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Income Taxes (Tables)
 12 Months Ended
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