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Income Taxes | 3 Months Ended
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Apr. 05, 2015
Income Taxes | P. Income Taxes For the three months ended April 5, 2015, Teradyne had income before income taxes of $42.4 million and recognized income tax expense of $9.7 million resulting in an effective tax rate of 22.7%. The tax rate was lower than the expected federal statutory rate of 35% primarily because of the favorable effect of statutory rates applicable to income earned outside the United States which reduced the projected annual effective tax rate below the expected statutory rate of 35%. The tax rate was reduced further by a $0.5 million discrete tax benefit related to disqualifying dispositions of incentive stock options and employee stock purchase plan shares and a $1.2 million discrete tax benefit related to non-taxable foreign exchange gains. For the three months ended March 30, 2014, Teradyne had a loss before income taxes of $1.9 million and recognized an income tax benefit of $2.8 million resulting in an effective tax rate of 149.6%. The tax rate for the three months ended March 30, 2014 was higher than the expected statutory rate of 35% primarily as a result of a $1.0 million discrete tax benefit related to disqualifying dispositions of incentive stock options and employee stock purchase plan shares and a $1.0 million discrete tax benefit related to decreases in uncertain tax positions resulting from changes in positions and the expiration of statutes. On a quarterly basis, Teradyne evaluates the realizability of the deferred tax assets by jurisdiction and assesses the need for a valuation allowance. At April 5, 2015, Teradyne believes that it will ultimately realize the deferred tax assets recorded on the condensed consolidated balance sheet. However, should Teradyne believe that it is more likely than not that the deferred tax assets would not be realized, the tax provision would increase in the period in which Teradyne determined that the realizability was not likely. Teradyne considers the probability of future taxable income and historical profitability, among other factors, in assessing the realizability of the deferred tax assets. As of April 5, 2015 and December 31, 2014, Teradyne had $30.3 million and $30.4 million, respectively, of reserves for uncertain tax positions. The $0.1 million net decrease in reserves for uncertain tax positions relates to the expiration of statutes of limitations. As of April 5, 2015, Teradyne anticipated the liability for uncertain tax positions could decrease by approximately $0.7 million over the next twelve months, primarily as a result of the expiration of statutes of limitations and settlements with tax authorities. The potential decrease is primarily related to transfer pricing exposures and research credits. Teradyne recognizes interest and penalties related to income tax matters in income tax expense. As of April 5, 2015 and December 31, 2014, $0.6 million of interest and penalties was included in the reserve for uncertain tax positions. Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings due to the tax holiday for the three months ended April 5, 2015 was $1.1 million. The impact of the tax holiday on earnings per share was not material. For the three months ended March 30, 2014, there was no incremental benefit from the tax holiday. The tax holiday is currently expected to expire on December 31, 2015. Teradyne is in discussion with the Singapore Economic Development Board with respect to extension of the tax holiday for periods after December 31, 2015.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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