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Retirement Plans
6 Months Ended
Jun. 30, 2019
Retirement Plans
R. RETIREMENT PLANS
ASC 715,
“Compensation—Retirement Benefits”
requires an employer with a 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 Plans
Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain
non-U.S.
subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to these plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of the U.S. qualified pension plan consist primarily of fixed income and equity securities. In addition, Teradyne has unfunded qualified foreign plans as well as 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”).
In the six months ended June 30, 2019, Teradyne contributed $1.3 million to the U.S. supplemental executive defined benefit pension plan and $0.4 million to certain qualified pension plans for
non-U.S.
subsidiaries.
For the three and six months ended June 30, 2019 and July 1, 2018, Teradyne’s net periodic pension cost was comprised of the following:
                                 
 
For the Three Months Ended
 
 
June 30, 2019
   
July 1, 2018
 
 
United
States
   
Foreign
   
United
States
   
Foreign
 
 
(in thousands)
 
Service cost
  $
399
    $
192
    $
545
    $
200
 
Interest cost
   
1,799
     
176
     
2,430
     
175
 
Expected return on plan assets
   
(1,510
)    
(7
)    
(2,550
)    
(5
)
Amortization of prior service cost
   
     
     
14
     
—  
 
Net actuarial loss (gain)
   
252
     
     
(189
)    
—  
 
Settlement loss
   
     
     
78
     
—  
 
                                 
Total net periodic pension cost
  $
940
    $
361
    $
328
    $
370
 
                                 
       
 
For the Six Months Ended
 
 
June 30, 2019
   
July 1, 2018
 
 
United
States
   
Foreign
   
United
States
   
Foreign
 
 
(in thousands)
 
Service cost
  $
804
    $
381
    $
1,116
    $
426
 
Interest cost
   
3,595
     
349
     
5,427
     
372
 
Expected return on plan assets
   
(3,021
)    
(14
)    
(5,919
)    
(10
)
Amortization of prior service cost
   
     
—  
     
29
     
—  
 
Net actuarial loss (gain)
   
252
     
—  
     
(189
)    
—  
 
Settlement loss
   
     
—  
     
78
     
—  
 
                                 
Total net periodic pension cost
  $
1,630
    $
716
    $
542
    $
788
 
                                 
 
 
 
 
Postretirement Benefit Plan
In addition to receiving pension benefits, Teradyne employees in the United States 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 June 30, 2019 and July 1, 2018, Teradyne’s net periodic postretirement benefit cost was comprised of the following:
                                 
 
For the Three Months
Ended
   
For the Six Months
Ended
 
 
June 30,
2019
   
July 1,
2018
   
June 30,
2019
   
July 1,
2018
 
 
(in thousands)
 
Service cost
  $
11
    $
10
    $
20
    $
19
 
Interest cost
   
88
     
48
     
173
     
98
 
Amortization of prior service credit
   
(48
)    
(93
)    
(95
)    
(187
)
Net actuarial loss 
   
196
     
40
     
196
     
40
 
Special termination benefits
   
     
1,192
     
     
2,818
 
                                 
Total net periodic postretirement benefit cost
  $
247
    $
1,197
    $
294
    $
2,788