Segment Information

6 Months Ended

Jul. 03, 2016

Segment Information

R. Segment Information

Teradyne has four operating segments (Semiconductor Test, System Test, Wireless Test, and Industrial Automation), 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 System Test segment includes operations related to the design, manufacturing and marketing of products and services for defense/aerospace instrumentation test, storage test and circuit-board test. The Wireless Test segment includes operations related to the design, manufacturing and marketing of wireless test products and services. The Industrial Automation segment includes operations related to the design, manufacturing and marketing of collaborative robots. 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 in effect are described in Note B: “Accounting Policies” in Teradyne’s Annual Report on Form 10-K for the year ended December 31, 2015.

Segment information for the three months and six months ended July 3, 2016 and July 5, 2015 is as follows:

	Semiconductor Test		System Test			Wireless Test			Industrial Automation			Corporate and Eliminations		Consolidated
	(in thousands)
Three months ended July 3, 2016:
Revenues	$	435,323	$	48,940		$	22,427		$	25,102		$	—	$	531,792
Income (loss) before income taxes (1)(2)		121,163		8,992			(356,505	)		(4,501	)		34		(230,817	)
Total assets (3)		731,394		91,374			61,618			346,290			1,177,182		2,407,858
Three months ended July 5, 2015:
Revenues	$	400,315	$	45,822		$	62,879		$	3,723		$	—	$	512,739
Income (loss) before income taxes (1)(2)		129,546		(4,333	)		6,841			(1,700	)		1,782		132,136
Total assets (3)		649,087		95,544			485,857			358,276			1,104,043		2,692,807
Six months ended July 3, 2016:
Revenues	$	775,588	$	102,610		$	42,741		$	41,848		$	—	$	962,787
Income (loss) before income taxes (1)(2)		194,417		18,484			(376,645	)		(11,669	)		1,788		(173,625	)
Total assets (3)		731,394		91,374			61,618			346,290			1,177,182		2,407,858
Six months ended July 5, 2015:
Revenues	$	671,232	$	83,258		$	96,927		$	3,723		$	—	$	855,140
Income (loss) before income taxes (1)(2)		172,671		(3,328	)		(3,600	)		(1,700	)		10,531		174,574
Total assets (3)		649,087		95,544			485,857			358,276			1,104,043		2,692,807

(1) Interest income, interest expense, and other (income) expense, net are included in Corporate and Eliminations.

(2) Included in the income (loss) before income taxes for each of the segments are charges related to inventory and other.

(3) Total business assets are directly attributable to each business. Corporate assets consist of cash and cash equivalents, marketable securities and certain other assets.

Included in the Semiconductor Test segment are charges in the following line items in the statements of operations:

	For the Three Months Ended				For the Six Months Ended
	July 3, 2016		July 5, 2015		July 3, 2016		July 5, 2015
	(in thousands)
Cost of revenues—inventory charge	$	2,234	$	6,409	$	5,919	$	6,940
Restructuring and other		337		305		751		305
Total	$	2,571	$	6,714	$	6,670	$	7,245

Included in the System Test segment are charges in the following line items in the statements of operations:

	For the Three Months Ended				For the Six Months Ended
	July 3, 2016		July 5, 2015		July 3, 2016		July 5, 2015
	(in thousands)
Cost of revenues—inventory charge	$	237	$	7,702	$	320	$	7,765

Included in the Wireless Test segment are charges in the following line items in the statements of operations:

	For the Three Months Ended				For the Six Months Ended
	July 3, 2016		July 5, 2015		July 3, 2016		July 5, 2015
	(in thousands)
Goodwill impairment	$	254,946	$	—	$	254,946	$	—
Acquired intangible assets impairment		83,339		—		83,339		—
Cost of revenues—inventory charge		5,271		330		5,876		1,176
Restructuring and other		967		—		967		—
Total	$	344,523	$	330	$	345,128	$	1,176

Included in the Industrial Automation segment are charges in the following line item in the statements of operations:

	For the Three Months Ended				For the Six Months Ended
	July 3, 2016		July 5, 2015		July 3, 2016		July 5, 2015
	(in thousands)
Cost of revenues—inventory step-up (1)	$	—	$	595	$	—	$	595

(1) Included in the cost of revenues for the three and six months ended July 5, 2015 is the cost for purchase accounting inventory step-up.

Included in Corporate and Eliminations are charges and credits in the following line items in the statements of operations:

	For the Three Months Ended						For the Six Months Ended
	July 3, 2016			July 5, 2015			July 3, 2016			July 5, 2015
	(in thousands)
Restructuring and other—Impairment of fixed assets and expenses related to the Japan earthquake	$	5,051		$	—		$	5,051		$	—
Restructuring and other—Property insurance recovery and proceeds		(5,051	)		—			(5,051	)		—
Restructuring and other—Universal Robots contingent consideration adjustment		755			—			1,928			—
Restructuring and other—AIT contingent consideration adjustment		550			—			550			—
Restructuring and other—ZTEC contingent consideration adjustment		—			(1,600	)		—			(1,600	)
Other (income) expense, net—gain from the sale of an equity investment		—			(624	)		—			(5,406	)
Restructuring and other—Universal Robots acquisition costs		—			960			—			960
Total	$	1,305		$	(1,264	)	$	2,478		$	(6,046	)