Operating Segment, Geographic and Significant Customer Information

12 Months Ended

Dec. 31, 2018

Operating Segment, Geographic and Significant Customer Information

R. OPERATING SEGMENT, GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION

Teradyne has four reportable segments (Semiconductor Test, System Test, Industrial Automation and Wireless Test). Each of the Semiconductor Test, System Test, and Wireless Test segments is also an individual operating segment. The Industrial Automation reportable segment consists of operating segments with discrete financial information, which have been combined into one reportable segment as they share similar economic characteristics, types of products, production processes, distribution channels, and currency risks. The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test products and services. The System Test segment includes operations related to the design, manufacturing and marketing of products and services for defense/aerospace instrumentation test, storage test and circuit-board test. The Industrial Automation segment includes operations related to the design, manufacturing and marketing of collaborative robotic arms, autonomous mobile robots and advanced robotic control software. The Wireless Test segment includes operations related to the design, manufacturing and marketing of wireless test products and services.

Teradyne evaluates performance based on several factors, of which the primary financial measure is business segment income (loss) before income taxes. The accounting policies of the business segments are the same as those described in Note B: “Accounting Policies.”

Segment information for the years ended December 31, 2018, 2017, and 2016 is as follows:

	Semiconductor Test		System Test		Industrial Automation			Wireless Test			Corporate And Other			Consolidated
	(in thousands)
2018
Revenues	$	1,492,417	$	216,132	$	261,452		$	132,006		$	(1,205	)	$	2,100,802
Income (loss) before taxes (1)(2)		397,645		48,857		7,670			29,052			(15,423	)		467,801
Total assets (3)		669,452		88,098		607,502			77,570			1,263,984			2,706,606
Property additions		94,496		3,469		11,188			5,226			—			114,379
Depreciation and amortization expense		58,095		6,430		36,755			5,328			6,616			113,224
2017
Revenues	$	1,662,549	$	192,135	$	170,056		$	111,866		$	—		$	2,136,606
Income (loss) before taxes (1)(2)		491,361		10,305		8,763			17,350			(3,368	)		524,411
Total assets (3)		597,480		97,018		368,037			59,912			1,987,098			3,109,545
Property additions		87,920		5,976		7,044			4,435			—			105,375
Depreciation and amortization expense		58,901		6,646		25,711			5,392			11,425			108,075
2016
Revenues	$	1,368,169	$	189,846	$	99,031		$	96,204		$	—		$	1,753,250
Income (loss) before taxes (1)(2)		311,939		28,916		(16,783	)		(371,409	)		(7,723	)		(55,060	)
Total assets (3)		557,546		110,361		317,635			62,366			1,714,585			2,762,493
Property additions		70,543		3,788		6,755			4,186			—			85,272
Depreciation and amortization expense		58,087		6,551		26,869			25,921			2,581			120,009

(1)

Included in Corporate and Other are: contingent consideration adjustments, pension and postretirement plans actuarial gains (losses), severance charges, impairment of fixed assets and expenses related to the Japan earthquake, property insurance recovery, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations and acquisition related charges.

(2)	Included in income (loss) before taxes are charges and credits related to restructuring and other, and inventory charges. In 2016, loss before income taxes in Wireless Test also included charges related to goodwill and acquired intangible assets impairment.

(3)	Total assets are attributable to each segment. Corporate assets consist of cash and cash equivalents, marketable securities and certain other assets.

Included in the Semiconductor Test segment are charges in the following accounts:

	For the Year Ended December 31,
	2018		2017		2016
	(in thousands)
Restructuring and other—employee severance	$	8,429	$	1,779	$	2,860
Cost of revenues—inventory charge		6,822		4,606		9,656
Restructuring and other—impairment of fixed assets		—		1,124		—

Included in the System Test segment are charges in the following accounts:

	For the Year Ended December 31,
	2018		2017		2016
	(in thousands)
Cost of revenues—inventory charge	$	1,175	$	1,918	$	630

Included in the Industrial Automation segment are charges in the following accounts:

	For the Year Ended December 31,
	2018		2017		2016
	(in thousands)
Restructuring and other—acquisition related expenses and compensation	$	1,163	$	—	$	—
Cost of revenues—inventory charge		680		—		—
Restructuring and other—employee severance		—		1,414		585

Included in the Wireless Test segment are charges in the following accounts:

	For the Year Ended December 31,
	2018		2017		2016
	(in thousands)
Cost of revenues—inventory charge	$	2,565	$	2,190	$	7,207
Restructuring and other—lease impairment		—		972		—
Restructuring and other—employee severance		—		—		2,650
Goodwill impairment charge		—		—		254,946
Intangible assets impairment charge		—		—		83,339

Included in Corporate and Other are charges and credits in the following accounts:

	For the Year Ended December 31,
	2018			2017			2016
	(in thousands)
Restructuring and other—MiR contingent consideration adjustment	$	17,666		$	—		$	—
Restructuring and other—Universal Robots contingent consideration adjustment		(16,679	)		7,820			15,346
Restructuring and other—acquisition related expenses		3,422			—			—
Restructuring and other		872			—			—
Restructuring and other—expense related to Japan earthquake and impairment of fixed assets		—			755			5,051
Restructuring and other—property insurance recovery		—			(5,064	)		(5,051	)

Information as to Teradyne’s revenues by country is as follows:

	2018		2017		2016
	(in thousands)
Revenues from customers (1):
Taiwan	$	516,322	$	687,031	$	653,076
China		348,942		260,451		174,876
United States		282,869		252,516		221,948
Europe		223,207		163,715		117,671
Korea		163,224		206,819		147,882
Japan		158,281		169,093		135,978
Malaysia		122,797		124,048		103,472
Singapore		108,618		101,085		73,172
Philippines		77,996		105,850		54,705
Thailand		59,184		29,566		43,097
Rest of the World		39,362		36,432		27,373
	$	2,100,802	$	2,136,606	$	1,753,250

(1)	Revenues attributable to a country are based on location of customer site.

In 2018, no single customer accounted for more than 10% of total consolidated revenue. In 2017 and 2016, one customer of Teradyne’s Semiconductor Test segment accounted for 13 % and 12%, respectively, of total consolidated revenues. In 2016, a different customer of Teradyne’s Semiconductor Test segment accounted for 12% of total consolidated revenues. Teradyne estimates

consolidated revenues

driven by a single OEM customer, combining direct sales to that customer with sales to the customer’s outsourced semiconductor assembly and test providers (“OSATs”), accounted for approximately 13%, 22%, and 26% of Teradyne’s consolidated revenues in 2018, 2017, and 2016, respectively.

Long-lived assets by geographic area:

	United States		Foreign(1)		Total
	(in thousands)
December 31, 2018	$	209,368	$	70,453	$	279,821
December 31, 2017	$	198,855	$	69,592	$	268,447

(1)	As of December 31, 2018 and 2017, long-lived assets attributable to Singapore were $19.4 million and $23.6 million, respectively.