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Retirement Plans
 6 Months Ended
Jul. 02, 2023
Retirement Plans
O. RETIREMENT PLANS
ASC 715, “Compensation—Retirement Benefits,” requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by ASC 715. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation at December 31. Teradyne uses a December 31 measurement date for all its plans.
Defined Benefit Pension Plans
Teradyne has defined benefit pension plans covering a portion of domestic employees and employees of certain
non-U.S.
subsidiaries. Benefits under these plans are based on employees’ years of service and compensation. Teradyne’s funding policy is to make contributions to these plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of the U.S. qu
alifie
d pension plan consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive def
ined b
enefit plan in the United States to provide retirement benefits in excess of levels allowed by the Employment Retirement Income Security Act (“ERISA”) and the Internal Revenue Code (the “IRC”), as well as unfunded qualified foreign plans.
In the six months ended July 2, 2023 and July 3, 2022, Teradyne contributed $1.5 million and $1.6 million, respectively, to the U.S. supplemental executive defined benefit pension plan, and $0.6 million and $0.5 million, respectively, to certain qualified pension plans for
non-U.S.
subsidiaries.
For the three and six months ended July 2, 2023 and July 3, 2022, Teradyne’s net periodic pension cost was comprised of the following:

 
 
  
For the Three Months Ended
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
July 2, 2023
 
  
July 3, 2022
 
 
  
United

States
 
  
Foreign
 
  
United

States
 
  
Foreign
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
(in thousands)
 
Service cost
    $ 272      $ 110      $ 397      $ 180  
Interest cost
      1,714        263        1,221        120  
Expected return on plan assets
      (1,286 )       (9 )       (732 )       (18 ) 
Net actuarial loss (gain)
      24        —          (45 )       —    
    
 
 
     
 
 
     
 
 
     
 
 
  
Total net periodic pension cost
    $ 724      $ 364      $ 841      $ 282  
    
 
 
     
 
 
     
 
 
     
 
 
  
 
 
  
For the Six Months Ended
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
July 2, 2023
 
  
July 3, 2022
 
 
  
United

States
 
  
Foreign
 
  
United

States
 
  
Foreign
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
(in thousands)
 
Service cost
    $ 543      $ 220      $ 794      $ 386  
Interest cost
      3,425        526        2,443        238  
Expected return on plan assets
      (2,571 )       (18 )       (1,463 )       (38 ) 
Net actuarial loss (gain)
      24        —          (45 )       —    
    
 
 
     
 
 
     
 
 
     
 
 
  
Total net periodic pension cost
    $ 1,421      $ 728      $ 1,729      $ 586  
    
 
 
     
 
 
     
 
 
     
 
 
  
Postretirement Benefit Plan
In addition to receiving pension benefits, Teradyne employees in the United States who meet early retirement eligibility requirements as of their termination dates may participate in Teradyne’s Welfare Plan, which includes medical and dental benefits up to age 65. Death benefits provide a fixed sum to retirees’ survivors and are available to all retirees. Substantially all of Teradyne’s current U.S. employees could become eligible for these benefits and the existing benefit obligation relates primarily to those employees.
 
During the three and six months ended July 2, 2023, Teradyne recorded special termination benefit charges associated with a voluntary early retirement program. 
For the three and six months ended July 2, 2023 and July 3, 2022, Teradyne’s net periodic postretirement benefit cost was comprised of the following:

 
 
  
For the Three Months

Ended
 
  
For the Six Months

Ended
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
July 2,
2023
 
  
July 3,
2022
 
  
July 2,
2023
 
  
July 3,
2022
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
(in thousands)
 
Service cost
    $ 8      $ 15      $ 17      $ 32  
Interest cost
      60        45        121        88  
Amortization of prior service credit
      (2 )       (2 )       (4 )       (4 ) 
Special termination benefits
      369        —          369        —    
Net actuarial loss
      30        54        30        54  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total net periodic postretirement benefit cost
    $ 465      $ 112      $ 533      $ 170