Retirement Plans

9 Months Ended

Oct. 03, 2021

Retirement Plans

Q. 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 at December 31. Teradyne uses a December 31 measurement date for all of its plans.

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 nine months ended October 3, 2021, and September 27, 2020, Teradyne contributed $2.5 million and $2.2 million, respectively, to the U.S. supplemental executive defined benefit pension plan and $0.8 million and $0.7 million, respectively, to certain qualified pension plans for non-U.S. subsidiaries.

For the three and nine months ended October 3, 2021 and September 27, 2020, Teradyne’s net periodic pension cost was comprised of the following components:

	For the Three Months Ended
	October 3, 2021						September 27, 2020
	United   States			Foreign			United   States			Foreign
	(in thousands)
Service cost	$	452		$	240		$	417		$	216
Interest cost		1,098			86			1,460			123
Expected return on plan assets		(936	)		(17	)		(1,170	)		(16	)
Net actuarial loss		—			—			2,238			—
Settlement loss		—			—			450			—
Total net periodic pension cost	$	614		$	309		$	3,395		$	323
	For the Nine Months Ended
	October 3, 2021						September 27, 2020
	United   States			Foreign			United   States			Foreign
	(in thousands)
Service cost	$	1,357		$	720		$	1,283		$	648
Interest cost		3,295			257			4,505			369
Expected return on plan assets		(2,809	)		(50	)		(3,634	)		(47	)
Net actuarial (gain) loss		(400	)		—			2,418			—
Settlement loss		—			—			450			—
Total net periodic pension cost	$	1,443		$	927		$	5,022		$	970

The net periodic pension cost components other than service cost were recorded in other (income) expense, net in the statement of operations.

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 nine months ended October 3, 2021 and September 27, 2020, Teradyne’s net periodic postretirement benefit cost (credit) was comprised of the following components:

	For the Three Months Ended						For the Nine Months Ended
	October 3,   2021			September 27,   2020			October 3,   2021			September 27,   2020
	(in thousands)
Service cost	$	16		$	14		$	48		$	43
Interest cost		43			60			128			180
Amortization of prior service credit		(2	)		(2	)		(7	)		(7	)
Net actuarial gain		—			—			(228	)		(279	)
Total net periodic postretirement benefit cost (credit)	$	57		$	72		$	(59	)	$	(63	)

The net periodic postretirement benefit cost (credit) components other than service cost were recorded in other (income) expense, net in the statement of operations.