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Financial Instruments and Derivatives (Tables) | 9 Months Ended
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Sep. 28, 2014
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 September 28, 2014 and December 31, 2013.
|  | September 28, 2014 |
|  | 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 |  | $ | 100,633 |  |  | $ | — |  |  | $ | — |  |  | $ | 100,633 |
Cash equivalents |  |  | 99,979 |  |  |  | 11,092 |  |  |  | — |  |  |  | 111,071 |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  |  | — |  |  |  | 459,240 |  |  |  | — |  |  |  | 459,240 |
U.S. government agency securities |  |  | — |  |  |  | 285,617 |  |  |  | — |  |  |  | 285,617 |
Commercial paper |  |  | — |  |  |  | 99,774 |  |  |  | — |  |  |  | 99,774 |
Corporate debt securities |  |  | — |  |  |  | 94,357 |  |  |  | — |  |  |  | 94,357 |
Certificates of deposit and time deposits |  |  | — |  |  |  | 18,522 |  |  |  | — |  |  |  | 18,522 |
Equity and debt mutual funds |  |  | 12,099 |  |  |  | — |  |  |  | — |  |  |  | 12,099 |
Total |  | $ | 212,711 |  |  | $ | 968,602 |  |  | $ | — |  |  | $ | 1,181,313 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | — |  |  | $ | — |  |  | $ | 1,600 |  |  | $ | 1,600 |
Derivatives |  |  | — |  |  |  | 546 |  |  |  | — |  |  |  | 546 |
Total |  | $ | — |  |  | $ | 546 |  |  | $ | 1,600 |  |  | $ | 2,146 |
Reported as follows:
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Total |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 200,612 |  |  | $ | 11,092 |  |  | $ | — |  |  | $ | 211,704 |
Marketable securities |  |  | — |  |  |  | 594,801 |  |  |  | — |  |  |  | 594,801 |
Long-term marketable securities |  |  | 12,099 |  |  |  | 362,709 |  |  |  | — |  |  |  | 374,808 |
|  | $ | 212,711 |  |  | $ | 968,602 |  |  | $ | — |  |  | $ | 1,181,313 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other accrued liabilities |  | $ | — |  |  | $ | 546 |  |  | $ | — |  |  | $ | 546 |
Long-term other accrued liabilities |  |  | — |  |  |  | — |  |  |  | 1,600 |  |  |  | 1,600 |
|  | $ | — |  |  | $ | 546 |  |  | $ | 1,600 |  |  | $ | 2,146 |
|  | December 31, 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 |  | $ | 117,242 |  |  | $ | — |  |  | $ | — |  |  | $ | 117,242 |
Cash equivalents |  |  | 165,865 |  |  |  | 58,531 |  |  |  | — |  |  |  | 224,396 |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  |  | — |  |  |  | 467,895 |  |  |  | — |  |  |  | 467,895 |
U.S. government agency securities |  |  | — |  |  |  | 202,588 |  |  |  | — |  |  |  | 202,588 |
Commercial paper |  |  | — |  |  |  | 105,598 |  |  |  | — |  |  |  | 105,598 |
Corporate debt securities |  |  | — |  |  |  | 65,387 |  |  |  | — |  |  |  | 65,387 |
Equity and debt mutual funds |  |  | 13,156 |  |  |  | — |  |  |  | — |  |  |  | 13,156 |
Certificates of deposit and time deposits |  |  | — |  |  |  | 3,258 |  |  |  | — |  |  |  | 3,258 |
Non-U.S. government securities |  |  | — |  |  |  | 78 |  |  |  | — |  |  |  | 78 |
Total |  |  | 296,263 |  |  |  | 903,335 |  |  |  | — |  |  |  | 1,199,598 |
Derivatives |  |  | — |  |  |  | 153 |  |  |  | — |  |  |  | 153 |
Total |  | $ | 296,263 |  |  | $ | 903,488 |  |  | $ | — |  |  | $ | 1,199,751 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | — |  |  | $ | — |  |  | $ | 2,230 |  |  | $ | 2,230 |
Total |  | $ | — |  |  | $ | — |  |  | $ | 2,230 |  |  | $ | 2,230 |
Reported as follows:
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Total |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 283,107 |  |  | $ | 58,531 |  |  | $ | — |  |  | $ | 341,638 |
Marketable securities |  |  | — |  |  |  | 586,882 |  |  |  | — |  |  |  | 586,882 |
Long-term marketable securities |  |  | 13,156 |  |  |  | 257,922 |  |  |  | — |  |  |  | 271,078 |
Other current assets |  |  | — |  |  |  | 153 |  |  |  | — |  |  |  | 153 |
|  | $ | 296,263 |  |  | $ | 903,488 |  |  | $ | — |  |  | $ | 1,199,751 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term other accrued liabilities |  | $ | — |  |  | $ | — |  |  | $ | 2,230 |  |  | $ | 2,230 |
|  | $ | — |  |  | $ | — |  |  | $ | 2,230 |  |  | $ | 2,230 |
Schedule of Changes in Fair Value of Level 3 Contingent Consideration | Changes in the fair value of Level 3 contingent consideration for the three and nine months ended September 28, 2014 and September 29, 2013 were as follows:
Contingent consideration related to Teradyne’s acquisition of ZTEC in October 2013 |  | For the Three and Nine Months Ended |
| September 28, 2014 |
|  | (in thousands) |
Balance at December 31, 2013 |  | $ | 2,230 |
Contingent consideration payments |  |  | — |
Balance at March 30, 2014 |  |  | 2,230 |
Contingent consideration payments |  |  | — |
Balance at June 29, 2014 |  |  | 2,230 |
Fair value adjustment |  |  | (630 | )
Balance at September 28, 2014 |  | $ | 1,600 |
Contingent consideration related to Teradyne’s acquisition of LitePoint in October 2011 |  | For the Three and Nine Months Ended |
| September 29, 2013 |
|  | (in thousands) |
Balance at December 31, 2012 |  | $ | 388 |
Contingent consideration payments |  |  | (313 | )
Balance at March 31, 2013 |  |  | 75 |
Contingent consideration payments |  |  | (75 | )
Balance at June 30, 2013 |  |  | — |
Contingent consideration payments |  |  | — |
Balance at September 29, 2013 |  | $ | — |
Schedule of Carrying Amounts and Fair Values of Financial Instruments | The carrying amounts and fair values of Teradyne’s financial instruments at September 28, 2014 and December 31, 2013 were as follows:
|  | September 28, 2014 |  |  | December 31, 2013 |
|  | Carrying Value |  |  | Fair Value |  |  | Carrying Value |  |  | Fair Value |
|  | (in thousands) |
Cash and cash equivalents |  | $ | 211,704 |  |  | $ | 211,704 |  |  | $ | 341,638 |  |  | $ | 341,638 |
Marketable securities |  |  | 969,609 |  |  |  | 969,609 |  |  |  | 857,960 |  |  |  | 857,960 |
Convertible debt(1) |  |  | — |  |  |  | — |  |  |  | 185,708 |  |  |  | 611,433 |
Japan loan |  |  | — |  |  |  | — |  |  |  | 955 |  |  |  | 955 |
(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 September 28, 2014 and December 31, 2013:
|  | September 28, 2014 |
|  | Available-for-Sale |  |  | Fair Market Value of Investments with Unrealized Losses |
|  | Cost |  |  | Unrealized Gain |  |  | Unrealized (Loss) |  |  | Fair Market Value |  |
|  | (in thousands) |
U.S. Treasury securities |  | $ | 458,958 |  |  | $ | 373 |  |  | $ | (91 | ) |  | $ | 459,240 |  |  | $ | 64,267 |
U.S. government agency securities |  |  | 285,528 |  |  |  | 195 |  |  |  | (106 | ) |  |  | 285,617 |  |  |  | 66,700 |
Commercial paper |  |  | 99,767 |  |  |  | 11 |  |  |  | (4 | ) |  |  | 99,774 |  |  |  | 23,722 |
Corporate debt securities |  |  | 92,883 |  |  |  | 1,734 |  |  |  | (260 | ) |  |  | 94,357 |  |  |  | 56,393 |
Certificates of deposit and time deposits |  |  | 18,508 |  |  |  | 14 |  |  |  | — |  |  |  | 18,522 |  |  |  | — |
Equity and debt mutual funds |  |  | 10,199 |  |  |  | 1,933 |  |  |  | (33 | ) |  |  | 12,099 |  |  |  | 1,074 |
|  | $ | 965,843 |  |  | $ | 4,260 |  |  | $ | (494 | ) |  | $ | 969,609 |  |  | $ | 212,156 |
Reported as follows:
|  | Cost |  |  | Unrealized Gain |  |  | Unrealized (Loss) |  |  | Fair Market Value |  |  | Fair Market Value of Investments with Unrealized Losses |
|  | (in thousands) |
Marketable securities |  | $ | 594,500 |  |  | $ | 319 |  |  | $ | (18 | ) |  | $ | 594,801 |  |  | $ | 66,188 |
Long-term marketable securities |  |  | 371,343 |  |  |  | 3,941 |  |  |  | (476 | ) |  |  | 374,808 |  |  |  | 145,968 |
|  | $ | 965,843 |  |  | $ | 4,260 |  |  | $ | (494 | ) |  | $ | 969,609 |  |  | $ | 212,156 |
|  | December 31, 2013 |
|  | Available-for-Sale |  |  | Fair Market Value of Investments with Unrealized Losses |
|  | Cost |  |  | Unrealized Gain |  |  | Unrealized (Loss) |  |  | Fair Market Value |  |
|  | (in thousands) |
U.S. Treasury securities |  | $ | 468,084 |  |  | $ | 94 |  |  | $ | (283 | ) |  | $ | 467,895 |  |  | $ | 108,212 |
U.S. government agency securities |  |  | 202,573 |  |  |  | 75 |  |  |  | (60 | ) |  |  | 202,588 |  |  |  | 84,498 |
Commercial paper |  |  | 105,583 |  |  |  | 16 |  |  |  | (1 | ) |  |  | 105,598 |  |  |  | 7,993 |
Corporate debt securities |  |  | 65,747 |  |  |  | 762 |  |  |  | (1,122 | ) |  |  | 65,387 |  |  |  | 40,355 |
Equity and debt mutual funds |  |  | 10,463 |  |  |  | 2,742 |  |  |  | (49 | ) |  |  | 13,156 |  |  |  | 702 |
Certificates of deposit and time deposits |  |  | 3,258 |  |  |  | — |  |  |  | — |  |  |  | 3,258 |  |  |  | — |
Non-U.S. government securities |  |  | 78 |  |  |  | — |  |  |  | — |  |  |  | 78 |  |  |  | — |
|  | $ | 855,786 |  |  | $ | 3,689 |  |  | $ | (1,515 | ) |  | $ | 857,960 |  |  | $ | 241,760 |
Reported as follows:
|  | Cost |  |  | Unrealized Gain |  |  | Unrealized (Loss) |  |  | Fair Market Value |  |  | Fair Market Value of Investments with Unrealized Losses |
|  | (in thousands) |
Marketable securities |  | $ | 586,818 |  |  | $ | 85 |  |  | $ | (21 | ) |  | $ | 586,882 |  |  | $ | 137,670 |
Long-term marketable securities |  |  | 268,968 |  |  |  | 3,604 |  |  |  | (1,494 | ) |  |  | 271,078 |  |  |  | 104,090 |
|  | $ | 855,786 |  |  | $ | 3,689 |  |  | $ | (1,515 | ) |  | $ | 857,960 |  |  | $ | 241,760 |
Contractual Maturities of Investments Held | The contractual maturities of investments held at September 28, 2014 were as follows:
|  | September 28, 2014 |
|  | Cost |  |  | Fair Market Value |
|  | (in thousands) |
Due within one year |  | $ | 594,500 |  |  | $ | 594,801 |
Due after 1 year through 5 years |  |  | 330,340 |  |  |  | 330,412 |
Due after 5 years through 10 years |  |  | 5,772 |  |  |  | 5,859 |
Due after 10 years |  |  | 25,032 |  |  |  | 26,438 |
Total |  | $ | 955,644 |  |  | $ | 957,510 |
Schedule of Derivative Instruments in Statement of Financial Position at Fair Value | The following table summarizes the fair value of derivative instruments at September 28, 2014 and December 31, 2013:
|  | Balance Sheet Location |  | September 28, 2014 |  |  | December 31, 2013 |
|  |  |  | (in thousands) |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |
Foreign currency forward contracts |  | Other current assets |  | $ | — |  |  | $ | 153 |
|  | Other accrued liabilities |  |  | 546 |  |  |  | — |
|  |  |  | $ | 546 |  |  | $ | 153 |
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 nine months ended September 28, 2014 and September 29, 2013. The table does not reflect the corresponding gains (losses) from the remeasurement of the monetary assets and liabilities denominated in foreign currencies. For the three and nine months ended September 28, 2014, (losses) gains from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $(0.4) million and $0.9 million, respectively. For the three and nine months ended September 29, 2013, losses from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $(0.4) million and $(5.0) million, respectively.
|  | Location of Gains (Losses) Recognized in Statement of Operations |  |  | For the Three Months Ended |  |  | For the Nine Months Ended |
|  | September 28, 2014 |  |  | September 29, 2013 |  |  | September 28, 2014 |  |  | September 29, 2013 |
|  |  |  |  | (in thousands) |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | Interest expense and other |  |  | $ | 237 |  |  | $ | — |  |  | $ | (1,632 | ) |  | $ | 4,068 |
|  |  |  |  |  | $ | 237 |  |  | $ | — |  |  | $ | (1,632 | ) |  | $ | 4,068 |

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