O. RETIREMENT PLANS

ASC 715, “Compensation—Retirement Benefits” requires an employer with defined benefit plan or other postretirement benefit plan to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plan. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation.

Defined Benefit Pension Plan

Teradyne has defined benefit pension plan covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under this plan are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to this plan in accordance with local laws and to the extent that such contributions are tax deductible. The assets of this plan consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (“IRC”), as well as unfunded qualified foreign plan.

In the six months ended July 2, 2017, Teradyne contributed $1.3 million to the U.S. supplemental executive defined benefit pension plan and $0.4 million to certain qualified plans for non-U.S. subsidiaries.

For the three and six months ended July 2, 2017 and July 3, 2016, Teradyne’s net periodic pension (income) cost was comprised of the following:


	For the Three Months Ended
	July 2, 2017						July 3, 2016
	United States			Foreign			United States			Foreign
	(in thousands)
Service cost	$	560		$	206		$	575		$	199
Interest cost		3,264			179			3,401			199
Expected return on plan assets		(3,004	)		(6	)		(3,472	)		(5	)
Amortization of prior service cost		18			—			24			—
Net actuarial (gain) loss		(2,732	)		243			(654	)		—

Total net periodic pension (income) cost	$	(1,894	)	$	622		$	(126	)	$	393


	For the Six Months Ended
	July 2, 2017						July 3, 2016
	United States			Foreign			United States			Foreign
	(in thousands)
Service cost	$	1,120		$	392		$	1,151		$	406
Interest cost		6,576			342			6,815			405
Expected return on plan assets		(6,004	)		(12	)		(6,915	)		(11	)
Amortization of prior service cost		35			—			48			—
Net actuarial (gain) loss		(2,732	)		243			(1,848	)		—
Settlement		—			—			—			(238	)

Total net periodic pension (income) cost	$	(1,005	)	$	965		$	(749	)	$	562

Postretirement Benefit Plan

In addition to receiving pension benefits, U.S. Teradyne employees who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits, and the existing benefit obligation relates primarily to those employees.

For the three and six months ended July 2, 2017 and July 3, 2016, Teradyne’s net periodic postretirement income was comprised of the following:


	For the Three Months Ended						For the Six Months Ended
	July 2, 2017			July 3, 2016			July 2, 2017			July 3, 2016
	(in thousands)
Service cost	$	7		$	9		$	17		$	19
Interest cost		50			53			100			109
Amortization of prior service benefit		(124	)		(154	)		(248	)		(304	)
Actuarial gain		(15	)		(15	)		(15	)		(15	)

Total net periodic post-retirement benefit	$	(82	)	$	(107	)	$	(146	)	$	(191	)