O. RETIREMENT PLANS

ASC 715, “Compensation—Retirement Benefits” requires an employer with defined benefit plan or other postretirement benefit plan to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plan. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation.

Defined Benefit Pension Plans

Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain non-U.S. subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to these plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of the U.S. qualified pension plan consist primarily of fixed income and equity securities. In addition, Teradyne has unfunded qualified foreign plans as well as an unfunded supplemental executive defined benefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (“IRC”).

In the nine months ended October 1, 2017, Teradyne contributed $1.9 million to the U.S. qualified pension plan, $1.9 million to the U.S. supplemental executive defined benefit pension plan and $0.6 million to certain qualified pension plans for non-U.S. subsidiaries.

In the nine months ended October 2, 2016, Teradyne contributed $1.9 million to the U.S. qualified pension plan, $1.9 million to the U.S. supplemental executive defined benefit pension plan and $1.5 million to certain qualified pension plans for non-U.S. subsidiaries.

For the three and nine months ended October 1, 2017 and October 2, 2016, Teradyne’s net periodic pension cost (income) was comprised of the following:


	For the Three Months Ended
	October 1, 2017						October 2, 2016
	United States			Foreign			United States			Foreign
	(in thousands)
Service cost	$	560		$	215		$	575		$	208
Interest cost		3,288			186			3,407			209
Expected return on plan assets		(3,002	)		(6	)		(3,458	)		(6	)
Amortization of prior service cost		18			—			24			—
Net actuarial loss		—			—			—			662

Total	$	864		$	395		$	548		$	1,073


	For the Nine Months Ended
	October 1, 2017						October 2, 2016
	United States			Foreign			United States			Foreign
	(in thousands)
Service cost	$	1,679		$	606		$	1,726		$	614
Interest cost		9,863			527			10,222			614
Expected return on plan assets		(9,006	)		(19	)		(10,373	)		(17	)
Amortization of prior service cost		53			—			72			—
Net Actuarial (gain) loss		(2,732	)		243			(1,848	)		662
Settlement		—			—			—			(184	)

Total	$	(143	)	$	1,357		$	(201	)	$	1,689

Postretirement Benefit Plan

In addition to receiving pension benefits, Teradyne employees in the United States who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits, and the existing benefit obligation relates primarily to those employees.

For the three and nine months ended October 1, 2017 and October 2, 2016, Teradyne’s net periodic postretirement income was comprised of the following:


	For the Three Months Ended						For the Nine Months Ended
	October 1, 2017			October 2, 2016			October 1, 2017			October 2, 2016
	(in thousands)
Service cost	$	8		$	9		$	25		$	28
Interest cost		50			54			151			163
Amortization of prior service benefit		(124	)		(151	)		(372	)		(455	)
Actuarial gain		—			—			(15	)		(15	)

Total	$	(66	)	$	(88	)	$	(211	)	$	(279	)