Financial Instruments and Derivatives (Tables)

6 Months Ended

Jun. 30, 2013

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 June 30, 2013 and December 31, 2012.


	June 30, 2013
	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	$	115,442	$	—	$	—	$	115,442
Cash equivalents		107,988		4,171		—		112,159
Available-for-sale securities:
U.S. Treasury securities		382,871		—		—		382,871
U.S. government agency securities		—		261,598		—		261,598
Commercial paper		—		97,667		—		97,667
Corporate debt securities		—		50,161		—		50,161
Equity and debt mutual funds		11,360		—		—		11,360
Certificates of deposit and time deposits		—		257		—		257
Non-U.S. government securities		—		80		—		80

Total		617,661		413,934		—		1,031,595
Derivatives		—		7		—		7

Total	$	617,661	$	413,941	$	—	$	1,031,602

Reported as follows:


	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	223,430	$	4,171	$	—	$	227,601
Marketable securities		289,230		211,918		—		501,148
Long-term marketable securities		105,001		197,845		—		302,846
Prepayments and other current assets		—		7		—		7

	$	617,661	$	413,941	$	—	$	1,031,602


	December 31, 2012
	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	$	139,354	$	—	$	—	$	139,354
Cash equivalents		183,039		16,527		—		199,566
Available-for-sale securities:
U.S. Treasury securities		312,116		—		—		312,116
U.S. government agency securities		—		217,655		—		217,655
Commercial paper		—		70,434		—		70,434
Corporate debt securities		—		55,755		—		55,755
Equity and debt mutual funds		9,717		—		—		9,717
Certificates of deposit and time deposits		—		1,627		—		1,627
Non-U.S. government securities		—		84		—		84

Total		644,226		362,082		—		1,006,308
Derivatives		—		121		—		121

Total	$	644,226	$	362,203	$	—	$	1,006,429

Liabilities
Contingent consideration	$	—	$	—	$	388	$	388

Total	$	—	$	—	$	388	$	388

Reported as follows:


	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	322,393	$	16,527	$	—	$	338,920
Marketable securities		239,192		192,324		—		431,516
Long-term marketable securities		82,641		153,231		—		235,872
Prepayments and other current assets		—		121		—		121

	$	644,226	$	362,203	$	—	$	1,006,429

Liabilities
Other accrued liabilities	$	—	$	—	$	388	$	388

	$	—	$	—	$	388	$	388

Schedule of Changes in Fair Value of Level 3 Financial Assets

Changes in the fair value of Level 3 contingent consideration for the three and six months ended June 30, 2013 were as follows:


	Contingent consideration
	(in thousands)
Balance at December 31, 2012	$	388
Payments		(313	)

Balance at March 31, 2013		75
Payments		(75	)

Balance at June 30, 2013	$	—

Schedule of Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of financial instruments at June 30, 2013 and December 31, 2012 were as follows:


	June 30, 2013				December 31, 2012
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Cash and cash equivalents	$	227,601	$	227,601	$	338,920	$	338,920
Marketable securities		803,994		803,994		667,388		667,388
Convertible debt(1)		177,532		610,726		169,896		589,000
Japan loan		2,033		2,033		3,491		3,491

(1)	The carrying value represents the bifurcated debt component only, while the fair value is based on quoted market prices for the convertible note which includes the equity conversion feature.

Schedule of Available-for-Sale Marketable Securities

The following tables summarize the composition of available-for-sale marketable securities at June 30, 2013 and December 31, 2012:


	June 30, 2013
	Available-for-Sale									Fair Market Value of Investments with Unrealized Losses
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	382,884	$	144	$	(157	)	$	382,871	$	166,301
U.S. government agency securities		261,870		129		(401	)		261,598		130,310
Commercial paper		97,660		14		(7	)		97,667		18,722
Corporate debt securities		50,043		1,032		(914	)		50,161		11,926
Equity and debt mutual funds		9,761		1,647		(48	)		11,360		892
Certificates of deposit and time deposits		257		—		—			257		—
Non-U.S. government securities		80		—		—			80		—

	$	802,555	$	2,966	$	(1,527	)	$	803,994	$	328,151

Reported as follows:


	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	501,007	$	170	$	(29	)	$	501,148	$	135,029
Long-term marketable securities		301,548		2,796		(1,498	)		302,846		193,122

	$	802,555	$	2,966	$	(1,527	)	$	803,994	$	328,151


	December 31, 2012
	Available-for-Sale									Fair Market Value of Investments with Unrealized Losses
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	311,915	$	216	$	(15	)	$	312,116	$	1,018
U.S. government agency securities		217,396		262		(3	)		217,655		9,018
Commercial paper		70,431		9		(6	)		70,434		25,209
Corporate debt securities		53,405		2,414		(64	)		55,755		23,255
Equity and debt mutual funds		8,767		961		(11	)		9,717		600
Certificates of deposit and time deposits		1,627		—		—			1,627		—
Non-U.S. government securities		84		—		—			84		—

	$	663,625	$	3,862	$	(99	)	$	667,388	$	59,100

Reported as follows:


	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	431,324	$	203	$	(11	)	$	431,516	$	41,110
Long-term marketable securities		232,301		3,659		(88	)		235,872		17,990

	$	663,625	$	3,862	$	(99	)	$	667,388	$	59,100

Contractual Maturities of Available-for-Sale Marketable Securities

The contractual maturities of available-for-sale marketable securities at June 30, 2013 were as follows:


	June 30, 2013
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	501,007	$	501,148
Due after 1 year through 5 years		275,543		276,815
Due after 5 years through 10 years		2,968		3,024
Due after 10 years		23,037		23,007

Total	$	802,555	$	803,994

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

The following table summarizes the fair value of derivative instruments at June 30, 2013 and December 31, 2012.


	Balance Sheet Location		June 30, 2013		December 31, 2012
			(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Prepayments and other current assets	$	7	$	121

			$	7	$	121

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 during the three and six months ended June 30, 2013 and July 1, 2012. The table does not reflect the corresponding (losses) gains from the remeasurement of the monetary assets and liabilities denominated in foreign currencies, which were $(1.8) million, $2.5 million, $(4.6) million, and $(0.4) million, respectively for the three and six months ended June 30, 2013 and July 1, 2012.


	Location of Gains (Losses) Recognized in Statement of Operations		For the Three Months Ended					For the Six Months Ended
			June 30, 2013		July 1, 2012			June 30, 2013		July 1, 2012
			(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Interest expense and other	$	1,818	$	(2,360	)	$	4,067	$	520

			$	1,818	$	(2,360	)	$	4,067	$	520

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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