 102,134		$ 73,145
Weighted average common shares-basic	194,408		190,569		193,860		190,128
Incremental shares from assumed conversion of convertible notes			23,266	[1]	10,026	[1]	23,326	[1]
Convertible note hedge warrant shares	20,406	[2]	18,689	[2]	20,674	[2]	18,774	[2]
Employee stock purchase rights	43		59		32		43
Dilutive potential common shares	22,160		44,340		32,666		44,705
Weighted average common shares-diluted	216,568		234,909		226,526		234,833
Net income per common share-basic	$ 0.52		$ 0.35		$ 0.53		$ 0.38
Net income per common share-diluted	$ 0.47		$ 0.28		$ 0.45		$ 0.31
Restricted Stock Units
Net Income Loss Per Common Share
Incremental shares attributable to share based payment arrangements	705		772		878		947
Stock Option
Net Income Loss Per Common Share
Incremental shares attributable to share based payment arrangements	1,006		1,554		1,056		1,615

[1] Incremental shares from conversion of the convertible notes for the six months ended June 29, 2014 were calculated using the difference between the average Teradyne stock price from January 1, 2014 through March 12, 2014 and the conversion price of $5.4750, multiplied by 34.7 million shares. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period from January 1, 2014 to March 12, 2014 and adjusted for the number of days the convertible notes were outstanding during the six months ended June 29, 2014. Incremental shares from assumed conversion of the convertible notes for the three and six months ended June 30, 2013 were calculated using the difference between the average Teradyne stock price for the period and the conversion price of $5.4750, multiplied by the 34.7 million shares to be issued upon conversion. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period.

[2] Convertible note hedge warrant shares for the three and six months ended June 29, 2014 and June 30, 2013 are calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.6389, multiplied by the weighted average warrant shares outstanding. The result of this calculation, representing the total intrinsic value of the warrant, is divided by the average Teradyne stock price for the period.

XML

Commitments and Contingencies

6 Months Ended

Jun. 29, 2014

Commitments and Contingencies

O. Commitments and Contingencies

Purchase Commitments

As of June 29, 2014, Teradyne had entered into purchase commitments for certain components and materials. The purchase commitments covered by the agreements aggregate to approximately $222.5 million, of which $211.5 million is for less than one year.

Legal Claims

Teradyne is subject to various legal proceedings and claims which have arisen in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on Teradyne’s results of operations, financial condition or cash flows.

XML

Restructuring and Other (Tables)

6 Months Ended

Jun. 29, 2014

Restructuring and Other

	Severance and Benefits			Facility Exit Costs			Total
	(in thousands)
Pre-2013 Activities
Balance at December 31, 2012	$	243		$	1,084		$	1,327
Change in estimate		—			(553	)		(553	)
Cash payments		(243	)		(531	)		(774	)
Balance at December 31, 2013	$	—		$	—		$	—
2013 Activities
Q3 2013 Activity:
Provision	$	1,337		$	—		$	1,337
Cash payments		(966	)		—			(966	)
Balance at December 31, 2013		371			—			371
Cash payments		(161	)		—			(161	)
Balance at March 30, 2014		210			—			210
Cash payments		—			—			—
Balance at June 29, 2014	$	210		$	—		$	210
Q4 2013 Activity:
Provision	$	600		$	—		$	600
Cash payments		(486	)		—			(486	)
Balance at December 31, 2013		114			—			114
Cash payments		(114	)		—			(114	)
Balance at March 30, 2014	$	—		$	—		$	—
2014 Activities
Q2 2014 Activity:
Provision	$	572		$	—		$	572
Cash payments		(530	)		—			(530	)
Balance at June 29, 2014	$	42		$	—		$	42
Balance at June 29, 2014	$	252		$	—		$	252

XML

Segment Information

6 Months Ended

Jun. 29, 2014

Segment Information

Q. Segment Information

Teradyne has three operating segments (Semiconductor Test, Wireless Test and System 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 Wireless Test segment includes operations related to design, manufacturing and marketing of wireless test products and services. The System Test segment includes operations related to design, manufacturing and marketing of products and services for military/aerospace instrumentation test, storage test and circuit-board test. 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, 2013. Segment information is as follows:

	Semiconductor Test		Wireless Test			System Test			Corporate and Eliminations			Consolidated
	(in thousands)
Three months ended June 29, 2014:
Net revenues	$	421,434	$	68,699		$	35,434		$	—		$	525,567
Income (loss) before income taxes(1)(2)		107,270		14,229			(715	)		608			121,392
Three months ended June 30, 2013:
Net revenues	$	292,431	$	99,386		$	37,072		$	—		$	428,889
Income (loss) before income taxes(1)(2)		58,606		23,913			779			(2,941	)		80,357
Six months ended June 29, 2014:
Net revenues	$	683,171	$	89,909		$	73,497		$	—		$	846,577
Income (loss) before income taxes(1)(2)		141,870		(10,856	)		(267	)		(11,228	)		119,519
Six months ended June 30, 2013:
Net revenues	$	503,937	$	132,984		$	72,335		$	—		$	709,256
Income (loss) before income taxes(1)(2)		72,372		13,916			2,309			(9,666	)		78,931

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

(2) Included in the income (loss) before income taxes for each of the segments are charges and credits for the three and six months ended June 29, 2014 and June 30, 2013 that include restructuring and other, 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 Six Months Ended
	June 29,  2014		June 30,  2013		June 29,  2014		June 30,  2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	3,713	$	287	$	9,918	$	500
Total	$	3,713	$	287	$	9,918	$	500

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

	For the Three Months Ended				For the Six Months Ended
	June 29,  2014		June 30,  2013		June 29,  2014		June 30,  2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	879	$	1,398	$	3,972	$	4,066
Restructuring and other		426		—		426		—
Total	$	1,305	$	1,398	$	4,398	$	4,066

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

	For the Three Months Ended				For the Six Months Ended
	June 29,  2014		June 30,  2013		June 29,  2014		June 30,  2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	440	$	290	$	1,181	$	1,209
Restructuring and other		146		131		146		375
Total	$	586	$	421	$	1,327	$	1,584

XML

Restructuring and Other - Additional Information (Detail) (USD $)			6 Months Ended
	Jun. 29, 2014	Jun. 29, 2014 Q3 2014 Activity	Jun. 29, 2014 Wireless Test Employee	Jun. 30, 2013 System Test and Semiconductor Test
Restructuring Cost and Reserve
Severance benefit and charges			$ 600,000	$ 600,000
Reduction in employees head count			28
Accrual balance for severance and benefits	$ 252,000	$ 252,000

XML

Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income	$ 102,134	$ 73,145
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	33,785	27,552
Amortization	42,990	46,052
Stock-based compensation	23,530	18,077
Provision for excess and obsolete inventory	15,071	5,775
Deferred taxes	(5,697)	(15,230)
Tax benefit related to stock options and restricted stock units	(1,671)	(1,584)
Retirement plans actuarial gains		(1,359)
Other	1,165	24
Changes in operating assets and liabilities:
Accounts receivable	(143,125)	(74,785)
Inventories	18,469	26,373
Prepayments and other assets	27,000	(17,277)
Accounts payable and other accrued expenses	52,796	(15,428)
Deferred revenue and customer advances	13,800	(2,811)
Retirement plans contributions	(2,388)	(2,511)
Accrued income taxes	5,495	2,964
Net cash provided by operating activities	183,354	68,977
Cash flows from investing activities:
Purchases of property, plant and equipment	(91,389)	(50,798)
Purchases of marketable securities	(523,306)	(458,070)
Proceeds from maturities of marketable securities	377,436	268,546
Proceeds from sales of marketable securities	152,818	50,255
Proceeds from life insurance	4,391
Net cash used for investing activities	(80,050)	(190,067)
Cash flows from financing activities:
Issuance of common stock under employee stock purchase and stock options plans	10,643	9,638
Tax benefit related to stock options and restricted stock units	1,671	1,584
Payments of dividend	(11,656)
Payments of long-term debt	(190,975)	(1,063)
Payments of contingent consideration		(388)
Net cash (used for) provided by financing activities	(190,317)	9,771
Decrease in cash and cash equivalents	(87,013)	(111,319)
Cash and cash equivalents at beginning of period	341,638	338,920
Cash and cash equivalents at end of period	$ 254,625	$ 227,601

XML

Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Jun. 29, 2014	Dec. 31, 2013
Accounts receivable, less allowance for doubtful accounts	$ 2,461	$ 2,912
Common stock, par value	$ 0.125	$ 0.125
Common stock, shares authorized	1,000,000	1,000,000
Common stock, shares issued	196,321	191,731
Common stock, shares outstanding	196,321	191,731

XML

Accumulated Other Comprehensive Income

6 Months Ended

Jun. 29, 2014

Accumulated Other Comprehensive Income

J. Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income, which is presented net of tax, consist of the following:

	Unrealized Gains on Marketable Securities			Retirement Plans Prior Service Credit			Total
	(in thousands)
Balance at December 31, 2013, net of tax of $794, $(284)	$	1,381		$	2,619		$	4,000
Other comprehensive income before reclassifications, net of tax of $1,242, $0		2,304			—			2,304
Amounts reclassified from accumulated other comprehensive income, net of tax of $(243), $(85)		(448	)		(147	)		(595	)
Net current period other comprehensive income		1,856			(147	)		1,709
Balance at June 29, 2014, net of tax of $1,793, $(369)	$	3,237		$	2,472		$	5,709

Reclassifications out of accumulated other comprehensive income to the statement of operations for the three and six months ended June 29, 2014 and June 30, 2013, were as follows:

Details about Accumulated Other Comprehensive Income Components	For the Three Months Ended				For the Six Months Ended				Affected Line Item in the Statements of Operations
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
			(in thousands)
Available-for-sale marketable securities:
Unrealized gains, net of tax of $141, $39, $243, $122	$	272	$	68	$	448	$	212	Interest income
Amortization of defined benefit pension and postretirement plans:
Prior service benefit, net of tax of $42, $40, $85, $79		74		69		147		138	(a)
Total reclassifications	$	346	$	137	$	595	$	350	Net income

(a) The amortization of prior service benefit is included in the computation of net periodic pension cost and postretirement benefit; see Note N: “Retirement Plans.”

XML

Document and Entity Information	6 Months Ended
	Jun. 29, 2014	Aug. 01, 2014
Document Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 29, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	TER
Entity Registrant Name	TERADYNE, INC
Entity Central Index Key	0000097210
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		204,676,850

XML

Intangible Assets

6 Months Ended

Jun. 29, 2014

Intangible Assets

K. Intangible Assets

Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheet:

	June 29, 2014
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	342,933	$	200,154	$	142,779		6.2 years
Customer relationships		141,497		86,145		55,352		8.0 years
Trade names and trademarks		30,034		12,417		17,617		9.1 years
Customer backlog		1,000		1,000		—		0.4 years
Total intangible assets	$	515,464	$	299,716	$	215,748		6.9 years

	December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	342,933	$	174,563	$	168,370		6.2 years
Customer relationships		141,497		76,963		64,534		8.0 years
Trade names and trademarks		30,034		10,647		19,387		9.1 years
Customer backlog		1,000		1,000		—		0.4 years
Total intangible assets	$	515,464	$	263,173	$	252,291		6.9 years

Aggregate intangible asset amortization expense was $18.3 million and $36.5 million, respectively, for the three and six months ended June 29, 2014 and $18.1 million and $36.1 million, respectively, for the three and six months ended June 30, 2013. Estimated intangible asset amortization expense for each of the five succeeding fiscal years is as follows:

Year	Amortization Expense
	(in thousands)
2014 (remainder)	$	33,598
2015		53,391
2016		53,391
2017		47,232
2018		22,691

XML

Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2014		Jun. 30, 2013		Jun. 29, 2014		Jun. 30, 2013
Net revenues:
Products	$ 452,488		$ 363,087		$ 707,874		$ 577,387
Services	73,079		65,802		138,703		131,869
Total net revenues	525,567		428,889		846,577		709,256
Cost of revenues:
Cost of products	202,411		158,411		326,859		255,204
Cost of services	32,743		29,245		62,258		59,402
Total cost of revenues	235,154		187,656		389,117		314,606
Gross profit	290,413		241,233		457,460		394,650
Operating expenses:
Engineering and development	73,414		67,773		140,499		130,524
Selling and administrative	77,489		69,230		155,492		137,120
Acquired intangible assets amortization	18,271		18,063		36,542		36,099
Restructuring and other	572		259		572		591
Total operating expenses	169,746		155,325		333,105		304,334
Income from operations	120,667		85,908		124,355		90,316
Interest income	1,266		903		2,302		1,975
Interest expense and other	541		6,454		7,138		13,360
Income before income taxes	121,392	[1],[2]	80,357	[1],[2]	119,519	[1],[2]	78,931	[1],[2]
Income tax provision	20,187		13,801		17,385		5,786
Net income	$ 101,205		$ 66,556		$ 102,134		$ 73,145
Net income per common share:
Basic	$ 0.52		$ 0.35		$ 0.53		$ 0.38
Diluted	$ 0.47		$ 0.28		$ 0.45		$ 0.31
Weighted average common shares-basic	194,408		190,569		193,860		190,128
Weighted average common shares-diluted	216,568		234,909		226,526		234,833
Cash dividend declared per common share					$ 0.06

[1] Pension and postretirement actuarial gains and losses, interest income, and interest expense and other are included in Corporate and Eliminations.

[2] Included in the income (loss) before income taxes for each of the segments are charges and credits for the three and six months ended June 29, 2014 and June 30, 2013 that include restructuring and other, and provision for excess and obsolete inventory, as follows:

XML

Debt

6 Months Ended

Jun. 29, 2014

Debt

E. Debt

Loan Agreement

On March 31, 2009, Teradyne K.K., Teradyne’s wholly-owned subsidiary in Japan, entered into a loan agreement with a local bank in Japan to borrow approximately $10.0 million (the loan was denominated in Japanese Yen). The loan had a term of 5 years and a fixed interest rate of 0.8%. Approximately $6.0 million of the loan was collateralized by a real estate mortgage on Teradyne K.K.’s building and land in Kumamoto, Japan and approximately $4.0 million was unsecured. Teradyne, Inc. guaranteed payment of the loan obligation. The loan was amortized over the term of the loan with semiannual principal payments of approximately $1.0 million on September 30 and March 30 each year. The final principal and interest payments were made in March 2014.

Convertible Senior Notes

In April 2009, Teradyne issued 4.50% convertible senior notes (the “Notes”) at an aggregate principal amount of $190 million and a conversion price of $5.4750 or 182.65 shares of Teradyne’s common stock per $1,000 principal amount of Notes. The Notes had a maturity date of March 15, 2014. Substantially all of the Notes were converted prior to March 15, 2014 and were “net share settled,” meaning that the holders received, for each $1,000 in principal amount of Notes, $1,000 in cash and approximately 131.95 shares of Teradyne common stock (calculated by taking 182.65 shares less 50.7 shares). The 50.7 shares were determined by dividing the $1,000 principal amount by the $19.74 average trading price of Teradyne’s common stock over the 25 day trading period from February 5, 2014 to March 12, 2014.

Teradyne satisfied the Notes “net share settlement” by paying the aggregate principal amount of $190 million in cash and issuing 25.1 million shares of common stock. On March 13, 2014, Teradyne exercised its call option agreement entered into with Goldman, Sachs & Co. (the “hedge counterparty”) at the time of issuance of the Notes and received 25.1 million shares of Teradyne’s common stock, which were retired.

Subsequently, the hedge counterparty can exercise warrants with a strike price of $7.6389. The warrants are net share settled. Approximately 536,000 warrants expire on a daily basis over a 65-day trading period from June 17, 2014 to September 17, 2014. In the three months ended June 29, 2014, approximately 1.9 million shares were issued for warrants exercised.

The tables below represent the components of Teradyne’s convertible senior notes:

	June 29, 2014		December 31, 2013
	(in thousands)
Debt principal	$	—	$	189,998
Unamortized debt discount		—		4,290
Net carrying amount of the convertible debt	$	—	$	185,708

The interest expense on Teradyne’s convertible senior notes for the three and six months ended June 29, 2014 and June 30, 2013 was as follows:

	For the Three Months Ended				For the Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(in thousands)
Contractual interest expense	$	—	$	2,137	$	1,757	$	4,274
Amortization of the discount component and debt issue fees		—		4,087		4,493		8,044
Total interest expense on the convertible debt	$	—	$	6,224	$	6,250	$	12,318

XML

Financial Instruments and Derivatives

6 Months Ended

Jun. 29, 2014

Financial Instruments and Derivatives

D. Financial Instruments and Derivatives

Cash Equivalents

Teradyne considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents.

Financial Instruments

Teradyne accounts for its investments in debt and equity securities in accordance with the provisions of ASC 320-10, “Investments—Debt and Equity Securities.” ASC 320-10 requires that certain debt and equity securities be classified into one of three categories; trading, available-for-sale or held-to-maturity securities. As of June 29, 2014, Teradyne’s investments in debt and equity securities were classified as available-for-sale and recorded at their fair market value.

On a quarterly basis, Teradyne reviews its investments to identify and evaluate those that have an indication of a potential other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include:

• The length of time and the extent to which the market value has been less than cost;

• The financial condition and near-term prospects of the issuer; and

• The intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value.

Teradyne uses the market and income approach techniques to value its financial instruments and there were no changes in valuation techniques during the three and six months ended June 29, 2014 and June 30, 2013. As defined in ASC 820-10 “Fair Value Measurements and Disclosures”, fair value is the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820-10 requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

Level 1: Quoted prices in active markets for identical assets as of the reporting date.

Level 2: Inputs other than Level 1, that are observable either directly or indirectly as of the reporting date. For example, a common approach for valuing fixed income securities is the use of matrix pricing, a technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are not supported by market data. Unobservable inputs are developed based on the best information available, which might include Teradyne’s own data.

Substantially all of Teradyne’s fixed income securities are classified as Level 2, with the exception of investments in equity and debt mutual funds, which are classified as Level 1, and contingent consideration, which is classified as Level 3. The majority of Teradyne’s Level 2 securities are priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.

During the six months ended June 29, 2014 and June 30, 2013, there were no transfers in or out of Level 1, Level 2 or Level 3 financial instruments.

There were no realized losses recorded in the three and six months ended June 29, 2014 and June 30, 2013. Realized gains recorded in the three and six months ended June 29, 2014 were $0.4 million and $0.7 million, respectively. Realized gains recorded in the three and six months ended June 30, 2013 were $0.1 million and $0.3 million, respectively. Realized gains are included in interest income.

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 June 29, 2014 and December 31, 2013.

	June 29, 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	$	136,730	$	—	$	—	$	136,730
Cash equivalents		112,152		5,743		—		117,895
Available-for-sale securities:
U.S. Treasury securities		—		404,942		—		404,942
U.S. government agency securities		—		228,075		—		228,075
Commercial paper		—		108,459		—		108,459
Corporate debt securities		—		82,490		—		82,490
Equity and debt mutual funds		14,441		—		—		14,441
Certificates of deposit and time deposits		—		14,030		—		14,030
Non-U.S. government securities		—		79		—		79
Total	$	263,323	$	843,818	$	—	$	1,107,141
Liabilities
Contingent consideration	$	—	$	—	$	2,230	$	2,230
Derivatives		—		306		—		306
Total	$	—	$	306	$	2,230	$	2,536

Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	248,882	$	5,743	$	—	$	254,625
Marketable securities		—		488,439		—		488,439
Long-term marketable securities		14,441		349,636		—		364,077
	$	263,323	$	843,818	$	—	$	1,107,141
Liabilities
Other accrued liabilities	$	—	$	306	$	—	$	306
Long-term other accrued liabilities		—		—		2,230		2,230
	$	—	$	306	$	2,230	$	2,536

	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		296,263		903,335		—		1,199,598
Derivatives		—		153		—		153
Total	$	296,263	$	903,488	$	—	$	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		—		586,882		—		586,882
Long-term marketable securities		13,156		257,922		—		271,078
Other current assets		—		153		—		153
	$	296,263	$	903,488	$	—	$	1,199,751
Liabilities
Long-term other accrued liabilities	$	—	$	—	$	2,230	$	2,230
	$	—	$	—	$	2,230	$	2,230

Contingent consideration relates to Teradyne’s acquisition of ZTEC on October 25, 2013. The total purchase price included $2.2 million in fair value of contingent consideration payable upon achievement of certain customer order and revenue targets through 2015. The maximum amount of contingent consideration that could be paid is $5.0 million. Based on the projected results for the acquisition, no value was assigned to the revenue component of the contingent consideration.

The valuation of the customer order component of the contingent consideration utilized the following assumptions: (1) probability of meeting each benchmark; (2) expected timing of meeting each benchmark; and (3) discount rate reflecting the risk associated with the expected payments. The probabilities and timing for each benchmark were estimated based on a review of the historical and projected results. A discount rate of 5.2 percent was selected based on the cost of debt for the business, as a significant portion of the risk in achieving the customer order contingent consideration was captured in the probabilities assigned to meeting each benchmark. There were no changes to the fair value of the contingent consideration during the six months ended June 29, 2014.

Changes in the fair value of Level 3 contingent consideration for the three and six months ended June 29, 2014 and June 30, 2013 were as follows:

Contingent consideration related to Teradyne’s acquisition of ZTEC in October 2013
	For the Three and Six Months Ended
	June 29, 2014
	(in thousands)
Balance at December 31, 2013	$	2,230
Contingent consideration payments		—
Balance at March 30, 2014		2,230
Contingent consideration payments		—
Balance at June 29, 2014	$	2,230

Contingent consideration related to Teradyne’s acquisition of LitePoint in October 2011	For the Three and Six Months Ended
	June 30, 2013
	(in thousands)
Balance at December 31, 2012	$	388
Contingent consideration payments		(313	)
Balance at March 31, 2013		75
Contingent consideration payments		(75	)
Balance at June 30, 2013	$	—

The carrying amounts and fair values of Teradyne’s financial instruments at June 29, 2014 and December 31, 2013 were as follows:

	June 29, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Cash and cash equivalents	$	254,625	$	254,625	$	341,638	$	341,638
Marketable securities		852,516		852,516		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.

The fair values of cash and cash equivalents, accounts receivable, net and accounts payable approximate the carrying amount due to the short-term nature of these instruments.

The following tables summarize the composition of available-for-sale marketable securities at June 29, 2014 and December 31, 2013:

	June 29, 2014
	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	$	404,707	$	308	$	(73	)	$	404,942	$	36,402
U.S. government agency securities		227,889		202		(16	)		228,075		41,122
Commercial paper		108,446		13		—			108,459		—
Corporate debt securities		80,771		1,903		(184	)		82,490		25,959
Equity and debt mutual funds		11,567		2,898		(24	)		14,441		839
Certificates of deposit and time deposits		14,027		3		—			14,030		—
Non-U.S. government securities		79		—		—			79		—
	$	847,486	$	5,327	$	(297	)	$	852,516	$	104,322

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	488,257	$	186	$	(4	)	$	488,439	$	26,407
Long-term marketable securities		359,229		5,141		(293	)		364,077		77,915
	$	847,486	$	5,327	$	(297	)	$	852,516	$	104,322

	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

As of June 29, 2014, the fair market value of investments with unrealized losses was $104.3 million. Of this value, $6.9 million had unrealized losses greater than one year and $97.4 million had unrealized losses less than one year. As of December 31, 2013, the fair market value of investments with unrealized losses was $241.8 million. Of this value, $0.9 million had unrealized losses greater than one year and $240.9 million had unrealized losses less than one year. Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments, at June 29, 2014 and December 31, 2013, were temporary.

The contractual maturities of investments held at June 29, 2014 were as follows:

	June 29, 2014
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	488,257	$	488,439
Due after 1 year through 5 years		317,047		317,321
Due after 5 years through 10 years		6,289		6,467
Due after 10 years		24,326		25,848
Total	$	835,919	$	838,075

Contractual maturities of investments held at June 29, 2014 exclude equity and debt mutual funds as they do not have a contractual maturity date.

Derivatives

Teradyne conducts business in a number of foreign countries, with certain transactions denominated in local currencies. The purpose of Teradyne’s foreign currency management is to minimize the effect of exchange rate fluctuations on certain foreign currency denominated monetary assets and liabilities. Teradyne does not use derivative financial instruments for trading or speculative purposes.

To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings, and is used to offset the change in value of the monetary assets and liabilities denominated in foreign currencies.

The notional amount of foreign currency forward contracts was $69.4 million and $74.8 million at June 29, 2014 and December 31, 2013, respectively.

The fair value of the outstanding contracts was a loss of $0.3 million and a gain of $0.2 million at June 29, 2014 and December 31, 2013, respectively. The following table summarizes the fair value of derivative instruments at June 29, 2014 and December 31, 2013:

	Balance Sheet Location	June 29, 2014		December 31, 2013
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other current assets	$	—	$	153
	Other accrued liabilities		306		—
		$	306	$	153

Teradyne had no offsetting foreign exchange contracts at June 29, 2014 and December 31, 2013.

In the three and six months ended June 29, 2014, Teradyne recorded net realized losses of $1.1 million and $1.9 million, respectively, related to foreign currency forward contracts hedging net monetary positions. In the three and six months ended June 30, 2013, Teradyne recorded net realized gains of $1.8 million and $4.1 million, respectively, related to foreign currency forward contracts hedging net monetary positions. Gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities are included in interest expense and other.

The following table summarizes the effect of derivative instruments recognized in the statement of operations during the three and six months ended June 29, 2014 and June 30, 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 and six months ended June 29, 2014, gains from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $0.7 million and $1.3 million, respectively. For the three and six months ended June 30, 2013, (losses) from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $(1.8) million and $(4.6) million, respectively.

	Location of Gains (Losses) Recognized in Statement of Operations		For the Three Months Ended					For the Six Months Ended
			June 29, 2014			June 30, 2013		June 29, 2014			June 30, 2013
			(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Interest expense and other	$	(1,122	)	$	1,818	$	(1,869	)	$	4,067
			$	(1,122	)	$	1,818	$	(1,869	)	$	4,067

See Note E: “Debt” regarding derivatives related to convertible senior notes.

XML

Income Taxes

6 Months Ended

Jun. 29, 2014

Income Taxes

P. Income Taxes

The effective tax rate for the three months ended June 29, 2014 and June 30, 2013 was 17%. The effective tax rate for the six months ended June 29, 2014 and June 30, 2013 was 15% and 7%, respectively. The increase in the tax rate for the six months ended June 29, 2014 compared to the six months ended June 30, 2013 was primarily because income tax expense for the six months ended June 30, 2013 was reduced for a discrete tax benefit from the January 2013 reinstatement of the U.S. research and development credit for fiscal year 2012.

The effective tax rate for each of these periods is lower than the 35% U.S. statutory federal tax rate primarily due to the geographic mix of income and profits earned by Teradyne’s international subsidiaries being taxed at rates lower than the U.S. statutory rate.

Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings due to the tax holiday for the six months ended June 29, 2014 were $6.1 million or $0.03 per diluted share. The tax holiday is currently expected to expire on December 31, 2015.

XML

Net Income per Common Share

6 Months Ended

Jun. 29, 2014

Net Income per Common Share

L. Net Income per Common Share

The following table sets forth the computation of basic and diluted net income per common share:

	For the Three Months Ended				For the Six Months Ended
	June 29, 2014		June 30, 2013		June 29, 2014		June 30, 2013
	(in thousands, except per share amounts)
Net income for basic and diluted net income per share	$	101,205	$	66,556	$	102,134	$	73,145
Weighted average common shares-basic		194,408		190,569		193,860		190,128
Effect of dilutive potential common shares:
Incremental shares from assumed conversion of convertible notes (1)		—		23,266		10,026		23,326
Convertible note hedge warrant shares (2)		20,406		18,689		20,674		18,774
Restricted stock units		705		772		878		947
Stock options		1,006		1,554		1,056		1,615
Employee stock purchase rights		43		59		32		43
Dilutive potential common shares		22,160		44,340		32,666		44,705
Weighted average common shares-diluted		216,568		234,909		226,526		234,833
Net income per common share-basic	$	0.52	$	0.35	$	0.53	$	0.38
Net income per common share-diluted	$	0.47	$	0.28	$	0.45	$	0.31

(1) Incremental shares from conversion of the convertible notes for the six months ended June 29, 2014 were calculated using the difference between the average Teradyne stock price from January 1, 2014 through March 12, 2014 and the conversion price of $5.4750, multiplied by 34.7 million shares. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period from January 1, 2014 to March 12, 2014 and adjusted for the number of days the convertible notes were outstanding during the six months ended June 29, 2014. Incremental shares from assumed conversion of the convertible notes for the three and six months ended June 30, 2013 were calculated using the difference between the average Teradyne stock price for the period and the conversion price of $5.4750, multiplied by the 34.7 million shares to be issued upon conversion. The result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne stock price for the period.

(2) Convertible note hedge warrant shares for the three and six months ended June 29, 2014 and June 30, 2013 are calculated using the difference between the average Teradyne stock price for the period and the warrant price of $7.6389, multiplied by the weighted average warrant shares outstanding. The result of this calculation, representing the total intrinsic value of the warrant, is divided by the average Teradyne stock price for the period.

The computation of diluted net income per common share for the three and six months ended June 29, 2014 excludes the effect of the potential exercise of stock options to purchase approximately 0.3 million shares because the effect would have been anti-dilutive.

The computation of diluted net income per common share for the three and six months ended June 30, 2013 excludes the effect of the potential exercise of stock options to purchase approximately 0.5 million shares because the effect would have been anti-dilutive.

XML

Product Warranty

6 Months Ended

Jun. 29, 2014

Product Warranty

H. Product Warranty

Teradyne generally provides a one-year warranty on its products, commencing upon installation or shipment. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience. Related costs are charged to the warranty accrual as incurred. The warranty balance below is included in other accrued liabilities on the balance sheet.

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Balance at beginning of period	$	6,615		$	7,075		$	6,660		$	9,786
Accruals for warranties issued during the period		5,399			3,684			8,257			5,107
Adjustments related to pre-existing warranties		(302	)		(869	)		(442	)		(1,798	)
Settlements made during the period		(2,639	)		(2,539	)		(5,402	)		(5,744	)
Balance at end of period	$	9,073		$	7,351		$	9,073		$	7,351

When Teradyne receives revenue for extended warranty beyond one year, it is deferred and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. The extended warranty balance below is included in short and long-term deferred revenue and customer advances on the balance sheet.

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Balance at beginning of period	$	33,949		$	28,599		$	34,909		$	26,987
Deferral of new extended warranty revenue		11,960			8,734			14,321			12,205
Recognition of extended warranty deferred revenue		(5,857	)		(2,479	)		(9,178	)		(4,338	)
Balance at end of period	$	40,052		$	34,854		$	40,052		$	34,854

XML

Reclassification Out of Accumulated Other Comprehensive Income to Statement of Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2014		Jun. 30, 2013		Jun. 29, 2014		Jun. 30, 2013
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Unrealized gains	$ 272		$ 68		$ 448		$ 212
Prior service benefit	74	[1]	69	[1]	147	[1]	138	[1]
Total reclassifications	$ 346		$ 137		$ 595		$ 350

[1] The amortization of prior service benefit is included in the computation of net periodic pension cost and postretirement benefit; see Note N: "Retirement Plans."

XML

Prepayments

6 Months Ended

Jun. 29, 2014

Prepayments

F. Prepayments

Prepayments consist of the following and are included in prepayments on the balance sheet:

	June 29, 2014		December 31, 2013
	(in thousands)
Contract manufacturer prepayments	$	92,196	$	115,388
Prepaid maintenance and other services		6,838		6,538
Prepaid taxes		1,960		3,281
Other prepayments		9,479		11,167
Total prepayments	$	110,473	$	136,374

XML

Deferred Revenue and Customer Advances

6 Months Ended

Jun. 29, 2014

Deferred Revenue and Customer Advances

G. Deferred Revenue and Customer Advances

Deferred revenue and customer advances consist of the following and are included in short and long-term deferred revenue and customer advances on the balance sheet:

	June 29, 2014		December 31, 2013
	(in thousands)
Extended warranty	$	40,052	$	34,909
Equipment maintenance and training		26,535		22,455
Customer advances		8,926		4,825
Undelivered elements		5,831		6,971
Customer acceptance		1,616		—
Total deferred revenue and customer advances	$	82,960	$	69,160

XML

Stock-Based Compensation

6 Months Ended

Jun. 29, 2014

Stock-Based Compensation

I. Stock-Based Compensation

In January 2014, Teradyne granted performance-based restricted stock units (“PRSUs”) to its executive officers with a performance metric based on relative total shareholder return (“TSR”). Teradyne’s three-year TSR performance will be measured against the Philadelphia Semiconductor Index, which consists of thirty companies in the semiconductor device and capital equipment industries. The final number of TSR PRSUs that vest will vary based upon the level of performance achieved from 200% of the target shares to 0% of the target shares. All TSR PRSUs will vest upon the three-year anniversary of the January 24, 2014 grant date. No TSR PRSUs will vest if the executive officer is no longer an employee at the end of the three-year period. The TSR PRSUs are valued using a Monte Carlo simulation model. The number of units expected to be earned, based upon the achievement of the TSR market condition, is factored into the grant date Monte Carlo valuation. Compensation expense is recognized on a straight-line basis over the three-year service period. Compensation expense is recognized regardless of the eventual number of units that are earned based upon the market condition, provided the executive officer remains an employee at the end of the three-year period. Compensation expense is reversed if the executive officer is not an employee at the end of the three-year service period. During the six months ended June 29, 2014, Teradyne granted 0.1 million TSR performance-based restricted stock unit awards with a grant date fair value of $22.06. The fair value was estimated using the Monte Carlo simulation model with the following assumptions:

	For the Six Months Ended
	June 29, 2014
Risk-free interest rate		0.75	%
Teradyne volatility-historical		36.1	%
Philadelphia Semiconductor Index volatility-historical		24.6	%
Dividend yield		1.25	%

Expected volatility was based on the historical volatility of Teradyne’s stock and the Philadelphia Semiconductor Index over the most recent three year period. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of $0.24 per share divided by Teradyne’s January 24, 2014 stock price of $19.16.

During the six months ended June 29, 2014, Teradyne granted 1.6 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of $19.08 and 0.1 million of service-based stock options to executive officers at a weighted average grant date fair value of $5.49.

During the six months ended June 30, 2013, Teradyne granted 1.9 million of service-based restricted stock unit awards to employees at a weighted average grant date fair value of $16.60 and 0.2 million of service-based stock options to executive officers at a weighted average grant date fair value of $6.09.

Restricted stock unit awards granted to employees vest in equal annual installments over four years. Stock options vest in equal annual installments over four years, and have a term of seven years from the date of grant.

The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:

	For the Six Months Ended
	June 29, 2014			June 30, 2013
Expected life (years)		4.0			4.0
Risk-free interest rate		1.2	%		0.6	%
Volatility-historical		38.8	%		46.8	%
Dividend yield		1.25	%		0.0	%

Teradyne determined the stock options’ expected life based upon historical exercise data for executive officers, the age of the executive officers and the terms of the stock option grant. Volatility was determined using historical volatility for a period equal to the expected life. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend yield was based upon an estimated annual dividend amount of $0.24 per share divided by Teradyne’s January 24, 2014 stock price of $19.16.

Effective January 31, 2014, Michael Bradley retired as Chief Executive Officer of Teradyne. Mr. Bradley will continue to serve on Teradyne’s Board of Directors. On January 22, 2014, Teradyne entered into an agreement (the “Retirement Agreement”) with Mr. Bradley. Under the Retirement Agreement, Mr. Bradley’s unvested restricted stock units and stock options granted prior to his retirement date will continue to vest in accordance with their terms through January 31, 2017; and any vested options or options that vest during that period may be exercised for the remainder of the applicable option term. In the Retirement Agreement, Mr. Bradley agreed to be bound by non-competition and non-solicitation restrictions through January 31, 2017. In January 2014, Teradyne recorded a one-time charge to stock-based compensation expense of $6.6 million related to the Retirement Agreement.

XML

Schedule of Estimated Intangible Asset Amortization Expense (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014
Finite-Lived Intangible Assets
2014 (remainder)	$ 33,598
2015	53,391
2016	53,391
2017	47,232
2018	$ 22,691

XML

Computation of Basic and Diluted Net Income Per Common Share (Parenthetical) (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Net Income Loss Per Common Share
Shares that would be issued upon conversion	34.7	34.7	34.7
Convertible Notes
Net Income Loss Per Common Share
Initial debt conversion price	$ 5.4750	$ 5.4750	$ 5.4750
Convertible Notes Hedge Warrant
Net Income Loss Per Common Share
Initial debt conversion price	$ 7.6389	$ 7.6389	$ 7.6389

XML

Intangible Assets - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Goodwill and Intangible Assets Disclosure [Line Items]
Aggregate intangible asset amortization expense	$ 18,271	$ 18,063	$ 36,542	$ 36,099

XML

Intangible Assets (Tables)

6 Months Ended

Jun. 29, 2014

Schedule of Amortizable Intangible Assets

Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheet:

	June 29, 2014
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	342,933	$	200,154	$	142,779		6.2 years
Customer relationships		141,497		86,145		55,352		8.0 years
Trade names and trademarks		30,034		12,417		17,617		9.1 years
Customer backlog		1,000		1,000		—		0.4 years
Total intangible assets	$	515,464	$	299,716	$	215,748		6.9 years

	December 31, 2013
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Useful Life
	(in thousands)
Developed technology	$	342,933	$	174,563	$	168,370		6.2 years
Customer relationships		141,497		76,963		64,534		8.0 years
Trade names and trademarks		30,034		10,647		19,387		9.1 years
Customer backlog		1,000		1,000		—		0.4 years
Total intangible assets	$	515,464	$	263,173	$	252,291		6.9 years

Schedule of Estimated Intangible Asset Amortization Expense

Estimated intangible asset amortization expense for each of the five succeeding fiscal years is as follows:

Year	Amortization Expense
	(in thousands)
2014 (remainder)	$	33,598
2015		53,391
2016		53,391
2017		47,232
2018		22,691

XML

Schedule of Prepayments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 31, 2013
Prepaid Expenses [Line Items]
Contract manufacturer prepayments	$ 92,196	$ 115,388
Prepaid maintenance and other services	6,838	6,538
Prepaid taxes	1,960	3,281
Other prepayments	9,479	11,167
Prepayments	$ 110,473	$ 136,374

XML

Retirement Plans

6 Months Ended

Jun. 29, 2014

Retirement Plans

N. Retirement Plans

ASC 715, “Compensation—Retirement Benefits” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation.

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. In the six months ended June 29, 2014, Teradyne contributed $0.9 million to the U.S. supplemental executive defined benefit pension plan and $1.0 million to certain qualified plans for non-U.S. subsidiaries.

For the three and six months ended June 29, 2014 and June 30, 2013, Teradyne’s net periodic pension cost was comprised of the following:

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Service cost	$	811		$	852		$	1,607		$	1,686
Interest cost		3,732			3,281			7,452			6,651
Expected return on plan assets		(3,384	)		(3,631	)		(6,725	)		(7,261	)
Amortization of unrecognized prior service cost		34			41			67			82
Actuarial loss (gain)		362			(1,123	)		362			(1,123	)
Total net periodic pension cost (benefit)	$	1,555		$	(580	)	$	2,763		$	35

Postretirement Benefit Plan

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.

For the three and six months ended June 29, 2014 and June 30, 2013, Teradyne’s net periodic postretirement benefit was comprised of the following:

	For the Three Months Ended						For the Six Months Ended
	June 29, 2014			June 30, 2013			June 29, 2014			June 30, 2013
	(in thousands)
Service cost	$	17		$	21		$	29		$	37
Interest cost		82			84			168			171
Amortization of unrecognized prior service benefit		(150	)		(150	)		(299	)		(299	)
Actuarial gain		(247	)		(236	)		(247	)		(236	)
Total net periodic post-retirement benefit	$	(298	)	$	(281	)	$	(349	)	$	(327	)

XML

Accounting Policies (Policies)

6 Months Ended

Jun. 29, 2014

Basis of Presentation

Basis of Presentation

The consolidated interim financial statements include the accounts of Teradyne and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated. These interim financial statements are unaudited and reflect all normal recurring adjustments that are, in the opinion of management, necessary for the fair presentation of such interim financial statements. Certain prior year’s amounts were reclassified to conform to the current year presentation. The December 31, 2013 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The accompanying financial information should be read in conjunction with the consolidated financial statements and notes thereto contained in Teradyne’s Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 28, 2014, for the year ended December 31, 2013.

Preparation of Financial Statements and Use of Estimates

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates.

XML

Components of Convertible Senior Notes (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 31, 2013
Debt Instrument
Debt principal	$ 0	$ 189,998
Unamortized debt discount	0	4,290
Net carrying amount of the convertible debt	$ 0	$ 185,708

XML

Schedule of Reported Financial Assets and Liabilities (Detail) (Fair Value, Measurements, Recurring, USD $) In Thousands, unless otherwise specified	Jun. 29, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	$ 1,107,141	$ 1,199,751
Liabilities	2,536	2,230
Other Accrued Liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Liabilities	306
Other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets		153
Cash and Cash Equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	254,625	341,638
Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	488,439	586,882
Long-term marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	364,077	271,078
Long-term other accrued liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Liabilities	2,230	2,230
Quoted Prices in Active Markets for Identical Instruments (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	263,323	296,263
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Cash and Cash Equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	248,882	283,107
Quoted Prices in Active Markets for Identical Instruments (Level 1) | Long-term marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	14,441	13,156
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	843,818	903,488
Liabilities	306
Significant Other Observable Inputs (Level 2) | Other Accrued Liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Liabilities	306
Significant Other Observable Inputs (Level 2) | Other current assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets		153
Significant Other Observable Inputs (Level 2) | Cash and Cash Equivalents
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	5,743	58,531
Significant Other Observable Inputs (Level 2) | Marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	488,439	586,882
Significant Other Observable Inputs (Level 2) | Long-term marketable securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Assets	349,636	257,922
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Liabilities	2,230	2,230
Significant Unobservable Inputs (Level 3) | Long-term other accrued liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Liabilities	$ 2,230	$ 2,230

XML

Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2014		Jun. 30, 2013		Jun. 29, 2014		Jun. 30, 2013
Net income	$ 101,205		$ 66,556		$ 102,134		$ 73,145
Other comprehensive income (loss):
Net unrealized gains (losses) on marketable securities arising during period, net of tax of $558, $(841), $1,242, $(726)	1,165		(1,463)		2,304		(1,263)
Less: Reclassification adjustment for net gains included in net income, net of tax of $(141), $(39), $(243), $(122)	(272)		(68)		(448)		(212)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax, Total	893		(1,531)		1,856		(1,475)
Defined benefit pension and post-retirement plans:
Amortization of net prior service benefit included in net periodic pension expense and post-retirement income, net of tax of $(42), $(40), $(85), $(79)	(74)	[1]	(69)	[1]	(147)	[1]	(138)	[1]
Other comprehensive income (loss)	819		(1,600)		1,709		(1,613)
Comprehensive income	$ 102,024		$ 64,956		$ 103,843		$ 71,532

[1] The amortization of prior service benefit is included in the computation of net periodic pension cost and postretirement benefit; see Note N: "Retirement Plans."

XML

Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 29, 2014

Recently Issued Accounting Pronouncements

C. Recently Issued Accounting Pronouncements

On July 18, 2013, Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” Under this ASU, unrecognized tax benefits will be netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by unrecognized tax benefits. The provisions of this ASU are effective for interim and annual periods beginning on or after December 15, 2013. Teradyne’s implementation of this ASU did not have a material impact on Teradyne’s financial position and results of operations.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” which will replace numerous requirements in U.S. GAAP, including industry-specific requirements, and provide companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core principle of the new standard is that a company should recognize revenue to show the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard will be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. For Teradyne, the standard will be effective in the first quarter of 2017. The two permitted transition methods under the new standard are the full retrospective method, in which case the standard would be applied to each prior reporting period presented, or the modified retrospective method, in which case the cumulative effect of applying the standard would be recognized at the date of initial application. Teradyne has not yet selected a transition method. Teradyne is currently evaluating the impact of this ASU on its financial position and results of operations.

XML

Changes in Accumulated Other Comprehensive Income Balances (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 29, 2014	Jun. 30, 2013	Jun. 29, 2014	Jun. 30, 2013
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			$ 4,000
Other comprehensive income before reclassifications, net of tax			2,304
Amounts reclassified from accumulated other comprehensive income, net of tax	(346)	(137)	(595)	(350)
Other comprehensive income (loss)	819	(1,600)	1,709	(1,613)
Ending balance	5,709		5,709
Unrealized Gains on Marketable Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			1,381
Other comprehensive income before reclassifications, net of tax			2,304
Amounts reclassified from accumulated other comprehensive income, net of tax			(448)
Other comprehensive income (loss)			1,856
Ending balance	3,237		3,237
Retirement Plans Prior Service Benefit
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			2,619
Amounts reclassified from accumulated other comprehensive income, net of tax			(147)
Other comprehensive income (loss)			(147)
Ending balance	$ 2,472		$ 2,472

XML

Schedule of Restructuring and Other Net (Detail) (USD $) In Thousands, unless otherwise specified		12 Months Ended	3 Months Ended	12 Months Ended		3 Months Ended	12 Months Ended	3 Months Ended		12 Months Ended	3 Months Ended	12 Months Ended		3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Jun. 29, 2014	Dec. 31, 2013 Pre-2013 Activities	Mar. 30, 2014 Q3 2013 Activity	Dec. 31, 2013 Q3 2013 Activity	Jun. 29, 2014 Q3 2013 Activity	Mar. 30, 2014 Q4 2013 Activity	Dec. 31, 2013 Q4 2013 Activity	Jun. 29, 2014 Q2 2014 Activity	Jun. 29, 2014 Severance and Benefits	Dec. 31, 2013 Severance and Benefits Pre-2013 Activities	Mar. 30, 2014 Severance and Benefits Q3 2013 Activity	Dec. 31, 2013 Severance and Benefits Q3 2013 Activity	Jun. 29, 2014 Severance and Benefits Q3 2013 Activity	Mar. 30, 2014 Severance and Benefits Q4 2013 Activity	Dec. 31, 2013 Severance and Benefits Q4 2013 Activity	Jun. 29, 2014 Severance and Benefits Q2 2014 Activity	Dec. 31, 2013 Facility Exit Costs Pre-2013 Activities
Restructuring Cost and Reserve
Beginning Balance	$ 252	$ 1,327	$ 371		$ 210	$ 114			$ 252	$ 243	$ 371		$ 210	$ 114			$ 1,084
Provision				1,337			600	572				1,337			600	572
Change in estimate		(553)															(553)
Cash payments		(774)	(161)	(966)		(114)	(486)	(530)		(243)	(161)	(966)		(114)	(486)	(530)	(531)
Ending balance	$ 252	$ 0	$ 210	$ 371	$ 210		$ 114	$ 42	$ 252	$ 0	$ 210	$ 371	$ 210		$ 114	$ 42	$ 0

XML

Financial Instruments and Derivatives (Tables)

6 Months Ended

Jun. 29, 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 June 29, 2014 and December 31, 2013.

	June 29, 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	$	136,730	$	—	$	—	$	136,730
Cash equivalents		112,152		5,743		—		117,895
Available-for-sale securities:
U.S. Treasury securities		—		404,942		—		404,942
U.S. government agency securities		—		228,075		—		228,075
Commercial paper		—		108,459		—		108,459
Corporate debt securities		—		82,490		—		82,490
Equity and debt mutual funds		14,441		—		—		14,441
Certificates of deposit and time deposits		—		14,030		—		14,030
Non-U.S. government securities		—		79		—		79
Total	$	263,323	$	843,818	$	—	$	1,107,141
Liabilities
Contingent consideration	$	—	$	—	$	2,230	$	2,230
Derivatives		—		306		—		306
Total	$	—	$	306	$	2,230	$	2,536

Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	248,882	$	5,743	$	—	$	254,625
Marketable securities		—		488,439		—		488,439
Long-term marketable securities		14,441		349,636		—		364,077
	$	263,323	$	843,818	$	—	$	1,107,141
Liabilities
Other accrued liabilities	$	—	$	306	$	—	$	306
Long-term other accrued liabilities		—		—		2,230		2,230
	$	—	$	306	$	2,230	$	2,536

	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		296,263		903,335		—		1,199,598
Derivatives		—		153		—		153
Total	$	296,263	$	903,488	$	—	$	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		—		586,882		—		586,882
Long-term marketable securities		13,156		257,922		—		271,078
Other current assets		—		153		—		153
	$	296,263	$	903,488	$	—	$	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 and six months ended June 29, 2014 and June 30, 2013 were as follows:

Contingent consideration related to Teradyne’s acquisition of ZTEC in October 2013
	For the Three and Six Months Ended
	June 29, 2014
	(in thousands)
Balance at December 31, 2013	$	2,230
Contingent consideration payments		—
Balance at March 30, 2014		2,230
Contingent consideration payments		—
Balance at June 29, 2014	$	2,230

Contingent consideration related to Teradyne’s acquisition of LitePoint in October 2011	For the Three and Six Months Ended
	June 30, 2013
	(in thousands)
Balance at December 31, 2012	$	388
Contingent consideration payments		(313	)
Balance at March 31, 2013		75
Contingent consideration payments		(75	)
Balance at June 30, 2013	$	—

Schedule of Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of Teradyne’s financial instruments at June 29, 2014 and December 31, 2013 were as follows:

	June 29, 2014				December 31, 2013
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Cash and cash equivalents	$	254,625	$	254,625	$	341,638	$	341,638
Marketable securities		852,516		852,516		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 June 29, 2014 and December 31, 2013:

	June 29, 2014
	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	$	404,707	$	308	$	(73	)	$	404,942	$	36,402
U.S. government agency securities		227,889		202		(16	)		228,075		41,122
Commercial paper		108,446		13		—			108,459		—
Corporate debt securities		80,771		1,903		(184	)		82,490		25,959
Equity and debt mutual funds		11,567		2,898		(24	)		14,441		839
Certificates of deposit and time deposits		14,027		3		—			14,030		—
Non-U.S. government securities		79		—		—			79		—
	$	847,486	$	5,327	$	(297	)	$	852,516	$	104,322

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	488,257	$	186	$	(4	)	$	488,439	$	26,407
Long-term marketable securities		359,229		5,141		(293	)		364,077		77,915
	$	847,486	$	5,327	$	(297	)	$	852,516	$	104,322

	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 June 29, 2014 were as follows:

	June 29, 2014
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	488,257	$	488,439
Due after 1 year through 5 years		317,047		317,321
Due after 5 years through 10 years		6,289		6,467
Due after 10 years		24,326		25,848
Total	$	835,919	$	838,075

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

The following table summarizes the fair value of derivative instruments at June 29, 2014 and December 31, 2013:

	Balance Sheet Location	June 29, 2014		December 31, 2013
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other current assets	$	—	$	153
	Other accrued liabilities		306		—
		$	306	$	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 and six months ended June 29, 2014 and June 30, 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 and six months ended June 29, 2014, gains from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $0.7 million and $1.3 million, respectively. For the three and six months ended June 30, 2013, (losses) from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $(1.8) million and $(4.6) million, respectively.

	Location of Gains (Losses) Recognized in Statement of Operations		For the Three Months Ended					For the Six Months Ended
			June 29, 2014			June 30, 2013		June 29, 2014			June 30, 2013
			(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Interest expense and other	$	(1,122	)	$	1,818	$	(1,869	)	$	4,067
			$	(1,122	)	$	1,818	$	(1,869	)	$	4,067

XML

Schedule of Segment Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 29, 2014		Jun. 30, 2013		Jun. 29, 2014		Jun. 30, 2013
Segment Reporting Information [Line Items]
Net revenues	$ 525,567		$ 428,889		$ 846,577		$ 709,256
Income (loss) before income taxes	121,392	[1],[2]	80,357	[1],[2]	119,519	[1],[2]	78,931	[1],[2]
Semiconductor Test
Segment Reporting Information [Line Items]
Net revenues	421,434		292,431		683,171		503,937
Income (loss) before income taxes	107,270	[1],[2]	58,606	[1],[2]	141,870	[1],[2]	72,372	[1],[2]
Wireless Test
Segment Reporting Information [Line Items]
Net revenues	68,699		99,386		89,909		132,984
Income (loss) before income taxes	14,229	[1],[2]	23,913	[1],[2]	(10,856)	[1],[2]	13,916	[1],[2]
System Test
Segment Reporting Information [Line Items]
Net revenues	35,434		37,072		73,497		72,335
Income (loss) before income taxes	(715)	[1],[2]	779	[1],[2]	(267)	[1],[2]	2,309	[1],[2]
Corporate And Eliminations
Segment Reporting Information [Line Items]
Income (loss) before income taxes	$ 608	[1],[2]	$ (2,941)	[1],[2]	$ (11,228)	[1],[2]	$ (9,666)	[1],[2]

[1] Pension and postretirement actuarial gains and losses, interest income, and interest expense and other are included in Corporate and Eliminations.

[2] Included in the income (loss) before income taxes for each of the segments are charges and credits for the three and six months ended June 29, 2014 and June 30, 2013 that include restructuring and other, and provision for excess and obsolete inventory, as follows:

XML

Segment Information (Tables)

6 Months Ended

Jun. 29, 2014

Segment Information

ended December 31, 2013. Segment information is as follows:

	Semiconductor Test		Wireless Test			System Test			Corporate and Eliminations			Consolidated
	(in thousands)
Three months ended June 29, 2014:
Net revenues	$	421,434	$	68,699		$	35,434		$	—		$	525,567
Income (loss) before income taxes(1)(2)		107,270		14,229			(715	)		608			121,392
Three months ended June 30, 2013:
Net revenues	$	292,431	$	99,386		$	37,072		$	—		$	428,889
Income (loss) before income taxes(1)(2)		58,606		23,913			779			(2,941	)		80,357
Six months ended June 29, 2014:
Net revenues	$	683,171	$	89,909		$	73,497		$	—		$	846,577
Income (loss) before income taxes(1)(2)		141,870		(10,856	)		(267	)		(11,228	)		119,519
Six months ended June 30, 2013:
Net revenues	$	503,937	$	132,984		$	72,335		$	—		$	709,256
Income (loss) before income taxes(1)(2)		72,372		13,916			2,309			(9,666	)		78,931

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

(2) Included in the income (loss) before income taxes for each of the segments are charges and credits for the three and six months ended June 29, 2014 and June 30, 2013 that include restructuring and other, and provision for excess and obsolete inventory, as follows:

Semiconductor Test

Schedule of Segment Reporting Information by Segment Charges

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

	For the Three Months Ended				For the Six Months Ended
	June 29,  2014		June 30,  2013		June 29,  2014		June 30,  2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	3,713	$	287	$	9,918	$	500
Total	$	3,713	$	287	$	9,918	$	500

Wireless Test

Schedule of Segment Reporting Information by Segment Charges

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

	For the Three Months Ended				For the Six Months Ended
	June 29,  2014		June 30,  2013		June 29,  2014		June 30,  2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	879	$	1,398	$	3,972	$	4,066
Restructuring and other		426		—		426		—
Total	$	1,305	$	1,398	$	4,398	$	4,066

System Test

Schedule of Segment Reporting Information by Segment Charges

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

	For the Three Months Ended				For the Six Months Ended
	June 29,  2014		June 30,  2013		June 29,  2014		June 30,  2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	440	$	290	$	1,181	$	1,209
Restructuring and other		146		131		146		375
Total	$	586	$	421	$	1,327	$	1,584

XML

Restructuring and Other

6 Months Ended

Jun. 29, 2014

Restructuring and Other

M. Restructuring and Other

Restructuring

During the six months ended June 29, 2014, Teradyne recorded $0.6 million of severance charges related to headcount reductions of 28 people, primarily in Wireless Test. During the six months ended June 30, 2013, Teradyne recorded $0.6 million of severance charges related to headcount reductions in System Test and Semiconductor Test.

	Severance and Benefits			Facility Exit Costs			Total
	(in thousands)
Pre-2013 Activities
Balance at December 31, 2012	$	243		$	1,084		$	1,327
Change in estimate		—			(553	)		(553	)
Cash payments		(243	)		(531	)		(774	)
Balance at December 31, 2013	$	—		$	—		$	—
2013 Activities
Q3 2013 Activity:
Provision	$	1,337		$	—		$	1,337
Cash payments		(966	)		—			(966	)
Balance at December 31, 2013		371			—			371
Cash payments		(161	)		—			(161	)
Balance at March 30, 2014		210			—			210
Cash payments		—			—			—
Balance at June 29, 2014	$	210		$	—		$	210
Q4 2013 Activity:
Provision	$	600		$	—		$	600
Cash payments		(486	)		—			(486	)
Balance at December 31, 2013		114			—			114
Cash payments		(114	)		—			(114	)
Balance at March 30, 2014	$	—		$	—		$	—
2014 Activities
Q2 2014 Activity:
Provision	$	572		$	—		$	572
Cash payments		(530	)		—			(530	)
Balance at June 29, 2014	$	42		$	—		$	42
Balance at June 29, 2014	$	252		$	—		$	252

The accrual balance for severance and benefits of $0.3 million is reflected in the accrued employees’ compensation and withholdings on the balance sheet and is expected to be paid by September 2014.