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v3.20.4

Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2020
Schedule of Income (Loss) Before Income Taxes and Provision (Benefit) for Income Taxes from Operations | The components of income (loss) before income taxes and the provision (benefit) for income taxes as shown in the consolidated statements of operations were as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands) |
Income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 312,153 |  |  | $ | 192,442 |  |  | $ | 189,691 |
Non-U.S. |  |  | 588,862 |  |  |  | 333,330 |  |  |  | 278,110 |
|  | $ | 901,015 |  |  | $ | 525,772 |  |  | $ | 467,801 |
Provision (benefit) for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 58,678 |  |  | $ | 19,297 |  |  | $ | (59,122 | )
Non-U.S. |  |  | 75,193 |  |  |  | 52,810 |  |  |  | 45,083 |
State |  |  | (1,315 | ) |  |  | (4,347 | ) |  |  | 1,721 |
|  |  | 132,556 |  |  |  | 67,760 |  |  |  | (12,318 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  |  | (12,604 | ) |  |  | (4,522 | ) |  |  | 29,252 |
Non-U.S. |  |  | (5,127 | ) |  |  | (8,007 | ) |  |  | (1,243 | )
State |  |  | 2,043 |  |  |  | 3,073 |  |  |  | 331 |
|  |  | (15,688 | ) |  |  | (9,456 | ) |  |  | 28,340 |
Total provision for income taxes: |  | $ | 116,868 |  |  | $ | 58,304 |  |  | $ | 16,022 |
Reconciliation of Effective Tax Rate | A reconciliation of the effective tax rate for the years 2020, 2019 and 2018 is as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
U.S. statutory federal tax rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
U.S. global intangible low-taxed income |  |  | 5.7 |  |  |  | 6.2 |  |  |  | 0.3 |
State income taxes, net of federal tax benefit |  |  | 0.3 |  |  |  | 0.5 |  |  |  | 0.1 |
Foreign taxes |  |  | (5.6 | ) |  |  | (4.0 | ) |  |  | (2.0 | )
Foreign tax credits |  |  | (4.8 | ) |  |  | (5.9 | ) |  |  | (2.2 | )
U.S. foreign derived intangible income |  |  | (2.2 | ) |  |  | (2.6 | ) |  |  | (1.8 | )
U.S. research and development credit |  |  | (1.3 | ) |  |  | (1.8 | ) |  |  | (2.2 | )
Equity compensation |  |  | (0.6 | ) |  |  | (0.7 | ) |  |  | (1.2 | )
Uncertain tax positions |  |  | (0.1 | ) |  |  | (4.3 | ) |  |  | 1.0 |
U.S. transition tax |  |  | — |  |  |  | 1.9 |  |  |  | (10.5 | )
Impact of rate change on deferred taxes |  |  | — |  |  |  | — |  |  |  | 0.3 |
Other, net |  |  | 0.6 |  |  |  | 0.8 |  |  |  | 0.6 |
|  |  | 13.0 | % |  |  | 11.1 | % |  |  | 3.4 | %
Deferred Tax Assets (Liabilities) | Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2020 and 2019 were as follows:
|  | 2020 |  |  | 2019 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Tax credits |  | $ | 87,595 |  |  | $ | 79,480 |
Accruals |  |  | 33,156 |  |  |  | 25,424 |
Pension liabilities |  |  | 28,348 |  |  |  | 24,459 |
Inventory valuations |  |  | 18,427 |  |  |  | 18,572 |
Lease liability |  |  | 12,627 |  |  |  | 13,093 |
Deferred revenue |  |  | 9,235 |  |  |  | 7,622 |
Equity compensation |  |  | 6,543 |  |  |  | 7,042 |
Vacation accrual |  |  | 5,890 |  |  |  | 4,768 |
Investment impairment |  |  | 3,292 |  |  |  | 3,292 |
Net operating loss carryforwards |  |  | 1,823 |  |  |  | 2,705 |
Other |  |  | 626 |  |  |  | 187 |
Gross deferred tax assets |  |  | 207,562 |  |  |  | 186,644 |
Less: valuation allowance |  |  | (84,962 | ) |  |  | (77,177 | )
Total deferred tax assets |  | $ | 122,600 |  |  | $ | 109,467 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  | $ | (14,525 | ) |  | $ | (18,238 | )
Intangible assets |  |  | (12,726 | ) |  |  | (16,705 | )
Right of use assets |  |  | (10,688 | ) |  |  | (11,197 | )
Contingent consideration |  |  | (3,515 | ) |  |  | — |
Marketable securities |  |  | (3,344 | ) |  |  | (1,601 | )
Other |  |  | (710 | ) |  |  | (611 | )
Total deferred tax liabilities |  | $ | (45,508 | ) |  | $ | (48,352 | )
Net deferred assets |  | $ | 77,092 |  |  | $ | 61,115 |
Operating Loss Carryforwards | At December 31, 2020, Teradyne had operating loss carryforwards that expire in the following years:
|  | State Operating Loss Carryforwards |  |  | Foreign Operating Loss Carryforwards |
|  | (in thousands) |
2021 |  | $ | 333 |  |  | $ | — |
2022 |  |  | 2,203 |  |  |  | — |
2023 |  |  | 3,368 |  |  |  | — |
2024 |  |  | 812 |  |  |  | — |
2025 |  |  | 191 |  |  |  | — |
2026-2030 |  |  | 7,452 |  |  |  | — |
2031-2035 |  |  | 2,147 |  |  |  | 68 |
Beyond 2035 |  |  | 73 |  |  |  | — |
Non-expiring |  |  | 870 |  |  |  | 3,923 |
Total |  | $ | 17,449 |  |  | $ | 3,991 |
Unrecognized Tax Benefits | Teradyne’s gross unrecognized tax benefits for the years ended December 31, 2020, 2019 and 2018 were as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands) |
Beginning balance as of January 1 |  | $ | 21,180 |  |  | $ | 43,395 |  |  | $ | 36,263 |
Additions: |  |  |  |  |  |  |  |  |  |  |  |
Tax positions for current year |  |  | 1,082 |  |  |  | 1,322 |  |  |  | 4,716 |
Tax positions for prior years |  |  | 66 |  |  |  | 8,043 |  |  |  | 2,626 |
Reductions: |  |  |  |  |  |  |  |  |  |  |  |
Tax positions for prior years |  |  | (2,989 | ) |  |  | (31,397 | ) |  |  | (153 | )
Expiration of statutes |  |  | (1,436 | ) |  |  | (183 | ) |  |  | (57 | )
Ending balance as of December 31 |  | $ | 17,903 |  |  | $ | 21,180 |  |  | $ | 43,395 |

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