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