Financial Instruments (Tables)

9 Months Ended

Oct. 02, 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 October 2, 2022 and December 31, 2021.

	October 2, 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	$	464,744	$	—	$	—	$	464,744
Cash equivalents		51,243		194,759		—		246,002
Available-for-sale securities:
U.S. Treasury securities		—		65,354		—		65,354
Corporate debt securities		—		45,864		—		45,864
Commercial paper		—		17,719		—		17,719
Debt mutual funds		6,441		—		—		6,441
U.S. government agency securities		—		4,681		—		4,681
Certificates of deposit and time deposits		—		1,205		—		1,205
Non-U.S. government securities		—		512		—		512
Equity securities:
Mutual funds		34,573		—		—		34,573
	$	557,001	$	330,094	$	—	$	887,095
Derivative assets		—		546		—		546
Total	$	557,001	$	330,640	$	—	$	887,641
Liabilities
Derivative liabilities	$	—	$	1,106	$	—	$	1,106
Total	$	—	$	1,106	$	—	$	1,106
Reported as follows:
	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	515,987	$	194,759	$	—	$	710,746
Marketable securities		—		65,310		—		65,310
Long-term marketable securities		41,014		70,025		—		111,039
Prepayments and other current assets		—		546		—		546
Total	$	557,001	$	330,640	$	—	$	887,641
Liabilities		.
Other current liabilities	$	—	$	1,106	$	—	$	1,106
Total	$	—	$	1,106	$	—	$	1,106

	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 nine months ended October 2, 2022, and October 3, 2021 were as follows:

	For the Three Months Ended				For the Nine Months Ended
	October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021
	(in thousands)
Balance at beginning of period	$	—	$	—	$	—	$	7,227
Fair value adjustment (a)		—		—		—		(7,227	)
Balance at end of period	$	—	$	—	$	—	$	—

(a) In the nine months ended October 3, 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 October 2, 2022 and December 31, 2021 were as follows:

	October 2, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Assets
Cash and cash equivalents	$	710,746	$	710,746	$	1,122,199	$	1,122,199
Marketable securities		176,349		176,349		378,089		378,089
Derivative assets		546		546		92		92
Liabilities
Derivative liabilities		1,106		1,106		118		118
Convertible debt		64,791		154,486		108,426		604,648

Schedule of Available-for-Sale Marketable Securities

The following table summarizes the composition of available-for-sale marketable securities at October 2, 2022:

	October 2, 2022
	Available-for-Sale
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	69,598	$	—	$	(4,244	)	$	65,354	$	65,354
Corporate debt securities		52,926		1		(7,063	)		45,864		45,622
Commercial paper		17,691		35		(7	)		17,719		8,983
Debt mutual funds		6,897		—		(456	)		6,441		3,075
U.S. government agency securities		4,790		—		(109	)		4,681		4,681
Certificates of deposit and time deposits		1,205		—		—			1,205		—
Non-U.S. government securities		512		—		—			512		—
	$	153,619	$	36	$	(11,879	)	$	141,776	$	127,715

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	65,744	$	35	$	(469	)	$	65,310	$	55,369
Long-term marketable securities		87,875		1		(11,410	)		76,466		72,346
	$	153,619	$	36	$	(11,879	)	$	141,776	$	127,715

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 October 2, 2022 were as follows:

	October 2, 2022
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	65,744	$	65,310
Due after 1 year through 5 years		35,934		34,116
Due after 5 years through 10 years		4,800		4,209
Due after 10 years		40,244		31,700
Total	$	146,722	$	135,335

Schedule of Notional Amount of Derivatives

At October 2, 2022 and December 31, 2021, Teradyne had the following foreign currency forward contracts to buy and sell non-U.S. currencies for U.S. dollars and other non-U.S. currencies with the following notional amounts:

	October 2, 2022								December 31, 2021
	Buy Position			Sell Position		Net Total			Buy Position			Sell Position		Net Total
	(in millions)
Japanese Yen	$	(37.5	)	$	—	$	(37.5	)	$	(31.4	)	$	—	$	(31.4	)
Taiwan Dollar		(35.2	)		—		(35.2	)		(35.1	)		—		(35.1	)
Korean Won		(5.4	)		—		(5.4	)		(4.2	)		—		(4.2	)
British Pound Sterling		(1.1	)		—		(1.1	)		(1.8	)		—		(1.8	)
Danish Krone		(0.5	)		—		(0.5	)		—			—		—
Singapore Dollar		—			24.4		24.4			—			61.9		61.9
Euro		—			36.7		36.7			—			44.9		44.9
Philippine Peso		—			2.8		2.8			—			3.9		3.9
Chinese Yuan		—			2.4		2.4			—			2.8		2.8
Total	$	(79.7	)	$	66.3	$	(13.4	)	$	(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 October 2, 2022 and December 31, 2021:

	Balance Sheet Location		October 2, 2022			December 31, 2021
			(in thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts		Prepayments	$	9		$	92
Foreign currency forward contracts		Other current liabilities		(1,106	)		(118	)
Derivatives designated as hedging instruments:
Foreign currency option contracts		Prepayments		537			—
Total derivatives			$	(560	)	$	(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 nine months ended October 2, 2022 and October 3, 2021:

	Location of Losses (Gains) Recognized in Statement of Operations	For the Three Months Ended				For the Nine Months Ended
		October 2, 2022		October 3, 2021		October 2, 2022			October 3, 2021
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts	Other (income) expense, net	$	1,246	$	2,288	$	(2,209	)	$	5,937
Derivatives designated as hedging instruments:
Foreign currency option contracts	Revenue		—		—		—			—
Total derivatives		$	1,246	$	2,288	$	(2,209	)	$	5,937

Schedule of Foreign Currency Cash Flow Hedges

At October 2, 2022 and December 31, 2021, Teradyne had the following cash flow hedge contracts to buy and sell non-U.S. currencies for U.S. dollars with the following notional amounts:

	October 2, 2022							December 31, 2021
	Buy Position			Sell Position		Net Total		Buy Position		Sell Position		Net Total
	(in millions)
Japanese Yen	$	(5.4	)	$	26.6	$	21.2	$	—	$	—	$	—
Taiwan Dollar		(9.2	)		18.3		9.1		—		—		—
Total	$	(14.6	)	$	44.9	$	30.3	$	—	$	—	$	—