Retirement Plans

9 Months Ended

Oct. 02, 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 nine months ended October 2, 2022 and October 3, 2021, Teradyne contributed $2.5 million and $2.5 million, respectively, to the U.S. supplemental executive defined benefit pension plan, and $0.7 million and $0.8 million, respectively, to certain qualified pension plans for non-U.S. subsidiaries.

For the three and nine months ended October 2, 2022 and October 3, 2021, Teradyne’s net periodic pension cost was comprised of the following:

	For the Three Months Ended
	October 2, 2022						October 3, 2021
	United States			Foreign			United States			Foreign
	(in thousands)
Service cost	$	397		$	153		$	452		$	240
Interest cost		1,222			96			1,098			86
Expected return on plan assets		(732	)		(16	)		(936	)		(17	)
Total net periodic pension cost	$	887		$	233		$	614		$	309

	For the Nine Months Ended
	October 2, 2022						October 3, 2021
	United States			Foreign			United States			Foreign
	(in thousands)
Service cost	$	1,191		$	539		$	1,357		$	720
Interest cost		3,665			333			3,295			257
Expected return on plan assets		(2,195	)		(54	)		(2,809	)		(50	)
Net actuarial gain		(45	)		—			(400	)		—
Total net periodic pension cost	$	2,616		$	818		$	1,443		$	927

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 2, 2022 and October 3, 2021, Teradyne’s net periodic postretirement benefit cost (credit) was comprised of the following:

	For the Three Months Ended						For the Nine Months Ended
	October 2, 2022			October 3, 2021			October 2, 2022			October 3, 2021
	(in thousands)
Service cost	$	16		$	16		$	48		$	48
Interest cost		44			43			132			128
Amortization of prior service credit		(2	)		(2	)		(7	)		(7	)
Net actuarial loss (gain)		—			—			54			(228	)
Total net periodic postretirement benefit cost (credit)	$	58		$	57		$	227		$	(59	)