Segment Information

9 Months Ended

Oct. 02, 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 nine months ended October 2, 2016 and October 4, 2015 is as follows:

	Semiconductor Test		System Test		Wireless Test			Industrial Automation			Corporate and Eliminations			Consolidated
	(in thousands)
Three Months Ended October 2, 2016
Revenues	$	322,021	$	37,030	$	27,919		$	23,505		$	—		$	410,475
Income (loss) before income taxes (1)(2)		67,710		1,550		1,049			(4,695	)		(5,933	)		59,681
Total assets (3)		522,529		90,713		65,953			340,030			1,346,462			2,365,687
Three Months Ended October 4, 2015
Revenues	$	325,516	$	69,062	$	55,359		$	16,057		$	—		$	465,994
Income (loss) before income taxes (1)(2)		73,957		13,751		2,997			(4,847	)		1,550			87,408
Total assets (3)		591,445		109,078		447,461			360,068			1,153,832			2,661,884
Nine Months Ended October 2, 2016
Revenues	$	1,097,608	$	139,640	$	70,660		$	65,353		$	—		$	1,373,261
Income (loss) before income taxes (1)(2)		262,127		20,033		(375,596	)		(16,364	)		(4,145	)		(113,945	)
Total assets (3)		522,529		90,713		65,953			340,030			1,346,462			2,365,687
Nine Months Ended October 4, 2015
Revenues	$	996,748	$	152,320	$	152,285		$	19,780		$	—		$	1,321,133
Income (loss) before income taxes (1)(2)		246,627		10,423		(603	)		(6,547	)		12,081			261,981
Total assets (3)		591,445		109,078		447,461			360,068			1,153,832			2,661,884

(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 Nine Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
	(in thousands)
Cost of revenues—inventory charge	$	2,351	$	1,697	$	8,270	$	8,637
Restructuring and other		2,047		194		2,798		499
Total	$	4,398	$	1,891	$	11,068	$	9,136

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

	For the Three Months Ended					For the Nine Months Ended
	October 2, 2016			October 4, 2015		October 2, 2016			October 4, 2015
	(in thousands)
Cost of revenues—inventory charge	$	121		$	460	$	441		$	8,225
Restructuring and other		(48	)		923		(48	)		923
Total	$	73		$	1,383	$	393		$	9,148

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 Nine Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
	(in thousands)
Goodwill impairment	$	—	$	—	$	254,946	$	—
Intangible assets impairment		—		—		83,339		—
Cost of revenues—inventory charge		561		901		6,437		2,077
Restructuring and other		1,672		—		2,639		—
Total	$	2,233	$	901	$	347,361	$	2,077

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

	For the Three Months Ended				For the Nine Months Ended
	October 2, 2016		October 4, 2015		October 2, 2016		October 4, 2015
	(in thousands)
Cost of revenues—inventory step-up (1)	$	—	$	972	$	—	$	1,567
Restructuring and other		532		—		532		—
Total	$	532	$	972	$	532	$	1,567

(1) Included in the cost of revenues for the three and nine months ended October 4, 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 Nine Months Ended
	October 2, 2016			October 4, 2015			October 2, 2016			October 4, 2015
	(in thousands)
Restructuring and other—Universal Robots contingent consideration adjustment	$	7,974		$	—		$	9,902		$	—
Restructuring and other—Impairment of fixed assets and expenses related to Japan Earthquake		312			—			5,363			—
Restructuring and other—Property insurance recovery		(312	)		—			(5,363	)		—
Restructuring and other—AIT contingent consideration adjustment		—			(1,000	)		550			(1,000	)
Restructuring and other—ZTEC contingent consideration adjustment		—			—			—			(1,600	)
Other (income) expense, net—Gain from the sale of an equity investment		—			—			—			(5,406	)
Restructuring and other—Universal Robots acquisition costs		—			144			—			1,104
Total	$	7,974		$	(856	)	$	10,452		$	(6,902	)