XML 26 R16.htm IDEA: XBRL DOCUMENT v3.22.1
Financial Instruments
 3 Months Ended
Apr. 03, 2022
Financial Instruments
G. FINANCIAL INSTRUMENTS
Cash Equivalents
Teradyne considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents.
Marketable Securities
Teradyne’s
available-for-sale
debt securities are classified as Level 2 and equity and debt mutual funds are classified as Level 1. Contingent consideration is classified as Level 3. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.
During the three months ended April 3, 2022 and April 4, 2021, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.
Realized gains recorded in the three months ended April 3, 2022 and April 4, 2021 were $0.4 million and $1.2 million, respectively. Realized losses recorded in the three months ended April 3, 2022 were $0.2 million. No realized losses were recorded in the three months ended April 4, 2021. Realized gains and losses are included in other (income) expense, net.
Unrealized losses on equity securities recorded in the three months ended April 3, 2022 were $2.2 million. Unrealized gains on equity securities recorded in the three months ended April 4, 2021 were $1.4 million. Unrealized gains and losses on equity securities are included in other (income) expense, net.
Unrealized gains and losses on
available-for-sale
debt securities are included in accumulated other comprehensive income (loss).
The cost of securities sold is based on average cost.
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 3, 2022 and December 31, 2021.
 
 
  
April 3, 2022
 
 
  
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
    $ 508,245      $ —        $ —        $ 508,245  
Cash equivalents
      212,647        73,711        —          286,358  
Available-for-sale
securities:
                                    
Commercial paper
      —          179,481        —          179,481  
U.S. Treasury securities
      —          119,837        —          119,837  
Corporate debt securities
      —          53,161        —          53,161  
Debt mutual funds
      7,030        —          —          7,030  
U.S. government agency securities
      —          4,714        —          4,714  
Certificates of deposit and time deposits
      —          1,312        —          1,312  
Non-U.S.
government securities
      —          578        —          578  
Equity securities:
                                    
Mutual funds
      42,033        —          —          42,033  
    
 
 
     
 
 
     
 
 
     
 
 
  
     $ 769,955      $ 432,794      $ —        $ 1,202,749  
Derivative assets
      —          9        —          9  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 769,955      $ 432,803      $ —        $ 1,202,758  
    
 
 
     
 
 
     
 
 
     
 
 
  
Liabilities
                                    
Derivative liabilities
    $ —        $ 469      $ —        $ 469  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ —        $ 469      $ —        $ 469  
    
 
 
     
 
 
     
 
 
     
 
 
  
Reported as follows:
  
      
  
      
  
      
  
      
         
 
  
(Level 1)
 
  
(Level 2)
 
  
(Level 3)
 
  
Total
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
(in thousands)
 
Assets
  
      
  
      
  
      
  
      
Cash and cash equivalents
    $ 720,892      $ 73,711      $ —        $ 794,603  
Marketable securities
      —          282,016        —          282,016  
Long-term marketable securities
      49,063        77,067        —          126,130  
Prepayments
      —          9        —          9  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 769,955      $ 432,803      $ —        $ 1,202,758  
    
 
 
     
 
 
     
 
 
     
 
 
  
Liabilities
                                    
Other current liabilities
    $ —        $ 469      $ —        $ 469  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ —        $ 469      $ —        $ 469  
    
 
 
     
 
 
     
 
 
     
 
 
  
 
  
December 31, 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
    $ 628,740      $ —        $ —        $ 628,740  
Cash equivalents
      412,212        81,247        —          493,459  
Available for sale securities:
                                    
Commercial paper
      —          189,620        —          189,620  
U.S. Treasury securities
      —          77,789        —          77,789  
Corporate debt securities
      —          56,901        —          56,901  
Debt mutual funds
      7,971        —          —          7,971  
U.S. government agency securities
      —          4,610        —          4,610  
Certificates of deposit and time deposits
      —          1,356        —          1,356  
Non-U.S.
government securities
      —          589        —          589  
Equity securities:
                                    
Mutual funds
      39,253        —          —          39,253  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 1,088,176      $ 412,112      $ —        $ 1,500,288  
Derivative assets
      —          92        —          92  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 1,088,176      $ 412,204      $ —        $ 1,500,380  
    
 
 
     
 
 
     
 
 
     
 
 
  
Liabilities
                                    
Derivative liabilities
    $ —        $ 118      $ —        $ 118  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ —        $ 118      $ —        $ 118  
    
 
 
     
 
 
     
 
 
     
 
 
  
Reported as follows:
  
      
  
      
  
      
  
      
 
  
(Level 1)
 
  
(Level 2)
 
  
(Level 3)
 
  
Total
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
(in thousands)
 
Assets
  
      
  
      
  
      
  
      
Cash and cash equivalents
    $ 1,040,952      $ 81,247      $ —        $ 1,122,199  
Marketable securities
      —          244,231        —          244,231  
Long-term marketable securities
      47,224        86,634        —          133,858  
Prepayments
      —          92        —          92  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ 1,088,176      $ 412,204      $ —        $ 1,500,380  
    
 
 
     
 
 
     
 
 
     
 
 
  
Liabilities
                                    
Other current liabilities
    $ —        $ 118      $ —        $ 118  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total
    $ —        $ 118      $ —        $ 118  
    
 
 
     
 
 
     
 
 
     
 
 
  
Changes in the fair value of Level 3 contingent consideration for the three months ended April 3, 2022, and April 4, 2021 were as follows:
 
 
  
For the Three Months

Ended
 
 
  
April 3,
2022
 
  
April 4,
2021
 
 
  
 
 
  
 
 
 
  
(in thousands)
 
Balance at beginning of period
    $ —        $ 7,227  
Fair value adjustment (a)
      —          (7,227 ) 
    
 
 
     
 
 
  
Balance at end of period
    $ —        $ —    
    
 
 
     
 
 
  
 
(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. 
On March 25, 2022, the arbitration claim filed by Industrial Automation LLC, sellers of AutoGuide, against Teradyne alleging
non-compliance
with the
earn-out
provisions of the Membership Interests Purchase Agreement (the “Purchase Agreement”), dated as of October 18, 2019, among Industrial Automation LLC, Teradyne and AutoGuide was settled
for
$26.7 million. As a result, Teradyne has no remaining
earn-out
obligations.
The carrying amounts and fair values of Teradyne’s financial instruments at April 3, 2022 and December 31, 2021 were as follows:
 
 
  
April 3, 2022
 
  
December 31, 2021
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
Carrying Value
 
  
Fair Value
 
  
Carrying Value
 
  
Fair Value
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
(in thousands)
 
Assets
  
  
  
  
Cash and cash equivalents
    $ 794,603      $ 794,603      $ 1,122,199      $ 1,122,199  
Marketable securities
      408,146        408,146        378,089        378,089  
Derivative assets
      9        9        92        92  
Liabilities
                                    
Derivative liabilities
      469        469        118        118  
Convertible debt
     95,875        323,670        108,426        604,648  
The fair values of accounts receivable, net and accounts payable approximate the carrying value due to the short-term nature of these instruments.
The following table summarizes the composition of
available-for-sale
marketable securities at April 3, 2022:
 
 
  
April 3, 2022
 
 
  
Available-for-Sale
 
  
 
 
 
  
Cost
 
  
Unrealized

Gain
 
  
Unrealized

(Loss)
 
 
Fair Market

Value
 
  
Fair Market

Value of

Investments

with Unrealized

Losses
 
 
  
 
 
  
 
 
  
 
 
 
 
 
  
 
 
 
  
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial paper
    $ 179,736      $ 3      $ (258 )    $ 179,481      $ 106,951  
U.S. Treasury securities
      121,504        8        (1,675 )      119,837        114,043  
Corporate debt securities
      53,079        1,585        (1,503 )      53,161        32,283  
Debt mutual funds
      7,150        —          (120 )      7,030        —    
U.S. government agency securities
      4,795        —          (81 )      4,714        4,714  
Certificates of deposit and time deposits
      1,312        —          —         1,312        —    
Non-U.S.
government securities
      578        —          —         578        —    
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
     $ 368,154      $ 1,596      $ (3,637 )    $ 366,113      $ 257,991  
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
Reported as follows:
 
 
  
Cost
 
  
Unrealized

Gain
 
  
Unrealized

(Loss)
 
 
Fair Market

Value
 
  
Fair Market

Value of

Investments

with Unrealized

Losses
 
 
  
 
 
  
 
 
  
 
 
 
 
 
  
 
 
 
  
(in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Marketable securities
    $ 282,563      $ 11      $ (558 )    $ 282,016      $ 202,243  
Long-term marketable securities
      85,591        1,585        (3,079 )      84,097        55,748  
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
     $ 368,154      $ 1,596      $ (3,637 )    $ 366,113      $ 257,991  
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
The following table summarizes the composition of
available-for-sale
marketable securities at December 31, 2021:
 
 
  
December 31, 2021
 
 
  
Available-for-Sale
 
  
 
 
 
  
Cost
 
  
Unrealized

Gain
 
  
Unrealized

(Loss)
 
 
Fair Market

Value
 
  
Fair Market

Value of

Investments

with Unrealized

Losses
 
 
  
 
 
  
 
 
  
 
 
 
 
 
  
 
 
 
  
(in thousands)
 
Commercial paper
    $ 189,614      $ 15      $ (9 )    $ 189,620      $ 22,784  
U.S. Treasury securities
      77,707        551        (470 )      77,789        46,435  
Corporate debt securities
      52,266        4,863        (227 )      56,901        19,422  
Debt mutual funds
      7,928        43        —         7,971        —    
U.S. government agency securities
      4,617        5        (12 )      4,610        3,296  
Certificates of deposit and time deposits
      1,356        —          —         1,356        —    
Non-U.S.
government securities
      589        —          —         589        —    
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
     $ 334,077      $ 5,477      $ (718 )    $ 338,836      $ 91,937  
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
Reported as follows:
 
 
  
Cost
 
  
Unrealized

Gain
 
  
Unrealized

(Loss)
 
 
Fair Market

Value
 
  
Fair Market

Value of

Investments

with Unrealized

Losses
 
 
  
 
 
  
 
 
  
 
 
 
 
 
  
 
 
 
  
(in thousands)
 
Marketable securities
    $ 244,213      $ 64      $ (46 )    $ 244,231      $ 54,798  
Long-term marketable securities
      89,864        5,413        (672 )      94,605        37,139  
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
     $ 334,077      $ 5,477      $ (718 )    $ 338,836      $ 91,937  
    
 
 
     
 
 
     
 
 
    
 
 
     
 
 
  
As of April 3, 2022, the fair market value of investments with unrealized losses less than one year and greater than one year totaled $248.2 million and $9.8 million
,
respectively. As of December 31, 2021, the fair market value of investments with unrealized losses for less than one year and greater than one year totaled $85.4 million and $6.5 million, respectively.
Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments at April 3, 2022 and December 31, 2021 were not other than temporary.
The contractual maturities of investments in
available-for-sale
securities held at April 3, 2022 were as follows:
 
 
  
April 3, 2022
 
 
  
Cost
 
  
Fair Market

Value
 
 
  
 
 
  
 
 
 
  
(in thousands)
 
Due within one year
    $ 282,563      $ 282,016  
Due after 1 year through 5 years
      36,844        35,718  
Due after 5 years through 10 years
      6,117        5,978  
Due after 10 years
      35,480        35,371  
    
 
 
     
 
 
  
Total
    $ 361,004      $ 359,083  
    
 
 
     
 
 
  
Contractual maturities of investments in
available-for-sale
securities held at April 3
, 2022
exclude debt mutual funds with a fair market value of $7.0 million, as they do not have a contractual maturity date.
 
Derivatives
Teradyne conducts business in a number of foreign countries, with certain transactions denominated in local currencies. The purpose of Teradyne’s foreign currency management is to minimize the effect of exchange rate fluctuations on certain foreign currency denominated monetary assets and liabilities. Teradyne does not use derivative financial instruments for trading or speculative purposes.
To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings and is used to offset the change in value of monetary assets and liabilities denominated in foreign currencies.
At April 3, 2022 and December 31, 2021, Teradyne had the following contracts to buy and sell non-U.S. currencies for U.S. dollars and other non-U.S. currencies with the following notional amounts:
 
 
  
April 3, 2022
 
 
December 31, 2021
 
 
  
Buy
Position
 
 
Sell
Position
 
  
Net

Total
 
 
Buy
Position
 
 
Sell

Position
 
  
Net

Total
 
 
  
(in millions)
 
Japanese Yen
  
$
(45.9
) 
 
$
—  
 
  
$
(45.9
) 
 
$
(31.4
) 
 
$
—  
 
  
$
(31.4
) 
Taiwan Dollar
  
 
(43.7
) 
 
 
—  
 
  
 
(43.7
) 
 
 
(35.1
) 
 
 
—  
 
  
 
(35.1
) 
Korean Won
  
 
(5.0
) 
 
 
—  
 
  
 
(5.0
) 
 
 
(4.2
) 
 
 
—  
 
  
 
(4.2
) 
British Pound Sterling
  
 
(2.9
) 
 
 
—  
 
  
 
(2.9
) 
 
 
(1.8
) 
 
 
—  
 
  
 
(1.8
) 
Singapore Dollar
  
 
—  
 
 
 
75.5
 
  
 
75.5
 
 
 
—  
 
 
 
61.9
 
  
 
61.9
 
Euro
  
 
—  
 
 
 
42.3
 
  
 
42.3
 
 
 
—  
 
 
 
44.9
 
  
 
44.9
 
Philippine Peso
  
 
—  
 
 
 
3.8
 
  
 
3.8
 
 
 
—  
 
 
 
3.9
 
  
 
3.9
 
Chinese Yuan
  
 
—  
 
 
 
2.8
 
  
 
2.8
 
 
 
—  
 
 
 
2.8
 
  
 
2.8
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
Total
  
$
(97.5
) 
 
$
124.4
 
  
$
26.9
 
 
$
(72.5
) 
 
$
113.5
 
  
$
41.0
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
The fair value of the outstanding contracts was a loss of $0.5 million and $0.1 million, respectively, at April 3, 2022 and December 31, 2021.
Gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities are included in other (income) expense, net.
The following table summarizes the fair value of derivative instruments as of April 3, 2022 and December 31,
2021:
 
 
  
Balance Sheet Location
  
April 3,
2022
 
  
December 31,
2021
 
 
  
 
  
 
 
  
 
 
 
  
 
  
(in thousands)
 
Derivatives not designated as hedging instruments:
  
  
  
      
  
      
Foreign exchange contracts
  
 Prepayments
  
$
 9
 
  
$
 92
 
Foreign exchange contracts
  
 Other current liabilities
  
 
 (469
) 
  
 
 (118
) 
 
  
  
  
 
 
 
  
 
 
 
Total derivatives
  
  
  
$
 (460
) 
  
$
 (26
) 
 
  
  
  
 
 
 
  
 
 
 
The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three months ended April 3, 2022 and April 4, 2021:
 
  
Location of (Gains) Losses
 
 
For the Three Months

Ended
 
 
  
Recognized in
Statement of Operations
 
 
April 3,
2022
 
  
April 4,
2021
 
 
  
 
 
 
 
 
  
 
 
 
  
 
 
 
(in thousands)
 
Derivatives not designated as hedging instruments:
  
      
 
      
  
      
 
 
 
 
 
 
 
 
 
 
 
 
  
Foreign exchange contracts
      Other
 
(income) expense, net
 
 
   $ (1,752 )     $ 2,118  
 
(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 3,
2022
, net losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $4.3 million.
(3)
For the three months ended April 4, 2021, net gains from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $0.2 million.
See Note H: “Debt” regarding derivatives related to the convertible senior notes.