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Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

Disaggregated Revenue by Primary Geographical Market, Major Product Line and Timing of Revenue Recognition

The following table provides information about disaggregated revenue by primary geographical market, major product line and timing of revenue recognition.

		For the Year Ended December 31, 2018
		Semiconductor Test								System Test												Industrial Automation												Wireless Test				Corporate and Other				Consolidated
		System on a Chip				Memory				Defense/ Aerospace				Storage Test				Production Board Test				Universal Robots				Mobile Industrial Robots				Energid
																						(in thousands)
Americas
Point in time		$	43,398			$	14,579			$	59,246			$	767			$	9,082			$	68,289			$	7,326			$	543			$	17,730			$	(1,205	)		$	219,755
Over time			35,100				2,774				24,577				—				3,091				649				—				997				1,436				—				68,624
Europe, Middle East and Africa
Point in time			50,988				9,726				3,056				—				16,733				105,776				10,839				—				3,821				—				200,939
Over time			21,584				1,125				2,124				—				6,467				1,000				—				1,591				1,147				—				35,038
Asia Pacific
Point in time			916,107				235,061				2,769				58,004				17,761				57,830				5,950				10				100,985				—				1,394,477
Over time			140,887				10,203				965				7,877				3,221				551				—				101				6,127				—				169,932
Lease revenue			10,885				—				—				—				392				—				—				—				760				—				12,037
Total		$	1,218,949			$	273,468			$	92,737			$	66,648			$	56,747			$	234,095			$	24,115			$	3,242			$	132,006			$	(1,205	)		$	2,100,802

Information about Contract Liabilities

The following table provides information about contract liabilities. Teradyne does not have material contract assets on the balance sheet.

		December 31, 2018				January 1, 2018 (as adjusted)				Increase
		(in thousands)
Deferred revenue and customer advances		$	77,711			$	76,638			$	1,073
Long-term deferred revenue and customer advances			32,750				20,848				11,902

Deferred Revenue and Customer Advances

As of December 31, 2018 and 2017, deferred revenue and customer advances consisted of the following and are included in the short and long-term deferred revenue and customer advances:

		2018				2017
		(in thousands)
Maintenance and training		$	58,362			$	57,256
Extended warranty			27,422				24,438
Customer advances, undelivered elements and other			24,677				32,047
Total deferred revenue and customer advances		$	110,461			$	113,741

Other Accrued Liabilities

The balance below is included in other accrued liabilities:

		Amount
		(in thousands)
Balance at December 31, 2015		$	6,925
Accruals for warranties issued during the period			14,291
Accruals related to pre-existing warranties			(1,354	)
Settlements made during the period			(12,659	)
Balance at December 31, 2016			7,203
Accruals for warranties issued during the period			14,223
Accruals related to pre-existing warranties			(379	)
Settlements made during the period			(12,847	)
Balance at December 31, 2017			8,200
Acquisition			41
Accruals for warranties issued during the period			13,045
Accruals related to pre-existing warranties			921
Settlements made during the period			(14,298	)
Balance at December 31, 2018		$	7,909

Extended Product Warranty of Short and Long-Term Deferred Revenue and Customer Advances

The balance below is included in short and long-term deferred revenue and customer advances:

		Amount
		(in thousands)
Balance at December 31, 2015		$	30,024
Deferral of new extended warranty revenue			19,909
Recognition of extended warranty deferred revenue			(21,733	)
Balance at December 31, 2016			28,200
Deferral of new extended warranty revenue			20,513
Recognition of extended warranty deferred revenue			(24,275	)
Balance at December 31, 2017			24,438
Deferral of new extended warranty revenue			23,753
Recognition of extended warranty deferred revenue			(20,769	)
Balance at December 31, 2018		$	27,422

Schedule of Prepayments and Other Current Assets

Prepayments consist of the following and are included in prepayments and other current assets on the balance sheet:

		2018				2017
		(in thousands)
Contract manufacturer and supplier prepayments		$	131,642			$	82,503
Prepaid taxes			9,646				5,039
Prepaid maintenance and other services			8,487				8,189
Other prepayments			12,744				12,386
Total prepayments		$	162,519			$	108,117

Useful Lives of Assets

Teradyne provides for depreciation of its assets principally on the straight-line method with the cost of the assets being charged to expense over their useful lives as follows:

Buildings		40 years
Building improvements		5 to 10 years
Leasehold improvements		Lesser of lease term or 10 years
Furniture and fixtures		10 years
Test systems manufactured internally		6 years
Machinery and equipment		3 to 5 years
Software		3 to 5 years

ASU 2014-09

Summarize Impact of ASC 606 to Consolidated Financial Statements

The following tables summarize the impact of ASC 606 to Teradyne’s consolidated financial statements. Differences are the result of timing differences between the recognition of revenue under ASC 606 and ASC 605 primarily with respect to software transactions deferred due to lack of vendor specific objective evidence of price under ASC 605 and Teradyne’s assessment of acceptance under ASC 606. Under Legacy GAAP, Teradyne did not recognize revenue prior to acceptance if payment, title, or risk of loss was tied to acceptance. Under ASC 606, Teradyne recognizes revenue prior to receipt of acceptance if acceptance is deemed a formality.

Condensed Consolidated Balance Sheet:

		December 31, 2018
		As Reported				Adjustments to Recognize under Legacy GAAP				Legacy GAAP
		(in thousands, except per share amount)
Assets
Accounts receivable, less allowance for doubtful accounts		$	291,267			$	(37,348	)		$	253,919
Inventories, net			153,541				10,759				164,300
Deferred tax assets			70,848				(3,874	)			66,974
Liabilities
Deferred revenue and customer advances		$	77,711			$	(4,118	)		$	73,593
Income taxes payable			36,185				(4,495	)			31,690
Long-term deferred revenue and customer advances			32,750				(10,303	)			22,447
Shareholders’ equity
Accumulated deficit		$	(158,191	)		$	(11,547	)		$	(169,738	)

Condensed Consolidated Statement of Operation:

		For the Year Ended December 31, 2018
		As Reported				Adjustments to Recognize under Legacy GAAP				Legacy GAAP
		(in thousands, except per share amount)
Total revenues		$	2,100,802			$	(39,184	)		$	2,061,618
Total cost of revenues			880,408				(10,760	)			869,648
Income tax provision			16,022				(4,197	)			11,825
Net income			451,779				(24,227	)			427,552
Net income per common share:
Basic		$	2.41			$	(0.13	)		$	2.28
Diluted		$	2.35			$	(0.13	)		$	2.22

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