XML 29 R16.htm IDEA: XBRL DOCUMENT
v3.21.2

Financial Instruments | 9 Months Ended
--- | ---
Oct. 03, 2021
Financial Instruments | G. FINANCIAL INSTRUMENTS Cash Equivalents Teradyne considers all highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents. Marketable Securities Teradyne’s available-for-sale debt securities are classified as Level 2 and equity and debt mutual funds are classified as Level 1. Contingent consideration is classified as Level 3. The vast majority of Level 2 securities are fixed income securities priced by third party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities. During the three and nine months ended October 3, 2021 and September 27, 2020, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments. Realized gains recorded in the three and nine months ended October 3, 2021 were $0.5 million and $2.6 million, respectively. Realized gains recorded in the three and nine months ended September 27, 2020 were $1.1 million and $4.1 million, respectively. No realized losses were recorded in the three and nine months ended October 3, 2021. Realized losses recorded in the three and nine months ended September 27, 2020 were $0.1 million and $0.3 million, respectively. Realized gains and losses are included in other (income) expense, net. Unrealized gains on equity securities recorded in the nine months ended October 3, 2021 were $3.3 million. Unrealized losses on equity securities recorded in the three and nine months ended October 3, 2021 were $0.4 million and $1.1 million, respectively. Unrealized gains on equity securities recorded in the three and nine months ended September 27, 2020 were $2.0 million and $5.7 million, respectively. Unrealized losses on equity securities recorded in the nine months ended September 27, 2020 were $6.0 million. Unrealized gains and losses on equity securities are included in other (income) expense, net. Unrealized gains and losses on available-for-sale debt securities are included in accumulated other comprehensive income. The cost of securities sold is based on average cost. The following table sets forth by fair value hierarchy Teradyne’s financial assets and liabilities that were measured at fair value on a recurring basis as of October 3, 2021 and December 31, 2020.
|  | October 3, 2021 |
|  | Quoted Prices in Active Markets for Identical Instruments (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 577,752 |  |  | $ | — |  |  | $ | — |  |  | $ | 577,752 |
Cash equivalents |  |  | 176,703 |  |  |  | 324,999 |  |  |  | — |  |  |  | 501,702 |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial paper |  |  | — |  |  |  | 179,629 |  |  |  | — |  |  |  | 179,629 |
U.S. Treasury securities |  |  | — |  |  |  | 80,519 |  |  |  | — |  |  |  | 80,519 |
Corporate debt securities |  |  | — |  |  |  | 58,648 |  |  |  | — |  |  |  | 58,648 |
Debt mutual funds |  |  | 8,937 |  |  |  | — |  |  |  | — |  |  |  | 8,937 |
U.S. government agency securities |  |  | — |  |  |  | 4,616 |  |  |  | — |  |  |  | 4,616 |
Certificates of deposit and time deposits |  |  | — |  |  |  | 1,346 |  |  |  | — |  |  |  | 1,346 |
Non-U.S. government securities |  |  | — |  |  |  | 590 |  |  |  | — |  |  |  | 590 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mutual funds |  |  | 35,776 |  |  |  | — |  |  |  | — |  |  |  | 35,776 |
|  | $ | 799,168 |  |  | $ | 650,347 |  |  | $ | — |  |  | $ | 1,449,515 |
Derivative assets |  |  | — |  |  |  | 93 |  |  |  | — |  |  |  | 93 |
Total |  | $ | 799,168 |  |  | $ | 650,440 |  |  | $ | — |  |  | $ | 1,449,608 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities |  |  | — |  |  |  | 433 |  |  |  | — |  |  |  | 433 |
Total |  | $ | — |  |  | $ | 433 |  |  | $ | — |  |  | $ | 433 |
Reported as follows: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Total |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 754,455 |  |  | $ | 324,999 |  |  | $ | — |  |  | $ | 1,079,454 |
Marketable securities |  |  | — |  |  |  | 233,397 |  |  |  | — |  |  |  | 233,397 |
Long-term marketable securities |  |  | 44,713 |  |  |  | 91,951 |  |  |  | — |  |  |  | 136,664 |
Prepayments and other current assets |  |  | — |  |  |  | 93 |  |  |  | — |  |  |  | 93 |
Total |  | $ | 799,168 |  |  | $ | 650,440 |  |  | $ | — |  |  | $ | 1,449,608 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other current liabilities |  | $ | — |  |  | $ | 433 |  |  | $ | — |  |  | $ | 433 |
Total |  | $ | — |  |  | $ | 433 |  |  | $ | — |  |  | $ | 433 |
|  | December 31, 2020 |
|  | Quoted Prices in Active Markets for Identical Instruments (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |  |  | Total |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash |  | $ | 443,166 |  |  | $ | — |  |  | $ | — |  |  | $ | 443,166 |
Cash equivalents |  |  | 347,768 |  |  |  | 123,187 |  |  |  | — |  |  |  | 470,955 |
Available-for-sale securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  | — |
U.S. Treasury securities |  |  | — |  |  |  | 258,304 |  |  |  | — |  |  |  | 258,304 |
Commercial paper |  |  | — |  |  |  | 254,413 |  |  |  | — |  |  |  | 254,413 |
Corporate debt securities |  |  | — |  |  |  | 83,615 |  |  |  | — |  |  |  | 83,615 |
Debt mutual funds |  |  | 8,565 |  |  |  | — |  |  |  | — |  |  |  | 8,565 |
U.S. government agency securities |  |  | — |  |  |  | 4,339 |  |  |  | — |  |  |  | 4,339 |
Certificates of deposit and time deposits |  |  | — |  |  |  | 979 |  |  |  | — |  |  |  | 979 |
Non-U.S. government securities |  |  | — |  |  |  | 625 |  |  |  | — |  |  |  | 625 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity mutual funds |  |  | 29,420 |  |  |  | — |  |  |  | — |  |  |  | 29,420 |
|  | $ | 828,919 |  |  | $ | 725,462 |  |  | $ | — |  |  | $ | 1,554,381 |
Derivative assets |  |  | — |  |  |  | 95 |  |  |  | — |  |  |  | 95 |
Total |  | $ | 828,919 |  |  | $ | 725,557 |  |  | $ | — |  |  | $ | 1,554,476 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  | $ | — |  |  | $ | — |  |  | $ | 7,227 |  |  | $ | 7,227 |
Derivative liabilities |  |  | — |  |  |  | 504 |  |  |  | — |  |  |  | 504 |
Total |  | $ | — |  |  | $ | 504 |  |  | $ | 7,227 |  |  | $ | 7,731 |
Reported as follows: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | (Level 1) |  |  | (Level 2) |  |  | (Level 3) |  |  | Total |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 790,934 |  |  | $ | 123,187 |  |  | $ | — |  |  | $ | 914,121 |
Marketable securities |  |  | — |  |  |  | 522,280 |  |  |  | — |  |  |  | 522,280 |
Long-term marketable securities |  |  | 37,985 |  |  |  | 79,995 |  |  |  | — |  |  |  | 117,980 |
Prepayments and other current assets |  |  | — |  |  |  | 95 |  |  |  | — |  |  |  | 95 |
Total |  | $ | 828,919 |  |  | $ | 725,557 |  |  | $ | — |  |  | $ | 1,554,476 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Other accrued liabilities |  | $ | — |  |  | $ | 504 |  |  | $ | — |  |  | $ | 504 |
Long-term contingent consideration |  |  | — |  |  |  | — |  |  |  | 7,227 |  |  |  | 7,227 |
Total |  | $ | — |  |  | $ | 504 |  |  | $ | 7,227 |  |  | $ | 7,731 |
Changes in the fair value of Level 3 contingent consideration for the three and nine months ended October 3, 2021 and September 27, 2020 were as follows:
|  | For the Three Months Ended |  |  | For the Nine Months Ended |
|  | October 3, 2021 |  |  | September 27, 2020 |  |  | October 3, 2021 |  |  | September 27, 2020 |
|  | (in thousands) |
Balance at beginning of period |  | $ | — |  |  | $ | 49,737 |  |  | $ | 7,227 |  |  | $ | 39,705 |
Fair value adjustment (a)(b)(c) |  |  | — |  |  |  | (27,206 | ) |  |  | (7,227 | ) |  |  | (7,967 | )
Foreign currency impact |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (355 | )
Payments (d) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (8,852 | )
Balance at end of period |  | $ | — |  |  | $ | 22,531 |  |  | $ | — |  |  | $ | 22,531 |
(a) | In the nine months ended October 3, 2021, the fair value of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide was reduced to zero, which resulted in a benefit of $7.2 million, primarily due to a decrease in forecasted revenues and earnings before interest and taxes. As of October 3, 2021, the maximum amount of contingent consideration that could be paid in connection with the acquisition of AutoGuide is $100.2 million. The remaining earn-out periods end on December 31, 2021 and December 31, 2022. The sellers of AutoGuide have filed an arbitration claim against Teradyne related to allegations of non-compliance with its earn-out obligations. The ultimate amount of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide may be affected by the outcome of the arbitration (see Note R: “Commitments and Contingencies”).
(b) | In the three and nine months ended September 27, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisition of AutoGuide decreased by $27.2 million and $4.4 million, respectively, due to lower forecasted revenues and earnings before interest and taxes.
(c) | In the nine months ended September 27, 2020, the fair value of contingent consideration for the earn-outs in connection with the acquisition of Mobile Industrial Robots (“MiR”) decreased by $3.5 million due to lower forecasted results.
(d) | In the nine months ended September 27, 2020, Teradyne paid $8.9 million of contingent consideration for the earn-out in connection with the acquisition of MiR.
The carrying amounts and fair values of Teradyne’s financial instruments at October 3, 2021 and December 31, 2020 were as follows:
|  | October 3, 2021 |  |  | December 31, 2020 |
|  | Carrying Value |  |  | Fair Value |  |  | Carrying Value |  |  | Fair Value |
|  | (in thousands) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 1,079,454 |  |  | $ | 1,079,454 |  |  | $ | 914,121 |  |  | $ | 914,121 |
Marketable securities |  |  | 370,061 |  |  |  | 370,061 |  |  |  | 640,260 |  |  |  | 640,260 |
Derivative assets |  |  | 93 |  |  |  | 93 |  |  |  | 95 |  |  |  | 95 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration |  |  | — |  |  |  | — |  |  |  | 7,227 |  |  |  | 7,227 |
Derivative liabilities |  |  | 433 |  |  |  | 433 |  |  |  | 504 |  |  |  | 504 |
Convertible debt (1) |  |  | 145,003 |  |  |  | 546,464 |  |  |  | 410,111 |  |  |  | 1,739,553 |
(1) | The carrying value represents the bifurcated debt component only, while the level 2 fair value is based on quoted market prices for the convertible note, which includes the equity conversion features.
The fair values of accounts receivable, net and accounts payable approximate the carrying value due to the short-term nature of these instruments. The following table summarizes the composition of available-for-sale marketable securities at October 3, 2021:
|  | October 3, 2021 |
|  | Available-for-Sale |  |  |  |
|  | Cost |  |  | Unrealized Gain |  |  | Unrealized (Loss) |  |  | Fair Market Value |  |  | Fair Market Value of Investments with Unrealized Losses |
|  | (in thousands) |
Commercial paper |  | $ | 179,624 |  |  | $ | 5 |  |  | $ | — |  |  | $ | 179,629 |  |  | $ | 20,799 |
U.S. Treasury securities |  |  | 80,370 |  |  |  | 636 |  |  |  | (487 | ) |  |  | 80,519 |  |  |  | 17,336 |
Corporate debt securities |  |  | 53,329 |  |  |  | 5,421 |  |  |  | (102 | ) |  |  | 58,648 |  |  |  | 22,010 |
Debt mutual funds |  |  | 8,872 |  |  |  | 65 |  |  |  | — |  |  |  | 8,937 |  |  |  | — |
U.S. government agency securities |  |  | 4,610 |  |  |  | 11 |  |  |  | (5 | ) |  |  | 4,616 |  |  |  | 3,302 |
Certificates of deposit and time deposits |  |  | 1,346 |  |  |  | — |  |  |  | — |  |  |  | 1,346 |  |  |  | — |
Non-U.S. government securities |  |  | 590 |  |  |  | — |  |  |  | — |  |  |  | 590 |  |  |  | — |
|  | $ | 328,741 |  |  | $ | 6,138 |  |  | $ | (594 | ) |  | $ | 334,285 |  |  | $ | 63,447 |
Reported as follows:
|  | Cost |  |  | Unrealized Gain |  |  | Unrealized (Loss) |  |  | Fair Market Value |  |  | Fair Market Value of Investments with Unrealized Losses |
|  | (in thousands) |
Marketable securities |  | $ | 233,327 |  |  | $ | 92 |  |  | $ | (22 | ) |  | $ | 233,397 |  |  | $ | 28,773 |
Long-term marketable securities |  |  | 95,414 |  |  |  | 6,046 |  |  |  | (572 | ) |  |  | 100,888 |  |  |  | 34,674 |
|  | $ | 328,741 |  |  | $ | 6,138 |  |  | $ | (594 | ) |  | $ | 334,285 |  |  | $ | 63,447 |
The following table summarizes the composition of available-for-sale marketable securities at December 31, 2020:
|  | December 31, 2020 |
|  | Available-for-Sale |  |  |  |
|  | Cost |  |  | Unrealized Gain |  |  | Unrealized (Loss) |  |  | Fair Market Value |  |  | Fair Market Value of Investments with Unrealized Losses |
|  | (in thousands) |
U.S. Treasury securities |  | $ | 257,132 |  |  | $ | 1,330 |  |  | $ | (158 | ) |  | $ | 258,304 |  |  | $ | 17,243 |
Commercial paper |  |  | 254,404 |  |  |  | 10 |  |  |  | (1 | ) |  |  | 254,413 |  |  |  | 12,173 |
Corporate debt securities |  |  | 76,129 |  |  |  | 7,539 |  |  |  | (53 | ) |  |  | 83,615 |  |  |  | 39,896 |
Debt mutual funds |  |  | 8,413 |  |  |  | 152 |  |  |  | — |  |  |  | 8,565 |  |  |  | — |
U.S. government agency securities |  |  | 4,294 |  |  |  | 46 |  |  |  | (1 | ) |  |  | 4,339 |  |  |  | 1,106 |
Certificates of deposit and time deposits |  |  | 979 |  |  |  | — |  |  |  | — |  |  |  | 979 |  |  |  | — |
Non-U.S. government securities |  |  | 625 |  |  |  | — |  |  |  | — |  |  |  | 625 |  |  |  | — |
|  | $ | 601,976 |  |  | $ | 9,077 |  |  | $ | (213 | ) |  | $ | 610,840 |  |  | $ | 70,418 |
Reported as follows:
|  | Cost |  |  | Unrealized Gain |  |  | Unrealized (Loss) |  |  | Fair Market Value |  |  | Fair Market Value of Investments with Unrealized Losses |
|  | (in thousands) |
Marketable securities |  | $ | 522,228 |  |  | $ | 92 |  |  | $ | (40 | ) |  | $ | 522,280 |  |  | $ | 61,806 |
Long-term marketable securities |  |  | 79,748 |  |  |  | 8,985 |  |  |  | (173 | ) |  |  | 88,560 |  |  |  | 8,612 |
|  | $ | 601,976 |  |  | $ | 9,077 |  |  | $ | (213 | ) |  | $ | 610,840 |  |  | $ | 70,418 |
As of October 3, 2021 and December 31, 2020, the fair market value of investments with unrealized losses less than one year totaled $57.3 million and $70.4 million, respectively. As of October 3, 2021, the fair market value of investments with unrealized losses for greater than one year totaled $6.2 million. Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments at October 3, 2021 and December 31, 2020 were not other than temporary. The contractual maturities of investments in available-for-sale securities held at October 3, 2021 were as follows:
|  | October 3, 2021 |
|  | Cost |  |  | Fair Market Value |
|  | (in thousands) |
Due within one year |  | $ | 233,327 |  |  | $ | 233,397 |
Due after 1 year through 5 years |  |  | 46,460 |  |  |  | 46,744 |
Due after 5 years through 10 years |  |  | 6,120 |  |  |  | 6,586 |
Due after 10 years |  |  | 33,962 |  |  |  | 38,621 |
Total |  | $ | 319,869 |  |  | $ | 325,348 |
Contractual maturities of investments in available-for-sale securities held at October 3, 2021 exclude debt mutual funds with a fair market value of $8.9 million, as they do not have a contractual maturity date. Derivatives Teradyne conducts business in a number of foreign countries with certain transactions denominated in local currencies. The purpose of Teradyne’s foreign currency management is to minimize the effect of exchange rate fluctuations on certain foreign currency denominated monetary assets and liabilities. Teradyne does not use derivative financial instruments for trading or speculative purposes. To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings and is used to offset the change in value of monetary assets and liabilities denominated in foreign currencies. The notional amount of foreign currency forward contracts at October 3, 2021 and December 31, 2020 was $181.8 million and $152.9 million, respectively. Gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities are included in other (income) expense, net. The following table summarizes the fair value of derivative instruments as of October 3, 2021 and December 31, 2020:
|  | Balance Sheet Location |  |  | October 3, 2021 |  |  | December 31, 2020 |
|  |  |  |  | (in thousands) |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | Prepayments |  |  | $ | 93 |  |  | $ | 95 |
Foreign exchange contracts |  |  | Other current liabilities |  |  |  | (433 | ) |  |  | (504 | )
Total derivatives |  |  |  |  |  | $ | (340 | ) |  | $ | (409 | )
The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three and nine months ended October 3, 2021 and September 27, 2020:
|  | Location of Losses (Gains) Recognized in Statement of Operations |  |  | For the Three Months Ended |  |  | For the Nine Months Ended |
|  | October 3, 2021 |  |  | September 27, 2020 |  |  | October 3, 2021 |  |  | September 27, 2020 |
|  |  |  |  | (in thousands) |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts |  |  | Other (income) expense, net |  |  | $ | 2,288 |  |  | $ | (551 | ) |  | $ | 5,937 |  |  | $ | 3,930 |
(1) | The table does not reflect the corresponding gains and losses from the remeasurement of the monetary assets and liabilities denominated in foreign currencies.
(2) | For the three and nine months ended October 3, 2021, net gains from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $1.0 million and $1.3 million, respectively.
(3) | For the three months ended September 27, 2020, net losses from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $1.2 million. For the nine months ended September 27, 2020, net gains from the remeasurement of monetary assets and liabilities denominated in foreign currencies were $0.4 million.
See Note H: “Debt” regarding derivatives related to the convertible senior notes.

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration