Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Income (Loss) Before Income Taxes and Provision (Benefit) for Income Taxes from Operations

The components of income (loss) before income taxes and the provision (benefit) for income taxes as shown in the consolidated statements of operations were as follows:

	2019			2018			2017
	(in thousands)
Income before income taxes
U.S.	$	192,442		$	189,691		$	76,699
Non-U.S.		333,330			278,110			447,713
	$	525,772		$	467,801		$	524,412
Provision (benefit) for income taxes
Current:
U.S. Federal	$	19,297		$	(59,122	)	$	162,679
Non-U.S.		52,810			45,083			64,313
State		(4,347	)		1,721			2,623
		67,760			(12,318	)		229,615
Deferred:
U.S. Federal		(4,522	)		29,252			43,687
Non-U.S.		(8,007	)		(1,243	)		(6,476	)
State		3,073			331			(106	)
		(9,456	)		28,340			37,105
Total provision for income taxes	$	58,304		$	16,022		$	266,720

Reconciliation of Effective Tax Rate

A reconciliation of the effective tax rate for the years 2019, 2018 and 2017 is as follows:

	2019			2018			2017
U.S. statutory federal tax rate		21.0	%		21.0	%		35.0	%
U.S. global intangible low-taxed income		6.2			0.3			—
U.S. transition tax		1.9			(10.5	)		28.7
State income taxes, net of federal tax benefit		0.5			0.1			(0.4	)
Foreign tax credits		(5.9	)		(2.2	)		(2.2	)
Uncertain tax positions		(4.3	)		1.0			1.7
Foreign taxes		(4.0	)		(2.0	)		(16.3	)
U.S. foreign derived intangible income		(2.6	)		(1.8	)		—
U.S. research and development credit		(1.8	)		(2.2	)		(1.6	)
Equity compensation		(0.7	)		(1.2	)		(0.8	)
Impact of rate change on deferred taxes		—			0.3			6.9
Domestic production activities deduction		—			—			(0.3	)
Other, net		0.8			0.6			0.2
		11.1	%		3.4	%		50.9	%

Deferred Tax Assets (Liabilities)

Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2019 and 2018 were as follows:

	2019			2018
	(in thousands)
Deferred tax assets
Tax credits	$	79,480		$	69,091
Accruals		25,424			23,449
Pension liabilities		24,459			20,826
Inventory valuations		18,572			18,514
Deferred revenue		7,622			9,130
Equity compensation		7,042			7,190
Vacation accrual		4,768			4,772
Investment impairment		3,292			—
Net operating loss carryforwards		2,705			3,658
Marketable securities		—			962
Other		1,472			685
Gross deferred tax assets		174,836			158,277
Less: valuation allowance		(77,177	)		(69,852	)
Total deferred tax assets	$	97,659		$	88,425
Deferred tax liabilities:
Depreciation	$	(18,238	)	$	(14,028	)
Intangible assets		(16,705	)		(24,211	)
Marketable securities		(1,601	)		—
Total deferred tax liabilities	$	(36,544	)	$	(38,239	)
Net deferred assets	$	61,115		$	50,186

Operating Loss Carryforwards

At December 31, 2019, Teradyne had operating loss carryforwards that expire in the following years:

	State Operating Loss Carryforwards		Federal Operating Loss Carryforwards		Foreign Operating Loss Carryforwards
			(in thousands)
2020	$	269	$	—	$	—
2021		2,141		—		—
2022		4,934		—		—
2023		4,342		—		—
2024		1,498		—		—
2025-2029		7,673		—		—
2030-2034		4,329		—		15
Beyond 2034		2,185		554		74
Non-expiring		1,357		—		4,207
Total	$	28,728	$	554	$	4,296

Unrecognized Tax Benefits

Teradyne’s gross unrecognized tax benefits for the years ended December 31, 2019, 2018 and 2017 were as follows:

	2019			2018			2017
	(in thousands)
Beginning balance, as of January 1	$	43,395		$	36,263		$	38,958
Additions:
Tax positions for current year		1,322			4,716			8,208
Tax positions for prior years		8,043			2,626			199
Reductions:
Tax positions for prior years		(31,397	)		(153	)		(10,573	)
Expiration of statutes		(183	)		(57	)		(325	)
Settlements with tax authorities		—			—			(204	)
Ending balance as of December 31	$	21,180		$	43,395		$	36,263