XML 43 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
Financial Instruments (Tables)
 6 Months Ended
Jul. 01, 2018
Schedule of Fair Value of Financial Assets and Liabilities Measured on Recurring Basis

The following table sets forth by fair value hierarchy Teradyne’s financial assets and liabilities that were measured at fair value on a recurring basis as of July 1, 2018 and December 31, 2017.

 

     July 1, 2018  
     Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		      Total  
     (in thousands)  

Assets

            

Cash

    $ 209,827      $ —        $ —        $ 209,827  

Cash equivalents

      247,525        23,032        —          270,557  

Available-for-sale securities:

            

U.S. Treasury securities

      —          528,857        —          528,857  

Commercial paper

      —          218,520        —          218,520  

Corporate debt securities

      —          38,372        —          38,372  

U.S. government agency securities

      —          10,009        —          10,009  

Certificates of deposit and time deposits

      —          1,318        —          1,318  

Debt mutual funds

      2,810        —          —          2,810  

Non-U.S. government securities

      —          551        —          551  

Equity securities:

            

Mutual funds

      23,289        —          —          23,289  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 483,451      $ 820,659      $ —        $ 1,304,110  

Derivative assets

      —          7        —          7  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 483,451      $ 820,666      $ —        $ 1,304,117  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities

            

Contingent consideration

    $ —        $ —        $ 60,914      $ 60,914  

Derivative liabilities

      —          253        —          253  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ —        $ 253      $ 60,914      $ 61,167  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

Reported as follows:

 

     (Level 1)      (Level 2)      (Level 3)      Total  
     (in thousands)  

Assets

            

Cash and cash equivalents

    $ 457,352      $ 23,032      $ —        $ 480,384  

Marketable securities

      —          712,309        —          712,309  

Long-term marketable securities

      26,099        85,318        —          111,417  

Prepayments

      —          7        —          7  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 483,451      $ 820,666      $ —        $ 1,304,117  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities

      .           

Other current liabilities

    $ —        $ 253      $ —        $ 253  

Contingent consideration

      —          —          35,911        35,911  

Long-term contingent consideration

      —          —          25,003        25,003  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ —        $ 253      $ 60,914      $ 61,167  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     December 31, 2017  
     Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		      Total  
     (in thousands)  

Assets

            

Cash

    $ 197,955      $ —        $ —        $ 197,955  

Cash equivalents

      206,335        25,553        —          231,888  

Available for sale securities:

            

U.S. Treasury securities

      —          855,795        —          855,795  

Commercial paper

      —          282,840        —          282,840  

Certificates of deposit and time deposits

      —          167,342        —          167,342  

Corporate debt securities

      —          133,186        —          133,186  

Equity and debt mutual funds

      23,430        —          —          23,430  

U.S. government agency securities

      —          10,726        —          10,726  

Non-U.S. government securities

      —          586        —          586  
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 427,720      $ 1,476,028      $ —        $ 1,903,748  

Derivative assets

      —          389        —          389  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 427,720      $ 1,476,417      $ —        $ 1,904,137  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities

            

Contingent consideration

    $ —        $ —        $ 45,102      $ 45,102  

Derivative liabilities

      —          446        —          446  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ —        $ 446      $ 45,102      $ 45,548  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

Reported as follows:

 

     (Level 1)      (Level 2)      (Level 3)      Total  
     (in thousands)  

Assets

            

Cash and cash equivalents

    $ 404,290      $ 25,553      $ —        $ 429,843  

Marketable securities

      —          1,347,979        —          1,347,979  

Long-term marketable securities

      23,430        102,496        —          125,926  

Prepayments

      —          389        —          389  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 427,720      $ 1,476,417      $ —        $ 1,904,137  
  

 

 

     

 

 

     

 

 

     

 

 

  

Liabilities

            

Other accrued liabilities

    $ —        $ 446      $ —        $ 446  

Contingent consideration

      —          —          24,497        24,497  

Long-term contingent consideration

      —          —          20,605        20,605  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ —        $ 446      $ 45,102      $ 45,548  
  

 

 

     

 

 

     

 

 

     

 

 

  
Schedule of Changes in Fair Value of Level 3 Contingent Consideration

Changes in the fair value of Level 3 contingent consideration for the three and six months ended July 1, 2018 and July 2, 2017 were as follows:

 

     For the Three Months
Ended		      For the Six Months
Ended		  
     July 1,
2018		      July 2,
2017		      July 1,
2018		      July 2,
2017		  
     (in thousands)  

Balance at beginning of period

    $ 15,581      $ 37,916      $ 45,102      $ 38,332  

Acquisition of MiR

      51,399        —          51,399        —    

Foreign currency impact

      (2,566 )       —          (2,566 )       —    

Payments (a)

      —          —          (24,553 )       (1,050 ) 

Fair value adjustment (b)

      (3,500 )       1,499        (8,468 )       2,133  
  

 

 

     

 

 

     

 

 

     

 

 

  

Balance at end of period

    $ 60,914      $ 39,415      $ 60,914      $ 39,415  
  

 

 

     

 

 

     

 

 

     

 

 

  

 

(a)

In the six months ended July 1, 2018, Teradyne paid $24.6 million of contingent consideration for the earn-out in connection with the acquisition of Universal Robots A/S (“Universal Robots”). In the six months ended July 2, 2017, Teradyne paid $1.1 million of contingent consideration for the earn-out in connection with the acquisition of Avionics Interface Technology, LLC (“AIT”).
(b)

In the three and six months ended July 1, 2018, the fair value of contingent consideration for the earn-out in connection with the acquisition of Universal Robots was decreased by $3.5 million and $8.5 million, respectively, primarily due to a decrease in forecasted revenue. In the three and six months ended July 2, 2017, the fair value of contingent consideration for the earn-out in connection with the acquisition of Universal Robots was increased by $1.5 million and $2.1 million, respectively, primarily due to a decrease in the discount rate.
Quantitative Information Associated With Fair Value Measurement of Level 3 Financial Instrument

The following table provides quantitative information associated with the fair value measurement of Teradyne’s Level 3 financial instruments:

 

Liability            

    July 1,
2018 Fair
Value		    Valuation
Technique		   

Unobservable Inputs
     (in thousands)                    

Contingent consideration

(Universal Robots)

    $12,081    Monte Carlo

Simulation

    Revenue volatility       11.4%
         Discount Rate       3.2%

Contingent consideration

(MiR)

    $48,833    Monte Carlo

Simulation

    Revenue volatility       18.0%
         Discount Rate       0.5%
Schedule of Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of Teradyne’s financial instruments at July 1, 2018 and December 31, 2017 were as follows:

 

     July 1, 2018      December 31, 2017  
     Carrying Value      Fair Value      Carrying Value      Fair Value  
     (in thousands)  

Assets

            

Cash and cash equivalents

    $ 480,384      $ 480,384      $ 429,843      $ 429,843  

Marketable securities

      823,726        823,726        1,473,905        1,473,905  

Derivative assets

      7        7        389        389  

Liabilities

            

Contingent consideration

      60,914        60,914        45,102        45,102  

Derivative liabilities

      253        253        446        446  

Convertible debt (1)

      372,897        612,693        365,987        659,525  

 

(1)

The carrying value represents the bifurcated debt component only, while the fair value is based on quoted market prices for the convertible note, which includes the equity conversion features.
Schedule of Available-for-Sale Marketable Securities

The following table summarizes the composition of available-for-sale marketable securities at July 1, 2018:

 

     July 1, 2018  
     Available-for-Sale      Fair Market
Value of
Investments
with Unrealized
Losses		  
     Cost      Unrealized
Gain		      Unrealized
(Loss)		     Fair Market
Value		  
     (in thousands)  

U.S. Treasury securities

    $ 530,944      $ 29      $ (2,116 )    $ 528,857      $ 477,385  

Commercial paper

      218,594        9        (83 )      218,520        184,349  

Corporate debt securities

      38,709        668        (1,005 )      38,372        20,956  

U.S. government agency securities

      10,066        1        (58 )      10,009        7,034  

Debt mutual funds

      2,878        —          (68 )      2,810        1,681  

Certificates of deposit and time deposits

      1,318        —          —         1,318        —    

Non-U.S. government securities

      552        —          (1 )      551        179  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  
   $ 803,061      $ 707      $ (3,331 )    $ 800,437      $ 691,584  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Reported as follows:

 

     Cost      Unrealized
Gain		      Unrealized
(Loss)		     Fair Market
Value		      Fair Market
Value of
Investments
with Unrealized
Losses		  
     (in thousands)  

Marketable securities

    $ 712,732      $ 68      $ (491 )    $ 712,309      $ 620,327  

Long-term marketable securities

      90,329        639        (2,840 )      88,128        71,257  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  
   $ 803,061      $ 707      $ (3,331 )    $ 800,437      $ 691,584  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

The following table summarizes the composition of available-for-sale marketable securities at December 31, 2017:

 

     December 31, 2017  
     Available-for-Sale      Fair Market
Value of
Investments
with Unrealized
Losses		  
     Cost      Unrealized
Gain		      Unrealized
(Loss)		     Fair Market
Value		  
     (in thousands)  

U.S. Treasury securities

    $ 858,258      $ 72      $ (2,535 )    $ 855,795      $ 850,163  

Commercial paper

      283,009        18        (187 )      282,840        258,933  

Certificates of deposit and time deposits

      167,523        6        (187 )      167,342        138,340  

Corporate debt securities

      131,179        2,380        (373 )      133,186        91,010  

Equity and debt mutual funds

      19,403        4,102        (75 )      23,430        1,723  

U.S. government agency securities

      10,775        —          (49 )      10,726        10,726  

Non-U.S. government securities

      582        4        —         586        —    
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  
   $ 1,470,729      $ 6,582      $ (3,406 )    $ 1,473,905      $ 1,350,895  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

 

Reported as follows:

 

     Cost      Unrealized
Gain		      Unrealized
(Loss)		     Fair
Market
Value		      Fair Market
Value of
Investments
with Unrealized
Losses		  
     (in thousands)  

Marketable securities

    $ 1,349,970      $ 38      $ (2,029 )    $ 1,347,979      $ 1,288,844  

Long-term marketable securities

      120,759        6,544        (1,377 )      125,926        62,051  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  
   $ 1,470,729      $ 6,582      $ (3,406 )    $ 1,473,905      $ 1,350,895  
  

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  
Contractual Maturities of Investments in Debt Securities Held

The contractual maturities of investments in debt securities held at July 1, 2018 were as follows:

 

     July 1, 2018  
     Cost      Fair Market
Value		  
     (in thousands)  

Due within one year

    $ 712,732      $ 712,309  

Due after 1 year through 5 years

      32,201        32,080  

Due after 5 years through 10 years

      15,455        14,587  

Due after 10 years

      39,795        38,651  
  

 

 

     

 

 

  

Total

    $ 800,183      $ 797,627  
  

 

 

     

 

 

  
Schedule of Derivative Instruments in Statement of Financial Position at Fair Value

The following table summarizes the fair value of derivative instruments as of July 1, 2018 and December 31, 2017:

 

     Balance Sheet Location    July 1,
2018		     December 31,
2017		  
          (in thousands)  

Derivatives not designated as hedging instruments:

        

Foreign currency forward contracts assets

    Prepayments    $ 7     $ 389  

Foreign currency forward contracts liabilities

    Other current liabilities      (253 )      (446 ) 
     

 

 

    

 

 

  

Total derivatives

       $ (246 )    $ (57 ) 
     

 

 

    

 

 

  
Schedule of Effect of Derivative Instruments on Statement of Operations Recognized

The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three and six months ended July 1, 2018 and July 2, 2017.

 

    Location of Losses (Gains)
Recognized in
Statement of Operations		     For the Three Months
Ended		     For the Six Months
Ended		  
    July 1,
2018		     July 2,
2017		     July 1,
2018		     July 2,
2017		  
          (in thousands)  

Derivatives not designated as hedging instruments:

          

Foreign currency forward contracts

     Other (income) expense, net     $ 1,826     $ (1,586 )    $ 3,401     $ (575 ) 

 

(1)

The table does not reflect the corresponding gains and losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies.
(2)

For the three and six months ended July 1, 2018, net gains from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $1.9 million and $2.5 million, respectively.
(3)

For the three and six months ended July 2, 2017, net losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $2.4 million and $0.9 million, respectively.