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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 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 December 31, 2014 and 2013.

		December 31, 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		$	111,471			$	—			$	—			$	111,471
Cash equivalents			160,218				22,567				—				182,785
Available for sale securities:
U.S. Treasury securities			—				402,154				—				402,154
U.S. government agency securities			—				258,502				—				258,502
Corporate debt securities			—				141,467				—				141,467
Commercial paper			—				140,638				—				140,638
Certificates of deposit and time deposits			—				49,036				—				49,036
Equity and debt mutual funds			12,333				—				—				12,333
Non-U.S. government securities			—				446				—				446
Total		$	284,022			$	1,014,810			$	—			$	1,298,832
Liabilities
Contingent consideration		$	—			$	—			$	3,350			$	3,350
Derivatives			—				149				—				149
Total		$	—			$	149			$	3,350			$	3,499

Reported as follows:

		(Level 1)				(Level 2)				(Level 3)				Total
		(in thousands)
Assets
Cash and cash equivalents		$	271,689			$	22,567			$	—			$	294,256
Marketable securities			—				533,787				—				533,787
Long-term marketable securities			12,333				458,456				—				470,789
		$	284,022			$	1,014,810			$	—			$	1,298,832
Liabilities
Other current liabilities		$	—			$	149			$	1,750			$	1,899
Long-term other accrued liabilities			—				—				1,600				1,600
		$	—			$	149			$	3,350				3,499

		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 years ended December 31, 2014 and 2013 were as follows:

		Contingent Consideration
		(in thousands)
Balance at December 31, 2012		$	388
Acquisition of ZTEC			2,230
Payments			(388	)
Balance at December 31, 2013			2,230
Fair value adjustment			(630	)
Acquisition of AIT			1,750
Balance at December 31, 2014		$	3,350

Quantitative Information Associated With Fair Value Measurement of Level 3 Financial Instrument

The following table provides quantitative information associated with the fair value measurement of Teradyne’s Level 3 financial instrument:

Liability		December 31, 2014 Fair Value		Valuation Technique		Unobservable Inputs		Weighted Average
		(in thousands)
Contingent consideration (ZTEC)		$1,600		Income approach- discounted cash flow		Revenue earn-out-probability for calendar year 2015 revenue.		0%
						Customer orders-probability of achievement during earn out period (acquisition date through December 31, 2015)		40%
						Discount rate for revenue earn-out		N/A
						Discount rate for customer orders		5.2%

Schedule of Carrying Amounts and Fair Values of Financial Instruments

The carrying amounts and fair values of financial instruments at December 31, 2014 and 2013 were as follows:

		December 31, 2014								December 31, 2013
		Carrying Value				Fair Value				Carrying Value				Fair Value
		(in thousands)
Cash and cash equivalents		$	294,256			$	294,256			$	341,638			$	341,638
Marketable securities			1,004,576				1,004,576				857,960				857,960
Convertible debt (1)			—				—				185,708				611,433
Japan loan			—				—				955				955

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

Schedule of Available-for-Sale Marketable Securities

The following tables summarize the composition of available for sale marketable securities at December 31, 2014 and 2013:

		December 31, 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		$	402,197			$	362			$	(405	)		$	402,154			$	317,771
U.S. government agency securities			258,452				135				(85	)			258,502				104,642
Corporate debt securities			139,374				2,414				(321	)			141,467				96,998
Commercial paper			140,616				26				(4	)			140,638				41,747
Certificates of deposit and time deposits			49,048				11				(23	)			49,036				20,684
Equity and debt mutual funds			10,492				1,870				(29	)			12,333				1,234
Non-U.S. government securities			446				—				—				446				—
		$	1,000,625			$	4,818			$	(867	)		$	1,004,576			$	583,076

Reported as follows:

		Cost				Unrealized Gain				Unrealized (Loss)				Fair Market Value				Fair Market Value of Investments with Unrealized Losses
		(in thousands)
Marketable securities		$	533,833			$	99			$	(145	)		$	533,787			$	240,234
Long-term marketable securities			466,792				4,719				(722	)			470,789				342,842
		$	1,000,625			$	4,818			$	(867	)		$	1,004,576			$	583,076

		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 December 31, 2014 were as follows:

		Cost				Fair Value
		(in thousands)
Due within one year		$	533,833			$	533,787
Due after 1 year through 5 years			418,732				418,363
Due after 5 years through 10 years			5,735				5,924
Due after 10 years			31,833				34,169
Total		$	990,133			$	992,243

Assets Measured at Fair Value on Non-Recurring Basis

Assets of Teradyne measured at fair value on a non-recurring basis as of December 31, 2014 are summarized as follows:

						Fair Value Measurements at Reporting Period
		December 31, 2014				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Other Unobservable Inputs (Level 3)				Total Losses
		(in thousands)
Assets
Goodwill		$	273,438			$	—			$	—			$	273,438			$	98,897
Definite lived intangible assets			158,237				—				—				158,237				—
Long-lived assets held and used			10,189				—				10,189				—				—
		$	441,864			$	—			$	10,189			$	431,675			$	98,897

Schedule of Notional Amount of Derivatives

At December 31, 2014 and 2013, 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:

		December 31, 2014												December 31, 2013
		Buy Position				Sell Position				Net Total				Buy Position				Sell Position				Net Total
		(in millions)
Japanese Yen		$	—			$	19.7			$	19.7			$	—			$	32.6			$	32.6
Taiwan Dollar			(0.9	)			5.7				4.8				—				4.0				4.0
British Pound Sterling			—				11.7				11.7				—				6.9				6.9
Korean Won			—				4.4				4.4				—				5.8				5.8
Euro			(30.6	)			—				(30.6	)			(24.8	)			0.7				(24.1	)
Total		$	(31.5	)		$	41.5			$	10.0			$	(24.8	)		$	50.0			$	25.2

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

The following table summarizes the fair value of derivative instruments as of December 31, 2014 and 2013:

		Balance Sheet Location		December 31, 2014				December 31, 2013
				(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Other current liabilities		$	149			$	—
Foreign exchange contracts		Other current assets			—				153
Total derivatives				$	149			$	153

Schedule of Effect of Derivative Instruments on Statement of Operations Recognized

The following table summarizes the effect of derivative instruments in the statement of operations recognized for the years ended December 31, 2014, 2013 and 2012. The table does not reflect the corresponding losses from the remeasurement of the monetary assets and liabilities denominated in foreign currencies. For the years ended December 31, 2014, 2013, and 2012, losses from the remeasurement of the monetary assets and liabilities denominated in foreign currencies were $0.9 million, $6.9 million, and $4.5 million, respectively.

		Location of Losses (Gains) Recognized in Statement of Operations		December 31, 2014				December 31, 2013				December 31, 2012
				(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange contracts		Other (income) expense, net		$	237			$	(5,933	)		$	(3,974	)
Total derivatives				$	237			$	(5,933	)		$	(3,974	)

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