UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-06462
TERADYNE, INC.
(Exact Name of Registrant as Specified in Its Charter)
MASSACHUSETTS
04-2272148
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification Number)
600 RIVERPARK DRIVE
NORTH READING, MASSACHUSETTS
01864
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s telephone number, including area code: (978) 370-2700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value
$0.125 per share
TER
Nasdaq Stock Market LLC
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒
No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes ☐
No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes ☒
No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File to be submitted pursuant to Rule 405 of
Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒
No ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act (check one):
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
Yes ☒
No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
No ☒
The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2024, was approximately $24.0 billion based upon
the closing price of the registrant’s Common Stock on the Nasdaq Stock Market on that date.
The number of shares outstanding of the registrant’s only class of Common Stock as of February 14, 2025, was 161,718,766 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement in connection with its 2024 annual meeting of shareholders are incorporated by reference into Part III of
this Form 10-K.
TERADYNE, INC.
INDEX
Page No.
PART I.
Item 1.
Business..............................................................................................................................................................
2
Item 1A.
Risk Factors........................................................................................................................................................
9
Item 1B.
Unresolved Staff Comments...............................................................................................................................
20
Item 1C.
Cybersecurity......................................................................................................................................................
21
Item 2.
Properties............................................................................................................................................................
22
Item 3.
Legal Proceedings...............................................................................................................................................
22
Item 4.
Mine Safety Disclosure ......................................................................................................................................
22
PART II.
Item 5.
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity
Securities ............................................................................................................................................................
23
Item 6.
(Reserved)...........................................................................................................................................................
23
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operation..............................
24
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk ............................................................................
35
Item 8.
Financial Statements and Supplementary Data ..................................................................................................
36
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...........................
85
Item 9A.
Controls and Procedures.....................................................................................................................................
85
Item 9B.
Other Information...............................................................................................................................................
85
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ...............................................................
85
PART III.
Item 10.
Directors, Executive Officers and Corporate Governance .................................................................................
86
Item 11.
Executive Compensation ....................................................................................................................................
86
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..........
86
Item 13.
Certain Relationships and Related Transactions, and Director Independence...................................................
86
Item 14.
Principal Accountant Fees and Services.............................................................................................................
86
PART IV.
Item 15.
Exhibits and Financial Statement Schedule........................................................................................................
87
Item 16.
Form 10-K Summary..........................................................................................................................................
88
Signatures ...........................................................................................................................................................
93
1
TERADYNE, INC.
FORM 10-K
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements” regarding Teradyne's future business prospects,
financial performance or position and results of operations. When used herein, the words such as “anticipate,” “expect,” “plan,”
“could,” “may,” “will,” “believe,” “estimate,” “goal,” or other comparable terms are intended to identify forward-looking statements
although not all forward-looking statements contain these identifying words. Forward-looking statements involve risks and
uncertainties, including, but not limited to, those discussed in the section entitled “Risk Factors” of this Annual Report on Form 10-K
and elsewhere, and in our other filings with the Securities and Exchange Commission (“SEC”). Readers are cautioned not to place
undue reliance on these forward-looking statements which reflect management’s analysis only as of the date hereof and are subject to
risks and uncertainties that could cause actual results to differ materially from those stated or implied. Teradyne assumes no obligation
to update these forward-looking statements for any reason, except as may be required by law.
2
PART I
Item 1: Business
Teradyne, Inc. (“Teradyne”) was founded in 1960 and is a leading global supplier of automated test equipment and robotics
solutions.
We design, develop, manufacture and sell automated test systems and robotics products. Our automated test systems are used to
test semiconductors, wireless products, data storage and complex electronics systems in many industries including consumer
electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our robotics products
include collaborative robotic arms and autonomous mobile robots (“AMRs”) used by global manufacturing, logistics and industrial
customers to improve quality, increase manufacturing and material handling efficiency and decrease manufacturing and logistics
costs. Our automated test equipment and robotics products and services include:
•
semiconductor test (“Semiconductor Test”) systems;
•
robotics (“Robotics”) products; and
•
defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, circuit-board test and inspection (“Production
Board Test”) systems, and wireless test systems (referred collectively as "All Other").
The market for our test products is concentrated with a limited number of significant customers accounting for a substantial
portion of the purchases of test equipment. A few customers drive significant demand for our products both through direct sales and
sales to the customer’s supply partners. We expect that sales of our test products will continue to be concentrated with a limited
number of significant customers for the foreseeable future.
In 2024, we saw strength in our Semiconductor Test business, with memory and compute offerings growing considerably
compared to 2023. We expect mobile, automotive, and industrial will grow in 2025 and that recent advancements in AI inference may
help mid-term recovery in these markets. Beyond AI compute, we are investing in other areas of the semiconductor test market that
offer the opportunity for accelerating long-term growth, including power semi-conductors and the shift towards vertically integrated
products ("VIPs"). We have seen the benefits start to materialize in 2024 and expect them to continue through the mid-term.
2024 was a very weak industrial automation market resulting in a year-over-year decline in Robotics revenues while
outperforming our peer group. In 2024, we built key OEM, systems integrators and large account strategic partnerships which will
strengthen our go to market for years to come. Introduction of new products, including the MiR 1200 Pallet Jack, will further expand
our available markets to support our growth.
On May 27, 2024, we paid 483.1 million Euros, equivalent to $524.1 million, to purchase a combination of previously issued
and outstanding shares and shares newly issued by Technoprobe, S.p.A. ("Technoprobe"). The shares purchased represent 10% of the
issued and outstanding shares of Technoprobe. We also received a board seat as part of the purchase. Additionally, as part of the
transaction, we completed the sale of the Device Interface Solutions ("DIS") business, a component of our Semiconductor Test
segment, to Technoprobe for $85.0 million in cash, net of cash and cash equivalents sold, and a customary working capital adjustment.
The sale resulted in a pre-tax gain of $57.1 million recorded as 'Gain on sale of business' in the consolidated statement of operations.
Our financial statements are denominated in U.S. dollars. While revenues in our test businesses are predominantly in U.S.
dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar would negatively
affect Robotics revenue growth in 2025.
Our corporate strategy for our test businesses is to profitably grow market share while in Robotics, we plan to profitably grow
revenue through the introduction of differentiated products targeting expanding markets. Our capital allocation plan will continue to
be balanced between investing in organic and inorganic growth and returning cash to shareholders through share repurchases and
dividends.
Investor Information
We are a Massachusetts corporation incorporated on September 23, 1960. We are subject to the informational requirements of
the Securities Exchange Act of 1934 (“Exchange Act”). We file periodic reports, proxy statements and other information with the
SEC. The SEC maintains an internet site (http://www.sec.gov) that contains reports, proxy and information statements and other
information regarding issuers that file documents electronically.
3
You can access financial and other information, including the charters of our Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee, our Corporate Governance Guidelines and Code of Conduct, by clicking the
Investors link on our web site at www.teradyne.com. We make available, free of charge, copies of our filings with the SEC, including
our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act through our web site as soon as reasonably practicable after filing
such material electronically or otherwise furnishing it to the SEC.
Products
Semiconductor Test
We design, manufacture, sell and support Semiconductor Test products and services and hard disk drives on a worldwide basis.
The test systems we provide are used for wafer level, device package testing, and system level testing of semiconductor devices.
These devices are used in automotive, industrial, communications, consumer, smartphones, cloud, computer and electronic game
applications, among others. Semiconductor devices span a broad range of functionality, from very simple low-cost devices such as
appliance microcontrollers, operational amplifiers or voltage regulators to complex digital signal processors, Artificial
Intelligence/Machine Learning (“AI/ML”) training, high performance computing and microprocessors as well as memory devices.
Semiconductor Test products and services are sold to integrated device manufacturers (“IDMs”) that integrate the fabrication of
silicon wafers into their business, “Fabless” companies that outsource the manufacturing of silicon wafers, “Foundries” that cater to
the processing and manufacturing of silicon wafers, and semiconductor assembly and test providers (“OSATs”) that provide test and
assembly services for the final packaged devices to both Fabless companies and IDMs. Fabless companies perform the design of
integrated circuits and use Foundries for wafer manufacturing and OSATs for test and assembly. Our customers obtain the overall
benefit of comprehensively testing devices and reducing the total costs associated with testing by using our Semiconductor Test
systems to:
•
improve and control product quality;
•
measure and improve product performance;
•
reduce time to market; and
•
increase production yields.
Our FLEX Test Platform architecture advances our core technologies to produce test equipment that is designed for high
efficiency multi-site testing. Multi-site testing involves the simultaneous testing of many devices in parallel. Leading semiconductor
manufacturers are using multi-site testing to significantly improve their “Cost of Test” economics. The FLEX Test Platform
architecture addresses customer requirements through the following key capabilities:
•
A high efficiency multi-site architecture that reduces tester overhead such as instrument setup, synchronization and data
movement, and signal processing;
•
The IG-XL™software operating system which provides fast program development, including instant conversion from single
to multi-site test; and
•
Broad technology coverage by instruments designed to cover the range of test parameters, coupled with a universal slot test
head design that allows easy test system reconfiguration to address changing test needs.
FLEX Test Platform purchases are made by IDMs, OSATs, Foundries and Fabless customers. The FLEX Test Platform has
become a widely used test solution at OSATs by providing versatile testers that can handle the widest range of devices, allowing
OSATs to leverage their capital investments. The broad consumer, automotive and broadband markets have historically driven most of
the device volume growth in the semiconductor industry. These markets include mobile phones and tablets, PCs, servers, networking
and automotive electronics. These end use markets continue to be drivers for the FLEX Test Platform family of products because they
require a wide range of technologies and instrument coverage. In 2019, we introduced our next generation UltraFLEXPlustester, the
newest member of the UltraFLEX family, which uses the new PACETMarchitecture to deliver superior economics and fast time to
market for complex digital devices.
Our J750™test system shares the IG-XL software environment with the family of FLEX Test Platform systems. The J750 is
designed to handle high volume semiconductor devices, such as microcontrollers, that are central to the functionality of almost every
consumer electronics product, from small appliances to automobiles. J750 test systems combine compact packaging, high throughput
and ease of production test. We extended the J750 platform technology to create the IP750 Image Sensor™test system. The IP750 is
focused on testing image sensor devices used in smartphones, automobiles and other imaging products. We have continued to invest in
4
the J750 platform with new instrument releases that bring new capabilities to existing market segments and expand the J750 platform
to new devices that include high end microcontrollers and the latest generation of image sensors.
Our Magnum platform addresses the requirements of mass production test of memory devices for flash and DRAM memory.
Flash and DRAM memory are widely used core building blocks in modern electronic products finding wide application in consumer,
industrial, and computing equipment. Our Magnum 7 solution is designed for parallel memory test in the flash, DRAM and multi-chip
package markets while our Magnum platform called Magnum EPIC giving us full product coverage of the memory test market.
Our ETS platform is used by semiconductor manufacturers and assembly and test subcontractors, primarily in the analog/mixed
signal markets that cover cost sensitive applications. Our proprietary SmartPin™technology enables high efficiency multi-site testing
on an individual test system permitting greater test throughput. Semiconductors tested by ETS platform systems are incorporated into
a wide range of products in historically high-growth markets including mobile devices, automotive electronics, computer peripherals,
and notebook and desktop computers. The Eagle platform includes the ETS-88 which is a high performance multi-site production test
system designed to test a wide variety of high volume power and precision devices including Silicon Carbide ("SiC") and Gallium
Nitride ("GaN") power devices used in vehicle electrification. The ETS-800, a high performance multi-site production test system, is
used to test high complexity power devices in automotive, industrial and consumer applications.
The Integrated System Test group is comprised of our system level test ("SLT") testers and our hard disk drive ("HDD") testers.
Our SLT testers for the semiconductor production market are used to test devices following wafer and package test. SLT testers
address customer requirements related to factory density, throughput and thermal performance. HDD products address the high
throughput and automated manufacturing test requirements of hard disk drive and semiconductor manufacturers. Our HDD products
address the client and enterprise storage markets. The client market is driven by the needs of desktop, laptop, and external HDD
storage products. The enterprise market is driven by the needs of data centers and cloud storage.
Robotics
Our Robotics segment is comprised of two business units: Universal Robots and Mobile Industrial Robots.
Universal Robots
Universal Robots is a leading provider of collaborative robots ("cobots") used across various industries, including automotive,
food & beverage, metal & machining, electronics, pharmaceutical, and in education. Founded in 2005 and headquartered in Odense,
Denmark, Universal Robots aims to create a world where people work with robots, not like robots. Its mission is simple: “Automation
for anyone. Anywhere.”
Since introducing the world's first commercially viable cobot in 2008, Universal Robots has sold over 75,000 cobots worldwide
and has developed a product portfolio reflecting a range of reaches and payloads, including the UR3e, UR5e, UR10e, UR16e, UR20
and UR30 robots. All models are robust, built to withstand a wide range of industrial environments, and can be easily integrated into
existing production setups, providing a number of game-changing benefits:
•
Straightforward programming – UR's intuitive software, PolyScope, enables users to program a cobot easily and have an
application up and running within a few hours.
•
High return on investment – cobots require a lower initial investment than traditional robotics and have an average
payback time of 12-18 months.
•
Versatile deployment – cobots' high degree of flexibility allows customers to change the task and pace of the cobot
according to production demands.
•
Collaborative-capable safety functions – following a risk assessment, most cobots can seamlessly operate alongside
employees, assisting with dull, dirty, and dangerous tasks.
•
Cutting-edge precision engineering – UR's global team of talented engineers creatively tackles customer challenges,
ensuring our cobots are rigorously tested and built for demanding industrial tasks.
An extensive ecosystem has grown around the company's cobot, technology creating innovation and choice for customers and a
wide range of components, kits and solutions to suit every application. UR also provides an all-encompassing customer experience
including UR Academy - an award-winning training program, available both online and in person in more than 120 training centers
worldwide, and three tiers of service offerings carefully designed to accelerate customer success.
5
Universal Robots has recently established global Centers of Excellence for Welding, Palletizing, and Machine Tending
applications. These centers, led by subject matter experts, serve as knowledge hubs, offering expert recommendations and guidance on
the latest trends in the field to UR partners and key customers worldwide.
Mobile Industrial Robots
MiR is a leading provider of autonomous mobile robots ("AMRs") for the manufacturing and logistics segments. MiR AMRs
enhance productivity, offering a high return on investment by streamlining workforce efficiency, reducing lead times, and improving
workplace safety. These AMRs operate autonomously, eliminating the need for traditional guidance infrastructure. MiR currently
offers three deckload AMR models, each supporting a different payload capacity—MiR250, MiR600, and MiR1350—as well as a
pallet jack AMR—MiR1200 Pallet Jack—all managed by our unified fleet management software, MiR Fleet.
All models can be easily integrated into existing production environments. MiR’s products are differentiated by their:
•
Ease of Use and Speed of Deployment: Our robots are designed for quick deployment and flexibility, allowing customers
to adapt tasks based on changing demands.
•
Safe Operations: Equipped with 360 safety coverage, our robots navigate around static and dynamic obstacles, ensuring
safety in busy environments.
•
Reliable Autonomous Navigation: MiR robots demonstrate consistent, reliable navigation across large manufacturing and
warehouse areas.
•
Short Payback Period: With an average payback period of 12–24 months, MiR's products provide a swift return on
investment.
System Test
Our System Test operating segment is comprised of two business units: Defense/Aerospace and Production Board Test.
Defense/Aerospace
We are a leading provider of high performance test systems, subsystems, instruments and service for the defense and aerospace
markets. Our test products are used to ensure the readiness of military and commercial aerospace electronics systems. New programs,
such as tactical aircraft and missile systems, as well as upgrade programs, continue to fuel the demand for high performance test
systems in this market. Our test products are well-suited to the demands of defense/aerospace electronics manufacturers and repair
depots worldwide. Our leadership in this market is underscored by our success with major Department of Defense programs across all
U.S. military service branches and many allied defense services worldwide.
Production Board Test
Our test systems are used by electronics manufacturers and OEMs worldwide to perform In-Circuit-Test (“ICT”) and device
programming of printed circuit board assemblies. Fast, accurate and cost-effective test capabilities are hallmark features of our Test
Station product families. We offer the Test Station in off-line and automated in-line configurations. The automated in-line
configurations address the growing requirements for automating production lines for high volume applications, such as automotive
electronics, computing, and communications.
Wireless Test
Our Wireless Test operating segment is a business unit run under the LitePoint brand name providing wireless test solutions for
silicon validation, wireless module manufacturing, and wireless end device manufacturing. LitePoint wireless test systems span design
verification to high volume manufacturing and are deployed across the entire production chain from wireless chipset suppliers to
consumer brands.
Sales and Distribution
In each of the years, 2024, 2023 and 2022, our five largest direct customers in aggregate accounted for 36%, 32% and 26% of
our consolidated revenues, respectively.
6
OSAT customers often purchase our test systems based upon recommendations from OEMs, IDMs and Fabless companies. In
all cases when an OSAT customer purchases a test system from us, we consider the OSAT as the customer since credit risk, title and
risk of loss, among other things, are between Teradyne and the OSAT. In 2024, we estimate consolidated revenues driven by
Samsung, a customer of our Semiconductor Test and Wireless Test segments, combining direct and indirect sales, accounted for
appropriately 12.5% of our consolidated revenues. In 2023, revenues driven by Texas Instruments Inc., a customer of our
Semiconductor Test segment, accounted for 10% of our consolidated revenues. In 2022, we estimate consolidated revenues driven by
Qualcomm, a customer of our Semiconductor Test, System Test, and Wireless Test operating segments, combining direct and indirect
sales, accounted for approximately 11% of our consolidated revenues. The loss of, or significant decrease in demand from key OEM
customers or any of our five largest direct customers, could have a material adverse effect on our business, results of operations and
financial condition.
We have sales and service offices located throughout North America, Central America, Asia and Europe. We sell in these areas
predominantly through a direct sales force, except for Robotics products, which are sold principally through distributors and OEMs.
Our manufacturing activities for our test businesses are primarily conducted through subcontractors and outsourced contract
manufacturers with significant operations in Malaysia. The manufacturing activities for our Robotics businesses are done primarily in
our production facilities in Denmark and the U.S.
Sales to customers outside the United States were 87%, 84%, and 85%, respectively, of our consolidated revenues in 2024, 2023
and 2022. Sales are attributed to geographic areas based on the location of the customer site.
See also “Item 1A: Risk Factors” and Note U: “Operating Segment, Geographic and Significant Customer Information” in
Notes to Consolidated Financial Statements.
Competition
We face significant competition throughout the world in each of our reportable segments. Competitors in the Semiconductor
Test segment include, among others, Advantest Corporation, SPEA S.p.A., and Cohu, Inc.
Competitors in our Robotics segment include manufacturers of traditional industrial robots such as KUKA Robotics
Corporation, ABB, FANUC, Staubli and Yaskawa Electric Corporation, companies with emerging collaborative robot offerings such
as Techman, Doosan, Jaka, and AUBO Robotics, and manufacturers of autonomous mobile robots in the material handling space such
as Omron, Rockwell Automation, Junion, HikRobot, Agilox, and KION.
Competitors in the System Test operating segment include, among others, Advantest Corporation and Test Research, Inc.
Competitors in our Wireless Test operating segment include, among others, Rohde & Schwarz GmbH & Co. KG, Anritsu
Company, National Instruments Corporation, Welzek and iTest.
Some of our competitors may have greater financial and other resources to pursue engineering, manufacturing, marketing, and
distribution of their products. We also face competition from emerging Asian companies and from internal supply at several of our
customers. Some of our competitors have introduced or announced new products with certain performance characteristics which may
be considered equal or superior to those we currently offer. We expect our competitors to continue to improve the performance of their
current products and to introduce new products or new technologies that provide improved cost of ownership and performance
characteristics. See also “Item 1A: Risk Factors.”
Backlog
At December 31, 2024 and 2023, our backlog of unfilled orders in our reportable segments was as follows:
2024
2023
(in millions)
Semiconductor Test
$
921.9
$
893.4
Robotics
36.6
42.3
All Other
203.7
188.9
$
1,162.2
$
1,124.6
Customers may delay delivery of products or cancel orders without advanced notice, subject to possible cancellation penalties.
Due to possible customer changes in delivery schedules and cancellation of orders, our backlog at any particular date is not necessarily
7
indicative of the actual sales for any succeeding period. Delays in delivery schedules or cancellations of backlog during any particular
period could have a material adverse effect on our business, financial condition or results of operations.
Raw Materials
Our products contain electronic and mechanical components that are provided by a wide range of suppliers. Some of these
components are standard products, while others are manufactured to our specifications. We have experienced delays in obtaining
timely delivery of certain components. These delays have impacted and may continue to impact the manufacturing of certain products
and the timing of delivery of those products to our customers. While the majority of our components are available from multiple
suppliers, certain items are obtained from sole sources. We may experience a temporary adverse impact if any of our sole source
suppliers delay or cease to deliver products.
Intellectual Property and Licenses
The development of our products, both hardware and software, is based in significant part on proprietary information, our
brands and technology. We protect our rights in proprietary information, brands and technology through various methods, such as:
•
patents;
•
copyrights;
•
trademarks;
•
trade secrets;
•
standards of business conduct and related business practices; and
•
technology license agreements, software license agreements, non-disclosure agreements, employment agreements, and other
agreements.
However, these protections might not be effective in all circumstances. Competitors might independently develop similar
technology or exploit our proprietary information and our brands in countries where we lack enforceable intellectual property rights or
where enforcement of such rights through the legal system provides an insufficient deterrent. Also, intellectual property protections
can lapse or be invalidated through appropriate legal processes. We do not believe that any single piece of intellectual property or
proprietary rights is essential to our business.
Human Capital
We believe that our future success depends upon our continued ability to attract, develop, and retain a high-performance
workforce bound by shared values. As of December 31, 2024, we employed approximately 6,500 employees, of whom approximately
2,200 were employed in the United States and approximately 4,300 were employed outside of the United States. Our largest non-US
employee populations are in the Philippines (18%), Denmark (12%), China (7%), Costa Rica (7%) and Taiwan (5%). We also
leverage contractors to provide flexibility for our business and manufacturing needs. As of December 31, 2024, we worked with
approximately 400 contractors globally. Since the inception of our business, we have experienced no work stoppages or other labor
disturbances.
Corporate Culture
Our core values are conducting business with honesty and integrity, collaborating with our colleagues as a company without
doors, and partnering with our customers every step of the way, because customers count on us.
We strive to foster a positive work environment that helps employees thrive. It is a priority for us to ensure that our people feel
inspired, supported, safe and able to achieve their personal best. We are committed to equality through nondiscrimination, harassment
prevention and pay equity policies. We value a diverse, inclusive and respectful work environment where all employees enjoy
challenging assignments, development opportunities and a safe, positive culture.
We are committed to conducting business in a responsible manner, with strategic operational policies, procedures and values
that support transparency, sustainability and legal compliance. We ensure ethical operations and business commitments through robust
governance of the company’s code of conduct and global environmental, health and safety programs.
8
Competitive Pay and Benefits
The primary objective of our compensation program is to provide a compensation and benefits package that will continue to
attract, retain, motivate and reward high performing employees who operate in a highly competitive and technologically challenging
environment. We seek to achieve this objective by linking a meaningful portion of compensation to company and business unit
performance. We enable employees worldwide to share in the success of the company through various programs including a stock
purchase program, equity compensation and bonus plans. We seek competitiveness and fairness in total compensation with reference
to peer comparisons and internal equity.
In addition to providing our employees with competitive compensation packages, we offer benefits designed to meet the needs
of employees and their families worldwide, including paid time off, parental leave, bereavement leave, health insurance coverage,
flexible work arrangements, contributions to retirement savings, and access to employee assistance and work-life programs.
Employee Development and Training
We believe that employee development and training is a key factor in attracting, motivating, improving and retaining a strong,
competitive global workforce. We provide continual development to our employees focused on developing their job skills and
competencies. Examples include new manager competencies like giving feedback and coaching, and training in software development
tools and project management. Our employees worldwide also receive annual performance reviews and are involved in setting goals
for their own development and performance. Employees and managers look back on the previous year, review career development
plans and create goals for the next year.
We are committed to recruiting and developing talent at the collegiate level to help advance Science, Technology, Engineering
and Mathematics (“STEM”) education for the future workforce. For example, our paid internships and entry-level positions offer real-
world experience, and our co-op program offers higher education students a unique learning opportunity as students alternate one
semester in a work assignment and one semester in the classroom. Additionally, we offer reimbursement for educational courses
related to an employee’s work or as part of a degree program, including tuition, lab fees and books. We also offer a scholarship
program for employees with college-age children, step-children and grandchildren. In 2024, approximately half of the scholarship
recipients were outside of the United States.
Employee Engagement
We conduct regular employee surveys to check in with our global workforce and obtain input on a number of topics. The
feedback we receive from these surveys helps us assess employee sentiment, identify areas of improvement and guides our decision-
making as it relates to people management. In addition, our CEO and other executives meet with employees worldwide on a frequent
basis through exchange meetings and quarterly webcasts. The exchange meetings allow the executives to directly interact with a small
group of employees, while the global webcasts enable all employees to engage with senior leaders and ask questions in an open Q&A
session.
We also offer employees worldwide an opportunity to network and connect with colleagues who share similar interests. This
includes global groups such as New Employees to Teradyne, Woman’s Affinity Group, Veterans, Blue and Green (for team members
that are committed to the environment), Runner’s affinity group and LGBTQ+ advocates.
Diversity and Inclusion
We believe in fostering a diverse workforce, an equitable and inclusive culture in order to build a stronger and more resilient
company for our customers, our investors, our employees and our communities worldwide. To support this effort, we have developed
programs and training courses for our employees, to aid in recruiting candidates from various backgrounds and experiences. We have
policies regarding gender pay equity and regularly conduct audits of pay equity in the United States. We are an equal opportunity
employer committed to making employment decisions without regard to race, religion, ethnicity or national origin, gender, sexual
orientation, gender identity or expression, age, disability, protected veteran status or any other characteristics protected by law.
We have a tradition of amplifying the charitable actions of our employees and responding to the needs of the communities
where we work. To make it easier for employees to support charitable activities and magnify the impact of support, we established a
formal matching gift program, “Teradyne Gives.” The program matches up to $1,000 per year of an employee’s donations to charities
of their choosing, selected from a wide range of qualified non-profit organizations.
9
Additionally, advancing education for future generations is a primary initiative at Teradyne. We seek to increase the diversity of
STEM graduates worldwide through our support of STEM programs at the middle, high school and collegiate level. We also donate
test equipment and robots to colleges, universities, and vocational programs.
Health and Safety
The health and safety of our employees worldwide is our highest priority. We are committed to complying with all applicable
regulatory health and safety requirements wherever we operate. We conduct internal audits, regular reviews and monitoring of
regulations to ensure compliance with laws and regulations at the local, state, province and country levels. We ensure workers are
provided with the knowledge to perform their jobs safely by deploying mandatory environmental, health and safety training. We also
require contractors to complete safety training prior to working at any Teradyne site. We monitor, track and report common safety
metrics such as accidents, near misses and illness. Our injury and illness rate is below the industry average. We also provide our
employees with a flexible and adjustable workspace, which includes reviewing ergonomics issues in the workplace, educating
employees to self-identify risks and ensuring they have the work environment they need to do their jobs safely and effectively.
Regulatory Environment
We are subject to various federal, state, and local government laws and regulations relating to international trade, business
conduct, the protection of employee health and safety and the environment.
We accrue for all known environmental liabilities when it becomes probable that we will incur cleanup costs and those costs can
reasonably be estimated. Estimated environmental costs are not expected to materially affect the financial position or results of our
operations in future periods. However, estimates of future costs are subject to change due to protracted cleanup periods and changing
environmental remediation laws and regulations.
We are subject to U.S. and foreign laws and regulations that limit and restrict the export of some of our products and services
and may restrict our transactions with certain customers, business partners and other persons. In certain circumstances, export control
and economic sanctions or regulations prohibit the export of certain products, services, and technologies, and in other circumstances
we are required to obtain an export license before exporting the controlled item. For example, we must comply with current U.S.
Department of Commerce export control regulations restricting transactions with certain customers in China. We must also comply
with export restrictions and laws imposed by other countries affecting trade and investments. We maintain an export compliance
program but there are risks that the compliance controls could be circumvented, exposing us to legal liabilities. Compliance with these
laws has limited our sales and likely will continue to limit sales to certain customers in the future. Changes in, and responses to, U.S.
trade policy could reduce the competitiveness of our products and cause our sales to drop, which could have a material adverse effect
on our business, financial condition or results of operations.
Item 1A: Risk Factors
The risks described below are not the only risks that we face. Additional risks and uncertainties not currently known to us or that
we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Risks Associated with Teradyne’s Markets
Our business is impacted by global and industry-specific economic cycles, which are difficult to predict, and actions we have taken
or may take to offset these cycles may not be sufficient.
Capital equipment providers in the electronics, semiconductor industries and robotics, such as Teradyne, have, in the past, been
negatively impacted by both sudden slowdowns in the global economies and recurring cyclicality within those industries. These cycles
have resulted in periods of over-supply; a trend we believe will continue to occur. Our business and results of operations depend, in
significant part, upon capital expenditures of manufacturers of semiconductors, electronics, and other industrial products, which in
turn depend upon the current and anticipated market demand for those products. Disruption or deterioration in economic conditions
may reduce customer purchases of our products, thereby reducing our revenues and earnings. In addition, such adverse changes in
economic conditions, and resulting slowdowns in the market for our products, may, among other things, result in increased price
competition for our products, increased risk of excess and obsolete inventories, increased risk in the collectability of our accounts
receivable from our customers, potential reserves for credit losses and write-offs of accounts receivable, increased risk of restructuring
charges, and higher operating costs as a percentage of revenues, which, in each case and together, adversely affect our operating
results. We are unable to predict the likely duration, frequency and severity of disruptions in financial markets, credit availability, and
adverse economic conditions throughout the world, and we cannot ensure that the level of revenues or new orders for a fiscal quarter
will be sustained in subsequent quarters. We have taken actions to address the effects of general economic variability and recurring
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industry cyclicality, including implementing cost control and reduction measures. We cannot predict whether these measures will be
sufficient to offset global or market-specific disruptions that might affect our businesses and we may need to take additional or
different measures in the future.
We are subject to intense competition.
We face significant competition throughout the world in each of our reportable segments. Some of our competitors have
substantial financial and other resources to pursue engineering, manufacturing, marketing and distribution of their products. In
addition, we are subject to trade regulations imposed by the United States government, which may not impact some of our
competitors. We also face competition from emerging Asian companies and internal development at several of our customers. Some
of our competitors have introduced or announced new products with certain performance characteristics that may be considered equal
or superior to those we currently offer. We expect our competitors to continue to improve the performance of their current products
and to introduce new products or new technologies that provide improved cost of ownership and performance characteristics. New
product introductions by competitors could cause a decline in revenues or loss of market acceptance of our products.
The market for our products is concentrated, and our business depends, in part, on obtaining orders from a few significant
customers.
The market for our products is concentrated with a limited number of significant customers accounting for a substantial portion
of the purchases of test equipment. In each of the years, 2024, 2023 and 2022, our five largest direct customers in aggregate accounted
for 36%, 32% and 26% of consolidated revenues, respectively.
We estimate consolidated revenues driven by Samsung, a customer of our Semiconductor Test and Wireless Test Segments,
combining direct sales to that customer with sales to the customer’s OSATs, accounted for 12.5% of our consolidated revenues in
2024.
Customer consolidation could affect our operating results.
There has been a trend toward customer consolidation in the semiconductor industry through business combinations, including
mergers, asset acquisitions and strategic partnerships. If this trend continues, it could make us more dependent on fewer customers
who may be able to exert increased pressure on our prices and other contract terms and could increase the portion of our total sales
concentration for any single customer. Customer consolidation activity could also reduce the demand for our products and services if
such customers streamline research and development or operations, reduce purchases or delay purchasing decisions. These outcomes
could negatively impact our operating results and financial condition.
If we fail to develop new technologies to adapt to our customers’ needs or if our customers fail to accept our new products, our
revenues will be adversely affected.
We believe that our technological position depends primarily on the technical competence and creative ability of our engineers.
In a rapidly evolving market, such as ours, the development or acquisition of new technologies, commercialization of those
technologies into products and market acceptance and customer demand for those products are critical to our success. Successful
product development or acquisition, introduction and acceptance depend upon a number of factors, including:
•
new product selection;
•
ability to meet customer requirements including with respect to safety and cyber security;
•
development of competitive products by competitors;
•
timely and efficient completion of product design;
•
timely and efficient implementation of manufacturing and manufacturing processes;
•
timely remediation of product performance issues, if any, identified during testing;
•
assembly processes and product performance at customer locations;
•
differentiation of our products from our competitors' products;
•
management of customer expectations concerning product capabilities and product life cycles;
•
transition of customers to new product platforms;
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•
compliance with product safety regulations;
•
ability to protect products from cyber attacks when used by our customers;
•
ability to attract and retain technical talent; and
•
innovation that does not infringe on the intellectual property rights of third parties.
Risks Associated with Operating a Global Business
We are subject to risks of operating internationally.
A significant portion of our consolidated revenues is derived from customers outside the United States. Our international sales
and operations are subject to significant risks and difficulties, including:
•
unexpected changes in legal and regulatory requirements affecting international markets;
•
cost increases due to inflation;
•
changes in tariffs and exchange rates;
•
social, political and economic instability, acts of terrorism and international conflicts;
•
disruption caused by health pandemics;
•
difficulties in protecting intellectual property;
•
difficulties in accounts receivable collection;
•
cultural differences in the conduct of business;
•
difficulties in staffing and managing international operations;
•
compliance with anti-corruption laws;
•
compliance with data privacy regulations;
•
compliance with customs and trade regulations; and
•
compliance with international tax laws and regulations.
In addition, an increasing portion of our products and the products we purchase from our suppliers are sourced or manufactured
in foreign locations, including Malaysia and Denmark, and a large portion of the devices our products test are fabricated and tested by
foundries and subcontractors in Taiwan, China, Korea and other parts of Asia. As a result, we are subject to a number of economic and
other risks, particularly during times of political, health or financial instability in these regions. Disruption of manufacturing or supply
sources in these international locations could materially adversely impact our ability to fill customer orders and potentially result in
lost business.
We are subject to risks associated with doing business in China.
In addition to the risks associated with the tariffs and trade regulations detailed below, we are subject to the following risks
associated with doing business in China:
•
adverse changes in Chinese political, economic or social conditions or Chinese laws, regulations or policies, including the
imposition of unexpected or confiscatory taxation, restrictions on currency conversion, imports and sources of supply,
devaluations of currency, the nationalization or other expropriation of private enterprises, or the reversal of economic reform
policies that encourage private economic activity, foreign investments and greater economic decentralization;
•
differing economic practices compared to most developed countries, including with respect to the amount of government
involvement, control of foreign exchange and allocation of resources;
•
uncertainties presented by the Chinese legal system, which is not fully integrated and continues to rapidly evolve, impeding
our ability to interpret certain Chinese laws and regulations, predict and evaluate the outcome of administrative and court
proceedings and the level of legal protection to enforce contracts we have entered into in China; and Chinese controls on the
convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China, restricting
our ability to remit sufficient foreign currency to pay dividends or make other payments to us, or otherwise satisfy foreign
currency-denominated obligations.
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The foregoing risks and the ongoing geopolitical tensions and economic uncertainty between the United States and China and
the unknown impact of current and future Chinese rules and regulations, may cause increased costs, as well as restrictions on our
ability to sell, or a decreased demand from customers to purchase, our products, which could harm our business, financial condition
and operating results.
The Israel-Hamas conflict may have a material impact on our Business
The Israel-Hamas conflict could have a negative impact on our future revenue and supply chain, either of which could adversely
affect our business and financial results. Our customers in Israel may experience delays in product releases due to impacts to their
labor force and impacts on their suppliers because of the conflict, which could materially impact demand for our products. Similarly,
our suppliers in Israel may experience delays in providing us with parts due to the conflict. In addition, the global economic
uncertainty following the start of the conflict could impact demand for our products.
Risks Related to Teradyne’s Finances
We may not fully realize the benefits of our acquisitions or strategic alliances.
In June 2015, we acquired Universal Robots, in 2018, we acquired Energid and MiR and, in 2019, we acquired Lemsys and
AutoGuide. In May 2024, we closed on our strategic partnership agreement with Technoprobe which included Teradyne acquiring
10% of the equity in Technoprobe. We may not be able to realize the benefits of acquiring or successfully growing these businesses.
We may continue to acquire additional businesses, form strategic alliances, or create joint ventures with third parties that we believe
will complement or augment our existing businesses. We may not be able to realize the expected synergies and cost savings from the
integration with our existing operations of other businesses or technologies that we may acquire. In addition, the integration process
for our acquisitions may be complex, costly and time consuming and include unanticipated issues, expenses, and liabilities. We may
have difficulty in developing, manufacturing, and marketing the products of a newly acquired company in a manner that enhances the
performance of our combined businesses or product lines and allows us to realize value from expected synergies. Following an
acquisition, we may not achieve the revenue or net income levels that justify the acquisition. Acquisitions may also result in one-time
charges (such as acquisition-related expenses, write-offs or restructuring charges) or in the future, impairment of goodwill or acquired
intangible assets, or adjustments to contingent consideration liabilities that adversely affect our operating results. Additionally, we
may fund acquisitions of new businesses, strategic alliances, or joint ventures by utilizing our cash, incurring debt, issuing shares of
our common stock, or by other means. Additionally, we may face restrictions pursuant to the terms of an acquisition or strategic
alliance agreement.
We may incur higher tax rates than we expect and may have exposure to additional international tax liabilities and costs.
We are subject to paying income taxes in the United States and other countries where we operate. Our effective tax rate is
dependent on where our earnings are generated and the tax regulations and the interpretation and judgment of administrative tax or
revenue authorities in the United States and other countries. We have pursued a global tax strategy that could be adversely affected by
the mix of earnings and tax rates in the countries where we operate, changes to tax laws (including but not limited to Pillar Two), tax
regulations or an adverse tax ruling by administrative authorities. We are also subject to tax audits in the countries where we operate.
Any material change in our tax liability resulting from changes in tax laws, tax regulations, administrative rulings or audits from an
administrative tax or revenue authority could negatively affect our financial results.
As a multinational corporation, we are subject to income taxes as well as non-income-based taxes, in both the United States and
various foreign jurisdictions. In certain foreign jurisdictions, we qualify for tax incentives and tax holidays based on our ability to
meet, on a continuing basis, various tests relating to our employment levels, research and development expenditures and other
qualification requirements in a particular foreign jurisdiction. While we intend to operate in such a manner to maintain and maximize
our tax incentives and tax holidays, no assurance can be given that we have so qualified or that we will qualify for any particular year
or jurisdiction. If we fail to qualify or fail to remain qualified for certain foreign tax incentives and tax holidays, we may be subject to
further taxation or an increase in our effective tax rate which would adversely impact our financial results. In November 2020, we
entered into an agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under
substantially similar terms to the agreement which expired on December 31, 2020. The new tax holiday is scheduled to expire on
December 31, 2025.
The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2024, 2023 and 2022 were $17.1
million or $0.10 per diluted share, $1.4 million or $0.01 per diluted share, and $16.0 million or $0.09 per diluted share, respectively.
These tax savings may not be achievable in subsequent years due to changes in Singapore’s tax laws, issuance of new global minimum
tax laws, or the expiration of the tax holiday.
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In addition, we may incur additional costs, including headcount expenses, in order to maintain or obtain a foreign tax incentive
or tax holiday in a particular foreign jurisdiction.
We have significant guarantees, indemnification, and customer confidentiality obligations.
From time to time, we make guarantees to customers regarding the delivery, price and performance of our products and
guarantee certain indebtedness, performance obligations or lease commitments of our subsidiary and affiliate companies. We also
have agreed to provide indemnification to our officers, directors, employees and agents, to the extent permitted by law, arising from
certain events or occurrences, while the officer, director, employee or agent, is or was serving at our request in such capacity.
Additionally, we have confidentiality obligations to certain customers and if breached would require the payment of significant
penalties. If we become liable under any of these obligations, it could materially and adversely affect our business, financial condition
or operating results. For additional information see Note N: “Commitments and Contingencies-Guarantees and Indemnification
Obligations” in Notes to Consolidated Financial Statements.
We may discontinue or reduce our quarterly cash dividend or share repurchase program.
In January 2014, our Board of Directors initiated a quarterly cash dividend. Since 2014, the Board of Directors has increased our
quarterly cash dividend from $0.06 per share to $0.12 per share. Holders of our common stock are only entitled to receive dividends
when and if they are declared by our Board of Directors.
In January 2021, our Board of Directors approved a $2.0 billion share repurchase program. In 2022 and 2021, we repurchased
$752.1 million, and $600.0 million, respectively of common stock. In January 2023, our Board of Directors cancelled the 2021
repurchase program and approved a new $2.0 billion share repurchase program. In 2024, we repurchased $199.4 million of common
stock and, in 2023, we repurchased $400.5 million of common stock. We intend to repurchase up to $400 million in 2025. Under the
share repurchase program, we may repurchase outstanding shares of our common stock from time to time in the open market and
through privately negotiated transactions. Unless terminated earlier by resolution of our Board of Directors, the repurchase program
will expire when we have repurchased all shares authorized for repurchase under the share repurchase program.
Future cash dividends and share repurchases are subject to the discretion of our Board of Directors and will depend, among
other things, upon our earnings, capital requirements and financial condition. While we have declared a quarterly cash dividend on our
common stock and authorized a share repurchase program, we are not required to do either and may reduce or eliminate our cash
dividend or share repurchase program in the future. The reduction or elimination of our cash dividend or our share repurchase program
could adversely affect the market price of our common stock.
We have incurred indebtedness and may incur additional indebtedness.
On May 1, 2020, we entered into a three-year, senior secured revolving credit facility of up to $400.0 million. On December 10,
2021, the credit agreement was amended to extend the maturity date of the credit facility to December 10, 2026. On October 5, 2022,
the credit agreement was amended to increase the amount of the credit facility to $750.0 million from $400.0 million. The amended
credit agreement provides that, subject to customary conditions, we may seek to obtain from existing or new lenders the available
incremental amount under the credit facility, not to exceed the greater of $200.0 million or 15% of consolidated EBIDTA. We could
borrow funds under this credit facility at any time for general corporate purposes and working capital. On May 16, 2024, we borrowed
$185.0 million under this credit facility, primarily to fund our acquisition of the 10% equity interest in Technoprobe discussed above.
By December 31, 2024, we had fully repaid all amounts borrowed under the credit facility. As of February 20, 2025, there are no
outstanding borrowings under the credit facility.
Our outstanding and any additional indebtedness, among other things, could:
•
make it difficult to make payments on this indebtedness and our other obligations;
•
make it difficult to obtain any necessary future financing for working capital, capital expenditures, debt service requirements
or other purposes;
•
require the dedication of a substantial portion of any cash flows from operations to service for indebtedness, thereby
reducing the amount of cash flows available for other purposes, including capital expenditures, and
•
limit our flexibility in planning for or reacting to changes in our business and the industries in which we complete.
Restrictive covenants in the agreement governing our senior secured revolving credit facility may restrict our ability to pursue
business strategies.
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The agreement governing our senior secured revolving credit facility limits our ability, among other things, to incur additional
secured indebtedness; sell, transfer, license or dispose of assets; consolidate or merge; enter into transactions with our affiliates; and
incur liens. In addition, our senior secured revolving credit facility contains financial and other restrictive covenants that limit our
ability to engage in activities that may be in our long-term best interest, such as, subject to permitted exceptions, making capital
expenditures in excess of certain thresholds, making investments, loans and other advances, and prepaying any additional
indebtedness while our indebtedness under our senior secured revolving credit facility is outstanding. Our failure to comply with
financial and other restrictive covenants could result in an event of default, which if not cured or waived, could result in the lenders
requiring immediate payment of all outstanding borrowings or foreclosing on collateral pledged to them to secure the indebtedness.
We may not be able to pay our debt and other obligations.
If our cash flows are inadequate to meet our obligations, we could face substantial liquidity problems. If we are unable to
generate sufficient cash flows or otherwise obtain funds necessary to make required payments on our senior secured revolving credit
facility or certain of our other obligations, we would be in default under the terms thereof, which would permit the holders of those
obligations to accelerate their maturity and also could cause defaults under future indebtedness we may incur. Any such default could
have a material adverse effect on our business, prospects, financial position and operating results.
Foreign currency exchange rates and fluctuations in those rates may affect the Company’s ability to realize projected growth rates
in its sales and earnings.
Our financial statements are denominated in U.S. dollars. While revenues in our test businesses are predominantly in U.S.
dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar would negatively
affect Robotics revenue growth.
Adverse developments affecting the financial services industry, including events or risks involving liquidity, defaults or non-
performance by financial institutions, could have a material adverse effect on our business, financial condition or results of
operations.
We hold cash balances in several large financial institutions significantly in excess of the Federal Deposit Insurance Corporation
("FDIC") and global insurance limits. If banks and financial institutions with whom we have banking relationships enter receivership
or become insolvent in the future, we may be unable to access, and we may lose some or all of our existing cash, cash equivalents and
investments to the extent those funds are not insured or otherwise protected by the FDIC. For example, on March 10, 2023, Silicon
Valley Bank ("SVB"), who is a lender in our revolving credit facility and where we maintain certain accounts and cash deposits, was
placed into receivership with the FDIC, which resulted in all funds held at SVB being temporarily inaccessible by SVB’s customers.
As of March 13, 2023, access to our cash and cash equivalents at SVB was fully restored. There is no guarantee that the FDIC or any
other global insurer will provide access to uninsured funds in the future in the event of the closure of any other banks or financial
institutions in a timely fashion or at all. Any inability to access or delay in accessing these funds could adversely affect our business,
financial position, and liquidity.
Our stock price has been subject to fluctuations, and will likely continue to be subject to fluctuations, which may be volatile and
due to factors beyond our control.
The market price of our common stock is subject to wide fluctuations in response to various factors, some of which are beyond
our control. In addition to the factors discussed in this "Risk Factors" section and elsewhere in this report, factors that could cause
fluctuations in the market price of our common stock include the following:
•
ratings changes by any securities analysts who follow our company;
•
announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint
ventures, or capital commitments;
•
changes in operating performance and stock market valuations of other technology companies generally, or those in our
industry in particular;
•
changes in accounting standards, policies, guidelines, interpretations, or principles;
•
actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
•
developments or disputes concerning our intellectual property or our products and platform capabilities, or third-party
proprietary rights;
15
•
cybersecurity attacks or incidents;
•
announced or completed acquisitions of businesses or technologies by us or our competitors;
•
changes in our board of directors or management;
•
announced or completed equity or debt transactions involving our securities;
•
sales of shares of our common stock by us, our officers, directors, or other stockholders; and
•
other events or factors, including those resulting from global and macroeconomic conditions, including heightened inflation,
rising interest rates, bank failures, and a potential recession, and speculation regarding the same, as well as public health
crises, geopolitical tension, incidents of terrorism, or responses to these events.
In addition, the market for technology stocks and the stock markets in general have experienced extreme price and volume
fluctuations. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating
performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market
volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the
attention of management from our business, and adversely affect our business, results of operations, financial condition, and cash
flows. A decline in the value of our common stock, including as a result of one or more factors set forth above, may result in
substantial losses for our stockholders.
Risks Related to Operations
Our operating results are likely to fluctuate significantly.
Our operating results are affected by a wide variety of factors that could materially adversely affect revenues or profitability.
The following factors could impact future operations:
•
a worldwide economic slowdown or disruption in the global financial or industrial markets;
•
cost increases from inflation on materials, employee wages, third party labor, and contract manufacturing;
•
competitive pressures on selling prices;
•
our ability to introduce, and the market acceptance of, new products;
•
changes in product revenues mix resulting from changes in customer demand;
•
the level of orders received which can be shipped in a quarter because of the tendency of customers to wait until late in a
quarter to commit to purchase due to capital expenditure approvals and constraints occurring at the end of a quarter, or the
hope of obtaining more favorable pricing from a competitor seeking the business;
•
engineering and development investments relating to new product introductions, and the expansion of manufacturing,
outsourcing and engineering operations in Asia;
•
provisions for excess and obsolete inventory relating to the lack of demand for and the discontinuance of products;
•
impairment charges for certain long-lived and intangible assets, and goodwill;
•
an increase in the leasing of our products to customers;
•
disruption caused by health pandemics,
•
the success of sales channel expansion in Robotics;
•
our ability to expand our global distribution channel for our collaborative and mobile robots;
•
parallel or multi-site testing which could lead to a decrease in the ultimate size of the market for our semiconductor and
electronic test products; and
•
the ability of our suppliers and subcontractors to meet product quality or delivery requirements needed to satisfy customer
orders for our products, especially if consolidated revenues increase.
As a result of the foregoing and other factors, we have experienced and may continue to experience material fluctuations in
future operating results on a quarterly or annual basis which could materially and adversely affect our business, financial condition,
operating results or stock price.
16
If our suppliers do not meet product or delivery requirements, we could have reduced revenues and earnings.
If any of our suppliers were to cancel contracts or commitments or fail to meet the quality or delivery requirements needed to
satisfy customer orders for our products, we could lose time-sensitive customer orders, have significantly decreased revenues and
earnings and be subject to contractual penalties, which would have a material adverse effect on our business, results of operations and
financial condition. In addition, we rely on contract manufacturers for certain of our products, and our ability to meet customer orders
for those products depends upon the timeliness and quality of the work performed by these subcontractors, over whom we do not
exercise any control.
To a certain extent, we are dependent upon the ability of our suppliers and contract manufacturers to help meet increased
product or delivery requirements. It may be difficult for certain suppliers to meet delivery requirements in a period of rapid growth,
therefore impacting our ability to meet our customers’ demands.
Our suppliers are subject to trade regulations, including tariffs and export restrictions imposed by the United States Government
and by the governments of other countries. These regulations could impact our suppliers’ ability to provide us with components for
our products or could increase the price of those components.
We rely on the financial strength of our suppliers. The loss of suppliers either as a result of financial viability, bankruptcy or
otherwise could have a material adverse effect on our business, results of operations or financial condition.
The global supply shortage of electrical components and inflationary cost increases impact our ability to meet customer demand
and could adversely affect our business and financial results.
The global supply shortage of electrical components, including semiconductor chips, impacted our supply chain in 2023. As a
result, we experienced and may experience in the future, increases in our lead times and costs for certain components for certain
products. We may also experience delays in the delivery of some orders placed by our customers. In addition, inflationary pressures
have in the past contributed to increased costs for product components along with wage inflation which yielded a minimal impact to
the costs of our products, gross margin and profit for the year. In an effort to mitigate these risks, we may in some cases, incur higher
costs due to investment in supply chain resiliency and to secure available inventory or have extended or non-cancellable purchase
commitments with semiconductor suppliers, which introduces inventory risk if our forecasts prove inaccurate. We have also sourced
components from additional suppliers and multi-sourced and pre0ordered components and finished goods inventory in some cases in
an effort to reduce the impact of the adverse supply chain conditions we have experienced in the past. However, if we are unable to
secure manufacturing capacities from our current or new suppliers and contract manufacturers, on acceptable terms or at all, or
successfully manage our purchase commitments and inventory for components, our ability to deliver our products to our customers in
the desired quantities, at competitive prices or in a timely manner may be negatively impacted for 2025. We also have been, and may
continue to attempt to, offset the effect of these inflationary pressures by increasing the prices of our products. However, we may not
be fully able to pass additional costs on to our customers, which could have a negative impact on our results of operations and
financial condition.
Our operations may be adversely impacted if our outsourced contract manufacturers or service providers fail to perform.
We depend on Flex Ltd. (“Flex”) to manufacture and test our FLEX and J750 family of products from its facility in Malaysia;
Plexus Corp. (“Plexus”) to manufacture and test our Magnum products from its facilities in Malaysia and Thailand and our ETS
family of products from its facility in Malaysia; SAM Meerkat to manufacture and test our storage test family of products from its
facilities in Malaysia and Thailand and on other contract manufacturers to manufacture other products. If for any reason these contract
manufacturers cannot provide us with these products in a timely fashion, or at all, we may not be able to sell these products to our
customers until we enter a similar arrangement with an alternative contract manufacturer.
If we experience a problem with our supply of products from Flex, Plexus, SAM Meerkat, or our other contract manufacturers,
it may take us significant time to either manufacture the product or find an alternate contract manufacturer, which could result in
substantial expense and disruption to our business.
We have also outsourced certain general and administrative functions to reputable service providers, many of which are in
foreign countries, sometimes impacting communication with them because of language and time differences. Their presence in foreign
countries also increases the risk they could be exposed to political and cybersecurity risk. Additionally, there may be difficulties
encountered in coordinating the outsourced operations with existing functions and operations. If we fail in successfully coordinating
and managing the outsourced service providers, it may cause an adverse effect on our operations which could have a material adverse
effect on our business, results of operations or financial condition.
17
Our business may suffer if we are unable to attract and retain key employees.
Competition for employees with skills we require is intense in the high technology industry. We expect intense competition for
employees to continue in 2025. Our success will depend on our ability to attract and retain key technical employees. The loss of one or
more key or other employees, a decrease in our ability to attract additional qualified employees, or the delay in hiring key personnel
could each have a material adverse effect on our business, results of operations or financial condition.
Our operations, and the operations of our customers and suppliers, are subject to risks of natural catastrophic events, severe
weather, widespread health epidemics, acts of war, terrorist attacks and the threat of domestic and international terrorist attacks,
any one of which could result in cancellation of orders, delays in deliveries or other business activities, or loss of customers and
could negatively affect our business and results of operations. In certain cases, our insurance policy may be insufficient to cover
losses.
Our business is international in nature, with our sales, service and administrative personnel and our customers and suppliers
located in numerous countries throughout the world. Our operations, and those of our customers and suppliers, are subject to
disruption for a variety of reasons, including work stoppages, acts of war, terrorism, health epidemics, fires, earthquakes, hurricanes,
typhoons, volcanic eruptions, energy shortages, telecommunication failures, tsunamis, flooding or other natural disasters. Such
disruption could materially increase our costs and expenses as well as cause delays in, among other things, shipments of products to
our customers, our ability to perform services requested by our customers, or the installation and acceptance of our products at
customer sites. Any of these conditions could have a material adverse effect on our business, financial condition or results of
operations.
Global climate change can result in natural disasters occurring more frequently, with greater intensity and with less
predictability. For example, when our operations in Cebu, Philippines experienced a devastating typhoon, our employees in Cebu
succeeded in restoring most of our operations within days despite the severity of the damage in the region. The long-term effects of
climate change on the global economy and the semiconductor industry in particular are unclear but could be severe.
Risks Related to Intellectual Property (“IP”) and Cybersecurity
Third parties may claim we are infringing their intellectual property and we could suffer significant litigation costs, licensing
expenses or be prevented from selling our products.
We have been sued for patent infringement and receive notifications from time to time that we may be in violation of patents
held by others. An assertion of patent infringement against us, if successful, could have a material adverse effect on our ability to sell
our products or it could force us to seek a license to the intellectual property rights of others or alter such products so that they no
longer infringe the intellectual property rights of others. A license could be very expensive to obtain or may not be available at all.
Similarly, changing our products or processes to avoid infringing the rights of others may be costly or impractical. Additionally, patent
litigation could require a significant use of management resources and involve a lengthy and expensive defense, even if we eventually
prevail. If we do not prevail, we might be forced to pay significant damages, obtain licenses, modify our products, or stop making our
products; each of which could have a material adverse effect on our financial condition, operating results or cash flows.
If we are unable to protect our IP, we may lose a valuable asset or may incur costly litigation to protect our rights.
We protect the technology that is incorporated in our products in several ways, including through patent, copyright, trademark
and trade secret protection and by contractual agreement. However, even with these protections, our IP may still be challenged,
invalidated or subject to other infringement actions. While we believe that our IP has value in the aggregate, we do not believe that
any single element of our IP is in itself essential. If a significant portion of our IP is invalidated or ineffective, our business could be
materially adversely affected.
A breach of our operational or security systems could negatively affect our business and results of operations.
We rely on various information technology networks and systems to process, transmit and store electronic information,
including proprietary and confidential data, and to carry out and support a variety of business activities, including manufacturing,
research and development, supply chain management, sales and accounting. We have experienced several attempted cyber-attacks of
our network. None of the attempted attacks have caused a disruption to our operations or had a material adverse effect on our business
or financial results. As a result of the attempts, we have taken further preventive security measures to protect our systems. Despite the
preventative security measures we have implemented, we may continue to be vulnerable to attempts by third parties to gain
unauthorized access to our networks or sabotage our systems. These attempts, which might be related to criminal hackers, industrial
espionage or state-sponsored intrusions, include trying to covertly introduce malware to our computers, networks and systems and
impersonating authorized users. In addition, third party suppliers and service providers that we rely on to manage our networks and
18
systems and who process and store our proprietary and confidential data, including the data of our customers and suppliers, may also
be subject to similar attacks. Employees and contractors may also attempt to gain unauthorized access to our systems and steal
proprietary and confidential data. Such attempts could result in the misappropriation, theft, misuse, disclosure or loss or destruction of
the intellectual property, or the proprietary, confidential or personal information, of Teradyne or our employees, customers, suppliers
or other third parties, as well as damage to or disruptions in our information technology networks and systems. These threats are
constantly evolving and expanding, such as through the increased use of artificial intelligence in our products and expanding remote
work opportunities for our employees, thereby increasing the difficulty of defending against them or implementing adequate
preventative measures. While we seek to detect and investigate all security incidents and to prevent their recurrence, attempts to gain
unauthorized access to our information technology networks and systems may be successful, and in some cases, we might be unaware
of an incident or its magnitude and effects. A failure in or a breach of our operational or security systems or infrastructure, or those of
our suppliers and other service providers, including as a result of cyber-attacks, could have a material adverse effect on our business or
financial results, disrupt our business, result in the disclosure or misuse of proprietary or confidential information, damage our
reputation, cause losses and increase our costs. We expect to continue to devote significant resources to the security of our information
technology networks and systems.
A breach of the security of our products could negatively affect our business and results of operations.
We may be subject to security breaches of certain of our products caused by viruses, illegal break-ins or hacking, sabotage, or
acts of vandalism by third parties or our employees or contractors. A breach of our product security systems could have a material
adverse effect on our business or financial results, disrupt our business, result in the disclosure or misuse of proprietary or confidential
information, damage our reputation, cause losses, and increase our costs. We expect to continue to devote significant resources to the
security of our products.
We are exposed to risks related to the use of AI tools by us and others.
Although we are evaluating, and where we believe appropriate, incorporating AI tools into our products and operations, our use
of AI tools may subject us to significant competitive, legal, regulatory and other risks, and there can be no assurance that our use of AI
tools will enhance our products, business operations or result in a benefit to us. Our competitors may be more successful in their use of
AI tools, including by developing superior products or improving their operations with the assistance of AI. Additionally, there could
be adverse impacts from flawed algorithms. Our use of AI tools, or our customers uses of our products that incorporate AI, could also
result in the loss of confidential information or intellectual property or an inability to claim or enforce intellectual property rights, as
well as subject us to risks related to intellectual property infringement or misappropriation, data privacy, cybersecurity, and the
unauthorized use of our data. The jurisdictions in which we conduct business have and may adopt laws and regulations related to AI,
which could cause us to incur greater compliance costs, limit our use of AI tools, or subject us to legal liabilities.
Risks Related to Legal and Regulatory Compliance
The implementation of tariffs on our products may have a material impact on our business.
Our business operations and supply chain are global and may be disrupted by the implementation of tariffs.
In 2018, the United States Trade Representative imposed a 25% tariff on many lists of products, including certain Teradyne
products that are made in China and imported into the United States. On February 1, 2025, President Trump issued an executive order
directing the United States to impose an additional 10% tariff on all imports from China effective February 4, 2025.We plan to
implement operational changes that mitigate some of the impact of these tariffs on the import of our impacted products into the United
States. As a result, the existing tariffs have not had a material adverse effect on our business, financial condition or results of
operations. The implementation of additional tariffs by the United States could have a material adverse effect on our business,
financial condition or results of operations.
In addition to the actions taken by the United States, China has implemented retaliatory tariffs on products made in the United
States and imported into China. These tariffs have not yet impacted Teradyne products. However, notwithstanding our efforts, the
retaliatory tariffs or other trade restrictions implemented by China and possible future retaliatory actions by China or other nations
could disrupt our business operations, sales and supply chain and, therefore, have a material adverse effect on our business, financial
condition or results of operations.
In February, 2025, President Trump issued executive orders directing the United States to impose new or additional tariffs on
certain imports from Canada, Mexico and China and subsequently announced his intention to pause such tariffs on Canada and
Mexico. While we do not believe any tariffs announced to date will have a material adverse effect on our business, financial condition
or results of operations, we are still evaluating the potential impact of these tariffs and any additional tariffs implemented by the
19
Trump administration as well as any retaliatory actions by the impacted countries to our business and financial condition and outlook.
The actual impact on any new tariffs is subject to a number of factors including the effective date, duration, amount, scope and nature
of the tariffs, any retaliatory actions any impacted country may take, and any mitigating actions that are available.
Trade regulations and restrictions impact our ability to manufacture certain products and to sell products to and support certain
customers, which may materially adversely affect our sales and results of operations.
We are subject to U.S. laws and regulations that limit and restrict the export of some of our products and services and may
restrict our transactions with certain customers, business partners and other persons. In certain circumstances, export control and
economic sanctions regulations prohibit the export of certain products, services and technologies, and in other circumstances are
required to obtain an export license before exporting the controlled item. We must also comply with export restrictions and laws
imposed by other countries affecting trade and investments. We maintain an export compliance program but there are risks that the
compliance controls could be circumvented, exposing us to legal liabilities. As further described below, compliance with these laws
has not significantly limited our sales over time, but could significantly limit them in the future. Changes in, and responses to, U.S.
trade policy could reduce the competitiveness of our products and cause our sales to drop, which could have a material adverse effect
on our business, financial condition or results of operations.
The U.S. government from time to time has issued export restrictions that prohibit U.S. companies from exporting U.S.
manufactured products, foreign manufactured products with more than 25% controlled U.S. content, foreign made product which was
produced using U.S. technology, as well as U.S. origin technology. For example, the U.S. Department of Commerce has restricted the
access of U.S. origin technologies to certain Chinese semiconductor companies by adding those companies to the Entity List and the
Foreign Direct Product Rule ("FDP") under U.S. Export Administration Regulations (“EAR”). On May 16, 2019, Huawei and 68 of its
affiliates, including HiSilicon, were added to the U.S. Department of Commerce Entity List under EAR. On December 2, 2024, certain
of our customers and prospective customers were added to the U.S. Department of Commerce Entity List or FDP under EAR. The
addition of certain of these companies to the entity list and FDP has had and will continue to have an adverse impact on our business
with these customers. We will take appropriate actions, including filing for licenses with the U.S. Department of Commerce to attempt
to minimize the impact of the restrictions on our business.
On April 28, 2020, the U.S. Department of Commerce published new export control regulations for certain U.S. products and
technology sold to military end users or for military end-use in China, Russia and Venezuela. The definition of military end user is
broad. The regulations went into effect on June 29, 2020. In December 2020, the U.S. Department of Commerce issued a list of
companies in China and other countries that it considered to be military end users. Compliance with the new export controls has
impacted our ability to sell products to certain customers in China. In addition, while we maintain an export compliance program, our
compliance controls could be circumvented, exposing us to legal liabilities. We will continue to assess the impact of these export
controls on our business and operations and take appropriate actions to ensure compliance and minimize any disruption. However, we
cannot be certain that the actions we take will mitigate all the risks associated with the export controls that may impact our business.
On October 7, 2022, the U.S. Department of Commerce published regulations restricting the export to China of advanced
semiconductors, supercomputer technology, equipment for the manufacturing of advanced semiconductors and components and
technology for the manufacturing in China of certain semiconductor manufacturing equipment. The restrictions impacted our sales to
certain companies in China and our manufacturing and development operations in China. We mitigated the impact of these restrictions
on our business by obtaining licenses from the U.S. Department of Commerce. On October 17, 2023, the U.S. Department of
Commerce released new rules updating the export controls issued on October 7, 2022. The new rules, which took effect on November
17, 2023, significantly limit the impact of the October 7, 2022 restrictions on our business. On December 2, 2024, the U.S.
Department of Commerce released additional new rules updating export controls. These regulations may continue to have an adverse
impact on certain actual or potential customers and on the global semiconductor industry. To the extent the regulations impact actual
and potential customers or disrupt the global semiconductor industry, our business and revenues will be adversely impacted.
In response to the regulations issued by the U.S. Department of Commerce, the Chinese government has passed new laws,
including blocking legislation, which may impact our business activities in China. The Company is assessing the potential impact of
these new Chinese laws and monitoring relevant laws and regulations issued by the Chinese government. The impact of these new
Chinese laws on our business activities in China remains uncertain at this time.
We may be subject to product recalls and warranty and product liability claims.
We invest significant resources in the design, manufacturing and testing of our products. However, from time to time, we
discover design or manufacturing defects in our products after they have been shipped and, as a result, we have incurred development
and remediation costs and settled warranty and product liability claims. In addition, when our products contain defects or have
reliability, quality or safety issues, we have conducted a product recall which resulted in significant repair or replacement costs and
20
substantial delays in product shipments and may damage our reputation which could make it more difficult to sell our products. We
could continue to have warranty and product liability claims or product recalls in the future. Any of these results could have a material
adverse effect on our business, results of operations or financial condition.
We may incur significant costs of complying with present and future environmental regulations and may incur significant
liabilities if we fail to comply with such environmental regulations.
We are subject to both domestic and international environmental regulations and statutory strict liability relating to the use,
storage, discharge, site cleanup and disposal of hazardous chemicals used in our manufacturing processes. In addition, future
regulations in response to global climate change may affect us, our suppliers, and our customers. Such regulations could cause us to
incur additional direct costs for compliance, as well as increased indirect costs resulting from our customers and/or suppliers. Future
climate change regulations could result in decreased demand for our products. If we fail to comply with present and future regulations,
or are required to perform site remediation, we could be subject to future liabilities or cost, including penalties or the suspension of
production. Present and future regulations may also:
•
restrict our ability to expand facilities;
•
restrict our ability to ship certain products;
•
require us to modify our operations logistics;
•
require us to acquire costly equipment; or
•
require us to incur other significant costs and expenses.
Pursuant to present regulations and agreements, we are conducting groundwater and subsurface assessment and monitoring and
are implementing remediation and corrective action plans for facilities located in Massachusetts and New Hampshire which are no
longer conducting manufacturing operations. As of December 31, 2024, we have not incurred material costs as a result of the
monitoring and remediation steps taken at the Massachusetts and New Hampshire sites.
The directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (the “RoHS
Directive”) and the directive on Waste Electrical and Electronic Equipment (the “WEEE Directive”) altered the form and manner in
which electronic equipment is imported, sold and handled in the European Union. Other jurisdictions, such as China, have followed
the European Union’s lead in enacting legislation with respect to hazardous substances and waste removal. Ensuring compliance with
the RoHS Directive, the WEEE Directive and similar legislation in other jurisdictions, and integrating compliance activities with our
suppliers and customers could result in additional costs and disruption to operations and logistics and thus, could have a negative
impact on our business, operations or financial condition.
We currently are, and in the future may be, subject to litigation or regulatory proceedings that could have an adverse effect on our
business.
From time to time, we may be subject to litigation or other administrative, regulatory or governmental proceedings, including
tax audits and resulting claims that could require significant management time and resources and cause us to incur expenses and, in the
event of an adverse decision, pay damages or incur costs in an amount that could have a material adverse effect on our financial
position or results of operations.
We may face risks associated with shareholder activism.
We may become subject to campaigns by shareholders advocating corporate actions such as financial restructuring, increased
borrowing, special dividends, stock repurchases or divestitures. Such activities could interfere with our ability to execute our business
plans, be costly and time-consuming, disrupt our operations, divert the attention of management, or result in our initiating borrowing
or increasing our share repurchase plan or dividend, any of which could have an adverse effect on our business or stock price.
Provisions of our charter and by-laws and Massachusetts law may make a takeover of Teradyne more difficult.
There are provisions in our basic corporate documents and under Massachusetts law that could discourage, delay or prevent a
change in control, even if a change in control may be regarded as beneficial to some or all of our stockholders.
Item 1B: Unresolved Staff Comments
None.
21
Item 1C: Cybersecurity
We believe cybersecurity is critical to supporting our vision and enabling our strategy. As a producer of leading-edge electronic
testing products and maker of advanced robotics, we face a multitude of cybersecurity threats that range from attacks common to most
industries, such as ransomware and denial-of-service, to attacks from more advanced, persistent, and highly organized adversaries,
including nation state actors, that may target us for our role in critical infrastructure sectors. Our customers, suppliers, and partners
face similar cybersecurity threats and, while we have not been materially affected to date, a cybersecurity incident impacting us or any
of these entities could materially adversely affect our operations, performance, and results of operations. These cybersecurity threats
and related risks make it imperative that we maintain a strong focus on cybersecurity.
Governance
The Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to
help align our risk exposure with our strategic objectives. Senior leadership, including our Chief Information Security Officer
("CISO"), brief the Audit Committee of the Board of Directors quarterly and the full Board of Directors at least annually on our
cybersecurity and information security posture.
The corporate information security organization, under the CISO, has implemented a governance structure and processes to
assess, identify, manage, and report cybersecurity risks. The CISO chairs management’s Cybersecurity Steering Committee, in which
current cyber threats, program performance, and ongoing risk mitigations are regularly reviewed. Cybersecurity related risks are also
integrated into our overall enterprise risk management ("ERM") process. These risks are included in the risk universe that the ERM
function evaluates to assess top enterprise risks on an annual basis and is reviewed and evaluated by the Board of Directors. The
Board of Directors is also apprised of cybersecurity issues or incidents deemed to have a moderate or higher business impact as they
arise, even if considered immaterial.
In the event of a significant incident, we intend to follow our detailed incident response playbooks, which outline the steps to be
followed from incident detection through mitigation, recovery and notification, including escalation to functional areas (e.g., legal),
and escalation to senior leadership via the Cybersecurity Steering Committee. Upon escalation, the Cybersecurity Steering Committee
will review all inputs, assess the materiality of the incident, and then brief the Board of Directors on the determination and on how
management intends to respond.
Risk management and strategy
Our global information security organization, led by our CISO, is responsible for our overall information security strategy,
policy, security engineering, operations, and cyber threat detection and response. Our CISO is an experienced cybersecurity senior
executive with more than 25 years of experience building and leading cybersecurity, risk management and information technology
teams. The information security organization manages and continually enhances a robust enterprise security structure with the goal of
preventing cybersecurity incidents to the extent feasible, while simultaneously increasing system resilience and deploying highly
proficient detection and response capabilities in an effort to minimize the business impact should an incident occur.
Central to this organization is our global cyber operations team, which is responsible for the protection, detection, and response
capabilities used in the defense of critical data and enterprise computing services. We also have a corporate-wide insider threat
detection program to proactively identify external and internal threats and mitigate those threats in a timely manner. Our broader
Teradyne employee community also has a key role in our cybersecurity defenses and is immersed in a comprehensive training and
awareness curriculum to build and promote a corporate culture supportive of security.
Third parties also play a role in our cybersecurity. We engage third-party services to provide 24x7x365 monitoring, escalation,
and response to cyber events. In addition to consulting on best practices, we leverage third parties for independent evaluations of our
security controls through penetration testing and independent audits. These evaluations include testing both the design and operational
effectiveness of security controls. We also share and receive threat intelligence with our industry peers, cybersecurity associations, and
our cyber controls vendors.
We rely on contract manufacturing organizations and distributors to deliver our products to our customers, and a cybersecurity
incident at one of these organizations or a key supplier could materially adversely impact us. We assess third party and supply chain
cybersecurity controls through risk monitoring services tailored to align with our risk policy. Notwithstanding the extensive approach
we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material
adverse effect on us, either directly within our managed environment or indirectly via a third-party partner or supply chain vendor.
Periodically we have a recognized independent security expert firm to assess our cyber security maturity along with risks and provide
22
feedback on where we should continue to improve to mitigate exposures. We share this review with our Board and develop a security
roadmap which incorporates this feedback.
Additionally, for our business that supports the defense and aerospace sector, we must comply with extensive regulations,
including requirements imposed by the Defense Federal Acquisition Regulation Supplement ("DFARS") related to adequately
safeguarding controlled unclassified information ("CUI") and reporting cybersecurity incidents to the DoD. We have implemented
cybersecurity policies and frameworks based on industry and governmental standards to align closely with DoD requirements,
instructions, and guidance. Moreover, we are pursuing the necessary controls to support the Cybersecurity Maturity Model
Certification ("CMMC") program, DoD’s program to ensure members of the defense industrial base meet cybersecurity requirements
for handling CUI and federal contract information. We believe we are well positioned to meet the requirements of the CMMC and are
preparing for certification once the requirements are effective.
Item 2: Properties
We conduct manufacturing, engineering, sales and marketing, service, corporate administration and other operations in various
leased and owned facilities throughout the world. We own approximately 920,000 square feet of office space and lease approximately
1,340,000 square feet of office space. We own our corporate headquarters in North Reading, Massachusetts, which is approximately
422,000 square feet. We believe our existing facilities are adequate to meet our current and reasonably foreseeable requirements. We
regularly evaluate our expected facility needs and periodically make adjustments based on these evaluations. In 2024, we completed
construction of an approximately 200,000 square foot building in Odense, Denmark, for our Robotics operations.
Item 3: Legal Proceedings
We are subject to legal proceedings, claims and investigations that arise in the ordinary course of business such as, but not
limited to, patent, employment, commercial and environmental matters. We believe that we have meritorious defenses against all
pending claims and intend to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending
claims or to provide possible ranges of losses that may arise, we believe the potential losses associated with all these actions are
unlikely to have a material adverse effect on our results of operations, financial condition or cash flows.
Item 4: Mine Safety Disclosure
Not Applicable.
23
PART II
Item 5: Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
Our common stock is traded on the Nasdaq Global Select Market under the trading symbol “TER.” As of February 20, 2025,
there were approximately 1,084 holders of record of shares of our common stock.
See “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for information on the
frequency and amounts of our quarterly cash dividends, equity compensation plans and performance graph.
The following table includes information with respect to repurchases we made of our common stock during the three months
ended December 31, 2024 (in thousands except per share price):
Period
(a) Total
Number of
Shares
(or Units)
Purchased
(b) Average
Price Paid per
Share (or Unit)
(c) Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
(d) Maximum Number
(or Approximate Dollar
Value) of Shares (or
Units) that may Yet Be
Purchased Under the
Plans or Programs
September 30, 2024 – October 27, 2024
104
$
129.01
103
$
1,531,150
October 28, 2024 – November 24, 2024
475
107.04
475
1,480,482
November 25, 2024 – December 31, 2024
668
120.26
668
1,400,063
1,247 (1)
$
115.95 (1)
1,246
(1)
Includes approximately two thousand shares at an average price of $122.14 withheld from employees for the payment of taxes.
As of January 1, 2023, share repurchases net of share issuances are subject to a 1% excise tax under the Inflation Reduction Act.
Excise tax incurred is included as part of the cost basis of shares repurchased in the Condensed Consolidated Statements of
Convertible Common Shares and Stockholders' Equity.
In January 2023, the Board of Directors cancelled the 2021 repurchase program and approved a new $2.0 billion of common
stock. Unless terminated by resolution of our Board of Directors, the repurchase program will expire when we have repurchased all
shares authorized for repurchase under the share repurchase program.
We satisfy U.S. federal and state minimum withholding tax obligations due upon the vesting and the conversion of restricted
stock units into shares of our common stock, by automatically withholding from the shares being issued, a number of shares with an
aggregate fair market value on the date of such vesting and conversion that would satisfy the minimum withholding amount due.
Item 6: (Reserved)
24
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
We are a leading global supplier of automated test equipment and robotics products. We design, develop, manufacture and sell
automated test systems and robotics products. Our automated test systems are used to test semiconductors, wireless products, data
storage and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial,
computing, communications, and aerospace and defense industries. Our Robotics products include collaborative robotic arms and
autonomous mobile robots (“AMRs”) used by global manufacturing, logistics and industrial customers to improve quality, increase
manufacturing and material handling efficiency and decrease manufacturing and logistics costs. Our automated test equipment and
robotics products and services include:
•
semiconductor test (“Semiconductor Test”) systems;
•
robotics (“Robotics”) products; and
•
defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, circuit-board test and inspection (“Production
Board Test”) systems, and wireless test systems (referred collectively as "All Other").
The market for our test products is concentrated with a limited number of significant customers accounting for a substantial
portion of the purchases of test equipment. A few customers drive significant demand for our products both through direct sales and
sales to the customer’s supply partners. We expect that sales of our test products will continue to be concentrated with a limited
number of significant customers for the foreseeable future.
In 2024, we saw strength in our Semiconductor Test business, with memory and compute offerings growing considerably
compared to 2023. We expect mobile, automotive, and industrial will grow in 2025 and that recent advancements in AI inference may
help mid-term recovery in these markets. Beyond AI compute, we are investing in other areas of the semiconductor test market that
offer the opportunity for accelerating long-term growth, including power semi-conductors and the shift towards vertically integrated
products ("VIPs"). We have seen the benefits start to materialize in 2024 and expect them to continue through the mid-term.
2024 was a very weak industrial automation market resulting in a year-over-year decline in Robotics revenues while
outperforming our peer group. In 2024, we built key OEM, systems integrators and large account strategic partnerships which will
strengthen our go to market for years to come. Introduction of new products, including the MiR 1200 Pallet Jack will further expand
our available markets to support our growth.
On May 27, 2024, we paid 483.1 million Euros, equivalent to $524.1 million, to purchase a combination of previously issued
and outstanding shares and shares newly issued by Technoprobe, S.p.A. ("Technoprobe"). The shares purchased represent 10% of the
issued and outstanding shares of Technoprobe. We also received a board seat as part of the purchase. Additionally, as part of the
transaction, we completed the sale of the Device Interface Solutions ("DIS") business, a component of our Semiconductor Test
segment, to Technoprobe for $85.0 million in cash, net of cash and cash equivalents sold, and a customary working capital adjustment.
The sale resulted in a pre-tax gain of $57.1 million recorded as 'Gain on sale of business' in the consolidated statement of operations.
Our financial statements are denominated in U.S. dollars. While revenues in our test businesses are predominantly in U.S.
dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar would negatively
affect Robotics revenue growth in 2025.
Our corporate strategy for our test businesses is to profitably grow market share while in Robotics, we plan to profitably grow
revenue through the introduction of differentiated products targeting expanding markets. Our capital allocation plan will continue to
be balanced between investing in organic and inorganic growth and returning cash to shareholders through share repurchases and
dividends.
Supply Chain Constraints and Inflationary Pressures
The global supply shortage of electrical components, including semiconductor chips, impacted our supply chain in the first half
of 2023. In the second half of 2023 and the full year of 2024, we saw improvements related to supply constraints and, consequently,
did not experience material increases in our lead times and costs for components. In addition, in 2023 and 2024, inflationary pressures
contributed to increased costs for product components and wage inflation, which had a minimal impact on our cost of products, gross
margin and profit for the year. While our businesses could be impacted by supply constraints in the future, we do not anticipate supply
chain constraints will have a material impact on our financial results in 2025.
25
Government Regulations
We are subject to numerous United States and foreign laws and regulations, including, without limitation, tariffs, trade
sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, and other
laws and regulations. Additionally, United States and foreign governmental authorities have taken, and may continue to take,
administrative, legislative or regulatory action that could impact our operations. We believe that our operations are in material
compliance with applicable trade regulations. The costs we incurred in complying with applicable trade regulations for the year ended
December 31, 2024 were not material, and we do not currently expect the cost of complying with existing trade laws and regulations
to have a material adverse effect on our capital expenditures or earnings or on our competitive position in any one year. It is possible,
however, that future developments, including changes in laws and regulations or government policies, could lead to material costs, and
such costs may have a material adverse effect on our future business or prospects.
For information regarding risks associated with import-export control regulations and similar applicable laws and regulations,
see Part II - Item 1A "Risk Factors- Risks Related to Legal and Regulatory Compliance" included elsewhere in this Form 10-K.
Critical Accounting Policies and Estimates
We have identified the policies and estimates discussed below as critical to understanding our business and our results of
operations and financial condition. The impact and any associated risks related to these estimates on our business operations is
discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies
affect our reported and expected financial results. For a full description of our accounting policies related to the below items refer to
Note B. Accounting Policies, included in the Notes to Consolidated Financial Statements in this Annual Report.
Critical accounting estimates are complex and may require significant judgment by management. Changes to the underlying
assumptions may have a material impact on our financial condition and results of operations. These estimates may change, as new
events occur, and additional information is obtained. Actual results could differ significantly from these estimates under different
assumptions or conditions.
Revenue Recognition
In accordance with ASC 606, “Revenue from Contracts with Customers” (“ASC 606”), we recognize revenues, when or as
control is transferred to a customer. Our determination of revenue requires judgment in the determination of performance obligations
and allocation of the transaction price to performance obligations. We often sell bundled orders that include both product and services
or multiple different products within the same order. We evaluate each of the deliverables to determine if it meets the definition of a
performance obligation, which requires that it is capable of being distinct and distinct within the context of the contract. This
determination is based on an assessment of contractual rights of the contract and the ability of the performance obligation to perform
on its own or with readily available resources. In bundled transactions we estimate the standalone selling price of each identified
performance obligation and use that estimate to allocate the transaction price among said performance obligations. The estimated
standalone selling price is determined using all information reasonably available to us, including standalone transactions, market
information and other observable inputs.
Equity Method Investments
We account for investments using the equity method of accounting when it has significant influence over the financial and
operating policies, but not control, of the investee. The equity method investments are initially recorded at cost and included in the
'Equity method investment' in the consolidated balance sheet. We record our share of investee's net income or loss and other
comprehensive income, and the amortization of equity method basis difference, calculated as the difference between the investment
and the amount of underlying equity in net assets acquired, on a 3-month lag, which is applied consistently from period to period. Our
share of investee's net income and the amortization of equity method basis difference are reported in 'Equity in net earnings of affiliate'
in the consolidated statement of operations. We include our share of investee's other comprehensive income and a cumulative
translation adjustment in the consolidated statements of comprehensive income. We monitor on an ongoing basis its equity method
investments for indicators of other-than-temporary declines in fair value below carrying value.
Inventories
Inventories are stated at the lower of cost using a standard costing system which approximates cost based on a first-in, first-out
basis or net realizable value. On a quarterly basis, we evaluate all inventories for net realizable value. This quarterly process identifies
obsolete and excess inventory. Obsolete inventory, which represents items for which there is no demand, is fully reserved. Excess
inventory, which represents inventory items that are not expected to be consumed within the forecasted demand window, is written
26
down to estimated net realizable value. Forecasted demand information is obtained from the sales and marketing groups and
incorporates factors such as backlog and future revenues. The demand forecast is based on assumptions around the product life and
customer and market expectations.
Retirement and Postretirement Plans
We recognize net actuarial gains and losses and the change in the fair value of the plan assets in our operating results in the year
in which they occur or upon any interim remeasurement of the plans. Discount rate and expected return on assets are two assumptions
which are important elements of pension plan expense and asset/liability measurement. We evaluate our discount rate and expected
rate of return on assets assumptions annually on a plan and country specific basis. We evaluate other assumptions related to
demographic factors, such as retirement age, mortality and turnover periodically, and update them to reflect our experience and
expectations for the future.
In developing the expected return on U.S. Qualified Pension Plan (“U.S. Plan”) assets assumption, we evaluated input from our
investment manager and pension consultants, including their forecast of asset class return expectations. We believe that 4.65% was an
appropriate rate of return on assets to use for 2024. The December 31, 2024 asset allocation for our U.S. Plan was 94% invested in
fixed income securities, 5% invested in equity securities, and 1% invested in other securities. Our investment manager regularly
reviews the actual asset allocation and periodically rebalances the portfolio to ensure alignment with our target allocations.
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension
Index adjusted for the U.S. Plan’s expected cash flows and was 5.45% at December 31, 2024, up from 4.75% at December 31, 2023.
We estimate that in 2025 we will recognize approximately $0.1 million of pension expense for the U.S. Plan. The U.S. Plan pension
expense estimate for 2025 is based on a 5.45% discount rate and a 5.05% return on assets. Future pension expense or income will
depend on future investment performance, changes in future discount rates and various other factors related to the employee
population participating in our pension plans.
Goodwill, Intangible and Long-Lived Assets
We assess goodwill for impairment at least annually in the fourth quarter, as of December 31, on a reporting unit basis, or more
frequently, when events and circumstances occur indicating that the recorded goodwill may be impaired. We review intangible and
long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets
may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Goodwill impairment will be the amount
by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Impairment of
intangible and long-lived assets would result in the asset being written down to its estimated fair value. The calculated fair value of a
reporting unit or intangible or long-lived asset is dependent upon discounted cash flow (“DCF”) models, discount rates, and market
multiples. DCF models rely on our forecasted mid-term plans which are subjective based on customer or market conditions and can
change materially. We utilize third party specialists when determining discount rates and selected market multiples. A change in any
of these key assumptions could result in a reporting unit, intangible asset, or long-lived asset being impaired in a future period.
Convertible Debt
We adopted Accounting Standards Update (“ASU”) ASU 2020-06 – “Debt—Debt with Conversion and Other Options and
Derivatives and Hedging—Contracts in Entity’s Own Equity,” on January 1, 2022 using the modified retrospective method of
adoption. In accordance with ASU 2020-06, we account for a convertible debt instrument as a single liability measured at its
amortized cost, as long as no other features require bifurcation and recognition as derivatives. Unsettled shares are recorded in current
debt, and there is no recognition of a debt discount, which was previously amortized to interest expense. Settled shares reduce the
outstanding debt balance in an amount equal to the cash paid, but do not result in any gain or loss on extinguishment. We use the if-
converted method in the diluted EPS calculation for convertible instruments.
Income Taxes
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and
liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The
measurement of deferred tax assets is reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax
assets will not be realized. Evaluating the positive and negative evidence regarding the realization of the net deferred tax assets in
accordance with ASC 740, “Accounting for Income Taxes” is a key judgment in the valuation of income taxes. This assessment
included the evaluation of scheduled reversals of deferred tax liabilities, estimates of projected future taxable income and tax-planning
strategies. Although realization is not assured, based on our assessment, we concluded that it is more likely than not that such assets,
net of the existing valuation allowance, will be realized.
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Results of Operations
Information pertaining to fiscal year 2022 results of operations, including a year-to-year comparison against fiscal year 2023,
was included in our Annual Report on Form 10-K for the year ended December 31, 2023 under Part II, Item 7, “Management’s
Discussion and Analysis of Financial Position and Results of Operations,” which was filed with the SEC on February 22, 2024. This
information is incorporated by reference herein.
The following table sets forth the percentage of total net revenues included in our consolidated statements of operations:
Years Ended December 31,
2024
2023
Percentage of revenues:
Revenues:
Products
81.4%
78.3%
Services
18.6
21.7
Total revenues
100.0
100.0
Cost of revenues:
Cost of products
34.1
33.0
Cost of services
7.4
9.6
Total cost of revenues (exclusive of acquired intangible
assets amortization shown separately below)
41.5
42.6
Gross profit
58.5
57.4
Operating expenses:
Selling and administrative
21.9
21.6
Engineering and development
16.3
15.6
Acquired intangible assets amortization
0.7
0.7
Restructuring and other
0.6
0.8
Gain on sale of business
(2.0)
0.0
Total operating expenses
37.4
38.7
Income from operations
21.1
18.7
Non-operating (income) expenses:
Interest income
(0.9)
(1.0)
Interest expense
0.1
0.1
Other (income) expense, net
0.2
(0.0)
Income before income taxes and equity in net earnings of affiliate
21.6
19.6
Income tax provision
2.1
2.9
Income before equity in net earnings of affiliate
19.5
16.8
Equity in net earnings of affiliate
(0.3)
0.0
Net income
19.2%
16.8%
Revenues
Revenues for our reportable segments were as follows:
2024
2023
2023-2024
Dollar
Change
(in millions)
Semiconductor Test
$
2,123.9
$
1,957.2
$
166.7
Robotics
364.8
375.2
(10.4)
All Other
331.1
343.9
(12.8)
$
2,819.9
$
2,676.3
$
143.5
The increase in Semiconductor Test revenues of $166.7 million, or 8.5%, was driven primarily by higher tester sales for
computing, ADAS, and memory applications, partially offset by lower tester sales for legacy automotive applications. The decrease in
Robotics revenues of $10.4 million, or 2.8%, was driven primarily by continued weakness in the Industrial Automation market and
softer sales in Universal Robots.
28
Our reportable segments accounted for the following percentages of consolidated revenues:
2024
2023
Semiconductor Test
75%
73%
Robotics
13
14
All Other
12
13
100%
100%
Revenues by country as a percentage of total revenues were as follows (1):
2024
2023
Korea
25%
15%
Taiwan
21
14
United States
13
16
China
13
12
Europe
9
10
Japan
6
11
Singapore
3
4
Philippines
2
7
Thailand
2
3
Malaysia
2
3
Rest of the World
4
5
100%
100%
(1)
Revenues attributable to a country are based on the location of the customer site.
The breakout of product and service revenues was as follows:
2024
2023
2023-2024
Dollar
Change
(in millions)
Product revenues
$
2,294.9
$
2,096.3
$
198.6
Service revenues
524.9
580.0
(55.1)
$
2,819.9
$
2,676.3
$
143.5
Our product revenues increased $198.6 million, or 9.5%, primarily driven by higher tester sales for computing, ADAS, and
memory applications, partially offset by lower tester sales for legacy automotive application. Our service revenues decreased $55.1
million, or 9.5%, primarily in Semiconductor Test related to the sale of the DIS business on May 27, 2024.
In 2024, revenues from Samsung, a customer of our Semiconductor Test segment, accounted for 12.5% of our consolidated
revenues. In 2023, revenues from Texas Instruments Inc., a customer of our Semiconductor Test segment, accounted for 10% of our
consolidated revenues. In 2024 and 2023, our five largest direct customers in aggregate accounted for 36% and 32% of our
consolidated revenues, respectively.
Gross Profit
2024
2023
2023-2024
Dollar /
Point
Change
(in millions)
Gross profit
$
1,648.9
$
1,536.7
$
112.2
Percent of total revenues
58.5%
57.4%
1.1
Gross profit as a percent of total revenues increased by 1.1 points, primarily due to a higher volume and product and service
mix.
29
The breakout of product and service gross profit was as follows:
2024
2023
2023-2024
Dollar /
Point
Change
(in millions)
Product gross profit
$
1,334.0
$
1,213.4
$
120.6
Percent of product revenues
58.1%
57.9%
0.2
Service gross profit
$
314.9
$
323.4
$
(8.5)
Percent of service revenues
60.0%
55.7%
4.3
Service and product revenues gross profit percentage increased by 4.3 points and 0.2 points, respectively, primarily due to
higher volume and product and service mix.
We assess the carrying value of our inventory on a quarterly basis by estimating future demand and comparing that demand
against on-hand and on-order inventory positions. Forecasted revenues information is obtained from the sales and marketing groups
and incorporates factors such as backlog and future revenues. This quarterly process identifies obsolete and excess inventory. Obsolete
inventory, which represents items for which there is no demand, is fully reserved. Excess inventory, which represents inventory items
that are not expected to be consumed within the forecasted demand window, is written down to estimated net realizable value.
During the year ended December 31, 2024, we recorded an inventory provision of $18.9 million included in cost of revenues,
primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $18.9 million of total excess
and obsolete provisions, $13.6 million was related to Semiconductor Test, $2.3 million was related to Robotics, and $3.1 million was
related to All Other.
During the year ended December 31, 2023, we recorded an inventory provision of $28.4 million included in cost of revenues,
primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $28.4 million of total excess
and obsolete provisions, $22.5 million was related to Semiconductor Test, $2.3 million was related to Robotics, and $3.6 million was
related to All Other.
During the years ended December 31, 2024 and 2023, we scrapped $10.6 million and $26.4 million of inventory, respectively,
and sold $2.2 million and $5.2 million of previously written-down or written-off inventory, respectively. As of December 31, 2024,
we had inventory related reserves for amounts which had been written-down or written-off totaling $141.4 million. We have no pre-
determined timeline to scrap the remaining inventory.
Selling and Administrative
Selling and administrative expenses were as follows:
2024
2023
2023-2024
Change
(in millions)
Selling and administrative
$
617.0
$
577.3
$
39.7
Percent of total revenues
21.9%
21.6%
The increase of $39.7 million in selling and administrative expenses was primarily due to higher sales and marketing spending
in Semiconductor Test.
Engineering and Development
Engineering and development expenses were as follows:
2024
2023
2023-2024
Change
(in millions)
Engineering and development
$
460.9
$
418.1
$
42.8
Percent of total revenues
16.3%
15.6%
30
The increase of $42.8 million in engineering and development expenses was primarily due to higher spending in Semiconductor
Test.
Restructuring and Other
During the year ended December 31, 2024, we recorded $5.2 million of severance charges related to headcount reductions of 98
people primarily in Robotics and Semiconductor Test, which included charges related to a voluntary early retirement program for
employees meeting certain conditions, $3.6 million of acquisition and divestiture expenses, and $1.3 million of charges related to lease
terminations.
During the year ended December 31, 2023, we recorded a charge of $14.7 million of severance charges related to headcount
reductions of 215 people primarily in Semiconductor Test and Robotics, which included charges related to a voluntary early
retirement program for employees meeting certain conditions, $3.1 million of acquisition and divestiture expenses related to the
Technoprobe transaction, a $1.5 million contract termination charge, and a charge of $1.1 million for an increase in environmental
liabilities.
Interest and Other
2024
2023
2023-2024
Change
(in millions)
Interest income
$
(24.8) $
(27.3) $
2.5
Interest expense
3.6
3.8
(0.2)
Other (income) expense, net
5.9
(1.0)
6.8
Other (income) expense, net decreased by $6.8 million primarily due to $9.8 million loss on our call option in connection with
our agreement to acquire a 10% investment in Technoprobe S.p.A, partially offset by the change in pension actuarial gains/losses,
from a $2.7 million loss in 2023 to a $4.4 million gain in 2024.
Income (Loss) Before Income Taxes
2024
2023
2023-2024
Change
(in millions)
Semiconductor Test
$
558.2
$
498.5
$
59.7
Robotics
(77.6)
(54.3)
(23.3)
All Other
65.7
79.5
(13.8)
Corporate and Eliminations (1)
62.7
1.9
60.8
$
609.1
$
525.6
$
83.5
(1)
Included in Corporate and Eliminations are gain on sale of business, interest income, interest expense, net foreign exchange
gains (losses), intercompany eliminations, severance charges, pension and postretirement plan actuarial gains (losses),
acquisition and divestiture related fees, legal and environmental fees, contract termination settlement charge, and modification
of outstanding equity awards.
The increase in income before income taxes in Semiconductor Test was driven primarily by higher tester sales for computing,
ADAS, and memory applications, partially offset by lower tester sales for legacy automotive application. The decrease in income
before income taxes in Robotics was primarily driven by continued weakness in the Industrial Automation market and softer sales in
Universal Robots along with higher selling and administrative costs. The decrease in income before income taxes in All Other was
driven primarily by a decrease in sales of Wireless Test products.
Income Taxes
Income tax expense for 2024 and 2023 totaled $59.5 million and $76.8 million, respectively. The effective tax rate for 2024 and
2023 was 9.8% and 14.6%, respectively.
31
The decrease in the effective tax rate from 2023 to 2024 is primarily attributable to a shift in the geographic distribution of
income which resulted in a reduction in income in higher tax rate foreign jurisdictions, the benefit of the release of reserves for
uncertain tax positions as a result of the expiration of statute and a decrease in non-deductible officer’s compensation. These decreases
in expense were partially offset by reductions in benefits from foreign tax credits, U.S research and development credits and the U.S.
foreign derived intangible income deduction.
We qualify for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic
Development Board under which certain headcount and spending requirements must be met. The tax savings attributable to the
Singapore tax holiday for the years ended December 31, 2024 and 2023 were $17.1 million or $0.10 per diluted share and $1.4 million
or $0.01 per diluted share, respectively. In November 2020, we entered into an agreement with the Singapore Economic Development
Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31,
2020. The new tax holiday is scheduled to expire on December 31, 2025.
Capital Resources and Material Cash Requirements
Our cash, cash equivalents and marketable securities balance decreased by $213.4 million in 2024 to $723.8 million. Cash
decreased due to investments in businesses for $532.1 million, stock repurchases in the amount of $198.6 million, and quarterly cash
dividend payments in the amount of $76.4 million, partially offset by proceeds from the sale of business and cash generated by our
global operations.
Operating activities during 2024 provided cash of $672.2 million. Changes in operating assets and liabilities used cash of $23.9
million. This was due to a $75.5 million decrease in operating assets and a $51.6 million decrease in operating liabilities.
The decrease in operating assets was primarily due to a decrease in other assets and inventory of $119.5 million and $8.7 million
respectively, partially offset by a $52.7 million increase in accounts receivable, driven by higher sales at year-end.
The decrease in operating liabilities was due to a $48.2 million decrease in accounts payable, a $6.2 million decrease in other
accrued compensation, $5.8 million of retirement plan contributions, and a $3.6 million decrease in income taxes, partially offset by a
$12.2 million increase in deferred revenue and customer advance payments.
Investing activities during 2024 used cash of $622.3 million, comprised of $532.1 million used for investments in businesses,
$198.1 million used for purchases of property, plant and equipment, and $45.8 million used for purchases of marketable securities,
partially offset by $90.3 million in proceeds from the sale of a business, $38.4 million and $24.0 million in proceeds from the
maturities and sales of marketable securities, respectively, and $0.9 million in proceeds from life insurance.
Financing activities during 2024 used cash of $251.8 million, due to $198.6 million used for the repurchase of 1.7 million shares
of common stock at an average price of $114.63 per share, $76.4 million used for dividend payments, and $14.1 million used for
payments related to net settlement of employee stock compensation awards, partially offset by $37.3 million from the issuance of
common stock under employee stock purchase and stock option plans.
Operating activities during 2023 provided cash of $585.2 million. Changes in operating assets and liabilities used cash of $9.6
million. This was due to a $33.2 million decrease in operating assets and a $42.8 million decrease in operating liabilities.
The decrease in operating assets was due to a $71.0 million decrease in accounts receivable due to lower sales and a $5.3 million
decrease in inventories, partially offset by a $43.1 million increase in prepayments and other assets due to prepayments to our contract
manufacturers.
The decrease in operating liabilities was due to a $57.2 million decrease in deferred revenue and customer advance payments, a
$26.9 million decrease in income taxes, a $21.2 million decrease in accrued employee compensation, and $5.5 million of retirement
plan contributions, partially offset by a $45.0 million increase in accounts payable, and a $23.0 million increase in other accrued
liabilities.
Investing activities during 2023 used cash of $179.6 million, due to $161.9 million used for purchases of marketable securities,
$159.6 million used for purchases of property, plant and equipment, and $5.0 million used for issuance of convertible loans, partially
offset by $85.0 million and $61.4 million in proceeds from maturities and sales of marketable securities, respectively, and $0.5 million
in proceeds from the cancellation of Teradyne owned life insurance policies related to the cash surrender value.
Financing activities during 2023 used cash of $501.9 million, due to $397.2 million used for the repurchase of 3.9 million shares
of common stock at an average price of $102.47 per share, $67.9 million used for dividend payments, $50.3 million used for the
32
payments of convertible debt principal, and $20.8 million used for payments related to net settlement of employee stock compensation
awards, partially offset by $34.3 million from the issuance of common stock under employee stock purchase and stock option plans.
In January 2024, May 2024, August 2024 and November 2024, our Board of Directors declared a quarterly cash dividend of
$0.12 per share. Total dividend payments in 2024 were $76.4 million. In January 2023, May 2023, August 2023 and November 2023,
our Board of Directors declared a quarterly cash dividend of $0.11 per share. Total dividend payments in 2023 were $67.9 million.
In January 2023, our Board of Directors cancelled the 2021 repurchase program and approved a new repurchase program for up
to $2.0 billion of common stock. In 2024, we repurchased 1.7 million shares of common stock for $198.6 million, which excludes
related excise tax, at an average price of $114.63 per share. In 2023, we repurchased 3.9 million shares of common stock for $397.2
million, which excludes related excise tax, at an average price of $102.47 per share against the 2023 repurchase program. The
cumulative repurchases as of December 31, 2024, under the 2023 repurchase program, were 5.6 million shares of common stock for
$595.2 million, exclusive of tax, at an average price per share of $106.21. In 2025, we intend to repurchase up to $400.0 million.
While we declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash
dividend or share repurchase program in the future. Future cash dividends and stock repurchases are subject to the discretion of our
Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.
On May 27, 2024, we paid 483.1 million Euros, equivalent to $524.1 million, to purchase a combination of previously issued
and outstanding shares and shares newly issued by Technoprobe, S.p.A. ("Technoprobe"). The shares purchased represent 10% of the
issued and outstanding shares of Technoprobe. We also received a board seat as part of the purchase. Additionally, as part of the
transaction, we completed the sale of the Device Interface Solutions ("DIS") business, a component of the Semiconductor Test
segment, to Technoprobe for $85.0 million in cash, net of cash and cash equivalents sold, and a customary working capital adjustment.
The sale resulted in a pre-tax gain of $57.1 million recorded as 'Gain on sale of business' in the consolidated statement of operations.
On May 1, 2020, we entered into a credit agreement providing a three-year, senior secured revolving credit facility of $400
million. On December 10, 2021, the credit agreement was amended to extend the senior secured revolving credit facility to December
10, 2026. On October 5, 2022, the credit agreement was amended to increase the amount of the credit facility to $750.0 million from
$400.0 million. On November 7, 2023, the Credit Agreement was amended to allow for the purchase of the shares of Technoprobe. On
May 16, 2024, we borrowed $185.0 million under the credit agreement to partially fund the acquisition of 10% of the issued and
outstanding shares of Technoprobe. We fully repaid our borrowings on the revolving credit facility prior to December 31, 2024. As of
February 20, 2025, there are no outstanding borrowings under the credit facility.
We expect operations to continue to be the primary source of cash to operate the business and meet material cash commitments,
including any payments of convertible debt principal, our stock repurchase program, our quarterly dividends, our office lease
obligations, contractual obligations related to inventory purchases and the construction of new facilities. We believe our cash, cash
equivalents and marketable securities balance will be sufficient to pay our quarterly dividend and meet our working capital and
expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings.
At December 31, 2024, our future contractual obligations were related to debt, leases, retirement plan liabilities, deferred tax
benefits, and purchase obligations. See Note K. “Debt”, Note J. “Leases”, Note Q. “Retirement Plans”, and Note T. “Income Taxes”
of Notes to Consolidated Financial Statements in this Annual Report for information about those obligations, which Notes are
incorporated by reference into this section. Our purchase obligations were approximately $419.8 million, with $409.6 million expected
to be paid within twelve months.
Retirement Plans
ASC 715-20, “Compensation—Retirement Benefits—Defined Benefit Plans,” 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 715-20. The pension asset or liability represents the difference between the fair value of the pension
plans’ assets and the projected benefit obligation as of December 31. For other postretirement benefit plans, the liability is the
difference between the fair value of the plan’s assets and the accumulated postretirement benefit obligation as of December 31.
For the year ended December 31, 2024, our pension expense, which includes the U.S. Qualified Pension Plan (“U.S. Plan”),
certain qualified plans for non-U.S. subsidiaries, and a U.S. Supplemental Executive Defined Benefit Plan, was approximately $0.1
million. Pension expense is calculated based upon a number of actuarial assumptions. Discount rate and expected return on assets are
two assumptions which are important elements of pension plan expense and asset/liability measurement. We evaluate our discount rate
and expected rate of return on assets assumptions annually on a plan and country specific basis. We evaluate other assumptions related
33
to demographic factors, such as retirement age, mortality and turnover periodically, and update them to reflect our experience and
expectations for the future.
In developing the expected return on U.S. Plan assets assumption, we evaluated input from our investment manager and pension
consultants, including their forecast of asset class return expectations. We believe that 4.65% was an appropriate rate of return on
assets to use for 2024. The December 31, 2024 asset allocation for our U.S. Plan was 94.0% invested in fixed income securities, 5%
invested in equity securities, and 1% invested in other securities. Our investment manager regularly reviews the actual asset allocation
and periodically rebalances the portfolio to ensure alignment with our target allocations.
We recognize net actuarial gains and losses and the change in the fair value of plan assets in our operating results in the year in
which they occur or upon any interim remeasurement of the plans. We calculate the expected return on plan assets using the fair value
of the plan assets. Actuarial gains and losses are generally measured annually as of December 31 and, accordingly, recorded during
the fourth quarter of each year or upon any interim remeasurement of the plans.
The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension
Index adjusted for the U.S. Plan’s expected cash flows and was 5.45% at December 31, 2024, up from 4.75% at December 31, 2023.
We estimate that in 2025, we will recognize approximately $0.1 million of pension expense for the U.S. Plan. The U.S. Plan pension
expense estimate for 2025 is based on a 5.45% discount rate and a 5.05% return on assets. Future pension expense or income will
depend on future investment performance, changes in future discount rates and various other factors related to the employee
population participating in our pension plans.
As of December 31, 2024, our pension plans had no unrecognized pension prior service cost.
The assets of the U.S. Plan consist substantially of fixed income securities. U.S. Plan assets have decreased from $112.6 million
at December 31, 2023 to $81.4 million at December 31, 2024, while the U.S. Plan’s liability decreased from $101.1 million at
December 31, 2023 to $69.4 million at December 31, 2024.
Our funding policy is to make contributions to our pension plans in accordance with local laws and to the extent that such
contributions are tax deductible. During 2024, we made contributions of $3.1 million to the U.S. supplemental executive defined
benefit pension plan, and $1.0 million to certain qualified plans for non-U.S. subsidiaries. In 2025, we expect to contribute
approximately $3.3 million to the U.S. supplemental executive defined benefit pension plan. Contributions to be made in 2025 to
certain qualified plans for non-U.S. subsidiaries are based on local statutory requirements and are estimated at approximately $1.1
million.
Equity Compensation Plans
In addition to our 1996 Employee Stock Purchase Plan discussed in Note R: “Stock-Based Compensation” in Notes to
Consolidated Financial Statements, we have a 2006 Equity and Cash Compensation Incentive Plan (the “2006 Equity Plan”) under
which equity securities are authorized for issuance. The 2006 Equity Plan was initially approved by stockholders on May 25, 2006.
At our annual meeting of stockholders held May 21, 2013, our stockholders approved an amendment to the 2006 Equity Plan to
increase the number of shares issuable thereunder by 10.0 million, for an aggregate of 32.0 million shares issuable thereunder, and our
stockholders also approved an amendment to our 1996 Employee Stock Purchase Plan to increase the number of shares issuable
thereunder by 5.0 million, for an aggregate of 30.4 million shares issuable thereunder. At our annual meeting of stockholders held
May 12, 2015, our stockholders approved an amendment to the 2006 Equity Plan to extend its term until May 12, 2025. At our annual
meeting of stockholders held May 7, 2021, our stockholders approved an amendment to our 1996 Employee Stock Purchase Plan to
increase the number of shares issuable thereunder by 3.0 million, for an aggregate of 33.4 million shares issuable thereunder.
The following table presents information about these plans as of December 31, 2024 (share numbers in thousands):
Plan category
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column one)
Equity plans approved by shareholders
1,668 (1)
$
99.51
6,862 (2)
(1)
Includes 1,527,351 shares of restricted stock units that are not included in the calculation of the weighted average exercise price.
34
(2)
Consists of 3,638,237 securities available for issuance under the 2006 Equity Plan and 3,224,044 of securities available for
issuance under the Employee Stock Purchase Plan.
The purpose of the 2006 Equity Plan is to motivate employees, officers and directors by providing equity ownership and
compensation opportunities in Teradyne. The aggregate number of shares available under the 2006 Equity Plan as of December 31,
2024 was 3,638,237 shares of our common stock. The 2006 Equity Plan authorizes the grant of stock-based awards in the form of (1)
non-qualified and incentive stock options, (2) stock appreciation rights, (3) restricted stock awards and restricted stock unit awards, (4)
phantom stock, and (5) other stock-based awards. Awards may be tied to time-based vesting schedules and/or performance-based
vesting measured by reference to performance criteria chosen by the Compensation Committee of the Board of Directors, which
administers the 2006 Equity Plan. Awards may be made to any employee, officer, consultant and advisor of Teradyne and our
subsidiaries, as well as to our directors. The maximum number of shares of stock-based awards that may be granted to one participant
during any one fiscal year is 2,000,000 shares of common stock.
As of December 31, 2024, total unrecognized compensation expense related to non-vested restricted stock units and options was
$82.6 million and is expected to be recognized over a weighted average period of 2.5 years.
Performance Graph
The following graph compares the change in our cumulative total shareholder return in our common stock with (i) the Standard
& Poor’s 500 Index and (ii) the Morningstar Global Semiconductor Equipment & Materials GR USD Industry Group. The comparison
assumes $100.00 was invested on December 31, 2019 in our common stock and in each of the foregoing indices and assumes
reinvestment of dividends, if any. Historic stock price performance is not necessarily indicative of future price performance.
Recently Issued Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.
2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which requires us to disclose
significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and
interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are
currently required annually. Additionally, we are required to disclose the title and position of the CODM. We retrospectively adopted
and complied with this standard for the annual period ending December 31, 2024. See Note U: "Segment, Geographic and Significant
Customer Information." The adoption of this standard had no impact on our results of operations, cash flows or financial condition.
35
In December 2023, the FASB issued ASU 2023-09 –“Income Taxes (Topic 740): Improvements to Income Tax Disclosures”,
which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax
expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU
2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a
prospective basis, but retrospective application is permitted. We are currently evaluating the impact of this new standard.
In November 2024, the FASB issued ASU 2024-03-"Income Statement - Reporting Comprehensive Income -Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which requires disclosure of
additional expense information on an annual and interim basis, including the amounts of inventory purchases, employee
compensation, depreciation and intangible amortization included within each income statement expense caption. This standard is
effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15,
2027, with early adoption permitted. The amendments in this update should be applied on a prospective basis, but retrospective
application is permitted. We are currently evaluating the impact of this new standard.
Item 7A: Quantitative and Qualitative Disclosures about Market Risks
Concentration of Credit Risk
Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash equivalents,
marketable securities, forward currency contracts and accounts receivable. Our cash equivalents consist primarily of money market
funds invested in U.S. Treasuries and government agencies. Our fixed income available-for-sale marketable securities have a
minimum rating of AA by one or more of the major credit rating agencies. We place forward currency contracts with high credit-
quality financial institutions in order to minimize credit risk exposure. Concentrations of credit risk with respect to accounts receivable
are limited due to the large number of geographically dispersed customers. We perform ongoing credit evaluations of our customers’
financial condition and from time to time may require customers to provide a letter of credit from a bank to secure accounts
receivable. As of December 31, 2024, two customers of our Semiconductor Test segment, Taiwan Semiconductor Manufacturing Co.
and SK Hynix Inc, each accounted for 10% of our accounts receivable balance. As of December 31, 2023, a customer of our
Semiconductor Test segment, Texas Instruments Inc., accounted for 18% of our accounts receivable balance.
Exchange Rate Risk Management
We regularly enter into foreign currency forward contracts to hedge the value of our monetary assets and liabilities in Japanese
Yen, British Pound, Korean Won, Taiwan Dollar, Singapore Dollar, Euro, Philippine Peso, Chinese Yuan, and Danish Krone. These
foreign currency forward contracts have maturities of approximately one month. These contracts are used to minimize the effect of
exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities.
We also enter into foreign currency forward contracts to hedge the impact of exchange rates on our revenues in Japanese Yen.
These contracts have maturities of less than one year. We do not engage in currency speculation.
On November 7, 2023, in connection with our agreement to acquire 10% investment in Technoprobe S.p.A, we purchased a call
option to buy 481.0 million Euros, which expired in April 2024. On April 12, 2024, we entered into a forward to buy 481.0 million
Euros, which expired on May 23, 2024.
We performed a sensitivity analysis assuming a hypothetical 10% fluctuation in foreign exchange rates to the hedging contracts
and the underlying exposures described above. As of December 31, 2024 and 2023, the analysis indicated that these hypothetical
market movements would not have a material effect on our consolidated financial position, results of operations or cash flows.
Interest Rate Risk Management
We are exposed to potential losses due to changes in interest rates. Our interest rate exposure is primarily related to short-term
and long-term marketable securities.
In order to estimate the potential loss due to interest rate risk, a fluctuation in interest rates of 25 basis points was assumed.
Market risk for the short and long-term marketable securities was estimated as the potential change in the fair value resulting from a
hypothetical change in interest rates for securities contained in the investment portfolio. The potential change in the fair value from
changes in interest rates is immaterial as of December 31, 2024 and 2023.
36
Item 8: Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Teradyne, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Teradyne, Inc. and its subsidiaries (the "Company") as of
December 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income, of convertible
common shares and shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2024,
including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December
31, 2024 appearing under Item 15(c) (collectively referred to as the "consolidated financial statements"). We also have audited the
Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America. Also in
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31,
2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Change in Accounting Principle
As discussed in Note B to the consolidated financial statements, the Company changed the manner in which it accounts for convertible
debt in 2022.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s
Annual Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the
Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
37
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are
material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or
on the accounts or disclosures to which it relates.
Revenue Recognition - Certain Product Revenue
As described in Note B to the consolidated financial statements, the Company recognizes revenue for transactions that do not meet the
criteria for over time recognition, at a point in time when shipped or delivered based on contractual terms. The transaction price is the
amount of consideration the Company expects to be entitled to in exchange for such products, which is generally at contractually
stated prices. The Company’s total product revenue was $2.3 billion for the year ended December 31, 2024, of which a majority
relates to certain product revenue.
The principal consideration for our determination that performing procedures relating to revenue recognition for certain product
revenue is a critical audit matter is a high degree of auditor effort in performing procedures related to revenue recognition for certain
of the Company’s product revenue.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion
on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the recognition
process for certain product revenue. These procedures also included, among others (i) testing the revenue recognized for a sample of
certain product revenue transactions by obtaining and inspecting source documents, such as purchase orders, invoices, and proof of
shipment or delivery; (ii) testing the timing of revenue recognized for a sample of certain product revenue transactions that occurred
near period end by obtaining and inspecting source documents, such as purchase orders, invoices, and proof of shipment or delivery;
and (iii) testing a sample of outstanding customer invoice balances as of December 31, 2024 by obtaining and inspecting source
documents, such as purchase orders, invoices, proof of shipment or delivery, and subsequent cash receipts.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 20, 2025
We have served as the Company’s auditor since 1968.
38
TERADYNE, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
2024
2023
(in thousands, except per share amount)
ASSETS
Current assets:
Cash and cash equivalents
$
553,354
$
757,571
Marketable securities
46,312
62,154
Accounts receivable, less allowance for credit losses of $2,111 and $1,988 in 2024 and 2023,
respectively
471,426
422,124
Inventories, net
298,492
309,974
Prepayments
429,086
548,970
Other current assets
17,727
37,992
Current assets held for sale
—
23,250
Total current assets
1,816,397
2,162,035
Property, plant and equipment, net
508,171
445,492
Operating lease right-of-use assets, net
70,185
73,417
Marketable securities
124,121
117,434
Deferred tax assets
222,438
175,775
Retirement plans assets
11,994
11,504
Equity Method Investment
494,494
—
Other assets
49,620
38,580
Acquired intangible assets, net
15,927
35,404
Goodwill
395,367
415,652
Long-term assets held for sale
—
11,531
Total assets
$
3,708,714
$
3,486,824
LIABILITIES
Current liabilities:
Accounts payable
$
134,792
$
180,131
Accrued employees’ compensation and withholdings
204,991
191,750
Deferred revenue and customer advances
107,710
99,804
Other accrued liabilities
90,777
114,712
Operating lease liabilities
18,699
17,522
Income taxes payable
67,610
48,653
Current liabilities held for sale
—
7,379
Total current liabilities
624,579
659,951
Retirement plans liabilities
133,338
132,090
Long-term deferred revenue and customer advances
40,505
37,282
Deferred tax liabilities
1,038
183
Long-term other accrued liabilities
7,442
19,998
Long-term operating lease liabilities
57,922
65,092
Long-term income taxes payable
24,596
44,331
Long-term liabilities held for sale
—
2,000
Total liabilities
889,420
960,927
Commitments and contingencies (Note N)
SHAREHOLDERS’ EQUITY
Common stock, $0.125 par value, 1,000,000 shares authorized, 161,722 and 152,698 shares issued
and outstanding at December 31, 2024 and 2023, respectively
20,215
19,087
Additional paid-in capital
1,909,538
1,827,274
Accumulated other comprehensive loss
(81,220 )
(26,978 )
Retained earnings
970,761
706,514
Total shareholders’ equity
2,819,294
2,525,897
Total liabilities and shareholders’ equity
$
3,708,714
$
3,486,824
The accompanying notes are an integral part of the consolidated financial statements.
39
TERADYNE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,
2024
2023
2022
(in thousands, except per share amount)
Revenues:
Products
$
2,294,935
$
2,096,286
$
2,591,572
Services
524,945
580,012
563,473
Total revenues
2,819,880
2,676,298
3,155,045
Cost of revenues:
Cost of products
960,888
882,892
1,042,555
Cost of services
210,065
256,658
245,339
Total cost of revenues (exclusive of acquired intangible assets
amortization shown separately below)
1,170,953
1,139,550
1,287,894
Gross profit
1,648,927
1,536,748
1,867,151
Operating expenses:
Selling and administrative
617,047
577,315
558,103
Engineering and development
460,876
418,089
440,591
Acquired intangible assets amortization
18,764
18,999
19,333
Restructuring and other
15,571
21,277
17,185
Gain on sale of business
(57,119)
—
—
Total operating expenses
1,055,139
1,035,680
1,035,212
Income from operations
593,788
501,068
831,939
Non-operating (income) expenses:
Interest income
(24,772)
(27,348)
(6,379)
Interest expense
3,587
3,806
3,719
Other (income) expense, net
5,887
(962)
(5,786)
Income before income taxes and equity in net earnings of affiliate
609,086
525,572
840,385
Income tax provision
59,503
76,820
124,884
Income before equity in net earnings of affiliate
549,583
448,752
715,501
Equity in net earnings of affiliate
(7,211)
—
—
Net income
$
542,372
$
448,752
$
715,501
Net income per common share:
Basic
$
3.41
$
2.91
$
4.52
Diluted
$
3.32
$
2.73
$
4.22
Weighted average common shares—basic
159,083
154,310
158,434
Weighted average common shares—diluted
163,314
164,304
169,734
The accompanying notes are an integral part of the consolidated financial statements.
40
TERADYNE, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31,
2024
2023
2022
(in thousands)
Net income
$
542,372
$
448,752
$
715,501
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment, net of tax of $0, $0, $0,
respectively
(52,847)
17,407
(29,031)
Available-for-sale marketable securities:
Unrealized (losses) gains on marketable securities arising during
period, net of tax of $(470), $568, ($3,388), respectively
(1,699)
2,423
(12,666)
Less: Reclassification adjustment for (gains) losses included in net
income, net of tax of $24, $12, $25, respectively
86
44
301
(1,613)
2,467
(12,365)
Cash flow hedges:
Unrealized (losses) gains arising during period, net of tax of $593,
$1,537, $(708), respectively
2,100
5,464
(2,517)
Less: Reclassification adjustment for (gains) losses included in net
income, net of tax of $(527), $(686), $0, respectively
(1,875)
(2,441)
—
225
3,023
(2,517)
Defined benefit post-retirement plan:
Amortization of prior service credit, net of tax $(2), $(2), $(2),
respectively
(7)
(7)
(7)
Other comprehensive income (loss)
(54,242)
22,890
(43,920)
Comprehensive income
$
488,130
$
471,642
$
671,581
The accompanying notes are an integral part of the consolidated financial statements.
41
TERADYNE, INC.
CONSOLIDATED STATEMENTS OF CONVERTIBLE COMMON SHARES
AND SHAREHOLDERS’ EQUITY
Shareholders’ Equity
Convertible
Common
Shares Value
Common
Stock
Shares
Common
Stock
Par Value
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (loss)
Retained
Earnings
Total
Shareholders’
Equity
(in thousands)
Year Ended December 31, 2021
$
1,512
162,251
$
20,281
$ 1,811,545
$
(5,948 )
$
736,566
2,562,444
Net issuance of common stock under stock-based plans
761
96
(4,471 )
(4,375 )
Stock-based compensation expense
48,466
48,466
Repurchase of common stock
(7,253 )
(907 )
(751,175 )
(752,082 )
Cash dividends ($0.44 per share)
(69,763 )
(69,763 )
Settlements of convertible notes
1,495
187
(442 )
(255 )
Exercise of convertible notes hedge call options
(1,495 )
(187 )
187
—
Convertible common shares
(1,512 )
1,512
1,512
Cumulative-effect of change in accounting principle
related to convertible debt
(100,834 )
94,600
(6,234 )
Net income
715,501
715,501
Other comprehensive loss
(43,920 )
(43,920 )
Year Ended December 31, 2022
$
—
155,759
$
19,470
$ 1,755,963
$
(49,868 )
$
725,729
$
2,451,294
Net issuance of common stock under stock-based plans
848
106
13,371
13,477
Stock-based compensation expense
57,940
57,940
Repurchase of common stock
(3,909 )
(489 )
(400,040 )
(400,529 )
Cash dividends ($0.44 per share)
(67,927 )
(67,927 )
Settlements of convertible notes
1,072
133
(133 )
—
Exercise of convertible notes hedge call options
(1,072 )
(133 )
133
—
Net income
448,752
448,752
Other comprehensive income
22,890
22,890
Year Ended December 31, 2023
$
—
152,698
$
19,087
$ 1,827,274
$
(26,978 )
$
706,514
$
2,525,897
Net issuance of common stock under stock-based plans
728
91
23,137
23,228
Stock-based compensation expense
60,397
60,397
Warrant exercises
10,036
1,254
(1,270 )
(16 )
Repurchase of common stock
(1,740 )
(217 )
(201,666 )
(201,883 )
Cash dividends ($0.48 per share)
(76,459 )
(76,459 )
Net income
542,372
542,372
Other comprehensive income
(54,242 )
(54,242 )
Year Ended December 31, 2024
$
—
161,722
$
20,215
$ 1,909,538
$
(81,220 )
$
970,761
$
2,819,294
The accompanying notes are an integral part of the consolidated financial statements.
42
TERADYNE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
2024
2023
2022
(in thousands)
Cash flows from operating activities:
Net income
$
542,372
$
448,752
$
715,501
Adjustments to reconcile net income from operations to net cash provided by
operating activities:
Depreciation
100,977
92,118
90,763
Stock-based compensation
60,122
57,682
48,228
Provision for excess and obsolete inventory
18,922
28,358
31,452
Amortization
18,764
18,768
19,912
Losses (gains) on investments
10,056
(14,915 )
9,985
Equity in net earnings of affiliate
7,211
—
—
Gain on sale of business
(57,119 )
—
—
Deferred taxes
(46,360 )
(37,642 )
(38,693 )
Retirement plans actuarial (gains) losses
(4,355 )
2,703
(25,584 )
Loss (gain) on sale of asset
—
—
(3,410 )
Other
(2,290 )
(955 )
2,353
Changes in operating assets and liabilities, net of businesses acquired:
Accounts receivable
(52,659 )
70,977
50,628
Inventories
8,707
5,327
(80,809 )
Prepayments and other assets
119,454
(43,101 )
(140,713 )
Accounts payable and other accrued expenses
(54,386 )
46,782
(60,507 )
Deferred revenue and customer advances
12,176
(57,210 )
(6,233 )
Retirement plan contributions
(5,814 )
(5,492 )
(5,116 )
Income taxes
(3,602 )
(26,921 )
(29,834 )
Net cash provided by operating activities
672,176
585,231
577,923
Cash flows from investing activities:
Investments in businesses
(532,060 )
—
—
Purchases of property, plant and equipment
(198,095 )
(159,642 )
(163,249 )
Purchases of marketable securities
(45,796 )
(161,906 )
(287,409 )
Issuance of convertible loan
—
(5,000 )
—
Proceeds from the sale of a business, net of cash and cash equivalents sold
90,348
—
—
Proceeds from maturities of marketable securities
38,353
85,042
222,941
Proceeds from sales of marketable securities
24,035
61,401
268,058
Proceeds from life insurance
873
460
—
Proceeds from sale of asset
—
—
3,410
Net cash (used for) provided by investing activities
(622,342 )
(179,645 )
43,751
Cash flows from financing activities:
Repurchase of common stock
(198,574 )
(397,241 )
(752,082 )
Payments of borrowings on revolving credit facility
(185,000 )
—
—
Dividend payments
(76,423 )
(67,878 )
(69,711 )
Payments related to net settlement of employee stock compensation awards
(14,100 )
(20,788 )
(33,170 )
Payments of convertible debt principal
—
(50,264 )
(66,759 )
Proceeds from borrowings on revolving credit facility
185,000
—
—
Issuance of common stock under stock purchase and stock option plans
37,330
34,259
28,733
Net cash used for financing activities
(251,767 )
(501,912 )
(892,989 )
Effects of exchange rate changes on cash and cash equivalents
(2,284 )
(876 )
3,889
(Decrease) increase in cash and cash equivalents
(204,217 )
(97,202 )
(267,426 )
Cash and cash equivalents at beginning of year
757,571
854,773
1,122,199
Cash and cash equivalents at end of year
$
553,354
$
757,571
$
854,773
Supplementary disclosure of cash flow information:
Cash paid for:
Interest
$
767
$
296
$
1,498
Income taxes
$
121,428
$
140,239
$
193,246
Non-cash investing activities:
Capital expenditures incurred but not yet paid:
$
3,893
$
2,735
$
1,826
43
The accompanying notes are an integral part of the consolidated financial statements.
44
TERADYNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A.
THE COMPANY
Teradyne, Inc. (“Teradyne”) is a leading global supplier of automated test equipment and robotics solutions. Teradyne designs,
develops, manufactures, and sells automated test systems and robotics products. Teradyne’s automated test systems are used to test
semiconductors, wireless products, data storage and complex electronics systems in many industries including consumer electronics,
wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Teradyne’s robotics products
consist primarily of collaborative robotic arms and autonomous mobile robots used by global manufacturing, logistics and industrial
customers to improve quality, increase manufacturing and material handling efficiency, and decrease manufacturing and logistics
costs. Teradyne’s automated test equipment and robotics products and services include:
•
semiconductor test (“Semiconductor Test”) systems;
•
robotics (“Robotics”) products; and
•
defense/aerospace (“Defense/Aerospace”) test instrumentation and systems, circuit-board test and inspection (“Production
Board Test”) systems, and wireless test systems (referred collectively as "All Other").
B.
ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Teradyne and its wholly owned subsidiaries. All significant
intercompany balances and transactions are eliminated. Certain prior years’ amounts were reclassified to conform to the current year
presentation.
Preparation of Financial Statements and Use of Estimates
The preparation of consolidated financial statements requires management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis,
management evaluates its estimates, including those related to revenue, inventories, investments, goodwill, intangible and other long-
lived assets, accounts receivable, income taxes, deferred tax assets and liabilities, pensions, warranties, and loss contingencies.
Management bases its estimates on historical experience and on appropriate and customary assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Management is not aware of any specific event or circumstance that would
require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of
this Annual Report on Form 10-K. These estimates may change, as new events occur and additional information is obtained. Actual
results may differ significantly from these estimates under different assumptions or conditions.
Revenue Recognition
Revenue from Contracts with Customers
In accordance with ASC 606, Teradyne recognizes revenues, when or as control is transferred to a customer. Teradyne’s
determination of revenue is dependent upon a five-step process outlined below.
•
Teradyne accounts for a contract with a customer when there is written approval, the contract is committed, the rights of the
parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of
collection.
•
Teradyne periodically enters into contracts with customers in which a customer may purchase a combination of goods and
services, such as products with extended warranty obligations. Teradyne determines performance obligations by assessing
whether the products or services are distinct from the other elements of the contract. In order to be distinct, the product or
service must perform either on its own or with readily available resources and must be separate within the context of the
contract.
•
Teradyne determines the transaction price to be the amount of consideration to which Teradyne expects to be entitled to,
which is generally at contractually stated prices.
•
Transaction price is allocated to each individual performance obligation based on the standalone selling price of that
performance obligation. Teradyne uses standalone transactions when available to value each performance obligation. If
standalone transactions are not available, Teradyne will estimate the standalone selling price through market assessments or
45
cost plus a reasonable margin analysis. Any discounts from standalone selling price are spread proportionally to each
performance obligation.
•
In order to determine the appropriate timing for revenue recognition, Teradyne first determines if the transaction meets any
of three criteria for over time recognition. If the transaction meets the criteria for over time recognition, Teradyne recognizes
revenue as the good or service is delivered. Teradyne uses input variables such as hours or months utilized or costs incurred
to determine the amount of revenue to recognize in a given period. Input variables are used as they best align consumption
with benefit to the customer. For transactions that do not meet the criteria for over time recognition, Teradyne will recognize
revenue at a point in time based on an assessment of the five criteria for transfer of control. Teradyne has concluded that
revenue should be recognized when shipped or delivered based on contractual terms. Typically, acceptance of Teradyne’s
products and services is a formality as Teradyne delivers similar systems, instruments and robots to standard specifications.
In cases where acceptance is not deemed a formality, Teradyne will defer revenue recognition until customer acceptance.
Performance Obligations
Products
Teradyne products consist primarily of semiconductor test systems and instruments, defense/aerospace test instrumentation and
systems, storage test systems and instruments, circuit-board test and inspection systems and instruments, wireless test systems and
robotics products. Teradyne’s hardware is typically recognized at a point in time upon transfer of control to the customer.
Services
Teradyne services consist of extended warranties, training and application support, service agreements, post contract customer
support (“PCS”) and replacement parts. Each service is recognized based on relative standalone selling price. Extended warranty,
training and support, service agreements and PCS are recognized over time based on the period of service. Replacement parts are
recognized at a point in time upon transfer of control to the customer.
Teradyne does not allow customer returns or provide refunds to customers for any products or services. Teradyne products
include a standard 12-month warranty. This warranty is not considered a distinct performance obligation because it does not obligate
Teradyne to provide a separate service to the customer and it cannot be purchased separately. Cost related to warranties are included in
cost of revenues when product revenues are recognized.
As of December 31, 2024 and 2023, deferred revenue and customer advances consisted of the following and are included in the
short and long-term deferred revenue and customer advances:
2024
2023
(in thousands)
Maintenance, service and training
$
58,473
$
66,458
Customer advances, undelivered elements and other
48,118
35,731
Extended warranty
41,624
34,897
Total deferred revenue and customer advances
$
148,215
$
137,086
46
Product Warranty
Teradyne generally provides a one-year warranty on its products, commencing upon installation, acceptance or shipment. A
provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based on historical experience.
Related costs are charged to the warranty accrual as incurred. The balance below is included in other accrued liabilities:
Amount
(in thousands)
Balance at December 31, 2021
$
24,577
Accruals for warranties issued during the period
21,851
Accruals related to pre-existing warranties
(5,618)
Settlements made during the period
(26,629)
Balance at December 31, 2022
14,181
Accruals for warranties issued during the period
21,644
Accruals related to pre-existing warranties
(1,576)
Settlements made during the period
(18,551)
Balance at December 31, 2023
15,698
Accruals for warranties issued during the period
11,315
Accruals related to pre-existing warranties
(1,078)
Settlements made during the period
(12,973)
Balance at December 31, 2024
$
12,962
When Teradyne receives revenue for extended warranties, beyond one year, it is deferred and recognized on a straight-line basis
over the contract period. Related costs are expensed as incurred. The balance below is included in short and long-term deferred
revenue and customer advances:
Amount
(in thousands)
Balance at December 31, 2021
$
64,168
Deferral of new extended warranty revenue
33,686
Recognition of extended warranty deferred revenue
(41,674)
Balance at December 31, 2022
56,180
Deferral of new extended warranty revenue
14,330
Recognition of extended warranty deferred revenue
(35,613)
Balance at December 31, 2023
34,897
Deferral of new extended warranty revenue
29,990
Recognition of extended warranty deferred revenue
(23,263)
Balance at December 31, 2024
$
41,624
Accounts Receivable and Allowance for Credit Losses
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Teradyne maintains allowances for
estimated losses resulting from the inability of its customers to make required payments. Estimated allowances for credit losses are
reviewed periodically taking into account the customer’s recent payment history, the customer’s current financial statements and other
information regarding the customer’s creditworthiness. Account balances are written off against the allowance when it is determined
the receivable will not be recovered.
Teradyne sells certain trade accounts receivables on a non-recourse basis to third-party financial institutions pursuant to
factoring agreements. Teradyne accounts for these transactions as sales of receivables and presents cash proceeds as a cash provided
by operating activities in the consolidated statements of cash flows. Total trade accounts receivable sold under the factoring
agreements were $129.0 million and $243.5 million during 2024 and 2023, respectively. Factoring fees for the sales of receivables are
recorded in interest expense and are not material.
Equity Method Investments
Teradyne accounts for investments using the equity method of accounting when it has significant influence over the financial
and operating policies, but not control, of the investee. The equity method investments are initially recorded at cost and included in
‘Equity method investment’ in the consolidated balance sheet. Teradyne records its share of investee's net income or loss and other
47
comprehensive income, and the amortization of equity method basis difference, calculated as the difference between the investment
and the amount of underlying equity in net assets acquired, on a 3-month lag, which is applied consistently from period to period.
Teradyne's share of investee's net income and the amortization of equity method basis difference are reported in ‘Equity in net
earnings of affiliate’ in the consolidated statement of operations. Teradyne includes its share of investee's other comprehensive income
and a cumulative translation adjustment in the consolidated statements of comprehensive income. Teradyne monitors on an ongoing
basis its equity method investments for indicators of other-than-temporary declines in fair value below carrying value.
Inventories
Inventories are stated at the lower of cost (first-in, first-out basis) or net realizable value. On a quarterly basis, Teradyne uses
consistent methodologies to evaluate all inventories for net realizable value. Teradyne records a provision for both excess and obsolete
inventory when such write-downs or write-offs are identified through the quarterly review process. The inventory valuation is based
upon assumptions about future demand, product mix and possible alternative uses.
Investments
Teradyne accounts for its investments in debt and equity securities in accordance with the provisions of ASC 320-10,
“Investments—Debt and Equity Securities.” ASC 320-10 requires that certain debt and equity securities be classified into one of three
categories; trading, available-for-sale or held-to-maturity securities. On a quarterly basis, Teradyne reviews its investments to identify
and evaluate those that have an indication of a potential other-than-temporary impairment. Factors considered in determining whether
a loss is other-than-temporary include:
•
The length of time and the extent to which the market value has been less than cost;
•
The financial condition and near-term prospects of the issuer; and
•
The intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated
recovery in market value.
Teradyne uses the market and income approach techniques to value its financial instruments and there were no changes in
valuation techniques during the twelve months ended December 31, 2024 and 2023.
Teradyne measures its debt and equity investments at fair value, in accordance with ASC 820-10, “Fair Value Measurements
and Disclosures.” ASC 820-10 defines fair value as the price that would be received from the sale of an asset or paid to transfer a
liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value be classified
and disclosed in one of the following three categories:
Level 1: Quoted prices in active markets for identical assets as of the reporting date;
Level 2: Inputs other than Level 1, that are observable either directly or indirectly as of the reporting date. For example, a
common approach for valuing fixed income securities is the use of matrix pricing. Matrix pricing is a mathematical technique
used to value securities by relying on the securities’ relationship to other benchmark quoted prices, and is considered a Level 2
input; or
Level 3: Unobservable inputs that are not supported by market data. Unobservable inputs are developed based on the best
information available, which might include Teradyne’s own data.
Teradyne’s debt investments are classified as Level 2, and equity investments are classified as Level 1.
Financial Assets and Financial Liabilities
Teradyne records changes in fair value of equity securities directly in earnings and unrealized gains and losses in other (income)
expense, net, in accordance with ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of
Financial Assets and Financial Liabilities.”
48
Prepayments
Prepayments consist of the following:
2024
2023 (1)
(in thousands)
Contract manufacturer and supplier prepayments
$
365,875
$
502,257
Prepaid maintenance and other services
22,176
17,592
Prepaid taxes
22,211
16,083
Other prepayments
18,824
13,038
Total prepayments
$
429,086
$
548,970
(1)
Excludes $5.3 million of contract manufacturer and supplier prepayments, classified as assets held for sale. See Note E:
"Dispositions" for additional information.
Retirement and Postretirement Plans
Teradyne recognizes net actuarial gains and losses and the change in the fair value of the plan assets in its operating results in
the year in which they occur or upon any interim remeasurement of the plans. Teradyne calculates the expected return on plan assets
using the fair value of the plan assets. Actuarial gains and losses are generally measured annually as of December 31 and, accordingly,
recorded during the fourth quarter of each year or upon any interim remeasurement of the plans.
Teradyne reports net periodic pension cost and net periodic postretirement benefit costs in accordance with ASU 2017-07,
“Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost.” The service cost component of net benefit costs is reported in the same line item in the consolidated
statement of operations as other employee compensation costs. The non-service components of net benefit costs such as interest cost,
expected return on assets, amortization of prior service cost, and actuarial gains or losses, are reported within other (income) expense,
net.
Goodwill, Intangible and Long-Lived Assets
Teradyne accounts for goodwill and intangible assets in accordance with ASC 350-10, “Intangibles-Goodwill and Other.”
Intangible assets are amortized over their estimated useful economic life and are carried at cost less accumulated amortization.
Goodwill is assessed for impairment at least annually in the fourth quarter, as of December 31, on a reporting unit basis, or more
frequently when events and circumstances occur indicating that the recorded goodwill may be impaired.
In accordance with ASC 350-10, Teradyne has the option to perform a qualitative assessment to determine whether it is more
likely than not that the fair value of a reporting unit is less than its carrying amount. If Teradyne determines this is the case, Teradyne
is required to perform a quantitative goodwill impairment test to identify potential goodwill impairment and measure the amount of
goodwill impairment loss to be recognized. If Teradyne determines that it is more likely than not that the fair value of the reporting
unit is greater than its carrying amounts, a quantitative goodwill impairment test is not required.
In accordance with ASC 360-10, “Impairment or Disposal of Long-Lived Assets,” Teradyne reviews long-lived assets for
impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully
recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the
estimated undiscounted cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its
estimated fair value based on a discounted cash flows analysis. The cash flows estimates used to determine the impairment, if any,
contain management’s best estimates using appropriate assumptions and projections at that time.
Business Combination
Teradyne recognizes the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at
the date of acquisition. The fair value of identifiable intangible assets is based on detailed cash flows valuations that use information
and assumptions provided by management. Teradyne uses all pertinent information known at the time of acquisition to estimate the
fair value of contingent consideration at the time of the acquisition using all pertinent information known to us at the time to assess the
probability of payment of contingent amounts or through the use of a Monte Carlo simulation model. Teradyne allocates any excess
purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed to goodwill. The
assumptions used in the valuations for our acquisitions may differ materially from actual results depending on performance of the
acquired businesses and other factors. While Teradyne believes the assumptions used were appropriate, different assumptions in the
valuation of assets acquired and liabilities assumed could have a material impact on the timing and extent of impact on our statements
of operations. Goodwill is assigned to reporting units as of the date of the related acquisition.
49
Property, Plant and Equipment
Property, plant and equipment are stated at cost and depreciated over the estimated useful lives of the assets. Leasehold
improvements and major renewals are capitalized and included in property, plant and equipment accounts, while expenditures for
maintenance and repairs and minor renewals are charged to expense. When assets are retired, the assets and related accumulated
depreciation are removed from the accounts and any resulting gain or loss is reflected in the consolidated statements of operations.
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, equipment and software
3 to 5 years
Test systems manufactured internally are used by Teradyne for customer evaluations and manufacturing and support of its
customers. Teradyne depreciates the test systems manufactured internally over a six-year life to cost of revenues, engineering and
development, and selling and administrative expenses. Teradyne often sells internally manufactured test equipment to customers.
Upon the sale of an internally manufactured test system, the net book value of the system is transferred to inventory and expensed as
cost of revenues. The net book value of internally manufactured test systems sold in the years ended December 31, 2024, 2023, and
2022 was $4.0 million, $2.8 million, and $6.6 million, respectively.
Convertible Debt
Teradyne adopted Accounting Standards Update (“ASU”) ASU 2020-06 – “Debt—Debt with Conversion and Other Options
and Derivatives and Hedging—Contracts in Entity’s Own Equity,” on January 1, 2022 using the modified retrospective method of
adoption. As a result of adoption, Teradyne recorded an increase of $1.4 million to current debt for unsettled shares, an increase of
$1.8 million to deferred tax assets, an increase of $6.6 million to long-term debt for unamortized debt discount, and an increase to
retained earnings of $94.6 million for the reclassification of the equity component. Mezzanine equity representing unsettled shares
value was reduced to zero and additional paid-in capital was reduced by $100.8 million. In accordance with ASU 2020-06, Teradyne
accounts for a convertible debt instrument as a single liability measured at its amortized cost, as long as no other features require
bifurcation and recognition as derivatives. Unsettled shares are recorded in current debt, and there is no recognition of a debt discount,
which was previously amortized to interest expense. Settled shares reduce the outstanding debt balance in an amount equal to the cash
paid, but do not result in any gain or loss on extinguishment. We use the if-converted method in the diluted EPS calculation for
convertible instruments.
Leases
Under ASC 842, a contract is or contains a lease when Teradyne has the right to control the use of an identified asset. Teradyne
determines if an arrangement is a lease at inception of the contract, which is the date on which the terms of the contract are agreed to
and the agreement creates enforceable rights and obligations. The commencement date of the lease is the date that the lessor makes an
underlying asset available for use by Teradyne. As of December 31, 2024, Teradyne does not have material leases that have not yet
commenced.
Teradyne determines if the lease is an operating or finance lease at the lease commencement date based upon the terms of the
lease and the nature of the asset. The lease term used to calculate the lease liability includes options to extend or terminate the lease
when it is reasonably certain that the option will be exercised.
The lease liability is measured at the present value of future lease payments, discounted using the discount rate for the lease at
the commencement date. As Teradyne is typically unable to determine the implicit rate, Teradyne uses an incremental borrowing rate
based on the lease term and economic environment at commencement date. Teradyne initially measures payments based on an index
by using the applicable rate at lease commencement. Variable payments that do not depend on an index are not included in the lease
liability and are recognized as they are incurred. The right-of-use (“ROU”) asset is initially measured as the amount of lease liability,
adjusted for any initial lease costs, prepaid lease payments, and reduced by any lease incentives.
50
Teradyne’s contracts often include non-lease components such as common area maintenance. Teradyne elected the practical
expedient to account for the lease and non-lease components as a single lease component. For leases with a term of one year or less,
Teradyne has elected not to record the lease asset or liability. Rent is recognized in the consolidated statement of earnings on a
straight-line basis over the lease term. Teradyne includes lease costs within cost of revenues and operating expenses. See Note J:
“Leases.”
Engineering and Development Costs
Teradyne’s products are highly technical and require a large and continuing engineering and development effort. Software
development costs incurred prior to the establishment of technological feasibility are charged to expense. Software development costs
incurred subsequent to the establishment of technological feasibility are capitalized until the product is available for release to
customers. To date, the period between achieving technological feasibility and general availability of the product has been short and
software development costs eligible for capitalization have not been material. Engineering and development costs are expensed as
incurred and consist primarily of salaries, contractor fees including non-recurring engineering charges related to product design,
allocated facility costs, depreciation, and tooling costs.
Stock Compensation Plans and Employee Stock Purchase Plan
Stock-based compensation expense is based on the grant-date fair value estimated in accordance with the provisions of ASC
718-10, “Compensation-Stock Compensation.” Teradyne elects to account for forfeitures by applying an estimated forfeiture rate and
recognizes compensation costs only for those stock-based compensation awards expected to vest. Under its stock compensation plans,
Teradyne has granted stock options, restricted stock units and performance-based restricted stock units, and employees are eligible to
purchase Teradyne’s common stock through its Employee Stock Purchase Plan (“ESPP”).
Excess tax benefits or tax deficiencies are recognized as a discrete tax benefit or discrete tax expense to the current income tax
provision in Teradyne’s consolidated statements of operations, all excess tax benefits related to share-based payments are reported as
cash flows from operating activities, and all cash payments made to taxing authorities on the employees’ behalf for withheld shares
are presented as financing activities on the statement of cash flows.
Income Taxes
Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and
liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The
measurement of deferred tax assets is reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax
assets will not be realized. Teradyne performed the required assessment of positive and negative evidence regarding the realization of
the net deferred tax assets in accordance with ASC 740, “Accounting for Income Taxes.” This assessment included the evaluation of
scheduled reversals of deferred tax liabilities, estimates of projected future taxable income and tax-planning strategies. Although
realization is not assured, based on its assessment, Teradyne concluded that it is more likely than not that such assets, net of the
existing valuation allowance, will be realized.
Advertising Costs
Teradyne expenses all advertising costs as incurred. Advertising costs were $16.1 million, $15.5 million and $17.3 million in
2024, 2023 and 2022, respectively.
Translation of Non-U.S. Currencies
The functional currency for all non-U.S. subsidiaries is the U.S. dollar, except for Robotics and Lemsys for which the local
currency is its functional currency. All foreign currency denominated monetary assets and liabilities are remeasured on a monthly
basis into the functional currency using exchange rates in effect at the end of the period. All foreign currency denominated non-
monetary assets and liabilities are remeasured into the functional currency using historical exchange rates. Net foreign exchange gains
and losses resulting from remeasurement are included in other (income) expense, net. For Robotics and Lemsys, assets and liabilities
are translated into U.S. dollars using exchange rates in effect at the end of the period. Revenues and expense amounts are translated
using an average of exchange rates in effect during the period. Translation adjustments are recorded within accumulated other
comprehensive income (loss) on the balance sheet.
Net foreign exchange gains and losses resulting from remeasurement are included in other (income) expense, net. For the years
ended December 31, 2024, 2023 and 2022, losses (gains) from the remeasurement of the monetary assets and liabilities denominated
in foreign currencies were $2.8 million, $10.9 million, and $10.8 million, respectively.
51
These amounts do not reflect the corresponding (gains) losses from foreign exchange contracts. See Note I: “Financial
Instruments” regarding foreign exchange contracts.
Net Income per Common Share
Basic net income per common share is calculated by dividing net income by the weighted average number of common shares
outstanding during the period. Except where the result would be anti-dilutive, diluted net income per common share is calculated by
dividing net income by the sum of the weighted average number of common shares plus common stock equivalents, if applicable.
With respect to its convertible debt issued in 2016, Teradyne was required to settle the principal of the convertible debt in cash;
accordingly, the principal amount was excluded from the determination of diluted earnings per share. As a result, Teradyne is
accounting for the conversion spread using the treasury stock method.
Comprehensive Income
Comprehensive income includes net income, unrealized pension and postretirement prior service costs and benefits, unrealized
gains and losses on investments in debt marketable securities, unrealized gains and losses on cash flow hedge and foreign currency
translation adjustment.
C.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No.
2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures", which requires Teradyne to disclose
significant segment expenses and other segment items used by the Chief Operating Decision Maker ("CODM") on an annual and
interim basis as well as provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are
currently required annually. Additionally, we are required to disclose the title and position of the CODM. Teradyne retrospectively
adopted and complied with this standard for the annual period ending December 31, 2024. Teradyne updated our segment disclosures
to comply with the requirements. See Note U: "Segment, Geographic and Significant Customer Information." The adoption of this
standard had no impact on Teradyne results of operations, cash flows or financial condition.
In December 2023, the FASB issued ASU 2023-09 –“Income Taxes (Topic 740): Improvements to Income Tax Disclosures”,
which requires expanded disclosures relating to the tax rate reconciliation, income taxes paid, income (loss) before income tax
expense (benefit) and income tax expense (benefit), requiring a greater disaggregation of information for each. The provisions of ASU
2023-09 are effective for fiscal years beginning after December 15, 2024. The amendments in this update should be applied on a
prospective basis, but retrospective application is permitted. Teradyne is currently evaluating the impact of this new standard.
In November 2024, the FASB issued ASU 2024-03-"Income Statement - Reporting Comprehensive Income -Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses", which requires disclosure of
additional expense information on an annual and interim basis, including the amounts of inventory purchases, employee
compensation, depreciation and intangible amortization included within each income statement expense caption. This standard is
effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15,
2027, with early adoption permitted. The amendments in this update should be applied on a prospective basis, but retrospective
application is permitted. Teradyne is currently evaluating the impact of this new standard.
52
D.
REVENUE
Disaggregation of Revenue
The following table provides information about disaggregated revenue by timing of revenue recognition, primary geographical
market, and major product lines.
Semiconductor
Test
Robotics
Reportable
Segments
All Other
System-
on-a-chip
Memory
IST
Corporate
and
Eliminations
Total
(in thousands)
For the Year Ended
December 31, 2024 (1)
Timing of Revenue
Recognition
Point in Time
$1,255,579
$
472,279
$
63,288
$
356,384
$
2,147,530
$
266,955
$
—
$ 2,414,485
Over Time
281,545
29,509
21,720
$
8,464
341,238
64,157
—
$
405,395
Total
$1,537,124
$
501,788
$
85,008
$
364,848
$
2,488,768
$
331,112
$
—
$ 2,819,880
Geographical Market
Asia Pacific
$1,400,149
$
466,214
$
78,719
$
69,353
$
2,014,435
$
113,263
$
—
$ 2,127,698
Americas
92,386
15,017
6,289
$
147,607
261,299
174,084
—
$
435,383
Europe, Middle East and
Africa
44,589
20,557
—
$
147,888
213,034
43,765
—
$
256,799
Total
$1,537,124
$
501,788
$
85,008
$
364,848
$
2,488,768
$
331,112
$
—
$ 2,819,880
For the Year Ended
December 31, 2023 (1)
Timing of Revenue
Recognition
Point in Time
$1,141,882
$
356,417
$
115,220
$
363,238
$
1,976,757
$
282,558
$
—
$ 2,259,315
Over Time
290,739
29,598
23,332
$
11,945
355,614
61,369
—
$
416,983
Total
$1,432,621
$
386,015
$
138,552
$
375,183
$
2,332,371
$
343,927
$
—
$ 2,676,298
Geographical Market
Asia Pacific
$1,214,322
$
366,151
$
135,502
$
73,736
$
1,789,711
$
103,300
$
—
$ 1,893,011
Americas
117,728
11,367
3,050
$
147,952
280,097
199,299
—
$
479,396
Europe, Middle East and
Africa
100,571
8,497
—
$
153,495
262,563
41,328
—
$
303,891
Total
$1,432,621
$
386,015
$
138,552
$
375,183
$
2,332,371
$
343,927
$
—
$ 2,676,298
For the Year Ended
December 31, 2022 (1)
Timing of Revenue
Recognition
Point in Time
$1,445,238
$
344,693
$
248,919
$
391,326
$
2,430,176
$
342,195
$
251
$ 2,772,622
Over Time
261,646
29,013
21,094
$
11,812
323,565
58,858
—
$
382,423
Total
$1,706,884
$
373,706
$
270,013
$
403,138
$
2,753,741
$
401,053
$
251
$ 3,155,045
Geographical Market
Asia Pacific
$1,514,964
$
360,176
$
266,729
$
89,654
$
2,231,523
$
168,388
$
—
$ 2,399,911
Americas
122,575
11,987
3,284
$
147,416
285,262
190,106
251
$
475,619
Europe, Middle East and
Africa
69,345
1,543
—
$
166,068
236,956
42,559
—
$
279,515
Total
$1,706,884
$
373,706
$
270,013
$
403,138
$
2,753,741
$
401,053
$
251
$ 3,155,045
(1)
Includes $3.7 million, $5.2 million and $8.2 million in 2024, 2023 and 2022, respectively, for leases of Teradyne’s systems
recognized outside of ASC 606: “Revenue from Contracts with Customers.”
Contract Balances
For the years ended December 31, 2024, 2023 and 2022, Teradyne recognized $72.7 million, $108.1 million and $112.4 million,
respectively, that was included within the deferred revenue and customer advances balances at the beginning of the period. This
revenue primarily relates to undelivered hardware, extended warranties, training, application support, and post contract support. Each
of these represents a distinct performance obligation. As of December 31, 2024, Teradyne had $1,162.2 million of unsatisfied
performance obligations. Teradyne expects to recognize 88% of the remaining performance obligation in the next 12 months and the
remainder in 1-3 years.
53
E.
DISPOSITIONS
On May 27, 2024, Teradyne completed the sale of the Device Interface Solutions ("DIS") business, a component of the
Semiconductor Test segment, to Technoprobe S.p.A. ("Technoprobe") for $85.0 million in cash, net of cash and cash equivalents sold,
and a customary working capital adjustment. The sale resulted in a pre-tax gain of $57.1 million recorded as 'Gain on sale of business'
in the consolidated statement of operations. The transaction did not meet the criteria to be classified as a discontinued operation, as it
did not represent a strategic shift that will have a major effect on operations and financial results.
Assets and liabilities related to the DIS sale agreement met the criteria and were classified as held for sale in Teradyne’s
consolidated balance sheet as of December 31, 2023, as follows:
December 31,
2023
(in thousands)
Current assets:
Inventories, net
$
17,952
Prepayments
5,298
Total current assets held for sale
23,250
Property, plant and equipment, net
8,986
Operating lease right-of-use assets, net
2,545
Total assets held for sale
$
34,781
Current liabilities:
Accounts payable
$
6,356
Other accrued liabilities
552
Operating lease liabilities
471
Total current liabilities held for sale
7,379
Long-term operating lease liabilities
2,000
Total liabilities held for sale
$
9,379
Net assets held for sale
$
25,402
F.
EQUITY METHOD INVESTMENT
On May 27, 2024, Teradyne paid 483.1 million Euros, equivalent to $524.1 million, to purchase a combination of previously
issued and outstanding shares and shares newly issued by Technoprobe, S.p.A. ("Technoprobe"). The shares purchased represent 10%
of the issued and outstanding shares of Technoprobe. Teradyne also received a board seat as part of the purchase. Teradyne accounts
for this investment using the equity method as a result of being able to exercise significant influence over the operating and financial
decisions of Technoprobe. As of December 31, 2024, $494.5 million was recorded as 'Equity method investment' in the consolidated
balance sheets.
(in thousands)
Balance at May 27, 2024
$
524,060
Other comprehensive income related to investment
(22,355)
Equity in net earnings of affiliate
(7,211)
Balance at December 31, 2024
$
494,494
Based on the quoted closing price of Technoprobe stock as of December 31, 2024, the fair value of the publicly traded
investment was $389.5 million. Evaluation of Technoprobe's financial condition and Teradyne's ability to hold the investment indicate
there was no other-than-temporary impairment as of December 31, 2024.
Teradyne's equity method basis difference was calculated as the difference between the investment and the amount of
underlying equity in net assets acquired. The equity method basis difference calculated at acquisition attributable to developed
technology, customer relationships, trade name, property, plant and equipment, inventory, and deferred tax liability was $200.9
million. The basis differences, net of tax, will be amortized over their estimated useful lives.
Teradyne made an accounting policy election to report its share of Technoprobe's results on a 3-month lag, which is applied
consistently from period to period. Teradyne records its share of Technoprobe's net income or loss and the amortization of equity
method basis difference, as 'Equity in net earnings of affiliate' in the consolidated statements of operations. Teradyne includes its share
54
of Technoprobe's other comprehensive income and a cumulative translation adjustment in the consolidated statements of
comprehensive income.
G.
INVENTORIES
Inventories, net consisted of the following at December 31, 2024 and 2023:
2024
2023 (1)
(in thousands)
Raw material
$
225,915
$
258,422
Work-in-process
41,964
26,851
Finished goods
30,613
24,701
$
298,492
$
309,974
(1)
Excludes $18.0 million of primarily work-in-process inventories, net classified as assets held for sale. See Note E:
"Dispositions" for additional information.
Inventory reserves at December 31, 2024, and December 31, 2023, were $141.4 million and $136.0 million, respectively.
H.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net consisted of the following at December 31, 2024 and 2023:
2024
2023 (1)
(in thousands)
Land
$
19,409
$
19,487
Buildings
183,371
127,705
Machinery, equipment and software
1,157,784
1,047,235
Furniture and fixtures
28,432
28,093
Leasehold improvements
67,387
66,777
Construction in progress
5,678
54,799
1,462,061
1,344,096
Less: accumulated depreciation
953,890
898,604
$
508,171
$
445,492
(1)
Excludes $9.0 million of property, plant and equipment, net classified as assets held for sale. See Note E: "Dispositions" for
additional information.
Depreciation of property, plant and equipment for the years ended December 31, 2024, 2023, and 2022 was $101.0 million,
$92.1 million, and $90.8 million, respectively. As of December 31, 2024 and 2023, the gross book value included in machinery and
equipment for internally manufactured test systems being leased by customers was $25.7 million and $5.1 million, respectively. As of
December 31, 2024 and 2023, the accumulated depreciation on these test systems was $5.5 million and $4.9 million, respectively.
I.
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 equity and debt mutual funds are classified as Level 1 and available-for-sale debt securities are classified as Level 2.
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 years ended December 31, 2024 and 2023, there were no transfers in or out of Level 1, Level 2, or Level 3 financial
instruments.
55
Realized gains recorded in 2024, 2023, and 2022 were $2.2 million, $0.6 million, and $0.8 million, respectively. Realized losses
recorded in 2024, 2023, and 2022 were $0.3 million, $0.3 million, and $0.1 million, respectively. Realized gains and losses are
included in other (income) expense, net.
Unrealized gains on equity securities recorded during the years ended December 31, 2024, 2023 and 2022 were $6.7 million,
$8.9 million and $1.9 million, respectively. Unrealized losses on equity securities recorded during the years ended December 31,
2024, 2023, and 2022 were $1.2 million, $1.7 million and $11.6 million, respectively. 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 (loss) on the balance sheet.
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 December 31, 2024 and 2023:
December 31, 2024
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
$
261,176
$
—
$
—
$
261,176
Cash equivalents
283,037
9,141
—
292,178
Available for sale securities:
U.S. Treasury securities
—
44,942
—
44,942
Corporate debt securities
—
35,696
—
35,696
Certificates of deposit and time deposits
—
21,689
—
21,689
Debt mutual funds
8,951
—
—
8,951
U.S. government agency securities
—
3,970
—
3,970
Non-U.S. government securities
—
773
—
773
Equity securities:
Mutual funds
54,412
—
—
54,412
Total
$
607,576
$
116,211
$
—
$
723,787
Derivative assets
—
1,665
—
1,665
Total
$
607,576
$
117,876
$
—
$
725,452
Liabilities
Derivative liabilities
—
1,324
—
1,324
Total
$
—
$
1,324
$
—
$
1,324
Reported as follows:
(Level 1)
(Level 2)
(Level 3)
Total
(in thousands)
Assets
Cash and cash equivalents
$
544,213
$
9,141
$
—
$
553,354
Marketable securities
—
46,312
—
46,312
Long-term marketable securities
63,363
60,758
—
124,121
Other current assets
—
1,665
—
1,665
Total
$
607,576
$
117,876
$
—
$
725,452
Liabilities
Other current liabilities
$
—
$
1,324
$
—
$
1,324
Total
$
—
$
1,324
$
—
$
1,324
56
December 31, 2023
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
$
298,156
$
—
$
—
$
298,156
Cash equivalents
453,298
6,117
—
459,415
Available for sale securities:
Corporate debt securities
—
52,734
—
52,734
U.S. Treasury securities
—
41,808
—
41,808
Certificates of deposit and time deposits
—
21,772
—
21,772
Debt mutual funds
8,773
—
—
8,773
U.S. government agency securities
—
4,892
—
4,892
Commercial paper
—
1,667
—
1,667
Non-U.S. government securities
—
810
—
810
Equity securities:
Mutual funds
47,132
—
—
47,132
Total
$
807,359
$
129,800
$
—
$
937,159
Derivative assets
—
18,746
—
18,746
Total
$
807,359
$
148,546
$
—
$
955,905
Liabilities
Derivative liabilities
—
2,545
—
2,545
Total
$
—
$
2,545
$
—
$
2,545
Reported as follows:
(Level 1)
(Level 2)
(Level 3)
Total
(in thousands)
Assets
Cash and cash equivalents
$
751,454
$
6,117
$
—
$
757,571
Marketable securities
—
62,154
—
62,154
Long-term marketable securities
55,905
61,529
—
117,434
Other current assets
—
18,746
—
18,746
Total
$
807,359
$
148,546
$
—
$
955,905
Liabilities
Other current liabilities
$
—
$
2,545
$
—
$
2,545
Total
$
—
$
2,545
$
—
$
2,545
The carrying amounts and fair values of Teradyne’s financial instruments at December 31, 2024 and 2023 were as follows:
December 31, 2024
December 31, 2023
Carrying Value
Fair Value
Carrying Value
Fair Value
(in thousands)
Assets
Cash and cash equivalents
$
553,354
$
553,354
$
757,571
$
757,571
Marketable securities
170,433
170,433
179,588
179,588
Derivative assets
1,665
1,665
18,746
18,746
Liabilities
Derivative liabilities
1,324
1,324
2,545
2,545
The fair values of accounts receivable, net and accounts payable approximate the carrying amount due to the short-term nature
of these instruments.
57
The following tables summarize the composition of available-for-sale marketable securities at December 31, 2024 and 2023:
December 31, 2024
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
$
49,879
$
14
$
(4,951) $
44,942
$
30,530
Corporate debt securities
40,395
79
(4,778)
35,696
27,824
Certificates of deposit and time deposits
21,689
—
—
21,689
—
Debt mutual funds
9,299
—
(348)
8,951
3,238
U.S. government agency securities
3,966
5
(1)
3,970
1,946
Non-U.S. government securities
773
—
—
773
—
$ 126,001
$
98
$
(10,078) $ 116,021
$
63,538
Reported as follows:
Cost
Unrealized
Gain
Unrealized
(Loss)
Fair Market
Value
Fair Market
Value of Investments
with Unrealized Losses
(in thousands)
Marketable securities
$
46,349
$
16
$
(53) $
46,312
$
10,454
Long-term marketable securities
79,652
82
(10,025) $
69,709
53,084
$
126,001
$
98
$
(10,078) $
116,021
$
63,538
December 31, 2023
Available-for-Sale
Cost
Unrealized
Gain
Unrealized
(Loss)
Fair Market
Value
Fair Market
Value of Investments
with Unrealized Losses
(in thousands)
Corporate debt securities
$
56,458
$
201
$
(3,925) $
52,734
$
44,263
U.S. Treasury securities
45,725
14
(3,931)
41,808
35,080
Certificates of deposit and time deposits
21,772
—
—
21,772
—
Debt mutual funds
9,081
—
(308)
8,773
3,303
U.S. government agency securities
4,898
—
(6)
4,892
4,892
Commercial paper
1,633
34
—
1,667
—
Non-U.S. government securities
810
—
—
810
—
$ 140,377
$
249
$
(8,170) $ 132,456
$
87,538
Reported as follows:
Cost
Unrealized
Gain
Unrealized
(Loss)
Fair Market
Value
Fair Market
Value of Investments
with Unrealized Losses
(in thousands)
Marketable securities
$
62,385
$
36
$
(267) $
62,154
$
34,844
Long-term marketable securities
77,992
213
(7,903) $
70,302
52,694
$
140,377
$
249
$
(8,170) $
132,456
$
87,538
As of December 31, 2024, the fair market value of investments with unrealized losses less than one year and greater than one
year totaled $22.6 million and $40.9 million, respectively.
As of December 31, 2023, the fair market value of investments with unrealized losses less than one year and greater than one
year totaled $22.3 million and $65.2 million, respectively.
58
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 December 31, 2024 and 2023 were not
other than temporary.
The contractual maturities of investments in available-for-sale marketable securities held at December 31, 2024 were as follows:
Cost
Fair Value
(in thousands)
Due within one year
$
46,349
$
46,312
Due after 1 year through 5 years
25,554
25,316
Due after 5 years through 10 years
8,648
8,232
Due after 10 years
36,151
27,210
Total
$
116,702
$
107,070
Contractual maturities of investments in available-for-sale marketable securities held at December 31, 2024 exclude debt mutual
funds with the fair market value of $9.0 million as they do not have a contractual maturity date.
Derivatives
Teradyne conducts business in various foreign countries, with certain transactions denominated in local currencies. As a result,
Teradyne is exposed to risks relating to changes in foreign currency exchange rates. Teradyne’s foreign currency risk management
objective is to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities
denominated in foreign currencies, and changes in its cash inflows attributable to the forecasted cash flows from certain foreign
currency denominated revenues.
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.
Teradyne also enters into foreign currency forward and option contracts designated as cash flow hedges to hedge the risk of
changes in its cash inflows attributable to changes in foreign currency exchange rates. The cash flow hedges have maturities of less
than six months and mature in the period of revenue recognition for certain products and services in backlog and forecasted to be
recognized in a future period. Teradyne evaluates cash flow hedges for effectiveness at inception based on the critical terms match
method. The hedges are not expected to incur any ineffectiveness however a quarterly qualitative assessment of effectiveness is done
to determine if the critical terms match method remains appropriate to use. The change in fair value of the contracts is recorded in
accumulated other comprehensive income (loss) and reclassified to earnings at maturity date.
Teradyne does not use derivative financial instruments for speculative purposes.
59
At December 31, 2024 and 2023, to hedge certain of its local currency balance sheet assets and liabilities, Teradyne had the
following contracts to buy and sell non-U.S. currencies for U.S. dollars and other non-U.S. currencies with the following notional
amounts:
Net Notional Value
December 31,
2024
December 31,
2023
(in millions)
Currency Hedged (Buy/Sell)
U.S. dollar/Taiwan dollar
$
14.5
$
42.7
U.S. dollar/Japanese yen
12.6
11.0
Danish krone/Chinese yuan
10.5
—
U.S. dollar/Korean won
4.2
7.2
U.S. dollar/British pound sterling
1.2
1.5
U.S. dollar/Danish krone
—
36.0
Singapore dollar/U.S. dollar
28.9
16.6
Euro/U.S. dollar
22.3
25.3
Danish krone/U.S. dollar
16.9
0.7
Philippine peso/U.S. dollar
9.4
10.1
Chinese yuan/U.S. dollar
1.6
1.0
$
122.1
$
152.1
The change in the fair value of the outstanding contracts was a loss of $0.6 million and a loss of $1.8 million, respectively, at
December 31, 2024 and 2023.
Unrealized 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.
At December 31, 2024 and 2023, Teradyne had the following cash flow hedge contracts to buy and sell non-U.S. currencies for
U.S. dollars with the following notional amounts:
Net Notional Value
December 31,
2024
December 31,
2023
(in millions)
Currency Hedged (Buy/Sell)
U.S. dollar/Japanese yen
$
15.6
$
35.5
Total
$
15.6
$
35.5
The change in the fair value of the outstanding cash flow hedge contracts was a gain of $0.9 million at December 31, 2024 and a
gain of $0.6 million at December 31, 2023.
Unrealized gains and losses on foreign currency cash flow hedge contracts are included in accumulated other comprehensive
income (loss). At maturity, the gains or losses associated with cash flow hedge contracts are recorded to revenue.
On November 7, 2023, in connection with the agreement to acquire 10% investment in Technoprobe S.p.A, Teradyne purchased
a call option to buy 481.0 million Euros. The expiration date of the option was April 26, 2024. At December 31, 2023, the fair value of
the outstanding contract was $17.4 million and an unrealized gain of $7.5 million was recorded in other (income) expense, net. On
April 12, 2024, Teradyne entered into a forward to buy 481.0 million Euros which expired on May 23, 2024. For the year ended
December 31, 2024, a realized loss of $9.8 million was recorded in 'Other (income) expense, net' in the consolidated statement of
operations.
60
The following table summarizes the fair value of derivative instruments as of December 31, 2024 and 2023:
Balance Sheet Location
December 31,
2024
December 31,
2023
(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts
Other current assets
$
725
$
733
Foreign exchange option contracts
Other current assets
—
17,364
Foreign exchange forward contracts
Other current
liabilities
(1,324)
(2,545)
Derivatives designated as hedging instruments:
Foreign exchange forward contracts
Other current assets
940
648
Total derivatives
$
341
$
16,200
The following table summarizes the effect of derivative instruments in the statements of operations recognized for the years
ended December 31, 2024, 2023, and 2022:
Location of (Gains) Losses
Recognized in Statement
of Operations
December 31,
2024
December 31,
2023
December 31,
2022
(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts (1)
Other (income) expense, net
$
3,226
$
(1,843)
$
(2,482)
Foreign exchange option contracts
Other (income) expense, net
9,764
(7,464)
—
Derivatives designated as hedging instruments:
Foreign exchange forward and option contracts
Revenue
(2,402)
(3,127)
(251)
Total derivatives
$
10,588
$
(12,434)
$
(2,733)
(1)
The table does not reflect the corresponding gains and losses from the remeasurement of the monetary assets and liabilities
denominated in foreign currencies. For the years ended December 31, 2024, 2023 and 2022, net losses from remeasurement of
monetary assets and liabilities denominated in foreign currencies were $2.8 million, $10.9 million, and $10.8 million,
respectively.
See Note K: “Debt” regarding derivatives related to the convertible senior notes.
Concentration of Credit Risk
Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash equivalents,
marketable securities, forward currency contracts and accounts receivable. Our cash equivalents consist primarily of money market
funds invested in U.S. Treasuries and government agencies. Our fixed income available-for-sale marketable securities have a
minimum rating of AA by one or more of the major credit rating agencies. We place forward currency contracts with high credit-
quality financial institutions in order to minimize credit risk exposure. Concentrations of credit risk with respect to accounts receivable
are limited due to the large number of geographically dispersed customers. We perform ongoing credit evaluations of our customers’
financial condition and from time to time may require customers to provide a letter of credit from a bank to secure accounts
receivable. As of December 31, 2024, two customers of our Semiconductor Test segment, Taiwan Semiconductor Manufacturing Co.
and SK Hynix Inc, each accounted for 10% of our accounts receivable balance. As of December 31, 2023, a customer of our
Semiconductor Test segment, Texas Instruments Inc., accounted for 18% of our accounts receivable balance.
J.
LEASES
Teradyne has facility and auto leases, which are accounted for as operating leases. Teradyne’s facility leases are primarily used
for administrative functions, research and development, manufacturing, and storage and distribution. Remaining lease terms range
from less than one year to twelve years.
For the years ended December 31, 2024, 2023 and 2022, total lease expense was $43.6 million, $42.7 million, and $40.1
million, respectively, and included $15.9 million, $15.5 million, and $14.1 million, respectively, of variable lease costs and $1.3
million, $1.3 million, and $2.0 million, respectively, of costs related to short-term leases, which are not recorded on the consolidated
balance sheets.
61
At December 31, 2024, the weighted average remaining lease term and weighted average discount rate for operating leases was
5.8 years and 5.5%, respectively. At December 31, 2023, the weighted average remaining lease term and weighted average discount
rate for operating leases was 6.3 years and 5.2%, respectively.
Supplemental cash flows information related to leases was as follows:
For the Years Ended
December 31,
2024
December 31,
2023
December 31,
2022
(in thousands)
Cash paid for amounts included in the measurement of lease
liabilities included in operating cash flows
$
23,990
$
26,059
$
20,775
Right-of-use assets obtained in exchange for new lease obligations
18,358
17,987
26,149
Maturities of lease liabilities as of December 31, 2024 were as follows:
Operating Lease
(in thousands)
2025
$
21,872
2026
17,729
2027
13,991
2028
9,608
2029
7,332
Thereafter
20,760
Total lease payments
91,292
Less imputed interest
(14,671)
Total lease liabilities
$
76,621
K.
DEBT
Convertible Senior Notes
On December 12, 2016, Teradyne completed a private offering of $460.0 million aggregate principal amount of 1.25%
convertible senior unsecured notes (the “Notes”) and received net proceeds, after issuance costs, of approximately $450.8 million,
$33.0 million of which was used to pay the net cost of the convertible note hedge transactions and $50.1 million of which was used to
repurchase 2.0 million shares of Teradyne’s common stock under its existing stock repurchase program from purchasers of the Notes
in privately negotiated transactions effected through one of the initial purchasers or its affiliates conducted concurrently with the
pricing of the Note offering. The Notes bore interest at a rate of 1.25% per year payable semiannually in arrears on June 15 and
December 15 of each year. The notes matured on December 15, 2023.
Concurrent with the offering of the Notes, Teradyne entered into convertible note hedge transactions (the “Note Hedge
Transactions”) with the initial purchasers or their affiliates (the “Option Counterparties”). The Note Hedge Transactions cover, subject
to customary anti-dilution adjustments, the number of shares of the common stock that underlie the Notes. Separately and concurrent
with the pricing of the Notes, Teradyne entered into warrant transactions with the Option Counterparties (the “Warrant Transactions”)
in which it sold net-share-settled (or, at its election subject to certain conditions, cash-settled) warrants to the Option Counterparties.
These transactions have been accounted for as an adjustment to Teradyne's shareholders’ equity. The Warrant Transactions, which
began expiring on March 18, 2024, and continued to expire through July 10, 2024, covered, subject to customary anti-dilution
adjustments, approximately 1.3 million shares of common stock. During the year ended December 31, 2024, 14.7 million warrants
expired, resulting in the issuance of 10.0 million shares of Teradyne common stock, respectively. As of the final date of expiration,
July 10, 2024, the strike price of the warrants was approximately $39.35 per share. The Warrant Transactions resulted in additional
shares of Teradyne’s common stock being issued to the extent that the market price per share of Teradyne’s common stock, as
measured under the terms of the Warrant Transactions, exceeded the applicable strike price of the warrants.
The interest expense on Teradyne's senior notes for the years ended December 31, 2024, and December 31, 2023, was as
follows:
62
For the Years Ended
December 31,
2024
December 31,
2023
(in thousands)
Contractual interest expense on the coupon
$
—
$
312
Amortization of the issuance fees recognized as interest expense
—
113
Total interest expense on the convertible debt
$
—
$
425
Revolving Credit Facility
On May 1, 2020, Teradyne entered into a credit agreement (the “Credit Agreement”) with Truist Bank, as administrative agent
and collateral agent, and the lenders party thereto. The Credit Agreement provides for a three-year, senior secured revolving credit
facility of $400.0 million (the “Credit Facility”).
On December 10, 2021, the Credit Agreement was amended to extend the maturity date of the Credit Facility to December 10,
2026. On October 5, 2022, the Credit Agreement was amended to increase the amount of the Credit Facility to $750.0 million from
$400.0 million. On November 7, 2023, the Credit Agreement was amended to allow for the purchase of the shares of Technoprobe.
The Credit Agreement provides that, subject to customary conditions, Teradyne may seek to obtain from existing or new lenders
the available incremental amount under the Credit Facility, not to exceed the greater of $200.0 million or 15% of consolidated
EBIDTA. The interest rate applicable to loans under the Credit Facility are, at Teradyne’s option, equal to either a base rate plus a
margin ranging from 0.00% to 0.75% per annum or SOFR plus a margin ranging from 1.10% to 1.85% per annum, based on the
consolidated leverage ratio of Teradyne. In addition, Teradyne will pay a commitment fee on the unused portion of the commitments
under the Credit Facility ranging from 0.15% to 0.25% per annum, based on the then applicable consolidated leverage ratio.
Teradyne is not required to repay any loans under the Credit Facility prior to maturity, subject to certain customary exceptions.
Teradyne is permitted to prepay all or any portion of the loans under the Credit Facility prior to maturity without premium or penalty,
other than customary SOFR breakage costs.
The Credit Agreement contains customary events of default, representations, warranties and affirmative and negative covenants
that, among other things, limit Teradyne’s ability to sell assets, grant liens on assets, incur other secured indebtedness and make
certain investments and restricted payments, all subject to exceptions set forth in the Credit Agreement. The Credit Agreement also
requires Teradyne to satisfy two financial ratios measured as of the end of each fiscal quarter; a consolidated leverage ratio and an
interest coverage ratio.
The Credit Facility is guaranteed by certain of Teradyne’s domestic subsidiaries and collateralized by assets of Teradyne and
such subsidiaries, including a pledge of 65% of the capital stock of certain foreign subsidiaries.
On May 16, 2024, Teradyne borrowed $185.0 million under the Credit Agreement to support the acquisition of 10% of the
issued and outstanding shares of Technoprobe. Teradyne fully repaid its borrowings on the revolving credit facility prior to
December 31, 2024. There was no outstanding revolver balance as of December 31, 2024.
As of February 20, 2025, the Credit Agreement was undrawn and Teradyne was in compliance with all covenants under the
Credit Agreement.
63
L.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Changes in accumulated other comprehensive income (loss), which is presented net of tax, consist of the following:
Foreign
Currency
Translation
Adjustment
Unrealized
Gains
(Losses) on
Marketable
Securities
Unrealized
(Losses)
Gains on
Cash Flow
Hedges
Retirement
Plans Prior
Service
Credit
Total
(in thousands)
Balance at December 31, 2022, net of tax of $0, $(2,308), $(708),
$(1,130), respectively
$
(39,849)
$
(8,661)
$
(2,517)
$
1,159
$
(49,868)
Other comprehensive gain before reclassifications, net of tax of
$0, $568, $1,537, $0, respectively
17,407
2,423
5,464
—
25,294
Amounts reclassified from accumulated other comprehensive
income (loss), net of tax of $0, $12, $(686), $(2),
respectively
—
44
(2,441)
(7)
(2,404)
Net current period other comprehensive gain (loss), net of tax
of $0 $580, $851, $(2), respectively
17,407
2,467
3,023
(7)
22,890
Balance at December 31, 2023, net of tax of $0, $(1,728), $143,
$(1,132), respectively
$
(22,442)
$
(6,194)
$
506
$
1,152
$
(26,978)
Other comprehensive gain before reclassifications, net of tax of
$0, $(470), $593, $0, respectively
(52,847)
(1,699)
2,100
—
(52,446)
Amounts reclassified from accumulated other comprehensive
income (loss), net of tax of $0, $24, $(527), $(2),
respectively
—
86
(1,875)
(7)
(1,796)
Net current period other comprehensive gain (loss), net of tax
of $0 $(446), $66, $(2), respectively
(52,847)
(1,613)
225
(7)
(54,242)
Balance at December 31, 2024, net of tax of $0, $(2,174), $209,
$(1,134), respectively
$
(75,289)
$
(7,807)
$
731
$
1,145
$
(81,220)
Reclassifications out of accumulated other comprehensive income (loss) to the statements of operations for the years ended
December 31, 2024, 2023, and 2022, were as follows:
Details about Accumulate Other Comprehensive Income (Loss)
Components
For the years ended
Affected Line Item
in the Statements
of Operations
December 31,
2024
December 31,
2023
December 31,
2022
(in thousands)
Available-for-sale marketable securities
Unrealized (losses) gains, net of tax of $(24), $(12), $(25),
respectively
$
(86)
$
(44)
$
(301)
Other (income) expense, net
Cash flow hedges:
Unrealized gains, net of tax of $527, $686, $0, respectively
1,875
2,441
—
Revenue
Defined benefit pension and postretirement plans:
Amortization of prior service benefit, net of tax of $2, $2, $2,
respectively
7
7
7
(a)
Total reclassifications, net of tax of $505, $676, $(23),
respectively
$
1,796
$
2,404
$
(294)
Net income
(a)
The amortization of prior service credit is included in the computation of net periodic pension cost and postretirement benefit;
see Note Q: “Retirement Plans.”
M.
GOODWILL AND INTANGIBLE ASSETS
Goodwill
Teradyne performs its annual goodwill impairment test as required under the provisions of ASC 350-10, “Intangibles—Goodwill
and Other,” on December 31 of each fiscal year unless interim indicators of impairment exist. Goodwill is considered to be impaired
when the net book value of a reporting unit exceeds its estimated fair value.
Teradyne has the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of
a reporting unit is less than its carrying amount. If Teradyne determines this is the case, Teradyne is required to perform a quantitative
64
goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be
recognized. If Teradyne determines that it is more likely than not that the fair value of the reporting unit is greater than its carrying
amounts, the quantitative goodwill impairment test is not required. In performing the quantitative goodwill impairment test, Teradyne
determines the fair value of a reporting unit using the results derived from an income approach and a market approach, weighting the
fair value determined under each approach to determine an estimated fair value for a reporting unit. The income approach is estimated
through the discounted cash flows (“DCF”) analysis. Determining fair value requires the exercise of significant judgment, including
judgments about appropriate discount rates, perpetual growth rates, and the amount and timing of expected future cash flows.
Discount rates are based on a weighted average cost of capital (“WACC”), which represents the average rate a business must pay its
providers of debt and equity, plus a risk premium. The WACC used to test goodwill is derived from a group of comparable
companies. The cash flows employed in the DCF analysis are derived from internal forecasts and external market forecasts. The
market approach estimates the fair value of the reporting unit by utilizing the market comparable method which is based on revenue
and earnings multiples from comparable companies. If the estimated fair value of a reporting unit exceeds its carrying amount,
goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its estimated fair value, then the
goodwill is written down by the amount that carrying value exceeds the fair value of the reporting unit, but not below zero.
In the fourth quarter of 2024, Teradyne performed the annual goodwill impairment test, completing a quantitative assessment
for the Robotics reporting unit and a qualitative assessment for the Wireless Test reporting unit and for a reporting unit within System
Test. There was no impairment as a result of the annual test performed in the fourth quarter of 2024. Key assumptions in the goodwill
valuation model are forecasted revenues, discount rate, earnings before interest and taxes, and revenue multiples from comparable
companies. A change in any of these key assumptions could result in the reporting unit being impaired in a future period.
In the fourth quarter of 2023, Teradyne performed the annual goodwill impairment test, completing a quantitative assessment
for the Robotics reporting unit and a qualitative assessment for the Wireless Test reporting unit and for a reporting unit within System
Test reporting units. There was no impairment as a result of the annual test performed in the fourth quarter of 2023. Key assumptions
in the goodwill valuation model are forecasted revenues, discount rate, earnings before interest and taxes, and revenue multiples from
comparable companies. A change in any of these key assumptions could result in the reporting unit being impaired in a future period.
The changes in the carrying amount of goodwill by reportable segments for the years ended December 31, 2024 and 2023 are as
follows:
Robotics
Semiconductor
Test
All Other
Total
(in thousands)
Balance at December 31, 2022
Goodwill
$
383,166
$
262,077
$
520,518
$
1,165,761
Accumulated impairment losses
—
(260,540)
(502,026)
(762,566)
Total Goodwill
383,166
1,537
18,492
403,195
Foreign currency translation adjustment
12,297
160
—
12,457
Balance at December 31, 2023
Goodwill
395,463
262,237
520,518
1,178,218
Accumulated impairment losses
—
(260,540)
(502,026)
(762,566)
Total Goodwill
395,463
1,697
18,492
415,652
Foreign currency translation adjustment
(20,165)
(120)
—
(20,285)
Balance at December 31, 2024
Goodwill
375,298
262,117
520,518
1,157,933
Accumulated impairment losses
—
(260,540)
(502,026)
(762,566)
Total Goodwill
$
375,298
$
1,577
$
18,492
$
395,367
Intangible Assets
Teradyne reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the
carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate.
There were no events or circumstances indicating that the carrying value of intangible and long-lived assets may not be
recoverable in 2024, 2023 and 2022.
65
Amortizable intangible assets consist of the following and are included in intangible assets, net on the balance sheets:
December 31, 2024
Gross
Carrying
Amount (1)
Accumulated
Amortization
(1)
Foreign
Currency
Translation
Adjustment
Net
Carrying
Amount
(in thousands)
Developed technology
$
267,706
$ (255,448) $
(5,820) $
6,438
Customer relationships
52,109
(49,562)
204
2,751
Tradenames and trademarks
59,007
(50,805)
(1,464)
6,738
Total intangible assets
$
378,822
$ (355,815) $
(7,080) $
15,927
December 31, 2023
Gross
Carrying
Amount (1)
Accumulated
Amortization
(1)
Foreign
Currency
Translation
Adjustment
Net
Carrying
Amount
(in thousands)
Developed technology
$
267,706
$ (243,191) $
(5,343) $
19,172
Customer relationships
52,109
(47,850)
232
4,491
Tradenames and trademarks
59,007
(46,021)
(1,245)
11,741
Total intangible assets
$
378,822
$ (337,062) $
(6,356) $
35,404
(1)
In 2023, $9.3 million of amortizable intangible assets became fully amortized and have been eliminated from the gross carrying
amount and accumulated amortization.
Aggregate intangible assets amortization expense for the years ended December 31, 2024, 2023, and 2022, was $18.8 million,
$19.0 million, and $19.3 million, respectively. Estimated intangible assets amortization expense for each of the five succeeding fiscal
years is as follows:
Year
Amortization Expense
(in thousands)
2025
$
11,125
2026
2,325
2027
1,108
2028
1,027
2029
342
Thereafter
—
N.
COMMITMENTS AND CONTINGENCIES
Purchase Commitments
As of December 31, 2024, Teradyne had entered into non-cancelable purchase commitments for certain components and
materials. The purchase commitments covered by the agreements aggregate to approximately $419.8 million, of which $409.6 million
is for less than one year.
Legal Claims
Teradyne is subject to various legal proceedings and claims which have arisen in the ordinary course of business such as, but not
limited to, patent, employment, commercial and environmental matters. Teradyne believes that it has meritorious defenses against all
pending claims and intends to vigorously contest them. While it is not possible to predict or determine the outcomes of any pending
claims or to provide possible ranges of losses that may arise, Teradyne believes the potential losses associated with all of these actions
are unlikely to have a material adverse effect on its business, financial position or results of operations.
On March 8, 2021, Industrial Automation LLC, sellers of AutoGuide, submitted a demand for arbitration against Teradyne and
AutoGuide in Wilmington, Delaware alleging that Teradyne and AutoGuide breached certain provisions of the Membership Interests
Purchase Agreement (the “Purchase Agreement”), dated as of October 18, 2019, among Industrial Automation LLC, Teradyne and
AutoGuide. The arbitration demand sought full acceleration of the maximum earn-out amount payable under the Purchase Agreement,
66
or $106.9 million, for the alleged breach of the earn-out provisions of the Purchase Agreement. On March 25, 2022, the arbitration
claim was settled for $26.7 million. As a result, Teradyne has no remaining earn-out obligations.
Guarantees and Indemnification Obligations
Teradyne provides indemnification, to the extent permitted by law, to its officers, directors, employees and agents for liabilities
arising from certain events or occurrences, while the officer, director, employee, or agent, is or was serving, at Teradyne’s request in
such capacity. Teradyne may enter into indemnification agreements with certain of its officers and directors. With respect to
acquisitions, Teradyne provides indemnifications to or assumes indemnification obligations for the current and former directors,
officers and employees of the acquired companies in accordance with the acquired companies’ by-laws and charter. As a matter of
practice, Teradyne has maintained directors’ and officers’ liability insurance coverage including coverage for directors and officers of
acquired companies.
Teradyne enters into agreements in the ordinary course of business with customers, resellers, distributors, integrators and
suppliers. Most of these agreements require Teradyne to defend and/or indemnify the other party against intellectual property
infringement claims brought by a third party with respect to Teradyne’s products. From time to time, Teradyne also indemnifies
customers and business partners for damages, losses and liabilities they may suffer or incur relating to personal injury, personal
property damage, product liability, breach of confidentiality obligations and environmental claims relating to the use of Teradyne’s
products and services or resulting from the acts or omissions of Teradyne, its employees, authorized agents or subcontractors. On
occasion, Teradyne has also provided guarantees to customers regarding the delivery and performance of its products in addition to the
warranty described below.
As a matter of ordinary course of business, Teradyne warrants that its products will substantially perform in accordance with its
standard published specifications in effect at the time of delivery. Most warranties have a one-year duration commencing from
installation. A provision is recorded upon revenue recognition to cost of revenues for estimated warranty expense based upon
historical experience. When Teradyne receives revenue for extended warranties beyond the standard duration, the revenue is deferred
and recognized on a straight-line basis over the contract period. Related costs are expensed as incurred. As of December 31, 2024 and
2023, Teradyne had a product warranty accrual of $13.0 million and $15.7 million, respectively, included in other accrued liabilities,
and revenue deferrals related to extended warranties of $41.6 million and $34.9 million, respectively, included in short and long-term
deferred revenue and customer advances.
In addition, in the ordinary course of business, Teradyne provides minimum purchase guarantees to certain vendors to ensure
continuity of supply against the market demand. Although some of these guarantees provide penalties for cancellations and/or
modifications to the purchase commitments as the market demand decreases, most of the guarantees do not. Therefore, as the market
demand decreases, Teradyne re-evaluates these guarantees and determines what charges, if any, should be recorded.
With respect to its agreements covering product, business or entity divestitures and acquisitions, Teradyne provides certain
representations, warranties and covenants to purchasers and agrees to indemnify and hold such purchasers harmless against breaches
of such representations, warranties and covenants. Many of the indemnification claims have a definite expiration date while some
remain in force indefinitely. With respect to its acquisitions, Teradyne may, from time to time, assume the liability for certain events
or occurrences that took place prior to the date of acquisition.
As a matter of ordinary course of business, Teradyne occasionally guarantees certain indebtedness obligations of its subsidiary
companies, limited to the borrowings from financial institutions, purchase commitments to certain vendors, and lease commitments to
landlords.
Based on historical experience and information known as of December 31, 2024, and 2023, except for product warranty,
Teradyne has not recorded any liabilities for these guarantees and obligations because the amount would be immaterial.
67
O.
NET INCOME PER COMMON SHARE
The following table sets forth the computation of basic and diluted net income per common share:
2024
2023
2022
(in thousands, except per share amounts)
Net income for basic and diluted net income per share
$
542,372
$
448,752
$
715,501
Weighted average common shares-basic
159,083
154,310
158,434
Effect of dilutive potential common shares:
Convertible note hedge warrant shares (1)
3,563
8,897
8,806
Restricted stock units
651
423
657
Stock options
11
34
52
Employee stock purchase rights
6
7
22
Incremental shares from assumed conversion of convertible notes (2)
—
633
1,763
Dilutive potential common shares
4,231
9,994
11,300
Weighted average common shares-diluted
163,314
164,304
169,734
Net income per common share-basic
$
3.41
$
2.91
$
4.52
Net income per common share-diluted
$
3.32
$
2.73
$
4.22
(1)
Convertible notes hedge warrant shares were calculated using the difference between the average Teradyne stock price for the
period and the warrant price, multiplied by the number of warrant shares. The result of this calculation, representing the total
intrinsic value of the warrant, was divided by the average Teradyne stock price for the period.
(2)
Incremental shares from the assumed conversion of the convertible notes was calculated using the difference between the
average Teradyne stock price for the period and the conversion price, multiplied by the number of convertible notes shares. The
result of this calculation, representing the total intrinsic value of the convertible debt, was divided by the average Teradyne
stock price for the period.
The computation of diluted net income per common share for 2024 and 2023 excludes the effect of the potential exercise of
stock options to purchase approximately 0.1 million shares and restricted stock units to purchase approximately 0.1 million shares
because the effect would have been anti-dilutive.
P.
RESTRUCTURING AND OTHER
During the year ended December 31, 2024, Teradyne recorded $5.2 million of severance charges related to headcount reductions
of 98 people primarily in Robotics and Semiconductor Test, which included charges related to a voluntary early retirement program
for employees meeting certain conditions, $3.6 million of acquisition and divestiture expenses, and $1.3 million of charges related to
lease terminations.
During the year ended December 31, 2023, Teradyne recorded $14.7 million of severance charges related to headcount
reductions of 215 people primarily in Semiconductor Test and Robotics, which included charges related to a voluntary early
retirement program for employees meeting certain conditions, $3.1 million of acquisition and divestiture expenses related to
Technoprobe transaction, a $1.5 million contract termination charge, and a charge of $1.1 million for an increase in environmental
liabilities.
During the year ended December 31, 2022, Teradyne recorded a charge of $14.7 million related to the arbitration claim filed
against Teradyne and AutoGuide related to an earn-out dispute, which was settled on March 25, 2022 for $26.7 million, $2.9 million
of severance charges primarily in Robotics, and a charge of $2.7 million for an increase in environmental and legal liabilities, partially
offset by a $3.4 million gain on sale of asset.
Q.
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 of its plans.
68
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 the plans in accordance with local laws and to the extent that such contributions are tax deductible. The assets of
these plans consist primarily of fixed income and equity securities. In addition, Teradyne has an unfunded supplemental executive
defined benefit 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 2024, Teradyne purchased a group annuity contract for its retiree participants in the U.S. qualified pension plan. Under the
group annuity, the accrued pension obligation for 132 retiree participants were transferred to an insurance company. The reduction in
the pension benefit obligation and pension assets was $23.4 million. During the year ended December 31, 2024, Teradyne recorded
settlement expense of $0.4 million related to the retiree group annuity transaction.
In 2024, Teradyne’s projected benefit obligations decreased primarily due to the $23.4 million purchase of a group annuity
contract for its retiree participants in the U.S. qualified pension plan, actuarial gains of $8.0 million across all pension plans from
increases in discount rates, and $2.0 million of gains from foreign exchange effects for foreign plans. In 2023, Teradyne’s projected
benefit obligations increased primarily due to actuarial losses of approximately $6.0 million across all pension plans from increases in
discount rates, and approximately $1.0 million of losses from foreign exchange effects for foreign plans.
The December 31 balances of these defined benefit pension plans assets and obligations are shown below:
2024
2023
United States
Foreign
United States
Foreign
(in thousands)
Assets and Obligations
Change in benefit obligation:
Projected benefit obligation:
Beginning of year
$
144,187
$
33,984
$
143,814
$
29,935
Service cost
881
446
1,063
446
Interest cost
6,292
953
6,888
1,057
Actuarial (gain) loss
(6,014)
(1,972)
3,229
2,738
Benefits paid
(11,658)
(955)
(10,807)
(947)
Retiree annuity purchase
(23,386)
—
—
—
Liability (gain) loss due to settlement
394
(195)
—
(254)
Non-U.S. currency movement
—
(1,988)
—
1,009
End of year
110,696
30,273
144,187
33,984
Change in plan assets:
Fair value of plan assets:
Beginning of year
112,617
1,929
111,760
2,087
Actual return on plan assets
779
77
8,613
43
Company contributions
3,065
1,024
3,051
1,028
Benefits paid
(11,658)
(955)
(10,807)
(947)
Retiree annuity purchase
(23,386)
—
—
—
Settlements gain
—
(195)
—
(254)
Non-U.S. currency movement
—
108
—
(28)
End of year
81,417
1,988
112,617
1,929
Funded status
$
(29,279) $
(28,285) $
(31,570) $
(32,055)
The following table provides amounts recorded within the account line items of the statements of financial position as of
December 31:
69
2024
2023
United States
Foreign
United States
Foreign
(in thousands)
Retirement plans assets
$
11,994
$
—
$
11,504
$
—
Accrued employees’ compensation and withholdings
(3,263)
(969)
(3,110)
(1,255)
Retirement plans liabilities
(38,010)
(27,316)
(39,964)
(30,800)
Funded status
$
(29,279) $
(28,285) $
(31,570) $
(32,055)
The accumulated benefit obligation for the United States defined benefit pension plans was $109.0 million and $142.2 million at
December 31, 2024 and 2023, respectively. The accumulated benefit obligation for foreign defined benefit pension plans was $29.1
million and $32.6 million at December 31, 2024 and 2023, respectively.
Information for pension plans with an accumulated benefit obligation in excess of plan assets as of December 31:
2024
2023
United States
Foreign
United States
Foreign
(in millions)
Projected benefit obligation
$
41.3
$
30.3
$
43.1
$
34.0
Accumulated benefit obligation
41.1
29.1
42.6
32.5
Fair value of plan assets
—
2.0
—
1.9
Expense
For the years ended December 31, 2024, 2023, and 2022, Teradyne’s net periodic pension cost (income) was comprised of the
following:
2024
2023
2022
United
States
Foreign
United
States
Foreign
United
States
Foreign
(in thousands)
Components of Net Periodic Pension Cost (Income):
Service cost
$
881
$
446
$
1,063
$
446
$
1,588
$
784
Interest cost
6,292
953
6,888
1,057
4,886
482
Expected return on plan assets
(4,865)
(77)
(5,194)
(45)
(2,927)
(75)
Net actuarial (gain) loss
(1,929)
(1,948)
18
2,735
(11,170)
(13,259)
Settlement (gain) loss
394
(24)
(209)
5
—
—
Total net periodic pension cost (income)
$
773
$
(650) $
2,566
$
4,198
$
(7,623) $ (12,068)
Weighted Average Assumptions to Determine Net Periodic Pension Cost at January 1:
2024
2023
2022
United
States
Foreign
United
States
Foreign
United
States
Foreign
Discount rate
4.7%
3.0%
3.5%
3.5%
2.5%
1.1%
Expected return on plan assets
4.7
2.5
4.8
1.8
2.0
4.0
Salary progression rate
2.5
2.4
2.4
2.1
2.4
2.2
Weighted Average Assumptions to Determine Pension Obligations at December 31:
2024
2023
United States
Foreign
United States
Foreign
Discount rate
5.4%
3.3%
4.7%
3.0%
Salary progression rate
2.5
2.4
2.5
2.4
In developing the expected return on plan assets assumption, Teradyne evaluates input from its investment manager and pension
consultants, including their forecast of asset class return expectations. Teradyne believes that 4.8% was an appropriate rate to use for
fiscal year 2024 for the U.S. Qualified Pension Plan (“U.S. Plan”).
70
Teradyne recognizes net actuarial gains and losses and the change in the fair value of the plan assets in its operating results in
the year in which they occur or upon any interim remeasurement of the plans. Teradyne calculates the expected return on plan assets
using the fair value of the plan assets. Actuarial gains and losses are generally measured annually as of December 31 and, accordingly,
recorded during the fourth quarter of each year or upon any interim remeasurement of the plans.
The discount rate utilized to determine future pension obligations for the U.S. Plan is based on FTSE Pension Index adjusted for
the plan’s expected cash flows and was 5.4% at December 31, 2024, up from 4.7% at December 31, 2023.
Plan Assets
As of December 31, 2024, the fair value of Teradyne’s pension plans’ assets totaled $83.4 million, of which $81.4 million was
related to the U.S. Plan and $2.0 million was related to the Taiwan defined benefit pension plan. Substantially all of Teradyne’s
pension plans’ assets are held in individual trusts, which were established for the investment of assets of Teradyne’s sponsored
retirement plans.
The following table provides weighted average pension asset allocation by asset category at December 31, 2024 and 2023:
2024
2023
United States
Foreign
United States
Foreign
Fixed income securities
94.0%
—%
94.0%
—%
Equity securities
5.0
—
5.0
—
Other
1.0
100.0
1.0
100.0
100.0%
100.0%
100.0%
100.0%
The assets of the U.S. Plan are overseen by the Teradyne Fiduciary Committee which is comprised of members of senior
management drawn from appropriate diversified levels of the management team. The Fiduciary Committee is responsible for setting
the policy that provides the framework for management of the U.S. Plan assets. In accordance with its responsibilities, the Fiduciary
Committee meets on a regular basis to review the performance of the U.S. Plan assets and compliance with the investment policy. The
policy sets forth an investment structure for managing U.S. Plan assets, including setting the asset allocation ranges, which are
expected to provide an appropriate level of overall diversification required to maximize the long-term return on plan assets for a
prudent and reasonable level of risk given prevailing market conditions, total investment return over the long term, and preservation of
capital, while maintaining sufficient liquidity to pay the benefits of the U.S. Plan. The investment portfolio will not, at any time, have
a direct investment in Teradyne stock. It may have indirect investment in Teradyne stock, if one of the funds selected by the
investment manager invests in Teradyne stock. In developing the asset allocation ranges, third party asset allocation studies are
periodically performed that consider the current and expected positions of the plan assets and funded status. Based on this study and
other appropriate information, the Fiduciary Committee establishes asset allocation ranges taking into account acceptable risk targets
and associated returns. The investment return objectives are to avoid excessive volatility and produce a rate of return that at least
matches the Policy Index identified below. The manager’s investment performance is reviewed at least annually. Results for the total
portfolio and for each major category of assets are evaluated in comparison with appropriate market indices and the Policy Index.
The target asset allocation and the index for each asset category for the U.S. Plan, per the investment policy, are as follows:
Asset Category:
Policy Index:
Target
Allocation
U.S. corporate fixed income
Bloomberg U.S. Corporate A or Better Index, 20+ Year
Index
66%
U.S. corporate fixed income
Bloomberg U.S. Intermediate Corporate ex Baa Index
9
U.S. government fixed income
Bloomberg U.S. 3 - 10 year Treasury Bond Index
12
U.S. government fixed income
Bloomberg U.S. Government Bond Index
2
Global equity
MSCI World Index
5
High yield fixed income
ICE BofA BB-B U.S. High Yield Constrained Index
5
Cash
ICE BofA 3-Month Treasury Bill Index
1
Teradyne’s U.S. Plan invests primarily in common trust funds. Units held in the common trust funds are valued at the unit price
as reported by the investment manager based on the asset value of the underlying investments; underlying investments in equity
securities are valued at the last reported sales price, and underlying investments in fixed-income securities are generally valued using
methods based upon market transactions for comparable securities.
71
During the years ended December 31, 2024 and December 31, 2023, there were no transfers of pension assets in or out of Level
1, Level 2, and Level 3.
The fair value of pension plan assets by asset category and by level at December 31, 2024 and December 31, 2023 were as
follows:
December 31, 2024
United States
Foreign
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
(in thousands)
Fixed income securities:
Corporate debt securities
$
—
$
65,160
$
—
$
65,160
$
—
$
—
$
—
$
—
U.S. government securities
—
11,414
—
11,414
—
—
—
—
Global equity
—
4,025
—
4,025
—
—
—
—
Other
—
—
—
—
—
1,988
—
1,988
Cash and cash equivalents
818
—
—
818
—
—
—
—
Total
$
818
$
80,599
$
—
$
81,417
$
—
$ 1,988
$
—
$ 1,988
December 31, 2023
United States
Foreign
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
(in thousands)
Fixed income securities:
Corporate debt securities
$
—
$
89,971
$
—
$
89,971
$
—
$
—
$
—
$
—
U.S. government securities
—
15,817
—
15,817
—
—
—
—
Global equity
—
5,691
—
5,691
—
—
—
—
Other
—
—
—
—
—
1,929
—
1,929
Cash and cash equivalents
1,138
—
—
1,138
—
—
—
—
Total
$ 1,138
$ 111,479
$
—
$ 112,617
$
—
$ 1,929
$
—
$ 1,929
Contributions
Teradyne’s funding policy is to make contributions to the plans in accordance with local laws and to the extent that such
contributions are tax deductible. During 2024, Teradyne contributed $3.1 million to the U.S. supplemental executive defined benefit
pension plan and $1.0 million to certain qualified plans for non-U.S. subsidiaries. During 2023, Teradyne contributed $3.1 million to
the U.S. supplemental executive defined benefit pension plan and $1.0 million to certain qualified plans for non-U.S. subsidiaries. In
2025, contributions to the U.S. supplemental executive defined benefit pension plan and certain qualified plans from non-U.S.
subsidiaries will be approximately $3.3 million and $1.1 million, respectively.
Contributions to the U.S. supplemental executive defined benefit pension plan and certain non-U.S. subsidiaries qualified plans
will be approximately $7.4 million and $2.4 million, respectively, in 1 to 3 years, $7.4 million and $2.5 million, respectively, in 3 to 5
years and $16.8 million and $7.8 million, respectively, thereafter.
Expected Future Pension Benefit Payments
Future benefit payments are expected to be paid as follows:
United States
Foreign
(in thousands)
2025
$
9,202
$
1,077
2026
8,152
1,208
2027
9,043
1,245
2028
9,135
1,253
2029
9,040
1,422
2030-2034
42,009
8,561
72
Postretirement Benefit Plans
In addition to receiving pension benefits, U.S. Teradyne employees 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 twelve months ended December 31, 2024, Teradyne recorded special termination benefit charges associated with a voluntary early
retirement program.
The December 31 balances of the postretirement assets and obligations are shown below:
2024
2023
(in thousands)
Assets and Obligations
Change in benefit obligation:
Projected benefit obligation:
Beginning of year
$
6,933
$
5,345
Service cost
37
34
Interest cost
289
299
Actuarial (gain) loss
(445)
155
Benefits paid
(1,685)
(1,413)
Special termination benefits
462
2,513
End of year
5,591
6,933
Change in plan assets:
Fair value of plan assets:
Beginning of year
—
—
Company contributions
1,685
1,413
Benefits paid
(1,685)
(1,413)
End of year
—
—
Funded status
$
(5,591) $
(6,933)
The following table provides amounts recorded within the account line items of financial position as of December 31:
2024
2023
(in thousands)
Accrued employees’ compensation and withholdings
$
(938) $
(1,508)
Retirement plans liabilities
(4,653)
(5,425)
Funded status
$
(5,591) $
(6,933)
The following table provides amounts recognized in accumulated other comprehensive income (loss) as of December 31:
2024
2023
(in thousands)
Prior service credit, before tax
$
(14) $
(23)
Deferred taxes
(1,693)
(1,691)
Total recognized in other comprehensive income (loss), net of tax
$
(1,707) $
(1,714)
73
Expense
For the years ended December 31, 2024, 2023, and 2022, Teradyne’s net periodic postretirement benefit cost (income) was
comprised of the following:
2024
2023
2022
(in thousands)
Components of Net Periodic Postretirement Benefit Cost (income):
Service cost
$
37
$
34
$
64
Interest cost
289
299
177
Amortization of prior service credit
(9)
(9)
(9)
Net actuarial (gain) loss
(445)
155
(1,155)
Special termination benefits
462
2,513
—
Total net periodic postretirement benefit cost (income)
334
2,992
(923)
Changes in Plan Assets and Benefit Obligations Recognized in Other
Comprehensive Income:
Reversal of amortization items:
Prior service credit
9
9
9
Total recognized in other comprehensive income
9
9
9
Total recognized in net periodic postretirement cost (income) and other
comprehensive income
$
343
$
3,001
$
(914)
Weighted Average Assumptions to Determine Net Periodic Postretirement Benefit Income as of January 1:
2024
2023
2022
Discount rate
4.7%
5.0%
2.6%
Initial health care cost trend rate
7.7
7.2
7.3
Ultimate health care cost trend rate
4.5
4.5
4.5
Year in which ultimate health care cost trend rate is reached
2033
2032
2029
Weighted Average Assumptions to Determine Postretirement Benefit Obligation as of December 31:
2024
2023
2022
Discount rate
5.4%
4.7%
5.0%
Initial health care trend
8.6
7.7
7.2
Ultimate health care trend
4.5
4.5
4.5
Medical cost trend rate decrease to ultimate rate in year
2035
2033
2032
Contributions
Contributions to the U.S. postretirement benefit plan will be approximately $0.9 million in 2025, $1.3 million in 1 to 3 years,
$0.9 million in 3 to 5 years and $1.7 million, thereafter.
Expected Future Benefit Payments
Future benefit payments are expected to be paid as follows:
Benefit Payments
(in thousands)
2025
$
938
2026
671
2027
585
2028
510
2029
414
2030-2034
1,719
74
R.
STOCK-BASED COMPENSATION
Stock Compensation Plans
On February 1, 2023 (the “Retirement Date”), Mark E. Jagiela retired as Chief Executive Officer of Teradyne and a member of
Teradyne's Board of Directors, and Teradyne entered into an agreement (the “Retirement Agreement”) with Mr. Jagiela. Under the
Retirement Agreement, Mr. Jagiela's unvested time-based restricted stock units and stock options granted prior to his Retirement Date
were modified to allow continued vesting; and any vested options or options that vest during that period may be exercised for the
remainder of the applicable option term. During 2023, Teradyne recorded a stock-based compensation expense of $5.9 million related
to the Retirement Agreement.
Under Teradyne’s stock compensation plans, Teradyne grants time-based restricted stock units, performance-based restricted
stock units and stock options, and employees are eligible to purchase Teradyne’s common stock through its Employee Stock Purchase
Plan (“ESPP”).
Service-based restricted stock unit awards granted to employees vest in equal annual installments over four years. Restricted
stock unit awards granted to non-employee directors vest after a one-year period, with 100% of the award vesting on the earlier of (a)
the first anniversary of the grant date or (b) the date of the following year’s Annual Meeting of Shareholders. Teradyne expenses the
cost of the restricted stock unit awards subject to time-based vesting, which is determined to be the fair market value of the shares at
the date of grant, ratably over the period during which the restrictions lapse.
Performance-based restricted stock units (“PRSUs”) granted to Teradyne’s executive officers may have a performance metric
based on relative total shareholder return (“TSR”). Teradyne’s three-year TSR performance is measured against the New York Stock
Exchange (“NYSE”) Composite Index. The final number of TSR PRSUs that vest will vary based upon the level of performance
achieved from 0% to 200% of the target shares. The TSR PRSUs will vest upon the three-year anniversary of the grant date. The TSR
PRSUs are valued using a Monte Carlo simulation model. The number of units expected to be earned, based upon the achievement of
the TSR market condition, is factored into the grant date Monte Carlo valuation. Compensation expense is recognized on a straight-
line basis over the shorter of the three-year service period or the period from the grant to the date described in the retirement
provisions below. Compensation expense for executive officers meeting the retirement provisions prior to the grant date is recognized
during the year following the grant. Compensation expense is recognized regardless of the eventual number of units that are earned
based upon the market condition, provided the executive officer remains an employee at the end of the three-year period.
Compensation expense is reversed if at any time during the three-year service period the executive officer is no longer an employee,
subject to the retirement and termination eligibility provisions noted below.
PRSUs granted to Teradyne’s executive officers may also have a performance metric based on three-year cumulative non-
GAAP profit before interest and tax (“PBIT”) as a percent of Teradyne’s revenue. Non-GAAP PBIT is a financial measure equal to
GAAP income from operations less restructuring and other, net; amortization of acquired intangible assets; acquisition and divestiture
related charges or credits; pension actuarial gains and losses; non-cash convertible debt interest expense; and other non-recurring gains
and charges. The final number of PBIT PRSUs that vest will vary based upon the level of performance achieved from 0% to 200% of
the target shares. The PBIT PRSUs will vest upon the three-year anniversary of the grant date. Compensation expense is recognized
on a straight-line basis over the shorter of the three-year service period or the period from the grant date to the date described in the
retirement provisions below. Compensation expense for executive officers meeting the retirement provisions prior to the grant date is
recognized during the year following the grant. Compensation expense is recognized based on the number of units that are earned
based upon the three-year Teradyne PBIT as a percent of Teradyne’s revenue, provided the executive officer remains an employee at
the end of the three-year period subject to the retirement and termination eligibility provisions noted below.
If a PRSU recipient’s employment ends prior to the determination of the performance percentage due to (1) death or (2) after
attaining both at least age sixty and at least ten years of service, retirement or termination other than for cause, then all or a portion of
the recipient’s PRSUs (based on the actual performance percentage achieved on the determination date) will vest on the date the
performance percentage is determined. Except as set forth in the preceding sentence, no PRSUs will vest if the executive officer is no
longer an employee at the end of the three-year period. Stock options to purchase Teradyne’s common stock at 100% of the fair
market value on the grant date vest in equal annual installments over four years from the grant date and have a maximum term of
seven years.
On January 22, 2024, the Board enacted the Executive Retirement Policy for Restricted Stock Unit and Option Vesting (the
"Retirement Policy"). Under the Retirement Policy, an executive officer that is over the age of 65 and has 10 or more years of service
as of the effective date of his or her retirement will be eligible for continued vesting of his or her unvested time-based restricted stock
units and stock options granted prior to his or her retirement date.
75
During 2024, 2023 and 2022, Teradyne granted 0.6 million, 0.5 million and 0.4 million of service-based restricted stock unit
awards to employees at a weighted average grant date fair value of $96.72, $102.45, and $109.42, respectively.
During 2024, 2023 and 2022, Teradyne granted 0.1 million of service-based restricted stock unit awards to non-employee
directors at a weighted average grant date fair value of $121.29, $90.50, and $105.93, respectively.
During 2024, 2023 and 2022, Teradyne granted 0.1 million of PBIT PRSUs with a grant date fair value of $94.51, $102.91 and
$110.84, respectively.
During 2024, 2023 and 2022, Teradyne granted 0.1 million TSR PRSUs, with a grant date fair value of $102.51, $139.04, and
$101.06, respectively. The fair value was estimated using the Monte Carlo simulation model with the following assumptions:
2024
2023
2022
Risk-free interest rate
3.9%
4.0%
1.4%
Teradyne volatility-historical
42.4%
49.7%
47.1%
NYSE Composite Index volatility-historical
15.6%
24.1%
22.7%
Dividend yield
0.5%
0.4%
0.4%
Expected volatility was based on the historical volatility of Teradyne’s stock and the NYSE Composite Index for each of the
2024, 2023 and 2022 grants over the most recent three-year period. The risk-free interest rate was determined using the U.S. Treasury
yield curve in effect at the time of each of the grants. Dividend yield was based upon an estimated annual dividend amount of $0.48
per share for 2024, $0.44 per share for 2023, and $0.44 per share for 2022, divided by Teradyne’s stock price on the grant date of
$95.83 for the 2024 grants, $104.12 for the 2023 grants, and $112.12 for the 2022 grants.
During 2024, 2023 and 2022, Teradyne granted 0.1 million of service-based stock options to executive officers at a weighted
average grant date fair value of $37.50, $41.23, and $39.01, respectively.
The fair value of stock options was estimated using the Black-Scholes option-pricing model with the following assumptions:
2024
2023
2022
Expected life (years)
4.0
4.0
4.0
Risk-free interest rate
4.0%
3.8%
1.6%
Volatility-historical
46.3%
46.6%
43.7%
Dividend yield
0.5%
0.4%
0.4%
Teradyne determined the stock options’ expected life based upon historical exercise data for executive officers, the age of the
executive officers and the terms of the stock option grant. Volatility was determined using historical volatility for a period equal to the
expected life. The risk-free interest rate was determined using the U.S. Treasury yield curve in effect at the time of grant. Dividend
yield was based upon an estimated annual dividend amount of $0.48 per share divided by Teradyne’s stock on the grant date of $95.14
for the 2024 grant, and $0.44 per share divided by Teradyne's stock price on the grant date of $104.15 for the 2023 grant, and $0.44
per share divided by Teradyne’s stock price on the grant date of $112.12 for the 2022 grants.
76
Stock compensation plan activity for the years 2024, 2023 and 2022, is as follows:
2024
2023
2022
(in thousands)
Restricted Stock Units:
Non-vested at January 1
1,378
1,317
1,417
Awarded
703
728
660
Vested
(492)
(609)
(709)
Forfeited
(62)
(58)
(51)
Non-vested at December 31
1,527
1,378
1,317
Stock Options:
Outstanding at January 1
171
188
171
Granted
49
41
42
Exercised
(77)
(56)
(25)
Forfeited
(2)
(2)
—
Expired
—
—
—
Outstanding at December 31
141
171
188
Vested and expected to vest at December 31
141
171
188
Exercisable at December 31
34
68
69
Total shares available for the years 2024, 2023 and 2022:
2024
2023
2022
(in thousands)
Shares available:
Available for grant at January 1
4,353
5,062
5,713
Options granted
(49)
(41)
(42)
Options forfeited
2
2
—
Restricted stock units awarded
(703)
(728)
(660)
Restricted stock units forfeited
62
58
51
Available for grant at December 31
3,665
4,353
5,062
Weighted average restricted stock unit award date fair value information for the years 2024, 2023 and 2022, is as follows:
2024
2023
2022
Non-vested at January 1
$
101.00
$
88.71
$
67.97
Awarded
97.06
105.05
108.74
Vested
93.12
75.55
54.27
Forfeited
103.81
102.12
85.71
Non-vested at December 31
$
101.17
$
101.00
$
88.71
Restricted stock unit awards aggregate intrinsic value information at December 31 for the years 2024, 2023 and 2022 is as
follows:
2024
2023
2022
(in thousands)
Vested
$
54,235
$
62,001
$
95,408
Outstanding
192,324
149,504
115,087
Expected to vest
177,878
135,238
108,666
Restricted stock units weighted average remaining contractual terms (in years) information at December 31 for the years 2024,
2023 and 2022 is as follows:
2024
2023
2022
Outstanding
1.19
1.13
0.99
Expected to vest
1.19
1.13
0.99
77
Weighted average stock options exercise price information for the year ended December 31, 2024 is as follows:
2024
Outstanding at January 1
$
94.85
Options granted
95.14
Options exercised
86.02
Options forfeited
112.58
Options cancelled
112.80
Outstanding at December 31
99.51
Exercisable at December 31
91.27
The total cash received from employees as a result of employee stock options exercised during the years ended December 31,
2024, 2023 and 2022, was $6.6 million, $2.2 million, and $0.9 million, respectively. In connection with these exercises, the tax benefit
realized by Teradyne for the years ended December 31, 2024, 2023 and 2022, was $0.2 million, $0.2 million, and $0.1 million,
respectively.
Stock option aggregate intrinsic value information for the years ended December 31, 2024, 2023 and 2022 is as follows:
2024
2023
2022
(in thousands)
Exercised
$
2,783
$
3,901
$
2,030
Outstanding
3,709
2,647
3,963
Expected to vest
2,531
696
1,583
Vested and exercisable
1,178
1,950
2,380
Stock options weighted average remaining contractual terms (in years) information at December 31, for the years 2024, 2023
and 2022 is as follows:
2024
2023
2022
Outstanding
4.8
4.4
4.2
Expected to vest
5.2
5.1
4.8
Vested and exercisable
3.3
3.4
3.1
As of December 31, 2024, total unrecognized expense related to non-vested restricted stock unit awards and stock options was
$82.6 million and is expected to be recognized over a weighted average period of 2.5 years.
Employee Stock Purchase Plan
Under the ESPP, eligible employees may purchase shares of common stock through regular payroll deductions of up to 10% of
their compensation, to a maximum of shares with a fair market value of $25,000 per calendar year, not to exceed 6,000 shares. Under
the plan, the price paid for the common stock is equal to 85% of the stock price on the last business day of the six-month purchase
period.
In July 2024, 0.1 million shares of common stock were issued to employees who participated in the plan during the first half of
2024 at the price of $126.05 per share. In January 2025, Teradyne issued 0.1 million shares of common stock to employees who
participated in the plan during the second half of 2024 at the price of $107.04 per share.
In July 2023, 0.2 million shares of common stock were issued to employees who participated in the plan during the first half of
2023 at the price of $94.64 per share. In January 2024, Teradyne issued 0.2 million shares of common stock to employees who
participated in the plan during the second half of 2023 at the price of $92.25 per share.
In July 2022, 0.2 million shares of common stock were issued to employees who participated in the plan during the first half of
2022 at the price of $76.12 per share. In January 2023, Teradyne issued 0.2 million shares of common stock to employees who
participated in the plan during the second half of 2022 at the price of $74.25 per share.
As of December 31, 2024, there were 3.2 million shares available for grant under the ESPP.
78
The following table provides the effect to income from operations for recording stock-based compensation for the years ended
December 31, 2024, 2023, and 2022:
2024
2023
2022
(in thousands)
Cost of revenues
$
4,922
$
4,208
$
4,050
Engineering and development
12,531
10,659
9,992
Selling and administrative
42,669
42,815
34,186
Stock-based compensation
60,122
57,682
48,228
Income tax benefit
(10,472)
(10,397)
(11,493)
Total stock-based compensation expense after income taxes
$
49,650
$
47,285
$
36,735
S.
SAVINGS PLAN
Teradyne sponsors a defined contribution employee retirement savings plan (“Savings Plan”) covering substantially all U.S.
employees. Under the Savings Plan, employees may contribute up to 20% of their compensation (subject to Internal Revenue Service
limitations). The Savings Plan provides for a discretionary employer match that is determined each year. In 2024, 2023 and 2022,
Teradyne matched 100% of eligible employee contributions up to 4% of their compensation for employees not accruing benefits in the
U.S. Qualified Pension Plan. There was no match for employees still actively accruing benefits in the U.S. Qualified Pension Plan.
Teradyne’s contributions vest 25% per year for the first four years of employment, and contributions for those employees with four
years of service vest immediately.
In addition, Teradyne sponsors an unfunded U.S. Supplemental Savings Plan to provide savings benefits in excess of those
allowed by the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. The provisions of this plan are the
same as the Savings Plan. The liability for the U.S. Supplemental Savings Plan at December 31, 2024 and 2023, was $63.4 million and
$55.9 million, respectively, and is included in retirement plan liabilities. Teradyne contributes to defined contributions savings plans
for its foreign employees. Under Teradyne’s savings plans, amounts charged to the statements of operations for the years ended
December 31, 2024, 2023, and 2022 were $29.7 million, $30.5 million, and $30.1 million, respectively.
T.
INCOME TAXES
The components of income before income taxes and the provision (benefit) for income taxes as shown in the consolidated
statements of operations were as follows:
2024
2023
2022
(in thousands)
Income before income taxes:
U.S.
$
231,346
$
307,997
$
385,968
Non-U.S.
377,740
217,575
454,417
$
609,086
$
525,572
$
840,385
Provision (benefit) for income taxes:
Current:
U.S. Federal
$
40,296
$
58,063
$
86,692
Non-U.S.
62,851
54,037
74,204
State
2,716
2,362
2,681
105,863
114,462
163,577
Deferred:
U.S. Federal
(33,195)
(27,459)
(36,739)
Non-U.S.
(9,003)
(8,584)
1,232
State
(4,162)
(1,599)
(3,186)
(46,360)
(37,642)
(38,693)
Total provision for income taxes:
$
59,503
$
76,820
$
124,884
Income tax expense for 2024, 2023 and 2022 totaled $59.5 million, $76.8 million, and $124.9 million, respectively. The
effective tax rate for 2024, 2023 and 2022 was 9.8%, 14.6% and 14.9%, respectively.
79
At December 31, 2024, Teradyne’s remaining tax liability resulting from the U.S. one-time transition tax on the mandatory
deemed repatriation of foreign earnings amounts to $44.3 million. Teradyne will pay approximately $19.7 million related to the
transition tax in 2025, and $24.6 million in one to three years.
Teradyne has made an accounting policy election to account for global intangible low-taxed income (“GILTI”) as a component
of tax expense in the period in which Teradyne is subject to the rules and therefore did not provide any deferred tax impacts of GILTI
in its consolidated financial statements.
The decrease in the effective tax rate from 2023 to 2024 is primarily attributable to a shift in the geographic distribution of
income which resulted in a reduction in income in higher tax rate foreign jurisdictions, the benefit of the release of reserves for
uncertain tax positions as a result of the expiration of statute and a decrease in non-deductible officer’s compensation. These rate
benefits were partially offset by reductions in benefits from foreign tax credits, U.S. research and development credits and the U.S.
foreign derived intangible income deduction.
The decrease in the effective tax rate from 2022 to 2023 is primarily attributable to benefit from tax credits and the U.S. foreign
derived intangible income deduction. These decreases in expense were partially offset by a shift in the geographic distribution of
income, which increased the income subject to taxation in higher tax rate jurisdictions relative to lower tax rate jurisdictions and a
reduction in benefit from equity compensation.
A reconciliation of the effective tax rate for the years 2024, 2023 and 2022 is as follows:
2024
2023
2022
U.S. statutory federal tax rate
21.0%
21.0%
21.0%
U.S. global intangible low-taxed income
1.2
0.8
1.2
Non-deductible officers’ compensation
0.3
1.1
1.3
Equity compensation
—
(0.4)
(1.1)
U.S. foreign derived intangible income
(3.1)
(3.9)
(3.1)
U.S. research and development credit
(3.0)
(4.2)
(1.8)
Foreign taxes
(2.7)
2.5
(1.9)
Uncertain tax positions
(1.9)
0.7
0.1
Foreign tax credits
(1.3)
(3.3)
(1.0)
State income taxes, net of federal tax benefit
(0.1)
0.1
(0.1)
Other, net
(0.6)
0.2
0.3
9.8%
14.6%
14.9%
Teradyne qualifies for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic
Development Board under which certain headcount and spending requirements must be met. The tax savings attributable to the
Singapore tax holiday for the years ended December 31, 2024, 2023 and 2022 were $17.1 million or $0.10 per diluted share, $1.4
million or $0.01 per diluted share, and $16.0 million or $0.09 per diluted share, respectively. In November 2020, Teradyne entered
into an agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially
similar terms to the agreement which expired on December 31, 2020. The new tax holiday is scheduled to expire on December 31,
2025.
80
Significant components of Teradyne’s deferred tax assets (liabilities) as of December 31, 2024 and 2023 were as follows:
2024
2023
(in thousands)
Deferred tax assets:
Tax credits
$
121,635
$
112,571
Research and development
116,746
82,571
Pension liabilities
25,202
24,997
Accruals
23,946
25,644
Inventory valuations
18,688
19,289
Lease liability
17,828
21,167
Net operating loss carryforwards
16,894
5,737
Deferred revenue
14,562
13,807
Equity compensation
8,901
7,179
Vacation accrual
6,847
6,096
Intangible assets
4,720
2,323
Investment impairment
3,328
3,292
Marketable securities
—
128
Other
322
953
Gross deferred tax assets
379,619
325,754
Less: valuation allowance
(117,254)
(109,251)
Total deferred tax assets
$
262,365
$
216,503
Deferred tax liabilities:
Depreciation
$
(18,788) $
(16,681)
Right of use assets
(16,257)
(19,016)
Contingent consideration
(5,270)
(5,214)
Marketable securities
(650)
—
Total deferred tax liabilities
$
(40,965) $
(40,911)
Net deferred assets
$
221,400
$
175,592
As of December 31, 2024 and 2023, Teradyne evaluated the likelihood that it would realize deferred income taxes to offset
future taxable income and concluded that it is more likely than not that the majority of its deferred tax assets will be realized through
consideration of both the positive and negative evidence. At December 31, 2024 and 2023, Teradyne maintained a valuation
allowance for certain deferred tax assets of $117.3 million and $109.3 million, respectively, primarily related to state net operating
losses and state tax credit carryforwards, due to the uncertainty regarding their realization. Adjustments could be required in the future
if Teradyne estimates that the amount of deferred tax assets to be realized is more or less than the net amount recorded.
At December 31, 2024, Teradyne had tax effected operating loss carryforwards that expire in the following years:
State
Operating Loss
Carryforwards
Foreign
Operating Loss
Carryforwards
(in thousands)
2025
$
4
$
—
2026
—
—
2027
—
—
2028
10
80
2029
49
465
2030-2034
62
34
2035-2039
37
—
Beyond 2039
19
—
Non-expiring
54
16,079
Total
$
235
$
16,658
Teradyne has approximately $158.2 million of tax credit carryforwards including federal business tax credits of approximately
$4.3 million which expire in 2028 through 2034, and state tax credits of $153.9 million, of which $81.5 million do not expire and the
remainder expire in the years 2025 through 2043.
81
Teradyne’s gross unrecognized tax benefits for the years ended December 31, 2024, 2023 and 2022 were as follows:
2024
2023
2022
(in thousands)
Beginning balance as of January 1
$
18,606
$
15,608
$
14,465
Additions:
Tax positions for current year
—
1,398
Tax positions for prior years
3,024
13
Reductions:
Tax positions for prior years
(2,696)
(26)
(56)
Expiration of statutes
(8,247)
—
(212)
Ending balance as of December 31
$
7,663
$
18,606
$
15,608
Current year reductions primarily relate to foreign transfer pricing and research credits.
Of the $7.7 million of unrecognized tax benefits as of December 31, 2024, $2.3 million would impact the consolidated income
tax rate if ultimately recognized. The remaining $5.4 million would impact deferred taxes if recognized.
As of December 31, 2024, Teradyne estimates that it is reasonably possible that the balance of unrecognized tax benefits may
decrease approximately $0.7 million in the next twelve months as a result of a lapse of statutes of limitation. The estimated decrease
relates to federal research credits.
Teradyne records all interest and penalties related to income taxes as a component of income tax expense. Accrued interest and
penalties related to income tax items at December 31, 2024 and 2023 amounted to $0.3 million and $1.3 million, respectively. For the
years ended December 31, 2024, 2023 and 2022, benefit of $1.0 million, expense of $0.9 million, and expense of $0.1 million,
respectively, was recorded for interest and penalties related to income tax items.
Teradyne is subject to U.S. federal income tax, as well as income tax in multiple state, local and foreign jurisdictions. As of
December 31, 2024, all material state and local income tax matters have been concluded through 2019, all material federal income tax
matters have been concluded through 2020 and all material foreign income tax matters have been concluded through 2017. However,
in some jurisdictions, including the United States, operating losses and tax credits may be subject to adjustment until such time as they
are utilized and the year of utilization is closed to adjustment.
As of December 31, 2024, Teradyne is not permanently reinvested with respect to the unremitted earnings of non-U.S.
subsidiaries to the extent that those earnings exceed local statutory and operational requirements. Remittance of those earnings is not
expected to result in material income tax.
On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA introduced a 15% alternative
minimum tax based on the financial statement income of certain large corporations (“CAMT”), effective January 1, 2023. Teradyne
currently does not expect the CAMT to have a material impact on its financial results.
The Organization for Economic Cooperation and Development (the “OECD”) has introduced a framework to implement a
global minimum tax of 15% for certain multinational companies, referred to as Pillar Two. While it is uncertain whether the United
States will enact legislation to adopt Pillar Two, certain countries in which Teradyne operates have enacted Pillar Two legislation, and
other countries are in the process of introducing draft Pillar Two legislation. Teradyne is closely monitoring these developments and
evaluating the potential future impact on our effective tax rate. As of December 31, 2024, the effective tax rate impact from Pillar Two
was not material to our consolidated financial statements.
82
U.
SEGMENT, GEOGRAPHIC AND SIGNIFICANT CUSTOMER INFORMATION
Teradyne historically has had four reportable segments (Semiconductor Test, System Test, Wireless Test and Robotics). Each of
the reportable segments represented an individual operating segment.
In the fourth quarter of 2024, Teradyne observed a shift in forecasted revenue generating activities within Integrated System
Test, a historical component of System Test, to activities that more closely align with the Semiconductor Test segment. In response,
beginning in the fourth quarter of 2024, Teradyne made changes to the operational structure of the business to better align the
components within the operating segments based on the chief operating decision maker’s ("CODM") conclusion that it would be more
appropriate to include Integrated System Test results within Semiconductor Test results. This was a primary consideration for
including Integrated System Test within Semiconductor Test and will allow for better informed decisions related to evaluating
segment performance. This change does not result in a change in the identified operating segments. However, the System Test
segment no longer meets the requirements for individual disclosure. Wireless Test also does not meet the requirements for individual
disclosure. As such, System Test and Wireless Test will be included within the “All other” segments category.
As of December 31, 2024, Teradyne has two reportable segments (Semiconductor Test and Robotics). Each of the reportable
segments continues to represent an individual operating segment.
The Semiconductor Test segment includes operations related to the design, manufacturing and marketing of semiconductor test
products and services inclusive of storage and system level test products. The Robotics segment includes operations related to the
design, manufacturing and marketing of collaborative robotic arms and autonomous mobile robots. Each reportable segment has a
segment manager who is accountable to and maintains regular contact with Teradyne’s CODM (Teradyne’s chief executive officer) to
discuss operating activities, financial results, forecasts, and plans for the segment.
The CODM uses business segment income (loss) before income taxes predominantly in the annual budgeting and forecasting
process. The CODM also uses this measure when making decisions about the allocation of operating and capital resources to each
segment. The accounting policies of the business segments are the same as those described in Note B: “Accounting Policies.”
83
Segment information for the years ended December 31, 2024, 2023 and 2022 is as follows:
Semiconductor
Test
Robotics
Reportable
Segments
All Other
Corporate
and Eliminations
Consolidated
(in thousands)
2024
Revenues
$
2,123,920
$
364,848
$
2,488,768
$
331,112
$
—
$
2,819,880
Less:
Cost of revenues
866,353
155,080
1,021,433
120,400
—
1,141,833
Engineering and development
295,614
67,306
362,920
46,556
—
409,476
Selling and marketing
187,384
113,327
300,711
50,317
—
351,028
General and administrative
89,952
54,328
144,280
21,282
—
165,562
Other segment items (1)(2)
126,449
52,359
178,808
26,833
(62,746 )
142,895
Income (loss) before taxes (2)
558,168
(77,552 )
480,616
65,724
62,746
609,086
Total assets (3)
1,287,219
742,017
2,029,236
213,749
1,465,730
3,708,714
Property additions
168,130
22,275
190,405
7,690
—
198,095
Depreciation and amortization expense
85,737
27,668
113,405
6,336
—
119,741
2023
Revenues
$
1,957,188
$
375,183
$
2,332,371
$
343,927
$
—
$
2,676,298
Less:
Cost of revenues
846,570
151,833
998,403
118,040
—
1,116,443
Engineering and development
257,387
68,668
326,055
44,538
—
370,593
Selling and marketing
162,068
107,157
269,225
50,131
—
319,356
General and administrative
77,786
56,483
134,269
25,104
—
159,373
Other segment items (1)(2)
114,873
45,294
160,167
26,657
(1,863 )
184,961
Income (loss) before taxes (2)
498,504
(54,252 )
444,252
79,457
1,863
525,572
Total assets (3)
1,388,842
737,323
2,126,165
191,055
1,169,605
3,486,824
Property additions
113,664
40,739
154,403
5,239
—
159,642
Depreciation and amortization expense
78,568
25,527
104,095
7,021
(230 )
110,886
2022
Revenues
$
2,350,603
$
403,138
$
2,753,741
$
401,053
$
251
$
3,155,045
Less:
Cost of revenues
970,972
161,383
1,132,355
125,522
—
1,257,877
Engineering and development
272,296
64,670
336,966
44,111
—
381,077
Selling and marketing
156,520
101,584
258,104
51,888
—
309,992
General and administrative
75,544
57,845
133,389
20,785
—
154,174
Other segment items (1)(2)
131,464
33,785
165,249
34,587
11,704
211,540
Income (loss) before taxes (2)
743,807
(16,129 )
727,678
124,160
(11,453 )
840,385
Total assets (3)
1,435,766
665,638
2,101,403
207,079
1,192,769
3,501,252
Property additions
126,899
25,711
152,610
10,639
—
163,249
Depreciation and amortization expense
76,922
25,339
102,261
7,836
578
110,675
(1)
For each reportable segment, the other segment items category includes equity and variable compensation, acquired intangible
assets amortization, and restructuring and other charges.
(2)
Included in Corporate and Eliminations are interest income, interest expense, net foreign exchange gains (losses), intercompany
eliminations, acquired intangible amortization, gain on the sale of a business, pension and postretirement plan actuarial gains
(losses), legal and environmental fees, contingent consideration adjustments, acquisition and divestiture related expenses,
contract termination settlement charge, and an expense for the modification of Teradyne's former chief executive officer's
outstanding equity awards.
(3)
Total assets are attributable to each segment. In 2023, Semiconductor Test includes $34.8 million of total assets classified as
assets held for sale. See Note E: "Dispositions" for additional information. Corporate assets consist of cash and cash equivalents,
marketable securities and certain other assets.
84
Information as to Teradyne’s revenues by country is as follows:
2024
2023
2022
(in thousands)
Revenues from customers (1):
Korea
$
695,669
$
394,690
$
544,816
Taiwan
601,997
384,842
626,424
China
375,186
314,899
491,798
United States
374,333
433,661
469,948
Europe
251,285
273,784
268,384
Japan
159,827
281,742
162,920
Singapore
90,113
116,969
99,503
Malaysia
62,376
89,197
142,203
Philippines
53,636
189,419
124,107
Thailand
49,268
91,818
137,356
Rest of the World
106,190
105,277
87,586
$
2,819,880
$
2,676,298
$
3,155,045
(1)
Revenues attributable to a country are based on location of customer site.
In 2024, revenues from Samsung, a customer of our Semiconductor Test segment, accounted for 12.5% of our consolidated
revenues. In 2023, revenues from Texas Instruments Inc., a customer of our Semiconductor Test segment, accounted for 10% of our
consolidated revenues. Teradyne estimates consolidated revenues driven by Qualcomm, a customer of our Semiconductor Test,
System Test, and Wireless Test segments, combining direct and indirect sales, accounted for approximately 11% of its consolidated
revenues in 2022.
Long-lived assets by geographic area:
United
States
Foreign (1)
Total
(in thousands)
December 31, 2024
$
328,733
$
249,623
$
578,356
December 31, 2023 (2)
$
322,445
$
207,995
$
530,440
(1)
As of December 31, 2024 and December 31, 2023, long-lived assets attributable to Denmark were $85.1 million and $78.1
million, respectively. Long-lived assets attributable to Singapore were $74.8 million as of December 31, 2024.
(2)
Includes $11.5 million of long-lived assets classified as assets held for sale. See Note E: "Dispositions" for additional
information.
V.
STOCK REPURCHASE PROGRAM
In January 2023, Teradyne’s Board of Directors cancelled the January 2021 repurchase program and approved a new repurchase
program for up to $2.0 billion of common stock. In 2024, Teradyne repurchased 1.7 million shares of common stock for a total cost of
$199.4 million, exclusive of tax, at an average price of $114.63 per share. In 2023, Teradyne repurchased 3.9 million shares of
common stock for $400.5 million at an average price of $102.47 per share. The cumulative repurchases under the January 2023
repurchase program as of December 31, 2024 were 5.6 million shares of common stock for $599.9 million at an average price per
share of $106.21.
The total cost of shares acquired includes commissions and related excise tax and is recorded as a reduction to retained earnings.
W.
SUBSEQUENT EVENTS
In January 2025, Teradyne’s Board of Directors declared a quarterly cash dividend of $0.12 per share to be paid on March 14,
2025 to shareholders of record as of February 14, 2025.
While Teradyne declared a quarterly cash dividend and authorized a share repurchase program, it may reduce or eliminate the
cash dividend or share repurchase program in the future. Future cash dividends and stock repurchases are subject to the discretion of
Teradyne’s Board of Directors which will consider, among other things, Teradyne’s earnings, capital requirements and financial
condition.
85
SUPPLEMENTARY INFORMATION
(Unaudited)
Item 9: Changes in and disagreements with accountants on accounting and financial disclosure
None.
Item 9A: Controls and procedures
Disclosure Controls and Procedures
As of the end of the period covered by this report, our management, with the participation of our CEO and CFO, evaluated the
effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Exchange Act. Based upon
that evaluation, our CEO and CFO concluded that, as of the end of the period covered by this report, our disclosure controls and
procedures were effective in ensuring that material information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms, including ensuring that such material information is accumulated and communicated to our management, including our CEO
and CFO, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting during the fourth fiscal quarter ended December 31, 2024
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our CEO
and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in
Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), our management concluded that our
internal control over financial reporting was effective as of December 31, 2024.
The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by
PricewaterhouseCoopers LLP, our independent registered public accounting firm, as stated in their report which is included under
Item 8 of this Annual Report.
Inherent Limitations on Effectiveness of Controls
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Item 9B: Other Information
Our officers (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
(“Section 16 Officers”) and directors from time to time enter into contracts, instructions or written plans for the purchase or sale of our
securities that are intended to satisfy the conditions specified in Rule 10b5-1(c) under the Exchange Act for an affirmative defense
against liability for trading in securities on the basis of material nonpublic information. We refer to these contracts, instructions, and
written plans as “Rule 10b5-1 trading plans” and each one as a “Rule 10b5-1 trading plan.” During our fiscal quarter ended
December 31, 2024, no Section 16 Officer or director adopted, modified or terminated a Rule 10b5-1 trading plan.
Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
86
PART III
Item 10: Directors, Executive Officers and Corporate Governance
The information required by this Item 10 will be included in our definitive Proxy Statement in connection with our 2025 Annual
Meeting of Shareholders to be filed with the SEC no later than 120 days after the close of the fiscal year covered by this Annual
Report and is incorporated herein by reference.
We have adopted a written code of business conduct that applies to all of our employees, officers and directors, including our
principal executive officer, principal financial officer and principal accounting officer. Our Code of Conduct is available on our
investor relations website at investors.teradyne.com under the section entitled "Governance Policies" in the "Governance" menu. If we
make any substantive amendments to our Code of Conduct or grant any of our directors or executive officers any waiver, including
any implicit waiver, from a provision of our Code of Conduct, we will disclose the nature of the amendment or waiver on our website
or in a Current Report on Form 8-K.
Item 11: Executive Compensation
The information required by this Item 11 will be included in our definitive Proxy Statement in connection with our 2025 Annual
Meeting of Shareholders to be filed with the SEC not later than 120 days after the close of the fiscal year covered by this Annual
Report and is incorporated herein by reference. For this purpose, the Compensation Committee Report included in such proxy
statement is specifically not incorporated herein.
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 12 will be included in our definitive Proxy Statement in connection with our 2025 Annual
Meeting of Shareholders to be filed with the SEC not later than 120 days after the close of the fiscal year covered by this Annual
Report and is incorporated herein by reference. Also see “Item 7: Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Equity Compensation Plans.”
Item 13: Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 will be included in our definitive Proxy Statement in connection with our 2025 Annual
Meeting of Shareholders to be filed with the SEC not later than 120 days after the close of the fiscal year covered by this Annual
Report and is incorporated herein by reference.
Item 14: Principal Accountant Fees and Services
The information required by this Item 14 will be included in our definitive Proxy Statement in connection with our 2025 Annual
Meeting of Shareholders to be filed with the SEC not later than 120 days after the close of the fiscal year covered by this Annual
Report and is incorporated herein by reference.
87
PART IV
Item 15: Exhibits and Financial Statement Schedule.
15(a)(1) Financial Statements
The following consolidated financial statements are included in Item 8:
Page
Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, PCAOB ID No 238)..................
36
Consolidated Balance Sheets as of December 31, 2024, and 2023 ............................................................................................
38
Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 ............................................
39
Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022........................
40
Consolidated Statements of Convertible Common Shares and Shareholders’ Equity for the years ended December 31,
2024, 2023 and 2022...................................................................................................................................................................
41
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022...........................................
42
15(a)(2) Financial Statement Schedule
The following consolidated financial statement schedule is included in Item 15(c):
Schedule II—Valuation and Qualifying Accounts
Schedules other than those listed above have been omitted since they are either not required or information is otherwise
included.
15(a)(3) Listing of Exhibits
The Exhibits which are filed with this report or which are incorporated by reference herein are set forth in the Exhibit Index.
88
15(c) Financial Statement Schedules
TERADYNE, INC.
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
Column A
Column B
Column C
Column D
Column E
Column F
Description
Balance at
Beginning
of Period
Additions
Charged to
Cost and
Expenses
Other
Deductions
Balance at
End of Period
(in thousands)
Valuation reserve deducted in the balance sheet
from the asset to which it applies:
Accounts receivable:
2024 Allowance for credit losses
$
1,988
$
149
$
(36) $
(10) $
2,111
2023 Allowance for credit losses
$
1,955
$
301
$
23
$
291
$
1,988
2022 Allowance for credit losses
$
2,012
$
500
$
(6) $
551
$
1,955
Column A
Column B
Column C
Column D
Column E
Column F
Description
Balance at
Beginning
of Period
Additions
Charged to
Cost and
Expenses
Other
Deductions
Balance at
End of Period
(in thousands)
Valuation reserve deducted in the balance sheet
from the asset to which it applies:
Deferred taxes:
2024 Valuation allowance
$
109,251
$
8,809
$
(41) $
765
$
117,254
2023 Valuation allowance
$
103,807
$
5,759
$
59
$
374
$
109,251
2022 Valuation allowance
$
97,170
$
7,652
$
21
$
1,036
$
103,807
Item 16: Form 10-K Summary
Not applicable.
89
EXHIBIT INDEX
The following designated exhibits are, as indicated below, either filed herewith or have heretofore been filed with the Securities
and Exchange Commission and are referred to and incorporated by reference to such filings.
Exhibit
No.
Description
SEC Document Reference
3.1
Restated Articles of Organization.
Appendix B to Teradyne’s Definitive Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act
of 1934 filed on March 29, 2024.
3.2
Amended and Restated By-laws, as amended.
Exhibit 3.1 to Teradyne’s Current Report on Form 8-K
filed on January 29, 2024.
4.1
Indenture dated as of December 12, 2016, between Teradyne,
Inc. and Wilmington Trust, National Association, as trustee.
Exhibit 4.1 to Teradyne’s Current Report on Form 8-K
filed on December 12, 2016.
4.2
First Supplemental Indenture dated as of November 4, 2021
between Teradyne, Inc. and Wilmington Trust, National
Association, as trustee.
Exhibit 4.1 to Teradyne’s Quarterly Report on Form 10-Q
for the quarter ended October 3, 2021.
4.3
Description of Teradyne, Inc. Securities Registered under
Section 12 of the Exchange Act.
Filed herewith.
10.1†
Standard Manufacturing Agreement entered into as of
November 24, 2003 by and between Teradyne and Solectron.
Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended September 30, 2007.
10.2†
Second Amendment to Standard Manufacturing Agreement,
dated as of August 27, 2007, by and between Teradyne and
Solectron.
Exhibit 10.3 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended September 30, 2007.
10.3†
Sixth Amendment to Standard Manufacturing Agreement,
dated as of July 27, 2009, by and between Teradyne and
Flextronics Corporation.
Exhibit 10.5 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2009.
10.4
Addendum to Standard Manufacturing Agreement (Authorized
Purchase Agreement)—Revised July 1, 2010.
Exhibit 10.6 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2010.
10.5
Eighth Amendment to Standard Manufacturing Agreement,
dated as of April 13, 2012, by and between Teradyne and
Flextronics Sales & Marketing North Asia (L) LTD.
Exhibit 10.7 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2012.
10.6†
Ninth Amendment to Standard Manufacturing Agreement,
dated as of September 17, 2012, by and between Teradyne and
Flextronics Sales & Marketing North Asia (L) LTD.
Exhibit 10.8 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2012.
10.7
2006 Equity and Cash Compensation Incentive Plan, as
amended. *
Exhibit 10.2 to Teradyne’s Current Report on Form 8-K
filed on May 13, 2021.
10.8
Danish Sub-Plan to the 2006 Equity and Cash Compensation
Incentive Plan.
Exhibit 10.10 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2018.
10.9
Form of Performance-Based Restricted Stock Unit Agreement
for Executive Officers under 2006 Equity and Cash
Compensation Incentive Plan.*
Exhibit 10.9 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2020.
10.10
Form of Time-Based Restricted Stock Unit Agreement for
Executive Officers under 2006 Equity and Cash Compensation
Incentive Plan.*
Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-
Q for the fiscal quarter ended March 31, 2024.
10.11
Form of Executive Officer Stock Option Agreement under
2006 Equity and Cash Compensation Incentive Plan, as
amended. *
Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-
Q for the fiscal quarter ended March 31, 2024.
10.12
Form of Restricted Stock Unit Agreement for Directors under
2006 Equity and Cash Compensation Incentive Plan.*
Exhibit 10.12 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2016.
90
10.13
1996 Employee Stock Purchase Plan, as amended.*
Exhibit 10.13 to Teradyne's Annual Report on Form 10-K
for the fiscal year ended December 31, 2022.
10.14
Danish Sub-Plan to the 1996 Employee Stock Purchase Plan.
Exhibit 10.15 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2019
10.15
Deferral Plan for Non-Employee Directors, as amended.*
Exhibit 10.1 to Teradyne’s Quarterly Report on form 10-Q
for the quarter ended October 3, 2021.
10.16
Supplemental Savings Plan, as amended and restated.*
Exhibit 10.18 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2008.
10.17
Supplemental Executive Retirement Plan, as restated.*
Exhibit 10.19 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2008.
10.18
Agreement Regarding Termination Benefits dated January 31,
2023 between Teradyne and Gregory S. Smith.*
Exhibit 10.18 to Teradyne's Annual Report on Form 10-K
for the fiscal year ended December 31, 2022.
10.19
Employment Agreement dated May 7, 2004 between Teradyne
and Mark Jagiela.*
Exhibit 10.37 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended July 4, 2004.
10.20
Executive Officer Retirement Agreement dated July 17, 2019
between Teradyne and Gregory R. Beecher.*
Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended June 30, 2019.
10.21
Executive Officer Agreement dated January 31, 2023 between
Teradyne and Mark Jagiela.*
Exhibit 10.21 to Teradyne's Annual Report on Form 10-K
for the fiscal year ended December 31, 2022.
10.22
Amended and Restated Executive Officer Change in Control
Agreement dated May 26, 2009 between Teradyne and Charles
J. Gray, as amended.*
Exhibit 10.30 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2012.
10.23
Employment Agreement dated July 24, 2009 between
Teradyne and Charles J. Gray.*
Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended April 4, 2010.
10.24
Executive Officer Agreement dated January 25, 2024 between
Teradyne and Charles J. Gray.*
Exhibit 10.1 to Teradyne's Current Report on Form 8-K/A
filed January 29, 2024
10.25
Amended and Restated Executive Officer Change in Control
Agreement dated June 30, 2012 between Teradyne and Walter
G. Vahey, as amended.*
Exhibit 10.32 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2012.
10.26
Employment Agreement dated February 6, 2013 between
Teradyne and Walter G. Vahey.*
Exhibit 10.33 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2012.
10.27
Executive Officer Change in Control Agreement dated
September 1, 2014 between Teradyne, Inc. and Bradford
Robbins.*
Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended September 28, 2014.
10.28
Employment Agreement dated September 1, 2014 between
Teradyne, Inc. and Bradford Robbins.*
Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended September 28, 2014.
10.29
Executive Change in Control Agreement dated February 8,
2016 between Teradyne, Inc. and Gregory S. Smith.*
Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended April 3, 2016.
10.30
Employment Agreement dated February 8, 2016 between
Teradyne, Inc. and Gregory S. Smith.*
Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended April 3, 2016.
10.31
Teradyne Offer of Employment dated February 8, 2019 for
Sanjay Mehta.*
Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended March 31, 2019.
10.32
Executive Officer Change in Control Agreement dated April
25, 2019 between Teradyne, Inc. and Sanjay Mehta.*
Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended March 31, 2019.
10.33
Employment Agreement dated April 25, 2019 between
Teradyne, Inc. and Sanjay Mehta.*
Exhibit 10.3 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended March 31, 2019.
10.34
Agreement Regarding Termination Benefits dated April 25,
2019 between Teradyne, Inc. and Sanjay Mehta.*
Exhibit 10.4 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended March 31, 2019.
91
10.35
Executive Officer Change in Control Agreement dated October
1, 2020 between Teradyne, Inc. and Richard Burns.*
Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended September 27, 2020.
10.36
Executive Officer Change in Control Agreement dated August
21, 2023 between Teradyne, Inc. and Ujjwal Kumar.*
Exhibit 10.1 to Teradyne's Quarterly Report on Form 10-
Q for the quarter ended October 1, 2023.
10.37
Employment Agreement dated June 27, 2023 between
Teradyne, Inc. and Ujjwal Kumar.*
Exhibit 10.2 to Teradyne's Quarterly Report on Form 10-
Q for the quarter ended October 1, 2023
10.38
Executive Officer Change in Control Agreement dated
February 2, 2024 between Teradyne, Inc. and Ryan Driscoll.*
Exhibit 10.38 to Teradyne's Annual Report on Form 10-K
for the fiscal year ended December 31, 2023.
10.39
Employment Agreement dated October 1, 2020 between
Teradyne, Inc. and Richard Burns.*
Exhibit 10.2 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended September 27, 2020.
10.40
Executive Officer Change in Control Agreement dated
November 14, 2023 between Teradyne, Inc. and John Wood. *
Exhibit 10.1 to Teradyne's Quarterly Report on Form 10-
Q for the quarter ended September 29, 2024.
10.41
Executive Officer Change in Control Agreement dated August
23, 2024 between Teradyne, Inc. and John Lukez. *
Exhibit 10.2 to Teradyne's Quarterly Report on Form 10-
Q for the quarter ended September 29, 2024.
10.42
Time-Based Restricted Stock Unit Agreement dated May 1,
2019 for Sanjay Mehta under 2006 Equity and Cash
Compensation Plan.*
Exhibit 10.5 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended March 31, 2019.
10.43
Form of Indemnification Agreement.*
Exhibit 10.24 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2006.
10.44
LitePoint Corporation 2002 Stock Plan.
Exhibit 10.43 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2011.
10.45
Credit Agreement dated May 1, 2020 among Teradyne, Inc.,
Truist Bank, as the administrative agent, issuing bank and
swingline lender, and other lenders party thereto.
Exhibit 10.1 to Teradyne’s Current Report on Form 8-K
filed May 5, 2020.
10.46
First Amendment to Credit Agreement dated December 10,
2021 among Teradyne, Inc., Truist Bank, as the administrative
agent, issuing bank and swingline lender, and other lenders
party thereto.
Exhibit 10.52 to Teradyne’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2021.
10.47
Second Amendment to Credit Agreement dated October 5,
2022 among Teradyne, Inc., Truist Bank, as the administrative
agent, issuing bank and swingline lender, and other lenders
party thereto.
Exhibit 10.1 to Teradyne’s Quarterly Report on Form 10-
Q for the quarter ended October 2, 2022.
10.48
Third Amendment to Credit Agreement dated November 7,
2023 among Teradyne, Inc., Truist Bank, as the administrative
agent, issuing bank and swingline lender, and other lenders
party thereto
Exhibit 10.1 to Teradyne's Quarterly Report on Form 10-
Q for the quarter ended June 30, 2024.
21.1
Subsidiaries of Teradyne.
Filed herewith.
23.1
Consent of PricewaterhouseCoopers LLP.
Filed herewith.
31.1
Rule 13a-14(a) Certification of Principal Executive Officer.
Filed herewith.
31.2
Rule 13a-14(a) Certification of Principal Financial Officer.
Filed herewith.
32.1
Section 1350 Certification of Principal Executive Officer.
Furnished herewith.
32.2
Section 1350 Certification of Principal Financial Officer.
Furnished herewith.
97.1
Policy for Recoupment of Incentive Compensation.
Filed herewith.
101
The following financial information from Teradyne, Inc.’s
Annual Report on Form 10-K for the fiscal year ended
December 31, 2023, formatted in Inline XBRL (eXtensible
Business Reporting Language): (i) Consolidated Balance
Sheets as of December 31, 2023 and December 31, 2022, (ii)
92
Consolidated Statements of Operations for the years ended
December 31, 2023, 2022 and 2021, (iii) Consolidated
Statements of Comprehensive Income (Loss) for the years
ended December 31, 2023, 2022 and 2021 (iv) Consolidated
Statements of Shareholders’ Equity for the years ended
December 31, 2023, 2022 and 2021, (v) Consolidated
Statements of Cash Flows for the years ended December 31,
2023, 2022 and 2021, and (vi) the Notes to Consolidated
Financial Statements.
104
The cover page of the Annual Report on Form 10-K formatted
in Inline XBRL (included in Exhibit 101).
† -Confidential treatment granted.
* -Management contract or compensatory plan.
93
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 20th day of February 2025.
TERADYNE, INC.
By:
/S/ SANJAY MEHTA
Sanjay Mehta,
Vice President, Chief Financial Officer and
Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/S/ PAUL J. TUFANO
Paul J. Tufano
Chair of the Board
February 20, 2025
/S/ GREGORY SMITH
Gregory Smith
Chief Executive Officer (Principal Executive
Officer) and Director
February 20, 2025
/S/ SANJAY MEHTA
Sanjay Mehta
Vice President, Chief Financial Officer and
Treasurer (Principal Financial and
Accounting Officer)
February 20, 2025
/S/ PETER HERWECK
Peter Herweck
Director
February 20, 2025
/S/ MERCEDES JOHNSON
Mercedes Johnson
Director
February 20, 2025
/S/ ERNEST E. MADDOCK
Ernest E. Maddock
Director
February 20, 2025
/S/ MARILYN MATZ
Marilyn Matz
Director
February 20, 2025
/S/ FOUAD TAMER
Fouad Tamer
Director
February 20, 2025
/S/ BRIDGET VAN KRALINGEN
Bridget van Kralingen
Director
February 20, 2025