Segment Information

9 Months Ended

Sep. 28, 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 September 28, 2014:
Net revenues	$	380,083	$	54,838		$	43,089		$	—		$	478,010
Income before income taxes(1)(2)		91,900		2,379			5,779			612			100,670
Three months ended September 29, 2013:
Net revenues	$	304,131	$	93,132		$	36,113		$	—		$	433,376
Income (loss) before income taxes(1)(2)		68,932		27,575			(2,462	)		(6,493	)		87,552
Nine months ended September 28, 2014:
Net revenues	$	1,063,254	$	144,747		$	116,586		$	—		$	1,324,587
Income (loss) before income taxes(1)(2)		233,770		(8,477	)		5,512			(10,616	)		220,189
Nine months ended September 29, 2013:
Net revenues	$	808,068	$	226,116		$	108,448		$	—		$	1,142,632
Income (loss) before income taxes(1)(2)		141,304		41,491			(153	)		(16,159	)		166,483

(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 nine months ended September 28, 2014 and September 29, 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 Nine Months Ended
	September 28, 2014		September 29, 2013		September 28, 2014		September 29, 2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	4,404	$	1,378	$	14,322	$	1,878
Restructuring and other		—		282		—		416
Total	$	4,404	$	1,660	$	14,322	$	2,294

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

	For the Three Months Ended				For the Nine Months Ended
	September 28, 2014		September 29, 2013		September 28, 2014		September 29, 2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	1,267	$	2,059	$	5,239	$	6,125
Restructuring and other		—		—		426		82
Total	$	1,267	$	2,059	$	5,665	$	6,207

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

	For the Three Months Ended				For the Nine Months Ended
	September 28, 2014		September 29, 2013		September 28, 2014		September 29, 2013
	(in thousands)
Cost of revenues—provision for excess and obsolete inventory	$	763	$	404	$	1,944	$	1,613
Restructuring and other		225		1,055		371		1,430
Total	$	988	$	1,459	$	2,315	$	3,043

Included in Corporate and Eliminations are credits for the following:

	For the Three Months Ended						For the Nine Months Ended
	September 28, 2014			September 29, 2013			September 28, 2014			September 29, 2013
	(in thousands)
Restructuring and other	$	(630	)	$	(448	)	$	(630	)	$	(448	)
Total	$	(630	)	$	(448	)	$	(630	)	$	(448	)