Financial Instruments (Tables)

6 Months Ended

Jul. 03, 2022

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 July 3, 2022 and December 31, 2021.

	July 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	$	447,312	$	—	$	—	$	447,312
Cash equivalents		95,068		29,643		—		124,711
Available-for-sale securities:
Commercial paper		—		150,443		—		150,443
U.S. Treasury securities		—		73,100		—		73,100
Corporate debt securities		—		49,344		—		49,344
Debt mutual funds		6,514		—		—		6,514
U.S. government agency securities		—		4,693		—		4,693
Certificates of deposit and time deposits		—		1,261		—		1,261
Non-U.S. government securities		—		546		—		546
Equity securities:
Mutual funds		35,944		—		—		35,944
	$	584,838	$	309,030	$	—	$	893,868
Derivative assets		—		103		—		103
Total	$	584,838	$	309,133	$	—	$	893,971
Liabilities
Derivative liabilities	$	—	$	233	$	—	$	233
Total	$	—	$	233	$	—	$	233

Reported as follows:

	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	542,380	$	29,643	$	—	$	572,023
Marketable securities		—		209,846		—		209,846
Long-term marketable securities		42,458		69,541		—		111,999
Prepayments and other current assets		—		103		—		103
Total	$	584,838	$	309,133	$	—	$	893,971
Liabilities		.
Other current liabilities	$	—	$	233	$	—	$	233
Total	$	—	$	233	$	—	$	233

	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
	$	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 and other current assets		—		92		—		92
Total	$	1,088,176	$	412,204	$	—	$	1,500,380
Liabilities
Other current liabilities	$	—	$	118	$	—	$	118
Total	$	—	$	118	$	—	$	118

Schedule of Changes in Fair Value of Level 3 Contingent Consideration

Changes in the fair value of Level 3 contingent consideration for the six months ended July 3, 2022, and July 4, 2021 were as follows:

	For the Three Months Ended				For the Six Months Ended
	July 3,		July 4,		July 3,		July 4,
	2022		2021		2022		2021
	(in thousands)
Balance at beginning of period	$	—	$	—	$	—	$	7,227
Fair value adjustment (a)		—		—		—		(7,227	)
Balance at end of period	$	—	$	—	$	—	$	—

(a) In the six months ended July 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.

Schedule of Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of Teradyne’s financial instruments at July 3, 2022 and December 31, 2021 were as follows:

	July 3, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Assets
Cash and cash equivalents	$	572,023	$	572,023	$	1,122,199	$	1,122,199
Marketable securities		321,845		321,845		378,089		378,089
Derivative assets		103		103		92		92
Liabilities
Derivative liabilities		233		233		118		118
Convertible debt		74,428		233,339		108,426		604,648

Schedule of Available-for-Sale Marketable Securities

The following table summarizes the composition of available-for-sale marketable securities at July 3, 2022:

	July 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	$	150,695	$	8	$	(260	)	$	150,443	$	137,162
U.S. Treasury securities		75,962		42		(2,904	)		73,100		71,861
Corporate debt securities		53,274		147		(4,077	)		49,344		46,289
Debt mutual funds		6,783		—		(269	)		6,514		3,245
U.S. government agency securities		4,786		—		(93	)		4,693		4,693
Certificates of deposit and time deposits		1,261		—		—			1,261		—
Non-U.S. government securities		546		—		—			546		—
	$	293,307	$	197	$	(7,603	)	$	285,901	$	263,250

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	210,598	$	8	$	(760	)	$	209,846	$	195,003
Long-term marketable securities		82,709		189		(6,843	)		76,055		68,247
	$	293,307	$	197	$	(7,603	)	$	285,901	$	263,250

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

Contractual Maturities of Investments Held

The contractual maturities of investments in available-for-sale securities held at July 3, 2022 were as follows:

	July 3, 2022
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	210,598	$	209,846
Due after 1 year through 5 years		32,283		31,069
Due after 5 years through 10 years		5,055		4,736
Due after 10 years		38,588		33,736
Total	$	286,524	$	279,387

Schedule of Notional Amount of Derivatives

At July 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:

	July 3, 2022								December 31, 2021
	Buy Position			Sell Position		Net Total			Buy Position			Sell Position		Net Total
	(in millions)
Japanese Yen	$	(32.5	)	$	—	$	(32.5	)	$	(31.4	)	$	—	$	(31.4	)
Taiwan Dollar		(27.2	)		—		(27.2	)		(35.1	)		—		(35.1	)
Korean Won		(3.1	)		—		(3.1	)		(4.2	)		—		(4.2	)
British Pound Sterling		(1.0	)		—		(1.0	)		(1.8	)		—		(1.8	)
Singapore Dollar		—			40.0		40.0			—			61.9		61.9
Euro		—			39.8		39.8			—			44.9		44.9
Philippine Peso		—			3.2		3.2			—			3.9		3.9
Chinese Yuan		—			2.8		2.8			—			2.8		2.8
Total	$	(63.8	)	$	85.8	$	22.0		$	(72.5	)	$	113.5	$	41.0

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

The following table summarizes the fair value of derivative instruments as of July 3, 2022 and December 31, 2021:

	Balance Sheet Location	July 3, 2022			December 31, 2021
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Prepayments	$	103		$	92
Foreign exchange contracts	Other current liabilities		(233	)		(118	)
Total derivatives		$	(130	)	$	(26	)

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 and six months ended July 3, 2022 and July 4, 2021:

	Location of (Gains) Losses	For the Three Months Ended					For the Six Months Ended
	Recognized in	July 3,			July 4,		July 3,			July 4,
	Statement of Operations	2022			2021		2022			2021
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts	Other (income) expense, net	$	(1,703	)	$	1,531	$	(3,455	)	$	3,650