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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income (loss) Before Income Taxes

The components of income (loss) before income taxes and the provision for income taxes as shown in the consolidated statements of operations were as follows:

		2015				2014				2013
		(in thousands)
Income (loss) before income taxes:
U.S.		$	56,270			$	(151,889	)		$	79,229
Non-U.S.			196,854				247,265				122,693
		$	253,124			$	95,376			$	201,922
Provision (benefit) for income taxes:
Current:
U.S. Federal		$	16,635			$	5,197			$	18,051
Non-U.S.			35,707				28,157				22,509
State			1,429				678				(269	)
			53,771				34,032				40,291
Deferred:
U.S. Federal			(574	)			(20,449	)			(1,692	)
Non-U.S.			(7,761	)			(404	)			(1,386	)
State			1,211				925				(238	)
			(7,124	)			(19,928	)			(3,316	)
Total provision for income taxes:		$	46,647			$	14,104			$	36,975

Reconciliation of Effective Tax Rate

A reconciliation of the effective tax rate for the years 2015, 2014 and 2013 follows:

		2015				2014				2013
U.S. statutory federal tax rate			35.0	%			35.0	%			35.0	%
Foreign taxes			(16.5	)			(58.1	)			(11.4	)
Goodwill impairment			—				36.3				—
U.S. research and development credit			(3.0	)			(7.9	)			(7.2	)
Uncertain tax positions			2.1				7.9				4.2
Valuation allowance			—				—				0.4
State income taxes, net of federal tax benefit			0.4				(0.1	)			0.1
Other, net			0.4				1.7				(2.8	)
			18.4	%			14.8	%			18.3	%

Deferred Tax Assets (Liabilities)

Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2015 and 2014 were as follows:

		2015				2014
		(in thousands)
Deferred tax assets:
Tax credits		$	44,684			$	50,554
Pension liabilities			31,742				30,036
Inventory valuations			29,445				29,105
Accruals			26,563				23,323
Deferred revenue			10,232				10,242
Equity compensation			9,674				11,131
Net operating loss carryforwards			7,989				10,989
Vacation accrual			7,354				7,425
Other			502				1,725
Gross deferred tax assets			168,185				174,530
Less: valuation allowance			(43,039	)			(41,737	)
Total deferred tax assets		$	125,146			$	132,793
Deferred tax liabilities:
Intangible assets		$	(68,433	)		$	(64,871	)
Depreciation			(20,541	)			(24,905	)
Marketable securities			(458	)			(1,599	)
Total deferred tax liabilities		$	(89,432	)		$	(91,375	)
Net deferred assets		$	35,714			$	41,418

Operating Loss Carryforwards

At December 31, 2015, Teradyne had operating loss carryforwards that expire in the following years:

		U.S. Federal Operating Loss Carryforwards				State Operating Loss Carryforwards				Foreign Operating Loss Carryforwards
		(in thousands)
2016		$	—			$	925			$	—
2017			—				10,649				—
2018			—				8,563				—
2019			—				1,203				—
2020			—				269				—
2021-2025			4,870				35,777				—
2026-2030			—				39,411				—
Beyond 2030			—				6,359				143
Non-expiring			—				—				8,202
Total		$	4,870			$	103,156			$	8,345

Unrecognized Tax Benefits

Teradyne’s gross unrecognized tax benefits for the years ended December 31, 2015, 2014 and 2013 were as follows:

		2015				2014				2013
		(in thousands)
Beginning balance, as of January 1		$	30,418			$	21,203			$	18,666
Additions:
Tax positions for current year			6,626				8,414				4,586
Tax positions for prior years			792				3,781				2,112
Reductions:
Tax positions for prior years			(708	)			(2,480	)			(4,161	)
Settlements with tax authorities			(336	)			(500	)			—
Ending balance as of December 31		$	36,792			$	30,418			$	21,203

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- Definition

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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