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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of (Loss) Income Before Income Taxes and (Benefit) Provision for Income Taxes from Operations

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

		2016				2015				2014
		(in thousands)
(Loss) income before income taxes:
U.S.		$	(341,018	)		$	56,270			$	(151,889	)
Non-U.S.			285,958				196,854				247,265
		$	(55,060	)		$	253,124			$	95,376
(Benefit) provision for income taxes:
Current:
U.S. Federal		$	7,750			$	16,635			$	5,197
Non-U.S.			41,579				35,707				28,157
State			1,968				1,429				678
			51,297				53,771				34,032
Deferred:
U.S. Federal			(51,482	)			(574	)			(20,449	)
Non-U.S.			(9,240	)			(7,761	)			(404	)
State			(2,214	)			1,211				925
			(62,936	)			(7,124	)			(19,928	)
Total (benefit) provision for income taxes:		$	(11,639	)		$	46,647			$	14,104

Reconciliation of Effective Tax Rate

A reconciliation of the effective tax rate for the years 2016, 2015 and 2014 follows:

		2016				2015				2014
U.S. statutory federal tax rate			35.0	%			35.0	%			35.0	%
Foreign taxes			127.1				(16.5	)			(58.1	)
U.S. research and development credit			15.8				(3.0	)			(7.9	)
Domestic production activities deduction			2.3				(1.0	)			(0.5	)
State income taxes, net of federal tax benefit			2.3				0.4				(0.1	)
Equity compensation			(2.7	)			0.6				(1.8	)
Uncertain tax positions			(2.6	)			2.2				7.9
Goodwill impairment			(162.1	)			—				36.3
Other, net			6.0				0.7				4.0
			21.1	%			18.4	%			14.8	%

Deferred Tax Assets (Liabilities)

Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2016 and 2015 were as follows:

		2016				2015
		(in thousands)
Deferred tax assets:
Tax credits		$	57,313			$	44,684
Pension liabilities			31,581				31,742
Inventory valuations			31,227				29,445
Accruals			27,247				26,563
Deferred revenue			12,806				10,232
Equity compensation			9,922				9,674
Vacation accrual			7,874				7,354
Net operating loss carryforwards			5,244				7,989
Other			630				502
Gross deferred tax assets			183,844				168,185
Less: valuation allowance			(48,369	)			(43,039	)
Total deferred tax assets		$	135,475			$	125,146
Deferred tax liabilities:
Intangible assets		$	(22,887	)		$	(68,433	)
Depreciation			(17,117	)			(20,541	)
Marketable securities			(210	)			(458	)
Total deferred tax liabilities		$	(40,214	)		$	(89,432	)
Net deferred assets		$	95,261			$	35,714

Operating Loss Carryforwards

At December 31, 2016, Teradyne had operating loss carryforwards that expire in the following years:

		State Operating Loss Carryforwards				Foreign Operating  Loss Carryforwards
		(in thousands)
2017		$	10,245			$	—
2018			8,562				—
2019			983				—
2020			1,248				—
2021			3,549				—
2022-2026			18,044				—
2027-2031			38,498				—
Beyond 2031			5,464				129
Non-expiring			—				6,400
Total		$	86,593			$	6,529

Unrecognized Tax Benefits

Teradyne’s gross unrecognized tax benefits for the years ended December 31, 2016, 2015 and 2014 were as follows:

		2016				2015				2014
		(in thousands)
Beginning balance as of January 1		$	36,792			$	30,418			$	21,203
Additions:
Tax positions for current year			9,766				6,626				8,414
Tax positions for prior years			187				792				3,781
Reductions:
Expiration of statutes			(3,532	)			—				—
Settlements with tax authorities			(2,295	)			(336	)			(500	)
Tax positions for prior years			(1,960	)			(708	)			(2,480	)
Ending balance as of December 31		$	38,958			$	36,792			$	30,418

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