Retirement Plans

6 Months Ended

Jul. 03, 2022

Retirement Plans

P. RETIREMENT PLANS

ASC 715, “Compensation—Retirement Benefits,” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715. 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 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 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 (the “IRC”), as well as unfunded qualified foreign plans.

In the six months ended July 3, 2022 and July 4, 2021, Teradyne contributed $1.6 million and $1.7 million, respectively, to the U.S. supplemental executive defined benefit pension plan, and $0.5 million and $0.5 million, respectively, to certain qualified pension plans for non-U.S. subsidiaries.

For the three and six months ended July 3, 2022 and July 4, 2021, Teradyne’s net periodic pension cost was comprised of the following:

	For the Three Months Ended
	July 3, 2022						July 4, 2021
	United States			Foreign			United States			Foreign
	(in thousands)
Service cost	$	397		$	180		$	452		$	245
Interest cost		1,221			120			1,096			88
Expected return on plan assets		(732	)		(18	)		(936	)		(17	)
Net actuarial gain		(45	)		—			(400	)		—
Total net periodic pension cost	$	841		$	282		$	212		$	316
	For the Six Months Ended
	July 3, 2022						July 4, 2021
	United States			Foreign			United States			Foreign
	(in thousands)
Service cost	$	794		$	386		$	905		$	491
Interest cost		2,443			238			2,196			175
Expected return on plan assets		(1,463	)		(38	)		(1,872	)		(33	)
Net actuarial gain		(45	)		—			(400	)		—
Total net periodic pension cost	$	1,729		$	586		$	829		$	633

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 July 3, 2022 and July 4, 2021, Teradyne’s net periodic postretirement benefit cost (credit) was comprised of the following:

	For the Three Months Ended						For the Six Months Ended
	July 3, 2022			July 4, 2021			July 3, 2022			July 4, 2021
	(in thousands)
Service cost	$	15		$	17		$	32		$	33
Interest cost		45			41			88			85
Amortization of prior service credit		(2	)		(2	)		(4	)		(4	)
Net actuarial loss (gain)		54			(228	)		54			(228	)
Total net periodic postretirement benefit cost (credit)	$	112		$	(172	)	$	170		$	(114	)