Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income (loss) Before Income Taxes

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

	2014			2013			2012
	(in thousands)
Income (loss) before income taxes:
U.S.	$	(151,889	)	$	79,229		$	112,008
Non-U.S.		247,265			122,693			153,968
	$	95,376		$	201,922		$	265,976
Provision (benefit) for income taxes:
Current:
U.S. Federal	$	5,197		$	18,051		$	22,695
Non-U.S.		28,157			22,509			18,261
State		678			(269	)		(12	)
		34,032			40,291			40,944
Deferred:
U.S. Federal		(20,449	)		(1,692	)		8,158
Non-U.S.		(404	)		(1,386	)		5,997
State		925			(238	)		(6,172	)
		(19,928	)		(3,316	)		7,983
Total provision for income taxes:	$	14,104		$	36,975		$	48,927

Reconciliation of Effective Tax Rate

A reconciliation of the effective tax rate for the years 2014, 2013 and 2012 follows:

	2014			2013			2012
U.S. statutory federal tax rate		35.0	%		35.0	%		35.0	%
Foreign taxes		(58.1	)		(11.4	)		(10.5	)
Goodwill impairment		36.3			—			—
U.S. research and development credit		(7.9	)		(7.2	)		—
Uncertain tax positions		7.9			4.2			(1.2	)
Other permanent items		3.4			(0.1	)		(2.8	)
Valuation allowance		—			0.4			(0.5	)
State income taxes, net of federal tax benefit		(0.1	)		0.1			(1.7	)
Other, net		(1.7	)		(2.7	)		0.1
		14.8	%		18.3	%		18.4	%

Deferred Tax Assets (Liabilities)

Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2014 and 2013 were as follows:

	2014			2013
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	10,989		$	14,679
Tax credits		50,554			65,210
Pension liability		30,036			22,966
Inventory valuations		29,105			38,452
Accruals		23,323			17,828
Equity compensation		11,131			10,498
Deferred revenue		10,242			12,379
Vacation accrual		7,425			7,291
Other		1,725			2,613
Gross deferred tax assets		174,530			191,916
Less: valuation allowance		(41,737	)		(40,386	)
Total deferred tax assets		132,793			151,530
Deferred tax liabilities:
Marketable securities		(1,599	)		(794	)
Intangible assets		(64,871	)		(89,268	)
Excess of tax over book depreciation		(24,905	)		(24,458	)
Total deferred tax liabilities		(91,375	)		(114,520	)
Net deferred assets	$	41,418		$	37,010

Operating Loss Carryforwards

At December 31, 2014, Teradyne had operating loss carryforwards that expire in the following years:

	U.S. Federal Operating Loss Carryforwards		State Operating Loss Carryforwards		Foreign Operating Loss Carryforwards
	(in thousands)
2015	$	—	$	1	$	—
2016		—		56		—
2017		—		738		—
2018		—		679		—
2019		—		133		—
2020-2025		10,698		2,686		—
2026-2028		—		676		—
Beyond 2028		806		3,055		115
Non-expiring		—		—		8,460
Total	$	11,504	$	8,024	$	8,575

Unrecognized Tax Benefits

Teradyne’s gross unrecognized tax benefits for the years ended December 31, 2014, 2013 and 2012 were as follows:

	2014			2013			2012
	(in thousands)
Beginning balance, as of January 1	$	21,203		$	18,666		$	19,391
Additions:
Tax positions for current year		8,414			4,586			459
Tax positions for prior years		3,781			2,112			2,259
Reductions:
Tax positions for prior years		(2,480	)		(4,161	)		(3,443	)
Settlements with tax authorities		(500	)		—			—
Ending Balance as of December 31	$	30,418		$	21,203		$	18,666