Financial Instruments (Tables)

3 Months Ended

Apr. 04, 2021

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 April 4, 2021 and December 31, 2020.​​​​​​​

	April 4, 2021
	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	$	417,888			$	—	$	417,888
Cash equivalents		386,694		26,567		—		413,261
Available-for-sale securities:
Commercial paper		—		306,715		—		306,715
U.S. Treasury securities		—		155,190		—		155,190
Corporate debt securities		—		83,372		—		83,372
Debt mutual funds		9,288		—		—		9,288
U.S. government agency securities		—		4,612		—		4,612
Certificates of deposit and time deposits		—		966		—		966
Non-U.S. government securities		—		619		—		619
Equity securities:
Mutual funds		33,151		—		—		33,151
	$	847,021	$	578,041	$	—	$	1,425,062
Derivative assets		—		16		—		16
Total	$	847,021	$	578,057	$	—	$	1,425,078
Liabilities
Derivative liabilities	$	—	$	393	$	—	$	393
Total	$	—	$	393	$	—	$	393

Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	804,582	$	26,567	$	—	$	831,149
Marketable securities		—		478,293		—		478,293
Long-term marketable securities		42,439		73,181		—		115,620
Prepayments and other current assets		—		16		—		16
Total	$	847,021	$	578,057	$	—	$	1,425,078
Liabilities
Other current liabilities	$	—	$	393	$	—	$	393
Total	$	—	$	393	$	—	$	393

	December 31, 2020
	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	$	443,166	$	—	$	—		443,166
Cash equivalents		347,768		123,187		—		470,955
Available-for-sale securities:								—
U.S. Treasury securities		—		258,304		—		258,304
Commercial paper		—		254,413		—		254,413
Corporate debt securities		—		83,615		—		83,615
Debt mutual funds		8,565		—		—		8,565
U.S. government agency securities		—		4,339		—		4,339
Certificates of deposit and time deposits		—		979		—		979
Non-U.S. government securities		—		625		—		625
Equity securities:
Equity mutual funds		29,420		—		—		29,420
	$	828,919	$	725,462	$	—	$	1,554,381
Derivative assets		—		95		—		95
Total	$	828,919	$	725,557	$	—	$	1,554,476
Liabilities
Contingent consideration	$	—	$	—	$	7,227	$	7,227
Derivative liabilities		—		504		—		504
Total	$	—	$	504	$	7,227	$	7,731

Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	790,934	$	123,187	$	—	$	914,121
Marketable securities		—		522,280		—		522,280
Long-term marketable securities		37,985		79,995		—		117,980
Prepayments and other current assets		—		95		—		95
Total	$	828,919	$	725,557	$	—	$	1,554,476
Liabilities
Other accrued liabilities	$	—	$	504	$	—	$	504
Long-term contingent consideration		—		—		7,227		7,227
Total	$	—	$	504	$	7,227	$	7,731

Schedule of Changes in Fair Value of Level 3 Contingent Consideration

Changes in the fair value of Level 3 contingent consideration for the three months ended April 4, 2021, and March 29, 2020 were as follows:

	For the Three Months Ended
	April 4,			March 29,
	2021			2020
	(in thousands)
Balance at beginning of period	$	7,227		$	39,705
Fair value adjustment (a)(b)		(7,227	)		(10,020	)
Foreign currency impact		—			(361	)
Payments (c)		—			(8,852	)
Balance at end of period	$	—		$	20,472

(a) In the three months ended April 4, 2021, the fair value of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide was reduced to zero, which resulted in a benefit of $7.2 million, primarily due to a decrease in forecasted revenues and earnings before interest and taxes. As of April 4, 2021, the maximum amount of contingent consideration that could be paid in connection with the acquisition of AutoGuide is $100.2 million. The remaining earn-out periods end on December 31, 2021 and December 31, 2022. The sellers of AutoGuide have filed an arbitration claim against Teradyne related to the earn-out alleging non-compliance with the earn-out provisions of the AutoGuide acquisition agreement. Teradyne disputes the allegations of non-compliance. The ultimate amount of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide may be affected by the outcome of the dispute.

(b) In the three months ended March 29, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisitions of Mobile Industrial Robots Aps (“MiR”) and AutoGuide decreased by $2.9 million and $7.1 million, respectively, due to lower forecasts.

(c) In the three months ended March 29, 2020, Teradyne paid $8.9 million of contingent consideration for the earn-out in connection with the acquisition of MiR.

Schedule of Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of Teradyne’s financial instruments at April 4, 2021 and December 31, 2020 were as follows:

	April 4, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Assets
Cash and cash equivalents	$	831,149	$	831,149	$	914,121	$	914,121
Marketable securities		593,913		593,913		640,260		640,260
Derivative assets		16		16		95		95
Liabilities
Contingent consideration		—		—		7,227		7,227
Derivative liabilities		393		393		504		504
Convertible debt (1)		367,934		1,664,667		410,111		1,739,553

(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 April 4, 2021:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Commercial paper	$	306,707	$	8	$	—		$	306,715	$	13,996
U.S. Treasury securities		155,337		644		(791	)		155,190		24,492
Corporate debt securities		79,190		4,340		(158	)		83,372		25,553
Debt mutual funds		9,242		46		—			9,288		—
U.S. government agency securities		4,581		34		(3	)		4,612		1,413
Certificates of deposit and time deposits		966		—		—			966		—
Non-U.S. government securities		619		—		—			619		—
	$	556,642	$	5,072	$	(952	)	$	560,762	$	65,454

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	478,221	$	95	$	(23	)	$	478,293	$	47,468
Long-term marketable securities		78,421		4,977		(929	)		82,469		17,986
	$	556,642	$	5,072	$	(952	)	$	560,762	$	65,454

The following table summarizes the composition of available-for-sale marketable securities at December 31, 2020:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	257,132	$	1,330	$	(158	)	$	258,304	$	17,243
Commercial paper		254,404		10		(1	)		254,413		12,173
Corporate debt securities		76,129		7,539		(53	)		83,615		39,896
Debt mutual funds		8,413		152		—			8,565		—
U.S. government agency securities		4,294		46		(1	)		4,339		1,106
Certificates of deposit and time deposits		979		—		—			979		—
Non-U.S. government securities		625		—		—			625		—
	$	601,976	$	9,077	$	(213	)	$	610,840	$	70,418

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	522,228	$	92	$	(40	)	$	522,280	$	61,806
Long-term marketable securities		79,748		8,985		(173	)		88,560		8,612
	$	601,976	$	9,077	$	(213	)	$	610,840	$	70,418

Contractual Maturities of Investments Held

The contractual maturities of investments in available-for-sale securities held at April 4, 2021 were as follows:

	April 4, 2021
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	478,221	$	478,293
Due after 1 year through 5 years		28,597		29,038
Due after 5 years through 10 years		6,103		6,484
Due after 10 years		34,479		37,659
Total	$	547,400	$	551,474

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

The following table summarizes the fair value of derivative instruments as of April 4, 2021 and December 31, 2020:

	Balance Sheet Location	April 4, 2021			December 31, 2020
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepayments	$	16		$	95
Foreign exchange contracts	Other current liabilities		(393	)		(504	)
Total derivatives		$	(377	)	$	(409	)

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 months ended April 4, 2021 and March 29, 2020:

	Location of Losses Recognized in Statement of Operations	For the Three Months Ended
		April 4, 2021		March 29, 2020
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other (income) expense, net	$	2,118	$	4,011

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

(2) For the three months ended April 4, 2021 and March 29, 2020, net gains from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $0.2 million and $2.0 million, respectively.